0001490892false00014908922021-10-282021-10-28

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 28, 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 October 28, 2021, CoreSite Realty Corporation ("CoreSite") issued a press release reporting financial results and operating information for the quarter ended September 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 October 28, 2021.

99.2

Quarter Ended September 30, 2021, Earnings Release and Supplemental Information, dated October 28, 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: October 28, 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 Third Quarter 2021 Financial Results

– Delivered Strong Q3 Financial Results, Including 6.4% Revenue Growth Year Over Year –

DENVER, CO – October 28, 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 the quarter ended September 30, 2021.

Q3 2021 Quarterly Highlights

oKey Financial Results –
oGrew operating revenues to $163.9 million, an increase of 6.4% year over year and 1.1% sequentially
oDelivered net income of $0.50 per common diluted share, consistent year over year and a decrease of $0.09 sequentially
oGrew adjusted EBITDA to $85.7 million, an increase of 5.2% year over year and a decrease of 2.0% sequentially
oGenerated FFO of $1.39 per diluted share and unit, an increase of $0.06, or 4.5% year over year, and a decrease of $0.03, or 2.1% sequentially
oPaid a dividend of $1.27 per share for the third quarter on October 15th, consistent with the prior quarter
oLease Commencements
oCommenced 122 new and expansion leases for 29,308 net rentable square feet (“NRSF”), representing $7.1 million of annualized GAAP rent, for an average rate of $242 per NRSF
oLA3 Phase 1 was 93% leased and moved into the stabilized data center portfolio less than 12 months after being placed into service
oLeasing Activity
oSigned 122 new and expansion leases for $7.2 million of annualized GAAP rent during the third quarter, and signed a large scale lease for $1.7 million of annualized GAAP rent at SV7 on October 7th, representing total leasing activity of $8.9 million of annualized GAAP rent
oThis $8.9 million of annualized GAAP rent reflects 62,098 NRSF for an average rate of $143 per NRSF and includes leases signed at SV7 for $2.9 million of annualized GAAP rent
oRenewed 296 leases for 118,887 NRSF and $18.7 million of annualized GAAP rent, for an average rate of $157 per NRSF
oRenewed leases reflected an increase of 2.0% in cash rent and 5.7% in GAAP rent, and we reported churn of 2.5%

“Demand trends continue to be positive for low-latency, high-performance, hybrid-cloud IT solutions across our markets,” said Paul Szurek, CoreSite’s President and Chief Executive Officer. “Our excellent team continues to build on and strengthen the diverse customer ecosystems in each of our eight markets and our connectivity products to facilitate digital transformation. Our purpose-built, power efficient and scalable data center campuses enable the interoperability required for multi and hybrid-cloud solutions the current and future needs of enterprises, networks and cloud providers.”

Graphic

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

1


Sales Activity

CoreSite signed new and expansion leases of $7.2 million in annualized GAAP rent during the third quarter, and signed a large scale lease for $1.7 million of annualized GAAP rent at SV7 on October 7th, representing total leasing activity of $8.9 million of annualized GAAP rent.

“We are encouraged by our continuing strong attraction of retail and small scale leases, which are fundamental to our go-to-market strategy,” said Steve Smith, CoreSite’s Chief Revenue Officer. “We are focused on continual generation of profitable organic growth, attracting high-quality new logos, and creating incremental value to our customers and shareholders through the lease-up of our available capacity within our portfolio.”

Including the $1.7 million of annualized GAAP rent for the scale lease signed on October 7th, CoreSite had annualized GAAP backlog of $9.9 million, or $17.2 million on a cash basis, for leases signed but not yet commenced. The difference between GAAP and cash backlog is primarily driven by a handful of scale leases with power ramps during the early portion of their lease terms.

