0001490892false00014908922020-10-292020-10-29

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): October 29, 2020

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value per share

COR

New York Stock Exchange

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 October 29, 2020, CoreSite Realty Corporation ("CoreSite") issued a press release reporting financial results and operating information for the quarter ended September 30, 2020. 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 October 29, 2020.

99.2

Quarter Ended September 30, 2020, Earnings Release and Supplemental Information, dated October 29, 2020.

101.INS

XBRL Instance – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema Document.

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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: October 29, 2020

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

Graphic

CoreSite Reports Third Quarter 2020 Financial Results

-- Signed $12.5 Million of New and Expansion Sales for the Quarter, Our Highest in 4 Quarters --

-- On-Time Completion of the LA3 Phase 1 Development in Mid-October --

DENVER, CO – October 29, 2020 – CoreSite Realty Corporation (NYSE:COR) (“the Company”), a premier provider of secure, reliable, high-performance data center, cloud and interconnection solutions across the U.S., today announced financial results for the third quarter ended September 30, 2020.

Q3 2020 Quarterly Highlights

Key Financial Results –
oGrew operating revenues to $154.0 million, an increase of 6.3% year over year and 2.3% sequentially
oDelivered net income of $0.50 per common diluted share, an increase of $0.03 year over year and a decrease of $0.02 sequentially
oGenerated Funds From Operations (“FFO”) of $1.33 per diluted share and unit, an increase of $0.05, or 3.9%, year over year and a decrease of $0.02 sequentially, or 1.5%
oPaid a dividend of $1.22 per share for the third quarter on October 15th  
Lease Commencements
oCommenced 130 new and expansion leases for 33,233 net rentable square feet (“NRSF”), representing $7.2 million of annualized GAAP rent, for an average rate of $216 per square foot
Leasing Activity
oSigned 129 new and expansion leases for 72,207 NRSF and $12.5 million of annualized GAAP rent, for an average rate of $173 per square foot
oRenewed 309 leases for 135,959 NRSF and $20.7 million of annualized GAAP rent, for an average rate of $152 per square foot, reflecting an increase of 2.9% in cash rent and 5.1% in GAAP rent, and reported churn of 1.9%

Q3 2020 Notable Events

Delivered new data center capacity on its Los Angeles campus in mid-October
oCompleted Phase 1 of its new LA3 data center, comprised of 51,000 NRSF and 6 megawatts (“MW”), and
oCommenced its previously announced LA3 pre-lease for 38,000 NRSF and 4.5 MWs
Completed the NY2 power infrastructure project
oAdded an incremental 4 MWs of power to support existing space at its NY2 data center
Published its third annual Corporate Sustainability Report  
oThe report summarizes our commitment to its customers, colleagues, and communities, and
oDiscusses the Company’s holistic focus on a broad range of success measures that take into account all of its stakeholders

“Over the last three years, we have added extensive data center capacity to strategically support organic growth, and continue to translate that capacity into larger and better customer communities in our markets,” said Paul Szurek, CoreSite’s President and Chief Executive Officer. “Our edge capacity is crucial to meeting the customer demand we continue to see in our major metro markets, especially for enterprises seeking the highest performance, cost effective, secure and reliable colocation solutions for multi- and hybrid-cloud IT architectures.”

Graphic

© 2020, CoreSite, L.L.C. All Rights Reserved

1


Sales Activity

CoreSite achieved new and expansion sales of $12.5 million of annualized GAAP rent for the quarter, which included $5.6 million of core retail colocation sales and $6.9 million of scale leasing. Retail colocation pricing was stable, with continued expansion with strategic customers and strength in new logo acquisition.

“The hard work of our team resulted in strategic sales wins for the quarter,” said Steve Smith, CoreSite’s Chief Revenue Officer. “Although we continued to see elongated sales cycles due to the pandemic, we are now seeing more reprioritization of digital transformation by enterprises, and we continue to build on and maintain a robust pipeline to support future quarter sales.”

“Our strong scale leasing this quarter included one relatively modest hyperscale lease, and we expect to continue to use our increased capacity to compete for scale opportunities with those customers who enrich our ecosystem,” said Steve Smith.

