Equity Method Investments

3 Months Ended

Mar. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

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	March 31, 2022		December 31, 2021
EMEA 1 Joint Venture with GIC	20%	$	127,827	$	131,516
EMEA 2 Joint Venture with GIC	20%	35,255		34,944
Asia-Pacific 1 Joint Venture with GIC	20%	64,188		60,108
Asia-Pacific 2 Joint Venture with PGIM	20%	30,286		—
Other	Various	19,759		18,481
Total		$	277,315	$	245,049

Non - Variable Interest Entity ("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 months ended March 31, 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 March 31, 2022, we had future equity contribution commitments of $45.1 million.

VIE Joint Ventures

Asia-Pacific 1, Asia-Pacific 2 and EMEA 2 Joint Ventures (the "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).

For the VIE Joint Ventures, we provide certain management services to their operations and earn fees for the performance of such services. The joint ventures do not have sufficient funds from operations to be self-sustaining, thus are considered VIEs. 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 months ended March 31, 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 March 31, 2022 (in thousands):


	Asia-Pacific 1 Joint Venture		EMEA 2 Joint Venture		Asia-Pacific 2 Joint Venture
Equity Investment	$	64,188	$	35,255	$	30,286
Outstanding Receivables	2,124		18,676		6,950
Future Equity Contribution Commitments (1)	2,030		67,033		1,086
Maximum Future Payments under Debt Guarantees (2)	N/A (3)		37,133		N/A (3)
Total	$	68,342	$	158,097	$	38,322

(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).

(3)The joint venture’s debt is secured by the net assets of the respective joint venture without recourse to its partners.

Other Related Party Transactions

We have lease arrangements and provide various services to the EMEA 1 Joint Venture, Asia-Pacific 1 Joint Venture, EMEA 2 Joint Venture and Asia-Pacific 2 Joint Venture (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 March 31,
Related Party	Nature of Transaction	2022		2021
EMEA 1 Joint Venture	Revenues	$	6,302	$	7,189
EMEA 1 Joint Venture	Expenses (1)	4,328		4,541
Asia-Pacific 1 Joint Venture	Revenues	2,811		—
EMEA 2 Joint Venture	Revenues	4,107		—
Asia-Pacific 2 Joint Venture	Revenues	85		—

(1)We have a sub-lease agreement with the EMEA 1 Joint Venture to sub-lease a portion of London ("LD") 10-2 data center or former LD10 data center, for a total of 15 years. Balances primarily consist of rent expenses for the LD10-2 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	March 31, 2022		December 31, 2021
EMEA 1 Joint Venture	Receivables	$	36,099	$	32,077
	Contract Assets (1)	54,132		54,503
	Finance Lease Right of Use Assets	113,081		118,817
	Other Liabilities and Payables	1,011		2,483
	Other Liabilities and Payables - construction obligation (2)	41,453		39,382
	Deferred Revenue	16,375		16,886
	Finance Lease Right of Use Liabilities	119,539		124,918
Asia-Pacific 1 Joint Venture	Receivables	2,124		2,124
	Payables	—		121
EMEA 2 Joint Venture	Receivables	18,676		26,953
	Contract Assets	1,753		1,492
	Payables	2,049		1,755
Asia-Pacific 2 Joint Venture	Receivables	6,950		—

(1)A portion of the EMEA 1 Joint Venture 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 the 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 March 31, 2022 and December 31, 2021, the total fair value of the remaining contingent consideration was $5.1 million and $5.3 million, respectively, which was included in other current assets on the condensed consolidated balance sheets. Changes in the fair value of the contingent consideration were recorded in gain (loss) on asset sales on the condensed consolidated statement of operations.