365 Main is back. The company has teamed with investors to acquire 16 data centers from Equinix, returning to the data center market just two years after it sold a portfolio of facilities to Digital Realty Trust. 365 Main and backers Crosslink Capital and Housatonic Partners will pay $75 million for the facilities, which total 280,000 square feet of data center space.
When the transaction closes in the fourth quarter, 365 Main will own and manage the 16 data centers. It is also acquiring the Equinix customers in those facilities, and will retain key employees at these sites.
Former Switch & Data Sites Being Sold
All 16 of the data centers being sold were acquired by Equinix in its 2010 purchase of Switch & Data, a provider known for its focus on second-tier markets. Equinix historically has focused its business in interconnection-rich facilities in major Internet hubs, and with this sale it will exit nine markets that it entered through the Switch & Data deal. Equinix estimates that the 16 data centers generate less than two percent of the company’s annual revenues.
“As we sharpen our focus on developing business ecosystems, we are prioritizing the largest global markets required by our targeted customers and applications that are driving growth across Platform Equinix,” said Charles Meyers, president of the Americas for Equinix. “We believe the divestiture of these assets will allow us to focus our capital and energy on our most productive data centers and will ensure that customers at these sites will be supported by an experienced data center operator that will continue to invest in these locations. We are excited to partner with 365 Main to make this transaction a success.”
365 Main took its name from its first data center, a San Francisco colocation facility originally built by AboveNet. The company added four more facilities – in Oakland, Phoenix, Los Angeles and northern Virginia – totaling more than 900,000 square feet of space. In 2010 the portfolio was sold to Digital Realty for $725 million.
A ‘Solid Platform’ for Re-Entry
“We have been continuously evaluating the data center market and believe the opportunity to enter 16 U.S. markets creates a solid platform for 365 Main,” said Chris Dolan, president and founding partner, 365 Main. “We are pleased to be back in this industry and to draw on our 15 years of data center experience to deliver on our strong reputation for customer service and retention.”
365 Main is acquiring Equinix properties in nine markets Equinix is departing, including Buffalo, Cleveland, Detroit, Indianapolis, Nashville, Phoenix, Pittsburgh, St. Louis and Tampa. The remaining seven data centers are in markets where Equinix has enough capacity to meet customer demand. These sites include CH6 (427 La Salle, Chicago), DC9 (11513-19 Sunset Hills Road, Reston, Va.), DA5 (4101 Bryan St., Dallas), NY10 (65 Broadway, New York), PH2 (3701 Market St., Philadelphia), SE1 (1914 Third Ave., Seattle), and SV7 (534 Stockton Ave., San Jose).
The announcement by Equinix made no mention of whether the divestiture would have any impact on its ongoing process to evaluate converting to a real estate investment trust (REIT).