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EX-99.1 - EXHIBIT 99.1 - PDF - DUPONT FABROS TECHNOLOGY, INC.dft2q15earningsrelease.pdf
8-K - 8-K - DUPONT FABROS TECHNOLOGY, INC.a8kearningsrelease6-30x15.htm


Exhibit 99.1

Second Quarter 2015
Earnings Release
and Supplemental Information
   

CH2 Data Center
Elk Grove Village, IL

DuPont Fabros Technology, Inc.
1212 New York Avenue, NW
Suite 900
Washington, D.C. 20005
(202) 728-0044
www.dft.com
NYSE: DFT
 
Investor Relations Contacts:
 
Jeffrey H. Foster
Chief Financial Officer
jfoster@dft.com
(202) 478-2333


Christopher A. Warnke
Manager, Investor Relations
investorrelations@dft.com
(202) 478-2330






    

Second Quarter 2015 Results

Table of Contents
 
Earnings Release
1-6
Consolidated Statements of Operations
7
Reconciliations of Net Income to NAREIT FFO, Normalized FFO and AFFO
8
Consolidated Balance Sheets
9
Consolidated Statements of Cash Flows
10
Operating Properties
11
Lease Expirations
12
Top Customers
13
Same Store Analysis
14-15
Development Projects
16
Debt Summary and Debt Principal Repayments
17
Selected Unsecured Debt Metrics and Capital Structure
18
Common Share and Operating Partnership Unit Weighted Average Amounts Outstanding
19
2015 Guidance
20




Note: This press release supplement contains certain non-GAAP financial measures that we believe are helpful in understanding our business, as further discussed within this press release supplement. These financial measures, which include NAREIT Funds From Operations, Normalized Funds From Operations, Adjusted Funds From Operations, Net Operating Income, Cash Net Operating Income, NAREIT Funds From Operations per share, Normalized Funds From Operations per share and Adjusted Funds From Operations per share, should not be considered as an alternative to net income, operating income, earnings per share or any other GAAP measurement of performance or as an alternative to cash flows from operating, investing or financing activities. Furthermore, these non-GAAP financial measures are not intended to be a measure of cash flow or liquidity. Information included in this supplemental package is unaudited.






NEWS

DUPONT FABROS TECHNOLOGY, INC. REPORTS SECOND QUARTER 2015 RESULTS
Revenues increase 12%, AFFO per share increases 13%
Midpoint of Normalized FFO guidance increases $0.03 per share and AFFO increases $0.05 per share
SC1 Phase IIB and CH2 Phase I placed into service

WASHINGTON, DC, - July 30, 2015 - DuPont Fabros Technology, Inc. (NYSE: DFT) is reporting results for the quarter ended June 30, 2015. All per share results are reported on a fully diluted basis.
Highlights
As of July 30, 2015, our operating portfolio excluding the newly opened CH2 Phase I was 96% leased and commenced as measured by computer room square feet ("CRSF") and critical load (in megawatts, or "MW").
Quarterly Highlights, all previously reported other than one lease extension:
Signed five leases totaling 12.26 MW and 67,561 CRSF.
Extended three leases totaling 7.91 MW and 47,120 CRSF.
Placed SC1 Phase IIB into service 100% leased, totaling 9.1 MW and 42,000 CRSF.
Issued $250 million 8-year, 5.625% Senior Notes at 99.205%.
Subsequent to the second quarter 2015:
Placed CH2 Phase I into service 20% leased, totaling 7.1 MW and 45,000 CRSF.
Increased capacity under the Line of Credit from $560 million to $700 million. There are currently no borrowings under the Line of Credit.
Christopher Eldredge, President and Chief Executive Officer, said, "I am very proud of the leases executed in the second quarter, which totaled over 12 megawatts of critical load. Also, we have placed over 16 megawatts of new capacity into service since the end of the first quarter. All indications are that demand for our wholesale product will remain strong."

Second Quarter 2015 Results
For the quarter ended June 30, 2015, earnings were $0.30 per share compared to $0.32 per share for the second quarter of 2014. As anticipated in our prior guidance, the current quarter was negatively impacted by a customer who filed for bankruptcy, resulting in $0.03 per share of revenue not being recognized and $0.03 of non-cash write-offs of straight-line receivables, intangible assets and leasing commissions due to this customer rejecting its leases. Excluding these items, earnings per share for second quarter 2015 increased $0.04 per share, or 13%. Revenues increased 12%, or $11.9 million, to $113.8 million for the second quarter of 2015 over the second quarter of 2014. The increase in revenues was primarily due to new leases commencing, an increase in a la carte project revenue and an increase in recoveries from customers due to higher real estate taxes, partially offset by the impact of the customer in bankruptcy noted above.

1



Normalized FFO for the quarter ended June 30, 2015 was $0.62 per share compared to $0.61 per share for the second quarter of 2014. Normalized FFO increased $0.01 per share, or 2%, from the prior year quarter primarily due to the following:
Increased operating income excluding depreciation of $0.08 per share which excludes the negative impact from the bankrupt customer, partially offset by
Revenue of $0.03 per share not recognized from the bankrupt customer,
Write-off of $0.02 per share of straight-line receivables and intangible assets related to the bankrupt customer, and
Increased interest expense of $0.02 per share due to a higher level of outstanding debt related to development financing.
Adjusted FFO ("AFFO") for the quarter ended June 30, 2015 was $0.70 per share compared to $0.62 per share in the second quarter of 2014. AFFO increased $0.08 per share, or 13% from the prior year. The increase was primarily due to the following:
Increased Normalized FFO of $0.01 per share,
Increased add-back of straight-line revenue as a result of rent received from bankrupt customer not recognized as revenue and increased cash rents totaling $0.04 per share,
Add-back of non-cash write-offs of straight-line receivables and intangible assets of $0.02 per share, and
Decreased capitalized leasing commissions of $0.01 per share.
The customer for which we increased our bad debt reserve in the fourth quarter of 2014 filed for bankruptcy protection on February 23, 2015. This customer did not pay the base rent owed to us in January and February, but did pay for operating expenses, direct electric and management fees in these months. Post-bankruptcy filing, we received full rent payments for March through June totaling $5.1 million. We did not recognize the base rent portions of these payments as revenue, but instead applied them to the straight-line rent receivables balance that we had on our books for this customer. At the time of the bankruptcy filing, this customer had the following leases with us:
Property
 
MW leased
 
CRSF Leased
ACC4
 
2.28

 
10,800

ACC5
 
0.40

 
1,930

NJ1 Phase I
 
2.28

 
11,000

VA3
 
1.30

 
15,122

Total
 
6.26

 
38,852


Effective July 1, 2015, this customer was deemed to have rejected each of its four leases with us. Consequently, in the second quarter 2015, we wrote-off a portion of straight-line receivables and all of the intangible asset and leasing commissions related to this customer, which totaled $0.03 per share. The remaining straight-line receivable balance as of July 29, 2015 is $0.9 million, which we believe will be recovered via a revenue sharing arrangement with this customer approved by the bankruptcy court, which allows this customer to occupy the leased space in our data centers while they work to negotiate a sale or vacate the space if such a sale does not materialize. As of July 29, 2015, we have received $0.8 million from this arrangement.
We also have a $6.5 million note receivable from this customer, of which $5.1 million is reserved and represents 79% of the outstanding note balance. We will continue to monitor this reserve each quarter.