As of September 30, 2020, CoreSite had annualized GAAP backlog of $17.8 million, or $23.6 million on a cash basis.

Other Financial Results

CoreSite’s $154.0 million of operating revenues for the third quarter included $130.3 million of rental, power and related revenue, reflecting 6.3% year over year growth, $21.1 million of interconnection revenue, 10.8% year over year growth, and $2.5 million of office, light-industrial and other revenue. Net income was $24.1 million for the quarter, or $0.50 attributable to each common diluted share.

Development Activity

CoreSite continues to execute on its property development pipeline. The Company has delivered a significant amount of capacity year-to-date, which enables it generally to turn up services for its customers quickly.

oDuring the third quarter, CoreSite completed its NY2 power infrastructure project, which adds an incremental 4 megawatts of power to support existing space and completed computer rooms.
oIn mid-October, the Company completed and placed into service LA3 Phase 1, comprising 51,000 NRSF and an incremental 6 MWs of turn-key data center capacity. LA3 Phase 1 was 74% pre-leased, and the customer lease commenced in October.
oThe Company has completed and placed into service 193,000 NRSF and 22 MWs of capacity year to date, including the completion of LA3 Phase 1.

CoreSite’s ongoing data center development and operational position includes –

othe ability to increase its occupied footprint of Tier 1, purpose-built data centers, both owned or leased, by approximately 2.1 million NRSF, or about 91.8%, including space unoccupied, under construction, pre-construction or held for development, and
oowning (versus leasing) 92.4% of its current and developable 4.3 million data center NRSF, supporting operational control, expansion and long-term expense management.

Graphic

© 2020, CoreSite, L.L.C. All Rights Reserved

2


Balance Sheet and Liquidity

The Company’s balance sheet remains strong, with a ratio of net principal debt to third quarter annualized adjusted EBITDA of 5.2 times, or 4.9 times including backlog. As of the end of the third quarter, CoreSite had $326.8 million of current liquidity, including $2.9 million of cash and $323.9 million of available capacity on its revolving credit facility.

Financing

On July 14th, the Company received the remaining $50 million of proceeds from the 7-year $150 million unsecured private placement of senior notes that it closed on May 6th. CoreSite used the proceeds to repay outstanding amounts on its revolving credit facility and for general working capital. The Company ended the quarter with 7% variable debt and 93% fixed debt.

2020 Guidance

CoreSite increased its 2020 Guidance related to net income attributable to common diluted shares to its new guidance range of $1.92 to $1.96 per share from its previous range of $1.81 to $1.91 per share. In addition, CoreSite increased its 2020 FFO per share guidance to its new guidance range of $5.26 to $5.30 per share from its previous range of $5.15 to $5.25 per share, and increased its adjusted EBITDA to $323 million at the midpoint from its midpoint of $321 million previously. The increase of $0.08 per share at the midpoint of FFO, or 1.5%, is largely driven by COVID-related travel and entertainment expense savings, decreased property taxes and insurance expense, and management of other operating costs. CoreSite’s full 2020 guidance can be found in the Company’s third quarter 2020 Supplemental Earnings Information on page 23.

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© 2020, CoreSite, L.L.C. All Rights Reserved

3


Upcoming Conferences and Events

CoreSite’s management will participate virtually in the Nareit REITworld Annual Conference on November 17th and 18th.

Conference Call Details

CoreSite will host its third quarter 2020 earnings call on Thursday, October 29, 2020, 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 after the call until November 5, 2020, and can be accessed dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The passcode for the replay is 13710893.  

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 third quarter 2020 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, cloud 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 460+ 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

Kate Ruppe

Investor Relations

303-222-7369
InvestorRelations@CoreSite.com

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© 2020, CoreSite, L.L.C. All Rights Reserved

4


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 level of supply of or 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, including indirect competition from cloud service providers; 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;  the effects on our business operations, demand for our services and general economic conditions resulting from the spread of the novel coronavirus (“COVID-19”) in our markets, as well as orders, directives and legislative action by local, state and federal governments in response to such spread of COVID-19; 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

Graphic

© 2020, CoreSite, L.L.C. All Rights Reserved

5


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 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.

