0001490892false00014908922021-07-292021-07-29

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): July 29, 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 July 29, 2021, CoreSite Realty Corporation ("CoreSite") issued a press release reporting financial results and operating information for the quarter ended June 30, 2021. 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 July 29, 2021.

99.2

Quarter Ended June 30, 2021, Earnings Release and Supplemental Information, dated July 29, 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: July 29, 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 Second Quarter 2021 Financial Results

– Delivered Strong Q2 Financial Results, Including 7.7% Revenue Growth Year Over Year –

– Executed $7.8 Million of New and Expansion Sales, Driven by Retail Colocation and Small Scale –

– Increased Total Data Center Portfolio Occupancy by 220 Basis Points Year-to-Date –

DENVER, CO – July 29, 2021 – CoreSite Realty Corporation (NYSE:COR) (“the Company”), a premier provider of secure, reliable high-uptime data center campuses with high-performance cloud access and interconnection solutions across the U.S., today announced financial results for quarter ended June 30, 2021.

Q2 2021 Quarterly Highlights

oKey Financial Results –
oGrew operating revenues to $162.1 million, an increase of 7.7% year over year and 2.8% sequentially
oDelivered net income of $0.59 per common diluted share, an increase of $0.07 year over year and $0.08 sequentially
oGrew adjusted EBITDA to $87.4 million, an increase of 7.1% year over year and 1.6% sequentially
oGenerated FFO, as adjusted, of $1.42 per diluted share and unit, an increase of $0.07, or 5.2% year over year and $0.02, or 1.4% sequentially
oPaid a dividend of $1.27 per share for the second quarter on July 15th, an increase of 3.25% over the prior quarter
oLease Commencements
oCommenced 133 new and expansion leases for 59,174 net rentable square feet (“NRSF”), representing $8.4 million of annualized GAAP rent, for an average rate of $142 per NRSF
oLeasing Activity
oSigned 112 new and expansion leases for 33,135 NRSF and $7.8 million of annualized GAAP rent, for an average rate of $235 per NRSF
oRenewed 330 leases for 136,564 NRSF and $20.4 million of annualized GAAP rent, for an average rate of $149 per NRSF
oRenewed leases reflected an increase of 4.2% in cash rent and 7.1% in GAAP rent, and we reported churn of 1.3%

Q2 Notable Events

oAchieved Stabilization at Our SV8 Data Center During the Quarter
oDuring the second quarter, our SV8 data center reached 98% occupancy less than two years after the delivery of SV8 Phase 1
oCompleted the New Boston Chiller Plant Project
oThe multipurpose chiller plant project will provide significantly expanded cooling capacity and generate a positive return on investment through improved power efficiency
oThis project is another leap forward in our ongoing energy efficiency improvement initiative described in our sustainability report

“We are optimistic about the fundamental market drivers supporting our go-to-market strategy,” said Paul Szurek, CoreSite’s President and Chief Executive Officer. “Technology requiring low-latency, high-performance, hybrid-cloud IT architectures continues to play an increasingly important role in the success of businesses. We believe we are well-positioned to capture a good share of the edge needs in our major metropolitan U.S. markets.”

Graphic

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

1


Sales Activity

CoreSite achieved new and expansion sales of $7.8 million of annualized GAAP rent for the quarter, which included annualized GAAP rent of $3.4 million, $3.6 million, and $0.8 million from retail colocation, small scale, and large scale leases, respectively.

“We remain focused on targeting retail and scale customers with performance-sensitive applications requiring high-performance interoperability and hybrid-cloud architectures,” said Steve Smith, CoreSite’s Chief Revenue Officer. “We expect these leases to drive higher yields with incremental power margin and interconnection revenues that we typically see through these types of deployments, while we continue to work on a strong funnel of scale opportunities with longer sales cycles.”

CoreSite had annualized GAAP backlog of $8.1 million, or $15.6 million on a cash basis, for leases signed by not yet commenced. The difference between GAAP and cash backlog is primarily driven by a handful of scale leases with power ramps in the early portion of their lease terms.

Other Financial Results

CoreSite’s $162.1 million of operating revenues for the second quarter, including $136.8 million of rental, power and related revenue, reflecting 7.6% year over year growth, $22.6 million of interconnection revenue, reflecting 8.2% year over year growth, and $2.7 million of office, light-industrial and other revenue. Net income was $28.5 million for the quarter, or $0.59 attributable to each common diluted share.

