A network component comprising a receiver configured to receive an outgoing frame from a local host, a logic circuit configured to map a destination address (DA) for a target host in the outgoing frame to a DA for a target location of the target host and encapsulate the outgoing frame using the DA for the target location, and a transmitter configured to receive a pre-encapsulated outgoing frame from a local switch, and send the pre-encapsulated outgoing frame to a gateway at a target location, wherein the transmitter does not encapsulate frames received from local switches and decapsulates an incoming frame from a remote gateway destined towards local hosts.