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© 2020, CoreSite, L.L.C. All Rights Reserved

6


Consolidated Balance Sheets

(in thousands, except per share data)

  

September 30,

  

December 31,

 

2020

2019

Assets:

Investments in real estate:

Land

$

100,432

$

94,593

Buildings and improvements

2,148,435

1,989,731

2,248,867

2,084,324

Less: Accumulated depreciation and amortization

(829,055)

(720,498)

Net investment in operating properties

1,419,812

1,363,826

Construction in progress

415,210

394,474

Net investments in real estate

1,835,022

1,758,300

Operating lease right-of-use assets, net

166,807

172,976

Cash and cash equivalents

2,894

3,048

Accounts and other receivables, net

31,388

21,008

Lease intangibles, net

2,959

3,939

Goodwill

40,646

40,646

Other assets, net

103,262

101,082

Total assets

$

2,182,978

$

2,100,999

Liabilities and equity:

Liabilities

Debt, net

$

1,686,810

$

1,478,402

Operating lease liabilities

182,068

187,443

Accounts payable and accrued expenses

91,310

123,304

Accrued dividends and distributions

62,796

62,332

Acquired below-market lease contracts, net

2,362

2,511

Unearned revenue, prepaid rent and other liabilities

54,848

33,119

Total liabilities

2,080,194

1,887,111

Stockholders' equity

Common stock, par value $0.01

422

373

Additional paid-in capital

551,227

512,324

Accumulated other comprehensive loss

(22,355)

(6,026)

Distributions in excess of net income

(439,028)

(348,509)

Total stockholders' equity

90,266

158,162

Noncontrolling interests

12,518

55,726

Total equity

102,784

213,888

Total liabilities and equity

$

2,182,978

$

2,100,999

Graphic

© 2020, CoreSite, L.L.C. All Rights Reserved

7


Consolidated Statements of Operations

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

  

2020

2020

2019

  

2020

  

2019

  

Operating revenues:

 

  

 

 

Data center revenue:(1)

 

Rental, power, and related revenue

$

130,300

$

127,108

$

122,598

$

381,913

$

361,534

 

Interconnection revenue

21,144

20,897

19,082

62,126

56,274

 

Total data center revenue

151,444

148,005

141,680

444,039

417,808

 

Office, light-industrial and other revenue

2,537

2,538

3,211

7,847

8,884

 

Total operating revenues

153,981

150,543

144,891

451,886

426,692

 

 

Operating expenses:

 

Property operating and maintenance

44,986

41,037

41,251

126,206

117,428

 

Real estate taxes and insurance

5,989

5,599

4,973

17,778

17,157

 

Depreciation and amortization

41,759

41,779

40,546

124,529

113,188

 

Sales and marketing

5,901

5,837

5,476

17,882

16,912

 

General and administrative

10,854

11,603

10,671

33,724

33,123

 

Rent

8,966

8,995

8,331

26,360

23,752

 

Total operating expenses

118,455

114,850

111,248

346,479

321,560

 

Operating income

35,526

35,693

33,643

105,407

105,132

 

Interest expense

(11,384)

(10,586)

(10,986)

(33,153)

(30,795)

 

Income before income taxes

24,142

25,107

22,657

72,254

74,337

 

Income tax expense

(10)

(19)

(13)

(46)

(45)

 

Net income

24,132

25,088

22,644

72,208

74,292

 

Net income attributable to noncontrolling interests

3,000

4,417

5,194

12,557

17,646

 

Net income attributable to common shares

$

21,132

$

20,671

$

17,450

$

59,651

$

56,646

 

 

Net income per share attributable to common shares:

 

Basic

$

0.50

$

0.52

$

0.47

$

1.50

$

1.55

 

Diluted

$

0.50

$

0.52

$

0.47

$

1.49

$

1.54

 

 

Weighted average common shares outstanding:

 

Basic

42,235

39,873

36,951

39,823

36,590

 

Diluted

42,404

39,993

37,132

39,996

36,763

 

(1)Below is a breakout of our contractual data center rental, power, and tenant reimbursements and other revenue:

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

  