Other Financial Results

CoreSite’s $163.9 million of operating revenues for the third quarter, included $138.1 million of rental, power and related revenue, reflecting 6.0% year over year growth, $23.0 million of interconnection revenue, reflecting 8.7% year over year growth, and $2.8 million of office, light-industrial and other revenue. Net income was $24.1 million for the quarter, or $0.50 attributable to each common diluted share.

Development Activity

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

oThe LA3 Phase 2 development project, comprised of 54,000 NRSF and 6 megawatts (“MW”), was completed in October. As of September 30, 2021, LA3 Phase 2 was approximately 8% leased.
oNY2 Phase 4A, comprised of 35,000 NRSF and 4 MWs, is under construction and is on track for its estimated 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 2.0 million NRSF, or about 84.0%, including space unoccupied, under construction, pre-construction design and permitting 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 reflects a ratio of net principal debt to second quarter annualized adjusted EBITDA of 5.2 times, or 5.1 times including GAAP backlog. As of the end of the third quarter, CoreSite had approximately $235.4 million of current liquidity, including $3.4 million of cash and $231.9 million of available capacity on its revolving credit facility.

Updated 2021 Guidance

CoreSite updated its 2021 guidance related to total capital expenditures to its new guidance range of $140 million to $150 million from its previous range of $185 million to $225 million. CoreSite’s full 2021 guidance can be found in the Company’s third quarter 2021 Supplemental Earnings Information on page 21.

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

2


Conference Call Details

CoreSite will host its third quarter 2021 earnings call on Thursday, October 28, 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 November 4, 2021, and can be accessed dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The passcode for the replay is 13723625.  

The quarterly conference call also will be offered as a simultaneous webcast, accessible by visiting CoreSite.com and clicking on the “Investors” link. An on-line replay will be available for a limited time immediately following the call.

Concurrently with issuing its financial results, the Company will post its third quarter 2021 Supplemental Information on its website at CoreSite.com, under the “Investors” link.

Upcoming Conferences and Events

CoreSite’s management will participate in the Nareit REITworld Virtual Conference on November 9th.

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 1,370 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 480+ 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)

  

September 30,

  

December 31,

 

2021

2020

Assets:

Investments in real estate:

Land

$

109,400

$

104,734

Buildings and improvements

2,315,125

2,273,536

2,424,525

2,378,270

Less: Accumulated depreciation and amortization

(986,095)

(867,975)

Net investment in operating properties

1,438,430

1,510,295

Construction in progress

375,168

319,411

Net investments in real estate

1,813,598

1,829,706

Operating lease right-of-use assets, net

172,439

173,928

Cash and cash equivalents

3,406

5,543

Accounts and other receivables, net

26,825

20,849

Lease intangibles, net

1,159

2,507

Goodwill

40,646

40,646

Other assets, net

108,922

103,094

Total assets

$

2,166,995

$

2,176,273

Liabilities and equity:

Liabilities

Debt, net

$

1,781,039

$

1,715,911

Operating lease liabilities

189,581

189,404

Accounts payable and accrued expenses

89,902

79,140

Accrued dividends and distributions

65,772

63,878

Acquired below-market lease contracts, net

2,164

2,313

Unearned revenue, prepaid rent and other liabilities

48,342

53,149

Total liabilities

2,176,800

2,103,795

Stockholders' equity (deficit)

Common stock, par value $0.01

436

422

Additional paid-in capital

570,746

555,595

Accumulated other comprehensive loss

(12,261)

(20,526)

Distributions in excess of net income

(567,771)

(471,910)

Total stockholders' equity (deficit)

(8,850)

63,581

Noncontrolling interests

(955)

8,897

Total equity (deficit)

(9,805)

72,478

Total liabilities and equity

$

2,166,995

$

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

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

  

2021

2021

2020

  

2021

  

2020

  

Operating revenues:

 

  

 

 

Data center revenue:(1)

 

Rental, power, and related revenue

$

138,095

$

136,793

$

130,300

$

407,864

$

381,913

 

