Exhibit
99.1
CORESITE REPORTS SECOND QUARTER 2011 RESULTS
AND INCREASES 2011 GUIDANCE / OUTLOOK
AND INCREASES 2011 GUIDANCE / OUTLOOK
DENVER, CO — August 4, 2011 — CoreSite Realty Corporation (NYSE: COR), a national provider of
powerful, network-rich data centers, today announced financial results for the second quarter 2011.
Highlights:
| • | Reported funds from operations (“FFO”) of $0.30 per diluted share and unit |
| • | Reported revenue of $42.5 million, an increase of $2.5 million, or 6.3%, over the prior
quarter |
| • | Executed gross leasing of 117,000 net rentable square feet (“NRSF”), including 31,000 NRSF
of new and expansion data center leases representing $4.7 million of annualized GAAP rent |
| • | Achieved a 71.8% rent-retention ratio and a 35.3% cash rent growth on renewals |
| • | In July completed the first tranche of data center space at 2972 Stender, a 50,400 NRSF
data center in Santa Clara, California |
| • | Increases its 2011 FFO per diluted share and unit guidance to $1.10 to $1.16 |
“In the second quarter, CoreSite delivered another quarter of solid leasing results, demonstrating
the strength of our portfolio. As we lease-up our available space and complete renewals on
in-place leases, we continue to realize the strong value inherent in our assets and our operating
platform. We also continue to invest in redevelopment and development of our properties. We are
pleased to announce the opening of 2972 Stender in late July and the continued progress of our
redevelopment projects in Northern Virginia, Boston and Los Angeles,” commented Thomas Ray,
CoreSite’s President and Chief Executive Officer.
Financial Results
The Company reported FFO of $13.8 million, or $0.30 per diluted share and unit, for the three
months ended June 30, 2011. These results include a gain of $0.9 million related to the early
discounted repayment on a portion of the loans on the 427 S. LaSalle property, and a $0.7 million
expense related to the costs of pursuing a potential acquisition, which the Company is no longer
pursuing.
Total operating revenue for the three months ended June 30, 2011, was approximately $42.5 million,
a 6.3% increase on a sequential-quarter basis. The Company reported a net loss for the three months
ended June 30, 2011, of $3.6 million and a net loss attributable to common shares of $1.5 million,
or $0.08 per diluted share.
A reconciliation of GAAP net loss to funds from operations can be found in the Company’s
supplemental financial presentation available on its website at www.CoreSite.com.
Operations and Leasing Activity
The Company executed leases for 117,142 NRSF of gross leasing activity during the period, including
new and expansion leases for 31,464 NRSF of data center space and 44,156 NRSF of office and light
industrial space. The data center leases were signed at a weighted average GAAP rate of $148 per
NRSF with a weighted average lease term of 3.3 years. The office and light industrial leases were
signed at a GAAP rental rate of $13 per NRSF.
During the second quarter, data center lease commencements totaled 23,401 NRSF at a weighted
average GAAP rental rate of $135 per NRSF. Data center occupancy increased to 84.1% based on
commenced leases at June 30, 2011. As of June 30, 2011, the Company had executed and not yet
commenced data center leases for 40,690 NRSF of space, which upon full commencement is forecasted
to contribute an additional $7.1 million in annualized rent and drive occupancy in the operating
data center portfolio at June 30, 2011, to 87.1%.
Renewal leases totaling 41,523 NRSF commenced in the second quarter at a weighted average GAAP
rental rate of $136 per NRSF. The Company achieved 35.3% rent growth on a cash basis and a
rent-retention ratio of 71.8%.
Development and Redevelopment Activity
As of June 30, 2011, the Company owned land and buildings sufficient to increase its operating data
center space by 996,058 NRSF, or 90.4%, through the development or redevelopment of (1) 192,738
NRSF of data center space currently under construction, (2) 304,519 NRSF of vacant space currently
available for redevelopment, (3) 102,951 NRSF of currently operating data center space targeted for
upgrade to more robust specifications through future redevelopment, and (4) 395,850 NRSF of new
data center space that can be developed on land that the Company currently owns at its
Coronado-Stender business park.
