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Exhibit 99.1

 

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CORESITE REPORTS SECOND QUARTER RESULTS

 

DENVER, CO – July 25, 2013 – CoreSite Realty Corporation (NYSE: COR), provider of network dense, cloud enabled data center solutions, today announced financial results for the second quarter ended June 30, 2013.

 

 

Quarterly Highlights

 

·

Reported second-quarter funds from operations (“FFO”) of $0.45 per diluted share and unit, representing a 21.6% increase year-over-year

 

 

·

Reported second-quarter operating revenue of $57.7 million, representing a 13.9% increase year-over-year

 

 

·

Executed new and expansion data center leases representing $5.8 million of annualized GAAP rent at a rate of $188 of annualized GAAP rent per square foot

 

 

·

Realized rent growth on signed renewals of 5.4% on a cash basis and 11.7% on a GAAP basis and rental churn of 2.0%

 

 

·

Commenced 42,672 net rentable square feet of new and expansion leases with annualized GAAP rent of $147 per square foot

 

Tom Ray, CoreSite’s Chief Executive Officer, commented, “We are pleased to record a solid quarter of growth for CoreSite, and importantly, one that reflects the continued success we are seeing in our network-centric, differentiated strategy. We remain focused upon continuing to increase the number and quality of customer deployments in our portfolio and enhancing the value proposition of the CoreSite Mesh. We executed 115 new and expansion leases in the quarter including agreements with 33 new customers. Additionally, we are pleased with the continued evolution we saw in our sales mix, recording an increasing number of leases bringing high-value applications to our platform.” Mr. Ray continued, “Regarding growth, we continue to invest to meet customer demand, with four data center projects under way. We believe that we have considerable upside embedded in our portfolio as we increase the utilization of existing and new inventory, positively mark to market expiring capacity, and most importantly, continue to drive increased network density and valuable customer communities across our data centers.”

 

Financial Results

 

CoreSite reported FFO attributable to shares and units of $21.1 million for the three months ended June 30, 2013, a 22.0% increase year-over-year and an increase of 9.6% sequential quarter-over-quarter.  On a per diluted share and unit basis, FFO increased 21.6% to $0.45 for the three months ended June 30, 2013, as compared to $0.37 per diluted share and unit for the three months ended June 30, 2012.  Total operating revenue for the three months ended June 30, 2013, was $57.7 million, a 13.9% increase year-over-year. CoreSite reported net income for the three months ended June 30, 2013, of $7.9 million and net income attributable to common shares of $2.6 million, or $0.12 per diluted share.

 



 

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Sales Activity

 

CoreSite executed new and expansion data center leases representing $5.8 million of annualized GAAP rent during the quarter, comprised of 30,810 NRSF at a weighted average GAAP rate of $188 per NRSF.

 

CoreSite’s renewal leases signed in the second quarter totaled 44,702 NRSF at a weighted average GAAP rate of $166 per NRSF, reflecting a 5.4% increase in rent on a cash basis and an 11.7% increase on a GAAP basis. The second quarter rental churn rate was 2.0%.

 

CoreSite’s second quarter data center lease commencements totaled 42,672 NRSF at a weighted average GAAP rental rate of $147 per NRSF, which represents $6.3 million of annualized GAAP rent.

 

Development Activity

 

CoreSite had 236,673 NRSF of data center space under construction at four key locations as of June 30, 2013. The projects under construction include new data centers at SV5 (San Francisco Bay area), VA2 (Northern Virginia area), NY2 (New York) and additional inventory at LA2 (Los Angeles). As of June 30, 2013, CoreSite had incurred $59.4 million of the estimated $188.0 million required to complete these projects.

 

Balance Sheet and Liquidity

 

As of June 30, 2013, CoreSite had $132.0 million of total long-term debt equal to 1.2x annualized adjusted EBITDA and long-term debt and preferred stock equal to 2.3x annualized adjusted EBITDA.

 

At quarter end, CoreSite had $2.8 million of cash available on its balance sheet and $324.5 million of available capacity under its credit facility.

