Summary
Equinix, Inc. (EQIX) filed an 8-K on November 14, 2013, providing an update on its planned conversion to a Real Estate Investment Trust (REIT). The company disclosed that the Internal Revenue Service (IRS) has informed them that it is actively resuming work on Equinix's Private Letter Ruling (PLR) request, which is crucial for the REIT conversion. While this indicates progress, the IRS has not yet provided definitive responses, and the timeline for these responses remains uncertain. Equinix continues to believe its data center assets qualify as real estate for REIT purposes, citing existing legal precedent and the REIT status of other data center companies. The company is proceeding with necessary operational and legal restructuring to support the REIT conversion, targeting an election of REIT status for the taxable year beginning January 1, 2015. However, the filing emphasizes that the REIT conversion is subject to numerous conditions, including receiving favorable IRS rulings, stockholder approvals, and successful completion of internal system upgrades. There is no assurance that the conversion will be successful or completed by the targeted date.
Key Highlights
- 1Equinix's Private Letter Ruling (PLR) request to the IRS for REIT conversion is actively being worked on by the IRS, with a response expected in due course.
- 2The IRS had previously paused work on Equinix's PLR request due to an internal study on what constitutes 'real estate' for REIT purposes.
- 3Equinix continues to believe its data center assets qualify as real estate for REIT purposes.
- 4The company is proceeding with operational and legal restructuring necessary for the REIT conversion.
- 5Equinix targets electing REIT status for the taxable year beginning January 1, 2015, but acknowledges potential delays.
- 6The REIT conversion is contingent on favorable IRS rulings and other conditions beyond Equinix's direct control.