Interconnection revenue

22,994

22,606

21,144

67,760

62,126

 

Total data center revenue

161,089

159,399

151,444

475,624

444,039

 

Office, light-industrial and other revenue

2,769

2,725

2,537

8,000

7,847

 

Total operating revenues

163,858

162,124

153,981

483,624

451,886

 

 

Operating expenses:

 

Property operating and maintenance

49,940

45,964

44,986

138,536

126,206

 

Real estate taxes and insurance

5,184

7,006

5,989

18,925

17,778

 

Depreciation and amortization

45,072

45,367

41,759

135,067

124,529

 

Sales and marketing

6,186

5,804

5,901

17,852

17,882

 

General and administrative

12,167

11,781

10,854

35,465

33,724

 

Rent

9,292

8,839

8,966

27,352

26,360

 

Total operating expenses

127,841

124,761

118,455

373,197

346,479

 

Operating income

36,017

37,363

35,526

110,427

105,407

 

Other income

3,098

3,098

Interest expense

(11,894)

(11,982)

(11,384)

(35,999)

(33,153)

 

Income before income taxes

24,123

28,479

24,142

77,526

72,254

 

Income tax expense

(5)

(4)

(10)

(18)

(46)

 

Net income

24,118

28,475

24,132

77,508

72,208

 

Net income attributable to noncontrolling interests

2,339

3,226

3,000

8,612

12,557

 

Net income attributable to common shares

$

21,779

$

25,249

$

21,132

$

68,896

$

59,651

 

 

Net income per share attributable to common shares:

 

Basic

$

0.50

$

0.59

$

0.50

$

1.60

$

1.50

 

Diluted

$

0.50

$

0.59

$

0.50

$

1.60

$

1.49

 

 

Weighted average common shares outstanding:

 

Basic

43,712

42,786

42,235

42,963

39,823

 

Diluted

43,907

42,939

42,404

43,166

39,996

 

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

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2021

2021

2020

2021

  

2020

Rental revenue

$

87,596

$

86,960

$

82,943

$

259,763

$

245,441

Power revenue

48,678

47,014

43,112

140,052

126,292

Tenant reimbursement and other

1,821

2,819

4,245

8,049

10,180

Rental, power, and related revenue

$

138,095

$

136,793

$

130,300

$

407,864

$

381,913

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

Nine Months Ended

 

  

September 30,

June 30,

September 30,

  

September 30,

  

September 30,

 

  

2021

2021

2020

  

2021

  

2020

 

Net income

$

24,118

$

28,475

$

24,132

$

77,508

$

72,208

 

Real estate depreciation and amortization

43,349

43,636

40,136

129,874

119,713

 

FFO available to common shareholders and OP unit holders

$

67,467

$

72,111

$

64,268

$

207,382

$

191,921

 

Other income adjustment(1)

(3,098)

(3,098)

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

$

67,467

$

69,013

$

64,268

$

204,284

$

191,921

 

Weighted average common shares outstanding - diluted

43,907

42,939

42,404

43,166

39,996

 

Weighted average OP units outstanding - diluted

4,740

5,664

6,030

5,444

8,392

 

Total weighted average shares and units outstanding - diluted

48,647

48,603

48,434

48,610

48,388

 

 

FFO per common share and OP unit - diluted

$

1.39

$

1.48

$

1.33

$

4.27

$

3.97

 

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

$

1.39

$

1.42

$

1.33

$

4.20

$

3.97

 

(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 second quarter that is no longer expected to be incurred.

