CoreSite Reports Fourth-Quarter Funds from Operations Increased 17% Year over Year
2013 funds from operations increased 17% to
Quarterly and Subsequent Highlights
-
Reported fourth-quarter funds from operations (“FFO”) of
$0.49 per diluted share and unit, representing a 16.7% increase year over year -
Reported fourth-quarter operating revenue of
$61.4 million , representing an 11.2% increase year over year -
Executed new and expansion data center leases representing
$3.5 million of annualized GAAP rent at a rate of$132 of annualized GAAP rent per square foot - Realized rent growth on signed renewals of 3.5% on a cash basis and 14.3% on a GAAP basis and rental churn of 1.9%
-
Increased quarterly dividend by 30% to
$0.35 per share; annual rate of$1.40 per share -
Entered into a new
$100 million , five-year, senior unsecured term loan, and subsequently retired the approximately$58 million loan secured by its SV1 facility
Financial Results
CoreSite reported FFO attributable to shares and units of
Sales Activity
CoreSite executed 122 new and expansion data center leases, representing
CoreSite’s renewal leases signed in the fourth quarter totaled
CoreSite’s fourth-quarter data center lease commencements totaled
116,052 NRSF at a weighted average GAAP rental rate of
Development Activity
In the fourth quarter, CoreSite completed and delivered the
build-to-suit powered shell building at SV5 on its
As of
Balance Sheet and Liquidity
As of
As of
At quarter end, CoreSite had
Dividend
On
CoreSite also announced on
2014 Guidance
CoreSite is introducing its 2014 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
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. 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 2014
Conference Call Details
CoreSite 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 13574365. The replay will be
available until
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” tab. The on-line replay will be available for a limited time immediately following the call.
About CoreSite
More than 750 of the world’s leading enterprises, carriers and mobile operators, content and cloud providers and media and entertainment companies choose CoreSite to connect, protect and optimize their performance-sensitive data, applications and computing workloads. CoreSite provides valuable gateways to global business opportunities with direct access to more than 275 carriers and ISPs, inter-site connectivity and CoreSite's Open Cloud Exchange, which supports rapid, efficient and scalable Ethernet access to multiple key public clouds, enabling simple, flexible, multiple-cloud capabilities.
For more information, visit www.CoreSite.com.
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) | |||||||||||
|
December 31, 2013 |
December 31, 2012 |
||||||||||
| Assets: | |||||||||||
| Investments in real estate: | |||||||||||
| Land | $ | 78,983 | $ | 85,868 | |||||||
| Building and building improvements | 717,007 | 596,405 | |||||||||
| Leasehold improvements | 95,218 | 85,907 | |||||||||
| 891,208 | 768,180 | ||||||||||
| Less: Accumulated depreciation and amortization | (155,704 | ) | (105,433 | ) | |||||||
| Net investment in operating properties | 735,504 | 662,747 | |||||||||
| Construction in progress | 157,317 | 61,328 | |||||||||
| Net investments in real estate | 892,821 | 724,075 | |||||||||
| Cash and cash equivalents | 5,313 | 8,130 | |||||||||
| Accounts and other receivables, net | 10,339 | 9,901 | |||||||||
| Lease intangibles, net | 11,028 | 19,453 | |||||||||
| Goodwill | 41,191 | 41,191 | |||||||||
| Other assets | 55,802 | 42,582 | |||||||||
| Total assets | $ | 1,016,494 | $ | 845,332 | |||||||
