Press Release

CoreSite Reports First-Quarter Revenue and FFO Per Share Growth, Excluding Non-Recurring Items in the Year-Ago Period, of 17% and 26%, Respectively

April 23, 2015 at 8:01 AM EDT
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Data center revenue increased 18% year over year

DENVER--(BUSINESS WIRE)--Apr. 23, 2015-- CoreSite Realty Corporation (NYSE:COR), a premier provider of secure, reliable, high-performance data center solutions across the US, today announced financial results for the first quarter ended March 31, 2015.

Quarterly and Subsequent Highlights

  • Reported first-quarter funds from operations (“FFO”) of $0.64 per diluted share and unit, representing 25.5% growth year over year, excluding non-recurring items in Q1 2014
  • Reported first-quarter total operating revenues of $74.8 million, representing a 17.3% increase year over year; total data center revenues increased 17.7% year over year
  • Executed 54,385 net rentable square feet of new and expansion turn-key data center leases representing $8.9 million of annualized GAAP rent at a rate of $163 per square foot
  • Commenced 60,797 net rentable square feet of new and expansion leases representing $9.2 million of annualized GAAP rent at a rate of $152 per square foot, increasing stabilized data center occupancy to 88.2%
  • Realized rent growth on signed renewals of 5.3% on a cash basis and 11.4% on a GAAP basis and recorded rental churn of 2.2%
  • Following the end of the first quarter, executed an agreement to construct a 136,580 square-foot powered shell on the Santa Clara campus 100% pre-leased to an existing strategic customer

Tom Ray, CoreSite’s Chief Executive Officer, commented, “We had a solid first quarter, both in financial results and operational performance, reflecting continued execution of our business plan.” Mr. Ray continued, “We believe that CoreSite remains well positioned within our industry and that the supply and demand dynamics in the markets we serve remain favorable. 2015 is off to a solid start and we remain optimistic about the internal growth opportunities inherent in our data center portfolio.”

Financial Results

CoreSite reported FFO attributable to shares and units of $30.2 million for the three months ended March 31, 2015, a 26.9% increase year over year, excluding non-recurring items in the first quarter of 2014, and an increase of 4.2% on a sequential-quarter basis. FFO per diluted share and unit increased 25.5% to $0.64 for the three months ended March 31, 2015, as compared to $0.51 per diluted share and unit for the three months ended March 31, 2014, excluding non-recurring items. On a sequential-quarter basis, FFO per diluted share increased 4.9%.

Total operating revenues for the three months ended March 31, 2015, were $74.8 million, a 17.3% increase year over year and an increase of 3.1% on a sequential-quarter basis. Total data center revenues for the three months ended March 31, 2015, were $72.6 million, a 17.7% increase year over year and an increase of 2.8% on a sequential-quarter basis. CoreSite reported net income attributable to common shares of $4.6 million, or $0.21 per diluted share.

Sales Activity

CoreSite executed 100 new and expansion turn-key data center leases representing $8.9 million of annualized GAAP rent during the first quarter, comprised of 54,385 NRSF at a weighted-average GAAP rental rate of $163 per NRSF.

CoreSite’s first-quarter data center lease commencements totaled 60,797 NRSF at a weighted average GAAP rental rate of $152 per NRSF, which represents $9.2 million of annualized GAAP rent.

CoreSite’s renewal leases signed in the first quarter totaled $7.2 million in annualized GAAP rent, comprised of 40,446 NRSF at a weighted-average GAAP rental rate of $179 per NRSF, reflecting a 5.3% increase in rent on a cash basis and an 11.4% increase on a GAAP basis. The first-quarter rental churn rate was 2.2%.

Development Activity

Santa Clara – In April 2015, CoreSite began construction on a 136,580 square-foot powered shell data center on land CoreSite owns on its Santa Clara campus. The building, which will be known as SV6, is 100% pre-leased. As of March 31, 2015, CoreSite has incurred $1.2 million of the estimated $27.0 million required to complete the development project, and expects to deliver the build-to-suit to a strategic customer in the first half of 2016.

Virginia – During the first quarter, CoreSite placed into service 44,036 NRSF associated with Phase 1 at VA2 and the lease for 100% of the space commenced on April 1, 2015. As of March 31, 2015, CoreSite had 48,137 NRSF of data center space under construction at Phase 2 at VA2 and had incurred $7.4 million of the estimated $13.3 million required to complete Phase 2. CoreSite expects to complete construction in the second quarter of 2015.

New York – During the first quarter, CoreSite had 49,050 NRSF under construction at Phase 2 at NY2, which is expected to be completed in the second quarter of 2015. As of March 31, 2015, CoreSite had incurred $7.9 million of the estimated $21.3 million required to complete this project.

Additional markets – CoreSite had 26,853 NRSF of turn-key data center capacity under construction as of March 31, 2015, across the Company’s existing facilities at BO1 (Boston) and CH1 (Chicago). As of the end of the first quarter, CoreSite had incurred $3.2 million of the estimated $16.5 million required to complete these projects.

Balance Sheet and Liquidity

As of March 31, 2015, CoreSite had $333.8 million of total long-term debt outstanding, correlating to 2.2 times first-quarter annualized adjusted EBITDA, and $448.8 million of long-term debt and preferred stock, correlating to 3.0 times first-quarter annualized adjusted EBITDA.

At quarter end, CoreSite had $12.1 million of cash available on its balance sheet and $163.9 million of capacity available under its revolving credit facility.

Dividend

On March 12, 2015, CoreSite announced a dividend of $0.42 per share of common stock and common stock equivalents for the first quarter of 2015. The dividend was paid on April 15, 2015, to shareholders of record on March 31, 2015.

CoreSite also announced on March 12, 2015, a dividend of $0.4531 per share of Series A preferred stock for the period January 15, 2015, to April 14, 2015. The preferred dividend was paid on April 15, 2015, to shareholders of record on March 31, 2015.

2015 Guidance

CoreSite is maintaining its 2015 guidance of FFO per diluted share and unit in the range of $2.55 to $2.65. In addition, CoreSite is maintaining its 2015 guidance for net income attributable to common shares in the range of $0.75 to $0.85 per diluted share, with the difference between FFO and net income being real estate depreciation and amortization.

CoreSite is increasing its guidance for 2015 total capital expenditures by $30 million to a range of $115 million to $145 million to primarily reflect the development of the powered shell build-to-suit data center on its Santa Clara campus.

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 NAREIT’s REITWeek conference from June 9, 2015, through June 10, 2015, at the New York Hilton in New York, NY.

Conference Call Details

CoreSite will host a conference call on April 23, 2015, 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 13604923. The replay will be available until April 30, 2015.

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 solutions across eight key North American markets. More than 800 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 350+ 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 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.

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