Equinix A Strong Buy, Now You Know Why
- Over the last 5 years, EQIX has generated impressive returns – shares are up an average of 25% annually – and the potential for growth is strong.
- The momentum of the business continues to drive AFFO and AFFO per share; AFFO is expected to grow 12% year over year on a reported basis.
- Shares aren’t cheap, but that’s not holding me back from my STRONG BUY upgrade.
A few days ago I wrote an article on CyrusOne’s (CONE) “secret weapon”, GDS Holdings Limited (NASDAQ:GDS). I explained that CONE’s $100 million investment in GDS had tripled in less than a year to a stake that’s now worth over $330 million.
“GDS is known for its attractive unit-level economics from its data center investments with 25%+ stabilized development yields, comparable to results reported by Equinix (NASDAQ:EQIX) and InterXion(NYSE:INXN) (which benefit from selling interconnection) and ahead of stabilized yields targeted by CryusOne, QTS Realty Trust (NYSE:QTS), and other large-footprint providers.”
Over a year ago, I wrote an article on Equinix, a data center REIT that announced back in September 2012 that it was pursuing a REIT conversion. In May 2015, the company received a favorable response to the private letter ruling (‘‘PLR’’) it had requested from the IRS in connection with the REIT conversion for federal income tax purposes.
As viewed below, over the last 5 years, EQIX has generated impressive returns – shares are up an average of 25% annually – and the potential for growth is strong.
Source: Yahoo Finance
Recently, I decided to include EQIX in our research (Intelligent REIT Lab), and as part of the process, I wanted to meet with the company’s management team. Included below are excerpts from the July edition of the Forbes Real Estate Investor.
Meet Management: Karl Strohmeyer joined Equinix in 2013 after 12 years at Level 3 Communications, where he was Group VP for the North American Enterprise Group. There, he was responsible for building and overseeing a sales force of more than 1,200 people generating approximately $2.5 billion in annual revenue. Prior to this role, Strohmeyer led the Global Carrier Channel for Level 3 and managed sales teams responsible for more than $1B in carrier and service provider revenue.
Prior to Level 3, Strohmeyer worked at NetRail, where he was first an executive VP for operations — during which time he introduced four new products to market and was part of a team that raised $85 million in capital. Later at NetRail, he was an executive VP for corporate development, helping manage the sale of the company. Strohmeyer earned a B.S. in business administration from the University of New Hampshire and a master’s degree in international business administration from Mercer University.