Sept. 12, 2003 -- The former Metromedia Fiber Networks has emerged from Chapter 11, rebranded as AboveNet and "ready to take its place as a formidable player helping to reshape the industry,” according to president and CEO John Gerdelman.
MFN/AboveNet's bankruptcy has already helped reshape the telecom real estate market, as the company sold or shed surplus data center facilities representing more than 600,000 square feet of space and $400 million in investment.
Restructuring its real estate under Chapter 11 protection helped AboveNet raise funds for creditors, while shedding the cost of surplus facilities and preserving a smaller network for post-bankruptcy operation. The company retained six data centers throughout the US, including locations in San Jose, New York, Northern Virginia and Seattle. It also arranged to lease back space in several data centers it sold, enabling it to continue operations at those sites.
The process also created some opportunities for both buyers and landlords, who acquired top-quality data centers at a fraction of their construction cost. Some of the notable MFN facility dispositions include:

• Reston Data Center: The 256,000 square foot AboveNet VA3 data center proved to be the most valuable data center asset, fetching $23 million in a court-sponsored auction. The winning bidder was DuPont Fabros Development, which got an attractive price (AboveNet spent $124 million on the building), leased space back to MFN and has since leased 30,000 square feet to search engine Google. (Full disclosure: CarrierHotels.com and our business affiliate Node Com Inc. assisted in the marketing and sale of the Reston facility for MFN)
• PAIX Data Centers: Switch and Data, a Tampa-based provider of colocation services, paid $40 million to acquire MFN's PAIX subsidiary, including 225 customers and six data centers spanning 43,652 square feet of rentable space. The facilities were located at 111 8th Avenue in New York, The Westin Building in Seattle, The Infomart in Dallas, 56 Marietta in Atlanta, 7990 Science Applications Court in Vienna, and 529 Bryant in Palo Alto. The deal also provided AboveNet with space in other centers in Switch & Data's network.
• San Francisco Data Center: AboveNet spent $125 million to outfit and "earthquake proof" the 185,000 square foot facility at 160 Harrison Street, which includes 96,000 square feet of raised-floor space. After it filed for bankruptcy, MFN cut a deal to transfer the building to landlord 160 Harrison LLC, which paid $2.6 million for the improved data center and kept Metromedia's $5.3 million deposit. The new management has rebranded the building as 365 Main, and recently gained a flurry of new tenants, including the Oakland Raiders' web operation.
• El Segundo Data Center: MFN walked away from a $70 million investment when it rejected the lease on this finished but vacant 131,000 square foot data center at 2260 East El Segundo Blvd. The landlord, Kilroy Realty, is now marketing the facility as the Kilroy Data Center.
• Seattle Data Center: MFN sold this fully-leased Tukwila, Wash. data center facility to landlord Sabey Corp. for $13 million, with lead tenant Microsoft remaining in place and AboveNet leasing back a portion of the site. Sabey, a Seattle-based developer, previously made a Chapter 11 deal to purchase a Tukwila data center it built for Exodus.