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8-K - 8-K - CoreSite Realty Corpa15-16043_18k.htm
EX-99.1 - EX-99.1 - CoreSite Realty Corpa15-16043_1ex99d1.htm

Exhibit 99.2

 

Quarter Ended June 30, 2015 Earnings Release and Supplemental Information Quarter ended June 30, 2015 ®2015 CoreSite Realty Corporation, All Rights Reserved.

 


Quarter Ended June 30, 2015 Overview Earnings Release 3 Company Profile 8 Summary of Financial Data 10 Financial Statements Consolidated Balance Sheets 11 Consolidated Statements of Operations 12 Reconciliations of Net Income to FFO, AFFO, EBITDA and Adjusted EBITDA 13 Operating Portfolio Operating Properties 14 Leasing Statistics 15 Geographic and Vertical Diversification 17 10 Largest Customers 18 Development Capital Expenditures and Completed Pre-Stabilized Projects 19 Development Summary 20 Capital Structure Market Capitalization and Debt Summary 21 Interest Summary and Debt Covenants 22 Components of Net Asset Value 23 2015 Guidance 24 Appendix 25 Table of Contents 2

 


Quarter Ended June 30, 2015 2015 FFO guidance increased to a range of $2.75 to $2.83 per share DENVER, CO – JULY 23, 2015 CoreSite Realty Corporation (NYSE:COR), a premier provider of secure, reliable, high-performance data center solutions across the US, today announced financial results for the second quarter ended June 30, 2015. Quarterly Highlights • Reported second-quarter funds from operations (“FFO”) of $0.68 per diluted share and unit, representing 19.3% growth year over year on an unadjusted basis and 33.3% growth year over year excluding non-recurring items in Q2 2014 • Reported second-quarter total operating revenues of $81.5 million, representing a 24.0% increase year over year; total data center revenues increased 24.7% year over year • Executed 243,477 net rentable square feet (NRSF) of new and expansion data center leases representing $19.6 million of annualized GAAP rent at a rate of $81 per square foot, comprised of 106,897 square feet of turn-key data center space in addition to a previously-announced 136,580 square-foot powered-shell build-to-suit on CoreSite’s Santa Clara Campus in California • Commenced 122,872 net rentable square feet of new and expansion leases representing $15.1 million of annualized GAAP rent at a rate of $123 per square foot, increasing stabilized data center occupancy to 89.9% • Realized rent growth on signed renewals of 5.7% on a cash basis and 9.1% on a GAAP basis and recorded rental churn of 1.6% Tom Ray, CoreSite’s Chief Executive Officer, commented, “Our Q2 results reflect continued execution against our stated business plan with solid financial and operational performance.” Mr. Ray continued, “We are pleased to have executed upon our core objectives of increasing the number of smaller leases we sign, continuing to grow interconnection count and revenue, adding key network and cloud deployments to our platform, and making our company more efficient as reflected by our earnings margins. In addition, during the quarter we were pleased to execute upon two larger lease opportunities – our build-to-suit in Santa Clara and a 35,000 square-foot anchor lease at our new SV7 building currently in preconstruction. We are encouraged by our continued strength in the performance-sensitive colocation segment and we remain focused upon executing our business plan in what we believe are strengthening market conditions.” Financial Results CoreSite reported FFO per diluted share and unit of $0.68 for the three months ended June 30, 2015, an increase of 33.3% compared to $0.51 per diluted share and unit for the three months ended June 30, 2014, excluding non-recurring items. On a sequential-quarter basis, FFO per diluted share and unit increased 6.3%. Total operating revenues for the three months ended June 30, 2015, were $81.5 million, a 24.0% increase year over year and an increase of 9.0% on a sequential-quarter basis. Total data center revenues for the three months ended June 30, 2015, were $79.5 million, a 24.7% increase year over year and an increase of 9.5% on a sequential-quarter basis. CoreSite reported net income attributable to common shares of $5.5 million, or $0.22 per diluted share. CORESITE REPORTS SECOND-QUARTER YEAR-OVER-YEAR REVENUE AND FFO PER SHARE GROWTH OF 24% AND 19%, RESPECTIVELY 3 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX

 


Quarter Ended June 30, 2015 Sales Activity CoreSite executed 122 new and expansion data center leases representing $19.6 million of annualized GAAP rent during the second quarter, comprised of 243,477 NRSF at a weighted-average GAAP rental rate of $81 per NRSF. The recently-announced 136,580-square foot powered-shell build-to-suit, SV6, is included in the second-quarter new and expansion leasing results. CoreSite’s second-quarter data center lease commencements totaled 122,872 NRSF at a weighted average GAAP rental rate of $123 per NRSF, which represents $15.1 million of annualized GAAP rent. CoreSite’s renewal leases signed in the second quarter totaled $6.5 million in annualized GAAP rent, comprised of 35,272 NRSF at a weighted-average GAAP rental rate of $185 per NRSF, reflecting a 5.7% increase in rent on a cash basis and 9.1% increase on a GAAP basis. The second-quarter rental churn rate was 1.6%. Development Activity Santa Clara – In April 2015, CoreSite began construction on a 136,580 square-foot powered shell data center on land CoreSite owns on its Santa Clara campus. The building, which will be known as SV6, is 100% pre-leased. As of June 30, 2015, CoreSite has incurred $5.0 million of the estimated $30.0 million required to complete the development project, and expects to deliver the build-to-suit to a strategic customer in the first half of 2016. Northern Virginia – During the second quarter, CoreSite placed into service 48,137 NRSF associated with Phase 2 at VA2. As of June 30, 2015, CoreSite had an incremental 48,137 NRSF of data center space under construction in Phase 3 at VA2 and had incurred $5.7 million of the estimated $14.5 million required to complete Phase 3. CoreSite expects to complete construction in the fourth quarter of 2015. New York – During the second quarter, CoreSite placed into service 49,050 NRSF associated with Phase 2 at NY2, comprised of three computers rooms of approximately 16,000 NRSF each. As of June 30, 2015, one computer room was 100% leased and occupied by a single customer. Los Angeles – During the second quarter, CoreSite began construction of 12,500 NRSF at LA2. As of June 30, 2015, CoreSite had incurred approximately $600,000 of the estimated $1.7 million required to complete the project, and expects to complete construction in the third quarter of 2015. Additional markets – As of June 30, 2015, CoreSite had 26,853 NRSF of turn-key data center capacity under construction across its existing facilities at BO1 (Boston) and CH1 (Chicago). As of the end of the second quarter, CoreSite had incurred $5.4 million of the estimated $16.5 million required to complete these two projects. Quarter Ended June 30, 2015 4 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX

 


Quarter Ended June 30, 2015 Balance Sheet and Liquidity As of June 30, 2015, CoreSite had net debt of $344.7 million, correlating to 2.1 times second-quarter annualized adjusted EBITDA, and net debt and preferred stock outstanding of $459.7 million, correlating to 2.8 times second-quarter annualized adjusted EBITDA. On June 24, 2015, CoreSite executed an amendment to its revolving credit facility, increasing debt capacity to $500 million. The amended unsecured credit facility is comprised of a 4-year $350 million revolving credit facility and a 5-year $150 million term loan. CoreSite used the term loan proceeds to pay down a portion of the balance on its existing revolving credit facility. At quarter end, CoreSite had $7.5 million of cash available on its balance sheet and $241.4 million of capacity available under its revolving credit facility. Dividend On May 21, 2015, CoreSite announced a dividend of $0.42 per share of common stock and common stock equivalents for the second quarter of 2015. The dividend was paid on July 15, 2015, to shareholders of record on June 30, 2015. CoreSite also announced on May 21, 2015, a dividend of $0.4531 per share of Series A preferred stock for the period April 15, 2015, to July 14, 2015. The preferred dividend was paid on July 15, 2015, to shareholders of record on June 30, 2015. 2015 Guidance CoreSite is increasing its 2015 guidance of FFO per diluted share and unit to a range of $2.75 to $2.83 from the previous range of $2.55 to $2.65. In addition, CoreSite is increasing its 2015 guidance for net income attributable to common shares to a range of $0.93 to $1.01 from the previous range of $0.75 to $0.85 per diluted share, with the difference between FFO and net income being real estate depreciation and amortization. CoreSite is increasing its guidance for 2015 total capital expenditures by $20 million to a range of $135 million to $165 million primarily to reflect the development of the recently announced SV7 data center on its Santa Clara campus. 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 beyond what has already been disclosed. Quarter Ended June 30, 2015 5 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX

 


Quarter Ended June 30, 2015 Upcoming Conferences and Events CoreSite will participate in a number of upcoming investor conferences, including the Pacific Crest 17th Annual Global Technology Leadership Forum on August 11th in Vail, Colorado; the Cowen and Company Communications Infrastructure Summit on August 12th in Boulder, Colorado; the Bank of America Merrill Lynch 2015 Media, Communications & Entertainment Conference on September 9th in Beverly Hills, California; and the Bank of America Merrill Lynch 2015 Global Real Estate Conference on September 16th in New York, New York. Conference Call Details CoreSite will host a conference call on July 23, 2015, 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 13611864. The replay will be available until July 30, 2015. Interested parties may also listen to a simultaneous webcast of the conference call by logging on to CoreSite’s website at www.CoreSite.com and clicking on the “Investors” link. The on-line replay will be available for a limited time beginning immediately following the call. About CoreSite CoreSite Realty Corporation (NYSE:COR) delivers secure, reliable, high-performance data center solutions across eight key North American markets. More than 800 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 350+ 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 Investor Relations Contact Greer Aviv CoreSite Investor Relations Director +1 303.405.1012 +1 303.222.7276 Greer.Aviv@CoreSite.com Quarter Ended June 30, 2015 6 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX

 


Quarter Ended June 30, 2015 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. Quarter Ended June 30, 2015 7 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX

 


Quarter Ended June 30, 2015 Company Profile CoreSite delivers secure, reliable, high-performance data center solutions across eight key North American markets. NY2 SILICON VALLEY SV1 SV3 SV5 SV2 SV4 SV6 LOS ANGELES LA1 LA2 DENVER HQ DE1 DE2 CHICAGO CH1 N VIRGINIA/DC VA1 DC1 VA2 BOSTON BO1 MIAMI MI1 NEW YORK NY1 NY2 8 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX

 


Quarter Ended June 30, 2015 Company Profile Secure, Reliable and Compliant Six 9s uptime for four consecutive years Physical security standards enable regulatory compliance requirements Payment Card Industry certification Rigorous internal security training Operational excellence in security and environmental controls Scalable Newest data centers, NY2 and VA2, and two new data centers on the Santa Clara campus expected to be delivered in 2016 2.5+ million gross square feet and 17 operating data centers in eight of the US’ largest commercial and data center markets Ability to nearly double occupied data center footprint on land and buildings currently owned, including current space unoccupied, under construction and held for development High-Performance Cloud-enabled, network-rich data center campuses Over 275 network service providers supported by robust IX services to key public clouds 15,000+ cross-connects Enabling enterprise with support ecosystems Best-in-Class Customer Experience 350+ professionals with dedicated industry expertise Experienced and committed operations and facilities personnel Dedicated implementation resources to ensure a seamless onboarding process 24/7 customer support and remote hands 9 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX VA2

 


Quarter Ended June 30, 2015 Summary of Financial Data (in thousands, except per share, NRSF and MRR data) 10 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 G UIDANCE APPENDIX Three Months Ended Six Months Ended Summary of Results June 30, 2015 March 31, 2015 June 30, 2014 June 30, 2015 June 30, 2014 Operating revenues $ 81,456 $ 74,757 $ 65,682 $ 156,213 $ 129,413 Data center revenues 79,487 72,623 63,731 152,110 125,447 Net income 12,882 12,060 10,638 24,942 18,756 Net income attributable to common shares 5,538 4,568 3,883 10,106 6,616 Funds from operations (FFO) to shares and units 32,140 30,193 26,716 62,333 49,586 Adjusted funds from operations (AFFO) 26,116 25,154 21,579 51,270 40,935 EBITDA 38,722 36,188 31,533 74,910 58,724 Adjusted EBITDA 40,559 37,951 34,111 78,510 64,170 Per share - diluted: Net income attributable to common shares $ 0.22 $ 0.21 $ 0.18 $ 0.43 $ 0.31 FFO per common share and OP unit $ 0.68 $ 0.64 $ 0.57 $ 1.32 $ 1.06 As of June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 Dividend Activity Dividends declared per share and OP unit $ 0.42 $ 0.42 $ 0.42 $ 0.35 $ 0.35 AFFO payout ratio 76.1% 79.1% 85.4% 86.2% 76.2% Operating Portfolio Statistics Operating data center properties 17 17 17 16 16 Stabilized data center NRSF 1,449,498 1,354,235 1,323,210 1,334,914 1,326,332 Stabilized data center NRSF occupied 1,303,274 1,194,994 1,156,486 1,153,345 1,132,894 Stabilized data center % occupied 89.9% 88.2% 87.4% 86.4% 85.4% Turn-Key Data Center (“TKD”) Same Store Statistics MRR per Cabinet Equivalent $ 1,420 $ 1,408 $ 1,413 $ 1,390 $ 1,364 Data center NRSF % occupied 84.9% 83.1% 80.2% 78.4% 76.4% Market Capitalization, Debt & Preferred Stock Total enterprise value $ 2,620,743 $ 2,755,403 $ 2,273,458 $ 1,967,868 $ 1,945,279 Total debt outstanding 352,250 333,750 318,500 305,250 276,750 Total debt and preferred stock outstanding 467,250 448,750 433,500 420,250 391,750 Net Debt to: Annualized Adjusted EBITDA 2.1x 2.1x 2.1x 2.3x 1.9x Enterprise Value 13.2% 11.7% 13.5% 15.0% 13.7% Net Debt & Preferred Stock to: Annualized Adjusted EBITDA 2.8x 2.9x 2.9x 3.1x 2.8x Enterprise Value 17.5% 15.8% 18.6% 20.9% 19.6%

