CoreSite Reports First Quarter Results
Quarterly Highlights
-
Reported first-quarter funds from operations (“FFO”) of
$0.41 per diluted share and unit, representing a 13.9% increase over the prior-year quarter -
Reported first-quarter revenue of
$55.1 million , representing a 16.5% increase over the prior-year quarter -
Executed new and expansion data center leases, representing
$5.1 million of annualized GAAP rent - Realized rental churn of 1.1% and rent growth on signed renewals of 2.0% on a cash basis and 21.6% on a GAAP basis
-
Commenced 39,376 net rentable square feet of new and expansion leases,
with GAAP annualized rent of
$161 per square foot
“We continue to expand our portfolio to support our sales funnel. During
Q1 we acquired and began construction on NY2 in
Financial Results
CoreSite reported FFO attributable to shares and units of
Sales Activity
First quarter data center lease commencements totaled 39,376 NRSF at a
weighted average GAAP rental rate of
The first quarter rental churn rate was 1.1%. Rental churn is calculated
based on the annualized rental revenue of leases terminated in the
period compared with total annualized rental revenue at the beginning of
the period. Renewal leases totaling 47,598 NRSF commenced in the first
quarter at a weighted average GAAP rate of
CoreSite executed new and expansion data center leases representing
Development and Redevelopment Activity
CoreSite had 275,010 NRSF of data center space under construction at
five key locations as of
Balance Sheet and Liquidity
On
As of
At quarter end, CoreSite had
Dividend
On
On the same date, the company announced a dividend of
2013 Guidance
The company is maintaining its 2013 guidance of FFO per diluted share
and unit in the range of
This outlook is predicated on current economic conditions, internal assumptions about CoreSite’s customer base, and the supply and demand dynamics of the markets in which CoreSite operates. Further, the guidance does not include the impact of any future financing, investment or disposition activities.
Upcoming Conferences and Events
CoreSite will participate in NAREIT’s REITWeek conference from
Conference Call Details
The company will host a conference call
The call can be accessed live over the phone by dialing 877-407-3982 for
domestic callers or 201-493-6780 for international callers. A replay
will be available shortly after the call and can be accessed by dialing
877-870-5176 for domestic callers, or for international callers,
858-384-5517. The passcode for the replay is 411380. The replay will be
available until
Interested parties may also listen to a simultaneous webcast of the conference call by logging on to the company’s website at www.CoreSite.com and clicking on the “Investors” tab. The on-line replay will be available for a limited time beginning immediately following the call.
About CoreSite
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 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
|
Consolidated Balance Sheet |
|||||||||||
| (in thousands, except per share data) | |||||||||||
| March 31, 2013 |
December 31, 2012 |
||||||||||
| Assets: | |||||||||||
| Investments in real estate: | |||||||||||
| Land | $ | 76,227 | $ | 85,868 | |||||||
| Building and building improvements | 618,593 | 593,020 | |||||||||
| Leasehold improvements | 89,306 | 85,907 | |||||||||
| 784,126 | 764,795 | ||||||||||
| Less: Accumulated depreciation and amortization | (115,435 | ) |
(104,490 |
) |
|||||||
| Net investment in operating properties | 668,691 | 660,305 | |||||||||
| Construction in progress | 98,957 | 61,328 | |||||||||
| Net investments in real estate | 767,648 | 721,633 | |||||||||
| Cash and cash equivalents | 8,487 | 8,130 | |||||||||
| Restricted cash | 200 | 468 | |||||||||
| Accounts and other receivables, net | 10,108 | 9,901 | |||||||||
| Lease intangibles, net | 16,260 | 19,453 | |||||||||
| Goodwill | 41,191 | 41,191 | |||||||||
| Other assets | 47,695 | 44,556 | |||||||||
| Total assets | $ | 891,589 | $ | 845,332 | |||||||
| Liabilities and equity: | |||||||||||
| Liabilities | |||||||||||
| Revolving credit facility | $ | 52,000 | $ | - | |||||||
| Mortgage loans payable | 59,375 | 59,750 | |||||||||
| Accounts payable and accrued expenses | 49,903 | 50,624 | |||||||||
| Deferred rent payable | 5,642 | 4,329 | |||||||||
| Acquired below-market lease contracts, net | 7,988 | 8,539 | |||||||||
| Prepaid rent and other liabilities | 12,177 | 11,317 | |||||||||
| Total liabilities | 187,085 | 134,559 | |||||||||
|
Stockholders' equity |
|||||||||||
| Series A cumulative preferred stock | 115,000 | 115,000 | |||||||||
| Common stock, par value $0.01 | 207 | 207 | |||||||||
| Additional paid-in capital | 261,249 | 259,009 | |||||||||
| Accumulated deficit | (39,911 | ) | (35,987 | ) | |||||||
| Total stockholders' equity | 336,545 | 338,229 | |||||||||
| Noncontrolling interests | 367,959 | 372,544 | |||||||||
| Total equity | 704,504 | 710,773 | |||||||||
| Total liabilities and equity | $ | 891,589 | $ | 845,332 | |||||||
| Consolidated Statement of Operations | ||||||||||||||||
| (in thousands, except share and per share data) | ||||||||||||||||