The total estimated cost to complete the 192,738 NRSF of data center space and the 2,345 NRSF of
office space under construction at June 30, 2011 is $132.1 million, of which $131.9 million relates
to the data center space. Approximately $58.0 million has been incurred through June 30, 2011,
including investments of $42.3 million in its 2972 Stender Way project and $12.9 million in its
12100 Sunrise Valley Drive project.
Balance Sheet and Liquidity
As of June 30, 2011, the Company had $110.6 million of total long-term debt equal to 12.8% of the
undepreciated book value of total assets and equal to 1.8x annualized adjusted EBITDA for the
quarter ended June 30, 2011.
On April 29, 2011, the Company repaid the $10.0 million mezzanine loan on the 427 S. LaSalle
property which was scheduled to mature on March 9, 2012, at a discount of $0.5 million, or at the
equivalent of 95% of par value. On June 3, 2011, the Company repaid the $5.0 million
subordinate loan on the 427 S. LaSalle property which was scheduled to mature on March 9, 2012 at a
discount of $0.4 million, or at the equivalent of 92% of par value. The Company recognized a net
gain of $0.9 million on these transactions.
2
At quarter end, the Company had $31.3 million of cash available on its balance sheet and
$101.1 million of available capacity under its revolving credit facility.
Dividend
On June 17, 2011, the Company’s Board of Directors declared a dividend of $0.13 per share of common
stock and common stock equivalents for the second quarter of 2011. The dividend was paid on July
15, 2011 to stockholders of record as of June 30, 2011.
2011 Outlook
The Company increased its full year FFO per diluted share and unit guidance to a range of $1.10 to
$1.16 compared to its prior range of $1.04 to $1.12 based on performance year-to-date and its
outlook for the remainder of 2011. 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 potential
acquisitions or capital markets transactions.
In addition, the Company’s estimate of the net loss attributable to common shares is ($0.39) to
($0.45) per diluted share with the difference between FFO and net loss being real estate
depreciation and amortization.
Conference Call Details
The Company will host a conference call August 4, 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) 407-9039 for domestic callers and
(201) 689-8470 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 376168. The replay will be available until August 11,
2011.
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.
3
About CoreSite
CoreSite Realty Corporation (NYSE: COR) delivers powerful, network-rich data centers that optimize,
secure and interconnect the mission-critical IT assets of the world’s top organizations. 700+
customers, including Global 1000 enterprises, cloud providers, financial firms, and government
agencies, choose CoreSite for reliability, service and expertise in delivering customized, flexible
data center solutions. CoreSite offers private data centers and suites, cage-to-cabinet
colocation, and interconnection services, such as Any2,
CoreSite’s Internet exchange. The Company’s portfolio comprises more than two million square feet,
including space held for redevelopment and development, and provides access to more than 200
network service providers via 11 data centers in seven key U.S. economic centers. Obtain more
information at www.CoreSite.com.
CoreSite Investor Relations Contact
+1 303.222.7276
InvestorRelations@CoreSite.com
+1 303.222.7276
InvestorRelations@CoreSite.com
CoreSite Media Contact
Mark Jobson
+1 303.405.1004
Mark.Jobson@CoreSite.com
Mark Jobson
+1 303.405.1004
Mark.Jobson@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 annual report
on Form 10-K for the year ended December 31, 2010, and other risks described in documents
subsequently filed by the Company from time to time with the Securities and Exchange Commission.