 


Quarter Ended June 30, 2015 Consolidated Balance Sheets (in thousands) 11 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX June 30, 2015 December 31, 2014 Assets: Investments in real estate: Land $ 78,337 $ 78,983 Buildings and improvements 1,012,845 888,966 1,091,182 967,949 Less: Accumulated depreciation and amortization (247,655) (215,978) Net investment in operating properties 843,527 751,971 Construction in progress 106,872 178,599 Net investments in real estate 950,399 930,570 Cash and cash equivalents 7,542 10,662 Accounts and other receivables, net 15,269 10,290 Lease intangibles, net 5,815 7,112 Goodwill 41,191 41,191 Other assets 77,569 75,600 Total assets $ 1,097,785 $ 1,075,425 Liabilities and equity: Liabilities Revolving credit facility $ 102,250 $ 218,500 Senior unsecured term loans 250,000 100,000 Accounts payable and accrued expenses 41,903 42,463 Accrued dividends and distributions 22,467 22,355 Deferred rent payable 8,519 8,985 Acquired below-market lease contracts, net 5,126 5,576 Unearned revenue, prepaid rent and other liabilities 24,734 19,205 Total liabilities 454,999 417,084 Stockholders’ equity Series A cumulative preferred stock 115,000 115,000 Common stock, par value $0.01 259 212 Additional paid-in capital 337,662 275,038 Accumulated other comprehensive loss (183) (125) Distributions in excess of net income (77,772) (67,538) Total stockholders’ equity 374,966 322,587 Noncontrolling interests 267,820 335,754 Total equity 642,786 658,341 Total liabilities and equity $ 1,097,785 $ 1,075,425

 


Quarter Ended June 30, 2015 Consolidated Statements of Operations (in thousands, except share and per share data) 12 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX Three Months Ended Six Months Ended June 30, 2015 March 31, 2015 June 30, 2014 June 30, 2015 June 30, 2014 Operating revenues: Data center revenue: Rental revenue $ 44,824 $ 41,323 $ 36,938 $ 86,147 $ 71,837 Power revenue 21,792 19,669 16,575 41,461 32,577 Interconnection revenue 10,595 10,215 8,591 20,810 16,650 Tenant reimbursement and other 2,276 1,416 1,627 3,692 4,383 Total data center revenue 79,487 72,623 63,731 152,110 125,447 Office, light-industrial and other revenue 1,969 2,134 1,951 4,103 3,966 Total operating revenues 81,456 74,757 65,682 156,213 129,413 Operating expenses: Property operating and maintenance 22,204 19,780 18,534 41,984 34,823 Real estate taxes and insurance 3,270 1,935 (980) 5,205 1,986 Depreciation and amortization 24,046 22,816 19,504 46,862 37,386 Sales and marketing 4,256 3,782 3,747 8,038 7,335 General and administrative 7,952 7,865 6,732 15,817 14,437 Rent 5,007 5,243 5,070 10,250 10,136 Impairment of internal-use software — — 1,037 — 1,959 Transaction costs 45 — 9 45 13 Total operating expenses 66,780 61,421 53,653 128,201 108,075 Operating income 14,676 13,336 12,029 28,012 21,338 Gain on real estate disposal — 36 — 36 — Interest income 2 2 2 4 4 Interest expense (1,730) (1,265) (1,415) (2,995) (2,588) Income before income taxes 12,948 12,109 10,616 25,057 18,754 Income tax benefit (expense) (66) (49) 22 (115) 2 Net income 12,882 12,060 10,638 24,942 18,756 Net income attributable to noncontrolling interests 5,259 5,408 4,670 10,667 7,971 Net income attributable to CoreSite Realty Corporation 7,623 6,652 5,968 14,275 10,785 Preferred stock dividends (2,085) (2,084) (2,085) (4,169) (4,169) Net income attributable to common shares $ 5,538 $ 4,568 $ 3,883 $ 10,106 $ 6,616 Net income per share attributable to common shares: Basic $ 0.23 $ 0.21 $ 0.18 $ 0.44 $ 0.31 Diluted $ 0.22 $ 0.21 $ 0.18 $ 0.43 $ 0.31 Weighted average common shares outstanding: Basic 24,536,583 21,372,157 21,131,077 22,963,111 21,062,299 Diluted 25,055,195 21,978,307 21,604,730 23,525,316 21,599,749

 