Reconciliations of Net Income to EBITDAre and Adjusted EBITDA:

(in thousands)

Three Months Ended

Nine Months Ended

 

  

September 30,

June 30,

September 30,

  

September 30,

  

September 30,

 

  

2021

2021

2020

  

2021

  

2020

 

Net income

$

24,118

$

28,475

$

24,132

$

77,508

$

72,208

 

Adjustments:

 

Interest expense

11,894

11,982

11,384

35,999

33,153

 

Income taxes

5

4

10

18

46

 

Depreciation and amortization

45,072

45,367

41,759

135,067

124,529

 

EBITDAre

$

81,089

$

85,828

$

77,285

$

248,592

$

229,936

 

Non-cash compensation

4,563

4,680

4,156

13,636

11,810

 

Transaction costs / litigation

3

 

Other income adjustment

(3,098)

(3,098)

Adjusted EBITDA

$

85,652

$

87,410

$

81,441

$

259,133

$

241,746

 

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 September 30, 2021

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

2


Table of Contents

CoreSite Reports Third Quarter 2021 Financial Results


– Delivered Strong Q3 Financial Results, Including 6.4% Revenue Growth Year Over Year –

DENVER, CO – October 28, 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 the quarter ended September 30, 2021.

Q3 2021 Quarterly Highlights

oKey Financial Results –
oGrew operating revenues to $163.9 million, an increase of 6.4% year over year and 1.1% sequentially
oDelivered net income of $0.50 per common diluted share, consistent year over year and a decrease of $0.09 sequentially
oGrew adjusted EBITDA to $85.7 million, an increase of 5.2% year over year and a decrease of 2.0% sequentially
oGenerated FFO of $1.39 per diluted share and unit, an increase of $0.06, or 4.5% year over year, and a decrease of $0.03, or 2.1% sequentially
oPaid a dividend of $1.27 per share for the third quarter on October 15th, consistent with the prior quarter
oLease Commencements
oCommenced 122 new and expansion leases for 29,308 net rentable square feet (“NRSF”), representing $7.1 million of annualized GAAP rent, for an average rate of $242 per NRSF
oLA3 Phase 1 was 93% leased and moved into the stabilized data center portfolio less than 12 months after being placed into service
oLeasing Activity
oSigned 122 new and expansion leases for $7.2 million of annualized GAAP rent during the third quarter, and signed a large scale lease for $1.7 million of annualized GAAP rent at SV7 on October 7th, representing total leasing activity of $8.9 million of annualized GAAP rent
oThis $8.9 million of annualized GAAP rent reflects 62,098 NRSF for an average rate of $143 per NRSF and includes leases signed at SV7 for $2.9 million of annualized GAAP rent
oRenewed 296 leases for 118,887 NRSF and $18.7 million of annualized GAAP rent, for an average rate of $157 per NRSF
oRenewed leases reflected an increase of 2.0% in cash rent and 5.7% in GAAP rent, and we reported churn of 2.5%

“Demand trends continue to be positive for low-latency, high-performance, hybrid-cloud IT solutions across our markets,” said Paul Szurek, CoreSite’s President and Chief Executive Officer. “Our excellent team continues to build on and strengthen the diverse customer ecosystems in each of our eight markets and our connectivity products to facilitate digital transformation. Our purpose-built, power efficient and scalable data center campuses enable the interoperability required for multi and hybrid-cloud solutions the current and future needs of enterprises, networks and cloud providers.”

Quarter Ended September 30, 2021

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

3


Table of Contents

Quarter Ended September 30, 2021


Sales Activity

CoreSite signed new and expansion leases of $7.2 million in annualized GAAP rent during the third quarter, and signed a large scale lease for $1.7 million of annualized GAAP rent at SV7 on October 7th, representing total leasing activity of $8.9 million of annualized GAAP rent.

“We are encouraged by our continuing strong attraction of retail and small scale leases, which are fundamental to our go-to-market strategy,” said Steve Smith, CoreSite’s Chief Revenue Officer. “We are focused on continual generation of profitable organic growth, attracting high-quality new logos, and creating incremental value to our customers and shareholders through the lease-up of our available capacity within our portfolio.”