 

Dividend

 

On May 24, 2013, CoreSite announced a dividend of $0.27 per share of common stock and common stock equivalents for the second quarter of 2013. The dividend was paid on July 15, 2013, to shareholders of record on June 28, 2013.

 

CoreSite also announced on May 24, 2013, a dividend of $0.4531 per share of Series A preferred stock for the period April 15, 2013, to July 14, 2013. The preferred dividend was paid on July 15, 2013, to shareholders of record on June 28, 2013.

 

2013 Guidance

 

 

CoreSite is increasing and narrowing its FFO per share and OP unit guidance to $1.76 to $1.84 from the prior range of $1.72 to $1.82.

 

This outlook is predicated on current economic conditions, internal assumptions about CoreSite’s customer base, and the supply and demand dynamics of the markets in which CoreSite operates. The guidance does not include the impact of any future financing, investment or disposition activities.

 



 

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Upcoming Conferences and Events

 

CoreSite will participate in Bank of America’s 2013 Global Real Estate Conference from September 11 through September 12 in New York, New York.

 

Conference Call Details

 

CoreSite will host a conference call July 25, 2013, at 12:00 p.m., Eastern time (10:00 a.m. Mountain time), to discuss its financial results, current business trends and market conditions.

 

The call can be accessed live over the phone by dialing 877-407-3982 for domestic callers or 201-493-6780 for international callers. A replay will be available shortly after the call and can be accessed by dialing 877-870-5176 for domestic callers or 858-384-5517 for international callers.  The passcode for the replay is 416873.  The replay will be available until August 1, 2013.

 

Interested parties may also listen to a simultaneous webcast of the conference call by logging on to the company’s website at www.CoreSite.com and clicking on the “Investors” tab.  The on-line replay will be available for a limited time beginning immediately following the call.

 



 

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About CoreSite

 

CoreSite Realty Corporation (NYSE: COR) is the data center provider chosen by more than 750 of the world’s leading carriers and mobile operators, content and cloud providers, media and entertainment companies, and global enterprises to run their performance-sensitive applications and to connect and do business. CoreSite propels customer growth and long-term competitive advantage through the CoreSite Mesh by connecting the Internet, private networking, mobility, and cloud communities within and across its 14 high-performance data center campuses in eight markets in North America. With direct access to 275+ carriers and ISPs, over 180 leading cloud and IT service providers, inter-site connectivity, and the nation’s first Open Cloud Exchange that provides access to thousands of lit buildings and multiple key cloud on-ramps, CoreSite provides easy, efficient and valuable gateways to global business opportunities. For more information, visit www.CoreSite.com.

 

 

 

CoreSite Investor Relations Contact

+1 303.222.7276

InvestorRelations@CoreSite.com

 

CoreSite Media Contact

Jeannie Zaemes | CoreSite Marketing Senior Director

+1 720.446.2006 | +1 866.777.CORE

Jeannie.Zaemes@CoreSite.com

 



 

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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 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; the company’s failure to obtain necessary outside financing;  the company’s 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; 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 the company’s 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.

 


 


 

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Consolidated Balance Sheets

(in thousands)

 

 

 

 

June 30,
2013

 

December 31,
2012

Assets:

 

 

 

 

 

Investments in real estate:

 

 

 

 

 

Land

 

  $

76,227

 

  $

85,868

 

Building and building improvements

 

652,142

 

596,405

 

Leasehold improvements

 

91,175

 

85,907

 

 

 

819,544

 

768,180

 

Less: Accumulated depreciation and amortization

 

(129,038)

 

(105,433)

 

Net investment in operating properties

 

690,506

 

662,747

 

Construction in progress

 

104,963

 

61,328

 

 Net investments in real estate

 

795,469

 

724,075

 

Cash and cash equivalents

 

2,803

 

8,130

 

Accounts and other receivables, net

 

7,930

 

9,901

 

Lease intangibles, net

 

14,154

 

19,453

 

Goodwill

 

41,191

 

41,191

 

Other assets

 

45,312

 

