DENVER--(BUSINESS WIRE)--Feb. 23, 2012-- CoreSite Realty Corporation (NYSE: COR), a national provider of powerful, network-rich data centers, today announced financial results for the fourth quarter 2011.
Tom Ray, CoreSite’s Chief Executive Officer, commented, “Our leasing results in the fourth quarter reflect our continued drive to further differentiate our network-centric data centers and deliver excellence in our customer experience. Our strongest leasing results in the quarter were in Virginia, Chicago and the Bay area. We signed 19 new customers in the quarter, with key network wins from both the carrier and cloud verticals. We also continued to expand our platform, delivering new space in two markets and remaining on schedule and on budget to complete construction in the first half of 2012 on three additional projects.”
Mr. Ray concluded, “We are pleased to have generated solid growth for our investors in 2011 and to enter 2012 with a strong asset base to drive internal growth and support expansion. We believe that the investments we are making in our operating platform will enable us to continue to drive the profitability of our company. We remain focused upon serving our customers, strengthening our go-to-market platform, executing in our development program and generating returns for our investors.”
Fourth Quarter 2011
CoreSite reported funds from operations (“FFO”) of $15.8 million, or $0.34 per diluted share and unit, for the three months ended December 31, 2011, compared to $11.5 million, or $0.25 per diluted share and unit, for the three months ended December 31, 2010. Total operating revenue for the three months ended December 31, 2011, was $46.0 million, a 3.7% increase on a sequential quarter basis and a 20.0% increase over the same quarter of the prior year. The company reported net income for the three months ended December 31, 2011, of $462,000 and net income attributable to common shares of $179,000, or $0.01 per diluted share.
Full Year 2011
CoreSite reported FFO of $56.9 million, or $1.24 per diluted share and unit, for the year ended December 31, 2011. Total operating revenue for the year ended December 31, 2011, was $172.8 million. The company reported a net loss for the year ended December 31, 2011, of $10.8 million and a net loss attributable to common shares of $4.6 million, or $0.24 per 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 www.CoreSite.com.
The company executed new and expansion data center leases representing $6.8 million of annualized GAAP rent during the quarter, comprised of 35,461 NRSF at a weighted average GAAP rate of $192 per NRSF and a weighted average lease term of 3.6 years.
During the fourth quarter, data center lease commencements totaled 38,864 NRSF at a weighted average GAAP rental rate of $168 per NRSF which represents $6.5 million of annualized GAAP rent.
Renewal leases totaling 22,911 NRSF commenced in the fourth quarter at a weighted average GAAP rate of $133 per NRSF, reflecting a 2.8% decrease in rent on a cash basis and a 4.8% increase on a GAAP basis. The decrease in cash rent was materially attributable to the decrease in rent associated with the renewal of an 9,532 NRSF lease at the company’s facility in Milpitas, California. Excluding this lease, renewal rent increased 7.3% on a cash basis and 13.9% on a GAAP basis. The company’s rent retention ratio for the fourth quarter was 69.4% and, adjusted to exclude the termination of a 102,951 square-foot lease in the company’s Los Angeles market, its rent retention ratio for the quarter was 90.7%. For the calendar year 2011, the company’s rent retention ratio was 70.2% in total, and 78.9% adjusted to exclude the termination of the 102,951 square-foot lease. For the year, rents on renewed leases increased 17.1% on a cash basis and 27.5% on a GAAP basis.
Development and Redevelopment Activity
During the fourth quarter, the company completed construction on 27,649 NRSF of space in Boston and Los Angeles for a total cost of $11.6 million, or approximately $420 per NRSF. Additionally, during the first half of 2012, the company plans to complete 126,106 NRSF of data center space currently under construction across three development projects in Northern Virginia, Santa Clara and Chicago.
The total estimated cost to complete the 126,106 NRSF of data center space under construction at December 31, 2011 is $99.7 million, an average cost of $790 per NRSF. The company incurred approximately $69.9 million through December 31, 2011, including investments of $38.7 million in its Santa Clara project and $28.0 million in its Northern Virginia project.
Including the space currently under construction or in preconstruction at December 31, 2011, as well as currently operating space targeted for future redevelopment, CoreSite owns land and buildings sufficient to develop or redevelop 936,390 feet of data center space, comprised of (1) 126,106 NRSF of data center space currently under construction, (2) 465,034 NRSF of office and industrial space currently available for redevelopment, and (3) 345,250 NRSF of new data center space available for development on land that the company currently owns at its Coronado-Stender business park.
Balance Sheet and Liquidity
As of December 31, 2011, the company had $121.9 million of total long-term debt equal to 12.9% of total enterprise value and equal to 1.7x annualized adjusted EBITDA for the quarter ended December 31, 2011.
In December, CoreSite amended its revolving credit facility, extending the term to three years with an additional one-year extension, and increasing the size of its facility from $110 million to $225 million. The facility contains an accordion feature that can increase the facility by an additional $175 million with lender approval.
Subsequent to December 31, 2011, the company has drawn an additional $30.3 million on its revolving credit facility, primarily to repay a $25.0 million senior mortgage loan secured by the 427 S. LaSalle property. In conjunction with the repayment of the senior mortgage loan, 427 S. LaSalle was added as a co-borrower under the facility, with borrowings secured by a lien on the 427 S. LaSalle property on a senior secured basis. As a result of contributing this property to the borrowing base the company’s accessible capacity has increased to $202.5 million, of which $158.6 million is currently available.
On December 7, 2011, the company’s board of directors declared a dividend of $0.18 per share of common stock and common stock equivalents for the fourth quarter of 2011. This represents a 38% increase from the previous quarterly dividend of $0.13 per share since the company’s initial public offering in September 2010. The dividend was paid on January 17, 2012 to shareholders of record on December 31, 2011.
The company is providing the following guidance predicated on current economic conditions, internal assumptions about its customer base, and the supply and demand dynamics of the markets in which it operates. The guidance does not include the impact of any acquisitions or capital markets transactions.
Net income (loss) per share$(0.02)$0.04Real estate related depreciation and
amortization per share
$1.38 $1.46FFO per share$1.36 $1.50
The company’s 2012 guidance provided in this press release incorporates projected operating results based upon significant drivers as follows:
Conference Call Details
The company will host a conference call on February 23, 2012 at 12:00 p.m. (Eastern 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 387074. The replay will be available until March 1, 2012.
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 a national provider of data center products and interconnection services. More than 700 customers such as Global 1000 enterprises, communications providers, cloud and content companies, financial firms, media and entertainment, healthcare, and government agencies choose CoreSite for the confidence that comes with customer-focused data center products, service and support systems, and scalability. CoreSite data centers are business catalysts, featuring the Any2 Internet exchange and network ecosystems, which include access to 200+ carriers and service providers and a growing mesh of more than 15,000 interconnections. The company features a diverse colocation offering from individual cabinets to custom cages and private suites, with 12 data center locations in seven major U.S. markets. 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 the company’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 our 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.