REDWOOD CITY, Calif. - Equinix, Inc. (NASDAQ: NASDAQ:EQIX), a global digital infrastructure company, in partnership with PGIM Real Estate, announced today their joint venture which involves a $600 million investment to develop and operate the inaugural xScale data center in the United States. The facility, named SV12x, is set to be located in San Jose, California, as part of Equinix's Great Oaks data center campus.
The construction of the SV12x data center will occur in two phases, with the first phase slated for completion in the second quarter of 2024. Upon full build-out, the data center is expected to provide over 28 megawatts of power capacity. This development marks the second collaboration between Equinix and PGIM Real Estate, building upon their existing ventures in other global markets.
This joint venture will expand Equinix's xScale data center portfolio to over $8 billion across more than 35 facilities, expected to offer in excess of 725 megawatts of power capacity when fully constructed. The xScale data centers are designed to support the expansion needs of large-scale companies, allowing them to leverage Equinix's global platform which spans over 70 metros and facilitates direct interconnection with an ecosystem of over 10,000 customers.
In this joint venture, PGIM Real Estate will hold an 80% equity interest, while Equinix will retain the remaining 20%. PGIM Real Estate has been active in the data center sector since 2013, and this current agreement with Equinix represents the first investment through PGIM Real Estate's dedicated global data center strategy. This strategy aims to invest in hyperscale facilities in key internet gateway markets across the U.S., Europe, and Asia-Pacific regions.
Equinix's role as a digital infrastructure provider is to enable organizations to scale with agility, accelerate the launch of digital services, and enhance customer experiences, all while aligning with sustainability objectives. PGIM Real Estate, with $210 billion in gross assets under management as of December 30, 2023, offers a range of real estate equity and debt solutions, emphasizing positive environmental and social impact, and community strengthening practices.
The partnership is based on a press release statement and is subject to the various risks and uncertainties inherent in forward-looking statements. These include, but are not limited to, risks associated with the construction and operation of data centers, market volatility, and other factors detailed in Equinix's filings with the Securities and Exchange Commission.
InvestingPro Insights
As Equinix, Inc. (NASDAQ: EQIX) embarks on its latest venture with PGIM Real Estate, the company's financial metrics offer a glimpse into its current market standing. With a robust market capitalization of $72.4 billion, Equinix stands as a significant player in the digital infrastructure industry. The company's commitment to expanding its xScale data center portfolio is underscored by its substantial revenue growth, which stood at 15.34% for the last twelve months as of Q4 2023. This growth trajectory is further evidenced by a quarterly revenue increase of 15.44% in Q4 2023.
Investors monitoring Equinix's performance will note the company's P/E ratio of 73.38, which has adjusted to a higher 116.24 for the last twelve months as of Q4 2023, reflecting investors' willingness to pay a premium for the company's earnings. The PEG ratio for the same period is 2.17, suggesting expectations of continued growth. Additionally, the company's Price / Book ratio stands at 5.79, indicating the market's valuation of the company relative to its book value.
Equinix's solid gross profit margin of 45.48% for the last twelve months as of Q4 2023 demonstrates its ability to manage costs effectively while scaling operations. With the upcoming SV12x data center, Equinix will likely further enhance its profitability and operational efficiency.
InvestingPro Tips highlight that Equinix's dividend yield is currently 2.16%, with a staggering dividend growth of 37.42% in the last twelve months as of Q4 2023, which may appeal to income-focused investors. Additionally, the fair value estimated by analysts stands at $950, while InvestingPro's fair value assessment is $605.48, offering different perspectives on the company's valuation.
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