UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
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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:
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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 | ||
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). |
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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
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
| o | Key Financial Results – |
| o | Grew operating revenues to $162.1 million, an increase of 7.7% year over year and 2.8% sequentially |
| o | Delivered net income of $0.59 per common diluted share, an increase of $0.07 year over year and $0.08 sequentially |
| o | Grew adjusted EBITDA to $87.4 million, an increase of 7.1% year over year and 1.6% sequentially |
| o | Generated 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 |
| o | Paid a dividend of $1.27 per share for the second quarter on July 15th, an increase of 3.25% over the prior quarter |
| o | Lease Commencements – |
| o | Commenced 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 |
| o | Leasing Activity – |
| o | Signed 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 |
| o | Renewed 330 leases for 136,564 NRSF and $20.4 million of annualized GAAP rent, for an average rate of $149 per NRSF |
| o | Renewed 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
| o | Achieved Stabilization at Our SV8 Data Center During the Quarter |
| o | During the second quarter, our SV8 data center reached 98% occupancy less than two years after the delivery of SV8 Phase 1 |
| o | Completed the New Boston Chiller Plant Project |
| o | The multipurpose chiller plant project will provide significantly expanded cooling capacity and generate a positive return on investment through improved power efficiency |
| o | This 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.”
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© 2020, CoreSite, L.L.C. All Rights Reserved |
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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.
| o | LA3 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. |
| o | NY2 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 –
| o | the 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 |
| o | owning (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.
|
© 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
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© 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
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© 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.
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© 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 | |
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© 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 | |
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© 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 |
|
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© 2021, CoreSite, L.L.C. All Rights Reserved |
8 |
Overview | |
3 | |
7 | |
8 | |
Financial Statements | |
9 | |
10 | |
Reconciliations of Net Income to FFO, AFFO, EBITDAre and Adjusted EBITDA | 11 |
Operating Portfolio | |
12 | |
13 | |
15 | |
Development | |
16 | |
17 | |
Capital Structure | |
18 | |
Interest Summary, Debt Covenants and Liquidity | 19 |
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22 |
Quarter Ended June 30, 2021 |
Overview | Financial | Operating | Development | Capital | Components | Guidance | Appendix | 2 |
– 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.
| o | Key Financial Results – |
| o | Grew operating revenues to $162.1 million, an increase of 7.7% year over year and 2.8% sequentially |
| o | Delivered net income of $0.59 per common diluted share, an increase of $0.07 year over year and $0.08 sequentially |
| o | Grew adjusted EBITDA to $87.4 million, an increase of 7.1% year over year and 1.6% sequentially |
| o | Generated 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 |
| o | Paid a dividend of $1.27 per share for the second quarter on July 15th, an increase of 3.25% over the prior quarter |
| o | Lease Commencements – |
| o | Commenced 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 |
| o | Leasing Activity – |
| o | Signed 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 |
| o | Renewed 330 leases for 136,564 NRSF and $20.4 million of annualized GAAP rent, for an average rate of $149 per NRSF |
| o | Renewed 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
| o | Achieved Stabilization at Our SV8 Data Center During the Quarter |
| o | During the second quarter, our SV8 data center reached 98% occupancy less than two years after the delivery of SV8 Phase 1 |
| o | Completed the New Boston Chiller Plant Project |
| o | The multipurpose chiller plant project will provide significantly expanded cooling capacity and generate a positive return on investment through improved power efficiency |
| o | This 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 | Operating | Development | Capital | Components | Guidance | Appendix | 3 |
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.
| o | LA3 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. |
| o | NY2 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 –
| o | the 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 |
| o | owning (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 | Operating | Development | Capital | Components | Guidance | Appendix | 4 |
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 | Operating | Development | Capital | Components | Guidance | Appendix | 5 |
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 | Operating | Development | Capital | Components | Guidance | Appendix | 6 |
Low-latency, secure and reliable access to Amazon, Microsoft, Google, Alibaba Cloud, Oracle and IBM from eight key North American Markets.
ONE DATA CENTER PROVIDER. EVERYTHING YOU NEED. | |||||
| | |
CONNECTIVITY TO NETWORKS AND CLOUDS | | THE BEST CUSTOMER EXPERIENCE |
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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 | Operating | Development | Capital | Components | Guidance | Appendix | 7 |
(in thousands, except per share, NRSF and MRR data)
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| | 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 | | |||||||||||||
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| Q2 2021 |
| Q1 2021 |
| Q4 2020 |
| Q3 2020 |
| Q2 2020 |
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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 | | ||