42,582

 

 Total assets

 

  $

906,859

 

  $

845,332

 

 

 

 

 

 

Liabilities and equity:

 

 

 

 

 

 Liabilities

 

 

 

 

 

Revolving credit facility

 

73,000

 

-    

 

Mortgage loans payable

 

59,000

 

59,750

 

Accounts payable and accrued expenses

 

50,127

 

50,624

 

Deferred rent payable

 

5,725

 

4,329

 

Acquired below-market lease contracts, net

 

7,520

 

8,539

 

Prepaid rent and other liabilities

 

11,590

 

11,317

 

 Total liabilities

 

206,962

 

134,559

 

 

 

 

 

 

 

 Stockholders’ equity

 

 

 

 

 

Series A cumulative preferred stock

 

115,000

 

115,000

 

Common stock, par value $0.01

 

208

 

207

 

Additional paid-in capital

 

263,479

 

259,009

 

Distributions in excess of net income

 

(43,078)

 

(35,987)

 

Total stockholders’ equity

 

335,609

 

338,229

 

Noncontrolling interests

 

364,288

 

372,544

 

 Total equity

 

699,897

 

710,773

 

 Total liabilities and equity

 

  $

906,859

 

  $

845,332

 



 

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Consolidated Statement of Operations

 

 

(in thousands, except share and per share data)

 

 

 

 

 

Three Months Ended:

 

Six Months Ended:

 

 

 

June 30,
2013

 

March 31,
2013

 

June 30,
2012

 

June 30,
2013

 

June 30,
2012

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

  $

34,205

 

  $

33,102

 

  $

30,604

 

  $

67,307

 

  $

60,234

 

Power revenue

 

14,486

 

13,529

 

12,939

 

28,015

 

25,313

 

Interconnection revenue

 

7,053

 

6,572

 

5,436

 

13,625

 

9,091

 

Tenant reimbursement and other

 

1,923

 

1,888

 

1,657

 

3,811

 

3,282

 

Total operating revenues

 

57,667

 

55,091

 

50,636

 

112,758

 

97,920

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Property operating and maintenance

 

15,118

 

14,527

 

15,274

 

29,645

 

29,669

 

Real estate taxes and insurance

 

2,304

 

2,220

 

2,132

 

4,524

 

4,146

 

Depreciation and amortization

 

16,261

 

15,949

 

15,947

 

32,210

 

31,408

 

Sales and marketing

 

3,936

 

3,789

 

2,581

 

7,725

 

4,710

 

General and administrative

 

6,177

 

7,003

 

6,036

 

13,180

 

12,388

 

Rent

 

4,756

 

4,793

 

4,691

 

9,549

 

9,268

 

Transaction costs

 

249

 

5

 

161

 

254

 

283

 

Total operating expenses

 

48,801

 

48,286

 

46,822

 

97,087

 

91,872

 

Operating income

 

8,866

 

6,805

 

3,814

 

15,671

 

6,048

 

Interest income

 

2

 

2

 

5

 

4

 

7

 

Interest expense

 

(783)

 

(439)

 

(1,309)

 

(1,222)

 

(2,327)

 

Income before income taxes

 

8,085

 

6,368

 

2,510

 

14,453

 

3,728

 

Income tax expense

 

(206)

 

(173)

 

(662)

 

(379)

 

(537)

 

Net income

 

7,879

 

6,195

 

1,848

 

14,074

 

3,191

 

Net income attributable to noncontrolling interests

 

3,176

 

2,262

 

1,022

 

5,438

 

1,765

 

Net income attributable to CoreSite Realty Corporation

 

4,703

 

3,933

 

826

 

8,636

 

1,426

 

Preferred dividends

 

(2,085)

 

(2,084)

 

-    

 

(4,169)

 

-    

 

Net income attributable to common shares

 

  $

2,618

 

  $

1,849

 

  $

826

 

  $

4,467

 

  $

1,426

 

Net income per share attributable to common shares:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

  $

0.13

 

  $

0.09

 

  $

0.04

 