2



First Half 2015 Results
For the six months ended June 30, 2015, earnings were $0.53 per share compared to $0.63 per share for the first half of 2014. The first half of 2015 was negatively impacted by the customer who filed for bankruptcy, resulting in $0.06 per share of revenue not being recognized and $0.03 of non-cash write-offs when this customer rejected its leases. Also, we recognized a $0.07 per share charge for the severance expense and equity accelerations associated with the departure of our former CEO. Excluding these items, earnings per share for the six months ended June 30, 2015 increased $0.06 per share, or 10%. Revenues increased 8%, or $17.1 million, to $221.1 million for the first half of 2015 compared to the first half of 2014. The increase in revenues was primarily due to new leases commencing, an increase in a la carte revenue and an increase in recoveries from tenants due to higher real estate taxes, partially offset by impact of the customer in bankruptcy noted above.
Normalized FFO for the six months ended June 30, 2015 was $1.23 per share compared to $1.20 per share for the first half of 2014. Normalized FFO adds back the $0.07 per share recognized in the first half of 2015 for the severance expense and equity accelerations noted above. Normalized FFO increased $0.03 per share, or 3%, from the prior year period primarily due to the following:
Increased operating income excluding depreciation of $0.13 per share which excludes the negative impact from the bankrupt customer, partially offset by
Revenue of $0.06 per share not recognized from bankrupt customer,
Write-off of $0.02 per share of straight-line receivables and intangible assets related to the bankrupt customer, and
Increased interest expense of $0.02 per share due to a higher level of outstanding debt related to development financing.
AFFO for the six months ended June 30, 2015 was $1.35 per share compared to $1.24 per share in the first half of 2014. AFFO increased $0.11 per share, or 9% from the prior year. The increase was primarily due to the following:
Increased Normalized FFO of $0.03 per share,
Increased add-back of straight-line revenue as a result rent received from bankrupt customer not recognized as revenue and increased cash rents totaling $0.08 per share,
Add-back of non-cash write-offs of straight-line receivables and intangible assets of $0.02 per share, partially offset by
Increased capitalized leasing commissions of $0.01 per share, and
Lower stock compensation expense add-back of $0.01 per share.
Portfolio Update
During the second quarter 2015, we:
Signed five leases with a weighted average lease term of 7.1 years totaling 12.26 MW and 67,561 CRSF.
Three of these leases were with one customer at ACC7 totaling 7.43 MW and 42,822 CRSF. Two of the leases were in Phase I (4.46 MW) which commenced in the second quarter of 2015 and one pre-lease is in Phase II (2.97 MW) which is projected to commence in the fourth quarter of 2015 upon the opening of Phase II.
One lease was at SC1 Phase IIB totaling 3.41 MW and 15,853 CRSF. This lease commenced in the second quarter of 2015.
One pre-lease was at CH2 Phase I totaling 1.42 MW and 8,886 CRSF. This lease commenced in the third quarter of 2015 upon the opening of CH2 Phase I.

3



Commenced six leases totaling 15.56 MW and 75,474 CRSF.
Extended three leases with two customers totaling 7.91 MW and 47,120 CRSF by an average of 1.5 years.
One customer extended a lease at ACC4 and a lease at ACC6 totaling 6.61 MW and 32,800 CRSF by an average of 0.8 years. Compared to the rates in effect at the time of renewal, cash base rents will be an average of 12.6% higher upon the expiration of the original lease terms. GAAP base rents will be an average of 3.7% higher immediately. The same customer was given the right to individually decrease the term of the lease of each of nine computer rooms at ACC5, each with 2.28 MW of available critical load provided the aggregate reduction in lease terms does not exceed 67 months, or an average of approximately seven months per computer room. This right does not impact cash base rents, but GAAP rents will be an average of 6.1% lower immediately.
Another customer extended a lease at VA3 totaling 1.30 MW and 14,320 CRSF that was scheduled to expire in 2016. This lease was extended by 5.0 years and is now scheduled to expire in 2021. Cash base rents are not changed, but GAAP rents will be an average of 10.5% lower immediately due to an increase in the amortization term of the below market lease liability.
Subsequent to the second quarter, we:
Commenced two leases totaling 2.56 MW and 14,386 CRSF. One of these leases was at CH2 Phase I for 1.42 MW and 8,886 CRSF and the other was at ACC5 for 1.14 MW and 5,500 CRSF.
Year to date, we:
Signed seven leases with a weighted average lease term of 7.1 years totaling 14.46 MW and 76,600 CRSF that are expected to generate approximately $16.5 million of annualized GAAP base rent revenue which is equivalent to a GAAP rate of $95 per kW per month.
Commenced nine leases totaling 18.32 MW and 90,720 CRSF.
Extended the maturity of five leases totaling 10.18 MW and 57,920 CRSF by a weighted average of 2.7 years. Compared to the rates in effect when the extension was executed, cash base rents will be an average of 7.7% higher upon the expiration of the original lease terms. GAAP base rents will be an average of 4.0% higher immediately.
Development Update
We placed SC1 Phase IIB (9.1 MW) into service on May 1, 2015, 100% leased and commenced. We placed CH2 Phase I (7.1 MW) into service on July 1, 2015, 20% leased and commenced. We are currently developing ACC7 Phase II (8.9 MW) and ACC7 Phase III (11.9 MW) and CH2 Phase II (5.7 MW). We anticipate that ACC7 Phase II, which is 33% pre-leased, will be placed into service in the fourth quarter of 2015 and that ACC7 Phase III and CH2 Phase II will be placed into service in the second quarter of 2016.

