Equity Method Investments

3 Months Ended

Mar. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

We hold various equity method investments, primarily joint venture 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"). The following table summarizes our equity method investments, which were included in other assets on the condensed consolidated balance sheets (in millions):


Investee	Ownership Percentage	March 31, 2024		December 31, 2023
EMEA 1 Joint Venture	20%	$	144	$	150
VIE Joint Ventures (1)	20%	300		308
Other	Various	10		10
Total		$	454	$	468

(1)Includes investments in xScale joint ventures in each of our three regions ("Asia-Pacific 1 Joint Venture", "Asia-Pacific 2 Joint Venture", "Asia-Pacific 3 Joint Venture", "EMEA 2 Joint Venture" and "AMER 1 Joint Venture"), which share a similar purpose, design and nature of assets.

Non-VIE Joint Venture

EMEA 1 Joint Venture

We invested in a joint venture in the form of a limited liability partnership to develop and operate xScale data centers in Europe (the "EMEA 1 Joint Venture"). 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, 2024 and 2023 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, 2024, we had future equity contribution commitments of $32 million.

VIE Joint Ventures

In March 2023, we invested in the AMER 1 Joint Venture. Upon formation of the joint venture, we sold the Mexico 3 ("MX3") data center in exchange for total consideration of $75 million. Consideration included $64 million of net cash proceeds, a 20% partnership interest in the AMER 1 Joint Venture with a fair value of $8 million, and $3 million of receivables. We recognized an insignificant loss on the sale of the MX3 data center.

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 our partners. 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 our partners. 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. Our share of losses of equity method investments from these joint ventures were insignificant for the three months ended March 31, 2024 and 2023, respectively. These amounts were 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, 2024 (in millions):


	VIE Joint Ventures
Equity Investment	$	300
Outstanding Accounts Receivable	44
Contract Assets	56
Future Equity Contribution Commitments (1)	42
Maximum Future Payments under Debt Guarantees (2)	205
Total	$	647

(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. A portion of the guarantees related to our AMER 1 Joint Venture (see Note 9).

Joint Venture Related Party Transactions

We have lease arrangements and provide various services to the EMEA 1 Joint Venture and the VIE Joint Ventures (collectively, 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 millions):


		Three Months Ended March 31,
Related Party	Nature of Transaction	2024		2023
EMEA 1 Joint Venture	Revenues	$	6	$	7
EMEA 1 Joint Venture	Expenses (1)	4		2
VIE Joint Ventures (2)	Revenues	38		22

(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.

(2)Expenses from transactions with VIE Joint Ventures were insignificant for the three months ended March 31, 2024 and 2023.

We have also sold certain data center facilities to our Joint Ventures and recognized gains or losses on asset sales as described above.

The following table presents the assets and liabilities from related party transactions with the Joint Ventures in our condensed consolidated balance sheets (in millions):


	EMEA 1 Joint Venture				VIE Joint Ventures
Balance Sheet	March 31, 2024		December 31, 2023		March 31, 2024		December 31, 2023
Accounts receivable, net	$	26	$	19	$	44	$	23
Other current assets (1)	11		19		52		43
Property, plant and equipment, net (2)	94		97		90		72
Operating lease right-of-use assets	2		2		2		2
Other assets (1)	—		—		14		21
Other current liabilities	5		9		6		6
Finance lease liabilities	109		111		93		75
Operating lease liabilities	2		2		2		2
Other liabilities (3)	49		50		—		—

(1)The balance primarily relates to contract assets and other receivables.

(2)The balance relates to finance lease right-of-use assets.

(3)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.