0001490892false00014908922021-02-042021-02-04

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): February 4, 2021

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 February 4, 2021, CoreSite Realty Corporation ("CoreSite") issued a press release reporting financial results and operating information for the quarter ended December 31, 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 February 4, 2021.

99.2

Quarter Ended December 31, 2020, Earnings Release and Supplemental Information, dated February 4, 2021.

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: February 4, 2021

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 Fourth Quarter 2020 Financial Results

- Signed $37.6 Million of New and Expansion Sales for the Full Year 2020, Including $9.7 Million in Q4 -

- Delivered New Data Center Capacity of 192,000 NRSF During 2020, Including 50,000 NRSF in Q4 -

- Ended 2020 with 40 Megawatts of Leasable Capacity -

DENVER, CO – February 4, 2021 – CoreSite Realty Corporation (NYSE:COR) (“the Company”), a premier provider of secure, reliable, high-performance data center, cloud access and interconnection solutions across the U.S., today announced financial results for the year and quarter ended December 31, 2020.

2020 Annual Highlights

oKey Financial Results –
oGrew operating revenues to $606.8 million, an annual increase of 6.0%
oDelivered net income of $1.95 per common diluted share, an annual decrease of $0.10 per share
oGrew adjusted EBITDA to $324.5 million, an annual increase of 5.3%
oGenerated Funds From Operations (“FFO”) of $5.31 per diluted share and unit, an annual increase of $0.21 per share, or 4.1%
oSigned $37.6 million of annualized GAAP rent, a record year for retail and small scale leasing
oCommenced $45.2 million of annualized GAAP rent
oDelivered new data center capacity of 192,000 net rentable square feet (“NRSF”) comprised of 22 megawatts (“MW”)

Q4 2020 Quarterly Highlights

oKey Financial Results –
oGrew operating revenues to $154.9 million, an increase of 6.1% year over year
oDelivered net income of $0.46 per common diluted share, a decrease of $0.05 year over year
oGrew adjusted EBITDA to $82.8 million, an increase of 4.7% year over year
oGenerated FFO of $1.34 per diluted share and unit, an increase of $0.04, or 3.1%, year over year
oPaid a dividend of $1.23 per share for the fourth quarter on January 15th, representing an increase of 0.8% over the previous quarter.
oLease Commencements
oCommenced 147 new and expansion leases for 109,154 NRSF, representing $20.4 million of annualized GAAP rent, for an average rate of $187 per square foot
oLeasing Activity
oSigned 151 new and expansion leases for 53,953 NRSF and $9.7 million of annualized GAAP rent, for an average rate of $180 per square foot
oRenewed 260 leases for 121,420 NRSF and $15.8 million of annualized GAAP rent, for an average rate of $130 per square foot
oRenewed leases reflected an increase of 1.0% in cash rent and 4.4% in GAAP rent, and churn was 5.4%

Q4 2020 Notable Events

oDelivered new data center capacity on its Los Angeles campus
oCompleted and placed into service LA3 Phase 1 for 50,000 NRSF with 80% leased
oCommenced the previously announced LA3 pre-lease for 38,000 NRSF and 4.5 MWs

“We executed well on each of our 2020 priorities amidst the backdrop of the global pandemic,” said Paul Szurek, CoreSite’s President and Chief Executive Officer. “The pandemic created a challenging environment that forced the team to rethink prior practices, and I’m proud of our ability to adapt quickly while continuing to execute on each priority.”

Graphic

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

1


Sales Activity

CoreSite achieved new and expansion sales of almost $9.7 million of annualized GAAP rent for the quarter, which included $4.4 million of annualized GAAP rent from retail colocation leases, $3.7 million of annualized GAAP rent from small scale leases, and $1.5 million from large scale leases.

“We delivered solid new and expansion sales in the fourth quarter, ending 2020 strongly,” said Steve Smith, CoreSite’s Chief Revenue Officer. “We believe we are well positioned to continue to take advantage of our available, contiguous capacity and to translate new and vacant capacity into increased sales opportunities as we attract new customers and grow with our existing customers that value our platform.”

