cor_Current_Folio_8K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


 

FORM 8-K


 

CURRENT REPORT

 

Pursuant to Section 13 OR 15(d) of The

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 24, 2019


 

CoreSite Realty Corporation

(Exact name of registrant as specified in its charter)


 

Maryland

001-34877

27-1925611

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)

 

 

 

1001 17th Street, Suite 500

 

Denver, CO

80202

(Address of principal executive offices)

(Zip Code)

 

Registrant's telephone number, including area code: (866) 777-2673

 

N/A

(Former name or former address, if changed since last report.)


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

 

 

 

 


 

Section 2 — Financial Information

 

Item 2.02 Results of Operations and Financial Condition.

 

On April 24, 2019, CoreSite Realty Corporation ("CoreSite") issued a press release reporting financial results and operating information for the quarter ended March 31, 2019. In addition, CoreSite made available on its website supplemental operating and financial data for the same period. The text of the press release and the supplemental information package are furnished herewith as Exhibits 99.1 and 99.2, respectively.

 

The information in this report, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Section 9 — Financial Statements and Exhibits

 

Item 9.01 Financial Statements and Exhibits.

 

(d) The following exhibits are furnished with this Current Report on Form 8-K.

 

Exhibit No.

    

Description

 

 

 

99.1

 

Press Release, dated April 24, 2019.

 

 

 

99.2

 

Quarter Ended March 31, 2019, Earnings Release and Supplemental Information, dated April 24, 2019.

 

2


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

CORESITE REALTY CORPORATION

 

 

 

 

 

 

Date: April 24, 2019

By:

/s/ Jeffrey S. Finnin

 

 

Name: Jeffrey S. Finnin

 

 

Title:   Chief Financial Officer

 

 

 

 

 

 

 

By:

/s/ Mark R. Jones

 

 

Name: Mark R.  Jones

 

 

Title:   Chief Accounting Officer

 

3


cor_Ex99_1

 

 

 Picture 1

 

CoreSite Reports First Quarter 2019 Financial Results

 

-- Delivered Improved Q1 Sales and Pre-leased Two Phases of SV8 in April --

-- Achieved Substantial Progress on Development Pipeline, including Closing Purchase of SV9 --

-- Executed Financing that funds Property Development and extends Debt Maturities –

 

DENVER, CO – April 24, 2019 – CoreSite Realty Corporation (NYSE:COR) (“the Company”), a premier provider of secure, reliable, high-performance data center and interconnection solutions across the U.S., today announced financial results for the first quarter ended March 31, 2019.

 

Q1 Quarterly Highlights

·

Key Financial Results  –

o

Operating revenues of $138.9 million increased 7.2% year over year, in line sequentially

o

Net income of $0.54 per common diluted share decreased $0.05 year over year, in line sequentially

o

Q1 FFO of $1.25 per diluted share and unit decreased $0.02 year over year, and $0.01 sequentially

·

Lease Commencements  –

o

Commenced 119 new and expansion leases for 24,040 net rentable square feet (“NRSF”), representing $5.8 million of annualized GAAP rent at an average GAAP rate of $242 per square foot

·

Lease Sales Activity  –

o

Signed 121 new and expansion leases for 31,975 NRSF, representing $6.6 million of annualized GAAP rent at an average GAAP rate of $207 per square foot

o

Renewed 264 existing leases for 68,605 NRSF, representing $11.9 million of annualized GAAP rent at an average GAAP rate of $173 per square foot, including churn of 2.7%, reflecting 3.2% cash rent growth and 5.9% GAAP rent growth

April 2019 Subsequent Events

·

Finalized Santa Clara Property Purchase

o

On April 12th, closed SV9 purchase, a property adjacent to CoreSite’s existing Santa Clara campus, which is held for development for a planned data center facility of approximately 200,000 NRSF

·

Pre-Leasing in Santa Clara  –

o

On April 15th, executed data center pre-leasing of Phases 1 and 2 at SV8, for approximately 108,000 NRSF, leading to the acceleration of the development of Phases 2 and 3