Quarter Ended June 30, 2015 Reconciliations of Net Income to FFO, AFFO, EBITDA and Adjusted EBITDA (in thousands, except per share data) Reconciliation of Net Income to FFO Reconciliation of FFO to AFFO Reconciliation of Net Income to EBITDA and Adjusted EBITDA 13 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX Three Months Ended Six Months Ended June 30, 2015 March 31, 2015 June 30, 2014 June 30, 2015 June 30, 2014 Net income $ 12,882 $ 12,060 $ 10,638 $ 24,942 $ 18,756 Real estate depreciation and amortization 21,343 20,253 18,163 41,596 34,999 Gain on real estate disposal — (36) — (36) — FFO $ 34,225 $ 32,277 $ 28,801 $ 66,502 $ 53,755 Preferred stock dividends (2,085) (2,084) (2,085) (4,169) (4,169) FFO available to common shareholders and OP unit holders $ 32,140 $ 30,193 $ 26,716 $ 62,333 $ 49,586 Weighted average common shares outstanding - diluted 25,055 21,978 21,605 23,525 21,600 Weighted average OP units outstanding - diluted 22,344 25,361 25,361 23,844 25,361 Total weighted average shares and units outstanding - diluted 47,399 47,339 46,966 47,369 46,961 FFO per common share and OP unit - diluted $ 0.68 $ 0.64 $ 0.57 $ 1.32 $ 1.06 Three Months Ended Six Months Ended June 30, 2015 March 31, 2015 June 30, 2014 June 30, 2015 June 30, 2014 FFO available to common shareholders and unit holders $ 32,140 $ 30,193 $ 26,716 $ 62,333 $ 49,586 Adjustments: Amortization of deferred financing costs 292 294 449 586 1,029 Non-cash compensation 1,792 1,569 1,532 3,361 3,248 Non-real estate depreciation 2,703 2,563 1,341 5,266 2,387 Straight-line rent adjustment (2,755) (1,064) (1,378) (3,819) (1,814) Amortization of above and below market leases (130) (128) (112) (258) (182) Impairment of internal-use software — — 1,037 — 1,959 Recurring capital expenditures (852) (1,981) (1,377) (2,833) (3,050) Tenant improvements (2,282) (2,197) (1,579) (4,479) (2,787) Capitalized leasing costs (4,792) (4,095) (5,050) (8,887) (9,441) AFFO available to common shareholders and OP unit holders $ 26,116 $ 25,154 $ 21,579 $ 51,270 $ 40,935 Three Months Ended Six Months Ended June 30, 2015 March 31, 2015 June 30, 2014 June 30, 2015 June 30, 2014 Net income $ 12,882 $ 12,060 $ 10,638 $ 24,942 $ 18,756 Adjustments: Interest expense, net of interest income 1,728 1,263 1,413 2,991 2,584 Income taxes 66 49 (22) 115 (2) Depreciation and amortization 24,046 22,816 19,504 46,862 37,386 EBITDA $ 38,722 $ 36,188 $ 31,533 $ 74,910 $ 58,724 Non-cash compensation 1,792 1,569 1,532 3,361 3,248 Gain on real estate disposal — (36) — (36) — Transaction costs / litigation 45 230 9 275 239 Impairment of internal-use software — — 1,037 — 1,959 Adjusted EBITDA $ 40,559 $ 37,951 $ 34,111 $ 78,510 $ 64,170

 


Quarter Ended June 30, 2015 Operating Properties 14 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX See Appendix for definitions. Data Center Operating NRSF Annualized Rent ($000)(1) Stabilized Pre-Stabilized Total NRSF Under Construction Held for Development NRSF Market/Facilities Total Percent Occupied(2) Total Percent Occupied(2) Total Percent Occupied(2) Total NRSF San Francisco Bay SV1 $ 7,040 84,045 83.4 % — — % 84,045 83.4 % — — 84,045 SV2 8,084 76,676 85.8 — — 76,676 85.8 — — 76,676 Santa Clara campus(3) 33,744 252,173 96.1 — — 252,173 96.1 136,580 230,000 618,753 San Francisco Bay Total 48,868 412,894 91.6 — — 412,894 91.6 136,580 230,000 779,474 Los Angeles One Wilshire campus LA1* 25,900 139,053 83.4 — — 139,053 83.4 — — 139,053 LA2 19,583 191,202 89.5 33,711 1.9 224,913 76.3 12,500 187,478 424,891 Los Angeles Total 45,483 330,255 86.9 33,711 1.9 363,966 79.0 12,500 187,478 563,944 Northern Virginia VA1 28,189 201,719 91.8 — — 201,719 91.8 — — 201,719 VA2 2,758 44,036 100.0 48,137 1.0 92,173 48.3 48,137 48,137 188,447 DC1* 3,080 22,137 88.8 — — 22,137 88.8 — — 22,137 Northern Virginia Total 34,027 267,892 92.9 48,137 1.0 316,029 78.9 48,137 48,137 412,303 Boston BO1 14,732 166,026 99.5 — — 166,026 99.5 15,149 72,501 253,676 Chicago CH1 13,615 166,703 83.2 — — 166,703 83.2 11,704 — 178,407 New York NY1* 6,195 48,404 75.0 — — 48,404 75.0 — — 48,404 NY2 5,543 16,130 100.0 85,612 50.7 101,742 58.5 — 134,508 236,250 New York Total 11,738 64,534 81.2 85,612 50.7 150,146 63.8 — 134,508 284,654 Miami MI1 1,846 30,176 80.3 — — 30,176 80.3 — 13,154 43,330 Denver DE1* 1,078 5,878 89.6 — — 5,878 89.6 — — 5,878 DE2* 332 5,140 62.9 — — 5,140 62.9 — — 5,140 Denver Total 1,410 11,018 77.1 — — 11,018 77.1 — — 11,018 Total Data Center Facilities $ 171,719 1,449,498 89.9 % 167,460 26.6 % 1,616,958 83.4 % 224,070 685,778 2,526,806 Office & Light-Industrial 6,627 324,648 74.7 — — 324,648 74.7 — — 324,648 Total Portfolio $ 178,346 1,774,146 87.1 % 167,460 26.6 % 1,941,606 81.9 # 224,070 685,778 2,851,454 * Indicates properties in which we hold a leasehold interest. (1) On a gross basis, our total portfolio annualized rent was approximately $183.1 million as of June 30, 2015, which reflects the addition of $4.8 million in operating expense reimbursements to contractual net rent under modified gross and triple-net leases. (2) Includes customer leases that have commenced and are occupied as of June 30, 2015. If all leases signed during the current and prior periods had commenced, the percent occupied would have been as follows: Percent Leased Stabilized Pre-Stabilized Total Total Data Center Facilities 90.8% 33.4% 84.8% Total Portfolio 87.9% 33.4% 83.2% (3) The annualized rent for the Santa Clara campus includes amounts associated with a restructured lease agreement involving a customer that has vacated the majority of its leased space and is paying discounted rent payments that may be applied to new lease arrangements elsewhere in the portfolio on a dollar-for-dollar basis until the terms expire. The amounts payable pursuant to this agreement are scheduled to expire as follows: $2.6 million in Q4 2015, $1.9 million in Q2 2016, and $4.2 million in Q2 2017.