As of December 31, 2020, CoreSite had annualized GAAP backlog of $7.8 million, or $21.4 million on a cash basis.

Other Financial Results

CoreSite’s $154.9 million of operating revenues for the fourth quarter included $130.4 million of rental, power and related revenue, reflecting 5.5% year over year growth, $21.9 million of interconnection revenue, reflecting 12.7% year over year growth, and $2.6 million of office, light-industrial and other revenue. Net income was $22.4 million for the quarter, or $0.46 attributable to each common diluted share.

Development Activity

CoreSite continues to execute on its property development pipeline and exited 2020 with 40 MW of available capacity in its top five markets, compared to 23 MW at the end of 2019. The Company has delivered a significant amount of capacity year-to-date, which enables it to turn up services for its customers quickly.

oDuring the fourth quarter, CoreSite completed and placed into service LA3 Phase 1, comprising 50,000 NRSF and 6 MWs of turn-key data center capacity. LA3 Phase 1 is 80% leased.
oThe Company completed and placed into service 192,000 NRSF comprised of 22 MWs of capacity during 2020.
oLA3 Phase 2 comprised of 54,000 NRSF and 6 MWs was placed under construction in late December 2020. This project is expected to be complete in the fourth quarter of 2021.

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 2.0 million NRSF, or about 87.4%, including space unoccupied, under construction, pre-construction or held for development, and
oowning (versus leasing) 93.1% of its current and developable 4.3 million data center NRSF, supporting operational control, expansion and long-term expense management.

Graphic

© 2021, 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 fourth quarter annualized adjusted EBITDA of 5.2 times, or 5.1 times including backlog. As of the end of the fourth quarter, CoreSite had approximately $301.0 million of current liquidity, including $5.5 million of cash and $295.5 million of available capacity on its revolving credit facility.

Operational Excellence

The Company achieved seven-nines, or 99.999996%, of uptime for power and cooling across its portfolio of data centers, which exceeded the Company’s target of six-nines and the industry standard of five-nines.

2021 Financial Outlook

CoreSite’s outlook is based 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 future financing, investment or disposition activities, beyond what has already been disclosed.

The Company’s guidance for 2021 includes –

oTotal operating revenues in the range of $642.0 million to $652.0 million, representing 6.6% growth at the midpoint,
oAdjusted EBITDA in the range of $336.0 million to $346.0 million, representing 5.1% growth at the midpoint,
oNet income attributable to common diluted shares in the range of $1.81 to $1.91, representing a decrease of 4.4% at the midpoint, and
oFFO per common diluted share and unit in the range of $5.42 to $5.52, representing growth of 3.0% at the midpoint.

CoreSite’s 2021 guidance drivers include –

oAnnual rental churn rate in the range of 6.5% to 8.5%,
oCash rent growth on data center renewals in the range of 0.0% to 2.0%, and
oTotal capital expenditures in the range of $185.0 million to $225.0 million.

The difference between net income and FFO represents real estate depreciation and amortization. For further details on the Company’s 2021 guidance, including operating revenues, Adjusted EBITDA, depreciation and amortization and capital expenditures, along with guidance drivers and other information, please see page 22 of CoreSite’s Supplemental Information.

Graphic

© 2021, CoreSite, L.L.C. All Rights Reserved

3


Conference Call Details

CoreSite will host its fourth quarter 2020 earnings call on Thursday, February 4, 2021, 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 February 11, 2021, and can be accessed dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The passcode for the replay is 13714615.  

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 fourth quarter 2020 Supplemental Information on its website at CoreSite.com, under the “Investors” link.

Upcoming Conferences and Events

CoreSite’s management will participate virtually in Raymond James and Associates’ 42nd Annual Institutional Investors Conference on March 1, 2021, Citi’s 2021 Global Property CEO Conference on March 8-11, 2021, and RBC Capital Markets’ Datacenter / Cloud Infrastructure Executive Meetings on March 30, 2021.  

