CoreSite Reports Fourth Quarter FFO of $0.42 Per Share, up 23.5% Year-Over-Year

  CoreSite Reports Fourth Quarter FFO of $0.42 Per Share, up 23.5%
  Year-Over-Year

Business Wire

DENVER -- February 22, 2013

CoreSite Realty Corporation (NYSE: COR), provider of powerful, network-dense
data center campuses and the CoreSite Mesh, which enable interconnected
communities of service providers and enterprises, today announced financial
results for the fourth quarter ended December 31, 2012.

Quarterly and Subsequent Highlights

  *Reported fourth-quarter funds from operations (“FFO”) of $0.42 per diluted
    share and unit, representing a 5.0% increase over the prior quarter and a
    23.5% increase over the prior-year quarter
  *Reported fourth-quarter revenue of $55.3 million, representing a 2.8%
    increase over the prior quarter and a 20.0% increase over the prior-year
    quarter
  *Executed new and expansion data center leases representing $11.6 million
    of annualized GAAP rent
  *Achieved 11.7% rent growth on signed renewals on a cash basis and 15.6% on
    a GAAP basis
  *Received net proceeds of $110.6 million from the company’s first preferred
    stock offering
  *In January 2013, amended its credit facility by converting it to
    unsecured, expanding availability to $355.0 million from $225.0 million,
    extending its maturity and lowering the interest rate spread
  *In February 2013, acquired a 283,000 square-foot building on 10 acres of
    land in Secaucus, New Jersey, for development of a new data center campus
    (NY2)
  *Increased quarterly dividend by 50% to $0.27 per share

Tom Ray, CoreSite’s Chief Executive Officer, commented, “During the fourth
quarter we made measurable progress across key objectives. We executed strong
sales across our customer verticals and platform, signing new and expansion
agreements for turn-key data center (“TKD”) capacity reflecting $8.4 million
in annualized GAAP rent plus a pre lease to construct a powered-shell building
on our Santa Clara campus. While we typically do not enter into large
powered-shell leases, we were pleased to leverage off of an existing land
holding to serve a strategic customer and further strengthen our Santa Clara
campus as a key North American network and cloud hub.”

“We were also pleased to execute upon our first preferred stock offering and
recast our line of credit, creating the liquidity to fund our near-term growth
objectives,” Mr. Ray continued. “Related, to date in 2013, we acquired a land
site to support the development of our NY2 data center in the New York region.
We continue to be encouraged by CoreSite’s growth opportunities and our
vertical sales and marketing model is gaining momentum. Further, we believe
that our platform is increasingly well-positioned to serve
performance-sensitive applications and enable our customers to scale their
businesses and increase profitability.”

Financial Results

CoreSite reported FFO of $19.7 million attributable to dilutive shares and
units for the three months ended December 31, 2012, an increase of 5.7% on a
sequential quarter basis and a 25.0% increase over the same quarter of the
prior year. On a per diluted share and unit basis, FFO was $0.42 for the three
months ended December 31, 2012, as compared to $0.34 per diluted share and
unit for the three months ended December 31, 2011. Total operating revenue for
the three months ended December 31, 2012 was $55.3 million, a 2.8% increase on
a sequential-quarter basis and a 20.0% increase over the same quarter of the
prior year. The company reported net income for the three months ended
December 31, 2012 of $4.6 million, and net income attributable to common
shares of $1.9 million, or $0.09 per diluted share.

Sales Activity

Fourth-quarter lease commencements totaled 21,372 NRSF and $2.9 million of
annualized GAAP rent at a weighted average GAAP rental rate of $137 per NRSF.

The fourth quarter rental churn rate was 2.1%. Rental churn is calculated
based on the annualized rental revenue of leases terminated in the period
compared with total annualized rental revenue at the beginning of the period.
We signed renewals with a weighted average GAAP rate of $140 per NRSF,
reflecting rent growth increases of 11.7% on a cash basis and 15.6% on a GAAP
basis. The $140 per foot renewal rental rate includes the renewal of a lower
powered, 9,127 NRSF private suite. Excluding that suite, the renewal rental
rate was $158 per square foot.

