CoreSite Reports First-Quarter Funds from Operations Increased 19% Year over Year

  CoreSite Reports First-Quarter Funds from Operations Increased 19% Year over
  Year

               Total operating revenues grew 16% year over year

Business Wire

DENVER -- April 24, 2014

CoreSite Realty Corporation (NYSE:COR), a provider of secure, reliable,
high-performance data center solutions, today announced financial results for
the first quarter ended March 31, 2014.

Quarterly Highlights

  *Reported first-quarter funds from operations (“FFO”) of $0.49 per diluted
    share and unit, representing a 19.5% increase year-over-year
  *Reported first-quarter total operating revenues of $63.7 million,
    representing a 15.7% increase year-over-year
  *Executed new and expansion data center leases representing $5.1 million of
    GAAP annualized rent at a rate of $129 per square foot
  *Realized rent growth on signed renewals of 4.7% on a cash basis and 9.4%
    on a GAAP basis and rental churn of 1.2%
  *Commenced 28,125 net rentable square feet of new and expansion leases with
    GAAP annualized rent of $134 per square foot, increasing stabilized data
    center occupancy to 83.0%

Tom Ray, CoreSite’s Chief Executive Officer, commented, “We are pleased that
our first-quarter results reflect continued execution of our business plan,
with total operating revenues and adjusted EBITDA increasing 16% and 21% year
over year, respectively.” Mr. Ray continued, “Importantly, we recorded an
increase in new and expansion sales, with 131 new and expansion leases
executed representing $5.1 million in annualized GAAP rent. This represents a
48% increase over the prior quarter and a 12% increase over the trailing-year
quarterly average. In addition, we increased the number of quota-bearing sales
reps across our platform by 21%, reflecting progress against our goal to
increase in-place quota coverage by approximately 35% over the course of
2014.”

Financial Results

CoreSite reported FFO attributable to shares and units of $22.9 million for
the three months ended March 31, 2014, an 18.8% increase year-over-year and a
decrease of 1.0% compared to prior quarter. On a per diluted share and unit
basis, FFO increased 19.5% to $0.49 for the three months ended March 31, 2014,
as compared to $0.41 per diluted share and unit for the three months ended
March 31, 2013. Total operating revenues for the three months ended March 31,
2014, were $63.7 million, a 15.7% increase year over year. CoreSite reported
net income attributable to common shares of $2.7 million, or $0.13 per diluted
share.

Sales Activity

CoreSite executed 131 new and expansion data center leases representing $5.1
million of GAAP annualized rent during the first quarter, comprised of 39,783
NRSF at a weighted average GAAP rate of $129 per NRSF.

CoreSite’s renewal leases signed in the first quarter totaled $3.5 million in
GAAP annualized rent, comprised of 22,291 NRSF at a weighted average GAAP rate
of $159 per NRSF, reflecting a 4.7% increase in rent on a cash basis and a
9.4% increase on a GAAP basis. The first-quarter rental churn rate was 1.2%.

CoreSite’s first-quarter data center lease commencements totaled 28,125 NRSF
at a weighted average GAAP rental rate of $134 per NRSF, which represents $3.8
million of GAAP annualized rent.

Development Activity

In the first quarter, CoreSite delivered two additional computer rooms
totaling 34,589 NRSF of turn-key data center (TKD) capacity in the New York
market at our NY2 facility and placed into service 33,711 NRSF of TKD capacity
in Los Angeles at our LA2 facility.

CoreSite had 50,000 NRSF of data center space under construction at VA2 in
Northern Virginia at the end of the first quarter. As of March 31, 2014,
CoreSite had incurred $38.7 million of the estimated $73.5 million required to
complete this project.

Balance Sheet and Liquidity

As of March 31, 2014, CoreSite had $260.0 million of total long-term debt
equal to 2.2x annualized adjusted EBITDA and $375.0 million of long-term debt
and preferred stock equal to 3.1x annualized adjusted EBITDA.

At quarter end, CoreSite had $10.2 million of cash available on its balance
sheet and $236.6 million of available capacity under its credit facility.