2019

Rental revenue

$

82,943

$

81,612

$

77,907

$

245,441

$

229,366

Power revenue

43,112

41,902

41,783

126,292

123,602

Tenant reimbursement and other

4,245

3,594

2,908

10,180

8,566

Rental, power, and related revenue

$

130,300

$

127,108

$

122,598

$

381,913

$

361,534

Graphic

© 2020, CoreSite, L.L.C. All Rights Reserved

8


Reconciliations of Net Income to FFO

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

 

  

September 30,

June 30,

September 30,

September 30,

  

September 30,

 

  

2020

2020

2019

2020

  

2019

 

Net income

$

24,132

$

25,088

$

22,644

$

72,208

$

74,292

 

Real estate depreciation and amortization

40,136

40,162

39,092

119,713

108,852

 

FFO available to common shareholders and OP unit holders

$

64,268

$

65,250

$

61,736

$

191,921

$

183,144

 

 

Weighted average common shares outstanding - diluted

42,404

39,993

37,132

39,996

36,763

 

Weighted average OP units outstanding - diluted

6,030

8,377

11,118

8,392

11,437

 

Total weighted average shares and units outstanding - diluted

48,434

48,370

48,250

48,388

48,200

 

 

FFO per common share and OP unit - diluted

$

1.33

$

1.35

$

1.28

$

3.97

$

3.80

 

Reconciliations of Net Income to EBITDAre and Adjusted EBITDA:

(in thousands)

Three Months Ended

Nine Months Ended

 

  

September 30,

June 30,

September 30,

September 30,

  

September 30,

 

  

2020

2020

2019

2020

  

2019

 

Net income

$

24,132

$

25,088

$

22,644

$

72,208

$

74,292

 

Adjustments:

 

Interest expense

11,384

10,586

10,986

33,153

30,795

 

Income taxes

10

19

13

46

45

 

Depreciation and amortization

41,759

41,779

40,546

124,529

113,188

 

EBITDAre

$

77,285

$

77,472

$

74,189

$

229,936

$

218,320

 

Non-cash compensation

4,156

4,172

3,732

11,810

10,781

 

Transaction costs / litigation

7

7

 

Adjusted EBITDA

$

81,441

$

81,644

$

77,928

$

241,746

$

229,108

 

Graphic

© 2020, CoreSite, L.L.C. All Rights Reserved

9


Table of Contents

Graphic


Table of Contents

Table of Contents


Overview

Earnings Release

3

Company Profile

8

Summary of Financial Data

9

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

2020 Guidance

23

Appendix

24

Quarter Ended September 30, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

2


Table of Contents

CoreSite Reports Third Quarter 2020 Financial Results


-- Signed $12.5 Million of New and Expansion Sales for the Quarter, Our Highest in 4 Quarters --

-- On-Time Completion of the LA3 Phase 1 Development in Mid-October --

DENVER, CO – October 29, 2020 – CoreSite Realty Corporation (NYSE:COR) (“the Company”), a premier provider of secure, reliable, high-performance data center, cloud and interconnection solutions across the U.S., today announced financial results for the third quarter ended September 30, 2020.

Q3 2020 Quarterly Highlights

Key Financial Results –
oGrew operating revenues to $154.0 million, an increase of 6.3% year over year and 2.3% sequentially
oDelivered net income of $0.50 per common diluted share, an increase of $0.03 year over year and a decrease of $0.02 sequentially
oGenerated Funds From Operations (“FFO”) of $1.33 per diluted share and unit, an increase of $0.05, or 3.9%, year over year and a decrease of $0.02 sequentially, or 1.5%
oPaid a dividend of $1.22 per share for the third quarter on October 15th  
Lease Commencements
oCommenced 130 new and expansion leases for 33,233 net rentable square feet (“NRSF”), representing $7.2 million of annualized GAAP rent, for an average rate of $216 per square foot
Leasing Activity
oSigned 129 new and expansion leases for 72,207 NRSF and $12.5 million of annualized GAAP rent, for an average rate of $173 per square foot
oRenewed 309 leases for 135,959 NRSF and $20.7 million of annualized GAAP rent, for an average rate of $152 per square foot, reflecting an increase of 2.9% in cash rent and 5.1% in GAAP rent, and reported churn of 1.9%