·

Financing  –

o

On April 17th, closed the financing of senior notes totaling $400 million of principal, with $325 million issued, and $75 million expected to be issued prior to July 17, 2019

 

“We’re executing well on our 2019 imperatives to accelerate growth in 2020,” said Paul Szurek, CoreSite’s President and Chief Executive Officer. “This includes substantial progress on our development pipeline, additional financing to fund new capacity, strong sales execution with the highest annualized GAAP rent for core retail colocation sales in 10 quarters, pre-leasing of two phases of our new SV8 purpose-built data center, and first quarter financial results consistent with where we are in the development cycle and our expectations, all of which we believe position us well for achieving higher revenue growth in 2020.” 

 

 

Picture 8

© 2019, CoreSite, L.L.C. All Rights Reserved

1

 


 

Sales Activity

In the core retail colocation space, CoreSite signed sales representing $6.6 million of GAAP annualized rent for the quarter, its highest quarterly core retail colocation sales in ten quarters. CoreSite’s core retail colocation sales included solid pricing, continued expansion with strategic customers and ongoing acquisition of new logos.  Scale colocation leasing continued to be impacted by high occupancies, resulting in constrained capacity for large blocks of contiguous space in certain markets. The Company continues to make solid progress on constructing new data center facilities, and believes its new capacity will strengthen its future sales opportunities, including for scale leasing. 

 

On April 15th, the Company pre-leased Phases 1 and 2 of its SV8 facility, comprised of approximately 108,000 NRSF. SV8 Phase 1 is currently under construction and on track for completion in late Q3 2019, and Phase 2 has been accelerated and is now expected to be completed in late Q4 2019.

 

Development Activity

CoreSite expects 2019 to be a positive transition year, entering the year with leasable capacity at a lower level compared to historical norms, and plans to end 2019 with leasable capacity, plus quickly developable incremental capacity, at the higher levels the Company experienced in previous years. 

 

As of March 31, 2019, including the accelerated development at SV8, CoreSite had a total of approximately 428,000 NRSF of turn-key data center capacity under construction, with $261.7 million incurred to date of the $671.2 million of total estimated costs, as detailed below. Property development highlights include –

o

CH2 in Chicago, began Phase 1 construction for 56,000 NRSF of a planned 169,000 NRSF project

o

NY2 in the New York area, began Phase 3 construction for 35,000 NRSF data center expansion

o

BO1 in Boston, began construction on a 20,000 NRSF data center expansion

o

SV8 in Santa Clara, executed pre-leasing that accelerated development of remaining phases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs Incurred

 

Estimated

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

To-Date

 

Total Costs

 

Percent

 

 

 

Market

 

Building

 

NRSF

 

Completion

 

(in millions)

 

(in millions)

 

Leased

 

 

 

Under Construction:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boston

 

BO1

 

19,961

 

 

Q3 2019

 

$

0.3

 

$

9.0

 

 —

%

 

 

Chicago

 

CH2, Phase 1

 

56,000

 

 

1H 2020

 

 

21.9

 

 

120.0

 

 —

 

 

 

Los Angeles

 

LA1

 

17,238

 

 

Q2 2019

 

 

7.5

 

 

13.2

 

 —

 

 

 

Los Angeles

 

LA2

 

28,191

 

 

Q2 2019

 

 

15.8

 

 

21.0

 

100.0

 

 

 

New York

 

NY2, Phase 3

 

34,589

 

 

1H 2020

 

 

 —

 

 

46.0

 

 —

 

 

 

Northern Virginia

 

VA3, Phase 1B

 

49,837

 

 

Q2 2019

 

 

102.3

 

 

119.0

 

 —

 

 

 

San Francisco Bay

 

SV8, Phase 1

 

53,953

 

 

Q3 2019

 

 

84.5

 

 

127.0

 

100.0

 

 

 

San Francisco Bay

 

SV8, Phase 2

 

53,728

 

 

Q4 2019

 

 

 —

 

 

46.0

 

100.0

 

 

 

San Francisco Bay

 

SV8, Phase 3

 

54,056

 