Sales activity in the fourth quarter of 2012 reflects the company’s
realignment to a vertical selling model and targeted business strategy. New
and expansion data center leases executed in the quarter represent $11.6
million of annualized GAAP rent and 156,704 NRSF. These results include a
101,250 NRSF build-to-suit powered shell lease for a valued and strategic
customer at the company’s Santa Clara Campus. TKD bookings totaled $8.4
million, comprised of 55,454 NRSF with a weighted average GAAP rate of $151
per NRSF. Included in our TKD sales is a strategic network-anchor agreement in
our Chicago facility reflecting discounted rent on an application that we
believe will drive material growth in cross connections over time. Excluding
this agreement, our weighted average GAAP rent on TKD sales was $162 per NRSF.

Development and Acquisition Activity

The company’s recent development and acquisition activities further
strengthened the company’s platform. On February 7, 2013, CoreSite acquired a
283,000 square-foot building (“NY2”) on 10 acres of land in Secaucus, New
Jersey, and will offer up to 18 critical megawatts of capacity and the
flexibility to grow with market demand. CoreSite expects to invest $65.0
million to acquire the facility, develop the powered shell, and complete the
initial phase of development consisting of 65,000 square feet of leasable
space. The Company anticipates offering turn-key data center space in this
facility by the end of the fourth quarter of 2013. This is in addition to the
company’s expansion in Northern Virginia and the Santa Clara campus as
previously announced.

CoreSite had 94,650 NRSF of data center space at four key locations under
construction as of December 31, 2012. As of the end of the fourth quarter, the
Company had incurred $37.0 million of the estimated $50.7 million required to
complete the projects.

Balance Sheet and Liquidity

As of December 31, 2012, CoreSite had $59.8 million of total long-term debt
equal to 4.1% of total enterprise value and equal to 0.6x annualized adjusted
EBITDA for the quarter ended December 31, 2012.

During the fourth quarter of 2012, CoreSite completed a public offering of
4,600,000 shares of 7.25% Series A Cumulative Redeemable Preferred Stock at a
price of $25.00 per share for net proceeds of approximately $110.6 million,
after deducting underwriting discounts and commissions and expenses. At
December 31, 2012, CoreSite had $174.8 million of total long-term debt and
preferred stock equal to 11.9% of total enterprise value and equal to 1.8x
annualized adjusted EBITDA for the quarter ended December 31, 2012.

At quarter end, CoreSite had $8.1 million of cash available on its balance
sheet. On January 3, 2013 CoreSite amended and restated its revolving credit
facility, which was scheduled to mature on December 15, 2014. The new credit
facility is unsecured compared to the prior facility, which was secured by
five assets, and the borrowing capacity was increased from $225.0 million to
$355.0 million. The facility has a five-year term through January 2018,
including a one-year extension option. On January 3, 2013, the company had
$346.5 million of available capacity under its revolving credit facility.

Dividend

On November 26, 2012, CoreSite announced a dividend of $0.27 per share of
common stock and common stock equivalents for the fourth quarter of 2012. This
dividend represented a $0.09 per share, or 50%, increase from the previous
quarterly dividend rate of $0.18 per share. The dividend was paid on January
15, 2013 to shareholders of record on December 31, 2012.

2013 Guidance

The annual guidance provided below and on page 21 of the supplemental
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 CoreSite operates. Further,
the guidance does not include the impact of any future financing, investment
or disposition activities.

The company is introducing its 2013 guidance of FFO per diluted share and unit
in the range of $1.72 to $1.82.

In addition, the company’s estimate of the net income attributable to common
shares is $0.37 to $0.47 per diluted share, with the difference between FFO
and net income being real estate depreciation and amortization.

Conference Call Details

The company will host a conference call on February 22 at 12:00 p.m. (Eastern
Time) to discuss its financial results, current business trends and market
conditions.

The call will be accessible by dialing +1-877-407-3982 (domestic) or
+1-201-493-6780 (international). A replay will be available until March 1,
2013 and can be accessed shortly after the call by dialing +1-877-870-5176
(domestic) or +1-858-384-5517 (international). The passcode for the replay is
407943.

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

Facility Names

CoreSite revised the names of its facilities. The chart below lists the new
name for each facility, as well as its corresponding prior name.