Dividend

On March 6, 2014, CoreSite announced a dividend of $0.35 per share of common
stock and common stock equivalents for the first quarter of 2014. The dividend
was paid on April 15, 2014, to shareholders of record on March 31, 2014.

CoreSite also announced on March 6, 2014, a dividend of $0.4531 per share of
Series A preferred stock for the period January 15, 2014, to April 14, 2014.
The preferred dividend was paid on April 15, 2014, to shareholders of record
on March 31, 2014.

2014 Guidance

CoreSite is maintaining its 2014 guidance of FFO per diluted share and unit in
the range of $2.00 to $2.10. In addition, CoreSite is maintaining its 2014
guidance for net income attributable to common shares in the range of $0.50 to
$0.60 per diluted share, with the difference between FFO and net income being
real estate depreciation and amortization.

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.

Upcoming Conferences and Events

CoreSite will participate in the Stephens Spring Investment Conference on June
3, 2014, at the New York Palace Hotel in New York, NY and NAREIT’s REITWeek
conference from June 4, 2014, through June 5, 2014, at the Waldorf Astoria in
New York, NY.

Conference Call Details

CoreSite will host a conference call on April 24, 2014, 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 13578866. The replay will be available until May 1, 2014.

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” tab. 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 and reliable data
center solutions across eight key North American markets. CoreSite connects,
protects and delivers an optimal performance environment and continued
operation of mission-critical data and IT infrastructure for enterprises and
Internet, private networking, mobility, and cloud service providers.
CoreSite's scalable platform of over two and a half million square feet of
efficient, network-dense, cloud-enabled data center capacity enables customers
to accelerate business performance, reduce operating costs and increase
flexibility across their IT and communications systems. CoreSite's 350+
professionals deliver best-in-class service by placing customer needs first in
supporting the planning, implementation and operating requirements
foundational to delivering reliable, secure and efficient IT operating
environments.

More than 800 of the world's leading enterprises, carriers and mobile
operators, content and cloud providers and media and entertainment companies
choose CoreSite to connect, protect and optimize their performance-sensitive
data, applications and computing workloads. CoreSite provides direct access to
more than 275 carriers and ISPs, inter-site connectivity and CoreSite's Open
Cloud Exchange, which supports rapid, efficient and scalable Ethernet access
to multiple key public clouds, enabling simple, flexible, multi-cloud
capabilities.

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)
                                              March 31,         December 31,
                                               2014              2013
Assets:
  Investments in real estate:
  Land                                         $ 79,929          $ 78,983
  Building and building improvements             760,624           717,007
  Leasehold improvements                        96,834          95,218    
                                                 937,387           891,208
  Less: Accumulated depreciation and            (170,132  )      (155,704  )
  amortization
  Net investment in operating properties         767,255           735,504
  Construction in progress                      134,725         157,317   
  Net investments in real estate                901,980         892,821   
  Cash and cash equivalents                      10,153            5,313
  Accounts and other receivables, net            10,454            10,339
  Lease intangibles, net                         9,933             11,028
  Goodwill                                       41,191            41,191
  Other assets                                  61,961          55,802    
                                                                 
  Total assets                                 $ 1,035,672      $ 1,016,494 
                                                                 
Liabilities and equity:
  Liabilities
  Revolving credit facility                    $ 160,000         $ 174,250
  Senior unsecured term loan                     100,000           -
  Mortgage loan payable                          -                 58,250
  Accounts payable and accrued expenses          63,469            67,782
  Deferred rent payable                          9,530             9,646
  Acquired below-market lease contracts,         6,426             6,681
  net
  Prepaid rent and other liabilities            15,561          11,578    
  Total liabilities                             354,986         328,187   
                                                                 
  Stockholders' equity
  Series A cumulative preferred stock            115,000           115,000
  Common stock, par value $0.01                  210               209
  Additional paid-in capital                     269,510           267,465
  Accumulated other comprehensive income         288               -
  Distributions in excess of net income         (54,992   )      (50,264   )
  Total stockholders' equity                     330,016           332,410
  Noncontrolling interests                      350,670         355,897   
  Total equity                                  680,686         688,307   
                                                                 
  Total liabilities and equity                 $ 1,035,672      $ 1,016,494 
                                                                             

                                                         
Consolidated
Statement of                                            
Operations
(in thousands, except
share and per share
data)