Including the $1.7 million of annualized GAAP rent for the scale lease signed on October 7th, CoreSite had annualized GAAP backlog of $9.9 million, or $17.2 million on a cash basis, for leases signed but not yet commenced. The difference between GAAP and cash backlog is primarily driven by a handful of scale leases with power ramps during the early portion of their lease terms.

Other Financial Results

CoreSite’s $163.9 million of operating revenues for the third quarter, included $138.1 million of rental, power and related revenue, reflecting 6.0% year over year growth, $23.0 million of interconnection revenue, reflecting 8.7% year over year growth, and $2.8 million of office, light-industrial and other revenue. Net income was $24.1 million for the quarter, or $0.50 attributable to each common diluted share.

Development Activity

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

oThe LA3 Phase 2 development project, comprised of 54,000 NRSF and 6 megawatts (“MW”), was completed in October. As of September 30, 2021, LA3 Phase 2 was approximately 8% leased.
oNY2 Phase 4A, comprised of 35,000 NRSF and 4 MWs, is under construction and is on track for its estimated 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 2.0 million NRSF, or about 84.0%, including space unoccupied, under construction, pre-construction design and permitting 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 reflects a ratio of net principal debt to second quarter annualized adjusted EBITDA of 5.2 times, or 5.1 times including GAAP backlog. As of the end of the third quarter, CoreSite had approximately $235.4 million of current liquidity, including $3.4 million of cash and $231.9 million of available capacity on its revolving credit facility.

Updated 2021 Guidance

CoreSite updated its 2021 guidance related to total capital expenditures to its new guidance range of $140 million to $150 million from its previous range of $185 million to $225 million. CoreSite’s full 2021 guidance can be found in the Company’s third quarter 2021 Supplemental Earnings Information on page 21.

Quarter Ended September 30, 2021

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

4


Table of Contents

Quarter Ended September 30, 2021


Conference Call Details

CoreSite will host its third quarter 2021 earnings call on Thursday, October 28, 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 November 4, 2021, and can be accessed dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The passcode for the replay is 13723625.

The quarterly conference call also will be offered as a simultaneous webcast, accessible by visiting CoreSite.com and clicking on the “Investors” link. An on-line replay will be available for a limited time immediately following the call.

Concurrently with issuing its financial results, the Company will post its third quarter 2021 Supplemental Information on its website at CoreSite.com, under the “Investors” link.

Upcoming Conferences and Events

CoreSite’s management will participate in the Nareit REITworld Virtual Conference on November 9th.

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 1,370 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 480+ 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 September 30, 2021

Overview

Financial
Statements

Operating
Portfolio

Development

Capital
Structure

Components
of NAV

Guidance

Appendix

5


Table of Contents

Quarter Ended September 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 September 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

•   32,000+ interconnections

•   Multiple options for peering, cloud exchange, and network management 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

480+ team dedicated to ensuring optimal data center performance and meeting the needs of our 1,370+ 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, and cross-connects, and to 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 September 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

Q3 2021

Q2 2021

Q3 2020

Q/Q

Y/Y

YTD 2021

YTD 2020

Y/Y

GAAP Financial Measures

Operating revenues

$

163,858

$

162,124

$

153,981

1.1

%

6.4

%

$

483,624

$

451,886

7.0

%

Net income

24,118

28,475

24,132

(15.3)

(0.1)

77,508

72,208

7.3

Net income attributable to common shares

21,779

25,249

21,132

(13.7)

3.1

68,896

59,651

15.5

Net income per share attributable to common shares - diluted

$

0.50

$

0.59

$

0.50

(15.3)

-

$

1.60

$

1.49

7.4

REIT Financial Measures(1)

Funds from operations (FFO) to shares and units

$

67,467

$

72,111

$

64,268

(6.4)

%

5.0

%

$

207,382

$

191,921

8.1

%

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

67,467

69,013

64,268

(2.2)

5.0

204,284

191,921

6.4

Adjusted funds from operations (AFFO)

64,028

64,624

62,580

(0.9)