 


Quarter Ended June 30, 2015 Leasing Statistics Data Center Leasing Activity MRR per Cabinet Equivalent (TKD Same Store) 15 OVERVIEW FINANCIAL S TATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of  NAV 2015 GUIDANCE APPENDIX 7.1% y-o-y 6.2% y-o-y 5.4% y-o-y 5.2% y-o-y 5.1% y-o-y 4.1% y-o-y $1,364 $1,390 $1,413 $1,408 $1,420 $1,300 $1,350 $1,400 $1,450 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 GAAP GAAP Leasing Number Annualized Total Annualized Rental Cash GAAP Activity of Rent Leased Rent per Churn Rent Rent Period Leases(1) (000’s) NRSF Leased NRSF Rate Growth Growth New/expansion leases commenced YTD 2015 217 $ 24,341 183,669 $ 133 (2) Q2 2015 107 15,117 122,872 123 (2) Q1 2015 110 9,224 60,797 152 Q4 2014 106 4,943 34,009 145 Q3 2014 115 6,066 45,014 135 Q2 2014 126 8,152 60,587 135 New/expansion leases signed YTD 2015 222 $ 28,485 297,862 $ 96 (3) Q2 2015 122 19,624 243,477 81 (3) Q1 2015 100 8,861 54,385 163 Q4 2014 96 11,075 91,662 121 (2) Q3 2014 118 7,607 54,123 141 Q2 2014 121 9,368 58,909 159 Renewal leases signed YTD 2015 257 $ 13,739 75,718 $ 181 3.8% 5.5% 10.3% Q2 2015 135 6,517 35,272 185 1.6% 5.7% 9.1% Q1 2015 122 7,222 40,446 179 2.2% 5.3% 11.4% Q4 2014 78 6,705 43,863 153 1.4% 2.6% 5.2% Q3 2014 123 12,078 55,262 219 1.2% 3.0% 10.6% Q2 2014 77 7,009 41,890 167 1.8% 2.1% 8.1% (1) Number of leases represents each agreement with a customer; a lease agreement could include multiple spaces and a customer could have multiple leases. (2) During Q4 2014, we signed a 44,036 NRSF lease with a single customer for a powered shell for the entire VA2 Phase 1 facility. The lease commenced during Q2 2015. (3) During Q2 2015, we signed a 136,580 NRSF build-to-suit powered shell lease at our SV6 facility which is currently under development.

 


Quarter Ended June 30, 2015 Leasing Statistics Lease Expirations (total portfolio, including total data center and office and light-industrial “OLI”) Lease Distribution (total portfolio, including total data center and office and light-industrial “OLI”) 16 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX Total Percentage Percentage Number Percentage Operating of Total Annualized of Total of of All NRSF of Operating Rent Annualized NRSF Under Lease Leases Leases Leases NRSF ($000) Rent Unoccupied data center — — % 269,140 13.9 % $ — - % Unoccupied OLI — — 82,111 4.2 — - Data center NRSF: 5,000 or less 1,523 90.4 503,496 25.9 84,404 47.3 5,001 - 10,000 30 1.8 203,720 10.5 27,613 15.5 10,001 - 25,000 16 0.9 209,349 10.8 26,185 14.7 Greater than 25,000 4 0.2 134,073 6.9 14,444 8.1 Powered shell and other(1) 17 1.0 297,180 15.3 19,073 10.7 OLI 96 5.7 242,537 12.5 6,627 3.7 Portfolio Total 1,686 100.0 % 1,941,606 100.0 % $ 178,346 100.0 % (1) The annualized rent for powered shell and other includes $8.7 million associated with a restructured lease agreement involving a customer that has vacated the majority of its leased space and is paying discounted rent payments that may be applied to new lease arrangements elsewhere in the portfolio on a dollar-for-dollar basis until the terms expire. The amounts payable pursuant to this agreement are scheduled to expire as follows: $2.6 million in Q4 2015, $1.9 million in Q2 2016, and $4.2 million in Q2 2017. Total Annualized Number Operating Percentage Percentage Annualized Annualized Rent Per of NRSF of of Total Annualized of Total Rent Per Rent at Leased Leases Expiring Operating Rent Annualized Leased Expiration NRSF at Year of Lease Expiration Expiring(1) Leases NRSF ($000) Rent NRSF ($000)(2) Expiration Unoccupied data center - 269,140 13.9 % $ - - % $ - $ - $ - Unoccupied OLI - 82,111 4.2 - - - - - 2015 365 171,210 8.8 28,299 15.9 165 28,395 166 2016 542 240,060 12.4 37,034 20.8 154 38,152 159 2017 368 213,504 11.0 39,515 22.2 185 39,683 186 2018 178 236,868 12.2 29,299 16.4 124 33,348 141 2019 77 179,427 9.2 15,393 8.6 86 18,852 105 2020-Thereafter 60 306,749 15.8 22,179 12.4 72 30,725 100 OLI (3) 96 242,537 12.5 6,627 3.7 27 6,605 27 Portfolio Total / Weighted Average 1,686 1,941,606 100.0 % $ 178,346 100.0 % $ 112 $ 195,760 $ 123 (1) Includes leases that upon expiration will automatically be renewed, primarily on a year-to-year basis. Number of leases represents each agreement with a customer; a lease agreement could include multiple spaces and a customer could have multiple leases. (2) Represents the final monthly contractual rent under existing customer leases as of June 30, 2015, multiplied by 12. This amount reflects total annualized base rent before any one-time or non-recurring rent abatements and excludes operating expense reimbursement, power revenue and interconnection revenue. (3) The office and light-industrial leases are scheduled to expire as follows: NRSF of Annualized Expiring Rent Year Leases ($000) 2015 8,202 $ 228 2016 63,522 1,540 2017 9,285 257 2018 4,773 137 2019 4,948 127 2020-Thereafter 151,807 4,338 Total OLI 242,537 $ 6,627

 


Quarter Ended June 30, 2015 Geographic and Vertical Diversification Geographic Diversification Vertical Diversification 17 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX San Francisco Bay 28.5% Los Angeles 26.5% Northern Virginia 19.8% Boston 8.7% Chicago 7.9% New York 6.8% Miami 1.0 Denver 0.8% Enterprise 0.0% Digital Content & Multimedia 26.7% SI & MSP 13.6% Other Enterprise 12.0% Networks & Mobility 24.5% Cloud 23.2% Percentage of Total Data Metropolitan Market Center Annualized Rent San Francisco Bay 28.5 % Los Angeles 26.5 Northern Virginia 19.8 Boston 8.7 Chicago 7.9 New York 6.8 Miami 1.0 Denver 0.8 Total 100.0 % Percentage of Total Data Vertical Center Annualized Rent Enterprise: Digital Content & Multimedia 26.7 % SI & MSP 13.6 Other Enterprise 12.0 Total Enterprise 52.3 Networks & Mobility 24.5 Cloud 23.2 Total 100.0 %

 