New Property Name    Previous Property Name
BO1                  70 Innerbelt
CH1                   427 S. LaSalle
DC1                   1275 K Street
DE1                   910 15th Street
DE2                   639 E. 18th Avenue
One Wilshire Campus
- LA1                 One Wilshire
- LA2                 900 N. Alameda
MI1                   2115 NW 22nd Street
NY1                   32 Avenue of the Americas
NY2                   Secaucus, NJ
SV1                   55 S. Market
SV2                   1656 McCarthy
Santa Clara Campus
- SV3                 2901 Coronado
- SV4                 2972 Stender
- SV5                 2900 Stender
VA1 & VA2             12100 Sunrise Valley

Reconciliations of Non-GAAP Financial Measures

Financial and operating measures found in this Earnings Release and the Q4
Supplemental Financial Report include certain measures used by CoreSite
management that are not calculated in accordance with accounting principles
generally accepted in the United States, or GAAP. These measures are defined
in the Supplemental Information and, where appropriate, reconciled to the most
comparable GAAP measures.

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 nine 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.

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.

Consolidated Balance Sheet
(in thousands, except per share data)                        
                                                                  
                                                 December 31,     December 31,
                                                 2012             2011
Assets:
Investments in real estate:
Land                                             $ 85,868         $  84,738
Building and building improvements                 593,020           499,717
Leasehold improvements                            85,907          81,057  
                                                   764,795           665,512
Less: Accumulated depreciation and                (104,490 )       (64,428 )
amortization
Net investment in operating properties             660,305           601,084
Construction in progress                          61,328          73,084  
Net investments in real estate                    721,633         674,168 
Cash and cash equivalents                          8,130             6,628
Restricted cash                                    468               9,291
Accounts and other receivables, net                9,901             6,562
Lease intangibles, net                             19,453            36,643
Goodwill                                           41,191            41,191
Other assets                                      44,556          33,743  
Total assets                                     $ 845,332       $  808,226 
                                                                  
Liabilities and equity:
Liabilities
Revolving credit facility                        $ -              $  5,000
Mortgage loans payable                             59,750            116,864
Accounts payable and accrued expenses              50,624            38,822
Deferred rent payable                              4,329             3,535
Acquired below-market lease contracts, net         8,539             11,872
Prepaid rent and other liabilities                11,317          11,946  
Total liabilities                                 134,559         188,039 
                                                                  
Stockholders' equity
Series A cumulative preferred stock                115,000           -
Common stock, par value $0.01                      207               204
Additional paid-in capital                         259,009           256,183
Accumulated other comprehensive income             -                 (34     )
(loss)
Accumulated deficit                               (35,987  )       (23,545 )
Total stockholders' equity                         338,229           232,808
Noncontrolling interests                          372,544         387,379 
Total equity                                      710,773         620,187 
Total liabilities and equity                     $ 845,332       $  808,226 

                                                                                     
Consolidated Statement of Operations
(in thousands, except share and per share data)
                    Three Months Ended:
                    December 31,       September 30,      June 30,           March 31,          December
                    2012               2012               2012               2012               31, 2011
Operating
revenues:
Rental revenue      $ 31,979           $ 31,461           $ 30,464           $ 29,493           $ 29,064
Power revenue         14,119             14,204             12,910             12,330             11,411
Interconnection       6,155              5,955              5,244              3,533              3,273
revenue
Tenant
reimbursement        2,999            2,142            2,018            1,928            2,281      
and other
Total operating       55,252             53,762             50,636             47,284             46,029
revenues
Operating
expenses:
Property
operating and         15,206             16,360             15,274             14,395             15,063
maintenance
Real estate
taxes and             2,461              2,158              2,132              2,014              2,064
insurance
Depreciation
and                   16,336             16,583             15,947             15,461             15,743
amortization
Sales and             3,389              2,231              2,581              2,129              1,619
marketing
General and           7,133              6,389              6,036              6,352              5,880
administrative
Rent                  4,754              4,689              4,691              4,577              4,588
Transaction          37               293              161              122              -          
costs
Total operating      49,316           48,703           46,822           45,050           44,957     
expenses
Operating             5,936              5,059              3,814              2,234              1,072
income
Interest income       1                  5                  5                  2                  2
Interest             (1,314     )      (1,595     )      (1,309     )      (1,018     )      (838       )
expense
Income before         4,623              3,469              2,510              1,218              236
income taxes
Income tax
(expense)            (45        )      (522       )      (662       )      125              226        
benefit
Net income            4,578              2,947              1,848              1,343              462
Net income
attributable to      2,276            1,627            1,022            743              283        
noncontrolling
interests
Net income
attributable to       2,302              1,320              826                600                179
CoreSite Realty
Corporation
Preferred            (440       )      -                -                -                -          
dividends
Net income
attributable to     $ 1,862           $ 1,320           $ 826             $ 600             $ 179        
common shares
Net income per
share
attributable to
common shares:
Basic               $ 0.09             $ 0.06             $ 0.04             $ 0.03             $ 0.01
Diluted             $ 0.09            $ 0.06            $ 0.04            $ 0.03            $ 0.01       
Weighted
average common
shares
outstanding:
Basic                 20,607,119         20,554,893         20,532,930         20,455,875         19,988,150
Diluted               21,036,794         21,027,635         20,914,686         20,694,855         20,082,003
                                                                                                             