2.3

189,141

187,981

0.6

EBITDAre

81,089

85,828

77,285

(5.5)

4.9

248,592

229,936

8.1

Adjusted EBITDA

85,652

87,410

81,441

(2.0)

5.2

259,133

241,746

7.2

FFO per common share and OP unit - diluted

$

1.39

$

1.48

$

1.33

(6.1)

4.5

$

4.27

$

3.97

7.6

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

$

1.39

$

1.42

$

1.33

(2.1)

4.5

$

4.20

$

3.97

5.8

Other Financial Ratios

EBITDAre Margin

49.5

%

52.9

%

50.2

%

(340)

bps

(70)

bps

51.4

%

50.9

%

50

bps

Adjusted EBITDA Margin

52.3

%

53.9

%

52.9

%

(160)

bps

(60)

bps

53.6

%

53.5

%

10

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 second quarter of 2021 that is no longer expected to be incurred.

As of

    

Q3 2021

    

Q2 2021

    

Q1 2021

    

Q4 2020

    

Q3 2020

    

Dividend Activity

Dividends declared per share and OP unit

$

1.27

$

1.27

$

1.23

$

1.23

$

1.22

TTM FFO payout ratio

89.7

%

89.8

%

91.1

92.7

93.1

TTM AFFO payout ratio

97.4

%

96.9

%

95.5

95.3

94.8

Operating Portfolio Statistics

Operating data center properties

25

25

25

25

24

Stabilized data center NRSF

2,673,639

2,623,263

2,502,591

2,502,591

2,516,411

Stabilized data center NRSF occupied

2,304,677

2,290,109

2,189,595

2,174,897

2,207,215

Stabilized data center % occupied

86.2

%

87.3

%

87.5

86.9

87.7

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

MRR per cabinet equivalent

$

1,548

$

1,526

$

1,508

$

1,478

$

1,474

TKD NRSF % occupied

82.5

%

83.9

%

82.5

81.8

82.4

Market Capitalization & Net Principal Debt

Total enterprise value

$

8,560,488

$

8,339,401

$

7,600,880

$

7,817,206

$

7,479,878

Total net principal debt outstanding

$

1,783,594

$

1,754,634

$

1,740,209

$

1,717,957

$

1,692,106

Net Principal Debt to:

Annualized adjusted EBITDA

5.2

x

5.0

x

5.1

x

5.2

x

5.2

x

Annualized adjusted EBITDA, including backlog(1)

5.1

x

4.9

x

4.9

x

5.1

x

4.9

x

Enterprise value

20.8

21.0

22.9

22.0

22.6

(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 September 30, 2021, was $9.9 million on a GAAP basis and $17.2 million on a cash basis, inclusive of a large scale lease signed at SV7 on October 7, 2021.

Quarter Ended September 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)

  

September 30,

  

December 31,

 

2021

2020

Assets:

Investments in real estate:

Land

$

109,400

$

104,734

Buildings and improvements

2,315,125

2,273,536

2,424,525

2,378,270

Less: Accumulated depreciation and amortization

(986,095)

(867,975)

Net investment in operating properties

1,438,430

1,510,295

Construction in progress

375,168

319,411

Net investments in real estate

1,813,598

1,829,706

Operating lease right-of-use assets, net

172,439

173,928

Cash and cash equivalents

3,406

5,543

Accounts and other receivables, net

26,825

20,849

Lease intangibles, net

1,159

2,507

Goodwill

40,646

40,646

Other assets, net

108,922

103,094

Total assets

$

2,166,995

$

2,176,273

Liabilities and equity:

Liabilities

Debt, net

$

1,781,039

$

1,715,911

Operating lease liabilities

189,581

189,404

Accounts payable and accrued expenses

89,902

79,140

Accrued dividends and distributions

65,772

63,878

Acquired below-market lease contracts, net

2,164

2,313

Unearned revenue, prepaid rent and other liabilities