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Equinix (EQIX) Expands in Osaka With $55M Data Center Development

Equinix, Inc.  EQIX announced that it will develop an International Business Exchange (IBX) data center in Osaka, Japan, with an initial investment of $55 million. The new facility will be named OS3 and is scheduled to open in fourth-quarter 2021.

The first phase of OS3 is anticipated to offer an initial capacity of 900 cabinets and colocation space, spanning more than 33,000 square feet. At full buildout, the facility will provide 2,500 cabinets and 89,340 square feet of colocation space.

This marks the company’s third facility in Osaka. Currently, it offers roughly 64,500 square feet of colocation space in the region through two IBX data centers. Notably, Osaka has emerged as a key data-center hub in Japan, the second-largest following Tokyo. Hence, Equinix’s effort to further bolster presence in the region will add scale and strengthen its position in the market, while helping it to capitalize on the robust demand for digital infrastructure.

OS3 will be located in close proximity to important internet and peering exchanges, and will offer direct and speedy connections to the large Kansai region. Moreover, a wide range of interconnection solutions, including Equinix Fabric, will be available through the O3 facility. This will permit businesses to connect between their distributed infrastructure and any other company's distributed infrastructure on Platform Equinix.

Notably, the company has been fortifying presence in Japan of late. In fact, following the success of a joint venture (“JV”) with GIC for xScale data centers in Europe, it has announced a similar JV in Japan with GIC in April. The xScale JV-approach is a strategic fit to pursue hyperscale deployments in desired markets and provide incremental cash flows without straining the company’s balance sheet.

However, Equinix competes with Internet data centers operated by established communication carriers and other REITs. In addition to competing with neutral colocation providers, the company competes with traditional colocation providers and Internet service providers. Considering the strong growth potential, competition is expected to increase from existing players and the entry of new players into the space. The intensified competition could prompt competitors to resort to aggressive pricing policies, making Equinix vulnerable to pricing pressure.

Shares of this Zacks Rank #3 (Hold) company have rallied 22.7% over the past year against the real estate market’s decline of 7.4%.


Stocks to Consider

Innovative Industrial Properties, Inc.’s IIPR funds from operations (FFO) per share estimates for 2020 have been revised upward by 5.8% to $5.11 over the past month. The company carries a Zacks Rank of 2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Extra Space Storage Inc’s EXR Zacks Consensus Estimate for 2020 FFO per share has moved upmarginally to $5.02 over the past 30 days. The company currently carries a Zacks Rank of 2.

City Office REIT, Inc.’s CIO Zacks Consensus Estimate for 2020 FFO per share has improved 2.6% to $1.17 in a month’s time. The company has a Zacks Rank of 2 at present.

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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