Reconciliation of net income to funds from operations (FFO):
(in
thousands,     Three Months Ended:
except per
share data)
                 December 31        September        June 30,         March 31,        December 31,
                 2012             30,            2012           2012           2011
                                    2012
Net income       $ 4,578            $ 2,947          $ 1,848          $ 1,343          $ 462
Real estate
depreciation      15,566         15,689        15,437        15,008        15,307
and
amortization
FFO              $ 20,144           $ 18,636         $ 17,285         $ 16,351         $ 15,769
Preferred
stock           (440       )    -             -             -             -
dividends
FFO
available to
common         $ 19,704        $ 18,636       $ 17,285       $ 16,351       $ 15,769
shareholders
and OP
unitholders
Weighted
average
common
shares and         46,390,503         46,374,440       46,260,783       46,039,937       45,862,220
OP units
outstanding
- diluted
FFO per
common share     $ 0.42            $ 0.40           $ 0.37           $ 0.36           $ 0.34
and OP unit
- diluted
                                                                                         

CoreSite Realty Corporation considers FFO to be a supplemental measure of
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. The company calculates FFO in accordance
with the standards established by 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. 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.

The company offers this measure because management recognizes that FFO will be
used by investors as a basis to compare operating performance with that of
other REITs. However, because FFO excludes depreciation and amortization and
captures neither the changes in the value of the 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 the properties, all of which have real economic effect and
could materially impact financial condition and results from operations, the
utility of FFO as a measure of 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 cash needs, including the ability to pay dividends or make
distributions. In addition, the company’s calculations of FFO are not
necessarily comparable to FFO as calculated by other REITs that do not use the
same definition or implementation guidelines or interpret the standards
differently. Investors in the company’s securities should not rely on these
measures as a substitute for any GAAP measure, including net income.


Reconciliation of net income to earnings before interest, taxes, depreciation and
amortization (EBITDA):
               Three Months Ended:
                 December     September     June 30,     March 31,      December
                 31,        30,         2012       2012         31,
                 2012         2012                                      2011
Net income       $ 4,578      $  2,947      $ 1,848      $ 1,343        $ 462
Adjustments:
Interest
expense, net       1,313         1,590        1,304        1,016          836
of interest
income
Income taxes       45            522          662          (125   )       (226   )
Depreciation
and             16,336     16,583    15,947    15,461     15,743 
amortization
EBITDA           $ 22,272     $  21,642     $ 19,761     $ 17,695       $ 16,815
Non-cash           1,568         1,556        1,779        747            693
compensation
Transaction
costs /
litigation      328        293       161       1,572      -      
settlement
expenses
Adjusted       $ 24,168   $  23,491   $ 21,701   $ 20,014    $ 17,508 
EBITDA
                                                                                 

EBITDA is defined as earnings before interest, taxes, depreciation and
amortization. The company calculates adjusted EBITDA by adding non-cash
compensation expense, transaction costs and litigation settlement 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 the company’s ability to incur and service debt. In addition,
management considers EBITDA and adjusted EBITDA to be appropriate supplemental
measures of the company’s 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.

Contact:

CoreSite Investor Relations
+1 303.222.7276
InvestorRelations@CoreSite.com
or
CoreSite Media
Jeannie Zaemes | CoreSite Marketing Senior Director
+1 720.446.2006 | +1 866.777.CORE
Jeannie.Zaemes@CoreSite.com
 
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