- Delivered Strong Q1 Financial Results,
Including 7.0% Revenue Growth Year Over Year - - Executed
$7.0 Million of New and Expansions Sales, Driven by Retail
Colocation and Small Scale -
CoreSite Realty Corporation (NYSE:COR) (“the Company”), a
premier provider of secure, reliable, high-uptime data center
campuses with high-performance cloud access and interconnection
solutions across the U.S., today announced financial results for
quarter ended March 31, 2021.
Q1 2021 Quarterly
Highlights
- Key Financial Results –
- Grew operating revenues to $157.6 million, an increase of 7.0%
year over year and 1.7% sequentially
- Delivered net income of $0.51 per common diluted share, an
increase of $0.03 year over year and $0.05 sequentially
- Grew adjusted EBITDA to $86.1 million, an increase of 9.4% year
over year and 4.0% sequentially
- Generated FFO of $1.40 per diluted share and unit, an increase
of $0.11, or 8.5% year over year and $0.06, or 4.5%
sequentially
- Paid a dividend of $1.23 per share for the first quarter on
April 15th
- Lease Commencements –
- Commenced 130 new and expansion leases for 28,776 net rentable
square feet (“NRSF”), representing $5.9 million of annualized GAAP
rent, for an average rate of $206 per NRSF
- Leasing Activity –
- Signed 134 new and expansion leases for 33,306 NRSF and $7.0
million of annualized GAAP rent, for an average rate of $209 per
NRSF
- Renewed 276 leases for 91,605 NRSF and $15.9 million of
annualized GAAP rent, for an average rate of $173 per NRSF
- Renewed leases reflected an increase of 2.3% in cash rent and
6.1% in GAAP rent, and we reported churn of 0.8%
“We are pleased with our start to the year, and we are excited
about the growth opportunities achievable as we lease up our vacant
and available capacity,” said Paul Szurek, CoreSite’s President and
Chief Executive Officer. “CoreSite’s network and cloud-dense
customer communities continue to evidence a differentiated value
proposition for customers who increasingly rely on digital
operations to advance their business, and we believe our priorities
and operating objectives will continue to drive long-term value
creation.”
Sales Activity
CoreSite achieved new and expansion sales of $7.0 million of
annualized GAAP rent for the quarter, which included annualized
GAAP rent of $3.6 million, $2.6 million, and $0.8 million from
retail colocation, small scale, and large scale leases,
respectively.
“Our sales results were primarily driven by retail colocation
and small scale leasing through strong organic growth from existing
customers and demand from new enterprises during the first
quarter,” said Steve Smith, CoreSite’s Chief Revenue Officer. “We
continue to pursue large scale and hyperscale leases supplementing
our retail and small scale leasing volume throughout the remainder
of 2021. We have the available capacity to provide the flexibility
and scalability required by customers to execute their hybrid and
multi-cloud architectures.”
In addition, on April 1st, CoreSite achieved an 89% leased
percentage at LA3 Phase 1 within six months of construction
completion as a result of signing a large scale lease for
approximately $0.8 million of annualized GAAP rent immediately
subsequent to quarter end. LA3 Phase 1 will become stabilized upon
the expected commencement of the large scale lease in Q3 2021.
CoreSite had annualized GAAP backlog of $9.6 million, or $19.3
million on a cash basis, which is inclusive of the large scale
lease signed at LA3 subsequent to quarter end.
Other Financial Results
CoreSite’s $157.6 million of operating revenues for the first
quarter included $133.0 million of rental, power and related
revenue, reflecting 6.8% year over year growth, $22.2 million of
interconnection revenue, reflecting 10.3% year over year growth,
and $2.5 million of office, light-industrial and other revenue. Net
income was $24.9 million for the quarter, or $0.51 attributable to
each common diluted share.
Development Activity
CoreSite continues to invest and develop new capacity as needed
to meet market demand.
- LA3 Phase 2 comprised of 54,000 NRSF and 6 MWs is under
construction and continues to be on track for its estimated
completion in the fourth quarter of 2021.
CoreSite’s ongoing data center development and operational
position includes –
- the ability to increase its occupied footprint of Tier 1,
purpose-built data centers, both owned or leased, by approximately
2.0 million NRSF, or about 85.8%, including space unoccupied, under
construction, pre-construction or held for development, and
- owning (versus leasing) 93.1% of its current and developable
4.3 million data center NRSF, supporting operational control,
expansion and long-term expense management.
