CoreSite Reports Fourth Quarter and Full Year 2011 Results
Quarterly Highlights
-
Reported fourth-quarter FFO of
$0.34 per diluted share and unit, representing a 36.0% increase over the prior-year quarter -
Reported fourth-quarter revenue of
$46.0 million , representing a 3.7% increase over the prior quarter and a 20.0% increase over the prior-year quarter -
Executed new and expansion data center leases representing
$6.8 million of annualized GAAP rent with a weighted-average GAAP rental rate of$192 per net rentable square foot -
Amended the company’s revolving credit facility, expanding capacity to
$225 million -
Announced 2012 FFO guidance with a range of
$1.36 to $1.50 per diluted share -
Increased quarterly dividend by 38% to
$0.18 per share
Mr. Ray concluded, “We are pleased to have generated solid growth for our investors in 2011 and to enter 2012 with a strong asset base to drive internal growth and support expansion. We believe that the investments we are making in our operating platform will enable us to continue to drive the profitability of our company. We remain focused upon serving our customers, strengthening our go-to-market platform, executing in our development program and generating returns for our investors.”
Financial Results
Fourth Quarter 2011
CoreSite reported funds from operations (“FFO”) of
Full Year 2011
CoreSite reported FFO of
A reconciliation of GAAP net income to funds from operations can be found in the company’s supplemental financial presentation available on its website at www.CoreSite.com.
Leasing Activity
The company executed new and expansion data center leases representing
During the fourth quarter, data center lease commencements totaled
38,864 NRSF at a weighted average GAAP rental rate of
Renewal leases totaling 22,911 NRSF commenced in the fourth quarter at a
weighted average GAAP rate of
Development and Redevelopment Activity
During the fourth quarter, the company completed construction on 27,649
NRSF of space in
The total estimated cost to complete the 126,106 NRSF of data center
space under construction at
Including the space currently under construction or in preconstruction
at
Balance Sheet and Liquidity
As of
In December, CoreSite amended its revolving credit facility, extending
the term to three years with an additional one-year extension, and
increasing the size of its facility from
Subsequent to
Dividend
On
2012 Guidance
The company is providing the following guidance predicated 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 acquisitions or capital markets transactions.
Low |
High |
|||||||
Net income (loss) per share | $ | (0.02 | ) | $ | 0.04 | |||
Real estate related depreciation and
amortization per share |
$ | 1.38 | $ | 1.46 | ||||
FFO per share | $ | 1.36 | $ | 1.50 |
The company’s 2012 guidance provided in this press release incorporates projected operating results based upon significant drivers as follows:
-
Total operating revenues of
$195.0 million to $205.0 million based upon:- Rent retention on renewals of 65% to 70%
- GAAP rent growth on renewals of 2% to 6%
-
Total general and administrative expenses of
$22.0 million to $24.0 million -
Adjusted EBITDA of
$76.0 million to $84.0 million -
Development/redevelopment capital expenditures of
$85.0 million to$110.0 million -
Recurring capital expenditures of
$3.0 million to $5.0 million
Conference Call Details
The company will host a conference call on
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 858-384-5517 for international
callers. The passcode for the replay is 387074. 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 the company’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 our 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) | ||||||||
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS | ||||||||
Investments in real estate: | ||||||||
Land | $ | 84,738 | $ | 84,738 | ||||
Building and building improvements | 499,717 | 450,097 | ||||||
Leasehold improvements | 81,057 | 75,800 | ||||||
665,512 | 610,635 | |||||||
Less: Accumulated depreciation and amortization | (64,428 | ) | (32,943 | ) | ||||
Net investment in operating properties | 601,084 | 577,692 | ||||||
Construction in progress | 73,084 | 11,987 | ||||||
Net investments in real estate | 674,168 | 589,679 | ||||||
Cash and cash equivalents | 6,628 | 86,246 | ||||||
Restricted cash | 9,291 | 14,968 | ||||||