Quarter Ended June 30, 2015 10 Largest Customers 10 Largest Customers (total portfolio, including data center and office and light-industrial) 18 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX Weighted Percentage Percentage Average Number Total of Total Annualized of Total Remaining of Occupied Operating Rent Annualized Lease Term in Customer Industry CoreSite Vertical Locations NRSF NRSF(1) ($000) Rent(2) Months(3) 1 Technology Cloud 9 145,179 7.5 % $ 10,381 5.8 % 64 2 Technology Enterprise - SI & MSP 3 66,758 3.4 8,347 4.7 32 3 Technology Enterprise - Digital Content 10 66,307 3.4 5,990 3.4 6 4 Technology Enterprise - Digital Content 2 32,915 1.7 5,504 3.1 34 5 Technology Enterprise - Other 2 19,299 1.0 4,201 2.4 16 6 Technology Cloud 1 28,923 1.5 4,118 2.3 40 7 Technology Enterprise - Digital Content 3 26,813 1.4 4,114 2.3 46 8 Government* Enterprise - Other 1 130,960 6.8 3,906 2.2 78 9 Financial(4) Enterprise - Other 2 12,188 0.6 3,233 1.8 110 10 Technology Enterprise - SI & MSP 1 6,417 0.3 3,025 1.6 19 Total/Weighted Average 535,759 27.6 % $ 52,819 29.6 % 36 * Denotes customer using space for general office purposes. (1) Represents the customer’s total occupied square feet divided by the total operating NRSF in the portfolio which, as of June 30, 2015, consisted of 1,941,606 NRSF. (2) Represents the customer’s total annualized rent divided by the total annualized rent in the portfolio as of June 30, 2015, which was approximately $178.3 million. (3) Weighted average based on percentage of total annualized rent expiring calculated as of June 30, 2015. (4) Customer’s lease term includes auto renewal provisions at the end of years four and six, which the customer may opt out of by paying termination fees of $0.4 million and $0.3 million, respectively.

 


Quarter Ended June 30, 2015 Capital Expenditures and Completed Pre-Stabilized Projects (in thousands, except NRSF and cost per NRSF data) Completed Pre-Stabilized Projects Capital Expenditures and Repairs and Maintenance 19 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX Three Months Ended June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 Data center expansion(1) $ 21,130 $ 21,078 $ 19,147 $ 14,166 $ 32,082 Non-recurring investments(2) 2,868 3,872 1,838 2,304 2,671 Tenant improvements 2,282 2,197 1,059 666 1,579 Recurring capital expenditures(3) 852 1,981 254 1,125 1,377 Total capital expenditures $ 27,132 $ 29,128 $ 22,298 $ 18,261 $ 37,709 Repairs and maintenance expense(4) $ 2,485 $ 2,349 $ 2,485 $ 2,186 $ 2,600 (1) Data center expansion capital expenditures include new data center construction, development projects adding capacity to existing data centers and other revenue generating investments. (2) Non-recurring investments include upgrades to existing data center or office space and company-wide improvements that are ancillary to revenue generation such as internal system development and system-wide security upgrades, which have a future economic benefit. (3) Recurring capital expenditures include required equipment upgrades within our operating portfolio, which have a future economic benefit. (4) Repairs and maintenance expense is classified within property operating and maintenance expense in the consolidated statement of operations. These expenditures represent recurring maintenance contracts and repairs to operating equipment necessary to maintain current operations. Projects/Facilities Metropolitan Area Completion NRSF Cost(1) Cost Per NRSF Percent Leased(2) Percent Occupied NY2 Phase 1 New York Dec ‘13 / Mar ‘14 52,692 $ 43,497 $ 825 69.0 % 67.4 % LA2 Los Angeles Feb 2014 33,711 9,800 291 7.2 1.9 VA2 Phase 2 Northern Virginia May 2015 48,137 32,129 667 19.4 1.0 NY2 Phase 2(3) New York Jun 2015 32,920 29,476 895 23.9 23.9 Total completed pre-stabilized 167,460 $ 114,902 $ 686 33.4 % 26.6 % (1) Cost includes capital expenditures related to the specific project / phase and, for NY2 and VA2, also includes allocations of capital expenditures related to land and building shell that were incurred during the first phase of each overall project. (2) Includes customer leases that have been signed as of June 30, 2015, but have not commenced. The percent leased is determined based on leased square feet as a proportion of total pre-stabilized NRSF. (3) During Q2 2015, we completed development of NY2 Phase 2 which comprises three computer rooms approximately 16,000 NRSF each. One computer room was 100% leased and occupied at completion and is included in our stabilized operating NRSF in the Operating Property table and two computer rooms are pre-stabilized as of June 30, 2015.

 


Quarter Ended June 30, 2015 Development Summary (in thousands, except NRSF and cost per NRSF data) Data Center Projects Under Construction 20 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX Held for Development(1) Costs Projects/Facilities Metropolitan Area Estimated Completion NRSF Incurred to-date Estimated Total Per NRSF Percent Leased(1) TKD CH1 Chicago Q3 2015 11,704 $ 5,165 $ 7,000 $ 598 53.9 % LA2 Los Angeles Q3 2015 12,500 594 1,700 136 — VA2 Phase 3 Northern Virginia Q4 2015 48,137 5,653 14,500 301 48.1 BO1 Boston Q1 2016 15,149 237 9,500 627 — Total / average TKD 87,490 $ 11,649 $ 32,700 $ 374 33.7 % Powered shell SV6(1) San Francisco Bay Q1 - Q2 2016 136,580 $ 4,984 $ 30,000 $ 220 100.0 % Total TKD and powered shell 224,070 $ 16,633 $ 62,700 74.1 % (1) Represents 136,580 NRSF of build-to-suit space that was 100% pre-leased in April 2015 and has an expected lease commencement date in the first half of 2016. Projects/Facilities Metropolitan Area Estimated NRSF Estimated Sellable Power (Megawatts) Estimated Incremental Costs Estimated Incremental Cost per MW New construction Santa Clara Campus(2) San Francisco Bay 230,000 12.0 - 27.0 Secaucus, NJ New York 47,211 - 147,211 3.0 - 9.0 Incremental capacity in existing facilities VA2 (Phase 4) Northern Virginia 48,137 3.0 $ 20,500 $ 6,833 NY2 (Phases 3-4) New York 87,297 8.5 57,000 6,706 BO1 Boston 72,501 6.0 50,000 8,333 LA2 Los Angeles 187,478 13.0 73,000 5,615 MI1 Miami 13,154 1.0 7,500 7,500 Total incremental capacity 408,567 31.5 $ 208,000 $ 6,603 Total new construction & incremental capacity 685,778 - 785,778 43.5 - 67.5 (1) Represents data center space that may be constructed on entitled and unentitled land and incremental data center capacity that may be constructed in existing facilities. The data presented represents management’s best estimate of incremental costs that may vary based on estimated NRSF and power and are subject to market conditions and build-out specifications. (2) CoreSite plans to develop a new data center in the Santa Clara Campus, SV7, which will comprise 230,000 NRSF. We have pre-leased approximately 35,000 NRSF in SV7 during the quarter. The project is currently in preconstruction and anticipated to commence construction during Q3 2015.