Q3 2020 Notable Events

Delivered new data center capacity on its Los Angeles campus in mid-October
oCompleted Phase 1 of its new LA3 data center, comprised of 51,000 NRSF and 6 megawatts (“MW”), and
oCommenced its previously announced LA3 pre-lease for 38,000 NRSF and 4.5 MWs
Completed the NY2 power infrastructure project
oAdded an incremental 4 MWs of power to support existing space at its NY2 data center
Published its third annual Corporate Sustainability Report  
oThe report summarizes our commitment to its customers, colleagues, and communities, and
oDiscusses the Company’s holistic focus on a broad range of success measures that take into account all of its stakeholders

“Over the last three years, we have added extensive data center capacity to strategically support organic growth, and continue to translate that capacity into larger and better customer communities in our markets,” said Paul Szurek, CoreSite’s President and Chief Executive Officer. “Our edge capacity is crucial to meeting the customer demand we continue to see in our major metro markets, especially for enterprises seeking the highest performance, cost effective, secure and reliable colocation solutions for multi- and hybrid-cloud IT architectures.”

Quarter Ended September 30, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

3


Table of Contents

Quarter Ended September 30, 2020


Sales Activity

CoreSite achieved new and expansion sales of $12.5 million of annualized GAAP rent for the quarter, which included $5.6 million of core retail colocation sales and $6.9 million of scale leasing. Retail colocation pricing was stable, with continued expansion with strategic customers and strength in new logo acquisition.

“The hard work of our team resulted in strategic sales wins for the quarter,” said Steve Smith, CoreSite’s Chief Revenue Officer. “Although we continued to see elongated sales cycles due to the pandemic, we are now seeing more reprioritization of digital transformation by enterprises, and we continue to build on and maintain a robust pipeline to support future quarter sales.”

“Our strong scale leasing this quarter included one relatively modest hyperscale lease, and we expect to continue to use our increased capacity to compete for scale opportunities with those customers who enrich our ecosystem,” said Steve Smith.

As of September 30, 2020, CoreSite had annualized GAAP backlog of $17.8 million, or $23.6 million on a cash basis.

Other Financial Results

CoreSite’s $154.0 million of operating revenues for the third quarter included $130.3 million of rental, power and related revenue, reflecting 6.3% year over year growth, $21.1 million of interconnection revenue, 10.8% year over year growth, and $2.5 million of office, light-industrial and other revenue. Net income was $24.1 million for the quarter, or $0.50 attributable to each common diluted share.

Development Activity

CoreSite continues to execute on its property development pipeline. The Company has delivered a significant amount of capacity year-to-date, which enables it generally to turn up services for its customers quickly.

oDuring the third quarter, CoreSite completed its NY2 power infrastructure project, which adds an incremental 4 megawatts of power to support existing space and completed computer rooms.
oIn mid-October, the Company completed and placed into service LA3 Phase 1, comprising 51,000 NRSF and an incremental 6 MWs of turn-key data center capacity. LA3 Phase 1 was 74% pre-leased, and the customer lease commenced in October.
oThe Company has completed and placed into service 193,000 NRSF and 22 MWs of capacity year to date, including the completion of LA3 Phase 1.

CoreSite’s ongoing data center development and operational position includes –

othe ability to increase its occupied footprint of Tier 1, purpose-built data centers, both owned or leased, by approximately 2.1 million NRSF, or about 91.8%, including space unoccupied, under construction, pre-construction or held for development, and
oowning (versus leasing) 92.4% of its current and developable 4.3 million data center NRSF, supporting operational control, expansion and long-term expense management.

Quarter Ended September 30, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

4


Table of Contents

Quarter Ended September 30, 2020


Balance Sheet and Liquidity

The Company’s balance sheet remains strong, with a ratio of net principal debt to third quarter annualized adjusted EBITDA of 5.2 times, or 4.9 times including backlog. As of the end of the third quarter, CoreSite had $326.8 million of current liquidity, including $2.9 million of cash and $323.9 million of available capacity on its revolving credit facility.

Financing

On July 14th, the Company received the remaining $50 million of proceeds from the 7-year $150 million unsecured private placement of senior notes that it closed on May 6th. CoreSite used the proceeds to repay outstanding amounts on its revolving credit facility and for general working capital. The Company ended the quarter with 7% variable debt and 93% fixed debt.

