UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended December 31, 2020
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From To

Commission file number 001-34877

CoreSite Realty Corporation

(Exact name of registrant as specified in its charter)

Maryland (State or other jurisdiction of incorporation or organization)	27-1925611 (I.R.S. Employer Identification No.)
1001 17th Street, Suite 500 Denver, CO (Address of principal executive offices)	80202 (Zip Code)

(866) 777-2673

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value per share	COR	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐
​ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of common equity held by non-affiliates of the registrant was approximately $4,439.8 million as of June 30, 2020, the last trading day of the registrant’s most recently completed second fiscal quarter. For purposes of the foregoing calculation, all directors and executive officers of the registrant and holders of more than 10% of the registrant’s common equity are assumed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of February 3, 2021, there were 42,767,634 shares of the registrant’s Common Stock, $0.01 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement to be filed in conjunction with the registrant’s 2021 Annual Meeting of Stockholders, which is expected to be filed not later than 120 days after the registrant’s fiscal year ended December 31, 2020, are incorporated by reference in Part III of this report.

Table of Contents

	Page
PART I	4
ITEM 1. BUSINESS	4
ITEM 1A. RISK FACTORS	17
ITEM 1B. UNRESOLVED STAFF COMMENTS	31
ITEM 2. PROPERTIES	32
ITEM 3. LEGAL PROCEEDINGS	32
ITEM 4. MINE SAFETY DISCLOSURES	32
PART II	33
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	33
ITEM 6. SELECTED FINANCIAL DATA	35
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	37
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	48
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	49
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	81
ITEM 9A. CONTROLS AND PROCEDURES	81
ITEM 9B. OTHER INFORMATION	82
PART III	83
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	83
ITEM 11. EXECUTIVE COMPENSATION	83
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	83
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	83
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES	83
PART IV	84
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES	84
ITEM 16. FORM 10-K SUMMARY	87
SIGNATURES	88
Exhibit 21.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

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Cautionary Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (this “Annual Report”), together with other statements and information publicly disseminated by our company, contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), namely Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the PSLRA and include this statement for purposes of complying with these safe harbor provisions.

In particular, statements pertaining to our capital resources, portfolio performance, business strategies and results of operations contain forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “pro forma” 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. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: (i) the geographic concentration of our data centers in certain markets and any adverse developments in local economic conditions or the amount of supply of or demand for data center space in these markets; (ii) fluctuations in interest rates and increased operating costs; (iii) difficulties in identifying properties to acquire and completing acquisitions; (iv) the significant competition in our industry, including indirect competition from cloud service providers, and an inability to lease vacant space, renew existing leases or release space as leases expire; (v) lack of sufficient customer demand to realize expected returns on our investments to expand our property portfolio; (vi) decreased revenue from costs and disruptions associated with any failure of our physical infrastructure or services; (vii) our ability to develop and lease available space to existing or new customers; (viii) our failure to obtain necessary outside financing; (ix) our ability to service existing debt; (x) our failure to qualify or maintain our status as a real estate investment trust (“REIT”); (xi) financial market fluctuations; (xii) changes in real estate and zoning laws and increases in real estate taxes; (xiii) the effects on our business operations, demand for our services and general economic conditions resulting from the spread of the novel coronavirus (“COVID-19”) in our markets, as well as orders, directives and legislative action by local, state and federal governments in response to the spread of COVID-19; (xiv) delays or disruptions in third-party network connectivity; (xv) service failures or price increases by third party power suppliers; (xvi) inability to renew net leases on the data center properties we lease; and (xvii) other factors affecting the real estate or technology industries generally.

In addition, important factors that could cause actual results to differ materially from the forward-looking statements include the risk factors in Item 1A. “Risk Factors” and elsewhere in this Annual Report. New risks and uncertainties arise from time to time, and we cannot predict those events or how they might affect us. We assume no obligation to update any forward-looking statements after the date of this Annual Report, except as required by applicable law. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

When we use the terms “we,” “us,” “our,” the “Company,” “CoreSite” and “our company” in this Annual Report, we are referring to CoreSite Realty Corporation, a Maryland corporation, together with our consolidated subsidiaries, including CoreSite, L.P., a Delaware limited partnership of which we are the sole general partner and to which we refer to as “our Operating Partnership.”

