Terremark Leases Expansion Space in Dallas

Terremark Worldwide (TMRK) has built huge data centers around the world. But when it needed to expand its data center footprint in Dallas, it opted to lease “plug and play” space from Digital Realty Trust (DLR), the largest provider of wholesale data centers.

Digital Realty said this morning that Terremark has leased 10,000 square feet of space in one of its Dallas area facilities. The location was not announced, but a likely suspect is Digital’s huge new campus in Richardson, where it plans to build out up to 800,000 square feet of mission-critical space.

The deal underscores the appeal of Digital Realty’s Turn-key Datacenter program, which  offers customers finished raised-floor data center space, shifting the data center development costs from the tenant to the landlord. This approach allows for much quicker deployment than if the customer built a new facility on its own. 

Terremark Acquires Storage Provider DS3

Just weeks after announcing a focus on seeking acquisition opportunities, managed hosting provider Terremark Worldwide (TMRK) has acquired DS3 DataVaulting for $11.5 million in cash, the company said today. DS3 provides customers with offsite, online data backup and restore services which enable enterprises and government agencies to rapidly and securely backup and restore files, databases and operating systems. The company is based in Fairfax, Va. and was founded in 2002.

“Acquiring DS3 enhances our overall data storage offering and helps us accelerate the development of our solutions in the area of managed storage, which is a key growth opportunity driven by the escalating data demands created by new technologies and increasingly stringent regulatory compliance,” said Marvin Wheeler, Terremark’s Chief Strategy Officer.

Surge in Federal Cloud Revenue for Terremark

The NAP of the Capital Region in Culpeper, Virginia is hosting many of Terremark's cloud computing customers.

The Obama administration’s plan to shift federal IT services to a cloud computing model is beginning to boost revenues for Terremark Worldwide, one of the early leaders in the government cloud services market. The Miami-based company said yesterday that its revenue from cloud computing has surged to an annual rate of $13.2 million, with the majority of that growth coming from the federal government.

Terremark (TMRK) is hosting two of the earliest federal web sites to seek out a cloud hosting model, the USA.gov information portal and Data.gov, an ambitious project to provide the public with better access to government activities through machine-readable data feeds. “Our early success with the federal government has clearly validated our technology leadership which is accelerating our commercial customer’s interest in an adoption of cloud computing,” said Terremark chairman and CEO Manuel Medina.

Medina said the Terremark cloud platform is becoming a gateway to selling additional value-added services to its customers. “Really what gives the premium to our cloud is the services we wrap around it. We don’t expect those (profits) to come down any time soon. To be perfectly honest with you, I’m a lot happier today when we sign a cloud deal than when we sign 1,000 square feet of colo.”

Alliances Key to Terremark Growth Strategy

In a sign that it is focusing on partnerships and acquisitions, Terremark Worldwide (TMRK) today announced the appointment of Marvin Wheeler as Chief Strategy Officer. Wheeler, who was previously Chief Operations Officer and President of the U.S. Commercial Business Unit, will be responsible for identifying key opportunities to drive continued growth for the company, including potential acquisitions.

“While Terremark has experienced exponential growth over the past several years, our continued focus on execution and tightly aligning our business plan with market demand and technological advancements will be vital as we continue our growth,” said Manuel Medina, Terremark’s Chairman and CEO. “Marvin’s vast experience and deep understanding of our dynamic industry, combined with his proven track record of success, will help us develop strategic alliances with key partners and capitalize on various opportunities to extend our successful growth trajectory.”

Roundup: Digital Realty, Terremark, Riverbed

Here’s a roundup of news announcements from the data center and hosting industry:

• Digital Realty Trust Outlines Third Quarter Leasing Activity. Digital Realty Trust announced 3rd quarter leasing activity Thursday, reflecting strong incremental revenue growth for the company.  For the period ending September 30, 2009 leases totaled 101,000 square feet.  Approximately 90,000 square feet of this was Turn-Key Datacenter space and 11,000 square feet was non-technical space.  For the year to date the company has signed leases totaling approximately 278,000 square feet of space.  “The continued demand for our Turn-Key Datacenter product has produced strong leasing results in the third quarter,” said CEO Michael Foust.  On a year-to-date basis, the leases that have commenced will contribute approximately $54.1 million of incremental revenue recognized in 2009.  Digital’s stock price has been steadily climbing since July 2009 and closed Thursday up 1.57 at $46.39
• Terremark launches cloud-enabled disaster recovery services. On Thursday Terremark announced an addition to its portfolio of virtualized services by launching cloud-enabled disaster recovery (DR) services.  The new offering leverages their cloud computing platform and delivers pre-provisioned computing and network capacity along with data replication and fully managed data center failover.  The new DR service is based on NetApp and VMware vSphere technologies.  VMware announced Thursday that vSphere 4 has surpassed 500,000 downloads.  Tom Mays, Vice President for Advanced Data Solutions at Terremark said “Our cloud-based disaster recovery offering is more than just a remote-replication solution; it is a complete cloud-based service that incorporates the enterprise-class services necessary to run IT operations securely in the event of a disaster declaration.”
• Riverbed 3rd quarter 2009 financial results. IT infrastructure performance company Riverbed announced record 3rd quarter 2009 results Thursday, with revenue exceeding $100 million.  Key financial statistics included revenue increases 12% over prior quarter and 18% over prior year, cash flow from operations of $38 million and $297 million in cash and marketable securities and no debt.  Riverbed CEO Jerry Kennelly said “as a critical enabler of fundamental business initiatives including virtualization, cloud computing and reducing data infrastructure costs, WAN optimization continues to be a top IT priority.”  In the third quarter of 2009 Riverbed was positioned by Gartner in the leaders quadrant for WAN Optimization Controllers, added 8 Fortune 500 customers, and introduced the Central Management Console – Virtual Edition, designed for managed service providers.

