CoreSite Reports Fourth Quarter FFO of $0.42 Per Share, up 23.5% Year-Over-Year
Quarterly and Subsequent Highlights
-
Reported fourth-quarter funds from operations (“FFO”) of
$0.42 per diluted share and unit, representing a 5.0% increase over the prior quarter and a 23.5% increase over the prior-year quarter -
Reported fourth-quarter revenue of
$55.3 million , representing a 2.8% increase over the prior quarter and a 20.0% increase over the prior-year quarter -
Executed new and expansion data center leases representing
$11.6 million of annualized GAAP rent - Achieved 11.7% rent growth on signed renewals on a cash basis and 15.6% on a GAAP basis
-
Received net proceeds of
$110.6 million from the company’s first preferred stock offering -
In
January 2013 , amended its credit facility by converting it to unsecured, expanding availability to$355.0 million from$225.0 million , extending its maturity and lowering the interest rate spread -
In
February 2013 , acquired a 283,000 square-foot building on 10 acres of land inSecaucus, New Jersey , for development of a new data center campus (NY2) -
Increased quarterly dividend by 50% to
$0.27 per share
“We were also pleased to execute upon our first preferred stock offering
and recast our line of credit, creating the liquidity to fund our
near-term growth objectives,” Mr. Ray continued. “Related, to date in
2013, we acquired a land site to support the development of our NY2 data
center in the
Financial Results
CoreSite reported FFO of
Sales Activity
Fourth-quarter lease commencements totaled 21,372 NRSF and
The fourth quarter rental churn rate was 2.1%. 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. We signed renewals with a weighted average GAAP
rate of
Sales activity in the fourth quarter of 2012 reflects the company’s
realignment to a vertical selling model and targeted business strategy.
New and expansion data center leases executed in the quarter represent
Development and Acquisition Activity
The company’s recent development and acquisition activities further
strengthened the company’s platform. On
CoreSite had 94,650 NRSF of data center space at four key locations
under construction as of
Balance Sheet and Liquidity
As of
During the fourth quarter of 2012, CoreSite completed a public offering
of 4,600,000 shares of 7.25% Series A Cumulative Redeemable Preferred
Stock at a price of
At quarter end, CoreSite had
Dividend
On
2013 Guidance
The annual guidance provided below and on page 21 of the supplemental 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 CoreSite operates. Further, the guidance does not include the impact of any future financing, investment or disposition activities.
The company is introducing its 2013 guidance of FFO per diluted share
and unit in the range of
In addition, the company’s estimate of the net income attributable to
common shares is
Conference Call Details
The company will host a conference call on
The call will be accessible by dialing +1-877-407-3982 (domestic) or
+1-201-493-6780 (international). A replay will be available until
The quarterly conference call also will be offered as a simultaneous webcast, accessible by visiting www.coresite.com and clicking on the “Investors” tab. An on-line replay will be available for a limited time immediately following the call.
Facility Names
CoreSite revised the names of its facilities. The chart below lists the new name for each facility, as well as its corresponding prior name.