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PART I

ITEM 1. BUSINESS

The Company

CoreSite delivers secure, reliable, high-performance data center, cloud access and interconnection solutions to a growing customer ecosystem across eight key North American communication markets. More than 1,375 of the world’s leading enterprises, network operators, cloud providers, and supporting service providers choose CoreSite’s network dense, cloud-enabled data center campuses to connect, protect and optimize their performance-sensitive data, applications and computing workloads.

Our Business

We are a fully integrated, self-administered, and self-managed REIT for federal income tax purposes and we conduct certain activities through our taxable REIT subsidiaries. Through our controlling interest in CoreSite, L.P., a Delaware limited partnership, our “Operating Partnership,” we are engaged in the business of ownership, acquisition, construction and operation of strategically located data centers in some of the largest and fastest growing data center markets in the United States, including the San Francisco Bay area, Los Angeles, the Northern Virginia area (including Washington D.C.), the New York area, Boston, Chicago, Denver and Miami. We are a Maryland corporation organized in 2010.

Our data centers are highly specialized and secure buildings that house networking, storage and communications technology infrastructure, including servers, storage devices, switches, routers and fiber optic transmission equipment. These buildings are designed to provide the power, cooling and network connectivity necessary to efficiently operate this mission-critical equipment. Data centers located at points where many communications networks converge can also function as interconnection hubs where customers are able to connect to multiple networks, cloud companies and other service providers to exchange traffic and interoperate with each other. Our data centers feature advanced reliable and efficient power, cooling and security systems, and many are points of network interconnection that provide the evolved ecosystems our customers need to meet their own competitive challenges, digital transformations, and other business goals. CoreSite has the flexibility and scalability to satisfy the full spectrum of our customers’ growth requirements and corresponding data center needs by providing data center space ranging in size from an entire building or large dedicated suite to a cage or half cabinet. Our interconnected data center campuses are particularly suitable for customers serving consumers and businesses with low-latency digital products in our major metro markets as well as customers deploying hybrid-cloud / multi-cloud information technology architectures.

The first data center in our portfolio was purchased in 2000 by certain real estate funds (the “Funds”) affiliated with The Carlyle Group, our predecessor, and since then we have continued to acquire, develop and operate these types of data center facilities. Our properties are self-managed, including construction project management in connection with our development initiatives. As of December 31, 2020, our property portfolio included 25 operating data center facilities, office and light-industrial space and multiple development projects and space, which collectively comprise, when fully built-out, over 4.6 million net rentable square feet (“NRSF”), of which over 2.7 million NRSF is existing operating data center space.

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Recent Developments

During the first quarter of 2020, we placed into service the third phase of our second data center in the New York market, referred to as NY2 in Secaucus, New Jersey, comprised of 35,000 NRSF and 4.0 megawatts (“MWs”) of power. During the second quarter of 2020, we completed and placed into service Phase 1 of our new Chicago data center, referred to as CH2, comprised of 55,000 NRSF and 6.0 MWs of power. CH2 is one of the first purpose-built, ground-up developments in downtown Chicago. We also completed the third and final phase of SV8, comprised of 52,000 NRSF and 6.0 MWs of power, during the second quarter. SV8 is the newest ground-up data center development on our Santa Clara campus. In the fourth quarter of 2020, we completed and placed into service Phase 1 of our new Los Angeles data center, referred to as LA3, comprised of 51,000 NRSF and 6.0 MWs of power.

Our Competitive Strengths

CoreSite’s key differentiators position us to compete, efficiently scale our business, capitalize on the demand for data center space and interconnection services, and thereby grow our cash flow.

