Press Release

CoreSite Reports Fourth Quarter 2018 Financial Results

February 6, 2019 at 4:20 PM EST
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-- Revenue Growth of 13% for the Year --

DENVER--(BUSINESS WIRE)--Feb. 6, 2019-- CoreSite Realty Corporation (NYSE:COR) (“the Company”), a premier provider of secure, reliable, high-performance data center and interconnection solutions across the U.S., today announced financial results for the fourth quarter ended December 31, 2018.

Annual Highlights

  • Key Financial Results, compared to 2017 --
  • Operating revenues of $544.4 million, increased 13.0%
  • Net income of $2.22 per diluted common share, increased 20.7%
  • Funds From Operations (“FFO”) of $5.06 per diluted share and unit –
  • increased 14.2% year over year, or 11.9% excluding 2017 non-cash charge for redeemed preferred stock original issuance costs
  • Dividends declared of $4.14 per share and unit, increased 15.6%

Quarterly Highlights

  • Key Financial Results --
  • Q4 operating revenues of $139.1 million -
  • increased 10.5% year over year, and was in line sequentially
  • Q4 net income of $0.54 per diluted common share -
  • increased 22.7% year over year, and 3.8% sequentially
  • Q4 FFO of $1.26 per diluted share and unit -
  • increased 15.6% year over year, or 6.8% excluding 2017 non-cash charge for redeemed preferred stock original issuance costs and 0.8% sequentially
  • Lease Commencements --
  • Commenced 116 new and expansion leases including -
  • 22,684 net rentable square feet (“NRSF”), representing $4.4 million of annualized GAAP rent at an average rate of $192 per square foot
  • Lease Sales Activity --
  • Signed 115 new and expansion leases including -
  • 16,125 NRSF, representing $4.2 million of annualized GAAP rent at an average rate of $259 per square foot
  • Renewed 303 existing leases including -
  • 125,078 NRSF, representing $22.5 million of annualized GAAP rent, at an average rate of $180 per square foot, including churn of 1.9%, reflecting 3.0% cash rent growth and 7.0% GAAP rent growth

“We delivered solid results in 2018, while expanding our customer ecosystem and building our new capacity pipeline,” said Paul Szurek, CoreSite’s Chief Executive Officer. “In 2019, our focus is to continue executing on high-value edge and hybrid cloud deployments requiring direct interconnection to networks and cloud on-ramps. This includes our goals of delivering significant new capacity and translating it into attractive sales growth, acquiring many new customers and continuing to deliver a strong customer experience.”

Other Financial Results and Liquidity

CoreSite’s $139.1 million of operating revenues for the fourth quarter included $118.3 million of rental, power and related revenue, $18.0 million of interconnection revenue and $2.8 million of office, light-industrial and other revenue.

Net Income was $25.9 million for the fourth quarter and $106.8 million for the year, or $0.54 and $2.22 attributable to each common diluted share, respectively.

The Company’s balance sheet remains strong, with a ratio of net principal debt to fourth quarter annualized adjusted EBITDA of 3.8 times. As of the end of the fourth quarter, CoreSite had $236.2 million of total liquidity, including $2.6 million of cash and $233.6 million of available capacity on its revolving credit facility.

Sales Activity

For the quarter, the Company continued to perform in the core retail colocation space with solid pricing, ongoing acquisition of new logos and expansion with key strategic customers. Additionally, the Company achieved strong lease renewals, with churn lower than expected. Scale colocation leasing for the quarter was impacted by the fact that occupancies were high and therefore capacity was constrained for large blocks of contiguous space in certain markets. In 2018, the Company made solid progress on construction, and when coupled with its development completion schedule for 2019, believes its new capacity will strengthen its future sales opportunities, including for scale leasing.

“We are entering 2019 with a strong pipeline of construction and development, new logo additions, and an ongoing value proposition that we believe resonates with customers,” said Steven Smith, Chief Revenue Officer. “These elements, along with our product enhancements, should drive significant new leasing opportunities in 2019.”

Development Activity

CoreSite expects 2019 to be a positive transition year, entering the year with leasable capacity at a low level compared to historical norms, and plans to end 2019 with leasable capacity, plus quickly developable incremental capacity, at the higher levels the Company experienced in previous years.

CoreSite has a strong ongoing development and operational position that includes --

  • the ability to increase its occupied footprint of land and buildings, both owned or leased, by 89%, or about 1.9 million NRSF, including space unoccupied, under construction, pre-construction or held for development, and
  • owning (versus leasing) 92% of its 4.1 million data center NRSF, which supports operational control, expansion and long-term cost management

In 2018, the Company placed into service nearly 172,000 NRSF of new turn-key data center capacity, including completion late in the fourth quarter of its DC2 data center, located in Washington DC, for nearly 25,000 NRSF.

As of December 31, 2018, CoreSite had a total of approximately 271,000 NRSF of turn-key data center capacity under construction, with $166.4 million incurred to date of the $530.2 million of total estimated costs as detailed below. Included in these numbers are two development projects in the pre-construction phase totaling 118,000 NRSF, with $39.4 million incurred to date of the $250.0 million of estimated total costs.

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