CoreSite Reports Second Quarter Results

  CoreSite Reports Second Quarter Results

Business Wire

DENVER -- July 25, 2013

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

Quarterly Highlights

  *Reported second-quarter funds from operations (“FFO”) of $0.45 per diluted
    share and unit, representing a 21.6% increase year-over-year
  *Reported second-quarter operating revenue of $57.7 million, representing a
    13.9% increase year-over-year
  *Executed new and expansion data center leases representing $5.8 million of
    annualized GAAP rent at a rate of $188 of annualized GAAP rent per square
    foot
  *Realized rent growth on signed renewals of 5.4% on a cash basis and 11.7%
    on a GAAP basis and rental churn of 2.0%
  *Commenced 42,672 net rentable square feet of new and expansion leases with
    annualized GAAP rent of $147 per square foot

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

Financial Results

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

Sales Activity

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

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

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

Development Activity

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

Balance Sheet and Liquidity

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

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

Dividend

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

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

2013 Guidance

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

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

Upcoming Conferences and Events

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

Conference Call Details

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

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

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

About CoreSite

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

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 Sheets
(in thousands)                                         
                                                                             
                                         June 30,             December 31,

                                         2013                 2012
Assets:
Investments in real estate:
Land                                     $  76,227           $  85,868
Building and building improvements           652,142             596,405
Leasehold improvements                    91,175            85,907    
                                             819,544             768,180
Less: Accumulated depreciation and        (129,038 )         (105,433  )
amortization
Net investment in operating                  690,506             662,747
properties
Construction in progress                  104,963           61,328    
Net investments in real estate            795,469           724,075   
Cash and cash equivalents                    2,803               8,130
Accounts and other receivables,              7,930               9,901
net
Lease intangibles, net                       14,154              19,453
Goodwill                                     41,191              41,191
Other assets                              45,312            42,582    
Total assets                            $  906,859         $  845,332   
                                                                             
Liabilities and equity:
Liabilities
Revolving credit facility                    73,000              -
Mortgage loans payable                       59,000              59,750
Accounts payable and accrued                 50,127              50,624
expenses
Deferred rent payable                        5,725               4,329
Acquired below-market lease                  7,520               8,539
contracts, net
Prepaid rent and other liabilities        11,590            11,317    
Total liabilities                         206,962           134,559   
                                                                             
Stockholders' equity
Series A cumulative preferred                115,000             115,000
stock
Common stock, par value $0.01                208                 207
Additional paid-in capital                   263,479             259,009
Distributions in excess of net            (43,078  )         (35,987   )
income
Total stockholders' equity                   335,609             338,229
Noncontrolling interests                  364,288           372,544   
Total equity                              699,897           710,773   
Total liabilities and equity            $  906,859         $  845,332   


                                                                                                             
  Consolidated Statement of Operations
  (in thousands, except share and per share data)
                     Three Months Ended:                                Six Months Ended:
                        June 30,         March 31,        June 30,           June 30,         June 30,
                                                                                          
                        2013             2013             2012               2013             2012
Operating
revenues:
  Rental revenue        $ 34,205         $ 33,102         $ 30,604           $ 67,307         $ 60,234
  Power revenue           14,486           13,529           12,939             28,015           25,313
  Interconnection         7,053            6,572            5,436              13,625           9,091
  revenue
  Tenant
  reimbursement         1,923          1,888          1,657            3,811          3,282      
  and other
  Total operating         57,667           55,091           50,636             112,758          97,920
  revenues
Operating
expenses:
  Property
  operating and           15,118           14,527           15,274             29,645           29,669
  maintenance
  Real estate
  taxes and               2,304            2,220            2,132              4,524            4,146
  insurance
  Depreciation
  and                     16,261           15,949           15,947             32,210           31,408
  amortization
  Sales and               3,936            3,789            2,581              7,725            4,710
  marketing
  General and             6,177            7,003            6,036              13,180           12,388
  administrative
  Rent                    4,756            4,793            4,691              9,549            9,268
  Transaction           249            5              161              254            283        
  costs
  Total operating       48,801         48,286         46,822           97,087         91,872     
  expenses
  Operating               8,866            6,805            3,814              15,671           6,048
  income
  Interest income         2                2                5                  4                7
  Interest               (783       )    (439       )    (1,309     )      (1,222     )    (2,327     )
  expense
  Income before           8,085            6,368            2,510              14,453           3,728
  income taxes
  Income tax             (206       )    (173       )    (662       )      (379       )    (537       )
  expense
  Net income              7,879            6,195            1,848              14,074           3,191
  Net income
  attributable to       3,176          2,262          1,022            5,438          1,765      
  noncontrolling
  interests
  Net income
  attributable to         4,703            3,933            826                8,636            1,426
  CoreSite Realty
  Corporation
  Preferred             (2,085     )    (2,084     )    -                (4,169     )    -          
  dividends
  Net income
  attributable to      $ 2,618         $ 1,849         $ 826             $ 4,467         $ 1,426      
  common shares
  Net income per
  share
  attributable to
  common shares:
  Basic                 $ 0.13           $ 0.09           $ 0.04             $ 0.22           $ 0.07
  Diluted               $ 0.12          $ 0.09          $ 0.04            $ 0.21          $ 0.07       
  Weighted
  average common
  shares
  outstanding:
  Basic                   20,829,375       20,673,896       20,532,930         20,752,065       20,494,402
  Diluted                 21,445,875       21,314,779       20,914,686         21,412,289       20,801,050

                                                                                                    
                                                                                                    
Reconciliation of Net Income to FFO
(in
thousands,
except share    Three Months Ended                               Six Months Ended
and per
share data)
                   June 30,         March 31,        June 30,         June 30,         June 30,
                                                                                   
                   2013             2013             2012             2013             2012
Net income         $ 7,879          $ 6,195          $ 1,848          $ 14,074         $ 3,191
Real estate
depreciation        15,309         15,142         15,437          30,451         30,445
and
amortization
FFO                $ 23,188         $ 21,337         $ 17,285         $ 44,525         $ 33,636
Preferred
stock            (2,085     )   (2,084     )   -             (4,169     )   -
dividends
FFO
available to
common          $ 21,103       $ 19,253       $ 17,285       $ 40,356       $ 33,636
shareholders
and OP unit
holders
Weighted
average
common               21,445,875       21,314,779       20,914,686       21,412,289       20,801,050
shares
outstanding
- diluted
Weighted
average OP
units               25,353,709     25,353,709     25,346,097      25,353,709     25,345,590
outstanding
- diluted
Total
weighted
average
shares and           46,799,584       46,668,488       46,260,783       46,765,998       46,146,640
units
outstanding
- diluted
FFO per
common share       $ 0.45          $ 0.41         $ 0.37         $ 0.86         $ 0.73
and OP unit
- diluted
                                                                                                    

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,
                                                                
                     2013       2013        2012         2013       2012
Net income           $ 7,879    $  6,195    $ 1,848      $ 14,074   $ 3,191
Adjustments:
Interest
expense, net           781         437        1,304        1,218      2,320
of interest
income
Income taxes           206         173        662          379        537
Depreciation
and                16,261    15,949   15,947    32,210   31,408
amortization
EBITDA               $ 25,127   $  22,754   $ 19,761     $ 47,881   $ 37,456
Non-cash               1,683       1,895      1,779        3,578      2,526
compensation
Transaction
costs /            399       105      161       504      1,733
litigation
Adjusted          $ 27,209  $  24,754  $ 21,701   $ 51,963  $ 41,715
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 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.

Contact:

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