4
Consolidated Balance Sheet
(in thousands, except per share data)
(in thousands, except per share data)
| June 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| (unaudited) | ||||||||
ASSETS |
||||||||
Investments in real estate: |
||||||||
Land |
$ | 84,738 | $ | 84,738 | ||||
Building and building improvements |
463,412 | 450,097 | ||||||
Leasehold improvements |
77,452 | 75,800 | ||||||
| 625,602 | 610,635 | |||||||
Less: Accumulated depreciation and amortization |
(49,003 | ) | (32,943 | ) | ||||
Net investment in operating properties |
576,599 | 577,692 | ||||||
Construction in progress |
63,175 | 11,987 | ||||||
Net investments in real estate |
639,774 | 589,679 | ||||||
Cash and cash equivalents |
31,324 | 86,246 | ||||||
Restricted cash |
16,120 | 14,968 | ||||||
Accounts and other receivables, net of
allowance for doubtful accounts of $315 and
$305 as of June 30, 2011 and December 31,
2010, respectively |
6,394 | 5,332 | ||||||
Lease intangibles, net of accumulated
amortization of $26,848 and $17,105 as of June
30, 2011 and December 31, 2010, respectively |
50,973 | 71,704 | ||||||
Goodwill |
41,191 | 41,191 | ||||||
Other assets |
25,979 | 23,906 | ||||||
Total assets |
$ | 811,755 | $ | 833,026 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Liabilities: |
||||||||
Mortgage loans payable |
$ | 110,560 | $ | 124,873 | ||||
Accounts payable and accrued expenses |
41,569 | 26,393 | ||||||
Deferred rent payable |
2,998 | 2,277 | ||||||
Acquired below-market lease contracts, net of
accumulated amortization of $7,151 and $4,989
as of June 30, 2011 and December 31, 2010,
respectively |
14,111 | 16,415 | ||||||
Prepaid rent and other liabilities |
10,420 | 8,603 | ||||||
Total liabilities |
179,658 | 178,561 | ||||||
Stockholders’ equity: |
||||||||
Common stock, par value $0.01, 100,000,000
shares authorized and 19,850,434 and
19,644,042 shares issued and outstanding at
June 30, 2011 and December 31, 2010 |
194 | 194 | ||||||
Additional paid-in capital |
240,822 | 239,453 | ||||||
Accumulated other comprehensive income (loss) |
(53 | ) | 52 | |||||
Accumulated deficit |
(17,523 | ) | (7,460 | ) | ||||
Total stockholders’ equity |
223,440 | 232,239 | ||||||
Noncontrolling interests |
408,657 | 422,226 | ||||||
Total equity |
632,097 | 654,465 | ||||||
Total liabilities and equity |
$ | 811,755 | $ | 833,026 | ||||
5
Consolidated Statement of Operations
(in thousands, except share and per share data)
(in thousands, except share and per share data)
| The Company | The Predecessor | The Company | The Predecessor | |||||||||||||
| Three Months | Three Months | Six Months | Six Months | |||||||||||||
| Ended June 30, | Ended June 30, | Ended June 30, | Ended June 30, | |||||||||||||
Operating revenues: |
||||||||||||||||
Rental revenue |
$ | 26,707 | $ | 8,776 | $ | 51,917 | $ | 15,029 | ||||||||
Power revenue |
10,760 | 2,765 | 20,541 | 4,922 | ||||||||||||
Tenant reimbursement |
1,425 | 439 | 3,145 | 704 | ||||||||||||
Other revenue |
3,592 | 407 | 6,847 | 764 | ||||||||||||
Total operating revenues |
42,484 | 12,387 | 82,450 | 21,419 | ||||||||||||
Operating expenses: |
||||||||||||||||
Property operating and maintenance |
13,830 | 4,485 | 25,853 | 8,465 | ||||||||||||
Real estate taxes and insurance |
2,149 | 365 | 4,892 | 812 | ||||||||||||
Management fees to related party |
— | 1,237 | — | 2,295 | ||||||||||||
Depreciation and amortization |
17,660 | 3,790 | 37,133 | 6,948 | ||||||||||||
Sales and marketing |
1,433 | 57 | 2,810 | 59 | ||||||||||||
General and administrative |
5,602 | 417 | 11,219 | 501 | ||||||||||||
Transaction costs |
683 | — | 683 | — | ||||||||||||
Rent |
4,600 | 692 | 9,147 | 1,389 | ||||||||||||
Total operating expenses |
45,957 | 11,043 | 91,737 | 20,469 | ||||||||||||
Operating loss |
(3,473 | ) | 1,344 | (9,287 | ) | 950 | ||||||||||
Gain on early extinguishment of debt |
949 | 949 | ||||||||||||||
Interest income |
40 | — | 106 | — | ||||||||||||
Interest expense |
(1,269 | ) | (399 | ) | (3,521 | ) | (911 | ) | ||||||||
Loss before income taxes |
(3,753 | ) | 945 | (11,753 | ) | 39 | ||||||||||
Income taxes |
165 | — | 249 | — | ||||||||||||
Net income (loss) |
$ | (3,588 | ) | $ | 945 | $ | (11,504 | ) | $ | 39 | ||||||
Net loss attributable to noncontrolling interests |
(2,058 | ) | — | (6,602 | ) | — | ||||||||||
Net loss attributable to common shares |
$ | (1,530 | ) | $ | 945 | $ | (4,902 | ) | $ | 39 | ||||||
Basic and diluted loss per common share |
||||||||||||||||
Net loss per share attributable to common shares |
$ | (0.08 | ) | N/A | $ | (0.25 | ) | N/A | ||||||||
Weighted average common shares outstanding |
19,473,219 | N/A | 19,465,970 | N/A | ||||||||||||
6