Development Activity

CoreSite continues to invest and develop new capacity as needed to meet market demand.

oLA3 Phase 2 comprised of 54,000 NRSF and 6 megawatts (“MW”) is under construction and continues to be on track for its estimated completion in the fourth quarter of 2021.
oNY2 Phase 4A comprised of 35,000 NRSF and 4 MWs commenced development during the quarter and is scheduled for completion in the first quarter of 2022.

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

othe ability to increase its occupied footprint of purpose-built data centers, both owned and leased, by approximately 1.9 million NRSF, or about 82.4%, 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.

Balance Sheet and Liquidity

The Company’s balance sheet remains strong, with a ratio of net principal debt to second quarter annualized adjusted EBITDA of 5.0 times, or 4.9 times including GAAP backlog. As of the end of the second quarter, CoreSite had approximately $264.3 million of current liquidity, including $2.9 million of cash and $261.4 million of available capacity on its revolving credit facility.

Graphic

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

2


2021 Updated Guidance

Updated Guidance

Previous Guidance

Total operating revenues

$645 - $653 million

$642 - $652 million

General and administrative expenses

$46.5 - $50.5 million

$47 - $51 million

Adjusted EBITDA

$340 - $348 million

$336 - $346 million

Net income attributable to common diluted shares

$1.99 - $2.07

$1.81 - $1.91

FFO per common diluted share and OP unit, diluted – as adjusted

$5.52 -$5.60

$5.42 - $5.52

Cash rent growth on data center renewals

2% - 4%

0% - 2%

The increase of $0.09 per share, or 1.6%, at the midpoint of FFO per share, as adjusted, is largely driven by an increase in operating revenues, improved adjusted EBITDA margins, and to a lesser extent, by lower than anticipated interest expense. CoreSite’s full 2021 guidance can be found in the Company’s second quarter 2021 Supplemental Earnings Information on page 21.

Conference Call Details

CoreSite will host its second quarter 2021 earnings call on Thursday, July 29, 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 August 5, 2021, and can be accessed dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The passcode for the replay is 13720612.  

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 second quarter 2021 Supplemental Information on its website at CoreSite.com, under the “Investors” link.

Upcoming Conferences and Events

CoreSite’s management will participate in the Cowen 7th Annual Communications Infrastructure Summit on August 10th.

About CoreSite

CoreSite Realty Corporation (NYSE:COR) delivers secure, reliable, high-uptime data center campuses with high-performance 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 475+ 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 Manager

303-222-7369
InvestorRelations@CoreSite.com

Graphic

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

3


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

4


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. In Q2 2021, we excluded from adjusted EBITDA a one-time, non-cash benefit of $3.1 million as a result of the release of a tax liability during the quarter that is no longer expected to be incurred.

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

5


Consolidated Balance Sheets

(in thousands, except per share data)

  

June 30,

  

December 31,

 

2021

2020

Assets:

Investments in real estate:

Land

$

109,400

$

104,734

Buildings and improvements

2,289,445

2,273,536

2,398,845

2,378,270

Less: Accumulated depreciation and amortization

(946,668)

(867,975)

Net investment in operating properties

1,452,177

1,510,295

Construction in progress

365,430

319,411

Net investments in real estate

1,817,607

1,829,706

Operating lease right-of-use assets, net

164,282

173,928

Cash and cash equivalents

2,866

5,543

Accounts and other receivables, net

24,804

20,849

Lease intangibles, net

1,612

2,507

Goodwill

40,646

40,646

Other assets, net

105,406

103,094

Total assets

$

2,157,223

$

2,176,273

Liabilities and equity:

Liabilities

Debt, net

$

1,751,005

$

1,715,911

Operating lease liabilities

180,709

189,404

Accounts payable and accrued expenses

84,599

79,140

Accrued dividends and distributions

65,154

63,878

Acquired below-market lease contracts, net

2,214

2,313

Unearned revenue, prepaid rent and other liabilities

51,907

53,149

Total liabilities

2,135,588

2,103,795

Stockholders' equity

Common stock, par value $0.01

436

422

Additional paid-in capital

566,370

555,595

Accumulated other comprehensive loss

(13,828)

(20,526)

Distributions in excess of net income

(533,451)

(471,910)