New Property Name |
Previous Property Name |
|
BO1 | 70 Innerbelt | |
CH1 | 427 S. LaSalle | |
DC1 | 1275 K Street | |
DE1 | 910 15th Street | |
DE2 | 639 E. 18th Avenue | |
One Wilshire Campus | ||
- LA1 | One Wilshire | |
- LA2 | 900 N. Alameda | |
MI1 | 2115 NW 22nd Street | |
NY1 | 32 Avenue of the Americas | |
NY2 | Secaucus, NJ | |
SV1 | 55 S. Market | |
SV2 | 1656 McCarthy | |
Santa Clara Campus | ||
- SV3 | 2901 Coronado | |
- SV4 | 2972 Stender | |
- SV5 | 2900 Stender | |
VA1 & VA2 | 12100 Sunrise Valley |
Reconciliations of Non-GAAP Financial Measures
Financial and operating measures found in this Earnings Release and the
Q4 Supplemental Financial Report include certain measures used by
CoreSite management that are not calculated in accordance with
accounting principles generally accepted in
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) | ||||||||||
December 31, |
December 31, |
|||||||||
Assets: | ||||||||||
Investments in real estate: | ||||||||||
Land | $ | 85,868 | $ | 84,738 | ||||||
Building and building improvements | 593,020 | 499,717 | ||||||||
Leasehold improvements | 85,907 | 81,057 | ||||||||
764,795 | 665,512 | |||||||||
Less: Accumulated depreciation and amortization | (104,490 | ) | (64,428 | ) | ||||||
Net investment in operating properties | 660,305 | 601,084 | ||||||||
Construction in progress | 61,328 | 73,084 | ||||||||
Net investments in real estate | 721,633 | 674,168 | ||||||||
Cash and cash equivalents | 8,130 | 6,628 | ||||||||
Restricted cash | 468 | 9,291 | ||||||||
Accounts and other receivables, net | 9,901 | 6,562 | ||||||||
Lease intangibles, net | 19,453 | 36,643 | ||||||||
Goodwill | 41,191 | 41,191 | ||||||||
Other assets | 44,556 | 33,743 | ||||||||
Total assets | $ | 845,332 | $ | 808,226 | ||||||
Liabilities and equity: | ||||||||||
Liabilities | ||||||||||
Revolving credit facility | $ | - | $ | 5,000 | ||||||
Mortgage loans payable | 59,750 | 116,864 | ||||||||
Accounts payable and accrued expenses | 50,624 | 38,822 | ||||||||
Deferred rent payable | 4,329 | 3,535 | ||||||||
Acquired below-market lease contracts, net | 8,539 | 11,872 | ||||||||
Prepaid rent and other liabilities | 11,317 | 11,946 | ||||||||
Total liabilities | 134,559 | 188,039 | ||||||||
Stockholders' equity | ||||||||||
Series A cumulative preferred stock | 115,000 | - | ||||||||
Common stock, par value $0.01 | 207 | 204 | ||||||||
Additional paid-in capital | 259,009 | 256,183 | ||||||||
Accumulated other comprehensive income (loss) | - | (34 | ) | |||||||
Accumulated deficit | (35,987 | ) | (23,545 | ) | ||||||
Total stockholders' equity | 338,229 | 232,808 | ||||||||
Noncontrolling interests | 372,544 | 387,379 | ||||||||
Total equity | 710,773 | 620,187 | ||||||||
Total liabilities and equity | $ | 845,332 | $ | 808,226 |
Consolidated Statement of Operations | |||||||||||||||||||||||||
(in thousands, except share and per share data) | |||||||||||||||||||||||||
Three Months Ended: | |||||||||||||||||||||||||
December 31, |
September 30, |
June 30, |
March 31, |
December |
|||||||||||||||||||||
Operating revenues: | |||||||||||||||||||||||||
Rental revenue | $ | 31,979 | $ | 31,461 | $ | 30,464 | $ | 29,493 | $ | 29,064 | |||||||||||||||
Power revenue | 14,119 | 14,204 | 12,910 | 12,330 | 11,411 | ||||||||||||||||||||
Interconnection revenue | 6,155 | 5,955 | 5,244 | 3,533 | 3,273 | ||||||||||||||||||||
Tenant reimbursement and other | 2,999 | 2,142 | 2,018 | 1,928 | 2,281 | ||||||||||||||||||||
Total operating revenues | 55,252 | 53,762 | 50,636 | 47,284 | 46,029 | ||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Property operating and maintenance | 15,206 | 16,360 | 15,274 | 14,395 | 15,063 | ||||||||||||||||||||
Real estate taxes and insurance | 2,461 | 2,158 | 2,132 | 2,014 | 2,064 | ||||||||||||||||||||
Depreciation and amortization | 16,336 | 16,583 | 15,947 | 15,461 | 15,743 | ||||||||||||||||||||
