CoreSite Realty Corporation (NYSE:COR), a premier provider of
secure, reliable, high-performance data center and interconnection
solutions across the U.S., today announced financial results for
the third quarter ended September 30, 2017.
Quarterly and Subsequent
Highlights
- Reported third-quarter total operating
revenues of $123.1 million, representing a 21.5% increase year over
year
- Reported third-quarter net income per
diluted share of $0.46, representing 27.8% growth year over
year
- Reported third-quarter funds from
operations (“FFO”) of $1.10 per diluted share and unit,
representing 22.2% growth year over year
- Executed 103 new and expansion data
center leases comprising 40,842 net rentable square feet (NRSF),
representing $10.1 million of annualized GAAP rent at an average
rate of $247 per square foot
- Commenced 21,617 NRSF of new and
expansion leases representing $8.9 million of annualized GAAP rent
at an average rate of $410 per square foot
- Realized rent growth on signed renewals
of 5.5% on a cash basis and 10.9% on a GAAP basis and recorded
rental churn of 1.4% in the third quarter
- CoreSite placed into service 8,276
square feet of turn-key data center capacity at DE1 in Denver, of
which 41.6% is currently leased
- On October 16, 2017, CoreSite announced
that it intends to redeem all 4,600,000 shares of its 7.25% Series
A cumulative redeemable preferred stock on December 12, 2017
“We again delivered strong results in the third quarter, with
revenue, adjusted EBITDA and FFO growth of 22%, 25%, and 22%, year
over year, respectively, driven by continued customer expansion
demand across the portfolio and a focus on effectiveness and
efficiency across the organization,” said Paul Szurek, CoreSite’s
Chief Executive Officer. “Third-quarter leasing was substantially
led by organic growth. This strong organic demand reflects our
differentiated business model and ownership strategy, focusing on
large edge markets in infill locations where the data community has
a very high level of interaction and interdependence, which we
successfully meet with our robust network and cloud connectivity
combined with flexible density options.”
Financial Results
CoreSite reported net income attributable to common shares of
$15.8 million, or $0.46 per diluted share, for the three months
ended September 30, 2017, compared to $12.2 million, or $0.36 per
diluted share for the three months ended September 30, 2016, an
increase of 27.8% on a per-share basis. Net income attributable to
common shares was consistent with the prior-quarter level.
CoreSite reported FFO per diluted share and unit of $1.10 for
the three months ended September 30, 2017, an increase of 22.2%
compared to $0.90 per diluted share and unit for the three months
ended September 30, 2016. FFO per diluted share and unit was also
consistent with the prior-quarter level.
Total operating revenues for the three months ended September
30, 2017, were $123.1 million, a 21.5% increase year over year and
an increase of 4.4% on a sequential-quarter basis.
Sales Activity
CoreSite executed 103 new and expansion data center leases
representing $10.1 million of annualized GAAP rent during the third
quarter, comprised of 40,842 NRSF at a weighted-average GAAP rental
rate of $247 per NRSF.
CoreSite’s third-quarter data center lease commencements totaled
21,617 NRSF at a weighted average GAAP rental rate of $410 per
NRSF, which represents $8.9 million of annualized GAAP rent.
CoreSite’s renewal leases signed in the third quarter totaled
$14.4 million in annualized GAAP rent, comprised of 80,818 NRSF at
a weighted-average GAAP rental rate of $178 per NRSF, reflecting a
5.5% increase in rent on a cash basis and a 10.9% increase on a
GAAP basis. The third-quarter rental churn rate was 1.4%.
Development and Acquisition
Activity
During the third quarter, CoreSite placed into service 8,276
square feet of turn-key data center capacity at DE1 in Denver, of
which 41.6% is currently leased.
On August 29, 2017, CoreSite closed on its acquisition of a
two-acre land parcel (referred to as SV8) immediately adjacent to
its existing Santa Clara campus. CoreSite estimates it can build
approximately 160,000 square feet of turn-key data center capacity
across multiple phases at a cost of approximately $190 to $210
million.