 

1H 2020

 

 

 —

 

 

40.0

 

 —

 

 

 

Pre-Construction:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

 

LA3, Phase 1

 

60,000

 

 

2H 2020

 

 

29.4

 

 

130.0

 

 —

 

 

 

    Total

 

 

 

427,553

 

 

 

 

$

261.7

 

$

671.2

 

31.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CoreSite’s ongoing development and operational position includes --

 

·

the ability to increase its occupied footprint of land and buildings, both owned or leased, by about 2.1 million NRSF, or about 99%, including space unoccupied, under construction, pre-construction or held for development, and

·

owning (versus leasing) 92.5% of its 4.3 million data center NRSF, supporting operational control, expansion and long-term cost management.

 

 

Picture 2

© 2019, CoreSite, L.L.C. All Rights Reserved

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Other Financial Results

CoreSite’s $138.9 million of operating revenues for the first quarter included $117.9 million of rental, power and related revenue, $18.4 million of interconnection revenue and $2.6 million of office, light-industrial and other revenue. Net Income was $25.9 million for the first quarter, or $0.54 attributable to each common diluted share. 

 

As forecasted for the first quarter, CoreSite’s results reflect higher than normal churn and interest and operating expense associated with recently completed developments now in lease up.

Balance Sheet, Financing and Liquidity

On April 17th, the Company’s Operating Partnership entered into a note purchase agreement pursuant to which the Operating Partnership agreed to issue and sell an aggregate principal amount of $200 million of 4.11% Series A Senior Notes due April 17, 2026, and $200 million of 4.31% Series B Senior Notes due April 17, 2029.  An initial aggregate principal amount of $200 million of the Series A Notes and $125 million of the Series B Notes were issued on April 17, 2019. The Company expects the Operating Partnership to issue $75 million in aggregate principal amount of the Series B Notes prior to July 17, 2019. 

 

The Operating Partnership used the proceeds from the Notes to pay down outstanding amounts on the revolving portion of its senior unsecured credit facilities, and plans to use the remainder for general corporate purposes. Including the repayment of all outstanding amounts on the revolving credit facility subsequent to March 31, CoreSite has the ability to borrow $445.1 million under the revolving credit facility. CoreSite expects to use its liquidity of $522 million, including $445 million available under the revolving credit facility, $75 million of expected additional debt proceeds, and $2 million in cash, primarily to fund the $409 million of remaining current development pipeline costs.

Financial Guidance

The Company’s outlook is based on current economic conditions, internal assumptions about its customer base, and the supply and demand dynamics of the markets in which it operates. The guidance does not include the impact of any future financing, investment or disposition activities, beyond what has already been disclosed.    

The Company reiterates its net income and FFO guidance for 2019 including:

·

Net income attributed to common shares in a range of $2.15 to $2.25, and

·

FFO per common diluted share and unit in the range of $5.21 to $5.31

·

The difference between net income and FFO represents real estate depreciation and amortization.

Due to a recent customer development and expected bankruptcy, CoreSite expects the customer to vacate its deployment in the third quarter and provide payments for utilization of the data center room and termination of the current license in August.  As a result, annual churn guidance is revised to:

·

7% to 9% annual churn

In conjunction with the pre-leasing at SV8 and acceleration of Phase 2 and Phase 3 development, CoreSite has revised its 2019 capital expenditure guidance, including:

·

Data center expansion capital – to a revised range of $405 million to $465 million, and

·

Total capital expenditures – to a revised range of $425 million to $500 million

 

For further detail on the Company’s 2019 guidance, including operating revenues, Adjusted EBITDA, depreciation and amortization and capital expenditures, along with guidance drivers, please see page 23 of CoreSite’s Supplemental Information.

 

Picture 2

© 2019, CoreSite, L.L.C. All Rights Reserved

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Upcoming Conferences and Events

CoreSite’s management will participate in RBC Capital Markets Data Center and Connectivity Investor Day in San Francisco, CA on May 29th,  Nareit’s REITweek in NYC, NY on June 4-6th, Cowen Communications Infrastructure Summit on August 12-13th in Boulder, CO and KeyBanc Capital Markets Annual Technology Leadership Forum, August 11-13 in Vail, CO.    