About CoreSite

CoreSite Realty Corporation (NYSE:COR) delivers secure, reliable, high-performance data center, cloud access and interconnection solutions to a growing customer ecosystem across eight key North American markets. More than 1,375 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

Graphic

© 2021, 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 economic effect and could materially impact the Company’s financial condition and results from operations. FFO

Graphic

© 2021, CoreSite, L.L.C. All Rights Reserved

5


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.

Graphic

© 2021, CoreSite, L.L.C. All Rights Reserved

6


Consolidated Balance Sheets

(in thousands, except per share data)

  

December 31,

  

December 31,

 

2020

2019

Assets:

Investments in real estate:

Land

$

104,734

$

94,593

Buildings and improvements

2,273,536

1,989,731

2,378,270

2,084,324

Less: Accumulated depreciation and amortization

(867,975)

(720,498)

Net investment in operating properties

1,510,295

1,363,826

Construction in progress

319,411

394,474

Net investments in real estate

1,829,706

1,758,300

Operating lease right-of-use assets, net

173,928

172,976

Cash and cash equivalents

5,543

3,048

Accounts and other receivables, net

20,849

21,008

Lease intangibles, net

2,507

3,939

Goodwill

40,646

40,646

Other assets, net

103,094

101,082

Total assets

$

2,176,273

$

2,100,999

Liabilities and equity:

Liabilities

Debt, net

$

1,715,911

$

1,478,402

Operating lease liabilities

189,404

187,443

Accounts payable and accrued expenses

79,140

123,304

Accrued dividends and distributions

63,878

62,332

Acquired below-market lease contracts, net

2,313

2,511

Unearned revenue, prepaid rent and other liabilities

53,149

33,119

Total liabilities

2,103,795

1,887,111

Stockholders' equity

Common stock, par value $0.01

422

373

Additional paid-in capital

555,595

512,324

Accumulated other comprehensive loss

(20,526)

(6,026)

Distributions in excess of net income

(471,910)

(348,509)

Total stockholders' equity

63,581

158,162

Noncontrolling interests

8,897

55,726

Total equity

72,478

213,888

Total liabilities and equity

$

2,176,273

$

2,100,999

Graphic

© 2021, CoreSite, L.L.C. All Rights Reserved

7


Consolidated Statements of Operations

(in thousands, except per share data)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

  

2020

2020

2019

  

2020

  

2019

  

Operating revenues:

 

  

 

 

Data center revenue:(1)

 

Rental, power, and related revenue

$

130,430

$

130,300

$

123,597

$

512,343

$

485,131

 

Interconnection revenue

21,947

21,144

19,477

84,073

75,751

 

Total data center revenue

152,377

151,444

143,074

596,416

560,882

 

Office, light-industrial and other revenue

2,561

2,537

2,961

10,408

11,845

 

Total operating revenues

154,938

153,981

146,035

606,824

572,727

 

 

Operating expenses:

 

Property operating and maintenance

43,649

44,986

39,865

169,855

157,293

 

Real estate taxes and insurance

6,218

5,989

5,709

23,996

22,866

 

Depreciation and amortization

44,386

41,759

39,737

168,915

152,925

 

Sales and marketing

5,844

5,901

5,527

23,726

22,439

 

General and administrative

10,302

10,854

10,641

44,026

43,764

 

Rent

10,187

8,966

8,872

36,547

32,624

 

Total operating expenses

120,586

118,455

110,351

467,065

431,911

 

Operating income

34,352

35,526

35,684

139,759

140,816

 

Interest expense

(11,933)

(11,384)

(10,917)

(45,086)

(41,712)

 

Income before income taxes

22,419

24,142

24,767

94,673

99,104

 

Income tax expense

(10)

(10)

(22)

(56)

(67)

 

Net income

22,409

24,132

24,745

94,617

99,037

 

Net income attributable to noncontrolling interests

2,751

3,000

5,551

15,308

23,197

 

Net income attributable to common shares

$

19,658

$

21,132

$

19,194

$

79,309

$

75,840

 

 

Net income per share attributable to common shares:

 

Basic

$

0.46

$

0.50

$

0.51

$

1.96

$

2.06

 

