Key Takeaways
- • Equinix's board of directors unanimously approved the company's conversion to a real estate investment trust (REIT) for federal income tax purposes, effective for the taxable year beginning January 1, 2015.
- • Equinix has not yet received its private letter ruling (PLR) from the IRS, but believes it will qualify as a REIT and receive a favorable PLR either by year-end 2014 or early 2015.
- • CEO Steve Smith said the REIT structure positions Equinix to continue delivering profitable global growth while serving its customers through Platform Equinix.
- • The company connects more than 4,500 companies across 32 strategic markets in the Americas, EMEA and Asia-Pacific.
Summary
Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, announced on December 23, 2014 that its board of directors unanimously approved the company's conversion to a real estate investment trust for federal income tax purposes. According to the company's press release distributed via PR Newswire, the conversion will take effect for the taxable year commencing January 1, 2015, and Equinix will begin operating as a REIT on that date.
The conversion is subject to a pending private letter ruling from the U.S. Internal Revenue Service, which Equinix is seeking to address numerous technical tax issues. The company said it has not yet received the PLR. Nonetheless, Equinix stated that, based on existing legal precedent, opinions of counsel, and the fact that many other data center companies already operate as REITs, it believes it will qualify for REIT taxation and expects a favorable ruling either before year-end or early in 2015. The company cautioned in its forward-looking statements that the IRS may not provide a favorable PLR and that the timing of any ruling cannot be assured.
Steve Smith, president and CEO of Equinix, said the board's approval was welcome given current business momentum. He stated that the REIT structure positions the company to continue delivering profitable global growth while providing world-class facilities and services to customers through Platform Equinix.
Equinix describes its business as connecting more than 4,500 companies directly to their customers and partners within its interconnection platform, which operates across 32 strategic markets in the Americas, EMEA and Asia-Pacific. The company's forward-looking statements refer to its recent quarterly and annual reports filed with the Securities and Exchange Commission for additional risk disclosure.
The conversion is subject to a pending private letter ruling from the U.S. Internal Revenue Service, which Equinix is seeking to address numerous technical tax issues. The company said it has not yet received the PLR. Nonetheless, Equinix stated that, based on existing legal precedent, opinions of counsel, and the fact that many other data center companies already operate as REITs, it believes it will qualify for REIT taxation and expects a favorable ruling either before year-end or early in 2015. The company cautioned in its forward-looking statements that the IRS may not provide a favorable PLR and that the timing of any ruling cannot be assured.
Steve Smith, president and CEO of Equinix, said the board's approval was welcome given current business momentum. He stated that the REIT structure positions the company to continue delivering profitable global growth while providing world-class facilities and services to customers through Platform Equinix.
Equinix describes its business as connecting more than 4,500 companies directly to their customers and partners within its interconnection platform, which operates across 32 strategic markets in the Americas, EMEA and Asia-Pacific. The company's forward-looking statements refer to its recent quarterly and annual reports filed with the Securities and Exchange Commission for additional risk disclosure.
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