| Liabilities and equity: | |||||||||||
| Liabilities | |||||||||||
| Revolving credit facility | $ | 174,250 | $ |
- |
|||||||
| Mortgage loan payable | 58,250 | 59,750 | |||||||||
| Accounts payable and accrued expenses | 67,782 | 50,624 | |||||||||
| Deferred rent payable | 9,646 | 4,329 | |||||||||
| Acquired below-market lease contracts, net | 6,681 | 8,539 | |||||||||
| Prepaid rent and other liabilities | 11,578 | 11,317 | |||||||||
| Total liabilities | 328,187 | 134,559 | |||||||||
| Stockholders' equity | |||||||||||
| Series A cumulative preferred stock | 115,000 | 115,000 | |||||||||
| Common stock, par value $0.01 | 209 | 207 | |||||||||
| Additional paid-in capital | 267,465 | 259,009 | |||||||||
| Distributions in excess of net income | (50,264 | ) | (35,987 | ) | |||||||
| Total stockholders' equity | 332,410 | 338,229 | |||||||||
| Noncontrolling interests | 355,897 | 372,544 | |||||||||
| Total equity | 688,307 | 710,773 | |||||||||
| Total liabilities and equity | $ | 1,016,494 | $ | 845,332 | |||||||
| Consolidated Statement of Operations | |||||||||||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||||
|
December 31, 2013 |
September 30, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|||||||||||||||||||
| Operating revenues: | |||||||||||||||||||||||
| Data center revenue: | |||||||||||||||||||||||
| Rental revenue | $ | 33,988 | $ | 33,428 | $ | 30,251 | $ | 131,080 | $ | 116,146 | |||||||||||||
| Power revenue | 15,669 | 15,979 | 14,129 | 59,663 | 53,672 | ||||||||||||||||||
| Interconnection revenue | 7,866 | 7,441 | 6,369 | 28,932 | 21,637 | ||||||||||||||||||
| Tenant reimbursement and other | 1,885 | 1,873 | 2,506 | 7,317 | 7,088 | ||||||||||||||||||
| Total data center revenue | 59,408 | 58,721 | 53,255 | 226,992 | 198,543 | ||||||||||||||||||
| Office, light industrial and other revenue | 2,032 | 1,914 | 1,997 | 7,841 | 8,391 | ||||||||||||||||||
| Total operating revenues | 61,440 | 60,635 | 55,252 | 234,833 | 206,934 | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Property operating and maintenance | 17,247 | 17,368 | 15,206 | 64,260 | 61,235 | ||||||||||||||||||
| Real estate taxes and insurance | 1,708 | 2,226 | 2,461 | 8,458 | 8,765 | ||||||||||||||||||
| Depreciation and amortization | 17,151 | 16,424 | 16,336 | 65,785 | 64,327 | ||||||||||||||||||
| Sales and marketing | 3,474 | 3,206 | 3,389 | 14,405 | 10,330 | ||||||||||||||||||
| General and administrative | 7,092 | 7,045 | 7,133 | 27,317 | 25,910 | ||||||||||||||||||
| Rent | 5,028 | 5,082 | 4,754 | 19,659 | 18,711 | ||||||||||||||||||
| Transaction costs | - | 25 | 37 | 279 | 613 | ||||||||||||||||||
| Total operating expenses | 51,700 | 51,376 | 49,316 | 200,163 | 189,891 | ||||||||||||||||||
| Operating income | 9,740 | 9,259 | 5,936 | 34,670 | 17,043 | ||||||||||||||||||
| Interest income | 14 | 14 | 1 | 32 | 13 | ||||||||||||||||||
| Interest expense | (759 | ) | (708 | ) | (1,314 | ) | (2,689 | ) | (5,236 | ) | |||||||||||||
| Income before income taxes | 8,995 | 8,565 | 4,623 | 32,013 | 11,820 | ||||||||||||||||||
| Income tax (expense) benefit | 34 | (56 | ) | (45 | ) | (401 | ) | (1,104 | ) | ||||||||||||||
| Net income | 9,029 | 8,509 | 4,578 | 31,612 | 10,716 | ||||||||||||||||||
| Net income attributable to noncontrolling interests | 3,809 | 3,524 | 2,276 | 12,771 | 5,668 | ||||||||||||||||||
| Net income attributable to CoreSite Realty Corporation | 5,220 | 4,985 | 2,302 | 18,841 | 5,048 | ||||||||||||||||||
| Preferred dividends | (2,085 | ) | (2,084 | ) | (440 | ) | (8,338 | ) | (440 | ) | |||||||||||||