 

Conference Call Details

CoreSite will host its first quarter 2019 earnings call on Thursday, April 25, 2019, at 12:00 p.m. (Eastern Time).  The call will be accessible by dialing 1-877-407-3982 (domestic) or 1-201-493-6780 (international). A replay will be available until May 9, 2019, 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 13688781.  The quarterly conference call also will be offered as a simultaneous webcast, accessible by visiting CoreSite.com and clicking on the “Investors” link. An on-line replay will be available for a limited time immediately following the call.

 

Concurrently with issuing its financial results, the Company will post its Q1 2019 Supplemental Information on its website at CoreSite.com, under the “Investors” link.

 

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 1,350 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

Carole Jorgensen

Vice President Investor Relations and Corporate Communications

303-405-1012
InvestorRelations@CoreSite.com

 

 

 

 

 

 

 

 

 

 

 

 

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© 2019, CoreSite, L.L.C. All Rights Reserved

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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; failure to obtain necessary outside financing; the ability to service existing debt; the 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 its 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.

 

Use of Funds From Operations (“FFO”)

FFO is a supplemental measure of CoreSite’s 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. The Company calculates 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.

 

CoreSite’s 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.

 

CoreSite offers this measure because it recognizes that investors use FFO as a basis to compare its operating performance with that of other REITs. However, the utility of FFO as a measure of the Company’s performance is limited because FFO excludes depreciation and amortization and captures neither the changes in the value of its 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 its properties, all of which have real economic effect and could materially impact the Company’s 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 the Company’s cash needs, including its ability to pay dividends

 

Picture 2

© 2019, CoreSite, L.L.C. All Rights Reserved

5

 


 

or make distributions. In addition, CoreSite’s 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 the Company. Investors in CoreSite’s securities should not rely on these measures as a substitute for any GAAP measure, including net income. 

 

Use of Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”)

EBITDAre is calculated in accordance with the standards established by the National Association of Real Estate Investment Trusts (“Nareit”). EBITDAre is defined as earnings before interest, taxes, depreciation and amortization, gains or losses from the sale of depreciated property, and impairment of depreciated property. CoreSite calculates adjusted EBITDA by adding its non-cash compensation expense, transaction costs from unsuccessful deals and business combinations and litigation expense to EBITDAre as well as adjusting for the impact of other impairment charges, gains or losses from sales of undepreciated land and gains or losses on early extinguishment of debt. Management uses EBITDAre and adjusted EBITDA as indicators of the Company’s ability to incur and service debt. In addition, CoreSite considers EBITDAre and adjusted EBITDA to be appropriate supplemental measures of its 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 EBITDAre 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 the Company’s business, their utilization as a cash flow measurement is limited.  

 

Picture 2

© 2019, CoreSite, L.L.C. All Rights Reserved

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Consolidated Balance Sheets

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

  

March 31,

  

December 31,

 

 

 

2019

 

2018

 

Assets:

 

 

 

 

 

 

 

Investments in real estate:

 

 

 

 

 

 

 

Land

 

$

86,955

 

$

86,955

 

Buildings and improvements

 

 

1,737,967

 

 

1,730,329

 

 

 

 

1,824,922

 

 

1,817,284

 

Less: Accumulated depreciation and amortization

 

 

(621,682)

 

 

(590,784)

 

Net investment in operating properties

 

 

1,203,240

 

 

1,226,500

 

Construction in progress

 

 

364,458

 

 

265,921

 

Net investments in real estate

 

 

1,567,698

 

 

1,492,421

 

Operating lease right-of-use assets

 

 

186,311

 

 

190,304

 

Cash and cash equivalents

 

 

2,294

 

 

2,599

 

Accounts and other receivables, net

 

 

26,148

 

 

18,464

 

Lease intangibles, net

 

 

6,324

 

 

6,943

 

Goodwill

 

 

40,646

 

 

40,646

 

Other assets, net

 