                                                                
                          Three Months Ended
                          March 31,          December 31,       March 31,
                          2014               2013               2013
Operating revenues:
  Data center
  revenue:
  Rental revenue          $ 34,899           $ 33,988           $ 31,309
  Power revenue             16,002             15,669             13,529
  Interconnection           8,059              7,866              6,572
  revenue
  Tenant
  reimbursement and        2,756            1,885            1,789      
  other
  Total data center         61,716             59,408             53,199
  revenue
  Office, light
  industrial and           2,015            2,032            1,892      
  other revenue
  Total operating           63,731             61,440             55,091
  revenues
Operating expenses:
  Property operating        16,289             17,247             14,527
  and maintenance
  Real estate taxes         2,966              1,708              2,220
  and insurance
  Depreciation and          17,882             17,151             15,949
  amortization
  Sales and marketing       3,588              3,474              3,789
  General and               8,627              7,092              7,003
  administrative
  Rent                      5,066              5,028              4,793
  Transaction costs        4                -                5          
  Total operating          54,422           51,700           48,286     
  expenses
                                                                
  Operating income          9,309              9,740              6,805
  Interest income           2                  14                 2
  Interest expense         (1,173     )      (759       )      (439       )
  Income before             8,138              8,995              6,368
  income taxes
  Income tax               (20        )      34               (173       )
  (expense) benefit
  Net income                8,118              9,029              6,195
                                                                
  Net income
  attributable to          3,301            3,809            2,262      
  noncontrolling
  interests
  Net income
  attributable to           4,817              5,220              3,933
  CoreSite Realty
  Corporation
  Preferred dividends      (2,084     )      (2,085     )      (2,084     )
  Net income
  attributable to         $ 2,733           $ 3,135           $ 1,849      
  common shares
                                                                
  Net income per
  share attributable
  to common shares:
  Basic                   $ 0.13             $ 0.15             $ 0.09
  Diluted                 $ 0.13            $ 0.15            $ 0.09       
                                                                
  Weighted average
  common shares
  outstanding:
  Basic                     20,992,758         20,924,624         20,673,896
  Diluted                   21,521,838         21,492,301         21,314,779
                                                                

                                                          
Reconciliations of                                       
Net Income to FFO
(in thousands, except
per share data)
                         Three Months Ended
                          March 31,          December 31,       March 31,
                          2014               2013               2013
Net income                $ 8,118            $ 9,029            $ 6,195
Real estate
depreciation and           16,836          16,146          15,142     
amortization
FFO                       $ 24,954           $ 25,175           $ 21,337
                                                                
Preferred stock            (2,084     )     (2,085     )     (2,084     )
dividends
FFO available to
common shareholders       $ 22,870         $ 23,090         $ 19,253     
and OP unit holders
                                                                
Weighted average
common shares               21,521,838         21,492,301         21,314,779
outstanding - diluted
Weighted average OP
units outstanding -        25,360,847       25,360,847       25,353,709 
diluted
Total weighted
average shares and          46,882,685         46,853,148         46,668,488
units outstanding -
diluted
                                                                
FFO per common share      $ 0.49            $ 0.49            $ 0.41       
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. 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.

Reconciliation of Net Income to    
EBITDA and Adjusted EBITDA
                                                              
                                      Three Months Ended
                                      March 31,     December 31,     March 31,
                                      2014          2013             2013
Net income                            $  8,118      $  9,029         $  6,195
Adjustments:
Interest expense, net of interest        1,171         745              437
income
Income taxes                             20            (34     )        173
Depreciation and amortization         17,882     17,151       15,949
EBITDA                                $  27,191     $  26,891        $  22,754
Non-cash compensation                    1,716         1,433            1,895
Transaction costs / litigation           230           -                105
Impairment of internal-use            922        -            -
software
Adjusted EBITDA                     $  30,059   $  28,324     $  24,754
                                                                        

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 and impairment charges 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 Realty Corporation
Greer Aviv, +1 303-405-1012 | +1 303-222-7276
Investor Relations Director
Greer.Aviv@CoreSite.com
 
Press spacebar to pause and continue. Press esc to stop.