Total stockholders' equity

19,527

63,581

Noncontrolling interests

2,108

8,897

Total equity

21,635

72,478

Total liabilities and equity

$

2,157,223

$

2,176,273

Graphic

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

6


Consolidated Statements of Operations

(in thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

  

2021

2021

2020

  

2021

  

2020

  

Operating revenues:

 

  

 

 

Data center revenue:(1)

 

Rental, power, and related revenue

$

136,793

$

132,976

$

127,108

$

269,769

$

251,613

 

Interconnection revenue

22,606

22,160

20,897

44,766

40,982

 

Total data center revenue

159,399

155,136

148,005

314,535

292,595

 

Office, light-industrial and other revenue

2,725

2,506

2,538

5,231

5,310

 

Total operating revenues

162,124

157,642

150,543

319,766

297,905

 

 

Operating expenses:

 

Property operating and maintenance

45,964

42,632

41,037

88,596

81,220

 

Real estate taxes and insurance

7,006

6,735

5,599

13,741

11,789

 

Depreciation and amortization

45,367

44,628

41,779

89,995

82,770

 

Sales and marketing

5,804

5,862

5,837

11,666

11,981

 

General and administrative

11,781

11,517

11,603

23,298

22,870

 

Rent

8,839

9,221

8,995

18,060

17,394

 

Total operating expenses

124,761

120,595

114,850

245,356

228,024

 

Operating income

37,363

37,047

35,693

74,410

69,881

 

Other income

3,098

3,098

Interest expense

(11,982)

(12,123)

(10,586)

(24,105)

(21,769)

 

Income before income taxes

28,479

24,924

25,107

53,403

48,112

 

Income tax expense

(4)

(9)

(19)

(13)

(36)

 

Net income

28,475

24,915

25,088

53,390

48,076

 

Net income attributable to noncontrolling interests

3,226

3,047

4,417

6,273

9,557

 

Net income attributable to common shares

$

25,249

$

21,868

$

20,671

$

47,117

$

38,519

 

 

Net income per share attributable to common shares:

 

Basic

$

0.59

$

0.52

$

0.52

$

1.11

$

1.00

 

Diluted

$

0.59

$

0.51

$

0.52

$

1.10

$

0.99

 

 

Weighted average common shares outstanding:

 

Basic

42,786

42,378

39,873

42,583

38,605

 

Diluted

42,939

42,592

39,993

42,781

38,759

 

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

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

  

2020

Rental revenue

$

86,960

$

85,207

$

81,612

$

172,167

$

162,498

Power revenue

47,014

44,360

41,902

91,374

83,180

Tenant reimbursement and other

2,819

3,409

3,594

6,228

5,935

Rental, power, and related revenue

$

136,793

$

132,976

$

127,108

$

269,769

$

251,613

Graphic

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

7


Reconciliations of Net Income to FFO

(in thousands, except per share data)

Three Months Ended

Six Months Ended

 

  

June 30,

March 31,

June 30,

  

June 30,

  

June 30,

 

  

2021

2021

2020

  

2021

  

2020

 

Net income

$

28,475

$

24,915

$

25,088

$

53,390

$

48,076

 

Real estate depreciation and amortization

43,636

42,889

40,162

86,525

79,577

 

FFO available to common shareholders and OP unit holders

$

72,111

$

67,804

$

65,250

$

139,915

$

127,653

 

Other Income Adjustment(1)

(3,098)

(3,098)

FFO available to common shareholders and OP unit holders, as adjusted(1)

$

69,013

$

67,804

$

65,250

$

136,817

$

127,653

 

Weighted average common shares outstanding - diluted

42,939

42,592

39,993

42,781

38,759

 

Weighted average OP units outstanding - diluted

5,664

5,941

8,377

5,801

9,586

 

Total weighted average shares and units outstanding - diluted

48,603

48,533

48,370

48,582

48,345

 

 

FFO per common share and OP unit - diluted

$

1.48

$

1.40

$

1.35

$

2.88

$

2.64

 

FFO per common share and OP unit - diluted, as adjusted(1)

$

1.42

$

1.40

$

1.35

$

2.82

$

2.64

 

(1)FFO available to shares and units, as adjusted, excludes a one-time benefit of $3.1 million, or $0.06 per share and unit, as a result of the release of a tax liability during the quarter that is no longer expected to be incurred.