Accounts and other receivables, net of allowance for doubtful accounts of $465 and $305 as of December 31, 2011 and 2010, respectively | 6,562 | 5,332 | ||||||
Lease intangibles, net of accumulated amortization of $33,711 and $17,105 as of December 31, 2011 and 2010, respectively | 36,643 | 71,704 | ||||||
Goodwill | 41,191 | 41,191 | ||||||
Other assets | 33,743 | 23,906 | ||||||
Total assets | $ | 808,226 | $ | 833,026 | ||||
LIABILITIES AND EQUITY | ||||||||
Liabilities: | ||||||||
Revolving credit facility | $ | 5,000 | $ | - | ||||
Mortgage loans payable | 116,864 | 124,873 | ||||||
Accounts payable and accrued expenses | 38,822 | 26,393 | ||||||
Deferred rent payable | 3,535 | 2,277 | ||||||
Acquired below-market lease contracts, net of accumulated amortization of $9,267 and $4,989 as of December 31, 2011 and 2010, respectively | 11,872 | 16,415 | ||||||
Prepaid rent and other liabilities | 11,946 | 8,603 | ||||||
Total liabilities | 188,039 | 178,561 | ||||||
Stockholders' equity: | ||||||||
Common stock, par value $0.01, 100,000,000 shares authorized and 20,747,794 and 19,644,042 shares issued and outstanding at December 31, 2011 and 2010, respectively | 204 | 194 | ||||||
Additional paid-in capital | 256,183 | 239,453 | ||||||
Accumulated other comprehensive income (loss) | (34 | ) | 52 | |||||
Accumulated deficit | (23,545 | ) | (7,460 | ) | ||||
Total stockholders' equity | 232,808 | 232,239 | ||||||
Noncontrolling interests | 387,379 | 422,226 | ||||||
Total equity | 620,187 | 654,465 | ||||||
Total liabilities and equity | $ | 808,226 | $ | 833,026 | ||||
Consolidated Statement of Operations | ||||||||||||||||
(in thousands, except share and per share data) | ||||||||||||||||
|
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The Company |
The Predecessor |
|||||||||||||||
Year Ended |
For the period September 28, 2010 through December 31, 2010 |
For the period January 1, 2010 through September 27, 2010 |
Year ended December 31, 2009 |
|||||||||||||
Operating revenues: | ||||||||||||||||
Rental revenue | $ | 108,597 | $ | 24,428 | $ | 24,377 | $ | 18,974 | ||||||||
Power revenue | 43,402 | 9,403 | 8,520 | 7,372 | ||||||||||||
Tenant reimbursement | 6,344 | 1,501 | 1,406 | 1,061 | ||||||||||||
Other revenue | 14,503 | 3,020 | 1,254 | 1,424 | ||||||||||||
Total operating revenues | 172,846 | 38,352 | 35,557 | 28,831 | ||||||||||||
Operating expenses: | ||||||||||||||||
Property operating and maintenance | 55,049 | 12,107 | 14,272 | 13,954 | ||||||||||||
Real estate taxes and insurance | 9,119 | 1,642 | 1,262 | 1,787 | ||||||||||||
Management fees to related party | - | - | 3,582 | 2,244 | ||||||||||||
Depreciation and amortization | 68,967 | 19,146 | 11,848 | 11,193 | ||||||||||||
Sales and marketing | 5,744 | 1,341 | 125 | 135 | ||||||||||||
General and administrative | 21,846 | 4,987 | 2,258 | 1,401 | ||||||||||||
Transaction costs | 875 | 3,275 | - | - | ||||||||||||
Rent | 18,336 | 4,551 | 2,177 | 2,816 | ||||||||||||
Total operating expenses | 179,936 | 47,049 | 35,524 | 33,530 | ||||||||||||
Operating income (loss) | (7,090 | ) | (8,697 | ) | 33 | (4,699 | ) | |||||||||
Gain on early extinguishment of debt | 939 | - | - | - | ||||||||||||
Interest income | 117 | 77 | 2 | 3 | ||||||||||||
Interest expense | (5,275 | ) | (2,325 | ) | (1,590 | ) | (2,343 | ) | ||||||||
Loss before income taxes | (11,309 | ) | (10,945 | ) | (1,555 | ) | (7,039 | ) | ||||||||
Income tax benefits | 530 | 223 | - | - | ||||||||||||
Net loss | $ | (10,779 | ) | $ | (10,722 | ) | $ | (1,555 | ) | $ | (7,039 | ) | ||||
Net loss attributable to noncontrolling interests | (6,168 | ) | (7,371 | ) | - | - | ||||||||||
Net loss attributable to common shares | $ | (4,611 | ) | $ | (3,351 | ) | $ | (1,555 | ) | $ | (7,039 | ) | ||||
Basic and diluted loss per common share: | ||||||||||||||||
Net loss per share attributable to common shares | $ | (0.24 | ) | $ | (0.17 | ) | N/A | N/A | ||||||||
Weighted average common shares outstanding | 19,609,375 | 19,458,605 | N/A | N/A | ||||||||||||
Consolidated Statement of Operations | ||||||||||||||||||||
(in thousands, except share and per share data) | ||||||||||||||||||||
Three Months Ended: | ||||||||||||||||||||
December 31, 2011 | September 30, 2011 | June 30, 2011 | March 31, 2011 | December 31, 2010 | ||||||||||||||||
Operating revenues: | ||||||||||||||||||||
Rental revenue | $ | 29,064 | $ | 27,616 | $ | 26,707 | $ | 25,210 | $ | 24,428 | ||||||||||