In addition, as of September 30, 2017, CoreSite had a total of
219,037 square feet of turn-key data center capacity under
construction and had spent $62.3 million of the estimated $217.1
million required to complete the projects, which consisted of the
following.
Reston – CoreSite had 24,922 square feet of turn-key data
center capacity under construction at VA3 (Phase 1A). As of
September 30, 2017, CoreSite had incurred $13.9 million of the
estimated $22.3 million required to complete this phase of the
project, and expects to complete development in the fourth quarter
of 2017. In the third quarter of 2017, CoreSite commenced site work
for the shell of an 80,000 square foot, 12 megawatt building, and a
77,000 square foot centralized infrastructure building which will
serve the entire VA3 property. VA3 Phase 1B will consist of 6
megawatts and 49,837 square feet of this first turn-key data center
building, inclusive of 9,837 square feet of the infrastructure
building to support this phase of the data center. VA3 Phase 1B and
the infrastructure building collectively are expected to cost
$100.2 million and be completed in the fourth quarter of 2018.
During the third quarter, CoreSite also had 3,087 square feet of
turn-key data center capacity under construction at VA1. CoreSite
expects to spend $1.7 million to complete this expansion and
expects to complete construction in the fourth quarter of 2017.
Washington, D.C. – CoreSite had 24,563 square feet of
turn-key data center capacity under construction at DC2. As of the
end of the third quarter, CoreSite had spent $3.8 million of the
estimated $17.4 million required to complete the project, and
expects to complete development in the second quarter of 2018.
Boston – CoreSite had 13,735 square feet of turn-key data
center capacity under construction at BO1. As of September 30,
2017, CoreSite had incurred $5.4 million of the estimated $7.8
million required to complete this expansion and expects to complete
construction in the fourth quarter of 2017.
Los Angeles – CoreSite had 47,338 square feet of turn-key
data center capacity under construction at LA2, which capacity was
78.6% pre-leased. As of September 30, 2017, CoreSite had incurred
$31.2 million of the estimated $45.2 million required to complete
the expansion and expects to complete construction in the first
quarter of 2018. In addition, CoreSite had an incremental 39,925
square feet of turn-key data center capacity under construction at
LA2, and expects to spend $15.0 million to complete this expansion
in the first quarter of 2018.
Denver – CoreSite commenced construction on 15,630 square
feet of additional turn-key data center capacity at DE1. CoreSite
expects to spend $7.5 million to complete this expansion and
expects to complete construction in the third quarter of 2018.
Balance Sheet and
Liquidity
As of September 30, 2017, CoreSite had net principal debt
outstanding of $789.3 million, correlating to 3.0 times
third-quarter annualized adjusted EBITDA, and net principal debt
and preferred stock outstanding of $904.3 million, correlating to
3.5 times third-quarter annualized adjusted EBITDA.
As of the end of the third quarter, CoreSite had $332.2 million
of total liquidity consisting of available cash and capacity on its
revolving credit facility.
On October 16, 2017, CoreSite announced that it intends to
redeem all 4,600,000 shares of its 7.25% Series A cumulative
redeemable preferred stock on December 12, 2017. The Series A
cumulative redeemable preferred stock will be redeemed at the
redemption price of $25.00 per share, plus $0.292014 in accrued and
unpaid dividends on each share.
Dividend
On September 1, 2017, CoreSite announced a dividend of $0.90 per
share of common stock and common stock equivalents for the third
quarter of 2017. The third-quarter dividend was paid on October 16,
2017, to shareholders of record on September 29, 2017.
CoreSite also announced on September 1, 2017, a dividend of
$0.4531 per share of Series A preferred stock for the period July
16, 2017, to October 14, 2017. The preferred dividend was paid on
October 16, 2017, to shareholders of record on September 29,
2017.
