Attached files
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8-K - 8-K - CoreSite Realty Corp | a13-17055_18k.htm |
EX-99.2 - EX-99.2 - CoreSite Realty Corp | a13-17055_1ex99d2.htm |
Exhibit 99.1
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 |
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|
· |
Reported second-quarter operating revenue of $57.7 million, representing a 13.9% increase year-over-year |
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· |
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 |
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· |
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% |
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· |
Commenced 42,672 net rentable square feet of new and expansion leases with annualized GAAP rent of $147 per square foot |
Tom Ray, CoreSites 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.
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.
CoreSites 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%.
CoreSites 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 CoreSites 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.
Upcoming Conferences and Events
CoreSite will participate in Bank of Americas 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 companys 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.
About CoreSite
CoreSite Realty Corporation (NYSE: COR) is the data center provider chosen by more than 750 of the worlds 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 nations 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
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 CoreSites 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 companys 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 companys failure to obtain necessary outside financing; the companys 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 companys 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 companys future results to differ materially from any forward-looking statements, see the section entitled Risk Factors in the companys 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.
Consolidated Balance Sheets |
(in thousands) |
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June 30, |
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December 31, | ||
Assets: |
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| |||
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Investments in real estate: |
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|
|
| ||
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Land |
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$ |
76,227 |
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$ |
85,868 |
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Building and building improvements |
|
652,142 |
|
596,405 | ||
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Leasehold improvements |
|
91,175 |
|
85,907 | ||
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|
|
819,544 |
|
768,180 | ||
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Less: Accumulated depreciation and amortization |
|
(129,038) |
|
(105,433) | ||
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Net investment in operating properties |
|
690,506 |
|
662,747 | ||
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Construction in progress |
|
104,963 |
|
61,328 | ||
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Net investments in real estate |
|
795,469 |
|
724,075 | ||
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Cash and cash equivalents |
|
2,803 |
|
8,130 | ||
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Accounts and other receivables, net |
|
7,930 |
|
9,901 | ||
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Lease intangibles, net |
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14,154 |
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19,453 | ||
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Goodwill |
|
41,191 |
|
41,191 | ||
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Other assets |
|
45,312 |
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42,582 | ||
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Total assets |
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$ |
906,859 |
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$ |
845,332 |
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|
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|
| ||
Liabilities and equity: |
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Liabilities |
|
|
|
| ||
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Revolving credit facility |
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73,000 |
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- | ||
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Mortgage loans payable |
|
59,000 |
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59,750 | ||
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Accounts payable and accrued expenses |
|
50,127 |
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50,624 | ||
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Deferred rent payable |
|
5,725 |
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4,329 | ||
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Acquired below-market lease contracts, net |
|
7,520 |
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8,539 | ||
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Prepaid rent and other liabilities |
|
11,590 |
|
11,317 | ||
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Total liabilities |
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206,962 |
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134,559 | ||
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Stockholders equity |
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|
|
| ||
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Series A cumulative preferred stock |
|
115,000 |
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115,000 | ||
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Common stock, par value $0.01 |
|
208 |
|
207 | ||
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Additional paid-in capital |
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263,479 |
|
259,009 | ||
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Distributions in excess of net income |
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(43,078) |
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(35,987) | ||
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Total stockholders equity |
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335,609 |
|
338,229 | ||
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Noncontrolling interests |
|
364,288 |
|
372,544 | ||
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Total equity |
|
699,897 |
|
710,773 | ||
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Total liabilities and equity |
|
$ |
906,859 |
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$ |
845,332 |
Consolidated Statement of Operations |
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(in thousands, except share and per share data) |
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Three Months Ended: |
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Six Months Ended: | |||||||||||
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June 30, |
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March 31, |
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June 30, |
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June 30, |
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June 30, | |||||
Operating revenues: |
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Rental revenue |
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$ |
34,205 |
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$ |
33,102 |
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$ |
30,604 |
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$ |
67,307 |
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$ |
60,234 |
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Power revenue |
|
14,486 |
|
13,529 |
|
12,939 |
|
28,015 |
|
25,313 | |||||
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Interconnection revenue |
|
7,053 |
|
6,572 |
|
5,436 |
|
13,625 |
|
9,091 | |||||
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Tenant reimbursement and other |
|
1,923 |
|
1,888 |
|
1,657 |
|
3,811 |
|
3,282 | |||||
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Total operating revenues |
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57,667 |
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55,091 |
|
50,636 |
|
112,758 |
|
97,920 | |||||
Operating expenses: |
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|
|
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|
|
|
|
|
| ||||||
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Property operating and maintenance |
|
15,118 |
|
14,527 |
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15,274 |
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29,645 |
|
29,669 | |||||
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Real estate taxes and insurance |
|
2,304 |
|
2,220 |
|
2,132 |
|
4,524 |
|
4,146 | |||||
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Depreciation and amortization |
|
16,261 |
|
15,949 |
|
15,947 |
|
32,210 |
|
31,408 | |||||
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Sales and marketing |
|
3,936 |
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3,789 |
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2,581 |
|
7,725 |
|
4,710 | |||||
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General and administrative |
|
6,177 |
|
7,003 |
|
6,036 |
|
13,180 |
|
12,388 | |||||
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Rent |
|
4,756 |
|
4,793 |
|
4,691 |
|
9,549 |
|
9,268 | |||||
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Transaction costs |
|
249 |
|
5 |
|
161 |
|
254 |
|
283 | |||||
|
Total operating expenses |
|
48,801 |
|
48,286 |
|
46,822 |
|
97,087 |
|
91,872 | |||||
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Operating income |
|
8,866 |
|
6,805 |
|
3,814 |
|
15,671 |
|
6,048 | |||||
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Interest income |
|
2 |
|
2 |
|
5 |
|
4 |
|
7 | |||||
|
Interest expense |
|
(783) |
|
(439) |
|
(1,309) |
|
(1,222) |
|
(2,327) | |||||
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Income before income taxes |
|
8,085 |
|
6,368 |
|
2,510 |
|
14,453 |
|
3,728 | |||||
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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 |
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$ |
1,426 |
|
Net income per share attributable to common shares: |
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|
|
|
|
|
|
|
|
| |||||
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Basic |
|
$ |
0.13 |
|
$ |
0.09 |
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$ |
0.04 |
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$ |
0.22 |
|
$ |
0.07 |
|
Diluted |
|
$ |
0.12 |
|
$ |
0.09 |
|
$ |
0.04 |
|
$ |
0.21 |
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$ |
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 |
Reconciliation of Net Income to FFO |
(in thousands, except share and per share data) |
|
|
|
Three Months Ended |
|
Six Months Ended | |||||||||||
|
|
June 30, |
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March 31, |
|
June 30, |
|
June 30, |
|
June 30, | |||||
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.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA |
(in thousands) |
|
|
|
Three Months Ended: |
|
Six Months Ended: | |||||||||||
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, | |||||
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.