Terremark’s vCloud Express in Spotlight

Terremark (TMRK) was featured in the opening keynote of VMworld 2009 on Tuesday and VMware CEO Paul Maritz showcased its new vCloud Express, a service to create and host virtual machines on VMware vSphere. In this video from VMworld TV, Terremark’s Simon West discusses his company’s implementation of vCloud Express and gives a quick demo of setting up a virtual server. Users can launch a single server and pay by credit card, with rates starting at less than $1 a day. This video runs about 2 minutes, 30 seconds.

For additional video, check out our DCK video archive and the Data Center Videos channel on YouTube.

Terremark Offers SAP Cloud Hosting

Terremark Worldwide (TMRK) will offer hosting services for SAP solutions on its Enterprise Cloud infrastructure platform, the company said today. The agreement offers expanded options for customers looking for a cloud environment to run business applications from SAP, as the German software giant has been slow in deploying its own cloud platform.

“Terremark’s hosting services will offer several benefits to both small and large SAP customers,” said Michael Ressemann, global head of BPO Solution Delivery and Partner Enablement at SAP. “Our partnership with Terremark will provide customers the ability to experience significant cost savings, while not having to sacrifice the reliability of their hosted SAP applications.”

The announcement continues the recent momentum for the Enterprise Cloud, which is hosting several of the federal government’s cloud-hosted sites and also backing cloud offerings from partners like CSC.

The Enterprise Cloud is a managed infrastructure service running on Terremark’s Infinistructure utility computing platform. The service seeks to marry the advantages of Amazon’s utility computing platform – especially scalability and rapid deployment – with enterprise-ready reliability to support mission-critical applications.

Terremark Beefs up Capital NAP Connectivity

The NAP of the Capital Region in Culpeper, Virginia.

FiberLight has completed the extension of its optical network to Terremark’s NAP of the Capital Region (NCR) data center in Culpeper, Virginia, providing access to an additional nine carrier networks, the companies said today. Terremark’s NCR now offers access to a total of 15 leading carrier networks.

“The completion of our optical network into Terremark’s NAP of the Capital Region represents a significant step for both companies,” said Michael P. Miller, CEO and Founder of FiberLight. “Connecting the NCR to Northern Virginia, allows us to extend our footprint while providing Terremark’s customers the benefits of FiberLight’s robust core metro network and our 24/7 network monitoring capabilities to proactively address any issues.”

Debt Markets Open, Construction to Follow

The credit crunch has had a meaningful impact on data center supply, sidelining many projects that weren’t fully funded prior to the meltdown on Wall Street last fall. But the deep freeze in the credit markets appears to be thawing, as two leading colocation providers announced debt financing this week:

• On Monday Equinix (EQIX) announced plans to issue $250 million in convertible debt to “fund the development of expansion opportunities.” Interest in the offering was strong enough that Equinix wound up selling $325 million in debt, while granting an over-allotment to underwriters for another $48 million.
• On Tuesday Terremark Worldwide (TMRK) announced plans to borrow $400 million through a private debt placement. The company will use the funds to repay $258 million in existing debt and make “capital investments to build out facilities and acquisitions of complementary businesses.”

As we’ve noted, the supply of data center space is getting tight in some key markets. Now that expansion-minded colocation providers are able to raise money through the debt markets, we can expect to see new construction soon. Data center REITs Digital Realty Trust and DuPont Fabros previosuly raised debt financing this spring. These companies, along with Equinix and Terremark, are well known to lenders and have a serious track record in building and filling data centers, and thus good candidates to serve as “icebreakers” for the data center industry in the credit markets. In the short run, this market access will likely extend the “incumbent advantage” for these veteran players in the data center industry, allowing them to build while smaller and newer players must wait for the credit crunch to ease further – a development we predicted back in March 2008.