Diluted

$

0.46

$

0.50

$

0.51

$

1.95

$

2.05

 

 

Weighted average common shares outstanding:

 

Basic

42,330

42,235

37,291

40,453

36,766

 

Diluted

42,529

42,404

37,489

40,634

36,944

 

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

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

  

2019

Rental revenue

$

83,891

$

82,943

$

79,257

$

329,331

$

308,623

Power revenue

43,374

43,112

41,804

169,667

165,406

Tenant reimbursement and other

3,165

4,245

2,536

13,345

11,102

Rental, power, and related revenue

$

130,430

$

130,300

$

123,597

$

512,343

$

485,131

Graphic

© 2021, CoreSite, L.L.C. All Rights Reserved

8


Reconciliations of Net Income to FFO

(in thousands, except per share data)

Three Months Ended

Year Ended

 

  

December 31,

September 30,

December 31,

December 31,

  

December 31,

 

  

2020

2020

2019

2020

  

2019

 

Net income

$

22,409

$

24,132

$

24,745

$

94,617

$

99,037

 

Real estate depreciation and amortization

42,518

40,136

38,190

162,231

147,042

 

FFO available to common shareholders and OP unit holders

$

64,927

$

64,268

$

62,935

$

256,848

$

246,079

 

 

Weighted average common shares outstanding - diluted

42,529

42,404

37,489

40,634

36,944

 

Weighted average OP units outstanding - diluted

5,943

6,030

10,797

7,777

11,275

 

Total weighted average shares and units outstanding - diluted

48,472

48,434

48,286

48,411

48,219

 

 

FFO per common share and OP unit - diluted

$

1.34

$

1.33

$

1.30

$

5.31

$

5.10

 

Reconciliations of Net Income to EBITDAre and Adjusted EBITDA:

(in thousands)

Three Months Ended

Year Ended

 

  

December 31,

September 30,

December 31,

December 31,

  

December 31,

 

  

2020

2020

2019

2020

  

2019

 

Net income

$

22,409

$

24,132

$

24,745

$

94,617

$

99,037

 

Adjustments:

 

Interest expense

11,933

11,384

10,917

45,086

41,712

 

Income taxes

10

10

22

56

67

 

Depreciation and amortization

44,386

41,759

39,737

168,915

152,925

 

EBITDAre

$

78,738

$

77,285

$

75,421

$

308,674

$

293,741

 

Non-cash compensation

4,033

4,156

3,603

15,843

14,384

 

Transaction costs / litigation

7

 

Adjusted EBITDA

$

82,771

$

81,441

$

79,024

$

324,517

$

308,132

 

Graphic

© 2021, 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 Portfolio & 10 Largest Customers

13

Leasing Statistics

14

Geographic and Vertical Diversification

16

Development

Capital Expenditures and Completed Pre-Stabilized Projects

17

Development Summary

18

Capital Structure

Market Capitalization and Debt Summary

19

Interest Summary, Debt Covenants and Liquidity

20

Components of Net Asset Value

21

2021 Guidance

22

Appendix

23

Quarter Ended December 31, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

2


Table of Contents

CoreSite Reports Fourth Quarter 2020 Financial Results


- Signed $37.6 Million of New and Expansion Sales for the Full Year 2020, Including $9.7 Million in Q4 -

- Delivered New Data Center Capacity of 192,000 NRSF During 2020, Including 50,000 NRSF in Q4 -

- Ended 2020 with 40 Megawatts of Leasable Capacity -

DENVER, CO – February 4, 2021 – CoreSite Realty Corporation (NYSE:COR) (“the Company”), a premier provider of secure, reliable, high-performance data center, cloud access and interconnection solutions across the U.S., today announced financial results for the year and quarter ended December 31, 2020.