 

103,441

 

 

102,290

 

Total assets

 

$

1,932,862

 

$

1,853,667

 

 

 

 

 

 

 

 

 

Liabilities and equity:

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Debt, net

 

$

1,210,716

 

$

1,130,823

 

Operating lease liabilities

 

 

199,112

 

 

202,699

 

Accounts payable and accrued expenses

 

 

116,195

 

 

89,315

 

Accrued dividends and distributions

 

 

55,109

 

 

55,679

 

Acquired below-market lease contracts, net

 

 

2,737

 

 

2,846

 

Unearned revenue, prepaid rent and other liabilities

 

 

42,823

 

 

37,672

 

Total liabilities

 

 

1,626,692

 

 

1,519,034

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

Common stock, par value $0.01

 

 

364

 

 

363

 

Additional paid-in capital

 

 

494,923

 

 

491,314

 

Accumulated other comprehensive loss

 

 

(5,733)

 

 

(2,193)

 

Distributions in excess of net income

 

 

(267,849)

 

 

(246,929)

 

Total stockholders' equity

 

 

221,705

 

 

242,555

 

Noncontrolling interests

 

 

84,465

 

 

92,078

 

Total equity

 

 

306,170

 

 

334,633

 

Total liabilities and equity

 

$

1,932,862

 

$

1,853,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Picture 2

© 2019, CoreSite, L.L.C. All Rights Reserved

7

 


 

Consolidated Statements of Operations

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

 

  

2019

 

2018

  

2018

Operating revenues:

 

 

 

 

 

 

 

 

 

Data center revenue:(1)

 

 

 

 

 

 

 

 

 

Rental, power, and related revenue

 

$

117,853

 

$

118,341

 

$

110,008

Interconnection revenue

 

 

18,416

 

 

18,026

 

 

16,560

Total data center revenue

 

 

136,269

 

 

136,367

 

 

126,568

Office, light-industrial and other revenue

 

 

2,626

 

 

2,779

 

 

3,051

Total operating revenues

 

 

138,895

 

 

139,146

 

 

129,619

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Property operating and maintenance

 

 

38,110

 

 

39,487

 

 

33,848

Real estate taxes and insurance

 

 

6,196

 

 

4,910

 

 

4,937

Depreciation and amortization

 

 

35,646

 

 

36,035

 

 

33,776

Sales and marketing

 

 

5,652

 

 

5,394

 

 

5,080

General and administrative

 

 

10,170

 

 

10,534

 

 

9,185

Rent

 

 

7,688

 

 

7,420

 

 

6,400

Transaction costs

 

 

 —

 

 

 —

 

 

56

Total operating expenses

 

 

103,462

 

 

103,780

 

 

93,282

Operating income

 

 

35,433

 

 

35,366

 

 

36,337

Interest expense

 

 

(9,498)

 

 

(9,448)

 

 

(7,738)

Income before income taxes

 

 

25,935

 

 

25,918

 

 

28,599

Income tax expense

 

 

(30)

 

 

(20)

 

 

(33)

Net income

 

 

25,905

 

 

25,898

 

 

28,566

Net income attributable to noncontrolling interests

 

 

6,244

 

 

6,267

 

 

8,264

Net income attributable to common shares

 

$

19,661

 

$

19,631

 

$

20,302

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to common shares:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.54

 

$

0.54

 

$

0.60

Diluted

 

$

0.54

 

$

0.54

 

$

0.59

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

36,348

 

 

36,300

 

 

33,936

Diluted

 

 

36,547

 

 

36,486

 

 

34,164

 

 

(1)

During 2018, the Financial Accounting Standards Board (“FASB”) issued updates to the new lease accounting standard. As a result of the updates the Company has combined contractual data center rental, power, and tenant reimbursements and other revenue into a single line item as shown below:

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

 

 

2019

 

2018

  

2018

Rental revenue

 

$

74,930

 

$

74,326

 

$

71,033

Power revenue

 

 

40,503

 

 

41,637

 

 

36,403

Tenant reimbursement and other

 

 

2,420

 