Secure, Reliable, and Compliant. We help businesses protect mission-critical data, performance sensitive applications and information technology (“IT”) infrastructure by delivering secure, reliable, and compliant data center solutions. Our data centers feature advanced efficient power and cooling infrastructure to support our customers’ IT infrastructures with additional power capacity to support continued growth. CoreSite provides 24/7 in-house data center operations with customizable security features. We also provide the infrastructure and physical security required to support many of our customers’ information, data, and security compliance needs across all of our properties.

High Performance Interconnection. CoreSite offers cloud-enabled, network rich data center campuses with over 30,000 interconnections across our portfolio. Our customers have direct access to over 445 carriers and Internet Service Providers (“ISPs”) and over 325 leading cloud and IT service providers, including 20 cloud on-ramps deployed on-site in our campuses currently, which we expect to increase in 2021. In addition to standard interconnection offerings, we also operate the CoreSite Open Cloud Exchange™, and the Any2 Exchange for Internet Peering, the second largest peering exchange in the U.S. The diverse network and cloud connectivity options at many of our data centers provide us with a competitive advantage by creating an ideal environment for enterprises to build holistic, streamlined hybrid and multi-cloud architectures. Many providers in our data center facilities can leverage our sites as revenue opportunities by offering their services directly to other customers within our data centers. Additionally, enterprises can reduce their total cost of operations, while increasing their performance, by directly connecting to service providers in the same data center in a cost effective manner.

Scalable. Across 25 operating data centers in eight key North American markets, CoreSite leases space to enterprises, cloud and IT service providers, and network and mobility providers. We believe our ability to be both flexible and scalable is a key differentiator. By offering many space, power, and interconnection options, we allow customers to select products and services that meet their exact business needs. Our offering is available in most of the top data center markets in the U.S. with the ability to meet customers’ growing capacity requirements within those markets.

We have the ability to increase our occupied data center square footage by approximately 1,992,000 NRSF, or 87%, through leasing our 505,000 NRSF of unoccupied space and the development of 54,000 NRSF of space under construction and approximately 1,433,000 NRSF at multiple facilities that are held for future development based on market supply and demand, in each case, as of December 31, 2020.

High-Quality Customer Experience. Our approximately 480 dedicated professionals execute a client-first model to support the planning, implementation and operating requirements of customers. We provide dedicated implementation resources for a customer-friendly onboarding process. Our leasing and sales professionals can develop complex data center solutions for the most demanding customer requirements. Our experienced and committed operations and facilities personnel are available for extensive management support. We believe one of the data points validating our customer satisfaction is indicated by the 89% of annualized rent signed during the year ended December 31, 2020, which came from existing customers who chose us to support their growth.

Facilities in Key Markets. Our portfolio is concentrated in some of the largest and most important U.S. metropolitan markets, and we expect to continue benefitting from this concentration as customers seek new, high-quality

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data center space and interconnections within many of the key North American network, financial, cloud and commercial hubs. Our data centers are located in the San Francisco Bay area, Los Angeles, the Northern Virginia area (including Washington D.C.), the New York area, Boston, Chicago, Denver and Miami. Many of our facilities are also situated in close proximity to a concentration of key businesses and corporations, driving demand for our data center space and interconnection services.

Diversified Customer Base. CoreSite has a diverse, global customer base, which we believe is a reflection of our strong reputation and proven track record, as well as our customers’ trust for us to effectively house their mission-critical applications and vital communications technology. Our diverse customer base spans many industries across eight key North America markets. In addition to geographic markets, we group our customers into the following industry verticals:

● Enterprises: digital content and multimedia, systems integrators and managed service providers (“SI & MSP”), financial, healthcare, education, government, manufacturing and professional services;

● Cloud Providers;

● Networks and Mobility: domestic and international telecommunications carriers, subsea cables, ISPs and Content Delivery Networks (“CDNs”).

Business and Growth Strategies

Our business objective is to continue growing our position as a provider of strategically located data center space in North America. Key components of our strategy include the following:

Increase Cash Flow from In-Place Data Center Space. We actively manage and lease our properties to increase cash flow by:

● Leasing Available Space. CoreSite has the ability to increase both our revenue and our revenue per square foot by leasing additional space and power services to new and existing data center customers. As of December 31, 2020, our existing data center facilities had approximately 450,000 NRSF of data center space available to lease, or 16.2% of our current operating data center portfolio. We believe our available space, together with available power, enables us to generate incremental revenue within our existing data center footprint.