 


Quarter Ended June 30, 2015 Market Capitalization and Debt Summary (in thousands, except per share data) Market Capitalization Debt Maturities Debt Summary (1) 21 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX Shares or Equivalents Outstanding Market Price / Liquidation Value as of June 30, 2015 Market Value Equivalents Common shares 26,531 $45.44 $ 1,205,569 Operating partnership units 20,861 $45.44 947,924 Liquidation value of preferred stock 4,600 $25.00 115,000 Total equity 2,268,493 Total debt 352,250 Total enterprise value $ 2,620,743 Net debt to enterprise value 13.2% Net debt and preferred stock to enterprise value 17.5% Maturity Outstanding as of: Maturity Date with June 30, December 31, Instrument Rate Date Extension 2015 2014 Revolving credit facility (2) 1.73% 6/24/2019 6/24/2020 $ 102,250 $ 218,500 2019 Senior unsecured term loan (3) 3.23% 1/31/2019 1/31/2019 100,000 100,000 2020 Senior unsecured term loan (4) 2.31% 6/24/2020 6/24/2020 150,000 — Total Debt $ 352,250 $ 318,500 Weighted average debt rate 2.40% Preferred Stock 7.25% N/A N/A 115,000 115,000 Total Debt and Preferred Stock $ 467,250 $ 433,500 Floating rate vs. fixed rate debt 50% / 50% 67% / 33% Floating rate vs. fixed rate debt and preferred stock 38% / 62% 50% / 50% (1) See the most recently filed Form 10-K and 10-Q for information on specific debt instruments. (2) The revolving credit facility interest rate is based on LIBOR at June 30, 2015, plus applicable spread. (3) Represents the effective interest rate as a result of the interest rate swap associated with $100 million in 1-month LIBOR variable rate debt. (4) Represents the effective interest rate as a result of the interest rate swap associated with $75 million in 1-month LIBOR variable rate debt and $75 million unhedged debt based on LIBOR plus applicable spread.

 


Quarter Ended June 30, 2015 Interest Summary and Debt Covenants (in thousands) Interest Expense Components Debt Covenants 22 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX Three Months Ended Six Months Ended June 30, 2015 March 31, 2015 June 30, 2014 June 30, 2015 June 30, 2014 Interest expense and fees $ 2,466 $ 2,226 $ 1,997 $ 4,692 $ 3,759 Amortization of deferred financing costs 292 294 449 586 1,029 Capitalized interest (1,028) (1,255) (1,031) (2,283) (2,200) Total interest expense $ 1,730 $ 1,265 $ 1,415 $ 2,995 $ 2,588 Percent capitalized 37.3% 49.8% 42.2% 43.3% 45.9% Revolving Credit Facility and Senior Unsecured Term Loans Required Compliance June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 Fixed charge coverage ratio Greater than 1.70x 8.4x 8.8x 8.4x 7.7x 7.5x Total indebtedness to gross asset value Less than 60% 17.9% 17.1% 17.2% 17.5% 16.4% Secured debt to gross asset value Less than 40% 0.0% 0.0% 0.0% 0.0% 0.0% Unhedged variable rate debt to gross asset value Less than 30% 8.3% 11.8% 11.6% 11.5% 10.2% Revolving credit facility availability $350,000 $405,000 $405,000 $405,000 $405,000 Borrowings outstanding (102,250) (233,750) (218,500) (205,250) (176,750) Outstanding letters of credit (6,330) (7,330) (7,330) (7,330) (7,330) Current availability $241,420 $163,920 $179,170 $192,420 $220,920

 


Quarter Ended June 30, 2015 Components of Net Asset Value (NAV) (in thousands) 23 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX Cash Net Operating Income Development Projects Other Assets and Liabilities Reconciliation of Net Operating Income (NOI) Q2 2015 Annualized Operating Income $ 14,676 $ 58,704 Adjustments: Depreciation and amortization 24,046 96,184 General and administrative 7,952 31,808 Transaction costs / litigation 45 180 Net Operating Income $ 46,719 $ 186,876 Cash Net Operating Income (Cash NOI) Net Operating Income $ 46,719 $ 186,876 Adjustments: Straight-line rent (2,755) (11,020) Amortization of above and below-market leases (130) (520) Cash NOI $ 43,834 $ 175,336 Cash NOI with backlog (83.2% leased)(1) $ 46,816 $ 187,264 Cash stabilized NOI (93% leased) $ 52,330 $ 209,320 Data Center Projects Under Construction Construction in progress(2) $ 16,633 Remaining spend(2) 46,067 Total $ 62,700 Targeted annual yields 12% - 16% Annualized pro forma NOI range $7,500 - $10,000 Other Assets Remaining construction in progress(3) $ 90,239 Cash and cash equivalents 7,542 Accounts and other receivables 15,269 Other tangible assets 19,783 Total other assets $ 132,833 Liabilities Debt $ 352,250 Accounts payable, accrued and other liabilities 89,104 Preferred equity 115,000 Total liabilities $ 556,354 Weighted average common shares and units — diluted 47,399 (1) Cash NOI with backlog is adjusted to include one quarter of the cash backlog as of June 30, 2015, less any leasing of currently occupied NRSF and data center projects under development. (2) Does not include spend associated with leasing commissions. See page 20 for further breakdown of data center projects under construction. (3) Represents the book value of in progress capital projects, including land and shell building, of future NY2 and VA2 phases and other data center expansion, non-recurring investments, tenant improvements and recurring capital expenditures.