Balance Sheet and
Liquidity
The Company’s balance sheet remains strong, with a ratio of net
principal debt to fourth quarter annualized adjusted EBITDA of 5.1
times, or 4.9 times including GAAP backlog. As of the end of the
first quarter, CoreSite had approximately $278.7 million of current
liquidity, including $3.8 million of cash and $274.9 million of
available capacity on its revolving credit facility.
2021 Guidance
The Company’s 2021 guidance, including operating revenues,
adjusted EBITDA, depreciation and amortization and capital
expenditures, along with guidance drivers and other information,
can be found on page 21 of CoreSite’s Supplemental Information.
Conference Call Details
CoreSite will host its first quarter 2021 earnings call on
Thursday, April 29, 2021, at 12:00 p.m. (Eastern Time). The call
will be accessible by dialing 1-877-407-3982 (domestic) or
1-201-493-6780 (international).
A replay will be available after the call until May 6, 2021, and
can be accessed dialing 1-844-512-2921 (domestic) or 1-412-317-6671
(international). The passcode for the replay is 13717856.
The quarterly conference call also will be offered as a
simultaneous webcast, accessible by visiting CoreSite.com and
clicking on the “Investors” link. An on-line replay will be
available for a limited time immediately following the call.
Concurrently with issuing its financial results, the Company
will post its first quarter 2021 Supplemental Information on its
website at CoreSite.com, under the “Investors” link.
Upcoming Conferences and
Events
CoreSite’s management will participate virtually in the RBC
Capital Markets Data Center & Connectivity Conference on May
25th, Cowen’s 49th Annual Technology, Media & Telecom
Conference on June 2nd, the Nareit REITweek 2021 Investor
Conference on June 8-9th, and Credit Suisse’s 23rd Annual
Communications Conference on June 15th.
About CoreSite
CoreSite Realty Corporation (NYSE:COR) delivers secure,
reliable, high-uptime data center campuses with high-performance
cloud access and interconnection solutions to a growing customer
ecosystem across eight key North American markets. More than 1,375
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 475+ 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 level of supply of or 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, including indirect competition from cloud service
providers; failure to obtain necessary outside financing; the
ability to service existing debt; the 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; the effects on our business operations, demand
for our services and general economic conditions resulting from the
spread of the novel coronavirus (“COVID-19”) in our markets, as
well as orders, directives and legislative action by local, state
and federal governments in response to such spread of COVID-19; 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 its 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.
Use of Funds From Operations
(“FFO”)
FFO is a supplemental measure of CoreSite’s 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. The Company calculates 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.
CoreSite’s management uses FFO as a supplemental performance
measure because, by 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.
CoreSite offers this measure because it recognizes that
investors use FFO as a basis to compare its operating performance
with that of other REITs. However, the utility of FFO as a measure
of the Company’s performance is limited because FFO excludes
depreciation and amortization and captures neither the changes in
the value of its 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 its properties, all of which have real economic effect and could
materially impact the Company’s financial condition and results
from operations. 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 the Company’s cash needs, including its
ability to pay dividends or make distributions. In addition,
CoreSite’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 from the Company. Investors in CoreSite’s securities
should not rely on these measures as a substitute for any GAAP
measure, including net income.
Use of Earnings Before Interest, Taxes,
Depreciation and Amortization for Real Estate
(“EBITDAre”)
EBITDAre is calculated in accordance with the standards
established by the National Association of Real Estate Investment
Trusts (“Nareit”). EBITDAre is defined as earnings before interest,
taxes, depreciation and amortization, gains or losses from the sale
of depreciated property, and impairment of depreciated property.
CoreSite calculates adjusted EBITDA by adding its non-cash
compensation expense, transaction costs from unsuccessful deals and
business combinations and litigation expense to EBITDAre as well as
adjusting for the impact of other impairment charges, gains or
losses from sales of undepreciated land and gains or losses on
early extinguishment of debt. Management uses EBITDAre and adjusted
EBITDA as indicators of the Company’s ability to incur and service
debt. In addition, CoreSite considers EBITDAre and adjusted EBITDA
to be appropriate supplemental measures of its 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 EBITDAre 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 the
Company’s business, their utilization as a cash flow measurement is
limited.
