XML 54 R13.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Equity Method Investments | 9 Months Ended
--- | ---
Sep. 30, 2022
Equity Method Investments and Joint Ventures [Abstract] |
Equity Method Investments | Equity Method Investments We hold various equity method investments, primarily joint venture or partnership arrangements, in order to invest in certain entities that are in line with our business development objectives, including the development and operation of xScale data centers. Some of these xScale joint ventures are classified as Variable Interest Entities ("VIEs"), as discussed further below. The Asia-Pacific 1, Asia-Pacific 2, Asia-Pacific 3 and EMEA 2 Joint Ventures (the "VIE Joint Ventures") share a similar purpose, design and nature of assets. The following table summarizes our equity method investments (in thousands), which were included in other assets on the condensed consolidated balance sheets:
Investee |  | Ownership Percentage |  | September 30, 2022 |  | December 31, 2021
EMEA 1 Joint Venture with GIC |  | 20% |  | $ | 124,364 |  |  | $ | 131,516 |
VIE Joint Ventures |  | 20% |  | 158,507 |  |  | 95,052 |
Other |  | Various |  | 18,138 |  |  | 18,481 |
Total |  |  |  | $ | 301,009 |  |  | $ | 245,049 |
Non - VIE Joint Venture EMEA 1 Joint Venture In 2019, we entered into a joint venture in the form of a limited liability partnership with GIC (the "EMEA 1 Joint Venture"), to develop and operate xScale data centers in Europe. The EMEA 1 Joint Venture is not a VIE given that both equity investors' interests have the characteristics of a controlling financial interest and it is sufficiently capitalized to sustain its operations, requiring additional funding from its partners only when expanding operations. Our share of income and losses of equity method investments from this joint venture was insignificant for the three and nine months ended September 30, 2022 and 2021 and was included in other income (expense) on the condensed consolidated statement of operations. We committed to make future equity contributions to the EMEA 1 Joint Venture for funding its future development. As of September 30, 2022, we had future equity contribution commitments of $24.3 million. VIE Joint Ventures In 2020, we entered into a joint venture in the form of a limited liability partnership with GIC (the "Asia-Pacific 1 Joint Venture") to develop and operate xScale data centers in Asia-Pacific. In 2021, we entered into the EMEA 2 Joint Venture with GIC to develop and operate additional xScale data centers in Europe and the Americas (see Note 5 above). On March 11, 2022, we entered into the Asia-Pacific 2 Joint Venture with PGIM to develop and operate additional xScale data centers in Asia-Pacific (see Note 5 above). On April 6, 2022, we entered into a joint venture in the form of a limited liability partnership with GIC (the "Asia-Pacific 3 Joint Venture") to develop and operate additional xScale data centers in Seoul, Korea. Upon closing, we contributed $17.0 million in exchange for a 20% partnership interest in the joint venture. The VIE Joint Ventures are considered VIEs because they do not have sufficient funds from operations to be self-sustaining. While we provide certain management services to their operations and earn fees for the performance of such services, the power to direct the activities of these joint ventures that most significantly impact economic performance is shared equally between us and either GIC or PGIM, as applicable. These activities include data center construction and operations, sales and marketing, financing, and real estate purchases or sales. Decisions about these activities require the consent of both Equinix and either GIC or PGIM, as applicable. We concluded that neither party is deemed to have predominant control over the VIE Joint Ventures and neither party is considered to be the primary beneficiary. During the three and nine months ended September 30, 2022, our share of income and losses of equity method investments from these joint ventures was insignificant both individually and in aggregate, and was included in other income (expense) on the condensed consolidated statement of operations. The following table summarizes our maximum exposure to loss related to the VIE Joint Ventures as of September 30, 2022 (in thousands):
|  | VIE Joint Ventures