 

2,378

 

 

2,572

Rental, power, and related revenue

 

$

117,853

 

$

118,341

 

$

110,008

 

 

Picture 2

© 2019, CoreSite, L.L.C. All Rights Reserved

8

 


 

Reconciliations of Net Income to FFO

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

  

March 31,

 

December 31,

 

March 31,

 

 

 

  

2019

 

2018

 

2018

 

 

Net income

 

$

25,905

 

$

25,898

 

$

28,566

 

 

Real estate depreciation and amortization

 

 

34,187

 

 

34,853

 

 

32,432

 

 

FFO available to common shareholders and OP unit holders

 

$

60,092

 

$

60,751

 

$

60,998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - diluted

 

 

36,547

 

 

36,486

 

 

34,164

 

 

Weighted average OP units outstanding - diluted

 

 

11,600

 

 

11,602

 

 

13,835

 

 

Total weighted average shares and units outstanding - diluted

 

 

48,147

 

 

48,088

 

 

47,999

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per common share and OP unit - diluted

 

$

1.25

 

$

1.26

 

$

1.27

 

 

 

 

 

 

Reconciliations of Net Income to EBITDAre and Adjusted EBITDA:

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

  

March 31,

 

December 31,

 

March 31,

 

 

 

  

2019

 

2018

 

2018

 

 

Net income

 

$

25,905

 

$

25,898

 

$

28,566

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

9,498

 

 

9,448

 

 

7,738

 

 

Income taxes

 

 

30

 

 

20

 

 

33

 

 

Depreciation and amortization

 

 

35,646

 

 

36,035

 

 

33,776

 

 

EBITDAre

 

$

71,079

 

$

71,401

 

$

70,113

 

 

Non-cash compensation

 

 

3,432

 

 

3,174

 

 

2,626

 

 

Transaction costs / litigation

 

 

 —

 

 

 —

 

 

139

 

 

Adjusted EBITDA

 

$

74,511

 

$

74,575

 

$

72,878

 

 

 

 

 

 

Picture 2

© 2019, CoreSite, L.L.C. All Rights Reserved

9

 


cor_EX99-2

 

 

 

Picture 22

 

 

 

Picture 2

ONE DATA CENTER PROVIDER. EVERYTHING YOU NEED.

 

©2019 CoreSite Realty Corporation, All Rights Reserved

 

 

 


 

Table of Contents

Table of Contents


 

 

Overview

 

Company Profile

3

Summary of Financial Data

4

Earnings Release

5

Financial Statements

 

Consolidated Balance Sheets

10

Consolidated Statements of Operations 

11

Reconciliations of Net Income to FFO, AFFO, EBITDAre and Adjusted EBITDA

12

Operating Portfolio

 

Operating Properties

13

Leasing Statistics

14

Geographic and Vertical Diversification 

16

10 Largest Customers

17

Development

 

Capital Expenditures and Completed Pre-Stabilized Projects 

18

Development Summary

19

Capital Structure

 

Market Capitalization and Debt Summary 

20

Interest Summary and Debt Covenants

21

Components of Net Asset Value

22

2019 Guidance

23

Appendix

24

 

 

 

 

 

 

Quarter Ended March 31, 2019

 

 

 

        
       

 

 

 

 

 

2

 


 

Table of Contents

 

Company Profile


Low-latency, secure and reliable on-premises access to Amazon, Microsoft, Google, Alibaba Cloud, Oracle and IBM from all eight key North American Markets via inter-site connectivity and a robust set of network service providers.

Picture 11

 

 

 

 

 

 

ONE DATA CENTER PROVIDER. EVERYTHING YOU NEED.

 

 

CONNECTIVITY TO NETWORKS AND CLOUDS

 

LOW LATENCY, EDGE MARKETS, GLOBAL REACH

 

 

 

Connecting to cloud and network providers within the same data center can save thousands of dollars a month in networking and data egress fees while reducing latency.

 

The closer a business is to end users, the easier it is to provide a better experience.