Reconciliations of Net Income to EBITDAre and Adjusted EBITDA:

(in thousands)

Three Months Ended

Six Months Ended

 

  

June 30,

March 31,

June 30,

  

June 30,

  

June 30,

 

  

2021

2021

2020

  

2021

  

2020

 

Net income

$

28,475

$

24,915

$

25,088

$

53,390

$

48,076

 

Adjustments:

 

Interest expense

11,982

12,123

10,586

24,105

21,769

 

Income taxes

4

9

19

13

36

 

Depreciation and amortization

45,367

44,628

41,779

89,995

82,770

 

EBITDAre

$

85,828

$

81,675

$

77,472

$

167,503

$

152,651

 

Non-cash compensation

4,680

4,393

4,172

9,073

7,654

 

Transaction costs / litigation

3

3

 

Other income adjustment

(3,098)

(3,098)

Adjusted EBITDA

$

87,410

$

86,071

$

81,644

$

173,481

$

160,305

 

Graphic

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

8


Table of Contents

Graphic


Table of Contents

Table of Contents


Overview

Earnings Release

3

Company Profile

7

Summary of Financial Data

8

Financial Statements

Consolidated Balance Sheets

9

Consolidated Statements of Operations

10

Reconciliations of Net Income to FFO, AFFO, EBITDAre and Adjusted EBITDA

11

Operating Portfolio

Operating Portfolio & 10 Largest Customers

12

Leasing Statistics

13

Geographic and Vertical Diversification

15

Development

Capital Expenditures and Completed Pre-Stabilized Projects

16

Development Summary

17

Capital Structure

Market Capitalization and Debt Summary

18

Interest Summary, Debt Covenants and Liquidity

19

Components of Net Asset Value

20

2021 Guidance

21

Appendix

22

Quarter Ended June 30, 2021

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

2


Table of Contents

CoreSite Reports Second Quarter 2021 Financial Results


– Delivered Strong Q2 Financial Results, Including 7.7% Revenue Growth Year Over Year –

– Executed $7.8 Million of New and Expansion Sales, Driven by Retail Colocation and Small Scale –

– Increased Total Data Center Portfolio Occupancy by 220 Basis Points Year-to-Date –

DENVER, CO – July 29, 2021 – CoreSite Realty Corporation (NYSE:COR) (“the Company”), a premier provider of secure, reliable high-uptime data center campuses with high-performance cloud access and interconnection solutions across the U.S., today announced financial results for quarter ended June 30, 2021.

Q2 2021 Quarterly Highlights

oKey Financial Results –
oGrew operating revenues to $162.1 million, an increase of 7.7% year over year and 2.8% sequentially
oDelivered net income of $0.59 per common diluted share, an increase of $0.07 year over year and $0.08 sequentially
oGrew adjusted EBITDA to $87.4 million, an increase of 7.1% year over year and 1.6% sequentially
oGenerated FFO, as adjusted, of $1.42 per diluted share and unit, an increase of $0.07, or 5.2% year over year and $0.02, or 1.4% sequentially
oPaid a dividend of $1.27 per share for the second quarter on July 15th, an increase of 3.25% over the prior quarter
oLease Commencements
oCommenced 133 new and expansion leases for 59,174 net rentable square feet (“NRSF”), representing $8.4 million of annualized GAAP rent, for an average rate of $142 per NRSF
oLeasing Activity
oSigned 112 new and expansion leases for 33,135 NRSF and $7.8 million of annualized GAAP rent, for an average rate of $235 per NRSF
oRenewed 330 leases for 136,564 NRSF and $20.4 million of annualized GAAP rent, for an average rate of $149 per NRSF
oRenewed leases reflected an increase of 4.2% in cash rent and 7.1% in GAAP rent, and we reported churn of 1.3%

Q2 Notable Events

oAchieved Stabilization at Our SV8 Data Center During the Quarter
oDuring the second quarter, our SV8 data center reached 98% occupancy less than two years after the delivery of SV8 Phase 1
oCompleted the New Boston Chiller Plant Project
oThe multipurpose chiller plant project will provide significantly expanded cooling capacity and generate a positive return on investment through improved power efficiency
oThis project is another leap forward in our ongoing energy efficiency improvement initiative described in our sustainability report

“We are optimistic about the fundamental market drivers supporting our go-to-market strategy,” said Paul Szurek, CoreSite’s President and Chief Executive Officer. “Technology requiring low-latency, high-performance, hybrid-cloud IT architectures continues to play an increasingly important role in the success of businesses. We believe we are well-positioned to capture a good share of the edge needs in our major metropolitan U.S. markets.”