Consolidated Balance Sheets
(in thousands, except per share data)
March 31,
December 31,
2021
2020
Assets:
Investments in real estate:
Land
$
109,400
$
104,734
Buildings and improvements
2,281,662
2,273,536
2,391,062
2,378,270
Less: Accumulated depreciation and
amortization
(907,256
)
(867,975
)
Net investment in operating properties
1,483,806
1,510,295
Construction in progress
335,913
319,411
Net investments in real estate
1,819,719
1,829,706
Operating lease right-of-use assets,
net
168,879
173,928
Cash and cash equivalents
3,791
5,543
Accounts and other receivables, net
22,102
20,849
Lease intangibles, net
2,061
2,507
Goodwill
40,646
40,646
Other assets, net
108,015
103,094
Total assets
$
2,165,213
$
2,176,273
Liabilities and equity:
Liabilities
Debt, net
$
1,736,972
$
1,715,911
Operating lease liabilities
184,775
189,404
Accounts payable and accrued expenses
79,185
79,140
Accrued dividends and distributions
62,861
63,878
Acquired below-market lease contracts,
net
2,263
2,313
Unearned revenue, prepaid rent and other
liabilities
50,340
53,149
Total liabilities
2,116,396
2,103,795
Stockholders' equity
Common stock, par value $0.01
424
422
Additional paid-in capital
559,777
555,595
Accumulated other comprehensive loss
(14,463
)
(20,526
)
Distributions in excess of net income
(502,894
)
(471,910
)
Total stockholders' equity
42,844
63,581
Noncontrolling interests
5,973
8,897
Total equity
48,817
72,478
Total liabilities and equity
$
2,165,213
$
2,176,273
Consolidated Statements of
Operations
(in thousands, except per share data)
Three Months Ended
March 31,
December 31,
March 31,
2021
2020
2020
Operating revenues:
Data center revenue:(1)
Rental, power, and related revenue
$
132,976
$
130,430
$
124,505
Interconnection revenue
22,160
21,947
20,085
Total data center revenue
155,136
152,377
144,590
Office, light-industrial and other
revenue
2,506
2,561
2,772
Total operating revenues
157,642
154,938
147,362
Operating expenses:
Property operating and maintenance
42,632
43,649
40,183
Real estate taxes and insurance
6,735
6,218
6,190
Depreciation and amortization
44,628
44,386
40,991
Sales and marketing
5,862
5,844
6,144
General and administrative
11,517
10,302
11,267
Rent
9,221
10,187
8,399
Total operating expenses
120,595
120,586
113,174
Operating income
37,047
34,352
34,188
Interest expense
(12,123
)
(11,933
)
(11,183
)
Income before income taxes
24,924
22,419
23,005
Income tax expense
(9
)
(10
)
(17
)
Net income
24,915
22,409
22,988
Net income attributable to noncontrolling
interests
3,047
2,751
5,140
Net income attributable to common
shares
$
21,868
$
19,658
$
17,848
Net income per share attributable to
common shares:
Basic
$
0.52
$
0.46
$
0.48
Diluted
$
0.51
$
0.46
$
0.48
Weighted average common shares
outstanding:
Basic
42,378
42,330
37,336
Diluted
42,592
42,529
37,504
(1) Below is a breakout of our contractual
data center rental, power, and tenant reimbursements and other
revenue:
Three Months Ended
March 31,
December 31,
March 31,
2021
2020
2020
Rental revenue
$
85,207
$
83,891
$
80,886
Power revenue
44,360
43,374
41,278
Tenant reimbursement and other
3,409
3,165
2,341
Rental, power, and related revenue
$
132,976
$
130,430
$
124,505
Reconciliations of Net Income to
FFO
(in thousands, except per share data)
Three Months Ended
March 31,
December 31,
March 31,
2021
2020
2020
Net income
$
24,915
$
22,409
$
22,988
Real estate depreciation and
amortization
42,889
42,518
39,415
FFO available to common shareholders
and OP unit holders
$
67,804
$
64,927
$
62,403
Weighted average common shares outstanding
- diluted
42,592
42,529
37,504
Weighted average OP units outstanding -
diluted
5,941
5,943
10,796
Total weighted average shares and units
outstanding - diluted
48,533
48,472
48,300
FFO per common share and OP unit -
diluted
$
1.40
$
1.34
$
1.29
Reconciliations of Net Income to
EBITDAre and Adjusted EBITDA:
(in thousands)
Three Months Ended
March 31,
December 31,
March 31,
2021
2020
2020
Net income
$
24,915
$
22,409
$
22,988
Adjustments:
Interest expense
12,123
11,933
11,183
Income taxes
9
10
17
Depreciation and amortization
44,628
44,386
40,991
EBITDAre
$
81,675
$
78,738
$
75,179
Non-cash compensation
4,393
4,033
3,482
Transaction costs / litigation
3
—
—
Adjusted EBITDA
$
86,071
$
82,771
$
78,661
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210429005200/en/
Kate Ruppe Investor Relations Manager 303-222-7369
InvestorRelations@CoreSite.com
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