2020 Annual Highlights

oKey Financial Results –
oGrew operating revenues to $606.8 million, an annual increase of 6.0%
oDelivered net income of $1.95 per common diluted share, an annual decrease of $0.10 per share
oGrew adjusted EBITDA to $324.5 million, an annual increase of 5.3%
oGenerated Funds From Operations (“FFO”) of $5.31 per diluted share and unit, an annual increase of $0.21 per share, or 4.1%
oSigned $37.6 million of annualized GAAP rent, a record year for retail and small scale leasing
oCommenced $45.2 million of annualized GAAP rent
oDelivered new data center capacity of 192,000 net rentable square feet (“NRSF”) comprised of 22 megawatts (“MW”)

Q4 2020 Quarterly Highlights

oKey Financial Results –
oGrew operating revenues to $154.9 million, an increase of 6.1% year over year
oDelivered net income of $0.46 per common diluted share, a decrease of $0.05 year over year
oGrew adjusted EBITDA to $82.8 million, an increase of 4.7% year over year
oGenerated FFO of $1.34 per diluted share and unit, an increase of $0.04, or 3.1%, year over year
oPaid a dividend of $1.23 per share for the fourth quarter on January 15th, representing an increase of 0.8% over the previous quarter.
oLease Commencements
oCommenced 147 new and expansion leases for 109,154 NRSF, representing $20.4 million of annualized GAAP rent, for an average rate of $187 per square foot
oLeasing Activity
oSigned 151 new and expansion leases for 53,953 NRSF and $9.7 million of annualized GAAP rent, for an average rate of $180 per square foot
oRenewed 260 leases for 121,420 NRSF and $15.8 million of annualized GAAP rent, for an average rate of $130 per square foot
oRenewed leases reflected an increase of 1.0% in cash rent and 4.4% in GAAP rent, and churn was 5.4%

Q4 2020 Notable Events

oDelivered new data center capacity on its Los Angeles campus
oCompleted and placed into service LA3 Phase 1 for 50,000 NRSF with 80% leased
oCommenced the previously announced LA3 pre-lease for 38,000 NRSF and 4.5 MWs

“We executed well on each of our 2020 priorities amidst the backdrop of the global pandemic,” said Paul Szurek, CoreSite’s President and Chief Executive Officer. “The pandemic created a challenging environment that forced the team to rethink prior practices, and I’m proud of our ability to adapt quickly while continuing to execute on each priority.”

Quarter Ended December 31, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

3


Table of Contents

Quarter Ended December 31, 2020


Sales Activity

CoreSite achieved new and expansion sales of almost $9.7 million of annualized GAAP rent for the quarter, which included $4.4 million of annualized GAAP rent from retail colocation leases, $3.7 million of annualized GAAP rent from small scale leases, and $1.5 million from large scale leases.

“We delivered solid new and expansion sales in the fourth quarter, ending 2020 strongly,” said Steve Smith, CoreSite’s Chief Revenue Officer. “We believe we are well positioned to continue to take advantage of our available, contiguous capacity and to translate new and vacant capacity into increased sales opportunities as we attract new customers and grow with our existing customers that value our platform.”

As of December 31, 2020, CoreSite had annualized GAAP backlog of $7.8 million, or $21.4 million on a cash basis.

Other Financial Results

CoreSite’s $154.9 million of operating revenues for the fourth quarter included $130.4 million of rental, power and related revenue, reflecting 5.5% year over year growth, $21.9 million of interconnection revenue, reflecting 12.7% year over year growth, and $2.6 million of office, light-industrial and other revenue. Net income was $22.4 million for the quarter, or $0.46 attributable to each common diluted share.

Development Activity

CoreSite continues to execute on its property development pipeline and exited 2020 with 40 MW of available capacity in its top five markets, compared to 23 MW at the end of 2019. The Company has delivered a significant amount of capacity year-to-date, which enables it to turn up services for its customers quickly.

oDuring the fourth quarter, CoreSite completed and placed into service LA3 Phase 1, comprising 50,000 NRSF and 6 MWs of turn-key data center capacity. LA3 Phase 1 is 80% leased.
oThe Company completed and placed into service 192,000 NRSF comprised of 22 MWs of capacity during 2020.
oLA3 Phase 2 comprised of 54,000 NRSF and 6 MWs was placed under construction in late December 2020. This project is expected to be complete in the fourth quarter of 2021.