Quarter Ended June 30, 2021

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

3


Table of Contents

Quarter Ended June 30, 2021


Sales Activity

CoreSite achieved new and expansion sales of $7.8 million of annualized GAAP rent for the quarter, which included annualized GAAP rent of $3.4 million, $3.6 million, and $0.8 million from retail colocation, small scale, and large scale leases, respectively.

“We remain focused on targeting retail and scale customers with performance-sensitive applications requiring high-performance interoperability and hybrid-cloud architectures,” said Steve Smith, CoreSite’s Chief Revenue Officer. “We expect these leases to drive higher yields with incremental power margin and interconnection revenues that we typically see through these types of deployments, while we continue to work on a strong funnel of scale opportunities with longer sales cycles.”

CoreSite had annualized GAAP backlog of $8.1 million, or $15.6 million on a cash basis, for leases signed by not yet commenced. The difference between GAAP and cash backlog is primarily driven by a handful of scale leases with power ramps in the early portion of their lease terms.

Other Financial Results

CoreSite’s $162.1 million of operating revenues for the second quarter, including $136.8 million of rental, power and related revenue, reflecting 7.6% year over year growth, $22.6 million of interconnection revenue, reflecting 8.2% year over year growth, and $2.7 million of office, light-industrial and other revenue. Net income was $28.5 million for the quarter, or $0.59 attributable to each common diluted share.

Development Activity

CoreSite continues to invest and develop new capacity as needed to meet market demand.

oLA3 Phase 2 comprised of 54,000 NRSF and 6 megawatts (“MW”) is under construction and continues to be on track for its estimated completion in the fourth quarter of 2021.
oNY2 Phase 4A comprised of 35,000 NRSF and 4 MWs commenced development during the quarter and is scheduled for completion in the first quarter of 2022.

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

othe ability to increase its occupied footprint of purpose-built data centers, both owned and leased, by approximately 1.9 million NRSF, or about 82.4%, 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.

Balance Sheet and Liquidity

The Company’s balance sheet remains strong, with a ratio of net principal debt to second quarter annualized adjusted EBITDA of 5.0 times, or 4.9 times including GAAP backlog. As of the end of the second quarter, CoreSite had approximately $264.3 million of current liquidity, including $2.9 million of cash and $261.4 million of available capacity on its revolving credit facility.

Quarter Ended June 30, 2021

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

4


Table of Contents

Quarter Ended June 30, 2021


2021 Updated Guidance

Updated Guidance

Previous Guidance

Total operating revenues

$645 - $653 million

$642 - $652 million

General and administrative expenses

$46.5 - $50.5 million

$47 - $51 million

Adjusted EBITDA

$340 - $348 million

$336 - $346 million

Net income attributable to common diluted shares

$1.99 - $2.07

$1.81 - $1.91

FFO per common diluted share and OP unit, diluted – as adjusted

$5.52 -$5.60

$5.42 - $5.52

Cash rent growth on data center renewals

2% - 4%

0% - 2%

The increase of $0.09 per share, or 1.6%, at the midpoint of FFO per share, as adjusted, is largely driven by an increase in operating revenues, improved adjusted EBITDA margins, and to a lesser extent, by lower than anticipated interest expense. CoreSite’s full 2021 guidance can be found in the Company’s second quarter 2021 Supplemental Earnings Information on page 21.

Conference Call Details

CoreSite will host its second quarter 2021 earnings call on Thursday, July 29, 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 August 5, 2021, and can be accessed dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The passcode for the replay is 13720612.

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 second quarter 2021 Supplemental Information on its website at CoreSite.com, under the “Investors” link.

Upcoming Conferences and Events

CoreSite’s management will participate in the Cowen 7th Annual Communications Infrastructure Summit on August 10th.

About CoreSite

CoreSite Realty Corporation (NYSE:COR) delivers secure, reliable, high-uptime data center campuses with high-performance 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 475+ 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 Manager

303-222-7369
InvestorRelations@CoreSite.com

Quarter Ended June 30, 2021

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

5


Table of Contents

Quarter Ended June 30, 2021


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 June 30, 2021

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

6


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

•   31,000+ interconnections

•   Multiple options for peering and cloud exchange, including the CoreSite Open Cloud ExchangeTM, and the Any2 Exchange for Internet Peering, the second largest peering exchange in the U.S.

