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Equinix (EQIX) to Expand Into Montreal With New Data Center

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Amid enterprises’ growing reliance on technology and acceleration in digital transformation strategies, Equinix, Inc. (EQIX - Free Report) reveals plans for a new state-of-the-art International Business Exchange™ (IBX®) data center in Montreal with an investment of $50 million.

Montreal is a key economic center in Canada and globally. It is also a major innovation hub with one of the largest concentrations of technology workforces in Canada. Given Montreal’s growing position as a world leader in industries such as Visual Effects (VFX), gaming, and financial services and aerospace, Equinix’s latest move is a strategic fit.

The new MT2 data center, slated to open in the second half of 2023, will enhance EQIX’s footprint in Canada to 16 high-quality IBX data centers coast to coast and add more than 37,000 square feet of colocation space. In addition, it will provide customers with a digital on-ramp to the company’s global platform of more than 245 data centers.

Furthermore, the new facility will continue to help bring the full value of Platform Equinix® and its portfolio of solutions to Canadian businesses. Customers will benefit from Equinix's digital services to build digital infrastructure securely and rapidly at software speed with automated bare metal and virtual network services to connect and consume network on demand.

Per Andrew Eppich, managing director at Equinix Canada, “Expanding our footprint in this metro will offer companies the best-in-class data center design with access to connectivity both globally and within Canada, so they can advance on their digital infrastructure and innovation journey at home and abroad.”

In line with Equinix's efficiency commitment to sustainable air-cooling practices announced in December 2022, the MT2 data center is expected to be among the first cohort of data centers to support this initiative. Over time, this initiative will help reduce the Scope 3 carbon emissions associated with the data center operations.

Data center REITs like Equinix are expected to benefit from growth in artificial intelligence, as well as autonomous vehicle and virtual/augmented reality markets, which is anticipated to be robust over the next five-six years.

Amid this backdrop, the company has been making concerted efforts to tap such growth opportunities through acquisitions and development efforts.

In February 2023, EQIX unveiled that it is building its second data center in Barcelona, a vital subsea hub. The new BA2 data center will serve as a strategic connection point for data communications between Europe, Africa and the Middle East, making EQIX’s move seem prudent.

In 2022, the company opened or acquired 13 new IBX data centers, opened three new xScale data centers through its joint ventures and entered three new markets. This increased Equinix’s total number of IBX and xScale data center facilities to 248.

As of the fourth-quarter end, Equinix had 49 major builds in progress across 35 metros in 23 countries, including nine xScale builds. This represents the largest new-build pipeline in company’s history.

With a solid balance-sheet position and ample financial flexibility, Equinix remains well-positioned to capitalize on long-term growth opportunities.

EQIX currently carries a Zacks Rank #3 (Hold). Its shares have gained 3.4% in the past three months against the real estate market’s fall of 3.3%. 

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Stocks to Consider

Some better-ranked stocks from the REIT sector are Terreno Realty (TRNO - Free Report) and Innovative Industrial Properties (IIPR - Free Report) , each currently carrying a Zacks Rank #2 (Buy), and Service Properties Trust (SVC - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Terreno Realty’s current-year FFO per share is stands at $2.17.

The Zacks Consensus Estimate for Innovative Industrial Properties’ 2023 FFO per share is pegged at $8.36.

The Zacks Consensus Estimate for Service Properties Trust’s 2023 FFO per share is pegged at $1.89.

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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