Power revenue | 11,411 | 11,450 | 10,760 | 9,781 | 9,403 | |||||||||||||||
Tenant reimbursement | 1,767 | 1,432 | 1,425 | 1,720 | 1,501 | |||||||||||||||
Other revenue | 3,787 | 3,869 | 3,592 | 3,255 | 3,020 | |||||||||||||||
Total operating revenues | 46,029 | 44,367 | 42,484 | 39,966 | 38,352 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Property operating and maintenance | 15,063 | 14,133 | 13,830 | 12,023 | 12,107 | |||||||||||||||
Real estate taxes and insurance | 2,064 | 2,163 | 2,149 | 2,743 | 1,642 | |||||||||||||||
Depreciation and amortization | 15,743 | 16,091 | 17,660 | 19,473 | 19,146 | |||||||||||||||
Sales and marketing | 1,619 | 1,315 | 1,433 | 1,377 | 1,341 | |||||||||||||||
General and administrative | 5,880 | 4,747 | 5,602 | 5,617 | 4,987 | |||||||||||||||
Transaction costs | - | 192 | 683 | - | - | |||||||||||||||
Rent | 4,588 | 4,601 | 4,600 | 4,547 | 4,551 | |||||||||||||||
Total operating expenses | 44,957 | 43,242 | 45,957 | 45,780 | 43,774 | |||||||||||||||
Operating income (loss) | 1,072 | 1,125 | (3,473 | ) | (5,814 | ) | (5,422 | ) | ||||||||||||
Gain on early extinguishment of debt | - | (10 | ) | 949 | - | - | ||||||||||||||
Interest income | 2 | 9 | 40 | 66 | 77 | |||||||||||||||
Interest expense | (838 | ) | (916 | ) | (1,269 | ) | (2,252 | ) | (2,325 | ) | ||||||||||
Income (loss) before income taxes | 236 | 208 | (3,753 | ) | (8,000 | ) | (7,670 | ) | ||||||||||||
Income tax benefits | 226 | 55 | 165 | 84 | 223 | |||||||||||||||
Net income (loss) per share attributable to common shares: | 462 | 263 | (3,588 | ) | (7,916 | ) | (7,447 | ) | ||||||||||||
Net income (loss) attributable to noncontrolling interests | 283 | 151 | (2,058 | ) | (4,544 | ) | (4,275 | ) | ||||||||||||
Net income (loss) attributable to common shares | $ | 179 | $ | 112 | $ | (1,530 | ) | $ | (3,372 | ) | $ | (3,172 | ) | |||||||
Net income (loss) per share attributable to common shares: | ||||||||||||||||||||
Basic | $ | 0.01 | $ | 0.01 | $ | (0.08 | ) | $ | (0.17 | ) | $ | (0.16 | ) | |||||||
Diluted | $ | 0.01 | $ | 0.01 | $ | (0.08 | ) | $ | (0.17 | ) | $ | (0.16 | ) | |||||||
Weighted average common shares outstanding: | ||||||||||||||||||||
Basic | 19,988,150 | 19,494,703 | 19,473,219 | 19,458,605 | 19,458,605 | |||||||||||||||
Diluted | 20,082,003 | 19,587,961 | 19,473,219 | 19,458,605 | 19,458,605 | |||||||||||||||
Reconciliation of Net Income (Loss) to Funds From Operations | ||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||
Three Months Ended: | ||||||||||||||||||
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
December 31, 2010 |
||||||||||||||
Net income (loss) | $ | 462 | $ | 263 | $ | (3,588 | ) | $ | (7,916 | ) | $ | (7,447 | ) | |||||
Adjustments: | ||||||||||||||||||
Real estate depreciation and amortization | 15,307 | 15,738 | 17,391 | 19,237 | 18,936 | |||||||||||||
FFO available to common shareholders and OP unitholders | $ | 15,769 | $ | 16,001 | $ | 13,803 | $ | 11,321 | $ | 11,489 | ||||||||
Weighted average common shares and OP units outstanding - diluted | 45,862,220 | 45,822,653 | 45,822,653 | 45,784,080 | 45,689,418 | |||||||||||||
FFO per common share and OP unit - diluted | $ | 0.34 | $ | 0.35 | $ | 0.30 | $ | 0.25 | $ | 0.25 | ||||||||
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 (Loss) to Earnings Before Interest, Taxes Depreciation and Amortization |
||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Three Months Ended: | ||||||||||||||||||||
December 31, 2011 | September 30, 2011 | June 30, 2011 | March 31, 2011 | December 31, 2010 | ||||||||||||||||
Net income (loss) | $ | 462 | $ | 263 | $ | (3,588 | ) | $ | (7,916 | ) | $ | (7,447 | ) | |||||||
Adjustments: | ||||||||||||||||||||
Interest expense, net of interest income | 836 | 907 | 1,229 | 2,186 | 2,248 | |||||||||||||||
Income taxes | (226 | ) | (55 | ) | (165 | ) | (84 | ) | (223 | ) | ||||||||||
Depreciation and amortization | 15,743 | 16,091 | 17,660 | 19,473 | 19,146 | |||||||||||||||
EBITDA | $ | 16,815 | $ | 17,206 | $ | 15,136 | $ | 13,659 | $ | 13,724 | ||||||||||
Non-cash compensation | 693 | 879 | 889 | 497 | 517 | |||||||||||||||
Gain on early extinguishment of debt | - | 10 | (949 | ) | - | - | ||||||||||||||
Transaction costs | - | 192 | 683 | - | - | |||||||||||||||
Adjusted EBITDA | $ | 17,508 | $ | 18,287 | $ | 15,759 | $ | 14,156 | $ | 14,241 | ||||||||||
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
Mark
Jobson, +1 303-405-1004
Mark.Jobson@CoreSite.com