•   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

475+ 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

•   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 June 30, 2021

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

7


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

Q2 2021

Q1 2021

Q2 2020

Q/Q

Y/Y

YTD 2021

YTD 2020

Y/Y

GAAP Financial Measures

Operating revenues

$

162,124

$

157,642

$

150,543

2.8

%

7.7

%

$

319,766

$

297,905

7.3

%

Net income

28,475

24,915

25,088

14.3

13.5

53,390

48,076

11.1

Net income attributable to common shares

25,249

21,868

20,671

15.5

22.1

47,117

38,519

22.3

Net income per share attributable to common shares - diluted

$

0.59

$

0.51

$

0.52

15.7

13.5

$

1.10

$

0.99

11.1

REIT Financial Measures(1)

Funds from operations (FFO) to shares and units

$

72,111

$

67,804

$

65,250

6.4

%

10.5

%

$

139,915

$

127,653

9.6

%

Funds from operations (FFO) to shares and units, as adjusted(2)

69,013

67,804

65,250

1.8

5.8

136,817

127,653

7.2

Adjusted funds from operations (AFFO)

64,624

60,489

65,291

6.8

(1.0)

125,113

125,401

(0.2)

EBITDAre

85,828

81,675

77,472

5.1

10.8

167,503

152,651

9.7

Adjusted EBITDA

87,410

86,071

81,644

1.6

7.1

173,481

160,305

8.2

FFO per common share and OP unit - diluted

$

1.48

$

1.40

$

1.35

5.7

9.6

$

2.88

$

2.64

9.1

FFO per common share and OP unit - diluted, as adjusted(2)

$

1.42

$

1.40

$

1.35

1.4

5.2

$

2.82

$

2.64

6.8

Other Financial Ratios

EBITDAre Margin

52.9

%

51.8

%

51.5

%

110

bps

140

bps

52.4

%

51.2

%

120

bps

Adjusted EBITDA Margin

53.9

%

54.6

%

54.2

%

(70)

bps

(30)

bps

54.3

%

53.8

%

50

bps

(1)See reconciliations of non-GAAP measures on page 11 and a discussion of the non-GAAP disclosures in the Appendix.
(2)FFO available to shares and units, as adjusted, excludes a one-time benefit of $3.1 million, or $0.06 per share and unit, as a result of the release of a tax liability during the quarter that is no longer expected to be incurred.

As of

    

Q2 2021

    

Q1 2021

    

Q4 2020

    

Q3 2020

    

Q2 2020

    

Dividend Activity

Dividends declared per share and OP unit

$

1.27

$

1.23

$

1.23

$

1.22

$

1.22

TTM FFO payout ratio

89.8

%

91.1

92.7

93.1

93.9

TTM AFFO payout ratio

96.9

%

95.5

95.3

94.8

95.2

Operating Portfolio Statistics

Operating data center properties

25

25

25

24

24

Stabilized data center NRSF

2,623,263

2,502,591

2,502,591

2,516,411

2,516,411

Stabilized data center NRSF occupied

2,290,109

2,189,595

2,174,897

2,207,215

2,226,153

Stabilized data center % occupied

87.3

%

87.5

86.9

87.7

88.5

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

MRR per cabinet equivalent

$

1,526

$

1,508

$

1,478

$

1,474

$

1,465

TKD NRSF % occupied

83.9

%

82.5

81.8

82.4

83.0

Market Capitalization & Net Principal Debt

Total enterprise value

$

8,339,401

$

7,600,880

$

7,817,206

$

7,479,878

$

7,514,871

Total net principal debt outstanding

$

1,754,634

$

1,740,209

$

1,717,957

$

1,692,106

$

1,621,314

Net Principal Debt to:

Annualized adjusted EBITDA

5.0

x

5.1

x

5.2

x

5.2

x

5.0

x

Annualized adjusted EBITDA, including backlog(1)

4.9

x

4.9

x

5.1

x

4.9

x

4.8

x

Enterprise value

21.0

22.9

22.0

22.6

21.6

(1)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 June 30, 2021, was $8.1 million on a GAAP basis and $15.6 million on a cash basis.

Quarter Ended June 30, 2021

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

8


Table of Contents

Consolidated Balance Sheets


(in thousands, except per share data)