Sale Includes Data Centers in Buffalo, NY; Cleveland, Detroit, Indianapolis, Nashville, Phoenix, Pittsburgh, St. Louis and Tampa
An investment team led by 365 Main agreed to acquire a 16-property portfolio of data centers from Equinix, Inc. (Nasdaq: EQIX
) located in nine states in a transaction valued at $75 million, among the largest data center purchases of 2012.
The investment group, which consists of 365 Main, Crosslink Capital and Housatonic Partners, agreed to buy the 16 properties spread across 16 markets and totaling 280,000 square feet. Privately held 365 Main, founded by Chris Dolan and James McGrath in 2002 and based in San Francisco, will own and manage the data centers, re-entering the market after selling five data centers to Digital Reality Trust in 2010.
Data centers have attracted the attention of REITs and other instititutional investors who have raised large sums of capital to invest in properties necessary to store and transmit the vast amount of data from computer networks and cloud computing.
Nine of the 16 data centers are in markets Equinix will exit with the close of the sale, including Buffalo, NY; Cleveland, Detroit, Indianapolis, Nashville, Phoenix, Pittsburgh, St. Louis and Tampa.
The remaining seven data centers sold by Equinix are in markets where the company will retain a presence and has sufficient capacity to meet customer demand, including 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 Equinix customers deployed in the 16 data centers will be transferred to 365 Main as part of the transaction. Additionally, key employees who have experience with these sites and their customers will be joining 365 Main to facilitate a seamless transition and ongoing support for customers.
"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 Dolan, president and founding partner of 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."
Charles Meyers, president of the Americas for Equinix, said the company is "prioritizing the largest global markets required by our targeted customers and applications that are driving growth" across its platform as Equinix "sharpens our focus on developing business ecosystems."
"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," he added.
Equinix estimates that the 16 data centers generate less than 2% of the company’s annual revenues and the financial results derived from the properties will be excluded from Equinix’s continuing operations for the quarter and will be reflected as discontinued operations. Davis Polk & Wardwell LLP and The Bank Street Group LLC served as legal and financial advisors to Equinix.