| Net income attributable to common shares | $ | 3,135 | $ | 2,901 | $ | 1,862 | $ | 10,503 | $ | 4,608 | |||||||||||||
| Net income per share attributable to common shares: | |||||||||||||||||||||||
| Basic | $ | 0.15 | $ | 0.14 | $ | 0.09 | $ | 0.50 | $ | 0.22 | |||||||||||||
| Diluted | $ | 0.15 | $ | 0.14 | $ | 0.09 | $ | 0.49 | $ | 0.22 | |||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 20,924,624 | 20,871,504 | 20,607,119 | 20,826,622 | 20,537,946 | ||||||||||||||||||
| Diluted | 21,492,301 | 21,479,971 | 21,036,794 | 21,503,212 | 20,992,290 | ||||||||||||||||||
| Reconciliations of Net Income to FFO | |||||||||||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||||
|
December 31, 2013 |
September 30, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|||||||||||||||||||
| Net income | $ | 9,029 | $ | 8,509 | $ | 4,578 | $ | 31,612 | $ | 10,716 | |||||||||||||
| Real estate depreciation and amortization | 16,146 | 15,443 | 15,566 | 62,040 | 61,700 | ||||||||||||||||||
| FFO | $ | 25,175 | $ | 23,952 | $ | 20,144 | $ | 93,652 | $ | 72,416 | |||||||||||||
| Preferred stock dividends | (2,085 | ) | (2,084 | ) | (440 | ) | (8,338 | ) | (440 | ) | |||||||||||||
| FFO available to common shareholders and OP unit holders | $ | 23,090 | $ | 21,868 | $ | 19,704 | $ | 85,314 | $ | 71,976 | |||||||||||||
| Weighted average common shares outstanding - diluted | 21,492,301 | 21,479,971 | 21,036,794 | 21,503,212 | 20,992,290 | ||||||||||||||||||
| Weighted average OP units outstanding - diluted | 25,360,848 | 25,353,942 | 25,353,709 | 25,355,567 | 25,347,936 | ||||||||||||||||||
| Total weighted average shares and units outstanding - diluted | 46,853,149 | 46,833,913 | 46,390,503 | 46,858,779 | 46,340,226 | ||||||||||||||||||
| FFO per common share and OP unit - diluted | $ | 0.49 | $ | 0.47 | $ | 0.42 | $ | 1.82 | $ | 1.55 | |||||||||||||
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
Our management uses FFO as a supplemental performance measure because, in 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 FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, 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, the utility of FFO as a measure of our 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 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.
| Reconciliation of Net Income to EBITDA and Adjusted EBITDA: | |||||||||||||||||||
| (in thousands) | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
|
December 31, 2013 |
September 30, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|||||||||||||||
| Net income | $ | 9,029 | $ | 8,509 | $ | 4,578 | $ | 31,612 | $ | 10,716 | |||||||||
| Adjustments: | |||||||||||||||||||
| Interest expense, net of interest income | 745 | 694 | 1,313 | 2,657 | 5,223 | ||||||||||||||
| Income taxes | (34 | ) | 56 | 45 | 401 | 1,104 | |||||||||||||
| Depreciation and amortization | 17,151 | 16,424 | 16,336 | 65,785 | 64,327 | ||||||||||||||
| EBITDA | $ | 26,891 | $ | 25,683 | $ | 22,272 | $ | 100,455 | $ | 81,370 | |||||||||
| Non-cash compensation | 1,433 | 1,759 | 1,568 | 6,770 | 5,650 | ||||||||||||||
| Transaction costs / litigation | - | 25 | 328 | 529 | 2,354 | ||||||||||||||
| Adjusted EBITDA | $ | 28,324 | $ | 27,467 | $ | 24,168 | $ | 107,754 | $ | 89,374 | |||||||||
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We calculate adjusted EBITDA by adding our non-cash compensation expense, transaction costs and litigation 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 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.
Source:
CoreSite Investor Relations Contact
Greer Aviv | CoreSite
Investor Relations Director
+1 303.405.1012 | +1 303.222.7276
Greer.Aviv@CoreSite.com