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 2.0 million NRSF, or about 87.4%, including space unoccupied, under construction, pre-construction or held for development, and
oowning (versus leasing) 93.1% of its current and developable 4.3 million data center NRSF, supporting operational control, expansion and long-term expense management.

Quarter Ended December 31, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

4


Table of Contents

Quarter Ended December 31, 2020


Balance Sheet and Liquidity

The Company’s balance sheet remains strong, with a ratio of net principal debt to fourth quarter annualized adjusted EBITDA of 5.2 times, or 5.1 times including backlog. As of the end of the fourth quarter, CoreSite had approximately $301.0 million of current liquidity, including $5.5 million of cash and $295.5 million of available capacity on its revolving credit facility.

Operational Excellence

The Company achieved seven-nines, or 99.999996%, of uptime for power and cooling across its portfolio of data centers, which exceeded the Company’s target of six-nines and the industry standard of five-nines.

2021 Financial Outlook

CoreSite’s outlook is based 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 future financing, investment or disposition activities, beyond what has already been disclosed.

The Company’s guidance for 2021 includes –

oTotal operating revenues in the range of $642.0 million to $652.0 million, representing 6.6% growth at the midpoint,
oAdjusted EBITDA in the range of $336.0 million to $346.0 million, representing 5.1% growth at the midpoint,
oNet income attributable to common diluted shares in the range of $1.81 to $1.91, representing a decrease of 4.4% at the midpoint, and
oFFO per common diluted share and unit in the range of $5.42 to $5.52, representing growth of 3.0% at the midpoint.

CoreSite’s 2021 guidance drivers include –

oAnnual rental churn rate in the range of 6.5% to 8.5%,
oCash rent growth on data center renewals in the range of 0.0% to 2.0%, and
oTotal capital expenditures in the range of $185.0 million to $225.0 million.

The difference between net income and FFO represents real estate depreciation and amortization. For further details on the Company’s 2021 guidance, including operating revenues, Adjusted EBITDA, depreciation and amortization and capital expenditures, along with guidance drivers and other information, please see page 22 of CoreSite’s Supplemental Information.

Quarter Ended December 31, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

5


Table of Contents

Quarter Ended December 31, 2020


Conference Call Details

CoreSite will host its fourth quarter 2020 earnings call on Thursday, February 4, 2021, 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 February 11, 2021, and can be accessed dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The passcode for the replay is 13714615.

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 fourth quarter 2020 Supplemental Information on its website at CoreSite.com, under the “Investors” link.

Upcoming Conferences and Events

CoreSite’s management will participate virtually in Raymond James and Associates’ 42nd Annual Institutional Investors Conference on March 1, 2021, Citi’s 2021 Global Property CEO Conference on March 8-11, 2021, and RBC Capital Markets’ Datacenter / Cloud Infrastructure Executive Meetings on March 30, 2021.

About CoreSite

CoreSite Realty Corporation (NYSE:COR) delivers secure, reliable, high-performance data center, cloud access and interconnection solutions to a growing customer ecosystem across eight key North American markets. More than 1,375 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 December 31, 2020

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

6


Table of Contents

Quarter Ended December 31, 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 December 31, 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 1,375+ 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 – achieved seven-nines of uptime for two consecutive years

•   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 its end users, the easier it is to provide a high quality experience

•   25 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

•   Access to subsea cables for international reach

Quarter Ended December 31, 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

Q4 2020

Q3 2020

Q4 2019

Q/Q

Y/Y

YTD 2020

YTD 2019

Y/Y

GAAP Financial Measures

Operating revenues

$

154,938

$

153,981

$

146,035

0.6

%

6.1

%

$

606,824

$

572,727

6.0

%

Net income

22,409

24,132

24,745

(7.1)

(9.4)

94,617

99,037

(4.5)

Net income attributable to common shares

19,658

21,132

19,194

(7.0)

2.4

79,309

75,840

4.6

Net income per share attributable to common shares - diluted

$

0.46

$

0.50

$

0.51

(8.0)