 

22 operating data centers in eight major metros that provide access to 75% of US businesses within 5 milliseconds

Optionality to connect to 775+ cloud, IT and network service providers as business needs evolve

 

 

27,000+ interconnections

 

National footprint with international cloud and data center partnerships for multi-market requirements

Peering and cloud exchanges

 

 

Direct connections to Amazon, Alibaba, Microsoft, Google, Oracle and IBM cloud services

 

Subsea cables for international reach

The CoreSite Interconnect GatewaySM allows customers to rapidly optimize application performance with a 100% managed solution

 

 

 

 

HIGH GROWTH, HIGH-DENSITY SOLUTIONS

 

THE BEST CUSTOMER EXPERIENCE

 

 

 

Cloud connectivity is important, and so is the ability for a data center campus to grow as business evolves

 

450+ team dedicated to ensuring that everything runs smoothly and needs are met no matter the time of day for our 1,350+ customers

The ability to cost-effectively scale from a single cabinet to a large-scale deployment

 

 

Consistent customer satisfaction demonstrated by customer expansion and retention

Data center campuses that connect our downtown carrier hotels to scalable infrastructure via short, high-count dark fiber

 

 

 

Dedicated move-in and service representatives, and in-house 24/7 data center operations personnel

Flexible and high-density solutions in many markets

 

100% uptime Service Level Agreement with six-nines portfolio uptime

 

Quarter Ended March 31, 2019

 

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

3

 


 

Table of Contents

 

 

 Summary of Financial Data


(in thousands, except per share, NRSF and MRR data) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

March 31,

 

December 31,

 

March 31,

 

Growth %

Summary of Results

 

2019

 

2018

 

2018

 

Y/Y

GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

138,895

 

$

139,146

 

$

129,619

 

7.2

%

Net income

 

 

25,905

 

 

25,898

 

 

28,566

 

(9.3)

 

Net income attributable to common shares

 

 

19,661

 

 

19,631

 

 

20,302

 

(3.2)

 

Net income attributable to common shares per share - diluted

 

$

0.54

 

$

0.54

 

$

0.59

 

(8.5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REIT Financial Measures(1)

 

 

 

 

 

 

 

 

 

 

 

 

Funds from operations (FFO) to shares and units

 

$

60,092

 

$

60,751

 

$

60,998

 

(1.5)

%

Adjusted funds from operations (AFFO)

 

 

60,651

 

 

61,169

 

 

57,045

 

6.3

 

EBITDAre

 

 

71,079

 

 

71,401

 

 

70,113

 

1.4

 

Adjusted EBITDA

 

 

74,511

 

 

74,575

 

 

72,878

 

2.2

 

FFO per common share and OP unit - diluted

 

$

1.25

 

$

1.26

 

$

1.27

 

(1.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

    

March 31,

    

December 31,

    

September 30,

    

June 30,

    

March 31,

 

 

    

2019

    

2018

    

2018

    

2018

    

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share and OP unit

 

$

1.10

 

$

1.10

 

$

1.03

 

$

1.03

 

$

0.98

 

TTM FFO payout ratio

 

 

84.9

 

82.1

 

82.6

 

82.3

 

82.6

%

TTM AFFO payout ratio

 

 

87.1

 

85.8

 

90.0

 

91.0

 

93.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Portfolio Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating data center properties

 

 

22

 

 

22

 

 

21

 

 

21

 

 

20

 

Stabilized data center NRSF

 

 

2,320,538

 

 

2,318,220

 

 

2,318,220

 

 

2,241,335

 

 

2,164,778

 

Stabilized data center NRSF occupied

 

 

2,128,820

 

 

2,151,747

 

 

2,141,455

 

 

2,084,852

 

 

2,021,268

 

Stabilized data center % occupied

 

 

91.7

 

92.8

 

92.4

 

93.0

 

93.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Turn-Key Data Center ("TKD") Same-Store Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MRR per cabinet equivalent

 

$

1,556

 

$

1,547

 

$

1,523

 

$

1,484

 

$

1,459

 

TKD NRSF % occupied

 

 

89.2

 

90.3

 

89.4

 

89.5