Balance Sheet and Liquidity
We issued $250 million of Unsecured Notes for eight years at a rate of 5.625% and a price of 99.205%. $180 million of the proceeds were used to pay down the line of credit, and the remainder will be used to fund future data center development.
We increased the size of our line of credit from $560 million to $700 million in July 2015. No other terms of the line of credit changed. All $700 million is available as of July 30, 2015.
The Board approved a common stock repurchase program of $120 million for 2015, of which we purchased $31.9 million in the first quarter of 2015 at an average price of $31.80. No shares were purchased in the second quarter of 2015. There is $88.1 million remaining under this program for the remainder of 2015.


4



Dividend
Our second quarter 2015 dividend of $0.42 per share was paid on July 15, 2015. Our third quarter 2015 dividend of $0.42 was declared on July 27, 2015 and will be paid on October 15, 2015 to shareholders of record as of October 2, 2015. The anticipated 2015 annualized dividend of $1.68 per share represents an estimated AFFO payout ratio of 64% at the midpoint of our current 2015 guidance.
Third Quarter and Full Year 2015 Guidance
We are increasing the mid-point of our 2015 Normalized FFO guidance range by $0.03 per share. The new range is $2.38 to $2.48 per share compared to last quarter's range of $2.30 to $2.50 per share. The increase in the mid-point is due to the following:
$0.03 per share from positive leasing and ala carte results,
$0.01 per share from lower interest expense due to increased capitalized interest,
$0.01 per share from the bankrupt customer, partially offset by
$0.02 per share second quarter write-off of straight-line receivables and intangible assets related to the bankrupt customer.
Key assumptions included in this guidance are:
The low end of the range assumes no additional revenue from the computer rooms that were leased by the bankrupt customer. The high end of the range assumes $0.02 of revenue from the revenue sharing agreement we have entered into with the bankrupt customer.
The low end of this range assumes no new leases commencing other than the ACC7 Phase II pre-lease. The high end of the range includes an additional $0.04 of revenue from new lease commencements.
The low end of the range assumes that ACC2 is not re-leased at the end of Yahoo's lease term, which is September 30, 2015, and remains vacant for the remainder of 2015. The current Yahoo! lease generates $0.05 of GAAP revenue per quarter. The high end of the range assumes $0.04 of revenue in the fourth quarter from the re-leasing of this space.
Our Normalized FFO guidance range is $0.59 to $0.62 per share for the third quarter of 2015. The mid-point of this range is $0.01 lower than Normalized FFO per share in the second quarter of 2015. This is due to the following:
$0.05 per share of increased interest expense due higher debt levels for the funding of our developments, increased average interest rate after issuing our new bonds and lower capitalized interest after placing CH2 Phase I into service, partially offset by
$0.02 per share of increased operating income excluding depreciation from new lease commencements, and
$0.02 per share of second quarter write-offs related to the bankrupt customer that are not forecasted in the third quarter.
We increased the mid-point of our 2015 AFFO guidance range by $0.05 per share. The new range is $2.56 to $2.66 per share compared to last quarter's range of $2.46 to $2.66 per share. This is due to the following:
Increased Normalized FFO of $0.03 per share, and
Forecasted revenue sharing rent from the bankrupt customer in July and August of $0.02 per share. This is forecasted to be applied to the straight-line receivable which increases the add-back to AFFO.
Our AFFO guidance range is $0.63 to $0.67 per share for the third quarter of 2015. The mid-point of the range is $0.05 per share lower than second quarter 2015 AFFO per share. This is due to following:

5



Decrease in mid-point of Normalized FFO of $0.01 per share,
Add-backs of second quarter write-offs of $0.02 per share related to the bankrupt customer that are not forecasted in the third quarter, and
Increased improvements to real estate of $0.02 per share.
The assumptions underlying Normalized FFO and AFFO guidance can be found on the last page of this earnings release.
Second Quarter 2015 Conference Call and Webcast Information
We will host a conference call to discuss these results today, Thursday, July 30, 2015 at 1:00 p.m. ET. To access the live call, please visit the Investor Relations section of our website at www.dft.com or dial 1-877-300-9306 (domestic) or 1-412-902-6613 (international). A replay will be available for seven days by dialing 1-877-344-7529 (domestic) or 1-412-317-0088 (international) using passcode 10068308. The webcast will be archived on our website for one year at www.dft.com on the Presentations & Webcasts page.
About DuPont Fabros Technology, Inc.
DuPont Fabros Technology, Inc. (NYSE: DFT) is a leading owner, developer, operator and manager of enterprise-class, carrier neutral, multi-tenant wholesale data centers. The Company's facilities are designed to offer highly specialized, efficient and safe computing environments in a low-cost operating model. The Company's customers outsource their mission critical applications and include national and international enterprises across numerous industries, such as technology, Internet content providers, media, communications, cloud-based, healthcare and financial services.  The Company's 12 data centers are located in four major U.S. markets, which total 2.9 million gross square feet and 256 megawatts of available critical load to power the servers and computing equipment of its customers. DuPont Fabros Technology, Inc., a real estate investment trust (REIT), is headquartered in Washington, DC.  For more information, please visit www.dft.com.
Forward-Looking Statements
Certain statements contained in this press release may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The matters described in these forward-looking statements include expectations regarding future events, results and trends and are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. We face many risks that could cause our actual performance to differ materially from the results contemplated by our forward-looking statements, including, without limitation, the risk that the assumptions underlying our full year and third quarter 2015 guidance are not realized, the risks related to the leasing of available space to third-party customers, including delays in executing new leases and failure to negotiate leases on terms that will enable us to achieve our expected returns, risks related to the collection of accounts and notes receivable, the risk that we may be unable to obtain new financing on favorable terms to facilitate, among other things, future development projects, the risks commonly associated with construction and development of new facilities (including delays and/or cost increases associated with the completion of new developments), risks relating to obtaining required permits and compliance with permitting, zoning, land-use and environmental requirements, the risk that we will not declare and pay dividends as anticipated for 2015 and the risk that we may not be able to maintain our qualification as a REIT for federal tax purposes. The periodic reports that we file with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31, 2014 and the quarterly report on Form 10-Q for the quarter ended March 31, 2015 contain detailed descriptions of these and many other risks to which we are subject. These reports are available on our website at www.dft.com. Because of the risks described above and other unknown risks, our actual results, performance or achievements may differ materially from the results, performance or achievements contemplated by our forward-looking statements. The information set forth in this news release represents our expectations and intentions only as of the date of this press release. We assume no responsibility to issue updates to the contents of this press release.

6



DUPONT FABROS TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands except share and per share data)
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Base rent
$
72,702

 
$
70,455

 
$
144,275

 
$
139,659

Recoveries from tenants
34,482

 
29,964

 
67,787

 
61,653

Other revenues
6,642

 
1,531

 
9,078

 
2,725

Total revenues
113,826

 
101,950

 
221,140

 
204,037

Expenses:
 
 
 
 
 
 
 
Property operating costs
29,660

 
27,782

 
61,153

 
57,877

Real estate taxes and insurance
7,063

 
3,411

 
11,039

 
6,878

Depreciation and amortization
26,185

 
23,603

 
51,212

 
46,872

General and administrative
4,468

 
3,868

 
8,811

 
8,108

Other expenses
5,552

 
1,599

 
12,805

 
2,472

Total expenses
72,928

 
60,263

 
145,020

 
122,207

Operating income
40,898

 
41,687

 
76,120

 
81,830

Interest income
30

 
39

 
41

 
107

Interest:
 
 
 
 
 
 
 
Expense incurred
(9,093
)
 
(7,707
)
 
(17,351
)
 
(15,531
)
Amortization of deferred financing costs
(694
)
 
(723
)
 
(1,336
)
 
(1,466
)
Loss on early extinguishment of debt

 
(338
)
 

 
(338
)
Net income
31,141

 
32,958

 
57,474

 
64,602

Net income attributable to redeemable noncontrolling interests – operating partnership
(4,662
)
 
(5,026
)
 
(8,381
)
 
(9,814
)
Net income attributable to controlling interests
26,479

 
27,932

 
49,093

 
54,788

Preferred stock dividends
(6,811
)
 
(6,811
)
 
(13,622
)
 
(13,622
)
Net income attributable to common shares
$
19,668

 
$
21,121

 
$
35,471

 
$
41,166

Earnings per share – basic:
 
 
 
 
 
 
 
Net income attributable to common shares
$
0.30

 
$
0.32

 
$
0.54

 
$
0.63

Weighted average common shares outstanding
65,030,132

 
65,486,202

 
65,266,766

 
65,417,615

Earnings per share – diluted:
 
 
 
 
 
 
 
Net income attributable to common shares
$
0.30

 
$
0.32

 
$
0.53

 
$
0.63

Weighted average common shares outstanding
65,743,874

 
65,951,113

 
66,098,759

 
65,887,897

Dividends declared per common share
$
0.42

 
$
0.35

 
$
0.84

 
$
0.70





7



DUPONT FABROS TECHNOLOGY, INC.
RECONCILIATIONS OF NET INCOME TO NAREIT FFO, NORMALIZED FFO AND AFFO (1)
(unaudited and in thousands except share and per share data)
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Net income
$
31,141

 
$
32,958

 
$
57,474

 
$
64,602

Depreciation and amortization
26,185

 
23,603

 
51,212

 
46,872

Less: Non real estate depreciation and amortization
(157
)
 
(185
)
 
(301
)
 
(357
)
NAREIT FFO
57,169

 
56,376

 
108,385

 
111,117

Preferred stock dividends
(6,811
)
 
(6,811
)
 
(13,622
)
 
(13,622
)
NAREIT FFO attributable to common shares and common units
50,358

 
49,565

 
94,763

 
97,495

Severance expense and equity acceleration

 

 
5,578

 

Loss on early extinguishment of debt

 
338

 

 
338

Normalized FFO attributable to common shares and common units
50,358

 
49,903

 
100,341

 
97,833

Straight-line revenues, net of reserve
5,367

 
1,305

 
9,150

 
2,016

Amortization and write-off of lease contracts above and below market value
415

 
(598
)
 
(178
)
 
(1,197
)
Compensation paid with Company common shares
1,288

 
1,507

 
2,629

 
3,100

Non real estate depreciation and amortization
157

 
185

 
301

 
357

Amortization of deferred financing costs
694

 
723

 
1,336

 
1,466

Improvements to real estate
(674
)
 
(595
)
 
(1,248
)
 
(1,020
)
Capitalized leasing commissions
(546
)
 
(1,550
)
 
(2,012
)
 
(1,577
)
AFFO attributable to common shares and common units
$
57,059

 
$
50,880

 
$
110,319

 
$
100,978

NAREIT FFO attributable to common shares and common units per share - diluted
$
0.62

 
$
0.61

 
$
1.16

 
$
1.20

Normalized FFO attributable to common shares and common units per share - diluted
$
0.62

 
$
0.61

 
$
1.23

 
$
1.20

AFFO attributable to common shares and common units per share - diluted
$
0.70

 
$
0.62

 
$
1.35

 
$
1.24

Weighted average common shares and common units outstanding - diluted
81,244,826

 
81,529,141

 
81,612,738

 
81,480,797


(1) Funds from operations, or FFO, is used by industry analysts and investors as a supplemental operating performance measure for REITs. We calculate FFO in accordance with the definition that was adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. FFO, as defined by NAREIT, represents net income determined in accordance with GAAP, excluding extraordinary items as defined under GAAP, impairment charges on depreciable real estate assets and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We also present FFO attributable to common shares and OP units, which is FFO excluding preferred stock dividends. FFO attributable to common shares and OP units per share is calculated on a basis consistent with net income attributable to common shares and OP units and reflects adjustments to net income for preferred stock dividends.
We use FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared period over period, captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO may be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes real estate related depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited.
While FFO is a relevant and widely used measure of operating performance of equity REITs, other equity REITs may use different methodologies for calculating FFO and, accordingly, FFO as disclosed by such other REITs may not be comparable to our FFO. Therefore, we believe that in order to facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income as presented in the consolidated statements of operations. FFO should not be considered as an alternative to net income or to cash flow from operating activities (each as computed in accordance with GAAP) or as an indicator of our liquidity, nor is it indicative of funds available to meet our cash needs, including our ability to pay dividends or make distributions.
We present FFO with adjustments to arrive at Normalized FFO. Normalized FFO is FFO attributable to common shares and units excluding severance expense and equity accelerations, gain or loss on early extinguishment of debt and gain or loss on derivative instruments. We also present FFO with supplemental adjustments to arrive at Adjusted FFO (“AFFO”). AFFO is Normalized FFO excluding straight-line revenue, compensation paid with Company common shares, below market lease amortization and write-offs net of above market lease amortization and write-offs, non real estate depreciation and amortization, amortization of deferred financing costs, improvements to real estate and capitalized leasing commissions. AFFO does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative to net income as an indicator of our operating performance or as an alternative to cash flow provided by operations as a measure of liquidity and is not necessarily indicative of funds available to fund our cash needs including our ability to pay dividends. In addition, AFFO may not be comparable to similarly titled measurements employed by other companies. We use AFFO in management reports to provide a measure of REIT operating performance that can be compared to other companies using AFFO.

8



DUPONT FABROS TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands except share data)
 
June 30,
2015
 
December 31,
2014
 
(unaudited)
 
 
ASSETS
 
 
 
Income producing property:
 
 
 
Land
$
88,842

 
$
83,793

Buildings and improvements
2,731,820

 
2,623,539

 
2,820,662

 
2,707,332

Less: accumulated depreciation
(552,653
)
 
(504,869
)
Net income producing property
2,268,009

 
2,202,463

Construction in progress and land held for development
350,860

 
358,965

Net real estate
2,618,869

 
2,561,428

Cash and cash equivalents
105,887

 
29,598

Rents and other receivables, net
8,560

 
8,113

Deferred rent, net
133,215

 
142,365

Lease contracts above market value, net
6,474

 
8,054

Deferred costs, net
39,826

 
38,495

Prepaid expenses and other assets
48,699

 
48,295

Total assets
$
2,961,530

 
$
2,836,348

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Liabilities:
 
 
 
Line of credit
$

 
$
60,000

Mortgage notes payable
115,000

 
115,000

Unsecured term loan
250,000

 
250,000

Unsecured notes payable, net of discount
848,024

 
600,000

Accounts payable and accrued liabilities
31,914

 
26,973

Construction costs payable
24,406

 
32,949

Accrued interest payable
11,440

 
10,759

Dividend and distribution payable
39,690

 
39,981

Lease contracts below market value, net
5,279

 
7,037

Prepaid rents and other liabilities
63,544

 
65,174

Total liabilities
1,389,297

 
1,207,873

Redeemable noncontrolling interests – operating partnership
454,097

 
513,134

Commitments and contingencies

 

Stockholders’ equity:
 
 
 
Preferred stock, $.001 par value, 50,000,000 shares authorized:
 
 
 
Series A cumulative redeemable perpetual preferred stock, 7,400,000 issued and outstanding at June 30, 2015 and December 31, 2014
185,000

 
185,000

Series B cumulative redeemable perpetual preferred stock, 6,650,000 issued and outstanding at June 30, 2015 and December 31, 2014
166,250

 
166,250

Common stock, $.001 par value, 250,000,000 shares authorized, 65,386,777 shares issued and outstanding at June 30, 2015 and 66,061,804 shares issued and outstanding at December 31, 2014
65

 
66

Additional paid in capital
766,821

 
764,025

Retained earnings

 

Total stockholders’ equity
1,118,136

 
1,115,341

Total liabilities and stockholders’ equity
$
2,961,530

 
$
2,836,348


9



DUPONT FABROS TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
 
Six months ended June 30,
 
2015
 
2014
Cash flow from operating activities
 
 
 
Net income
$
57,474

 
$
64,602

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Depreciation and amortization
51,212

 
46,872

Loss on early extinguishment of debt

 
338

Straight-line revenues, net of reserve
9,150

 
2,016

Amortization of deferred financing costs
1,336

 
1,466

Amortization and write-off of lease contracts above and below market value
(178
)
 
(1,197
)
Compensation paid with Company common shares
6,578

 
3,100

Changes in operating assets and liabilities
 
 
 
Rents and other receivables
(447
)
 
2,231

Deferred costs
(2,031
)
 
(442
)
Prepaid expenses and other assets
418

 
(6,229
)
Accounts payable and accrued liabilities
5,013

 
(994
)
Accrued interest payable
693

 
605

Prepaid rents and other liabilities
(1,733
)
 
6,260

Net cash provided by operating activities
127,485

 
118,628

Cash flow from investing activities
 
 
 
Investments in real estate – development
(106,347
)
 
(128,068
)
Interest capitalized for real estate under development
(5,857
)
 
(6,163
)
Improvements to real estate
(1,248
)
 
(1,020
)
Additions to non-real estate property
(568
)
 
(283
)
Net cash used in investing activities
(114,020
)
 
(135,534
)
Cash flow from financing activities
 
 
 
Line of credit:
 
 
 
Proceeds
120,000

 

Repayments
(180,000
)
 

Unsecured term loan:
 
 
 
Proceeds

 
96,000

Unsecured notes payable:
 
 
 
Proceeds
248,012

 

Payments of financing costs
(3,948
)
 
(2,816
)
Equity compensation (payments) proceeds
(7,544
)
 
3,457

Common stock repurchases
(31,912
)
 

Dividends and distributions:
 
 
 
Common shares
(55,202
)
 
(39,333
)
Preferred shares
(13,622
)
 
(13,622
)
Redeemable noncontrolling interests – operating partnership
(12,960
)
 
(9,372
)
Net cash provided by financing activities
62,824

 
34,314

Net increase in cash and cash equivalents
76,289

 
17,408

Cash and cash equivalents, beginning
29,598

 
38,733

Cash and cash equivalents, ending
$
105,887

 
$
56,141

Supplemental information:
 
 
 
Cash paid for interest
$
22,527

 
$
21,089

Deferred financing costs capitalized for real estate under development
$
447

 
$
354

Construction costs payable capitalized for real estate under development
$
24,406

 
$
25,032

Redemption of operating partnership units
$
598

 
$
2,400

Adjustments to redeemable noncontrolling interests - operating partnership
$
(53,868
)
 
$
36,047


10



DUPONT FABROS TECHNOLOGY, INC.
Operating Properties
As of July 1, 2015

Property
 
Property Location
 
Year Built/
Renovated
 
Gross
Building
Area (2)
 
Computer Room
Square Feet
("CRSF") (2)
 
CRSF %
Leased
(3)
 
CRSF %
Commenced
(4)
 
Critical
Load
MW (5)
 
Critical
Load %
Leased
(3)
 
Critical
Load %
Commenced
(4)
Stabilized (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACC2
 
Ashburn, VA
 
2001/2005
 
87,000

 
53,000

 
100
%
 
100
%
 
10.4

 
100
%
 
100
%
ACC3
 
Ashburn, VA
 
2001/2006
 
147,000

 
80,000

 
100
%
 
100
%
 
13.9

 
100
%
 
100
%
ACC4
 
Ashburn, VA
 
2007
 
347,000

 
172,000

 
100
%
 
100
%
 
36.4

 
100
%
 
100
%
ACC5
 
Ashburn, VA
 
2009-2010
 
360,000

 
176,000

 
99
%
 
99
%
 
36.4

 
99
%
 
99
%
ACC6
 
Ashburn, VA
 
2011-2013
 
262,000

 
130,000

 
100
%
 
100
%
 
26.0

 
100
%
 
100
%
CH1
 
Elk Grove Village, IL
 
2008-2012
 
485,000

 
231,000

 
100
%
 
100
%
 
36.4

 
100
%
 
100
%
NJ1 Phase I
 
Piscataway, NJ
 
2010
 
180,000

 
88,000

 
70
%
 
70
%
 
18.2

 
59
%
 
59
%
SC1
 
Santa Clara, CA
 
2011-2015
 
360,000

 
173,000

 
100
%
 
100
%
 
36.6

 
100
%
 
100
%
VA3
 
Reston, VA
 
2003
 
256,000

 
147,000

 
94
%
 
94
%
 
13.0

 
95
%
 
95
%
VA4
 
Bristow, VA
 
2005
 
230,000

 
90,000

 
100
%
 
100
%
 
9.6

 
100
%
 
100
%
Subtotal – stabilized
 
 
 
2,714,000

 
1,340,000

 
97
%
 
97
%
 
236.9

 
96
%
 
96
%
Completed, not Stabilized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACC7 Phase I
 
Ashburn, VA
 
2014
 
126,000

 
67,000

 
75
%
 
75
%
 
11.9

 
84
%
 
84
%
CH2 Phase I
 
Elk Grove Village, IL
 
2015
 
94,000

 
45,000

 
20
%
 
20
%
 
7.1

 
20
%
 
20
%
Subtotal – not stabilized
 
 
 
220,000

 
112,000

 
53
%
 
53
%
 
19.0

 
60
%
 
60
%
Total Operating Properties
 
 
 
2,934,000

 
1,452,000

 
94
%
 
94
%
 
255.9

 
94
%
 
94
%
 
(1)
Stabilized operating properties are either 85% or more leased and commenced or have been in service for 24 months or greater.
(2)
Gross building area is the entire building area, including CRSF (the portion of gross building area where our customers' computer servers are located), common areas, areas controlled by us (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to our customers.
(3)
Percentage leased is expressed as a percentage of CRSF or critical load, as applicable, that is subject to an executed lease. Leases executed as of July 1, 2015 represent $300 million of base rent on a GAAP basis and $312 million of base rent on a cash basis over the next twelve months. Both amounts include $18 million of revenue from management fees over the next twelve months.
(4)
Percentage commenced is expressed as a percentage of CRSF or critical load, as applicable, where the lease has commenced under generally accepted accounting principles.
(5)
Critical load (also referred to as IT load or load used by customers' servers or related equipment) is the power available for exclusive use by customers expressed in terms of megawatt, or MW, or kilowatt, or kW (1 MW is equal to 1,000 kW).




 




11



DUPONT FABROS TECHNOLOGY, INC.
Lease Expirations
As of July 1, 2015

The following table sets forth a summary schedule of lease expirations at our operating properties for each of the ten calendar years beginning with 2015. The information set forth in the table below assumes that customers exercise no renewal options and takes into account customers’ early termination options in determining the life of their leases under GAAP.
 
Year of Lease Expiration
 
Number
of Leases
Expiring (1)
 
CRSF of
Expiring Commenced Leases
(in thousands)
(2)
 
% of
Leased
CRSF
 
Total kW
of Expiring
Commenced Leases (2)
 
% of
Leased kW
 
% of
Annualized
Base Rent (3)
Month to month (4)
 
5

 
44

 
3.2
%
 
7,387

 
3.1
%
 
3.1
%
2015
 
1

 
53

 
3.9
%
 
10,400

 
4.3
%
 
4.1
%
2016
 
3

 
12

 
0.9
%
 
2,248

 
0.9
%
 
1.2
%
2017
 
13

 
84

 
6.2
%
 
13,905

 
5.8
%
 
5.7
%
2018
 
21

 
180

 
13.2
%
 
34,017

 
14.2
%
 
14.0
%
2019
 
20

 
291

 
21.4
%
 
51,740

 
21.6
%
 
21.9
%
2020
 
15

 
182

 
13.4
%
 
32,404

 
13.5
%
 
13.1
%
2021
 
10

 
157

 
11.5
%
 
25,569

 
10.7
%
 
10.9
%
2022
 
7

 
89

 
6.5
%
 
15,509

 
6.5
%
 
6.4
%
2023
 
3

 
29

 
2.1
%
 
4,386

 
1.8
%
 
1.6
%
2024
 
8

 
112

 
8.2
%
 
19,279

 
8.0
%
 
9.4
%
After 2024
 
9

 
127

 
9.5
%
 
22,856

 
9.6
%
 
8.6
%
Total
 
115

 
1,360


100
%

239,700


100
%

100
%
 
(1)
Represents 38 customers with 115 lease expiration dates.
(2)
CRSF is that portion of gross building area where customers locate their computer servers. One MW is equal to 1,000 kW.
(3)
Annualized base rent represents the monthly contractual base rent (defined as cash base rent before abatements) multiplied by 12 for commenced leases as of July 1, 2015.
(4)
Includes four leases with our bankrupt customer which DFT can terminate upon 30 days' notice and one lease where the lessee held over and has now departed.




12



DUPONT FABROS TECHNOLOGY, INC.
Top 15 Customers
As of July 1, 2015


The following table presents our top 15 customers based on annualized monthly contractual base rent at our operating properties as of July 1, 2015:
 
Customer
 
Number of Buildings
 
Number of Markets
 
Remaining Term
 
% of
Annualized
Base Rent (1)
1
Microsoft
 
6

 
3

 
6.2

 
21.4
%
2
Facebook
 
4

 
1

 
5.1

 
19.0
%
3
Yahoo!
 
3

 
2

 
1.7

 
11.3
%
4
Rackspace
 
3

 
2

 
10.1

 
9.8
%
5
Fortune 1000 leading Software as a Service (SaaS) Provider, Not Rated
 
4

 
2

 
7.1

 
6.4
%
6
Fortune 25 Investment Grade Rated Company
 
2

 
2

 
3.1

 
5.0
%
7
Server Central
 
1

 
1

 
6.1

 
2.7
%
8
Net Data Centers
 
4

 
2

 
MTM

 
2.2
%
9
Zynga
 
1

 
1

 
0.6

 
2.1
%
10
Dropbox
 
1

 
1

 
3.5

 
1.7
%
11
IAC
 
1

 
1

 
3.8

 
1.7
%
12
Symantec
 
2

 
1

 
2.0

 
1.5
%
13
Fortune 25 Investment Grade Rated Company
 
2

 
2

 
5.7

 
1.2
%
14
UBS
 
1

 
1

 
10.0

 
1.1
%
15
Sanofi Aventis
 
2

 
1

 
6.0

 
1.0
%
Total
 
 
 
 
 
 
 
88.1
%

(1)
Annualized base rent represents monthly contractual base rent (defined as cash base rent before abatements) multiplied by 12 for commenced leases as of July 1, 2015.


13



DUPONT FABROS TECHNOLOGY, INC.
Same Store Analysis
($ in thousands)
Same Store Properties
Three Months Ended
 
Six Months Ended
 
 
 
30-Jun-15
 
30-Jun-14
 
% Change
 
31-Mar-15
 
% Change
 
30-Jun-15
 
30-Jun-14
 
% Change
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Base rent
$
70,626

 
$
70,455

 
0.2
 %
 
$
70,528

 
0.1
 %
 
$
141,154

 
$
139,659

 
1.1
 %
 
Recoveries from tenants
34,256

 
29,965

 
14.3
 %
 
33,122

 
3.4
 %
 
67,378

 
61,654

 
9.3
 %
 
Other revenues
486

 
458

 
6.1
 %
 
475

 
2.3
 %
 
961

 
914

 
5.1
 %
Total revenues
105,368

 
100,878

 
4.5
 %
 
104,125

 
1.2
 %
 
209,493

 
202,227

 
3.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating costs
28,686

 
27,782

 
3.3
 %
 
30,375

 
(5.6
)%
 
59,061

 
57,877

 
2.0
 %
 
Real estate taxes and insurance
6,928

 
3,410

 
N/M

 
3,771

 
83.7
 %
 
10,699

 
6,870

 
55.7
 %
 
Other expenses
30

 
52

 
N/M

 
14

 
N/M

 
44

 
77

 
(42.9
)%
Total expenses
35,644

 
31,244

 
14.1
 %
 
34,160

 
4.3
 %
 
69,804

 
64,824

 
7.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (1)
69,724

 
69,634

 
0.1
 %
 
69,965

 
(0.3
)%
 
139,689

 
137,403

 
1.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Straight-line revenues, net of reserve
4,339

 
1,305

 
N/M

 
3,492

 
24.3
 %
 
7,831

 
2,016

 
N/M

 
 
Amortization of lease contracts above and below market value
415

 
(598
)
 
N/A

 
(593
)
 
N/A

 
(178
)
 
(1,197
)
 
(85.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash net operating income (1)
$
74,478

 
$
70,341

 
5.9
 %
 
$
72,864

 
2.2
 %
 
$
147,342

 
$
138,222

 
6.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Same Store Properties represent those properties placed into service on or before January 1, 2014 and excludes ACC7.
 
 
 
 
 
 
 
 
 
 
Same Store, Same Capital Properties
Three Months Ended
 
Six Months Ended
 
 
 
30-Jun-15
 
30-Jun-14
 
% Change
 
31-Mar-15
 
% Change
 
30-Jun-15
 
30-Jun-14
 
% Change
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Base rent
$
61,032

 
$
64,528

 
(5.4
)%
 
$
62,737

 
(2.7
)%
 
$
123,769

 
$
128,439

 
(3.6
)%
 
Recoveries from tenants
26,337

 
25,669

 
2.6
 %
 
27,662

 
(4.8
)%
 
53,999

 
53,505

 
0.9
 %
 
Other revenues
457

 
427

 
7.0
 %
 
445

 
2.7
 %
 
902

 
853

 
5.7
 %
Total revenues
87,826

 
90,624

 
(3.1
)%
 
90,844

 
(3.3
)%
 
178,670

 
182,797

 
(2.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating costs
23,302

 
23,923

 
(2.6
)%
 
25,585

 
(8.9
)%
 
48,887

 
50,662

 
(3.5
)%
 
Real estate taxes and insurance
3,350

 
2,727

 
22.8
 %
 
2,894

 
15.8
 %
 
6,244

 
5,509

 
13.3
 %
 
Other expenses
14

 
35

 
N/M

 
13

 
N/M

 
27

 
59

 
(54.2
)%
Total expenses
26,666

 
26,685

 
(0.1
)%
 
28,492

 
(6.4
)%
 
55,158

 
56,230

 
(1.9
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income (1)
61,160

 
63,939

 
(4.3
)%
 
62,352

 
(1.9
)%
 
123,512

 
126,567

 
(2.4
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Straight-line revenues, net of reserve
4,716

 
1,505

 
N/M

 
3,678

 
28.2
 %
 
8,394

 
2,335

 
N/M

 
 
Amortization of lease contracts above and below market value
415

 
(598
)
 
N/A

 
(593
)
 
N/A

 
(178
)
 
(1,197
)
 
(85.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash net operating income (1)
$
66,291

 
$
64,846

 
2.2
 %
 
$
65,437

 
1.3
 %
 
$
131,728

 
$
127,705

 
3.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Same Store, Same Capital properties represent those properties placed into service on or before January 1, 2014 and have less than 10% of additional critical load developed after January 1, 2014. Excludes SC1 and ACC7.

(1) See next page for a reconciliation of Net Operating Income and Cash Net Operating Income to GAAP measures.