 


Quarter Ended June 30, 2015 2015 Guidance (in thousands, except per share amounts) 24 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX The annual guidance provided below represents forward-looking projections, which are based on current economic conditions, internal assumptions about our existing customer base and the supply and demand dynamics of the markets in which we operate. Further, the guidance does not include the impact of any future financing, investment or disposition activities. Please refer to the press release for additional information on forward-looking statements. Projected per share and OP unit information: 2015 Implied Low High Mid 2014 Growth(1) Net income attributable to common shares $ 0.93 $ 1.01 $ 0.97 $ 0.66 47% Real estate depreciation and amortization 1.82 1.82 1.58 Gain on land disposal - — (0.02) FFO $ 2.75 $ 2.83 $ 2.79 $ 2.22 Non-recurring items: Q2 benefit from real estate tax accrual true-up — — — (0.08) Q1 and Q2 charges for software impairment — — — 0.04 FFO - excluding non-recurring items(2) $ 2.75 $ 2.83 $ 2.79 $ 2.18 28% Projected operating results: Total operating revenues $ 325,000 $ 330,000 $ 327,500 $ 272,420 20% Data center revenue 317,000 322,000 319,500 264,578 21% General and administrative expenses 30,000 32,000 31,000 27,842 11% Adjusted EBITDA(3) 162,000 167,000 164,500 129,634 27% Guidance drivers: Annual rental churn rate 6.0% 8.0% 7.0% 5.6% Cash rent growth on data center renewals 3.0% 5.0% 4.0% 2.9% Capital expenditures: Data center expansion $ 115,000 $ 130,000 $ 122,500 $ 84,312 Non-recurring investments 10,000 15,000 12,500 12,527 Tenant improvements 5,000 10,000 7,500 4,512 Recurring capital expenditures 5,000 10,000 7,500 4,429 Total capital expenditures $ 135,000 $ 165,000 $ 150,000 $ 105,780 (1) Implied growth is based on the midpoint of 2015 guidance. (2) 2014 FFO was adjusted to exclude non-recurring items, including a benefit from real estate tax accrual true-up and charges for software impairment. (3) 2014 Adjusted EBITDA was reported as $133,281 and was also adjusted to exclude a $3,647 benefit from a real estate tax accrual true-up.

 


Quarter Ended June 30, 2015 Appendix Definitions This document includes certain non-GAAP financial measures that management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs and therefore may not be comparable. The non-GAAP measures should not be considered an alternative to net income as an indicator of our performance and should be considered only a supplement to net income, cash flows from operating, investing or financing activities as a measure of profitability and/or liquidity, computed in accordance with GAAP. 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 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. FFO attributable to common shares and units represents FFO less preferred stock dividends declared during the period. 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. 25 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX

 


Quarter Ended June 30, 2015 Appendix Adjusted Funds From Operations “AFFO” is a non-GAAP measure that is used as a supplemental operating measure specifically for comparing year over year ability to fund dividend distribution from operating activities. AFFO is used by us as a basis to address our ability to fund our dividend payments. We calculate adjusted funds from operations by adding to or subtracting from FFO: 1. Plus: Amortization of deferred financing costs 2. Plus: Non-cash compensation 3. Plus: Non-real estate depreciation 4. Plus: Impairment charges 5. Plus: Below market debt amortization 6. Less: Straight line rents adjustment 7. Less: Amortization of above and below market leases 8. Less: Recurring capital expenditures 9. Less: Tenant improvements 10. Less: Capitalized leasing costs AFFO is not intended to represent cash flow from operations for the period, and is only intended to provide an additional measure of performance by adjusting the effect of certain items noted above included in FFO. AFFO is a widely reported measure by other REITs, however, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs. Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA - 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 impairment charges, gains or losses from sales of property and undepreciated land and 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. 26 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX

 


Quarter Ended June 30, 2015 Appendix Net Operating Income (“NOI”) and Cash NOI – NOI, and cash NOI are supplemental measures for the operating performance of the company’s portfolio. NOI is operating revenues less operating expenses and adjusted for items such as depreciation and amortization, general and administrative expenses, transaction costs and litigation expenses. Cash NOI is NOI less straight-line rents and above and below market rent amortization. Data Center Net Rentable Square Feet (“NRSF”) Both occupied and available data center NRSF includes a factor to account for a customer’s proportionate share of required data center support space (such as the mechanical, telecommunications and utility rooms) and building common areas, which may be updated on a periodic basis to reflect the most current build-out of our properties. Stabilized and Pre-Stabilized NRSF Data center projects and facilities that recently have been developed and are in the initial lease-up phase are classified as pre-stabilized NRSF until they reach 85% occupancy or have been in service for 24 months. Pre-stabilized projects and facilities become stabilized operating properties at the earlier of achievement of 85% occupancy or 24 months after development completion and are included in the stabilized operating NRSF. Annualized Rent Monthly contractual rent under existing commenced customer leases as of quarter-end, multiplied by 12. This amount reflects total annualized base rent before any one-time or non-recurring rent abatements and excludes power revenue, interconnection revenue and operating expense reimbursement. NRSF Under Construction Represents NRSF for which substantial activities are ongoing to prepare the property for its intended use following development. The NRSF reflects managements estimate of engineering drawings and required support space and is subject to change based on final demising of space. Estimated costs of completion are based on actual costs at quarter-end and management’s estimate of remaining projects costs. 27 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX

 


Quarter Ended June 30, 2015 Appendix NRSF Held for Development Represents incremental data center capacity that may be constructed in existing facilities and entitled land in our portfolio that requires significant capital investment in order to develop new data center facilities. In addition to entitled land, we may develop an additional 100,000 NRSF at NY2 upon our receipt of the necessary entitlements. Turn-Key Same Store Includes turn-key data center space that was leased or available to be leased to our colocation customers as of December 31, 2013, at each of our properties, and excludes powered shell data center space, SV3 data center space, office and light-industrial space and space for which development was completed and became available to be leased after December 31, 2013. The turn-key same store space as of December 31, 2013, is 1,067,665 NRSF. We track same store on a computer room basis within each data center facility. Monthly Recurring Revenue per Cabinet Equivalent Represents the turn-key monthly recurring colocation revenue (“MRR”) per cabinet equivalent billed. MRR is defined as recurring contractual revenue under existing commenced customer leases. MRR per cabinet equivalent is calculated as (current quarter MRR/3) divided by ((quarter-end cabinet equivalents billed plus prior quarter-end cabinet equivalents billed)/2). Cabinet equivalents are calculated as cage-usable square feet (turn-key leased NRSF/NRSF factor) divided by 25. Data Center Leasing Metrics Rental Churn Rate – represents data center leases which are not renewed or are terminated during the period. Rental churn is calculated based on the annualized rent of data center expired leases terminated in the period, compared with total portfolio annualized rent at the beginning of the period. Cash and GAAP Rent Growth – represents the increase in rental rates on renewed data center leases signed during the period, as compared with the previous rental rates for the same space. Cash and GAAP rent growth is calculated based on annualized rent from the renewed data center license compared to annualized rent from the expired data center license. 28 OVERVIEW FINANCIAL STATEMENTS OPERATING PORTFOLIO DEVELOPMENT CAPITAL STRUCTURE Components of NAV 2015 GUIDANCE APPENDIX