  $

0.22

 

  $

0.07

 

Diluted

 

  $

0.12

 

  $

0.09

 

  $

0.04

 

  $

0.21

 

  $

0.07

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

20,829,375

 

20,673,896

 

20,532,930

 

20,752,065

 

20,494,402

 

Diluted

 

21,445,875

 

21,314,779

 

20,914,686

 

21,412,289

 

20,801,050

 



 

GRAPHIC

 

 

Reconciliation of Net Income to FFO

 

(in thousands, except share and per share data)

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,
2013

 

March 31,
2013

 

June 30,
2012

 

June 30,
2013

 

June 30,
2012

Net income

 

  $

7,879

 

  $

6,195

 

  $

1,848

 

  $

14,074

 

  $

3,191

Real estate depreciation and amortization

 

15,309

 

15,142

 

15,437

 

30,451

 

30,445

FFO

 

  $

23,188

 

  $

21,337

 

  $

17,285

 

  $

44,525

 

  $

33,636

Preferred stock dividends

 

(2,085)

 

(2,084)

 

-  

 

(4,169)

 

-  

FFO available to common shareholders and OP unit holders

 

  $

21,103

 

  $

19,253

 

  $

17,285

 

  $

40,356

 

  $

33,636

Weighted average common shares outstanding - diluted

 

21,445,875

 

21,314,779

 

20,914,686

 

21,412,289

 

20,801,050

Weighted average OP units outstanding - diluted

 

25,353,709

 

25,353,709

 

25,346,097

 

25,353,709

 

25,345,590

Total weighted average shares and units outstanding - diluted

 

46,799,584

 

46,668,488

 

46,260,783

 

46,765,998

 

46,146,640

FFO per common share and OP unit - diluted

 

  $

0.45

 

  $

0.41

 

  $

0.37

 

  $

0.86

 

  $

0.73

 

Funds from Operations “FFO” is a supplemental measure of our 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 and liquidity. We calculate 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 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.

 

Our management uses FFO as a supplemental performance measure because, in 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.

 

We offer this measure because we recognize that FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our 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 our properties, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. FFO is a non-GAAP measure and should not be considered a measure of liquidity, an alternative to net income, cash provided by operating activities or any other performance measure determined in accordance with GAAP, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. In addition, our 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 us. Investors in our securities should not rely on these measures as a substitute for any GAAP measure, including net income.

 



 

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Reconciliation of Net Income to EBITDA and Adjusted EBITDA

 

(in thousands)

 

 

 

 

Three Months Ended:

 

Six Months Ended:

 

 

June 30,
2013

 

March 31,
2013

 

June 30,
2012

 

June 30,
2013

 

June 30,
2012

Net income

 

  $

7,879

 

  $

6,195

 

  $

1,848

 

  $

14,074

 

  $

3,191

Adjustments:

 

 

 

 

 

 

 

 

 

 

Interest expense, net of interest income

 

781

 

437

 

1,304

 

1,218

 

2,320

Income taxes

 

206

 

173

 

662

 

379

 

537

Depreciation and amortization

 

16,261

 

15,949

 

15,947

 

32,210

 

31,408

EBITDA

 

  $

25,127

 

  $

22,754

 

  $

19,761

 

  $

47,881

 

  $

37,456

Non-cash compensation

 

1,683

 

1,895

 

1,779

 

3,578

 

2,526

Transaction costs / litigation

 

399

 

105

 

161

 

504

 

1,733

Adjusted EBITDA

 

  $

27,209

 

  $

24,754

 

  $

21,701

 

  $

51,963

 

  $

41,715

 

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We calculate adjusted EBITDA by adding our non-cash compensation expense, transaction costs and litigation expense to EBITDA as well as adjusting for the impact of gains or losses on early extinguishment of debt. Management uses EBITDA and adjusted EBITDA as indicators of our ability to incur and service debt. In addition, we consider EBITDA and adjusted EBITDA to be appropriate supplemental measures of our 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 EBITDA 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 our business, their utilization as a cash flow measurement is limited.