2017 Guidance
CoreSite is maintaining its 2017 guidance of net income
attributable to common shares in the range of $1.78 to $1.86 per
diluted share. In addition, CoreSite is maintaining its guidance of
FFO per diluted share and unit in the range of $4.39 to $4.47, with
the difference between net income and FFO being real estate
depreciation and amortization.
This outlook is based 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 NAREIT’s REITWorld conference on
November 14-16 at the Hilton Anatole in Dallas, Texas and the
Credit Suisse 21st Annual Technology, Media & Telecom
Conference on November 28th at The Phoenician in Scottsdale,
Arizona.
Conference Call Details
CoreSite will host a conference call on October 26, 2017, 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 will be accessible by dialing +1-877-407-3982
(domestic) or +1-201-493-6780 (international). A replay will be
available until November 9, 2017, and can be accessed shortly after
the call by dialing + 1-844-512-2921 (domestic) or + 1-412-317-6671
(international). The passcode for the replay is 13671218.
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 and interconnection
solutions to a growing customer ecosystem across eight key North
American markets. More than 1,200 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 430+ 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.
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
ability to service existing debt; 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,
except per share data)
September 30,2017
December 31,2016
Assets: Investments in real estate: Land $ 97,258 $ 100,258
Buildings and improvements 1,512,015 1,472,580
1,609,273 1,572,838 Less: Accumulated depreciation and
amortization (446,742 ) (369,303 ) Net investment in
operating properties 1,162,531 1,203,535 Construction in progress
153,079 70,738 Net investments in real
estate 1,315,610 1,274,273 Cash and
cash equivalents 4,682 4,429 Accounts and other receivables, net
27,990 25,125 Lease intangibles, net 6,989 9,913 Goodwill 40,646
41,191 Other assets, net 104,039 96,372
Total assets $ 1,499,956 $
1,451,303 Liabilities and equity:
Liabilities Debt, net $ 788,787 $ 690,450 Accounts payable
and accrued expenses 67,798 72,519 Accrued dividends and
distributions 46,523 41,849 Deferred rent payable 9,674 7,694
Acquired below-market lease contracts, net 3,688 4,292 Unearned
revenue, prepaid rent and other liabilities 31,260
37,413
Total liabilities 947,730
854,217 Stockholders'
equity Series A cumulative preferred stock 115,000 115,000
Common stock, par value $0.01 338 334 Additional paid-in capital
450,594 438,531 Accumulated other comprehensive income (loss) 314
(101 ) Distributions in excess of net income (158,926 )
(118,038 ) Total stockholders' equity 407,320 435,726
Noncontrolling interests 144,906 161,360
Total equity 552,226
597,086 Total liabilities and equity $
1,499,956 $ 1,451,303
Consolidated Statements of Operations (in thousands, except
share and per share data)
Three Months Ended Nine Months Ended September
30, June 30, September 30, September 30,
September 30, 2017 2017 2016
2017 2016 Operating revenues: Data center
revenue: Rental revenue $ 66,657 $ 64,853 $ 54,219 $ 195,761 $
156,954 Power revenue 35,110 32,410 28,844 98,381 80,819
Interconnection revenue 16,201 15,325 13,374 46,038 39,093 Tenant
reimbursement and other 2,185 2,329
2,826 6,790 6,982 Total
data center revenue 120,153 114,917 99,263 346,970 283,848 Office,
light-industrial and other revenue 2,915 2,969
2,011 8,905 5,996
Total operating revenues 123,068 117,886 101,274 355,875 289,844