(9.8)

$

1.95

$

2.05

(4.9)

REIT Financial Measures(1)

Funds from operations (FFO) to shares and units

$

64,927

$

64,268

$

62,935

1.0

%

3.2

%

$

256,848

$

246,079

4.4

%

Adjusted funds from operations (AFFO)

61,694

62,580

62,193

(1.4)

(0.8)

249,675

247,318

1.0

EBITDAre

78,738

77,285

75,421

1.9

4.4

308,674

293,741

5.1

Adjusted EBITDA

82,771

81,441

79,024

1.6

4.7

324,517

308,132

5.3

FFO per common share and OP unit - diluted

$

1.34

$

1.33

$

1.30

0.8

3.1

$

5.31

$

5.10

4.1

Other Financial Ratios

EBITDAre Margin

50.8

%

50.2

%

51.6

%

60

bps

(80)

bps

50.9

%

51.3

%

(40)

bps

Adjusted EBITDA Margin

53.4

%

52.9

%

54.1

%

50

bps

(70)

bps

53.5

%

53.8

%

(30)

bps

As of

    

Q4 2020

    

Q3 2020

    

Q2 2020

    

Q1 2020

Q4 2019

    

Dividend Activity

Dividends declared per share and OP unit

$

1.23

$

1.22

$

1.22

$

1.22

$

1.22

TTM FFO payout ratio

92.7

%

93.1

93.9

95.2

93.7

TTM AFFO payout ratio

95.3

%

94.8

95.2

95.9

93.2

Operating Portfolio Statistics

Operating data center properties

25

24

24

23

23

Stabilized data center NRSF

2,502,591

2,516,411

2,516,411

2,482,660

2,406,512

Stabilized data center NRSF occupied

2,174,897

2,207,215

2,226,153

2,183,751

2,179,854

Stabilized data center % occupied

86.9

%

87.7

88.5

88.0

90.6

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

MRR per cabinet equivalent

$

1,635

$

1,608

$

1,601

$

1,608

$

1,602

TKD NRSF % occupied

83.1

%

83.9

84.7

83.3

83.4

Market Capitalization & Net Principal Debt

Total enterprise value

$

7,817,206

$

7,479,878

$

7,514,871

$

7,218,678

$

6,919,211

Total net principal debt outstanding

$

1,717,957

$

1,692,106

$

1,621,314

$

1,577,193

$

1,484,452

Net Principal Debt to:

Annualized adjusted EBITDA

5.2

x

5.2

x

5.0

x

5.0

x

4.7

x

Annualized adjusted EBITDA, including backlog(2)

5.1

x

4.9

x

4.8

x

4.7

x

4.5

x

Enterprise value

22.0

22.6

21.6

21.8

21.5

(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 December 31, 2020, was $7.8 million on a GAAP basis and $21.4 million on a cash basis.

Quarter Ended December 31, 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)

  

December 31,

  

December 31,

 

2020

2019

Assets:

Investments in real estate:

Land

$

104,734

$

94,593

Buildings and improvements

2,273,536

1,989,731

2,378,270

2,084,324

Less: Accumulated depreciation and amortization

(867,975)

(720,498)

Net investment in operating properties

1,510,295

1,363,826

Construction in progress

319,411

394,474

Net investments in real estate

1,829,706

1,758,300

Operating lease right-of-use assets, net

173,928

172,976

Cash and cash equivalents

5,543

3,048

Accounts and other receivables, net

20,849

21,008

Lease intangibles, net

2,507

3,939

Goodwill

40,646

40,646

Other assets, net

103,094

101,082

Total assets

$

2,176,273

$

2,100,999

Liabilities and equity:

Liabilities

Debt, net

$

1,715,911

$

1,478,402

Operating lease liabilities

189,404

187,443

Accounts payable and accrued expenses

79,140

123,304

Accrued dividends and distributions

63,878

62,332

Acquired below-market lease contracts, net

2,313

2,511

Unearned revenue, prepaid rent and other liabilities

53,149

33,119

Total liabilities

2,103,795

1,887,111