● Increasing Interconnection in our Facilities. As more customers deploy in our data center facilities, it benefits their business partners and customers to deploy with CoreSite in order to gain the full economic and performance benefits of our interconnection services. We believe this ecosystem of customers continues to drive new and existing customer growth, and in turn, increases the volume of interconnection services and the amount of value-add power services such as breakered AC and DC primary and redundant power.

Capitalize on Embedded Expansion Opportunities. We plan to grow by developing new secure, reliable and high-performance data center space. Our development opportunities include leveraging existing in-place infrastructure and entitlements in currently operating properties or campuses. In many cases, we are able to strategically deploy capital by developing space in incremental phases to meet customer demand. Including the space currently under construction, pre-construction projects, and space and land targeted for future development at December 31, 2020, we own land and buildings sufficient to develop approximately 1,487,000 NRSF of data center space. The following table summarizes the NRSF under construction and NRSF held for development throughout our portfolio, each as of December 31, 2020:

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	Development Opportunities (in NRSF)
	Under	Held for
Facilities	Construction(1)	Development(2)	Total
San Francisco Bay
SV9(3)	—	240,000	240,000
One Wilshire campus
LA1	—	10,352	10,352
LA3	54,388	54,388	108,776
Los Angeles Total	54,388	64,740	119,128
Northern Virginia
VA3	—	395,997	395,997
Reston Campus Expansion(3)	—	413,745	413,745
Northern Virginia Total	—	809,742	809,742
New York
NY2	—	81,799	81,799
Boston
BO1	—	110,985	110,985
Chicago
CH2	—	112,368	112,368
Miami
MI1	—	13,154	13,154
Total Facilities(4)	54,388	1,432,788	1,487,176

(1) Represents NRSF for which substantial construction activities are ongoing to prepare the property for its intended use following development. The NRSF reflects management’s estimate of engineering drawings and required support space and is subject to change based on final demising of space.

(2) Represents estimated incremental data center capacity currently vacant in existing facilities or on vacant land in our portfolio that requires significant capital investment in order to develop into data center facilities.

(3) The NRSF for these facilities reflect management’s estimates based on our current construction plans and expectations regarding entitlements. These estimates are subject to change based on current economic conditions, final zoning approvals, and the supply and demand dynamics of the market.

(4) In addition to our development opportunities disclosed within this table, we have land adjacent to our NY2 facility, in the form of an existing parking lot. By utilizing this land, we believe that we could develop 100,000 NRSF of data center capacity on our available acreage in Secaucus, New Jersey, upon receipt of necessary entitlements.

Selectively Pursue Acquisition and Development Opportunities in New and Existing Markets. We evaluate opportunities to acquire or develop data center space with abundant power and/or dense points of interconnection in key markets that will expand our customer base and broaden our geographic footprint. Such acquisitions may entail subsequent development, which requires significant capital expenditures. We also intend to continue to implement the “hub-and-spoke strategy” that we have deployed in our largest markets, namely Los Angeles, New York, the San Francisco Bay, Northern Virginia, and Chicago areas. In these markets, we have extended our data center footprint by connecting via fiber our newer facilities, the spokes, to our established data centers, our hubs, which allows our customers leasing space at the spokes to leverage the significant interconnection capabilities of our hubs. In order to deploy our “hub-and-spoke strategy,” we typically rely on third-party providers of network connectivity to establish highly reliable network connectivity within and between facilities. Our SV9 held-for-development project, when constructed, will be connected via dark fiber to its campus hub.

Leverage Existing Customer Relationships and Reach New Customers. Our strong customer and industry relationships, combined with our national footprint and sales force, afford us insight into the size, timing and location of customers’ planned growth. Historically, we have been successful in leveraging this market visibility to expand our footprint and customer base in our markets. We intend to continue to strengthen and expand our relationships with existing customers and to further grow and diversify our customer base by targeting growing customers and segments.

