Equinix (EQIX) Announces IBX Data Center Expansion in Perth

Equinix, Inc. EQIX recently announced a new International Business Exchange (“IBX”) data center in Perth.  It will be named PE3, and marks the company's 18th data center in Australia and third in Perth.

This new retail IBX data center will enable the company to expand its Platform Equinix and cater to rising demand stemming from accelerated digital infrastructure transformations and low-latency networking capabilities in Western Australia.

Total capital expenditure for the opening of the first phase, which is slated for fourth-quarter 2021, is $54 million. The first phase will open with 650 cabinets and more than 1,830 square meters of colocation space. At full built, the data center will have 1,650 cabinets and more than 10,600 square meters of colocation space.

With Perth emerging as Australia’s digital gateway to international markets, the expansion is in line with Equinix’s strategy to enhance data-center capacity in key markets and strengthen its competitive positioning and global reach. In fact, following inauguration, PE3 will have a rich and diverse ecosystem with more than 1,045 companies, comprising 215 networks and 395 cloud providers, utilizing Platform Equinix in Australia.

The PE3 IBX will be situated adjacent to the PE2 IBX facility and both facilities will be connected with a planned secure link bridge. Moreover, it will provide a wide range of interconnection solutions, including Equinix Fabric. This will aid enterprises to advance their digital transformation journey and expand in other geographic markets.

Notably, there has been a rise in demand for highly interconnected data center space, especially from cloud and Internet customers, courtesy ofacceleration in enterprise cloud adoption and increase in remote working. These factors, in turn, arelikely to drive leasing at PE3.

Moreover, leveraging on strong industry fundamental, Equinix seems to be firing on all cylinders as reflected by its organic and inorganic growth strategies, and robust operating metrics.

Recently, the company reported third-quarter revenues of $1.52 billion. The top-line figure improved 8.8% year over year, representing the 71st consecutive quarter of revenue growth.Revenues from the three geographic regions increased on a year-over-year basis as well.

However, Equinix competes with Internet data centers operated by established communications carriers and other REITs. In addition to competing with neutral colocation providers, the company competes with traditional colocation providers, Internet service providers and Web-hosting facilities.

Given that it leases majority of its data centers, a competitive landscape might make the leases more expensive for Equinix.

Shares of this Zacks Rank #3 (Hold) have rallied 35.8% over the past year as against the real estate market’s decline of 8.3%.

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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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