Equity Investment |  | $ | 158,507 |
Outstanding Receivables |  | 22,531 |
Future Equity Contribution Commitments (1) |  | 65,310 |
Maximum Future Payments under Debt Guarantees (2) |  | 58,333 |
Total |  | $ | 304,681 |
(1)The joint ventures' partners are required to make additional equity contributions proportionately upon certain occurrences, such as a shortfall in capital necessary to complete certain construction phases or make interest payments on their outstanding debt. (2)In connection with our 20% equity investment in the EMEA 2 Joint Venture, we provided the lenders with our guarantees covering 20% of all payments of principal and interest due under EMEA 2 Joint Venture's credit facility agreements (see Note 11). Other Related Party Transactions We have lease arrangements and provide various services to the EMEA 1 Joint Venture and the VIE Joint Ventures (the "Joint Ventures") through multiple agreements, including sales and marketing, development management, facilities management, and asset management. These transactions are generally considered to have been negotiated at arm's length. The following table presents the revenues and expenses from these arrangements with the Joint Ventures in our condensed consolidated statements of operations (in thousands):
|  |  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Related Party | Nature of Transaction |  | 2022 |  | 2021 |  | 2022 |  | 2021
EMEA 1 Joint Venture |  | Revenues |  | $ | 5,957 |  |  | $ | 11,698 |  |  | $ | 31,138 |  |  | $ | 30,548 |
EMEA 1 Joint Venture |  | Expenses (1) |  | 2,010 |  |  | 4,006 |  |  | 5,422 |  |  | 12,786 |
VIE Joint Ventures |  | Revenues |  | 9,551 |  |  | 4,928 |  |  | 29,739 |  |  | 19,373 |
(1)Balances primarily consist of rent expenses for a 15 year sub-lease agreement with the EMEA 1 Joint Venture for a London data center. The following table presents the assets and liabilities from related party transactions with the Joint Ventures in our condensed consolidated balance sheets (in thousands):
Related Party |  | Balance Sheet Line Item |  | September 30, 2022 |  | December 31, 2021
EMEA 1 Joint Venture |  | Receivables |  | $ | 29,808 |  |  | $ | 32,077 |
| Contract Assets (1) |  | 53,998 |  |  | 54,503 |
| Finance Lease Right of Use Assets |  | 92,199 |  |  | 118,817 |
| Other Liabilities and Payables |  | 1,303 |  |  | 2,483 |
| Other Liabilities and Payables - construction obligation (2) |  | 32,929 |  |  | 39,382 |
| Deferred Revenue |  | 14,351 |  |  | 16,886 |
| Finance Lease Right of Use Liabilities |  | 98,565 |  |  | 124,918 |
VIE Joint Ventures |  | Receivables |  | 22,531 |  |  | 29,077 |
|  | Contract Assets |  | 3,227 |  |  | 1,492 |
|  | Payables |  | — |  |  | 1,876 |
(1)A portion of the contract asset balance relates to commitments to complete a residual portion of the Paris 9 data center sold to the EMEA 1 Joint Venture, which is reimbursable in full upon completion. (2)The balance primarily relates to the obligation to pay for future construction for certain sites sold as a part of the EMEA 1 Joint Venture transaction. We received contingent consideration from separate sales of xScale data centers to the EMEA 1 Joint Venture, which become receivable upon completion of certain performance milestones, primarily contingent on the local regulatory approvals for certain sites. The contingent consideration are considered derivatives and are remeasured at fair value each reporting period using inputs such as probabilities of payment, discount rates, foreign currency forward rates and projected payment dates. The fair value measurements were based on significant inputs that are not observable in the market and thus represent Level 3 measurements. As of September 30, 2022 and December 31, 2021, the total fair value of the remaining contingent consideration which was included in other current assets on the condensed consolidated balance sheets was not significant. Changes in the fair value of the contingent consideration were recorded in gain (loss) on asset sales on the condensed consolidated statement of operations.

X
- References No definition available. + Details
Name: | us-gaap_EquityMethodInvestmentsAndJointVenturesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI https://asc.fasb.org/topic&trid=2196965 + Details
Name: | us-gaap_EquityMethodInvestmentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration