Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - CoreSite Realty Corp | ex-99d1.htm |
| 8-K - 8-K - CoreSite Realty Corp | f8-k.htm |
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SECURE, RELIABLE, HIGH-PERFORMANCE DATA CENTER SOLUTIONS |
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®2018 CoreSite Realty Corporation, All Rights Reserved |
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Overview |
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| 3 | |
| 8 | |
| 9 | |
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Financial Statements |
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| 10 | |
| 11 | |
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Reconciliations of Net Income to FFO, AFFO, EBITDA and Adjusted EBITDA |
12 |
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Operating Portfolio |
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| 13 | |
| 14 | |
| 16 | |
| 17 | |
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Development |
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| 18 | |
| 19 | |
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Capital Structure |
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| 20 | |
| 21 | |
| 22 | |
| 23 | |
| 24 |
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Quarter Ended December 31, 2017 |
2
CoreSite Reports Fourth-Quarter 2017 Financial Results Reflecting Revenue Growth of 14% Year over Year
DENVER, CO – February 8, 2018
CoreSite Realty Corporation (NYSE:COR), a premier provider of secure, reliable, high-performance data center and interconnection solutions across the U.S., today announced financial results for the fourth quarter ended December 31, 2017.
Quarterly and Subsequent Highlights
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Reported fourth-quarter total operating revenues of $125.9 million, representing a 14.0% increase year over year |
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Reported fourth-quarter net income per diluted share of $0.44, consistent with the prior-year level |
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Reported fourth-quarter funds from operations (“FFO”), excluding a one-time non-cash expense related to the original issuance costs associated with CoreSite’s redeemed Preferred Stock, of $1.18 per diluted share and unit, representing 11.3% growth year over year. As reported, FFO per diluted share and unit was $1.09 |
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Executed 128 new and expansion data center leases comprising 41,521 net rentable square feet (NRSF), representing $7.2 million of annualized GAAP rent at an average rate of $174 per square foot |
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Commenced 52,221 NRSF of new and expansion leases representing $8.2 million of annualized GAAP rent at an average rate of $157 per square foot |
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Realized rent growth on signed renewals of 3.5% on a cash basis and 6.2% on a GAAP basis and recorded rental churn of 0.5% in the fourth quarter |
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On January 29, 2018, CoreSite acquired a two-acre land parcel in Chicago, Illinois, on which CoreSite expects to build CH2, a 175,000 square foot turn-key data center building, which should have dark fiber campus connectivity to CoreSite’s existing CH1 facility |
“We finished out the year with solid results, highlighted by fourth-quarter revenue, adjusted EBITDA and FFO growth, before the one-time Preferred Stock redemption charge, of 14%, 13%, and 11%, year over year, respectively,” said Paul Szurek, CoreSite’s Chief Executive Officer. “Organic growth was driven primarily by the continued expansion of existing customers across the portfolio and also by new logo growth as we continue to attract valuable deployments to our facilities, driving interactions and interconnections among our customers. When looking at 2017 in its entirety, we executed well on our strategic priorities and took important steps to grow our differentiated scalable and flexible campus strategy in key markets, including Santa Clara, Northern Virginia, Los Angeles, and most recently, Chicago.”
Financial Results
CoreSite reported net income attributable to common shares of $14.9 million, or $0.44 per diluted share, for the three months ended December 31, 2017, compared to $14.9 million, or $0.44 per diluted share for the three months ended December 31, 2016. Net income per diluted share declined 4.3% on a sequential-quarter basis, due to a one-time non-cash expense related to the original issuance costs associated with CoreSite’s redeemed Preferred Stock.
CoreSite reported FFO per diluted share and unit, excluding the aforementioned one-time non-cash expense related to the original issuance costs associated with CoreSite’s redeemed Preferred Stock, of $1.18 for the three months ended December 31, 2017, an increase of 11.3% compared to $1.06 per diluted share and unit for the three months ended December 31, 2016. FFO per diluted share and unit, adjusted for the non-cash expense, increased 7.3% on a sequential-quarter basis. FFO per diluted share and unit, as reported, was $1.09 for the three months ended December 31, 2017, an increase of 2.8% year over year. On a sequential-quarter basis, FFO, as reported, declined 0.9%, again reflecting the one-time non-cash expense related to CoreSite’s redeemed Preferred Stock.
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Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
3 |
Total operating revenues for the three months ended December 31, 2017, were $125.9 million, a 14.0% increase year over year and an increase of 2.3% on a sequential-quarter basis.
Sales Activity
CoreSite executed 128 new and expansion data center leases representing $7.2 million of annualized GAAP rent during the fourth quarter, comprised of 41,521 NRSF at a weighted-average GAAP rental rate of $174 per NRSF. Leasing to smaller deployments rebounded during the fourth quarter, with annualized GAAP rent signed for leases less than 5,000 square feet increasing 5.2% compared to the trailing twelve-month average.
CoreSite’s fourth-quarter data center lease commencements totaled 52,221 NRSF at a weighted average GAAP rental rate of $157 per NRSF, which represents $8.2 million of annualized GAAP rent.
CoreSite’s renewal leases signed in the fourth quarter totaled $11.2 million in annualized GAAP rent, comprised of 78,577 NRSF at a weighted-average GAAP rental rate of $142 per NRSF, reflecting a 3.5% increase in rent on a cash basis and a 6.2% increase on a GAAP basis. The fourth-quarter rental churn rate was 0.5%.
Development and Acquisition Activity
During the fourth quarter, CoreSite placed into service 13,735 square feet of turn-key data center capacity at BO1 in Boston and 3,087 square feet of turn-key data center capacity at VA1 in Reston, Virginia.
On January 29, 2018, CoreSite acquired a two-acre land parcel located in downtown Chicago, Illinois, with a total real estate cost of $4.5 million. CoreSite expects to build CH2, a 175,000 square foot turn-key data center building, on the acquired land parcel, upon the receipt of necessary entitlements. The facility is located in close proximity to CoreSite’s existing CH1 facility and network node and CoreSite expects to achieve campus interconnectivity with diverse, high-count dark fiber between CH1 and CH2.
In addition, as of December 31, 2017, CoreSite had a total of 220,336 square feet of turn-key data center capacity under construction and had spent $98.5 million of the estimated $213.6 million required to complete the projects, which consisted of the following.
Reston – CoreSite had 24,922 square feet of turn-key data center capacity under construction at VA3 (Phase 1A). As of December 31, 2017, CoreSite had incurred $16.5 million of the estimated $22.3 million required to complete this phase of the project, and expects to complete development late in the first quarter or early in the second quarter of 2018. During the fourth quarter, CoreSite also had 49,837 square feet of turn-key data center capacity under construction at VA3 (Phase 1B), inclusive of 9,837 square feet of the infrastructure building to support this phase of the data center campus. As of the end of the fourth quarter, CoreSite had incurred $27.4 million of the estimated $100.2 million required to complete VA3 Phase 1B and the infrastructure building, and expects to complete development in the fourth quarter of 2018.
Los Angeles – CoreSite had 47,338 square feet of turn-key data center capacity under construction at LA2, which capacity was 78.6% pre-leased. As of December 31, 2017, CoreSite had incurred $43.6 million of the estimated $45.2 million required to complete the expansion and expects to complete construction in the first quarter of 2018. In addition, CoreSite had an incremental 39,925 square feet of turn-key data center capacity under construction at LA2. As of the end of the fourth quarter, CoreSite had spent $6.2 million of the estimated $15.0 million required to complete this expansion and expects to complete construction in the first quarter of 2018. In conjunction with the build-out of the fourth floor at LA2, during the fourth quarter CoreSite spent $8.6 million in recurring capital expenditures to substantially complete a chiller plant replacement and upgrade project at LA2. The project is expected to result in improved energy efficiency and reduced maintenance capital requirements.
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Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
4 |
Washington D.C. – CoreSite had 24,563 square feet of turn-key data center capacity under construction at DC2. As of the end of the fourth quarter, CoreSite had spent $4.4 million of the estimated $17.4 million required to complete the project, and expects to complete development in the third quarter of 2018.
Denver – CoreSite had 15,630 square feet of turn-key data center capacity under construction at DE1. CoreSite expects to spend $7.5 million to complete this expansion and expects to complete construction in the third quarter of 2018.
New York – CoreSite commenced construction on 18,121 square feet of turn-key data center capacity at NY2, and expects to spend $6.0 million to complete this expansion in the third quarter of 2018.
Balance Sheet and Liquidity
As of December 31, 2017, CoreSite had net principal debt outstanding of $939.3 million, correlating to 3.4 times fourth-quarter annualized adjusted EBITDA.
As of the end of the fourth quarter, CoreSite had $180.9 million of total liquidity consisting of available cash and capacity on its revolving credit facility.
On December 12, 2017, CoreSite redeemed all 4,600,000 shares of its 7.25% Series A cumulative redeemable Preferred Stock for $25.00 per share, plus all accrued and unpaid dividends in an amount equal to $0.292014 per share, for a total payment of $25.292014 per share.
Dividend
On December 7, 2017, CoreSite announced a dividend of $0.98 per share of common stock and common stock equivalents for the fourth quarter of 2017. The $0.98 per share quarterly dividend represents a $0.08, or 8.9%, increase over the prior quarterly dividend of $0.90 per share that was established in May 2017, and a $0.18, or 22.5%, increase over the dividend rate set in December 2016.
The fourth-quarter dividend was paid on January 16, 2018, to shareholders of record on December 29, 2017.
2018 Guidance
CoreSite is introducing its 2018 guidance of net income attributable to common shares in the range of $2.15 to $2.27 per diluted share. In addition, the company’s guidance of FFO per diluted share and unit is a range of $4.92 to $5.04, with the difference between net income and FFO being real estate depreciation and amortization.
CoreSite’s 2018 guidance of FFO per diluted share reflects the company’s adoption of two new accounting standards – revenue recognition and lease accounting, which are cumulatively expected to reduce FFO per diluted share by approximately $0.06 per share. Absent these accounting changes, CoreSite’s 2018 guidance midpoint would reflect 11.5% year-over-year growth.
This outlook is based on current economic conditions, internal assumptions about CoreSite’s customer base, and the supply and demand dynamics of the markets in which CoreSite operates. The guidance does not include the impact of any future financing, investment or disposition activities, beyond what has already been disclosed.
Upcoming Conferences and Events
CoreSite will participate in Citi’s 2018 Global Property CEO Conference on March 5-6, 2018, at The Diplomat Resort & Spa in Hollywood, Florida.
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Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
5 |
Conference Call Details
CoreSite will host a conference call on February 8, 2018, at 12:00 p.m., Eastern Time (10:00 a.m., Mountain Time), to discuss its financial results, current business trends and market conditions.
The call will be accessible by dialing +1-877-407-3982 (domestic) or +1-201-493-6780 (international). A replay will be available until February 22, 2018, and can be accessed shortly after the call by dialing + 1-844-512-2921 (domestic) or + 1-412-317-6671 (international). The passcode for the replay is 13674936.
Interested parties may also listen to a simultaneous webcast of the conference call by logging on to CoreSite’s website at www.CoreSite.com and clicking on the “Investors” link. The on-line replay will be available for a limited time beginning immediately following the call.
About CoreSite
CoreSite Realty Corporation (NYSE:COR) delivers secure, reliable, high-performance data center and interconnection solutions to a growing customer ecosystem across eight key North American markets. More than 1,200 of the world’s leading enterprises, network operators, cloud providers, and supporting service providers choose CoreSite to connect, protect and optimize their performance-sensitive data, applications and computing workloads. Our scalable, flexible solutions and 450+ dedicated employees consistently deliver unmatched data center options — all of which leads to a best-in-class customer experience and lasting relationships. For more information, visit www.CoreSite.com.
CoreSite Contact
Greer Aviv
Vice President of Investor Relations and Corporate Communications
+1 303.405.1012
+1 303.222.7276
Greer.Aviv@CoreSite.com
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Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
6 |
Forward Looking Statements
This earnings release and accompanying supplemental information may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond CoreSite’s control, that may cause actual results to differ significantly from those expressed in any forward-looking statement. These risks include, without limitation: the geographic concentration of the company’s data centers in certain markets and any adverse developments in local economic conditions or the demand for data center space in these markets; fluctuations in interest rates and increased operating costs; difficulties in identifying properties to acquire and completing acquisitions; significant industry competition; the company’s failure to obtain necessary outside financing; the company’s ability to service existing debt; the company’s failure to qualify or maintain its status as a REIT; financial market fluctuations; changes in real estate and zoning laws and increases in real property tax rates; and other factors affecting the real estate industry generally. All forward-looking statements reflect the company’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, the company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company’s most recent annual report on Form 10-K, and other risks described in documents subsequently filed by the company from time to time with the Securities and Exchange Commission.
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Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
7 |
CoreSite delivers secure, reliable, high-performance data center and interconnection solutions to a growing customer ecosystem at 20 operating data centers across eight key North American Markets.
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Secure, Reliable and Compliant |
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Scalable |
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100% uptime Service Level Agreement guarantees our reliability commitment to customer applications |
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Serving customer requirements from half cabinet to full buildings |
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Physical security standards and rigorous internal security training enable compliance with regulatory requirements |
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20 operating data centers in eight of the largest commercial and data center markets in the United States |
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Consistent compliance across all properties |
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Ability to increase occupied data center footprint on land and buildings currently owned and under contract, including current space unoccupied, under construction and held for development, by approximately 1.7 million NRSF, or 83% of currently occupied space |
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SOC 1 & SOC 2 Type 2 reviews |
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ISO 27001 certified |
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Payment Card Industry Data Security Standard compliant |
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HIPAA validation |
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High-Performance Interconnection |
High-Quality Customer Experience |
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Cloud-enabled, network-rich data center buildings and campuses |
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450+ professionals with dedicated industry expertise supporting over 1,200 customers |
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Over 400 network service providers supported by robust interconnection services to key public clouds |
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Experienced and committed operations, facilities and security personnel |
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25,000+ interconnections |
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24/7 customer support and remote hands |
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Enabling enterprises with support ecosystems |
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Dedicated implementation resources to ensure a successful onboarding process |
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Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
8 |
(in thousands, except per share, NRSF and MRR data)
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Three Months Ended |
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Year Ended |
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December 31, |
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September 30, |
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December 31, |
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Growth % |
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December 31, |
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December 31, |
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Growth % |
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Summary of Results |
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2017 |
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2017 |
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2016 |
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Y/Y |
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2017 |
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2016 |
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Y/Y |
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GAAP Financial Measures |
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Operating revenues |
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$ |
125,946 |
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$ |
123,068 |
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$ |
110,508 |
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14.0 |
% |
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$ |
481,821 |
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$ |
400,352 |
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20.3 |
% |
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Net income |
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27,008 |
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24,288 |
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23,161 |
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16.6 |
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100,491 |
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81,921 |
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22.7 |
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Net income attributable to common shares |
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14,912 |
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15,758 |
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14,895 |
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0.1 |
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62,605 |
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50,371 |
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24.3 |
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Net income attributable to common shares per share - diluted |
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$ |
0.44 |
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$ |
0.46 |
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$ |
0.44 |
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— |
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$ |
1.84 |
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$ |
1.54 |
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19.5 |
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REIT Financial Measures |
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Funds from operations (FFO) to shares and units |
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$ |
52,224 |
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$ |
52,931 |
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$ |
50,430 |
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3.6 |
% |
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$ |
212,089 |
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$ |
176,719 |
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20.0 |
% |
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Funds from operations (FFO) to shares and units, as adjusted(1) |
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56,550 |
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52,931 |
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50,430 |
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12.1 |
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216,415 |
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176,719 |
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22.5 |
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Adjusted funds from operations (AFFO) |
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43,675 |
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48,336 |
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40,444 |
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8.0 |
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183,810 |
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156,551 |
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17.4 |
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EBITDA |
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66,296 |
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62,876 |
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58,607 |
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13.1 |
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254,063 |
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203,269 |
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25.0 |
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Adjusted EBITDA |
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68,755 |
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65,250 |
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60,625 |
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13.4 |
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263,206 |
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212,348 |
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24.0 |
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FFO per common share and OP unit - diluted |
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$ |
1.09 |
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$ |
1.10 |
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$ |
1.06 |
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2.8 |
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$ |
4.43 |
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$ |
3.71 |
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19.4 |
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FFO per common share and OP unit - diluted, as adjusted(1) |
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$ |
1.18 |
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$ |
1.10 |
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$ |
1.06 |
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11.3 |
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$ |
4.52 |
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$ |
3.71 |
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21.8 |
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(1) |
FFO available to shares and units, as adjusted, excludes $4.3 million, or $0.09 per share and unit, of non-cash charge related to the original issuance costs associated with our redeemed preferred stock. |
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As of |
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December 31, |
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September 30, |
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June 30, |
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March 31, |
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December 31, |
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2017 |
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2017 |
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2017 |
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2017 |
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2016 |
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Dividend Activity |
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Dividends declared per share and OP unit |
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$ |
0.98 |
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$ |
0.90 |
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$ |
0.90 |
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$ |
0.80 |
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$ |
0.80 |
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TTM FFO payout ratio |
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81.0 |
% |
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77.4 |
% |
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72.4 |
% |
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66.9 |
% |
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64.6 |
% |
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TTM AFFO payout ratio(1) |
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93.4 |
% |
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90.2 |
% |
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84.0 |
% |
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75.1 |
% |
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73.0 |
% |
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Operating Portfolio Statistics |
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Operating data center properties |
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20 |
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20 |
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20 |
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20 |
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20 |
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Stabilized data center NRSF |
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2,067,257 |
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2,025,594 |
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2,025,594 |
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1,987,231 |
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1,985,592 |
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Stabilized data center NRSF occupied |
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1,951,491 |
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1,891,014 |
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1,900,699 |
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1,881,908 |
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1,876,384 |
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Stabilized data center % occupied |
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94.4 |
% |
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93.4 |
% |
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93.8 |
% |
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94.7 |
% |
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94.5 |
% |
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Turn-Key Data Center ("TKD") Same-Store Statistics |
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MRR per Cabinet Equivalent |
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$ |
1,508 |
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$ |
1,503 |
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$ |
1,470 |
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$ |
1,439 |
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$ |
1,432 |
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TKD NRSF % occupied |
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91.8 |
% |
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90.3 |
% |
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91.1 |
% |
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90.9 |
% |
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90.8 |
% |
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Market Capitalization, Principal Debt & Preferred Stock |
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Total enterprise value |
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$ |
6,420,488 |
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$ |
6,288,910 |
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$ |
5,866,955 |
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$ |
5,164,449 |
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$ |
4,598,768 |
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Total principal debt outstanding |
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$ |
944,500 |
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$ |
794,000 |
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$ |
775,000 |
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$ |
723,000 |
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$ |
694,000 |
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Total principal debt and preferred stock outstanding(2) |
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$ |
944,500 |
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$ |
909,000 |
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$ |
890,000 |
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$ |
838,000 |
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$ |
809,000 |
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Net Principal Debt to: |
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Annualized Adjusted EBITDA |
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3.4 |
x |
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3.0 |
x |
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2.9 |
x |
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2.8 |
x |
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2.8 |
x |
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Enterprise Value |
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14.6 |
% |
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12.6 |
% |
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12.8 |
% |
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14.0 |
% |
|
15.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Principal Debt & Preferred Stock(2) to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Adjusted EBITDA |
|
|
3.4 |
x |
|
3.5 |
x |
|
3.3 |
x |
|
3.2 |
x |
|
3.3 |
x |
|
Enterprise Value |
|
|
14.6 |
% |
|
14.4 |
% |
|
14.8 |
% |
|
16.2 |
% |
|
17.5 |
% |
|
(1) |
The TTM AFFO payout ratio included $11.9 million, $3.3 million, and $3.0 million as of December 31, 2017, September 30, 2017, and June 30, 2017, respectively, of recurring capital expenditures associated with replacing our chiller plant at LA2 that we expect to generate a significant return on investment. |
|
(2) |
On December 12, 2017 we redeemed our preferred stock at par value plus accrued dividends. |
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
9 |
(in thousands, except per share data)
|
|
|
December 31, 2017 |
|
December 31, 2016 |
|
||
|
Assets: |
|
|
|
|
|
|
|
|
Investments in real estate: |
|
|
|
|
|
|
|
|
Land |
|
$ |
97,258 |
|
$ |
100,258 |
|
|
Buildings and improvements |
|
|
1,561,056 |
|
|
1,472,580 |
|
|
|
|
|
1,658,314 |
|
|
1,572,838 |
|
|
Less: Accumulated depreciation and amortization |
|
|
(473,141) |
|
|
(369,303) |
|
|
Net investment in operating properties |
|
|
1,185,173 |
|
|
1,203,535 |
|
|
Construction in progress |
|
|
162,903 |
|
|
70,738 |
|
|
Net investments in real estate |
|
|
1,348,076 |
|
|
1,274,273 |
|
|
Cash and cash equivalents |
|
|
5,247 |
|
|
4,429 |
|
|
Accounts and other receivables, net |
|
|
28,875 |
|
|
25,125 |
|
|
Lease intangibles, net |
|
|
6,314 |
|
|
9,913 |
|
|
Goodwill |
|
|
40,646 |
|
|
41,191 |
|
|
Other assets, net |
|
|
103,501 |
|
|
96,372 |
|
|
Total assets |
|
$ |
1,532,659 |
|
$ |
1,451,303 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity: |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Debt, net |
|
$ |
939,570 |
|
$ |
690,450 |
|
|
Accounts payable and accrued expenses |
|
|
77,170 |
|
|
72,519 |
|
|
Accrued dividends and distributions |
|
|
48,976 |
|
|
41,849 |
|
|
Deferred rent payable |
|
|
9,928 |
|
|
7,694 |
|
|
Acquired below-market lease contracts, net |
|
|
3,504 |
|
|
4,292 |
|
|
Unearned revenue, prepaid rent and other liabilities |
|
|
34,867 |
|
|
37,413 |
|
|
Total liabilities |
|
|
1,114,015 |
|
|
854,217 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Series A cumulative preferred stock |
|
|
— |
|
|
115,000 |
|
|
Common stock, par value $0.01 |
|
|
338 |
|
|
334 |
|
|
Additional paid-in capital |
|
|
457,495 |
|
|
438,531 |
|
|
Accumulated other comprehensive income (loss) |
|
|
753 |
|
|
(101) |
|
|
Distributions in excess of net income |
|
|
(177,566) |
|
|
(118,038) |
|
|
Total stockholders' equity |
|
|
281,020 |
|
|
435,726 |
|
|
Noncontrolling interests |
|
|
137,624 |
|
|
161,360 |
|
|
Total equity |
|
|
418,644 |
|
|
597,086 |
|
|
Total liabilities and equity |
|
$ |
1,532,659 |
|
$ |
1,451,303 |
|
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
10 |
Consolidated Statements of Operations
(in thousands, except share and per share data)
|
|
|
Three Months Ended |
|
Year Ended |
|
|||||||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|||||
|
|
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|||||
|
Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data center revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenue |
|
$ |
68,373 |
|
$ |
66,657 |
|
$ |
61,106 |
|
$ |
264,134 |
|
$ |
218,060 |
|
|
Power revenue |
|
|
36,528 |
|
|
35,110 |
|
|
30,722 |
|
|
134,909 |
|
|
111,541 |
|
|
Interconnection revenue |
|
|
16,255 |
|
|
16,201 |
|
|
13,984 |
|
|
62,293 |
|
|
53,077 |
|
|
Tenant reimbursement and other |
|
|
1,847 |
|
|
2,185 |
|
|
2,104 |
|
|
8,637 |
|
|
9,086 |
|
|
Total data center revenue |
|
|
123,003 |
|
|
120,153 |
|
|
107,916 |
|
|
469,973 |
|
|
391,764 |
|
|
Office, light-industrial and other revenue |
|
|
2,943 |
|
|
2,915 |
|
|
2,592 |
|
|
11,848 |
|
|
8,588 |
|
|
Total operating revenues |
|
|
125,946 |
|
|
123,068 |
|
|
110,508 |
|
|
481,821 |
|
|
400,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating and maintenance |
|
|
34,722 |
|
|
37,091 |
|
|
28,690 |
|
|
132,820 |
|
|
107,212 |
|
|
Real estate taxes and insurance |
|
|
3,963 |
|
|
2,622 |
|
|
4,591 |
|
|
14,913 |
|
|
14,250 |
|
|
Depreciation and amortization |
|
|
32,629 |
|
|
32,077 |
|
|
30,674 |
|
|
129,251 |
|
|
108,652 |
|
|
Sales and marketing |
|
|
4,616 |
|
|
4,643 |
|
|
4,308 |
|
|
18,176 |
|
|
17,495 |
|
|
General and administrative |
|
|
10,157 |
|
|
9,759 |
|
|
8,399 |
|
|
37,548 |
|
|
35,369 |
|
|
Rent |
|
|
6,155 |
|
|
6,077 |
|
|
5,913 |
|
|
24,125 |
|
|
22,631 |
|
|
Transaction costs |
|
|
37 |
|
|
— |
|
|
— |
|
|
176 |
|
|
126 |
|
|
Total operating expenses |
|
|
92,279 |
|
|
92,269 |
|
|
82,575 |
|
|
357,009 |
|
|
305,735 |
|
|
Operating income |
|
|
33,667 |
|
|
30,799 |
|
|
27,933 |
|
|
124,812 |
|
|
94,617 |
|
|
Interest expense |
|
|
(6,635) |
|
|
(6,447) |
|
|
(4,698) |
|
|
(24,147) |
|
|
(12,577) |
|
|
Income before income taxes |
|
|
27,032 |
|
|
24,352 |
|
|
23,235 |
|
|
100,665 |
|
|
82,040 |
|
|
Income tax expense |
|
|
(24) |
|
|
(64) |
|
|
(74) |
|
|
(174) |
|
|
(119) |
|
|
Net income |
|
|
27,008 |
|
|
24,288 |
|
|
23,161 |
|
|
100,491 |
|
|
81,921 |
|
|
Net income attributable to noncontrolling interests |
|
|
6,099 |
|
|
6,446 |
|
|
6,181 |
|
|
25,636 |
|
|
23,212 |
|
|
Net income attributable to CoreSite Realty Corporation |
|
|
20,909 |
|
|
17,842 |
|
|
16,980 |
|
|
74,855 |
|
|
58,709 |
|
|
Preferred stock dividends |
|
|
(1,671) |
|
|
(2,084) |
|
|
(2,085) |
|
|
(7,924) |
|
|
(8,338) |
|
|
Original issuance costs associated with redeemed preferred stock |
|
|
(4,326) |
|
|
— |
|
|
— |
|
|
(4,326) |
|
|
— |
|
|
Net income attributable to common shares |
|
$ |
14,912 |
|
$ |
15,758 |
|
$ |
14,895 |
|
$ |
62,605 |
|
$ |
50,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.44 |
|
$ |
0.47 |
|
$ |
0.45 |
|
$ |
1.85 |
|
$ |
1.56 |
|
|
Diluted |
|
$ |
0.44 |
|
$ |
0.46 |
|
$ |
0.44 |
|
$ |
1.84 |
|
$ |
1.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
33,893,021 |
|
|
33,878,881 |
|
|
33,431,318 |
|
|
33,792,759 |
|
|
32,289,414 |
|
|
Diluted |
|
|
34,145,280 |
|
|
34,114,169 |
|
|
33,859,539 |
|
|
34,058,949 |
|
|
32,732,059 |
|
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
11 |
Reconciliations of Net Income to FFO, AFFO, EBITDA and Adjusted EBITDA
(in thousands, except per share data)
|
Reconciliation of Net Income to FFO |
|
|
|
Three Months Ended |
|
Year Ended |
|
|||||||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|||||
|
|
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|||||
|
Net income |
|
$ |
27,008 |
|
$ |
24,288 |
|
$ |
23,161 |
|
$ |
100,491 |
|
$ |
81,921 |
|
|
Real estate depreciation and amortization |
|
|
31,213 |
|
|
30,727 |
|
|
29,354 |
|
|
123,848 |
|
|
103,136 |
|
|
FFO |
|
$ |
58,221 |
|
$ |
55,015 |
|
$ |
52,515 |
|
$ |
224,339 |
|
$ |
185,057 |
|
|
Preferred stock dividends |
|
|
(1,671) |
|
|
(2,084) |
|
|
(2,085) |
|
|
(7,924) |
|
|
(8,338) |
|
|
Original issuance costs associated with redeemed preferred stock |
|
|
(4,326) |
|
|
— |
|
|
— |
|
|
(4,326) |
|
|
— |
|
|
FFO available to common shareholders and OP unit holders |
|
$ |
52,224 |
|
$ |
52,931 |
|
$ |
50,430 |
|
$ |
212,089 |
|
$ |
176,719 |
|
|
Original issuance costs associated with redeemed preferred stock |
|
|
4,326 |
|
|
— |
|
|
— |
|
|
4,326 |
|
|
— |
|
|
FFO available to common shareholders and OP unit holders, as adjusted(1) |
|
$ |
56,550 |
|
$ |
52,931 |
|
$ |
50,430 |
|
$ |
216,415 |
|
$ |
176,719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - diluted |
|
|
34,145 |
|
|
34,114 |
|
|
33,860 |
|
|
34,059 |
|
|
32,732 |
|
|
Weighted average OP units outstanding - diluted |
|
|
13,836 |
|
|
13,838 |
|
|
13,851 |
|
|
13,844 |
|
|
14,943 |
|
|
Total weighted average shares and units outstanding - diluted |
|
|
47,981 |
|
|
47,952 |
|
|
47,711 |
|
|
47,903 |
|
|
47,675 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per common share and OP unit - diluted |
|
$ |
1.09 |
|
$ |
1.10 |
|
$ |
1.06 |
|
$ |
4.43 |
|
$ |
3.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per common share and OP unit - diluted, as adjusted(1) |
|
$ |
1.18 |
|
$ |
1.10 |
|
$ |
1.06 |
|
$ |
4.52 |
|
$ |
3.71 |
|
(1) FFO available to shares and units, as adjusted, excludes $4.3 million, or $0.09 per share and unit, of non-cash charge related to the original issuance costs associated with our redeemed preferred stock.
|
Reconciliation of FFO to AFFO |
|
|
|
Three Months Ended |
|
Year Ended |
|
|||||||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|||||
|
|
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|||||
|
FFO available to common shareholders and unit holders |
|
$ |
52,224 |
|
$ |
52,931 |
|
$ |
50,430 |
|
$ |
212,089 |
|
$ |
176,719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of deferred financing costs |
|
|
445 |
|
|
445 |
|
|
369 |
|
|
1,676 |
|
|
1,333 |
|
|
Non-cash compensation |
|
|
2,401 |
|
|
2,374 |
|
|
2,018 |
|
|
8,946 |
|
|
8,892 |
|
|
Non-real estate depreciation |
|
|
1,416 |
|
|
1,350 |
|
|
1,320 |
|
|
5,403 |
|
|
5,516 |
|
|
Original issuance costs associated with redeemed preferred stock |
|
|
4,326 |
|
|
— |
|
|
— |
|
|
4,326 |
|
|
— |
|
|
Straight-line rent adjustment |
|
|
(677) |
|
|
(777) |
|
|
(5,389) |
|
|
(4,411) |
|
|
(8,418) |
|
|
Amortization of above and below market leases |
|
|
(170) |
|
|
(177) |
|
|
(124) |
|
|
(598) |
|
|
(541) |
|
|
Recurring capital expenditures(1) |
|
|
(10,949) |
|
|
(3,219) |
|
|
(2,063) |
|
|
(23,725) |
|
|
(6,081) |
|
|
Tenant improvements |
|
|
(1,466) |
|
|
(1,252) |
|
|
(2,314) |
|
|
(6,764) |
|
|
(6,865) |
|
|
Capitalized leasing costs |
|
|
(3,875) |
|
|
(3,339) |
|
|
(3,803) |
|
|
(13,132) |
|
|
(14,004) |
|
|
AFFO available to common shareholders and OP unit holders |
|
$ |
43,675 |
|
$ |
48,336 |
|
$ |
40,444 |
|
$ |
183,810 |
|
$ |
156,551 |
|
(1) Recurring capital expenditures for the three months and year ended December 31, 2017, includes $8.6 million and $11.9 million, respectively, of recurring capital expenditures associated with replacing our chiller plant at LA2 that we expect to generate a significant return on investment.
|
Reconciliation of Net Income to EBITDA and Adjusted EBITDA |
|
|
|
Three Months Ended |
|
Year Ended |
|
|||||||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|||||
|
|
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|||||
|
Net income |
|
$ |
27,008 |
|
$ |
24,288 |
|
$ |
23,161 |
|
$ |
100,491 |
|
$ |
81,921 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
6,635 |
|
|
6,447 |
|
|
4,698 |
|
|
24,147 |
|
|
12,577 |
|
|
Income taxes |
|
|
24 |
|
|
64 |
|
|
74 |
|
|
174 |
|
|
119 |
|
|
Depreciation and amortization |
|
|
32,629 |
|
|
32,077 |
|
|
30,674 |
|
|
129,251 |
|
|
108,652 |
|
|
EBITDA |
|
$ |
66,296 |
|
$ |
62,876 |
|
$ |
58,607 |
|
$ |
254,063 |
|
$ |
203,269 |
|
|
Non-cash compensation |
|
|
2,401 |
|
|
2,374 |
|
|
2,018 |
|
|
8,946 |
|
|
8,892 |
|
|
Transaction costs / litigation |
|
|
58 |
|
|
— |
|
|
— |
|
|
197 |
|
|
187 |
|
|
Adjusted EBITDA |
|
$ |
68,755 |
|
$ |
65,250 |
|
$ |
60,625 |
|
$ |
263,206 |
|
$ |
212,348 |
|
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
12 |
|
|
|
Data Center Operating NRSF |
|
|
|
|
|
|
|
|||||||||||||
|
|
|
Annualized |
|
Stabilized |
|
Pre-Stabilized |
|
Total |
|
|
|
Held for |
|
|
|
|||||||
|
|
|
Rent |
|
|
|
Percent |
|
|
|
Percent |
|
|
|
Percent |
|
NRSF Under |
|
Development |
|
|
|
|
|
Market/Facilities |
|
($000)(1) |
|
Total |
|
Occupied(2) |
|
Total |
|
Occupied(2) |
|
Total |
|
Occupied(2) |
|
Construction |
|
NRSF |
|
Total NRSF |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Francisco Bay |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SV1 |
|
$ |
6,133 |
|
85,932 |
|
84.6 |
% |
— |
|
— |
% |
85,932 |
|
84.6 |
% |
— |
|
— |
|
85,932 |
|
|
SV2 |
|
|
8,114 |
|
76,676 |
|
94.0 |
|
— |
|
— |
|
76,676 |
|
94.0 |
|
— |
|
— |
|
76,676 |
|
|
Santa Clara campus |
|
|
66,564 |
|
538,615 |
|
98.9 |
|
76,885 |
|
54.4 |
|
615,500 |
|
93.4 |
|
— |
|
175,000 |
|
790,500 |
|
|
San Francisco Bay Total |
|
|
80,811 |
|
701,223 |
|
96.6 |
|
76,885 |
|
54.4 |
|
778,108 |
|
92.5 |
|
— |
|
175,000 |
|
953,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Los Angeles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Wilshire campus |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LA1* |
|
|
29,923 |
|
139,053 |
|
96.1 |
|
— |
|
— |
|
139,053 |
|
96.1 |
|
— |
|
10,352 |
|
149,405 |
|
|
LA2 |
|
|
37,680 |
|
264,512 |
|
96.1 |
|
43,345 |
|
66.0 |
|
307,857 |
|
91.8 |
|
87,263 |
|
29,770 |
|
424,890 |
|
|
LA3 |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
180,000 |
|
180,000 |
|
|
Los Angeles Total |
|
|
67,603 |
|
403,565 |
|
96.1 |
|
43,345 |
|
66.0 |
|
446,910 |
|
93.2 |
|
87,263 |
|
220,122 |
|
754,295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northern Virginia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VA1 |
|
|
29,232 |
|
198,632 |
|
90.5 |
|
3,087 |
|
— |
|
201,719 |
|
89.1 |
|
— |
|
— |
|
201,719 |
|
|
VA2 |
|
|
17,817 |
|
139,033 |
|
97.8 |
|
49,414 |
|
63.4 |
|
188,447 |
|
88.7 |
|
— |
|
— |
|
188,447 |
|
|
DC1* |
|
|
3,295 |
|
22,137 |
|
79.5 |
|
— |
|
— |
|
22,137 |
|
79.5 |
|
— |
|
— |
|
22,137 |
|
|
DC2* |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
24,563 |
|
— |
|
24,563 |
|
|
Reston Campus Expansion(3) |
|
|
1,136 |
|
48,928 |
|
100.0 |
|
— |
|
— |
|
48,928 |
|
100.0 |
|
74,759 |
|
536,313 |
|
660,000 |
|
|
Northern Virginia Total |
|
|
51,480 |
|
408,730 |
|
93.5 |
|
52,501 |
|
59.6 |
|
461,231 |
|
89.7 |
|
99,322 |
|
536,313 |
|
1,096,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NY1* |
|
|
6,068 |
|
48,404 |
|
83.2 |
|
— |
|
— |
|
48,404 |
|
83.2 |
|
— |
|
— |
|
48,404 |
|
|
NY2 |
|
|
13,150 |
|
101,742 |
|
86.9 |
|
— |
|
— |
|
101,742 |
|
86.9 |
|
18,121 |
|
116,387 |
|
236,250 |
|
|
New York Total |
|
|
19,218 |
|
150,146 |
|
85.7 |
|
— |
|
— |
|
150,146 |
|
85.7 |
|
18,121 |
|
116,387 |
|
284,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicago |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CH1 |
|
|
19,191 |
|
178,407 |
|
92.5 |
|
— |
|
— |
|
178,407 |
|
92.5 |
|
— |
|
— |
|
178,407 |
|
|
CH2(4) |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
175,000 |
|
175,000 |
|
|
Chicago Total |
|
|
19,191 |
|
178,407 |
|
92.5 |
|
— |
|
— |
|
178,407 |
|
92.5 |
|
— |
|
175,000 |
|
353,407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boston |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BO1 |
|
|
18,514 |
|
180,057 |
|
97.1 |
|
13,735 |
|
— |
|
193,792 |
|
90.3 |
|
— |
|
59,884 |
|
253,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denver |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DE1* |
|
|
2,587 |
|
9,813 |
|
100.0 |
|
4,341 |
|
53.6 |
|
14,154 |
|
85.8 |
|
15,630 |
|
— |
|
29,784 |
|
|
DE2* |
|
|
460 |
|
5,140 |
|
96.6 |
|
— |
|
— |
|
5,140 |
|
96.6 |
|
— |
|
— |
|
5,140 |
|
|
Denver Total |
|
|
3,047 |
|
14,953 |
|
98.8 |
|
4,341 |
|
53.6 |
|
19,294 |
|
88.7 |
|
15,630 |
|
— |
|
34,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miami |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MI1 |
|
|
1,501 |
|
30,176 |
|
66.2 |
|
— |
|
— |
|
30,176 |
|
66.2 |
|
— |
|
13,154 |
|
43,330 |
|
|
Total Data Center Facilities |
|
$ |
261,365 |
|
2,067,257 |
|
94.4 |
% |
190,807 |
|
54.6 |
% |
2,258,064 |
|
91.0 |
% |
220,336 |
|
1,295,860 |
|
3,774,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office & Light-Industrial |
|
|
8,125 |
|
354,721 |
|
80.1 |
|
— |
|
— |
|
354,721 |
|
80.1 |
|
— |
|
— |
|
354,721 |
|
|
Reston Office & Light-Industrial(3) |
|
|
2,101 |
|
150,375 |
|
100.0 |
|
— |
|
— |
|
150,375 |
|
100.0 |
|
— |
|
(150,375) |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Portfolio |
|
$ |
271,591 |
|
2,572,353 |
|
92.7 |
% |
190,807 |
|
54.6 |
% |
2,763,160 |
|
90.1 |
% |
220,336 |
|
1,145,485 |
|
4,128,981 |
|
* Indicates properties in which we hold a leasehold interest.
|
(1) |
On a gross basis, our total portfolio annualized rent was approximately $277.8 million as of December 31, 2017, which includes $6.2 million in operating expense reimbursements under modified gross and triple-net leases. |
|
(2) |
Includes customer leases that have commenced as of December 31, 2017. If all leases signed during the current and prior periods had commenced, the percent occupied would have been as follows: |
|
Percent Leased |
|
Stabilized |
|
Pre-Stabilized |
|
Total |
|
|
Total Data Center Facilities |
|
95.2 |
% |
60.0 |
% |
92.2 |
% |
|
Total Portfolio |
|
93.4 |
% |
60.0 |
% |
91.1 |
% |
|
(3) |
Included with our Reston Campus Expansion held for development space is 150,375 NRSF which is currently operating as office and light-industrial space. |
|
(4) |
On January 29, 2018, we acquired a two-acre land parcel located in Chicago, Illinois, with a total real estate cost of $4.5 million. We plan to build a turn-key data center on the acquired land parcel, which we refer to as CH2, upon the receipt of necessary entitlements. |
See Appendix for definitions.
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
13 |
|
Data Center Leasing Activity |
|
|
|
|
|
|
|
GAAP |
|
|
|
GAAP |
|
|
|
|
|
|
|
||
|
|
|
Leasing |
|
Number |
|
Annualized |
|
Total |
|
Annualized |
|
Rental |
|
Cash |
|
GAAP |
|
||
|
|
|
Activity |
|
of |
|
Rent |
|
Leased |
|
Rent per |
|
Churn |
|
Rent |
|
Rent |
|
||
|
|
|
Period |
|
Leases(1) |
|
($000) |
|
NRSF |
|
Leased NRSF |
|
Rate |
|
Growth |
|
Growth |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New/expansion leases commenced |
|
YTD 2017 |
|
495 |
|
$ |
32,775 |
|
136,902 |
|
$ |
239 |
(2) |
|
|
|
|
|
|
|
|
|
Q4 2017 |
|
126 |
|
|
8,219 |
|
52,221 |
|
|
157 |
|
|
|
|
|
|
|
|
|
|
Q3 2017 |
|
122 |
|
|
8,855 |
|
21,617 |
|
|
410 |
(2) |
|
|
|
|
|
|
|
|
|
Q2 2017 |
|
129 |
|
|
6,580 |
|
25,712 |
|
|
256 |
|
|
|
|
|
|
|
|
|
|
Q1 2017 |
|
118 |
|
|
9,121 |
|
37,352 |
|
|
244 |
|
|
|
|
|
|
|
|
|
|
Q4 2016 |
|
153 |
|
|
34,891 |
|
189,050 |
|
|
185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New/expansion leases signed |
|
YTD 2017 |
|
478 |
|
$ |
38,937 |
(3) |
180,415 |
|
$ |
209 |
(2)(3) |
|
|
|
|
|
|
|
|
|
Q4 2017 |
|
128 |
|
|
7,219 |
|
41,521 |
|
|
174 |
|
|
|
|
|
|
|
|
|
|
Q3 2017 |
|
103 |
|
|
10,099 |
|
40,842 |
|
|
247 |
(2) |
|
|
|
|
|
|
|
|
|
Q2 2017 |
|
119 |
|
|
11,918 |
(3) |
51,568 |
|
|
208 |
(3) |
|
|
|
|
|
|
|
|
|
Q1 2017 |
|
128 |
|
|
9,701 |
|
46,484 |
|
|
209 |
|
|
|
|
|
|
|
|
|
|
Q4 2016 |
|
127 |
|
|
7,412 |
|
35,037 |
|
|
212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewal leases signed |
|
YTD 2017 |
|
871 |
|
$ |
52,345 |
|
337,600 |
|
$ |
155 |
|
5.5 |
% |
3.4 |
% |
7.3 |
% |
|
|
|
Q4 2017 |
|
241 |
|
|
11,156 |
|
78,577 |
|
|
142 |
|
0.5 |
|
3.5 |
|
6.2 |
|
|
|
|
Q3 2017 |
|
280 |
|
|
14,370 |
|
80,818 |
|
|
178 |
|
1.4 |
|
5.5 |
|
10.9 |
|
|
|
|
Q2 2017 |
|
172 |
|
|
12,934 |
|
83,097 |
|
|
156 |
|
2.6 |
(4) |
2.6 |
|
6.5 |
|
|
|
|
Q1 2017 |
|
178 |
|
|
13,885 |
|
95,108 |
|
|
146 |
|
1.1 |
|
1.9 |
|
5.5 |
|
|
|
|
Q4 2016 |
|
173 |
|
|
9,490 |
|
51,775 |
|
|
183 |
|
1.9 |
|
2.9 |
|
5.5 |
|
|
(1) |
Number of leases represents each agreement with a customer; a lease agreement could include multiple spaces and a customer could have multiple leases. |
|
(2) |
During Q3 2017, we signed and commenced a highly dense capacity expansion at our Santa Clara campus. |
|
(3) |
GAAP annualized rent includes contractual payments related to reserved dedicated expansion space, however, such amount is excluded in calculating the GAAP annualized rent per leased NRSF rate. |
|
(4) |
During Q2 2017, $4.1 million in annualized rent associated with a previously restructured lease at our Santa Clara campus expired resulting in rental churn of 1.7%. |
|
New/Expansion Leases Signed by Deployment Size by Period |
|
|
|
Q4 2017 |
|
Q3 2017 |
|
Q2 2017 |
|
Q1 2017 |
|
Q4 2016 |
|
|||||
|
GAAP Annualized Rent ($000) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leases < 1,000 NRSF |
|
$ |
3,521 |
|
$ |
2,180 |
|
$ |
3,208 |
|
$ |
3,292 |
|
$ |
2,078 |
|
|
Leases 1,000-5,000 NRSF |
|
|
2,053 |
|
|
2,001 |
|
|
1,667 |
|
|
3,050 |
|
|
3,718 |
|
|
Leases <= 5,000 NRSF |
|
$ |
5,574 |
|
$ |
4,181 |
|
$ |
4,875 |
|
$ |
6,342 |
|
$ |
5,796 |
|
|
Leases > 5,000 NRSF |
|
|
1,645 |
|
|
5,918 |
|
|
7,043 |
|
|
3,359 |
|
|
1,616 |
|
|
Total GAAP Annualized Rent |
|
$ |
7,219 |
|
$ |
10,099 |
|
$ |
11,918 |
|
$ |
9,701 |
|
$ |
7,412 |
|
|
MRR per Cabinet Equivalent (TKD Same-Store) |
|
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
14 |
Leasing Statistics
|
Lease Distribution (total portfolio, including total data center and office and light-industrial “OLI”) |
|
|
|
|
|
|
|
Total |
|
Percentage |
|
|
|
|
Percentage |
|
|
|
|
Number |
|
Percentage |
|
Operating |
|
of Total |
|
Annualized |
|
of Total |
|
|
|
|
|
of |
|
of All |
|
NRSF of |
|
Operating |
|
Rent |
|
Annualized |
|
|
|
NRSF Under Lease |
|
Leases |
|
Leases |
|
Leases |
|
NRSF |
|
($000) |
|
Rent |
|
|
|
Unoccupied data center |
|
— |
|
— |
% |
202,904 |
|
7.3 |
% |
$ |
— |
|
— |
% |
|
Unoccupied OLI |
|
— |
|
— |
|
70,528 |
|
2.6 |
|
|
— |
|
— |
|
|
Data center NRSF: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000 or less |
|
2,057 |
|
91.0 |
|
747,916 |
|
27.1 |
|
|
126,616 |
|
46.6 |
|
|
5,001 - 10,000 |
|
36 |
|
1.6 |
|
243,635 |
|
8.8 |
|
|
36,419 |
|
13.4 |
|
|
10,001 - 25,000 |
|
22 |
|
1.0 |
|
350,400 |
|
12.7 |
|
|
44,302 |
|
16.3 |
|
|
Greater than 25,000 |
|
5 |
|
0.2 |
|
227,953 |
|
8.2 |
|
|
37,139 |
|
13.7 |
|
|
Powered shell |
|
17 |
|
0.8 |
|
485,256 |
|
17.6 |
|
|
16,889 |
|
6.2 |
|
|
OLI |
|
122 |
|
5.4 |
|
434,568 |
|
15.7 |
|
|
10,226 |
|
3.8 |
|
|
Portfolio Total |
|
2,259 |
|
100.0 |
% |
2,763,160 |
|
100.0 |
% |
$ |
271,591 |
|
100.0 |
% |
|
Lease Expirations (total portfolio, including total data center and office and light-industrial “OLI”) |
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
Annualized |
|
|||
|
|
|
Number |
|
Operating |
|
Percentage |
|
|
|
|
Percentage |
|
Annualized |
|
Annualized |
|
Rent Per |
|
|||
|
|
|
of |
|
NRSF of |
|
of Total |
|
Annualized |
|
of Total |
|
Rent Per |
|
Rent at |
|
Leased |
|
||||
|
|
|
Leases |
|
Expiring |
|
Operating |
|
Rent |
|
Annualized |
|
Leased |
|
Expiration |
|
NRSF at |
|
||||
|
Year of Lease Expiration |
|
Expiring(1) |
|
Leases |
|
NRSF |
|
($000) |
|
Rent |
|
NRSF |
|
($000)(2) |
|
Expiration |
|
||||
|
Unoccupied data center |
|
— |
|
202,904 |
|
7.3 |
% |
$ |
— |
|
— |
% |
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Unoccupied OLI |
|
— |
|
70,528 |
|
2.6 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2018 |
|
1,195 |
|
577,011 |
|
20.9 |
|
|
91,674 |
|
33.7 |
|
|
159 |
|
|
92,249 |
|
|
160 |
|
|
2019 |
|
544 |
|
417,762 |
|
15.1 |
|
|
53,387 |
|
19.6 |
|
|
128 |
|
|
55,911 |
|
|
134 |
|
|
2020 |
|
241 |
|
280,363 |
|
10.1 |
|
|
43,741 |
|
16.1 |
|
|
156 |
|
|
46,275 |
|
|
165 |
|
|
2021 |
|
63 |
|
96,088 |
|
3.5 |
|
|
11,082 |
|
4.1 |
|
|
115 |
|
|
15,796 |
|
|
164 |
|
|
2022 |
|
65 |
|
159,249 |
|
5.8 |
|
|
17,247 |
|
6.4 |
|
|
108 |
|
|
19,523 |
|
|
123 |
|
|
2023-Thereafter |
|
29 |
|
524,687 |
|
19.0 |
|
|
44,234 |
|
16.3 |
|
|
84 |
|
|
56,040 |
|
|
107 |
|
|
OLI (3) |
|
122 |
|
434,568 |
|
15.7 |
|
|
10,226 |
|
3.8 |
|
|
24 |
|
|
10,799 |
|
|
25 |
|
|
Portfolio Total / Weighted Average |
|
2,259 |
|
2,763,160 |
|
100.0 |
% |
$ |
271,591 |
|
100.0 |
% |
$ |
109 |
|
$ |
296,593 |
|
$ |
119 |
|
|
(1) |
Includes leases that upon expiration will automatically be renewed, primarily on a year-to-year basis. Number of leases represents each agreement with a customer; a lease agreement could include multiple spaces and a customer could have multiple leases. |
|
(2) |
Represents the final monthly contractual rent under existing customer leases as of December 31, 2017, multiplied by 12. This amount reflects total annualized base rent before any one-time or non-recurring rent abatements and excludes operating expense reimbursements, power revenue and interconnection revenue. Leases expiring during 2018 include annualized rent of $16.8 million associated with lease terms currently on a month-to-month basis. |
|
(3) |
The office and light-industrial leases are scheduled to expire as follows: |
|
|
|
NRSF of |
|
Annualized |
|
|
|
|
|
Expiring |
|
Rent |
|
|
|
Year |
|
Leases |
|
($000) |
|
|
|
2018 |
|
62,149 |
|
$ |
1,439 |
|
|
2019 |
|
48,729 |
|
|
1,145 |
|
|
2020 |
|
73,255 |
|
|
1,388 |
|
|
2021 |
|
30,671 |
|
|
935 |
|
|
2022 |
|
68,971 |
|
|
1,177 |
|
|
2023-Thereafter |
|
150,793 |
|
|
4,142 |
|
|
Total OLI |
|
434,568 |
|
$ |
10,226 |
|
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
15 |
Geographic and Vertical Diversification
|
Geographical Diversification |
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total Data |
|
|
|
Metropolitan Market |
|
Center Annualized Rent |
||
|
|
San Francisco Bay |
|
30.9 |
% |
|
|
|
Los Angeles |
|
25.9 |
|
|
|
|
Northern Virginia |
|
19.7 |
|
|
|
|
New York |
|
7.3 |
|
|
|
|
Chicago |
|
7.3 |
|
|
|
|
Boston |
|
7.1 |
|
|
|
|
Denver |
|
1.2 |
|
|
|
|
Miami |
|
0.6 |
|
|
|
|
Total |
|
100.0 |
% |
|
|
Vertical Diversification |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total Data |
||
|
|
Vertical |
|
Center Annualized Rent |
||
|
|
Enterprise |
|
51.0 |
% |
|
|
|
Cloud |
|
28.4 |
|
|
|
|
Network |
|
20.6 |
|
|
|
|
Total |
|
100.0 |
% |
|
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
16 |
|
10 Largest Customers (total portfolio, including data center and office and light-industrial) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Percentage |
|
|
|
Percentage |
|
Average |
|
|
|
|
|
|
|
Number |
|
Total |
|
of Total |
|
Annualized |
|
of Total |
|
Remaining |
|
|
|
|
|
|
|
of |
|
Occupied |
|
Operating |
|
Rent |
|
Annualized |
|
Lease Term in |
|
|
|
|
CoreSite Vertical |
Customer Industry |
|
Locations |
|
NRSF |
|
NRSF(1) |
|
($000) |
|
Rent(2) |
|
Months(3) |
|
|
|
1 |
Cloud |
Public Cloud |
|
5 |
|
86,892 |
|
3.2 |
% |
$ |
17,438 |
|
6.4 |
% |
99 |
|
|
2 |
Cloud |
Public Cloud |
|
11 |
|
293,085 |
|
10.6 |
|
|
16,295 |
|
6.0 |
|
55 |
|
|
3 |
Enterprise |
Travel / Hospitality |
|
3 |
|
103,959 |
|
3.8 |
|
|
15,257 |
|
5.6 |
|
25 |
|
|
4 |
Cloud |
Private Cloud |
|
2 |
|
115,811 |
|
4.2 |
|
|
10,903 |
|
4.0 |
|
62 |
|
|
5 |
Enterprise |
SI & MSP |
|
3 |
|
63,671 |
|
2.3 |
|
|
8,622 |
|
3.2 |
|
20 |
|
|
6 |
Enterprise |
SI & MSP |
|
3 |
|
16,421 |
|
0.6 |
|
|
5,951 |
|
2.2 |
|
11 |
|
|
7 |
Enterprise |
SI & MSP |
|
2 |
|
23,311 |
|
0.8 |
|
|
5,714 |
|
2.1 |
|
23 |
|
|
8 |
Network |
Global Carrier |
|
6 |
|
28,002 |
|
1.0 |
|
|
5,023 |
|
1.8 |
|
16 |
|
|
9 |
Cloud |
Software as a Service |
|
1 |
|
30,618 |
|
1.1 |
|
|
4,466 |
|
1.7 |
|
10 |
|
|
10 |
Enterprise |
Digital Content |
|
4 |
|
33,327 |
|
1.2 |
|
|
4,192 |
|
1.6 |
|
23 |
|
|
|
Total/Weighted Average |
|
|
|
|
795,097 |
|
28.8 |
% |
$ |
93,861 |
|
34.6 |
% |
46 |
|
|
(1) |
Represents the customer’s total occupied square feet divided by the total operating NRSF in the portfolio as of December 31, 2017. |
|
(2) |
Represents the customer’s total annualized rent divided by the total annualized rent in the portfolio as of December 31, 2017. |
|
(3) |
Weighted average based on percentage of total annualized rent expiring calculated as of December 31, 2017. |
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
17 |
Capital Expenditures and Completed
(in thousands, except NRSF and cost per NRSF data)
|
Capital Expenditures and Repairs and Maintenance |
|
|
|
Three Months Ended |
|
|||||||||||||
|
|
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
|||||
|
|
|
2017 |
|
2017 |
|
2017 |
|
2017 |
|
2016 |
|
|||||
|
Data center expansion(1) |
|
$ |
45,518 |
|
$ |
46,282 |
|
$ |
29,966 |
|
$ |
22,644 |
|
$ |
103,959 |
|
|
Non-recurring investments(2) |
|
|
2,679 |
|
|
2,960 |
|
|
2,724 |
|
|
3,301 |
|
|
1,964 |
|
|
Tenant improvements |
|
|
1,466 |
|
|
1,252 |
|
|
2,198 |
|
|
1,848 |
|
|
2,314 |
|
|
Recurring capital expenditures(3) |
|
|
10,949 |
|
|
3,219 |
|
|
6,975 |
|
|
2,582 |
|
|
2,063 |
|
|
Total capital expenditures |
|
$ |
60,612 |
|
$ |
53,713 |
|
$ |
41,863 |
|
$ |
30,375 |
|
$ |
110,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repairs and maintenance expense(4) |
|
$ |
3,682 |
|
$ |
4,476 |
|
$ |
3,508 |
|
$ |
3,109 |
|
$ |
3,330 |
|
|
(1) |
Data center expansion capital expenditures include new data center construction, development projects adding capacity to existing data centers and other revenue generating investments. Data center expansion also includes investment of Deferred Expansion Capital. During the three months ended December 31, 2016, we incurred $65.0 million to acquire the Reston Campus Expansion, a 21.75-acre light-industrial / flex office park suitable for data center development. During the three months ended September 30, 2017, we incurred $12.2 million to acquire a two acre land parcel adjacent to our existing Santa Clara campus, which we refer to as SV8. |
|
(2) |
Non-recurring investments include upgrades to existing data center or office space and company-wide improvements that are ancillary to revenue generation such as internal system development and system-wide security upgrades, which have a future economic benefit. |
|
(3) |
Recurring capital expenditures include required equipment upgrades within our operating portfolio, which have a future economic benefit. During the three months ended December 31, 2017, September 30, 2017, and June 30, 2017, we incurred $8.6 million, $0.3 million, and $3.0 million, respectively, or $11.9 million for the year ended December 31, 2017, associated with replacing our chiller plants at LA2 that we expect to generate a significant return on investment. |
|
(4) |
Repairs and maintenance expense is classified within property operating and maintenance expense in the consolidated statement of operations. These expenditures represent recurring maintenance contracts and repairs to operating equipment necessary to maintain current operations. |
|
Completed Pre-Stabilized Projects |
|
|
|
Metropolitan |
|
|
|
|
|
|
|
|
Cost Per |
|
Percent |
|
Percent |
|
|
|
Projects/Facilities |
|
Market |
|
Completion |
|
NRSF |
|
Cost(1) |
|
NRSF |
|
Leased(2) |
|
Occupied |
|
||
|
VA2 Phase 3 |
|
Northern Virginia |
|
Q1 2016 |
|
24,974 |
|
$ |
12,286 |
|
$ |
492 |
|
83.2 |
% |
80.9 |
% |
|
LA2 |
|
Los Angeles |
|
Q2 2016 |
|
43,345 |
|
|
15,434 |
|
|
356 |
|
77.5 |
|
66.0 |
|
|
VA2 Phase 4 |
|
Northern Virginia |
|
Q2 2016 |
|
24,440 |
|
|
13,706 |
|
|
561 |
|
52.0 |
|
45.5 |
|
|
SV7(3) |
|
San Francisco Bay |
|
Q4 2016 |
|
76,885 |
|
|
58,272 |
|
|
758 |
|
58.3 |
|
54.4 |
|
|
DE1 |
|
Denver |
|
Q3 2017 |
|
4,341 |
|
|
6,206 |
|
|
1,430 |
|
60.6 |
|
53.6 |
|
|
BO1 |
|
Boston |
|
Q4 2017 |
|
13,735 |
|
|
7,000 |
|
|
510 |
|
— |
|
— |
|
|
VA1 |
|
Northern Virginia |
|
Q4 2017 |
|
3,087 |
|
|
1,263 |
|
|
409 |
|
— |
|
— |
|
|
Total completed pre-stabilized |
|
|
|
|
|
190,807 |
|
$ |
114,167 |
|
$ |
598 |
|
60.0 |
% |
54.6 |
% |
|
(1) |
Cost includes capital expenditures related to the specific project / phase and, for VA2, also includes allocations of capital expenditures related to land and building shell that were incurred during the first phase of each overall project. |
|
(2) |
Includes customer leases that have been signed as of December 31, 2017, but have not commenced. The percent leased is determined based on leased NRSF as a proportion of total pre-stabilized NRSF. |
|
(3) |
During Q4 2016, we completed development of SV7, which is comprised of three floors totaling 226,911 NRSF. Two of the three floors are 100% leased and occupied and are included in our stabilized operating NRSF in the Operating Properties table and the remaining floor totaling 76,885 NRSF is pre-stabilized as of December 31, 2017. |
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
18 |
(in thousands, except NRSF)
|
|
|
Under Construction |
|
|
Held for Development(1) |
|||||||||||||||
|
|
|
|
|
|
|
Costs |
|
|
|
|
Estimated |
|||||||||
|
|
|
Estimated |
|
|
|
Incurred to- |
|
Estimated |
|
Percent |
|
|
|
|
|
|
Power |
|||
|
Projects/Facilities |
|
Completion |
|
NRSF |
|
Date |
|
Total |
|
Leased |
|
|
NRSF |
|
Total Cost |
|
(Megawatts) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data center expansion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
BO1 |
|
— |
|
— |
|
$ |
— |
|
$ |
— |
|
— |
% |
|
59,884 |
|
$ |
32,200 |
|
4.5 |
|
DC2 |
|
Q3 2018 |
|
24,563 |
|
|
4,405 |
|
|
17,400 |
|
— |
|
|
— |
|
|
— |
|
— |
|
DE1 |
|
Q3 2018 |
|
15,630 |
|
|
127 |
|
|
7,500 |
|
— |
|
|
— |
|
|
— |
|
— |
|
LA1 |
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
10,352 |
|
|
1,250 |
|
0.5 |
|
LA2(2) |
|
Q1 2018 |
|
47,338 |
|
|
43,647 |
|
|
45,200 |
|
78.6 |
|
|
29,770 |
|
|
10,000 |
|
3.0 |
|
LA2 |
|
Q1 2018 |
|
39,925 |
|
|
6,232 |
|
|
15,000 |
|
— |
|
|
— |
|
|
— |
|
— |
|
MI1 |
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
13,154 |
|
|
7,500 |
|
1.0 |
|
NY2 Phase 3-4 |
|
Q3 2018 |
|
18,121 |
|
|
169 |
|
|
6,000 |
|
— |
|
|
69,176 |
|
|
51,000 |
|
7.0 |
|
NY2 Phase 5 |
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
47,211 |
|
|
35,000 |
|
5.0 |
|
Total |
|
|
|
145,577 |
|
$ |
54,580 |
|
$ |
91,100 |
|
25.6 |
% |
|
229,547 |
|
$ |
136,950 |
|
21.0 |
|
Deferred expansion capital |
|
— |
|
|
11,669 |
|
|
16,000 |
|
— |
|
|
— |
|
|
25,000 - 35,000 |
|
— |
||
|
Total data center expansion |
|
145,577 |
|
$ |
66,249 |
|
$ |
107,100 |
|
25.6 |
% |
|
229,547 |
|
$ |
161,950 - 171,950 |
|
21.0 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
CH2(3) |
|
— |
|
— |
|
$ |
— |
|
$ |
— |
|
— |
% |
|
175,000 |
|
$ |
190,000 - 210,000 |
|
18.0 |
|
LA3 |
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
180,000 |
|
|
190,000 - 210,000 |
|
18.0 |
|
SV8 |
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
175,000 |
|
|
190,000 - 210,000 |
|
18.0 |
|
VA3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phase 1A(4) |
|
Q1/Q2 2018 |
|
24,922 |
|
|
16,523 |
|
|
22,300 |
|
— |
|
|
— |
|
|
— |
|
— |
|
Phase 1B & C(5) |
|
Q4 2018 |
|
49,837 |
|
|
27,445 |
|
|
100,200 |
|
— |
|
|
49,837 |
|
|
25,000 - 35,000 |
|
6.0 |
|
Future Phases(6) |
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
486,476 |
|
|
320,000 - 400,000 |
|
48.0 |
|
Total new development |
|
74,759 |
|
$ |
43,968 |
|
$ |
122,500 |
|
— |
% |
|
1,066,313 |
|
$ |
915,000 - 1,065,000 |
|
108.0 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total development(7) |
|
220,336 |
|
$ |
110,217 |
|
$ |
229,600 |
|
16.9 |
% |
|
1,295,860 |
|
$ |
1,076,950 - 1,236,950 |
|
129.0 |
||
|
(1) |
These estimates are based on our current construction plans and expectations regarding entitlements. These estimates are subject to change based on current economic conditions, final zoning approvals, and the supply and demand dynamics of the market. |
|
(2) |
Includes a portion of the infrastructure costs that will support later phases of the development. |
|
(3) |
On January 29, 2018, we acquired a two-acre land parcel located in Chicago, Illinois, with a total real estate cost of $4.5 million. We plan to build a turn-key data center on the acquired land parcel, which we refer to as CH2, upon the receipt of necessary entitlements. |
|
(4) |
Includes a 24,922 NRSF computer room in addition to approximately 20,000 NRSF of office, meeting, and storage space built into an existing building. |
|
(5) |
As part of VA3 Phase 1B, we will build the shell of an 80,000 NRSF, 12 megawatt building, and a 77,000 NRSF centralized infrastructure building which will serve the entire VA3 property. Upon completion of VA3 Phase 1B, we will deliver 6 megawatts and 49,837 TKD NRSF. The centralized infrastructure building represents approximately $24 million of the estimated Phase 1B cost. The full construction of the 12 megawatt TKD building (Phase 1B and Phase 1C) will cost approximately $1,306 per NRSF, of which 6 megawatts is planned to be delivered with Phase 1C. |
|
(6) |
The Reston Campus Expansion project is estimated to deliver 611,000 NRSF of incremental data center capacity (of which 74,759 NRSF is under construction) across multiple phases with new buildings and as existing light-industrial / flex office leases expire and customers vacate. Based on our entitlement application, we believe we may be able to build an additional 286,000 NRSF for a total of 897,000 NRSF of incremental data center capacity. These estimates are subject to change based on current economic conditions, final zoning approvals, and the supply and demand dynamics of the market. The chart assumes the minimum expected zoning entitlement. |
|
(7) |
In addition to new development and incremental capacity in existing core and shell buildings, we have available acreage we own adjacent to our existing NY2 building in the form of an existing parking lot. By utilizing this land, we believe we can build approximately 100,000 NRSF of data center capacity in Secaucus, New Jersey, upon receipt of necessary entitlements. |
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
19 |
Market Capitalization and Debt Summary
(in thousands, except per share data)
|
Market Capitalization |
|
|
|
Shares or |
|
Market Price / |
|
|
|
|
|
|
|
|
Equivalents |
|
Liquidation Value as of |
|
Market Value |
|
||
|
|
|
Outstanding |
|
December 31, 2017 |
|
Equivalents |
|
||
|
Common shares |
|
34,241 |
|
$ |
113.90 |
|
$ |
3,900,029 |
|
|
Operating partnership units |
|
13,836 |
|
|
113.90 |
|
|
1,575,959 |
|
|
Total equity |
|
|
|
|
|
|
|
5,475,988 |
|
|
Total principal debt outstanding |
|
|
|
|
|
|
|
944,500 |
|
|
Total enterprise value |
|
|
|
|
|
|
$ |
6,420,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net principal debt to enterprise value |
|
|
|
|
|
|
|
14.6 |
% |
|
Debt Summary(1) |
|
|
|
|
|
|
|
Outstanding as of: |
|
||||
|
|
|
|
|
Maturity |
|
December 31, |
|
December 31, |
|
||
|
Instrument |
|
Rate |
|
Date(2) |
|
2017 |
|
2016 |
|
||
|
Revolving credit facility (3) |
|
3.11 |
% |
6/24/2019 |
|
$ |
169,500 |
|
$ |
194,000 |
|
|
2020 Senior unsecured term loan (4) |
|
3.00 |
|
6/24/2020 |
|
|
150,000 |
|
|
150,000 |
|
|
2021 Senior unsecured term loan (3) |
|
3.06 |
|
2/2/2021 |
|
|
100,000 |
|
|
100,000 |
|
|
2022 Senior unsecured term loan (5) |
|
3.04 |
|
4/19/2022 |
|
|
200,000 |
|
|
100,000 |
|
|
2023 Senior unsecured notes |
|
4.19 |
|
6/15/2023 |
|
|
150,000 |
|
|
150,000 |
|
|
2024 Senior unsecured notes |
|
3.91 |
|
4/20/2024 |
|
|
175,000 |
|
|
— |
|
|
Total principal debt outstanding |
|
|
|
|
|
|
944,500 |
|
|
694,000 |
|
|
Unamortized deferred financing costs |
|
|
|
|
|
|
(4,930) |
|
|
(3,550) |
|
|
Total debt |
|
|
|
|
|
$ |
939,570 |
|
$ |
690,450 |
|
|
Weighted average interest rate |
|
3.39 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock (redeemed on December 12, 2017)(6) |
|
7.25 |
% |
N/A |
|
$ |
— |
|
$ |
115,000 |
|
|
Total debt and preferred stock |
|
|
|
|
|
$ |
939,570 |
|
$ |
805,450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating rate vs. fixed rate debt |
|
|
|
|
|
|
52% / 48% |
|
|
53% / 47% |
|
|
(1) |
See the filed Form 10-K for information on specific debt instruments. |
|
(2) |
The revolving credit facility agreement includes a one-time extension option, which, if exercised, would extend the maturity date to June 24, 2020. |
|
(3) |
The revolving credit facility and 2021 senior unsecured term loan interest rates are based on 1-month LIBOR at December 31, 2017, plus applicable spread. |
|
(4) |
Represents the effective interest rate as a result of the interest rate swap associated with $75 million in 1-month LIBOR variable rate debt and $75 million unhedged debt based on 1-month LIBOR plus applicable spread. |
|
(5) |
Represents the effective interest rate as a result of the interest rate swap associated with $50 million in 1-month LIBOR variable rate debt and $150 million unhedged debt based on 1-month LIBOR plus applicable spread. |
|
(6) |
On December 12, 2017, we redeemed all 4,600,000 shares of our 7.25% Series A cumulative redeemable preferred stock for $25.00 per share, plus all accrued and unpaid dividends in an amount equal to $0.292014 per share, for a total payment of $25.292014 per share. |
|
Debt Maturities |
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
20 |
Interest Summary and Debt Covenants
(in thousands)
|
Interest Expense Components |
|
|
|
Three Months Ended |
|
Year Ended |
|
|||||||||||
|
|
|
December 31 |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|||||
|
|
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|||||
|
Interest expense and fees |
|
$ |
7,241 |
|
$ |
6,840 |
|
$ |
4,909 |
|
$ |
25,753 |
|
$ |
15,365 |
|
|
Amortization of deferred financing costs |
|
|
445 |
|
|
445 |
|
|
369 |
|
|
1,676 |
|
|
1,333 |
|
|
Capitalized interest |
|
|
(1,051) |
|
|
(838) |
|
|
(580) |
|
|
(3,282) |
|
|
(4,121) |
|
|
Total interest expense |
|
$ |
6,635 |
|
$ |
6,447 |
|
$ |
4,698 |
|
$ |
24,147 |
|
$ |
12,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent capitalized |
|
|
13.7 |
% |
|
11.5 |
% |
|
11.0 |
% |
|
12.0 |
% |
|
24.7 |
% |
|
Debt Covenants |
|
|
|
Revolving Credit Facility and Senior Unsecured Term Loans and Notes |
|
||||||||||||||||
|
|
|
|
|
December 31, |
|
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
|||||
|
|
|
Required Compliance |
|
2017 |
|
|
2017 |
|
2017 |
|
2017 |
|
2016 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed charge coverage ratio |
|
Greater than 1.70x |
|
|
6.5 |
x |
|
|
7.4 |
x |
|
7.6 |
x |
|
8.6 |
x |
|
8.0 |
x |
|
Total indebtedness to gross asset value |
|
Less than 60% |
|
|
26.7 |
% |
|
|
23.8 |
% |
|
23.6 |
% |
|
22.4 |
% |
|
23.3 |
% |
|
Secured debt to gross asset value |
|
Less than 40% |
|
|
— |
% |
|
|
— |
% |
|
— |
% |
|
— |
% |
|
— |
% |
|
Unhedged variable rate debt to gross asset value |
|
Less than 30% |
|
|
13.9 |
% |
|
|
10.3 |
% |
|
9.8 |
% |
|
12.2 |
% |
|
12.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving credit facility availability |
|
|
|
$ |
350,000 |
|
|
$ |
350,000 |
|
$ |
350,000 |
|
$ |
350,000 |
|
$ |
350,000 |
|
|
Borrowings outstanding |
|
|
|
|
(169,500) |
|
|
|
(19,000) |
|
|
— |
|
|
(223,000) |
|
|
(194,000) |
|
|
Outstanding letters of credit |
|
|
|
|
(4,879) |
|
|
|
(3,480) |
|
|
(4,480) |
|
|
(4,480) |
|
|
(4,480) |
|
|
Current availability |
|
|
|
$ |
175,621 |
|
|
$ |
327,520 |
|
$ |
345,520 |
|
$ |
122,520 |
|
$ |
151,520 |
|
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
21 |
Components of Net Asset Value (NAV)
(in thousands)
|
Cash Net Operating Income |
|
Reconciliation of Net Operating Income (NOI) |
|
Q4 2017 |
|
Annualized |
||
|
Operating Income |
|
$ |
33,667 |
|
$ |
134,668 |
|
Adjustments: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
32,629 |
|
|
130,516 |
|
General and administrative (includes litigation expenses) |
|
|
10,157 |
|
|
40,628 |
|
Transaction costs |
|
|
37 |
|
|
148 |
|
Net Operating Income |
|
$ |
76,490 |
|
$ |
305,960 |
|
|
|
|
|
|
|
|
|
Cash Net Operating Income (Cash NOI) |
|
|
|
|
|
|
|
Net Operating Income |
|
$ |
76,490 |
|
$ |
305,960 |
|
Adjustments: |
|
|
|
|
|
|
|
Straight-line rent |
|
|
(677) |
|
|
(2,708) |
|
Amortization of above and below-market leases |
|
|
(170) |
|
|
(680) |
|
Cash NOI |
|
$ |
75,643 |
|
$ |
302,572 |
|
|
|
|
|
|
|
|
|
Cash NOI with backlog (91.1% leased)(1) |
|
$ |
78,266 |
|
$ |
313,064 |
|
Cash stabilized NOI (93% leased) |
|
$ |
79,898 |
|
$ |
319,592 |
|
Development Projects |
|
Data Center Projects Under Construction |
|
|
|
|
|
|
|
TKD construction in progress(2) |
|
$ |
98,548 |
|
|
|
|
Remaining spend(2) |
|
|
115,052 |
|
|
|
|
Total |
|
$ |
213,600 |
|
|
|
|
|
|
|
|
|
|
|
|
Targeted annual yields |
|
|
12 - 16 |
% |
|
|
|
Annualized pro forma NOI range |
|
$ |
25,600 - 34,200 |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Expansion Capital in progress |
|
$ |
11,669 |
|
|
|
|
Remaining spend(3) |
|
|
4,331 |
|
|
|
|
Total |
|
$ |
16,000 |
|
|
|
|
Other Assets and Liabilities |
|
Other Assets |
|
|
|
|
|
|
|
Remaining construction in progress(4) |
|
$ |
52,686 |
|
|
|
|
Cash and cash equivalents |
|
|
5,247 |
|
|
|
|
Accounts and other receivables |
|
|
28,875 |
|
|
|
|
Other tangible assets |
|
|
31,009 |
|
|
|
|
Total other assets |
|
$ |
117,817 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Principal debt |
|
$ |
944,500 |
|
|
|
|
Accounts payable, accrued and other liabilities |
|
|
112,037 |
|
|
|
|
Accrued dividends and distributions |
|
|
48,976 |
|
|
|
|
Total liabilities |
|
$ |
1,105,513 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares and units - diluted |
|
|
47,981 |
|
|
|
|
(1) |
Cash NOI with backlog is adjusted to include one quarter of the cash backlog as of December 31, 2017, less any leasing of currently occupied NRSF and data center projects under development. |
|
(2) |
Does not include spend associated with leasing commissions. See page 19 for further breakdown of data center projects under construction. |
|
(3) |
Does not include spend associated with future Deferred Expansion Capital. |
|
(4) |
Represents the book value of in-progress capital projects, including land and shell building, of future data center expansion, non-recurring investments, tenant improvements and recurring capital expenditures. |
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
22 |
(in thousands, except per share data)
The annual guidance provided below represents forward-looking projections, which are based on current economic conditions, internal assumptions about our existing customer base and the supply and demand dynamics of the markets in which we operate. Please refer to the press release for additional information on forward-looking statements.
|
Projected per share and OP unit information: |
|
|
|
|
2018 |
|
|
|
|
|
|
|
|
Implied |
|
|
|
|
|
Low |
|
High |
|
Mid |
|
|
2017 |
|
Growth(1) |
|
||||
|
Net income attributable to common shares |
|
$ |
2.15 |
|
$ |
2.27 |
|
$ |
2.21 |
|
|
$ |
1.84 |
|
20.4 |
% |
|
Real estate depreciation and amortization |
|
|
2.77 |
|
|
2.77 |
|
|
2.77 |
|
|
|
2.77 |
|
|
|
|
Original issuance costs associated with redeemed preferred stock |
|
|
— |
|
|
— |
|
|
— |
|
|
|
(0.09) |
|
|
|
|
FFO , as adjusted |
|
$ |
4.92 |
|
$ |
5.04 |
|
$ |
4.98 |
|
|
$ |
4.52 |
|
10.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected operating results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues |
|
$ |
535,000 |
|
$ |
545,000 |
|
$ |
540,000 |
|
|
$ |
481,821 |
|
12.1 |
% |
|
General and administrative expenses |
|
|
38,000 |
|
|
40,000 |
|
|
39,000 |
|
|
|
37,548 |
|
3.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
103,743 |
|
$ |
109,527 |
|
$ |
106,635 |
|
|
|
100,491 |
|
6.1 |
% |
|
Depreciation and amortization |
|
|
137,847 |
|
|
137,847 |
|
|
137,847 |
|
|
|
129,251 |
|
6.7 |
% |
|
Other adjustments(2) |
|
|
49,410 |
|
|
48,626 |
|
|
49,018 |
|
|
|
33,464 |
|
46.5 |
% |
|
Adjusted EBITDA |
|
$ |
291,000 |
|
$ |
296,000 |
|
$ |
293,500 |
|
|
|
263,206 |
|
11.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guidance drivers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual rental churn rate |
|
|
6.0 |
% |
|
8.0 |
% |
|
7.0 |
% |
|
|
5.5 |
% |
|
|
|
Cash rent growth on data center renewals |
|
|
3.0 |
% |
|
5.0 |
% |
|
4.0 |
% |
|
|
3.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data center expansion |
|
$ |
228,000 |
|
$ |
263,000 |
|
$ |
245,500 |
|
|
$ |
144,410 |
|
|
|
|
Non-recurring investments |
|
|
7,500 |
|
|
12,500 |
|
|
10,000 |
|
|
|
11,664 |
|
|
|
|
Tenant improvements |
|
|
2,000 |
|
|
7,000 |
|
|
4,500 |
|
|
|
6,764 |
|
|
|
|
Recurring capital expenditures |
|
|
12,500 |
|
|
17,500 |
|
|
15,000 |
|
|
|
23,725 |
|
|
|
|
Total capital expenditures |
|
$ |
250,000 |
|
$ |
300,000 |
|
$ |
275,000 |
|
|
$ |
186,563 |
|
|
|
|
(1) |
Implied growth is based on the midpoint of 2018 guidance. |
|
(2) |
Refer to the appendix for the adjustments made to net income to calculate adjusted EBITDA. |
The following assumptions are included in CoreSite’s 2018 guidance:
|
1. |
Interconnection revenue growth – CoreSite expects the 2018 growth rate to be between 11% and 14%, correlating to interconnection revenue in the range of $69-$71 million. |
|
2. |
Adjusted EBITDA margin – CoreSite’s guidance for adjusted EBITDA implies adjusted EBITDA margin of approximately 54.4% based on the midpoint of guidance, and revenue flow-through to adjusted EBITDA of approximately 52%. |
|
3. |
New accounting standards – CoreSite’s 2018 guidance of FFO per share reflects the company’s adoption of two new accounting standards – revenue recognition and lease accounting, which are cumulatively expected to reduce FFO per share by approximately $0.06, inclusive of the impact from accelerated straight-line rent expense. |
|
4. |
Financing transaction – CoreSite expects to add incremental debt financing, the majority of which is expected to be completed during the first half of 2018, to fund its development pipeline. Timing, pricing, and type of debt instrument are dependent on market conditions and CoreSite has targeted a total issuance amount of approximately $225 million-$300 million. |
|
5. |
GAAP backlog – CoreSite’s projected annualized GAAP rent from signed but not yet commenced leases was $13.2 million as of December 31, 2017. CoreSite expects substantially all of the GAAP backlog to commence during the first half of 2018. |
|
6. |
Capitalized interest – CoreSite expects the percentage of interest capitalized in 2018 to be in the range of 12%-18%, slightly elevated compared to the 2017 level based on CoreSite’s expectations regarding its development pipeline. |
|
7. |
Commencements – CoreSite expects lease commencements of approximately $40 million in annualized GAAP rent in 2018. |
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
23 |
Definitions
This document includes certain non-GAAP financial measures that management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other Real Estate Investment Trusts (“REITs”) and therefore may not be comparable. The non-GAAP measures should not be considered an alternative to net income as an indicator of our performance and should be considered only a supplement to net income, cash flows from operating, investing or financing activities as measures of profitability and/or liquidity, computed in accordance with GAAP.
Adjusted Funds From Operations “AFFO” is a non-GAAP measure that is used as a supplemental
operating measure specifically for comparing year over year ability to fund dividend distribution from operating activities. We use AFFO as a basis to address our ability to fund our dividend payments. AFFO is calculated by adding to or subtracting from FFO:
|
1. |
Plus: Amortization of deferred financing costs |
|
2. |
Plus: Non-cash compensation |
|
3. |
Plus: Non-real estate depreciation |
|
4. |
Plus: Impairment charges |
|
5. |
Plus: Below market debt amortization |
|
6. |
Plus: Original issuance costs associated with redeemed preferred stock |
|
7. |
Less: Straight line rents adjustment |
|
8. |
Less: Amortization of above and below market leases |
|
9. |
Less: Recurring capital expenditures |
|
10. |
Less: Tenant improvements |
|
11. |
Less: Capitalized leasing costs |
Capitalized leasing costs consist of commissions payable to third parties, including brokers, leasing agents, referral agents, and internal sales commissions payable to employees. Capitalized leasing costs are accrued and deducted from AFFO generally in the period the lease is executed. Leasing costs are generally paid a) to third party brokers and internal sales employees 50% at customer lease signing and 50% at lease commencement and b) to referral and leasing agents monthly over the lease term as and to the extent we receive payment from the end customer.
AFFO is not intended to represent cash flow from operations for the period, and is only intended to provide an additional measure of performance by adjusting for the effect of certain items noted above included in FFO. Other REITs widely report AFFO, however, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.
Annualized Rent
Monthly contractual rent under existing commenced customer leases as of quarter-end, multiplied by 12. This amount reflects total annualized base rent before any one-time or non-recurring rent abatements and excludes power revenue, interconnection revenue and operating expense reimbursement.
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
24 |
Appendix
Data Center Leasing Metrics
|
· |
Rental Churn Rate – represents data center leases which are not renewed or are terminated during the period. Rental churn is calculated based on the annualized rent of data center expired leases terminated in the period, compared with total data center annualized rent at the beginning of the period. |
|
· |
Cash and GAAP Rent Growth – represents the increase in rental rates on renewed data center leases signed during the period, as compared with the previous rental rates for the same space. Cash and GAAP rent growth are calculated based on annualized rent from the renewed data center lease compared to annualized rent from the expired data center lease. |
Data Center Net Rentable Square Feet (“NRSF”)
Both occupied and available data center NRSF includes a factor based on management’s estimate of space to account for a customer’s proportionate share of required data center support space (such as the mechanical, telecommunications and utility rooms) and building common areas, which may be updated on a periodic basis to reflect the most current build-out of our properties.
Deferred Expansion Capital
As we construct data center capacity, we work to optimize both the amount of the capital we deploy on power and cooling infrastructure and the timing of that capital deployment; as such, we generally construct our power and cooling infrastructure supporting our data center NRSF based on our estimate of customer utilization. This practice can result in our investment at a later time in Deferred Expansion Capital. We define Deferred Expansion Capital as our estimate of the incremental capital we may invest in the future to add power or cooling infrastructure to support existing or anticipated future customer utilization of NRSF within our operating data centers. From time to time, we may revise our estimate of Deferred Expansion Capital as well as the potential time period during which we may invest it. See the Data Center Projects Under Construction and Held for Development tables for more detail.
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA –
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We calculate adjusted EBITDA by adding our non-cash compensation expense, transaction costs from unsuccessful deals and business combinations and litigation expense to EBITDA as well as adjusting for the impact of impairment charges, gains or losses from sales of property and undepreciated land and gains or losses on early extinguishment of debt. Management uses EBITDA and adjusted EBITDA as indicators of our ability to incur and service debt. In addition, we consider EBITDA and adjusted EBITDA to be appropriate supplemental measures of our performance because they eliminate depreciation and interest, which permits investors to view income from operations without the impact of non-cash depreciation or the cost of debt. However, because EBITDA and adjusted EBITDA are calculated before recurring cash charges including interest expense and taxes, and are not adjusted for capital expenditures or other recurring cash requirements of our business, their utilization as a cash flow measurement is limited.
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
25 |
Appendix
Funds From Operations (“FFO”) is a supplemental measure of our performance which should be considered
along with, but not as an alternative to, net income and cash provided by operating activities as a measure of operating performance and liquidity. We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property and undepreciated land and impairment write-downs of depreciable real estate, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. FFO attributable to common shares and units represents FFO less preferred stock dividends declared during the period.
Our management uses FFO as a supplemental performance measure because, by excluding real estate related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs.
We offer this measure because we recognize that investors use FFO as a basis to compare our operating performance with that of other REITs. However, the utility of FFO as a measure of our performance is limited because FFO excludes 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 capitalized leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our financial condition and results from operations. FFO is a non-GAAP measure and should not be considered a measure of liquidity, an alternative to net income, cash provided by operating activities or any other performance measure determined in accordance with GAAP, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. In addition, our calculations of FFO are not necessarily comparable to FFO as calculated by other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us. Investors in our securities should not rely on these measures as a substitute for any GAAP measure, including net income.
Monthly Recurring Revenue per Cabinet Equivalent
Represents the turn-key monthly recurring colocation revenue (“MRR”) per cabinet equivalent billed. We define MRR as recurring contractual revenue under existing commenced customer leases. MRR per cabinet equivalent is calculated as (current quarter MRR/3) divided by ((quarter-end cabinet equivalents billed plus prior quarter-end cabinet equivalents billed)/2). Cabinet equivalents are calculated as cage-usable square feet (turn-key leased NRSF/NRSF factor) divided by 25.
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
26 |
Appendix
Net Operating Income (“NOI”) and Cash NOI – NOI, and cash NOI are supplemental measures for the operating performance of the company’s portfolio. NOI is operating revenues less operating expenses adjusted for items such as depreciation and amortization, general and administrative expenses, transaction costs from unsuccessful deals and business combinations and litigation expenses. Cash NOI is NOI less straight-line rents and above and below market rent amortization.
NRSF Held for Development
Represents incremental data center capacity that may be constructed in existing facilities that requires significant capital investment in order to develop new data center facilities. The data represents management's best estimate of incremental costs based on estimated NRSF and power design and are subject to market conditions and build-out specifications and may vary.
NRSF Under Construction
Represents NRSF for which substantial activities are ongoing to prepare the property for its intended use following development. The NRSF reflects management’s estimate of engineering drawings and required support space and is subject to change based on final demising of space. TKD estimated development costs include two components: 1) general construction to ready the NRSF as data center space and 2) power, cooling and other infrastructure to provide the designed amount of power capacity for the project. Following development completion, incremental capital, referred to as Deferred Expansion Capital, may be invested to support existing or anticipated future customer utilization of NRSF within our operating data centers.
Turn-Key Same-Store
Includes turn-key data center space that was leased or available to be leased to our colocation customers as of December 31, 2015, at each of our properties, and excludes powered shell data center space, office and light-industrial space and space for which development was completed and became available to be leased after December 31, 2015. The turn-key same-store space as of December 31, 2015, is 1,360,068 NRSF. We track same-store on a computer room basis within each data center facility.
Stabilized and Pre-Stabilized NRSF
Data center projects and facilities that recently have been developed and are in the initial lease-up phase are classified as pre-stabilized NRSF until they reach 85% occupancy or have been in service for 24 months. Pre-stabilized projects and facilities become stabilized operating properties at the earlier of achievement of 85% occupancy or 24 months after development completion and are included in the stabilized operating NRSF.
|
Quarter Ended December 31, 2017 |
|
Overview |
Financial Statements |
Operating Portfolio |
Development |
Capital Structure |
Components of NAV |
Guidance |
Appendix |
27 |