Reconciliation of net loss attributable to controlling interests to funds from operations (FFO):
| Three Months Ended: | ||||||||||||
| June 30, | March 31, | December 31, | ||||||||||
| 2011 | 2011 | 2010 | ||||||||||
Net loss |
$ | (3,588 | ) | $ | (7,916 | ) | $ | (7,447 | ) | |||
Adjustments: |
||||||||||||
Real estate depreciation and amortization |
17,391 | 19,237 | 18,936 | |||||||||
FFO available to common shareholders and OP unitholders |
$ | 13,803 | $ | 11,321 | $ | 11,489 | ||||||
Weighted average common shares and OP units outstanding — diluted |
45,784,080 | 45,689,418 | 45,684,670 | |||||||||
FFO per common share and OP unit — diluted |
$ | 0.30 | $ | 0.25 | $ | 0.25 | ||||||
CoreSite Realty Corporation considers FFO to be a supplemental measure of performance which
should be considered along with, but not as an alternative to, net income and cash provided by
operating activities as a measure of operating performance and liquidity. The Company calculates
FFO in accordance with the standards established by NAREIT. FFO represents net income (loss)
(computed in accordance with GAAP), excluding gains (or losses) from sales of property, real estate
related depreciation and amortization (excluding amortization of deferred financing costs) and
after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a
supplemental performance measure because, in excluding real estate related depreciation and
amortization and gains and losses from property dispositions, it provides a performance measure
that, when compared year over year, captures trends in occupancy rates, rental rates and operating
costs.
The Company offers this measure because management recognizes that FFO will be used by investors as
a basis to compare operating performance with that of other REITs. However, because FFO excludes
depreciation and amortization and captures neither the changes in the value of the properties that
result from use or market conditions, nor the level of capital expenditures and capitalized leasing
commissions necessary to maintain the operating performance of the properties, all of which have
real economic effect and could materially impact financial condition and results from operations,
the utility of FFO as a measure of performance is limited. FFO is a non-GAAP measure and should not
be considered a measure of liquidity, an alternative to net income, cash provided by operating
activities or any other performance measure determined in accordance with GAAP, nor is it
indicative of funds available to fund cash needs, including the ability to pay dividends or make
distributions. In addition, the Company’s calculations of FFO are not necessarily comparable to FFO
as calculated by other REITs that do not use the same definition or implementation guidelines or
interpret the standards differently. Investors in the Company’s securities should not rely on these
measures as a substitute for any GAAP measure, including net income.
7
Reconciliation of earnings before interest, taxes, depreciation and amortization (EBITDA):
| Three Months Ended: | ||||||||||||
| June 30, | March 31, | December 31, | ||||||||||
| 2011 | 2011 | 2010 | ||||||||||
Net loss |
$ | (3,588 | ) | $ | (7,916 | ) | $ | (7,447 | ) | |||
Adjustments: |
||||||||||||
Interest expense, net of interest income |
1,229 | 2,186 | 2,248 | |||||||||
Income taxes |
(165 | ) | (84 | ) | (223 | ) | ||||||
Depreciation and amortization |
17,660 | 19,473 | 19,146 | |||||||||
EBITDA |
$ | 15,136 | $ | 13,659 | $ | 13,724 | ||||||
Non-cash compensation |
889 | 497 | 517 | |||||||||
Gain on early extinguishment of debt |
(949 | ) | — | — | ||||||||
Transaction costs |
683 | — | — | |||||||||
Adjusted EBITDA |
$ | 15,759 | $ | 14,156 | $ | 14,241 | ||||||
EBITDA
is defined as earnings before interest, taxes, depreciation and
amortization. The Company calculates adjusted EBITDA by adding non-cash compensation expense and transaction costs to
EBITDA as well as adjusting for the impact of gains or losses on early extinguishment of debt.
Management uses EBITDA and adjusted EBITDA as indicators of the
Company’s ability to incur and service debt.
In addition, Management considers EBITDA and adjusted EBITDA to be appropriate
supplemental measures of the Company’s
performance because they eliminate depreciation and interest, which permits investors to view
income from operations without the impact of non-cash depreciation or the cost of debt. However,
because EBITDA and adjusted EBITDA are calculated before recurring cash charges including interest
expense and taxes, and are not adjusted for capital expenditures or other recurring cash
requirements of our business, their utilization as a cash flow measurement is limited.
8