2020 Guidance

CoreSite increased its 2020 Guidance related to net income attributable to common diluted shares to its new guidance range of $1.92 to $1.96 per share from its previous range of $1.81 to $1.91 per share. In addition, CoreSite increased its 2020 FFO per share guidance to its new guidance range of $5.26 to $5.30 per share from its previous range of $5.15 to $5.25 per share, and increased its adjusted EBITDA to $323 million at the midpoint from its midpoint of $321 million previously. The increase of $0.08 per share at the midpoint of FFO, or 1.5%, is largely driven by COVID-related travel and entertainment expense savings, decreased property taxes and insurance expense, and management of other operating costs. CoreSite’s full 2020 guidance can be found in the Company’s third quarter 2020 Supplemental Earnings Information on page 23.

Quarter Ended September 30, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

5


Table of Contents

Quarter Ended September 30, 2020


Upcoming Conferences and Events

CoreSite’s management will participate virtually in the Nareit REITworld Annual Conference on November 17th and 18th.

Conference Call Details

CoreSite will host its third quarter 2020 earnings call on Thursday, October 29, 2020, 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 after the call until November 5, 2020, and can be accessed dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The passcode for the replay is 13710893.

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 third quarter 2020 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, cloud 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 460+ 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

Kate Ruppe

Investor Relations

303-222-7369
InvestorRelations@CoreSite.com

Quarter Ended September 30, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

6


Table of Contents

Quarter Ended September 30, 2020


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 level of supply of or 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, including indirect competition from cloud service providers; 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; the effects on our business operations, demand for our services and general economic conditions resulting from the spread of the novel coronavirus (“COVID-19”) in our markets, as well as orders, directives and legislative action by local, state and federal governments in response to such spread of COVID-19; 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.

Quarter Ended September 30, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

7


Table of Contents

Company Profile


Low-latency, secure and reliable access to Amazon, Microsoft, Google, Alibaba Cloud, Oracle and IBM from eight key North American Markets.

Graphic

ONE DATA CENTER PROVIDER. EVERYTHING YOU NEED.

CONNECTIVITY TO NETWORKS AND CLOUDS

THE BEST CUSTOMER EXPERIENCE

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

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

•   30,000+ interconnections

•   Peering and cloud exchanges

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

•   CoreSite’s Inter-Site Connectivity allows SDN connectivity between its markets, enabling access to its national ecosystem

460+ team dedicated to ensuring optimal data center performance and meeting the needs of our 1,350+ customers at all times of day

•   Consistent customer satisfaction demonstrated by customer expansion and retention

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

•   100% uptime Service Level Agreement with a minimum of six-nines portfolio uptime goal

•   Prepared to support and respond to our customers, employees, and communities during the COVID-19 pandemic

•   Direct access through our customer portal to provision new space, power, cross-connects, and monitor temperature, humidity, and power draw

HIGH GROWTH, HIGH-DENSITY SOLUTIONS

LOW LATENCY, EDGE MARKETS, GLOBAL REACH

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

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

•   Data center campuses that connect our buildings via short-run dark fiber to a network/cloud dense campus ecosystem

•   Flexible and high-density solutions

The closer a business is to end users, the easier it is to provide a high quality experience

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

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

•   Subsea cables for international reach

Quarter Ended September 30, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

8


Table of Contents

Summary of Financial Data


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

For the period of

Growth %

Growth %

Growth %

Summary of Results

Q3 2020

Q2 2020

Q3 2019

Q/Q

Y/Y

YTD 2020

YTD 2019

Y/Y

GAAP Financial Measures

Operating revenues

$

153,981

$

150,543

$

144,891

2.3

%

6.3

%

$

451,886

$

426,692

5.9

%

Net income

24,132

25,088

22,644

(3.8)

6.6

72,208

74,292

(2.8)

Net income attributable to common shares

21,132

20,671

17,450

2.2

21.1

59,651

56,646

5.3

Net income per share attributable to common shares - diluted

$

0.50

$

0.52

$

0.47

(3.8)

6.4

$

1.49

$

1.54

(3.2)

REIT Financial Measures(1)

Funds from operations (FFO) to shares and units

$

64,268

$

65,250

$

61,736

(1.5)

