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Equinix: Debt, Balance Sheet, and Capex

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Capex

Equinix had capex (capital expenditure) of $320.0 million in 3Q17, which included recurring capex of $45.0 million. EQIX currently has 22 new projects underway, which increases its capacity in 16 markets around the world. 

This large level of expenditure is due to heavy supply and demand, which is based on the estimate of inventory consumed over the last few quarters.

Equinix estimated its capex to be $355.0 million–$375.0 million for 4Q17. This estimate includes $290.0 million–$310.0 million of nonrecurring capex.

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Balance sheet

Equinix (EQIX) repriced $1.8 billion of term loan B debt at a lower rate. The company raised additional debt to refinance its 2020 notes and to meet existing demand. Its cash and investments increased to $1.6 billion, and it has an untapped line of credit. Equinix had total debt of ~$10.1 billion in 3Q17.

The company’s 3Q17 net leverage ratio is 3.9x, and its target range for its net-debt-to-adjusted-EBITDA multiple is 3.0x–4.0x. EQIX received a BB+ rating from Standard & Poor’s with a positive outlook. It also received a BB rating from Fitch Ratings with a “stable” outlook.

REITs’ underlying model emphasizes the importance of debt in carrying out routine activities. EQIX’s debt-to-equity ratio is ~153.2%. Among its peers, Digital Realty Trust (DLR) has a debt-to-equity ratio of ~81.0%, CoreSite Realty’s (COR) debt-to-equity ratio is ~193.7%, and Cyrus One’s (CONE) debt-to-equity ratio is ~156.8%. The industry average stands at ~102.9%. 

EQIX forms ~4.2% of the iShares Core US REIT ETF (USRT).

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