If Equinix board’s plan to turn the world’s biggest colocation company into a real estate investment trust (REIT) is successful, the firm will likely gain access to cheaper capital, but will also open doors wider for similar transformations by other data center companies.

“Equinix will gain the tax benefit and probably a lower cost of capital as well, since investors seem to value REITs more highly, and even lenders seem to think of REITs as more stable,” Kelly Morgan, an analyst with Tier1 Research, said. “The move may make the market more receptive to other data center REIT conversions,” she added.

Foster City, California-based Equinix announced Thursday that its board had voted to turn the company into a REIT. The point is essentially to pay a much lower corporate tax. Corporations’ income is taxed twice: first a corporation pays an income tax, and then its shareholders pay a tax on the same income. A REIT is required to pay at least 90% of its income out to shareholders, and it is not required to pay a tax on the income it distributes. The profit is taxed only once in the form of shareholders’ income tax.

In publicly traded Equinix’ case, the REIT conversion may give it even more expansion fuel, as it becomes easier to find cash to build or buy more data centers around the world.

Josh Snowhorn, VP and general manager of interconnection at CyrusOne (an Equinix competitor), said, the conversion may also mean Equinix will have to pursue deals that are larger than retail colo leases and more along the lines of wholesale leases, since there will be pressure to pay dividends.

Equinix will also be under pressure to buy or build more properties, as opposed to leasing wholesale data center space. US law requires a REIT is to invest at least 75% of the value of all of its assets in real estate. According to the company’s 2011 year-end earnings report, filed with the US Securities and Exchange Commission, the bulk of its data centers are in buildings it leases from other companies.

Snowhorn’s Houston-based employer CyrusOne is also going through the REIT conversion process. Its owner Cincinnati Bell, which bought it in June 2010, announced in May a plan to spin the data center business off through an initial public offering and turn it into a REIT.

“CyrusOne is a firm that stands to benefit from that investor interest in REITs at the moment,” Morgan said. “The IPO seems like a great way for Cincinnati Bell to make the most of the investor appetite for data center assets.”

Existing US data center REITs include San Francisco-based Digital Realty Trust, Washington, D.C.-based DuPont Fabros, Denver-based CoreSite and Tampa, Florida-based Carter Validus.