Sales and marketing | 3,389 | 2,231 | 2,581 | 2,129 | 1,619 | ||||||||||||||||||||
General and administrative | 7,133 | 6,389 | 6,036 | 6,352 | 5,880 | ||||||||||||||||||||
Rent | 4,754 | 4,689 | 4,691 | 4,577 | 4,588 | ||||||||||||||||||||
Transaction costs | 37 | 293 | 161 | 122 | - | ||||||||||||||||||||
Total operating expenses | 49,316 | 48,703 | 46,822 | 45,050 | 44,957 | ||||||||||||||||||||
Operating income | 5,936 | 5,059 | 3,814 | 2,234 | 1,072 | ||||||||||||||||||||
Interest income | 1 | 5 | 5 | 2 | 2 | ||||||||||||||||||||
Interest expense | (1,314 | ) | (1,595 | ) | (1,309 | ) | (1,018 | ) | (838 | ) | |||||||||||||||
Income before income taxes | 4,623 | 3,469 | 2,510 | 1,218 | 236 | ||||||||||||||||||||
Income tax (expense) benefit | (45 | ) | (522 | ) | (662 | ) | 125 | 226 | |||||||||||||||||
Net income | 4,578 | 2,947 | 1,848 | 1,343 | 462 | ||||||||||||||||||||
Net income attributable to noncontrolling interests | 2,276 | 1,627 | 1,022 | 743 | 283 | ||||||||||||||||||||
Net income attributable to CoreSite Realty Corporation | 2,302 | 1,320 | 826 | 600 | 179 | ||||||||||||||||||||
Preferred dividends | (440 | ) | - | - | - | - | |||||||||||||||||||
Net income attributable to common shares | $ | 1,862 | $ | 1,320 | $ | 826 | $ | 600 | $ | 179 | |||||||||||||||
Net income per share attributable to common shares: | |||||||||||||||||||||||||
Basic | $ | 0.09 | $ | 0.06 | $ | 0.04 | $ | 0.03 | $ | 0.01 | |||||||||||||||
Diluted | $ | 0.09 | $ | 0.06 | $ | 0.04 | $ | 0.03 | $ | 0.01 | |||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||||
Basic | 20,607,119 | 20,554,893 | 20,532,930 | 20,455,875 | 19,988,150 | ||||||||||||||||||||
Diluted | 21,036,794 | 21,027,635 | 20,914,686 | 20,694,855 | 20,082,003 | ||||||||||||||||||||
Reconciliation of net income to funds from operations (FFO): | |||||||||||||||||||||
(in thousands, except per share data) | Three Months Ended: | ||||||||||||||||||||
December 31 |
September 30, |
June 30, |
March 31, |
December 31, |
|||||||||||||||||
Net income | $ | 4,578 | $ | 2,947 | $ | 1,848 | $ | 1,343 | $ | 462 | |||||||||||
Real estate depreciation and amortization | 15,566 | 15,689 | 15,437 | 15,008 | 15,307 | ||||||||||||||||
FFO | $ | 20,144 | $ | 18,636 | $ | 17,285 | $ | 16,351 | $ | 15,769 | |||||||||||
Preferred stock dividends | (440 | ) | - | - | - | - | |||||||||||||||
FFO available to common shareholders and OP unitholders | $ | 19,704 | $ | 18,636 | $ | 17,285 | $ | 16,351 | $ | 15,769 | |||||||||||
Weighted average common shares and OP units outstanding - diluted | 46,390,503 | 46,374,440 | 46,260,783 | 46,039,937 | 45,862,220 | ||||||||||||||||
FFO per common share and OP unit - diluted | $ | 0.42 | $ | 0.40 | $ | 0.37 | $ | 0.36 | $ | 0.34 | |||||||||||
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: | ||||||||||||||||||||||
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
||||||||||||||||||
Net income | $ | 4,578 | $ | 2,947 | $ | 1,848 | $ | 1,343 | $ | 462 | ||||||||||||
Adjustments: | ||||||||||||||||||||||
Interest expense, net of interest income | 1,313 | 1,590 | 1,304 | 1,016 | 836 | |||||||||||||||||
Income taxes | 45 | 522 | 662 | (125 | ) | (226 | ) | |||||||||||||||
Depreciation and amortization | 16,336 | 16,583 | 15,947 | 15,461 | 15,743 | |||||||||||||||||
EBITDA | $ | 22,272 | $ | 21,642 | $ | 19,761 | $ | 17,695 | $ | 16,815 | ||||||||||||
Non-cash compensation | 1,568 | 1,556 | 1,779 | 747 | 693 | |||||||||||||||||
Transaction costs / litigation settlement expenses | 328 | 293 | 161 | 1,572 | - | |||||||||||||||||
Adjusted EBITDA | $ | 24,168 | $ | 23,491 | $ | 21,701 | $ | 20,014 | $ | 17,508 | ||||||||||||
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. The company calculates adjusted EBITDA by adding non-cash compensation expense, transaction costs and litigation settlement expense 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