October 21, 2003 -- Managed hosting provider Globix Corp. said today that it has agreed to sell a surplus Manhattan data center at 415 Greenwich Street to Heritage Partners for $60 million. The sale price for the 193,000 square foot building equates to $310 a square foot.
The deal, which requied approval from holders of the company's 11 percent senior notes, is subject to closing conditions, according to Globix. The New York-based provider said the proceeds will be used to fund oeprations and redeem some of its senior notes. Globix will also use some of the funds to repay investors in historic tax credits.
"This transaction allows Globix to reduce debt and operating expenses," said Pete Stevenson, CEO of Globix, which expects to consolidate its New York operations at the company's headquarters at 139 Centre Street.
Globix purchased the eight-story building, which is a certified historic structure, in September of 2000 to serve as a "SuperPop" data center. The expansion was announced amid fanfare at Internet World 2000 by then-CEO Marc Bell, who cited "tremendous demand for our managed Internet Data Center services" as prompting the expansion.
At the time, Globix had 289,000 square feet of data center space, and planned four additional centers to eventually give it 1.4 million square feet of space.
Instead, Globix wound up reorganizing through a prepackaged Chapter 11 filing in March 2002. Later in the summer, the company emerged from bankruptcy with less debt and a lot less data center space. At the close of 2002, Globix said it had 78,000 square feet of data center space, of which 40 percent was leased.
That didn't count the huge space at 415 Greenwich, which was completed in the spring of 2001. The conversion process involved the complete gut renovation of two warehouses occupying the entire block from Hubert Street north to Laith Street, according to Skanska, which provided construction services for the project.
Because of the property's TriBeCa location, some New York real estate observers expected the building to draw residential converters as bidders. The sale price of is substantially more than the per-square-foot valuation of most data centers, but includes a significant premium reflecting the building's Manhattan location.