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
CoreSite Reports Second Quarter Results
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