%

4.1

%

$

191,921

$

183,144

4.8

%

Adjusted funds from operations (AFFO)

62,580

65,291

61,171

(4.2)

2.3

187,981

185,125

1.5

EBITDAre

77,285

77,472

74,189

(0.2)

4.2

229,936

218,320

5.3

Adjusted EBITDA

81,441

81,644

77,928

(0.2)

4.5

241,746

229,108

5.5

FFO per common share and OP unit - diluted

$

1.33

$

1.35

$

1.28

(1.5)

3.9

$

3.97

$

3.80

4.5

Other Financial Ratios

EBITDAre Margin

50.2

%

51.5

%

51.2

%

(130)

bps

(100)

bps

50.9

%

51.2

%

(30)

bps

Adjusted EBITDA Margin

52.9

%

54.2

%

53.8

%

(130)

bps

(90)

bps

53.5

%

53.7

%

(20)

bps

As of

    

Q3 2020

    

Q2 2020

    

Q1 2020

    

Q4 2019

Q3 2019

    

Dividend Activity

Dividends declared per share and OP unit

$

1.22

$

1.22

$

1.22

$

1.22

$

1.22

TTM FFO payout ratio

93.1

%

93.9

95.2

93.7

92.1

TTM AFFO payout ratio

94.8

%

95.2

95.9

93.2

91.2

Operating Portfolio Statistics

Operating data center properties

24

24

23

23

23

Stabilized data center NRSF

2,516,411

2,516,411

2,482,660

2,406,512

2,335,962

Stabilized data center NRSF occupied

2,207,215

2,226,153

2,183,751

2,179,854

2,110,574

Stabilized data center % occupied

87.7

%

88.5

88.0

90.6

90.4

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

MRR per cabinet equivalent

$

1,604

$

1,596

$

1,602

$

1,597

$

1,580

TKD NRSF % occupied

83.6

%

84.6

83.4

83.6

83.3

Market Capitalization & Net Principal Debt

Total enterprise value

$

7,479,878

$

7,514,871

$

7,218,678

$

6,919,211

$

7,287,403

Total net principal debt outstanding

$

1,692,106

$

1,621,314

$

1,577,193

$

1,484,452

$

1,382,547

Net Principal Debt to:

Annualized adjusted EBITDA

5.2

x

5.0

x

5.0

x

4.7

x

4.4

x

Annualized adjusted EBITDA, including backlog(2)

4.9

x

4.8

x

4.7

x

4.5

x

4.1

x

Enterprise value

22.6

21.6

21.8

21.5

19.0

(1)See reconciliations of non-GAAP measures on page 12 and a discussion of the non-GAAP disclosures in the Appendix.
(2)Backlog is the annualized rent for data center leases that were signed, but have not yet commenced during the quarter. Backlog for the quarter ended September 30, 2020, was $17.8 million on a GAAP basis and $23.6 million on a cash basis.

Quarter Ended September 30, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

9


Table of Contents

Consolidated Balance Sheets


(in thousands, except per share data)

  

September 30,

  

December 31,

 

2020

2019

Assets:

Investments in real estate:

Land

$

100,432

$

94,593

Buildings and improvements

2,148,435

1,989,731

2,248,867

2,084,324

Less: Accumulated depreciation and amortization

(829,055)

(720,498)

Net investment in operating properties

1,419,812

1,363,826

Construction in progress

415,210

394,474

Net investments in real estate

1,835,022

1,758,300

Operating lease right-of-use assets, net

166,807

172,976

Cash and cash equivalents

2,894

3,048

Accounts and other receivables, net

31,388

21,008

Lease intangibles, net

2,959

3,939

Goodwill

40,646

40,646

Other assets, net

103,262

101,082

Total assets

$

2,182,978

$

2,100,999

Liabilities and equity:

Liabilities

Debt, net

$

1,686,810

$

1,478,402

Operating lease liabilities

182,068

187,443

Accounts payable and accrued expenses

91,310

123,304

Accrued dividends and distributions

62,796

62,332

Acquired below-market lease contracts, net

2,362

2,511

Unearned revenue, prepaid rent and other liabilities

54,848

33,119

Total liabilities

2,080,194

1,887,111

Stockholders' equity