Assets Held for Sale

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

In October 2021, we entered into an agreement to form a joint venture in the form of a limited liability partnership with PGIM Real Estate ("PGIM"), to develop and operate xScaleTM data centers in Asia-Pacific (the "Asia-Pacific 2 Joint Venture"). xScale data centers are engineered to meet the technical and operational requirements and price points of core hyperscale workload deployments and also offer access to our comprehensive suite of interconnection and edge services. Upon closing, PGIM will contribute cash in exchange for an 80% partnership interest in the Asia-Pacific 2 Joint Venture. We agreed to sell the Sydney 9 ("SY9") data center site in exchange for a 20% partnership interest in the Asia-Pacific 2 Joint Venture and cash proceeds. The assets and liabilities of the SY9 data center, which are currently included within our Asia-Pacific region, were classified as held for sale as of September 30, 2021 and remained held for sale as of December 31, 2021.

In June 2021, we entered into an agreement to form another joint venture in the form of a limited liability partnership with GIC, Singapore's sovereign wealth fund ("GIC"), to develop and operate additional xScale data centers in Europe and the Americas (the “EMEA 2 Joint Venture”). The assets and liabilities of the data center sites expected to be sold to the EMEA 2 Joint Venture within a year were classified as held for sale as of June 30, 2021. The transaction was structured to close in phases over the course of two years, pending regulatory approval and other closing conditions. The first phase of the transaction, comprised of data center sites located in Frankfurt, Helsinki, Madrid, Milan and Paris, closed in September 2021. Upon closing, we sold these data center sites in exchange for a total consideration of $144.0 million, which is comprised of $106.4 million of net cash proceeds, a 20% partnership interest in the EMEA 2 Joint Venture with a fair value of $30.4 million, and $7.2 million of receivables. During the year ended December 31, 2021, we recognized an insignificant gain on the sale of these xScale data center facilities. In October 2021, we completed the sale of the Sao Paulo 5 ("SP5") data center to the EMEA 2 Joint Venture in exchange for a total consideration of $34.3 million. During the year ended December 31, 2021, we recognized an insignificant loss on the sale of the SP5 data center. The assets and liabilities of the Warsaw 4 ("WA4") data center site, which is currently included within our EMEA region and is expected to be sold to the EMEA 2 Joint Venture in a future phase, were classified as held for sale as of June 30, 2021 and remained held for sale as of December 31, 2021.

Additionally, we entered negotiations to sell the Mexico 3 ("MX3") data center site in connection with the formation of a new joint venture with GIC (the "AMER 1 Joint Venture"). Given that the key terms of the sale had been substantially agreed upon as of September 30, 2021, the assets and liabilities of the MX3 data center, which are currently included within our Americas region, were classified as held for sale as of September 30, 2021 and remained held for sale as of December 31, 2021.

In May 2021, we entered into an agreement to sell the Dublin 5 ("DB5") data center site to the EMEA 1 Joint Venture (as defined in Note 6 below). The assets and liabilities of the DB5 data center, which were included within our EMEA region, were classified as held for sale as of June 30, 2021. In July 2021, we sold the DB5 data center in exchange for a total consideration of $77.9 million. During the year ended December 31, 2021, we recognized a total gain of $15.8 million on the sale of the DB5 data center.

All assets and liabilities classified as held for sale are reported at the lower of their carrying amounts or fair values less costs to sell. The following table summarizes the assets and liabilities that were classified as assets and liabilities held for sale in the consolidated balance sheet as of December 31, 2021 (in thousands):


	December 31, 2021
Operating lease right-of-use assets	$	12,835
Property, plant and equipment	260,182
Other assets	3,178
Total assets held for sale	$	276,195

Accounts payable and accrued expenses	$	510
Current portion of operating lease liabilities	2,039
Operating lease liabilities, less current portion	348
Accrued property, plant and equipment	18,127
Total liabilities held for sale (1)	$	21,024

(1)Liabilities held for sale were included within other current liabilities on the consolidated balance sheet.

Sale of xScale™ data center facilities in Europe in 2020

In September 2020, we entered into an agreement to sell its Paris 9 ("PA9") data center to the EMEA 1 Joint Venture. The assets and liabilities of the PA9 data center, which were included within our EMEA region, were classified as held for sale as of September 30, 2020. On December 15, 2020, we closed the transaction for a total consideration of $131.5 million, which is comprised of 1) cash proceeds of $124.6 million, 2) a contract asset with a fair value of $5.6 million and 3) an insignificant amount of contingent consideration that is receivable upon completion of certain performance milestones. During the year ended December 31, 2020, we recognized an insignificant loss on the sale of the PA9 data center. In connection with this transaction, we have a commitment with the EMEA 1 Joint Venture to complete a residual portion of the PA9 data center for an estimated cost of $17.7 million on December 31, 2020, reimbursable upon completion.

The contingent consideration recognized on the EMEA 1 Joint Venture transaction noted above, along with the 2019 EMEA 1 Joint Venture transaction, 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 December 31, 2021 and 2020, the total fair value of the contingent consideration was $5.3 million and $44.2 million, respectively, which was included in other current assets and other assets on the consolidated balance sheet. Changes in the fair value of the contingent consideration were recorded in gain (loss) on asset sales on the consolidated statement of operations.

Sale of xScale™ data center facilities in Asia-Pacific in 2020

In April 2020, we entered into an agreement to form a joint venture in the form of a limited liability partnership with GIC to develop and operate xScale™ data centers in Asia-Pacific (the “Asia-Pacific 1 Joint Venture”), with ownership upon close for GIC and our company being established at 80% and 20%, respectively. The assets and liabilities of three Japan xScale™ data center sites, the Osaka 2, Tokyo 12, and Tokyo 14 development sites, which were included within our Asia-Pacific region, were classified as held for sale as of June 30, 2020. In the third quarter of 2020, we recorded an impairment charge of $7.3 million, reducing the carrying value of the development site assets to the estimated fair value less cost to sell. On December 17, 2020, we closed the transaction including the sale of the three development sites to the Asia-Pacific 1 Joint Venture in exchange for $209.8 million of cash proceeds and $15.6 million of receivables. During the year ended December 31, 2020, we recognized an insignificant gain on the sale of these xScale™ data center development sites.

Our investments in the EMEA 1 Joint Venture, EMEA 2 Joint Venture and the Asia-Pacific 1 Joint Venture are accounted for using the equity method of accounting. For further information, see Note 6 below.