Operating expenses: Property operating and
maintenance 37,091 31,781 28,283 98,098 78,522 Real estate taxes
and insurance 2,622 3,824 3,524 10,950 9,659 Depreciation and
amortization 32,077 32,207 26,981 96,622 77,978 Sales and marketing
4,643 4,414 4,465 13,560 13,187 General and administrative 9,759
9,508 9,432 27,391 26,970 Rent 6,077 5,931 5,967 17,970 16,718
Transaction costs — 139 117
139 126 Total operating expenses
92,269 87,804 78,769
264,730 223,160
Operating income
30,799 30,082 22,505 91,145
66,684 Interest expense (6,447 ) (5,958 )
(3,188 ) (17,512 ) (7,879 ) Income before
income taxes 24,352 24,124 19,317 73,633 58,805 Income tax benefit
(expense) (64 ) 11 2 (150
) (45 )
Net income 24,288 24,135
19,319 73,483 58,760 Net income attributable
to noncontrolling interests 6,446 6,407
5,055 19,537 17,031 Net
income attributable to CoreSite Realty Corporation 17,842 17,728
14,264 53,946 41,729 Preferred stock dividends (2,084 )
(2,085 ) (2,084 ) (6,253 ) (6,253 )
Net income attributable to common shares $
15,758 $ 15,643 $
12,180 $ 47,693 $
35,476 Net income per share attributable to
common shares: Basic $ 0.47 $
0.46 $ 0.36 $ 1.41 $
1.11 Diluted $ 0.46 $
0.46 $ 0.36 $ 1.40
$ 1.10 Weighted average common
shares outstanding: Basic 33,878,881 33,835,727 33,425,762
33,758,971 31,906,000 Diluted 34,114,169 34,053,816 33,912,155
34,033,842 32,361,367
Reconciliations of Net Income to FFO (in thousands, except
per share data)
Three Months Ended Nine Months
Ended September 30,
June
30,
September 30, September 30, September 30,
2017 2017 2016 2017 2016 Net
income $ 24,288 $ 24,135 $ 19,319 $ 73,483 $ 58,760 Real estate
depreciation and amortization 30,727 30,879
25,533 92,635
73,782 FFO $ 55,015 $ 55,014 $ 44,852 $ 166,118 $ 132,542
Preferred stock dividends (2,084 ) (2,085 )
(2,084 ) (6,253 ) (6,253 )
FFO available to common
shareholders and OP unit holders $ 52,931
$ 52,929 $ 42,768
$ 159,865 $ 126,289
Weighted average common shares outstanding - diluted 34,114
34,054 33,912 34,034 32,361 Weighted average OP units outstanding -
diluted 13,838 13,849 13,851
13,846 15,310 Total weighted
average shares and units outstanding - diluted 47,952 47,903 47,763
47,880 47,671
FFO per common share and OP unit -
diluted $ 1.10 $ 1.10
$ 0.90 $ 3.34 $
2.65
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.
Reconciliations of Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA):
(in thousands)
Three Months Ended Nine Months
Ended September 30,
June
30,
September 30, September 30, September 30,
2017
2017
2016 2017 2016 Net income $ 24,288 $ 24,135 $
19,319 $ 73,483 $ 58,760 Adjustments: Interest expense 6,447 5,958
3,188 17,512 7,879 Income taxes 64 (11 ) (2 ) 150 45 Depreciation
and amortization 32,077 32,207 26,981
96,622 77,978
EBITDA $
62,876 $ 62,289 $ 49,486
$ 187,767 $ 144,662 Non-cash
compensation 2,374 2,369 2,470 6,545 6,874 Transaction costs /
litigation — 139 158 139 187
Adjusted EBITDA $ 65,250 $
64,797 $ 52,114 $
194,451 $ 151,723
EBITDA is defined as earnings before interest, taxes,
depreciation and amortization. We calculate adjusted EBITDA by
adding our non-cash compensation expense, transaction costs from
unsuccessful deals and business combinations and litigation expense
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171026005728/en/
CoreSiteGreer Aviv+1
303-405-1012+1 303-222-7276Vice President of Investor Relations and
Corporate CommunicationsGreer.Aviv@CoreSite.com
Cencora (NYSE:COR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Cencora (NYSE:COR)
Historical Stock Chart
From Jul 2023 to Jul 2024