14



DUPONT FABROS TECHNOLOGY, INC.
Same Store Analysis - Reconciliations of Operating Income
to Net Operating Income and Cash Net Operating Income (1) 
($ in thousands)
Reconciliation of Same Store Operating Income to Same Store Net Operating Income and Cash Net Operating Income
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
30-Jun-15
 
30-Jun-14
 
% Change
 
31-Mar-15
 
% Change
 
30-Jun-15
 
30-Jun-14
 
% Change
Operating income
$
44,616

 
$
46,234

 
(3.5
)%
 
$
46,010

 
(3.0
)%
 
$
90,626

 
$
90,937

 
(0.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
25,108

 
23,400

 
7.3
 %
 
23,955

 
4.8
 %
 
49,063

 
46,466

 
5.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income
69,724

 
69,634

 
0.1
 %
 
69,965

 
(0.3
)%
 
139,689

 
137,403

 
1.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Straight-line revenues, net of reserve
4,339

 
1,305

 
N/M

 
3,492

 
24.3
 %
 
7,831

 
2,016

 
N/M

 
 
Amortization of lease contracts above and below market value
415

 
(598
)
 
N/A

 
(593
)
 
N/A

 
(178
)
 
(1,197
)
 
(85.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash net operating income
$
74,478

 
$
70,341

 
5.9
 %
 
$
72,864

 
2.2
 %
 
$
147,342

 
$
138,222

 
6.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Same Store, Same Capital Operating Income to Same Store, Same Capital Net Operating Income and Cash Net Operating Income
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
30-Jun-15
 
30-Jun-14
 
% Change
 
31-Mar-15
 
% Change
 
30-Jun-15
 
30-Jun-14
 
% Change
Operating income
$
39,501

 
$
42,717

 
(7.5
)%
 
$
41,178

 
(4.1
)%
 
$
80,679

 
$
84,161

 
(4.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
21,659

 
21,222

 
2.1
 %
 
21,174

 
2.3
 %
 
42,833

 
42,406

 
1.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income
61,160

 
63,939

 
(4.3
)%
 
62,352

 
(1.9
)%
 
123,512

 
126,567

 
(2.4
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Straight-line revenues, net of reserve
4,716

 
1,505

 
N/M

 
3,678

 
28.2
 %
 
8,394

 
2,335

 
N/M

 
 
Amortization of lease contracts above and below market value
415

 
(598
)
 
N/A

 
(593
)
 
N/A

 
(178
)
 
(1,197
)
 
(85.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash net operating income
$
66,291

 
$
64,846

 
2.2
 %
 
$
65,437

 
1.3
 %
 
$
131,728

 
$
127,705

 
3.2
 %

(1) Net Operating Income ("NOI") represents total revenues less property operating costs, real estate taxes and insurance, and other expenses (each as reflected in the consolidated statements of operations) for the properties included in the analysis. Cash Net Operating Income ("Cash NOI") is NOI less straight-line revenues, net of reserve and amortization of lease contracts above and below market value for the properties included in the analysis.
We use NOI and Cash NOI as supplemental performance measures because, in excluding depreciation and amortization and gains and losses from property dispositions, each provides a performance measure that, when compared period over period, captures trends in occupancy rates, rental rates and operating expenses. However, because NOI and Cash NOI exclude depreciation and amortization and capture neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of NOI and Cash NOI as a measure of our performance is limited.
Other REITs may not calculate NOI and Cash NOI in the same manner we do and, accordingly, our NOI and Cash NOI may not be comparable to the NOI and Cash NOI of other REITs. NOI and Cash NOI should not be considered as an alternative to operating income (as computed in accordance with GAAP).

15



DUPONT FABROS TECHNOLOGY, INC.
Development Projects
As of June 30, 2015
($ in thousands) 
 
Property
 
Property
Location
 
Gross
Building
Area (1)
 
CRSF (2)
 
Critical
Load
MW (3)
 
Estimated
Total Cost (4)
 
Construction
in Progress &
Land Held for
Development
(5)
 
CRSF %
Pre-
leased
 
Critical
Load %
Pre-
leased
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Development Projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CH2 Phase I (6)
 
Elk Grove Village, IL
 
94,000

 
45,000

 
7.1

 
   $74,000 - $78,000
 
$
69,700

 
20
%
 
20
%
ACC7 Phase II
 
Ashburn, VA
 
98,000

 
51,000

 
8.9

 
    78,000 - 82,000
 
53,856

 
34
%
 
33
%
ACC7 Phase III
 
Ashburn, VA
 
126,000

 
68,000

 
11.9

 
   106,000 - 110,000
 
31,924

 
%
 
%
 
 
 
 
318,000

 
164,000

 
27.9

 
   258,000 - 270,000
 
155,480

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future Development Projects/Phases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACC7 Phase IV
 
Ashburn, VA
 
96,000

 
52,000

 
8.9

 
35,799
 
35,799

 
 
 
 
CH2 Phases II to III
 
Elk Grove Village, IL
 
242,000

 
115,000

 
18.5

 
  112,000 - 116,000
 
110,779

 
 
 
 
NJ1 Phase II
 
Piscataway, NJ
 
180,000

 
88,000

 
18.2

 
39,212
 
39,212

 
 
 
 
 
 
 
 
518,000

 
255,000

 
45.6

 
$187,011 - $191,011
 
185,790

 
 
 
 
Land Held for Development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACC8
 
Ashburn, VA
 
100,000

 
50,000

 
10.4

 
 
 
4,242

 
 
 
 
SC2 (7)
 
Santa Clara, CA
 
150,000

 
69,000

 
16.0

 
 
 
5,348

 
 
 
 
 
 
 
 
250,000

 
119,000

 
26.4

 
 
 
9,590

 
 
 
 
Total
 
 
 
1,086,000

 
538,000

 
99.9

 
 
 
$
350,860

 
 
 
 
 
(1)
Gross building area is the entire building area, including CRSF (the portion of gross building area where our customers’ computer servers are located), common areas, areas controlled by us (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to our customers. The respective amounts listed for each of the “Land Held for Development” sites are estimates.
(2)
CRSF is that portion of gross building area where customers locate their computer servers. The respective amounts listed for each of the “Land Held for Development” sites are estimates.
(3)
Critical load (also referred to as IT load or load used by customers’ servers or related equipment) is the power available for exclusive use by customers expressed in terms of MW or kW (1 MW is equal to 1,000 kW). The respective amounts listed for each of the “Land Held for Development” sites are estimates.
(4)
Current development projects include land, capitalization for construction and development and capitalized interest and operating carrying costs, as applicable, upon completion. Future development projects/phases include land, shell and underground work through Phase I opening only.
(5)
Amount capitalized as of June 30, 2015. Future development projects/phases include land, shell and underground work through the opening of the phase(s) that are either under current development or in service.
(6)
CH2 Phase I was placed in service on July 1, 2015.
(7)
Amounts listed are updated estimates. We are currently evaluating the best use for this land. Options include a stand-alone data center, an additional phase of SC1 or a powered base shell.



16



DUPONT FABROS TECHNOLOGY, INC.
Debt Summary as of June 30, 2015
($ in thousands)

 
June 30, 2015
 
Amounts
 
% of Total
 
Rates
 
Maturities
(years)
Secured
$
115,000

 
9
%