DENVER, Nov 03, 2011 (BUSINESS WIRE) -- CoreSite Realty Corporation (NYSE: COR), a national provider of powerful, network-rich data centers, today announced financial results for the third quarter 2011.
Tom Ray, CoreSite's Chief Executive Officer, commented, "We are pleased with the Company's third quarter financial and operational results, reflecting the continued systematic execution of the Company's business plan. Customer activity across our markets was strong with solid leasing at our 900 N. Alameda building in Los Angeles as well as in Chicago, Virginia and the Bay area. We executed new and expansion data center leases representing $5.2 million in annualized GAAP rent, consistent with the Company's year-to-date average. Importantly, these leases were accomplished in fewer square feet, reflecting a more efficient utilization of our space. Renewal activity was similarly strong, achieving a rent-retention ratio of 88.4% and rent growth of 13.9% on a cash basis. With robust demand for our assets, we remain confident in our lease-up and pacing as we bring online in the coming quarters the 161,000 NRSF of redevelopment and development space that we currently have under construction."
Mr. Ray continued, "In addition to our operational accomplishments, we made further investments in our organizational platform, notably in hiring professionals with domain expertise in network and ecosystem sales, marketing and engineering. We continue to orient our organizational platform toward serving key identified communities of interest to drive increasing returns on each dollar of capital we deploy. We also continue to seek new opportunities for internal and external growth as we steadily execute our business plan in our current assets. We are invigorated by our growth prospects, by the talented professionals we continue to attract to our company and by the opportunity to create increasing value in the coming quarters."
The Company reported funds from operations ("FFO") of $16.0 million, or $0.35 per diluted share and unit, for the three months ended September 30, 2011. Total operating revenue for the three months ended September 30, 2011 was $44.4 million, a 4.4% increase on a sequential quarter basis. The Company reportednet income for the three months ended September 30, 2011 of $263,000 and net income attributable to common shares of $112,000, or $0.01 per diluted share.
A reconciliation of GAAP net income to funds from operations can be found in the Company's supplemental financial presentation available on its website at http://www.CoreSite.com.
Operations and Leasing Activity
The Company signed new and expansion data center leases representing $5.2 million of annualized GAAP rent during the quarter, comprised of 28,553 NRSF at a weighted average GAAP rate of $183 per NRSF and a weighted average lease term of 4.0 years.
During the third quarter, data center lease commencements totaled 38,658 NRSF at a weighted average GAAP rental rate of $166 per NRSF. The leases that commenced during the quarter include 12,485 NRSF signed during the quarter and 26,173 NRSF signed in prior periods. As of September 30, 2011, the Company had executed and not yet commenced leases which upon full commencement would contribute an additional $7.6 million in annualized rent.
Renewal leases totaling 21,353 NRSF commenced in the third quarter at a weighted average GAAP rate of $175 per NRSF, representing a retention rate of 88.4% and a 13.9% increase over expiring leases on a cash basis or a 21.5% increase on a GAAP basis.
Development and Redevelopment Activity
Including the space currently under construction or in preconstruction at September 30, 2011, and including currently operating space targeted for future redevelopment, we own land and buildings sufficient to develop or redevelop 964,037 feet of data center space, comprised of (1) 161,385 NRSF of data center space currently under construction, (2) 354,451 NRSF of office and industrial space currently available for redevelopment, (3) 102,951 NRSF of currently operating data center space targeted for future redevelopment, and (4) 345,250 NRSF of new data center space that can be developed on land that the Company currently owns at its Coronado-Stender campus.
During the quarter, the Company completed the first computer room at 2972 Stender and closed the quarter 17% leased in completed space. The Company anticipates completing additional space at 2972 Stender in the fourth quarter of 2011 and the first quarter of 2012. Additionally, the Company remains on schedule to complete development of the 161,385 NRSF of data center space currently under construction, including 64,561 NRSF at 12100 Sunrise Valley.
The total estimated cost to complete the 161,385 NRSF of data center space under construction at September 30, 2011 is $114.2 million. Approximately $69.1 million has been incurred through September 30, 2011, including investments of $37.0 million in its 2972 Stender project and $20.6 million in its 12100 Sunrise Valley project.
Balance Sheet and Liquidity
As of September 30, 2011, the Company had $110.5 million of total long-term debt equal to 12.8% of the undepreciated book value of total assets and equal to 1.5x annualized adjusted EBITDA for the quarter ended September 30, 2011.
At quarter-end, the Company had $10.2 million of cash available on its balance sheet and $101.3 million of available capacity under its revolving credit facility.
On September 28, 2011, the Company filed a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission, and the shelf registration statement was declared effective on October 20, 2011. This provides the Company with further financial flexibility by providing an additional avenue to raise capital as needed.
On September 19, 2011, the Company's Board of Directors declared a dividend of $0.13 per share of common stock and common stock equivalents for the third quarter of 2011. The dividend was paid on October 17, 2011 to stockholders of record on September 30, 2011.
The Company is increasing its full year FFO per diluted share and unit guidance to a range of $1.21 to $1.23 from $1.10 to $1.16. This outlook is predicated on current economic conditions, internal assumptions about its customer base, and the supply and demand dynamics of the markets in which it operates. Further, the Company's guidance does not include the impact of any acquisitions or capital markets transactions that may become available.