DENVER--(BUSINESS WIRE)--Apr. 24, 2013-- CoreSite Realty Corporation (NYSE: COR), provider of powerful, network-dense data center campuses and the CoreSite Mesh, which enable interconnected communities of service providers and enterprises, today announced financial results for the first quarter ended March 31, 2013.
Tom Ray, CoreSite’s Chief Executive Officer, commented, “Our first-quarter financial results reflect continuing momentum in growing our business. New and expansion data center sales volume of 42,800 square feet was 30% above our trailing 12-month average, excluding the 100,000 square-foot powered-shell build-to-suit signed in Q4-12. The GAAP rental rate on new and expansion data center sales in Q1-13 was $119 per square foot, which was below our trailing four-quarter mean, driven meaningfully by lower power density and geographic variations in the Q1-13 sales mix. Looking deeper, our Q1-13 sales also accomplished key operational goals. Specifically, we materially increased the number of customer commitments that we believe add strategic value to our platform. Further, we backfilled a significant component of recently vacated capacity and executed an anchor deployment on the newly opened third floor of our LA2 facility. Finally, we saw strong annualized interconnection growth, which we believe reflects early signs of what we target to be a more profitable sales mix.”
“We continue to expand our portfolio to support our sales funnel. During Q1 we acquired and began construction on NY2 in Secaucus, New Jersey, and commenced site construction on VA2 in Reston,” Mr. Ray continued. “In Q1-13 we also launched a new product, our Open Cloud Exchange, designed to enhance the value of our platform to enterprises and public and private clouds. We remain focused on executing our business plan targeted to increase returns on investment and believe we are well-positioned to capture growth.”
CoreSite reported FFO attributable to shares and units of $19.3 million for the three months ended March 31, 2013, a 17.7% increase over the same quarter of the prior year and a decrease of 2.3% on a sequential quarter basis. The decrease results from the first full-quarter effect of preferred stock dividends since CoreSite issued the preferred stock in December 2012. On a per diluted share and unit basis, FFO increased 13.9% to $0.41 for the three months ended March 31, 2013, as compared to $0.36 per diluted share and unit for the three months ended March 31, 2012. Total operating revenue for the three months ended March 31, 2013, was $55.1 million, a 16.5% increase over the same quarter of the prior year. The company reported net income for the three months ended March 31, 2013, of $6.2 million and net income attributable to common shares of $1.8 million, or $0.09 per diluted share.
First quarter data center lease commencements totaled 39,376 NRSF at a weighted average GAAP rental rate of $161 per NRSF, which represents $6.3 million of annualized GAAP rent.
The first quarter rental churn rate was 1.1%. Rental churn is calculated based on the annualized rental revenue of leases terminated in the period compared with total annualized rental revenue at the beginning of the period. Renewal leases totaling 47,598 NRSF commenced in the first quarter at a weighted average GAAP rate of $103 per NRSF, reflecting a 2.0% increase in rent on a cash basis and a 21.6% increase on a GAAP basis. The renewals include a 22,000 NRSF powered shell lease. Excluding this lease, the weighted average GAAP rate was $137 per NRSF.
CoreSite executed new and expansion data center leases representing $5.1 million of annualized GAAP rent during the quarter, comprised of 42,799 NRSF at a weighted average GAAP rate of $119 per NRSF.
Development and Redevelopment Activity
CoreSite had 275,010 NRSF of data center space under construction at five key locations as of March 31, 2013. The projects under construction include SV4 and SV5 (San Francisco Bay), BO1 (Boston), CH1 (Chicago), VA2 (Virginia) and NY2 (New York). As of the end of the first quarter, CoreSite had incurred $67.0 million of the estimated $190.2 million required to complete these projects.
Balance Sheet and Liquidity
On January 3, 2013, CoreSite amended its credit facility by converting it to unsecured, expanding availability to $355.0 million from $225.0 million, extending its maturity to January 2017 and lowering the interest rate spread.
As of March 31, 2013, CoreSite had $111.4 million of total long-term debt equal to 6.0% of total enterprise value and equal to 1.1x annualized adjusted EBITDA for the quarter ended March 31, 2013.
At quarter end, CoreSite had $8.5 million of cash available on its balance sheet and $294.5 million of available capacity under its credit facility.
On March 5, 2013, the company announced a dividend of $0.27 per share of common stock and common stock equivalents for the first quarter of 2013. The dividend was paid on April 15, 2013, to shareholders of record on March 28, 2013.
On the same date, the company announced a dividend of $0.62 per share of Series A preferred stock for the period December 12, 2012, to April 14, 2013. The dividend was paid on April 15, 2013, to shareholders of record on March 28, 2013.
The company is maintaining its 2013 guidance of FFO per diluted share and unit in the range of $1.72 to $1.82.
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. Further, the guidance does not include the impact of any future financing, investment or disposition activities.
Upcoming Conferences and Events
CoreSite will participate in NAREIT’s REITWeek conference from June 5, 2013, through June 7, 2013, at the Chicago Hilton in Chicago, IL.
Conference Call Details
The company will host a conference call April 24, 2013, at 1:00 p.m., Eastern time (11:00 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 for international callers, 858-384-5517. The passcode for the replay is 411380. The replay will be available until May 1, 2013.
Interested parties may also listen to a simultaneous webcast of the conference call by logging on to the company’s website at www.CoreSite.com and clicking on the “Investors” tab. The on-line replay will be available for a limited time beginning immediately following the call.
CoreSite Realty Corporation (NYSE: COR) is the data center provider chosen by more than 750 of the world's leading carriers and mobile operators, content and cloud providers, media and entertainment companies, and global enterprises to run their performance-sensitive applications and to connect and do business. CoreSite propels customer growth and long-term competitive advantage through the CoreSite Mesh by connecting the Internet, private networking, mobility, and cloud communities within and across its 14 high-performance data center campuses in nine markets in North America. With direct access to 275+ carriers and ISPs, over 180 leading cloud and IT service providers, inter-site connectivity, and the nation's first Open Cloud Exchange that provides access to thousands of lit buildings and multiple key cloud on-ramps, CoreSite provides easy, efficient and valuable gateways to global business opportunities. 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.