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CoreSite Reports First-Quarter Revenue and FFO Per Share Growth of 24% and 34% Year over Year, Respectively

April 28, 2016 at 6:55 AM EDT
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2016 FFO per share guidance increased $0.14, or 4%

DENVER--(BUSINESS WIRE)--Apr. 28, 2016-- CoreSite Realty Corporation (NYSE:COR), a premier provider of secure, reliable, high-performance data center and interconnection solutions to growing communities of interest across the U.S., today announced financial results for the first quarter ended March 31, 2016.

Quarterly Highlights

  • Reported first-quarter funds from operations (“FFO”) of $0.86 per diluted share and unit, representing 34.4% growth year over year
  • Reported first-quarter total operating revenues of $92.5 million, representing a 23.9% increase year over year
  • Executed 119 new and expansion data center leases comprising 102,678 net rentable square feet (NRSF), representing $22.5 million of annualized GAAP rent at a rate of $219 per square foot
  • Commenced 45,965 net rentable square feet of new and expansion leases representing $7.5 million of annualized GAAP rent at a rate of $164 per square foot
  • Realized rent growth on signed renewals of 3.7% on a cash basis and 9.2% on a GAAP basis and experienced rental churn of 1.6%

Tom Ray, CoreSite’s Chief Executive Officer, commented, “We continued to execute on our business plans, producing a solid first quarter. We’re pleased to deliver strong sales in conjunction with a further increase in Adjusted EBITDA margin.” Mr. Ray continued, “Importantly, our work with our key global cloud-service partners continues to bear fruit and we believe that in the first quarter we drove additional value across our platform. We continue to believe that the combination of our commitment to serve the customer and the strong cloud and network capabilities associated with our platform brings differentiated value to enterprise customers from around the world.”

Financial Results

CoreSite reported FFO per diluted share and unit of $0.86 for the three months ended March 31, 2016, an increase of 34.4% compared to $0.64 per diluted share and unit for the three months ended March 31, 2015. On a sequential-quarter basis, FFO per diluted share and unit increased 7.5%.

Total operating revenues for the three months ended March 31, 2016, were $92.5 million, a 23.9% increase year over year and an increase of 1.7% on a sequential-quarter basis. CoreSite reported first-quarter net income attributable to common shares of $11.3 million, or $0.37 per diluted share.

Sales Activity

CoreSite executed 119 new and expansion data center leases representing $22.5 million of annualized GAAP rent during the first quarter, comprised of 102,678 NRSF at a weighted-average GAAP rental rate of $219 per NRSF. These totals include a previously-announced 80,000 NRSF lease at SV7.

CoreSite’s first-quarter data center lease commencements totaled 45,965 NRSF at a weighted average GAAP rental rate of $164 per NRSF, which represents $7.5 million of annualized GAAP rent.

CoreSite’s renewal leases signed in the first quarter totaled $9.7 million in annualized GAAP rent, comprised of 56,333 NRSF at a weighted-average GAAP rental rate of $173 per NRSF, reflecting a 3.7% increase in rent on a cash basis and a 9.2% increase on a GAAP basis. The first-quarter rental churn rate was 1.6%.

Development Activity

Santa Clara – During the first quarter, CoreSite had 230,000 square feet of turn-key data center capacity under construction at SV7. As of March 31, 2016, CoreSite had incurred $58.5 million of the estimated $190.0 million required to complete this development and expects to substantially complete construction in the middle of 2016. Additionally, as of the end of the first quarter, CoreSite had incurred $26.9 million of the estimated $30.0 million required to complete the previously-announced 136,580 square-foot SV6 build-to-suit development. CoreSite expects to substantially complete SV6 and commence the associated lease during the second quarter of 2016.

Northern Virginia – During the first quarter, CoreSite placed into service 48,317 NRSF associated with Phase 3 at VA2; this capacity was 50% leased and occupied at March 31, 2016. Additionally, as of the end of the first quarter, CoreSite had 48,137 square feet of data center space under construction in Phase 4 at VA2 and had incurred $5.6 million of the estimated $8.0 million required to complete this project. CoreSite expects to complete construction of Phase 4 during the second quarter of 2016.

Los Angeles – As of March 31, 2016, CoreSite had 43,345 square feet of data center space under construction at LA2 and had incurred $15.6 million of the estimated $18.0 million required to complete this project. Construction at LA2 is expected to be completed in the second quarter of 2016.

Boston – During the first quarter, CoreSite placed into service 14,031 NRSF, comprised of one computer room at BO1.

Balance Sheet and Liquidity

As of March 31, 2016, CoreSite had net principal debt of $457.8 million, correlating to 2.4 times first-quarter annualized adjusted EBITDA, and net principal debt and preferred stock outstanding of $572.8 million, correlating to 3.0 times first-quarter annualized adjusted EBITDA.

On February 2, 2016, CoreSite entered into a new five-year, $100 million term loan by exercising a portion of the accordion under CoreSite’s $500 million senior unsecured credit facility. CoreSite used the term loan proceeds to pay down a portion of the balance on its existing revolving credit facility, as well as for general corporate purposes.

At quarter end, CoreSite had $3.2 million of cash available on its balance sheet and $233.5 million of capacity available under its revolving credit facility.

Dividend

On March 3, 2016, CoreSite announced a dividend of $0.53 per share of common stock and common stock equivalents for the first quarter of 2016. The dividend was paid on April 15, 2016, to shareholders of record on March 31, 2016.

CoreSite also announced on March 3, 2016, a dividend of $0.4531 per share of Series A preferred stock for the period January 15, 2016, to April 14, 2016. The preferred dividend was paid on April 15, 2016, to shareholders of record on March 31, 2016.

2016 Guidance

CoreSite is increasing its 2016 guidance of FFO per diluted share and unit to a range of $3.52 to $3.60 from the previous range of $3.37 to $3.47. In addition, CoreSite is increasing its 2016 guidance for net income attributable to common shares to a range of $1.28 to $1.36 from the previous range of $1.13 to $1.23 per diluted share, with the difference between FFO and net income being real estate depreciation and amortization.

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.

Upcoming Conferences and Events

CoreSite will participate in the Stephens Spring Investment Conference on June 7, 2016, at the New York Palace Hotel in New York, NY and NAREIT’s REITWeek conference from June 8, 2016, through June 9, 2016, at the Waldorf Astoria in New York, NY.

Conference Call Details

CoreSite will host a conference call on April 28, 2016, 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 13632079. The replay will be available until May 5, 2016.

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 and interconnection solutions to a growing customer ecosystem across eight key North American markets. More than 900 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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