| Three Months Ended: | ||||||||||||||||
| March 31, 2013 | December 31, 2012 | March 31, 2012 | ||||||||||||||
| Operating revenues: | ||||||||||||||||
|
Rental revenue |
$ | 33,102 | $ | 32,113 | $ | 29,630 | ||||||||||
| Power revenue | 13,529 | 14,129 | 12,374 | |||||||||||||
| Interconnection revenue | 6,572 |
6,369 |
3,655 | |||||||||||||
| Tenant reimbursement and other | 1,888 | 2,641 | 1,625 | |||||||||||||
| Total operating revenues | 55,091 | 55,252 | 47,284 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Property operating and maintenance | 14,527 | 15,206 | 14,395 | |||||||||||||
| Real estate taxes and insurance | 2,220 | 2,461 | 2,014 | |||||||||||||
| Depreciation and amortization | 15,949 | 16,336 | 15,461 | |||||||||||||
| Sales and marketing | 3,789 | 3,389 | 2,129 | |||||||||||||
| General and administrative | 7,003 | 7,133 | 6,352 | |||||||||||||
| Rent | 4,793 | 4,754 | 4,577 | |||||||||||||
| Transaction costs | 5 | 37 | 122 | |||||||||||||
| Total operating expenses | 48,286 | 49,316 | 45,050 | |||||||||||||
| Operating income | 6,805 | 5,936 | 2,234 | |||||||||||||
| Interest income | 2 | 1 | 2 | |||||||||||||
| Interest expense |
(439 |
) |
(1,314 | ) | (1,018 | ) | ||||||||||
| Income before income taxes | 6,368 | 4,623 | 1,218 | |||||||||||||
| Income tax (expense) benefit | (173 | ) | (45 | ) | 125 | |||||||||||
| Net income | 6,195 | 4,578 | 1,343 | |||||||||||||
| Net income attributable to noncontrolling interests | 2,262 | 2,276 | 743 | |||||||||||||
| Net income attributable to CoreSite Realty Corporation | 3,933 | 2,302 | 600 | |||||||||||||
| Preferred dividends | (2,084 | ) | (440 | ) | - | |||||||||||
| Net income attributable to common shares | $ | 1,849 | $ | 1,862 | $ | 600 | ||||||||||
| Net income per share attributable to common shares: | ||||||||||||||||
| Basic | $ | 0.09 | $ | 0.09 | $ | 0.03 | ||||||||||
| Diluted | $ | 0.09 | $ | 0.09 | $ | 0.03 | ||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 20,673,896 | 20,607,119 | 20,455,875 | |||||||||||||
| Diluted | 21,314,779 | 21,036,794 | 20,694,855 | |||||||||||||
| Reconciliation of net income to funds from operations (FFO): | |||||||||||||
| (in thousands, except per share data) | Three Months Ended: | ||||||||||||
| March 31, 2013 | December 31, 2012 | March 31, 2012 | |||||||||||
| Net income | $ | 6,195 | $ | 4,578 | $ | 1,343 | |||||||
| Real estate depreciation and amortization | 15,142 | 15,566 | 15,008 | ||||||||||
| FFO | $ | 21,337 | $ | 20,144 | $ | 16,351 | |||||||
| Preferred stock dividends | (2,084 | ) | (440 | ) | - | ||||||||
| FFO available to common shareholders and OP unitholders | $ | 19,253 | $ | 19,704 | $ | 16,351 | |||||||
| Weighted average common shares and OP units outstanding - diluted | 46,668,488 | 46,390,503 | 46,039,937 | ||||||||||
| FFO per common share and OP unit - diluted | $ | 0.41 | $ | 0.42 | $ | 0.36 | |||||||
The company offers this measure because management recognizes that FFO will be used by investors as a basis to compare operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the 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 the properties, all of which have real economic effect and could materially impact financial condition and results from operations, the utility of FFO as a measure of performance is limited. 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 cash needs, including the ability to pay dividends or make distributions. In addition, the company’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. Investors in the company’s securities should not rely on these measures as a substitute for any GAAP measure, including net income.
| Reconciliation of net income to earnings before interest, taxes, depreciation and amortization (EBITDA): | ||||||||||||
| Three Months Ended: | ||||||||||||
|
|
March 31, 2013 | December 31, 2012 | March 31, 2012 | |||||||||
| Net income | $ | 6,195 | $ | 4,578 | $ | 1,343 | ||||||
| Adjustments: | ||||||||||||
| Interest expense, net of interest income | 437 | 1,313 | 1,016 | |||||||||
| Income taxes | 173 | 45 | (125 | ) | ||||||||
| Depreciation and amortization | 15,949 | 16,336 | 15,461 | |||||||||
| EBITDA | $ | 22,754 | $ | 22,272 | $ | 17,695 | ||||||
| Non-cash compensation | 1,895 | 1,568 | 747 | |||||||||
| Transaction costs / litigation settlement expenses | 105 | 328 | 1,572 | |||||||||
| Adjusted EBITDA | $ | 24,754 | $ | 24,168 | $ | 20,014 | ||||||
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. The company calculates adjusted EBITDA by adding non-cash compensation expense and transaction costs to EBITDA as well as adjusting for the impact of gains or losses on early extinguishment of debt. Management uses EBITDA and adjusted EBITDA as indicators of the company’s ability to incur and service debt. In addition, management considers EBITDA and adjusted EBITDA to be appropriate supplemental measures of the company’s 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.
Source:
CoreSite Investor Relations:
+1 303.222.7276
InvestorRelations@CoreSite.com
or
CoreSite
Media:
Jeannie Zaemes | CoreSite Marketing Senior Director
+1
720.446.2006 | +1 866.777.CORE
Jeannie.Zaemes@CoreSite.com