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Our Portfolio

As of December 31, 2020, our property portfolio included 25 operating data center facilities, office and light-industrial space and multiple potential development projects that collectively comprise over 4.6 million NRSF, of which over 2.7 million NRSF is existing data center space. The approximately 1.5 million NRSF of development capacity includes space available for development within existing data centers and construction of new data center facilities. We expect that this development potential plus any incremental investment into existing or new markets will enable us to accommodate existing and future customer demand and position us to continue to increase our operating cash flows. The following table provides an overview of our property portfolio by market as of December 31, 2020:

	Data Center Operating Portfolio(1)
			Stabilized			Pre-Stabilized (2)			Total			Total	Total
	Annualized		Total	Percent		Total	Percent			Percent		Development	Portfolio
Market	Rent ($000)(3)		NRSF	Occupied(4)		NRSF	Occupied(4)		NRSF	Occupied(4)		NRSF (5)	NRSF
San Francisco Bay	$	102,152	888,108	86.1	%	52,201	75.1	%	940,309	85.5	%	240,000	1,180,309
Los Angeles(6)		91,158	563,943	91.8		67,614	65.4		631,557	89.0		119,128	750,685
Northern Virginia(7)		57,872	516,036	85.6		51,233	27.7		567,269	83.7		809,742	1,377,011
New York		22,492	168,267	87.9		34,589	16.0		202,856	75.6		81,799	284,655
Chicago		16,708	178,407	87.1		54,798	0.7		233,205	66.8		112,368	345,573
Boston		14,952	122,730	78.0		19,961	—		142,691	67.1		110,985	253,676
Denver		5,483	34,924	77.5		—	—		34,924	77.5		—	34,924
Miami		1,756	30,176	81.5		—	—		30,176	81.5		13,154	43,330
Total Data Center Facilities	$	312,573	2,502,591	86.9	%	280,396	36.9	%	2,782,987	81.9	%	1,487,176	4,270,163
Office and Light-Industrial(8)		9,536	418,110	79.7		—	—		418,110	79.7		(49,799)	368,311
Total Portfolio	$	322,109	2,920,701	85.9	%	280,396	36.9	%	3,201,097	81.6	%	1,437,377	4,638,474

(1) This table presents NRSF at each market that is currently occupied or readily available for lease as data center space and pre-stabilized data center space. Both occupied and available data center NRSF includes a factor based on management’s estimate to account for a customer’s proportionate share of the required data center support space (such as the mechanical, telecommunications and utility rooms) and building common areas, which may be updated on a periodic basis to reflect the most current build-out of our properties. Operating data center NRSF may require investment of Deferred Expansion Capital (see definition on page 10).

(2) Pre-stabilized NRSF represents projects or facilities that recently have been developed and are in the initial lease-up phase. Pre-stabilized projects or facilities become stabilized operating properties at the earlier of achievement of 85% occupancy or 24 months after development completion.

(3) “Annualized Rent” represents the monthly contractual rent under existing commenced customer leases as of December 31, 2020, multiplied by 12. This amount reflects total annualized base rent before any one-time or non-recurring rent abatements and excludes power revenue, interconnection revenue and operating expense reimbursement. Our management uses annualized rent as a supplemental performance measure because, when compared quarter over quarter or year over year, it captures profitability of our assets. We offer this measure because we recognize that annualized base rent will be used by investors to compare our profitability with that of other REITs. On a gross basis, our total portfolio annualized rent was approximately $327.8 million as of December 31, 2020, which includes $5.7 million in operating expense reimbursements under modified gross and triple-net leases.

(4) “Percent Occupied” represents customer leases that have commenced and are occupied as of December 31, 2020. The percent occupied is determined based on occupied square feet as a proportion of total operating NRSF as of December 31, 2020. Our management uses percent occupied as a supplemental performance measure because, when compared year-over-year, it captures trends in market demand for our assets. We offer this measure because we recognize that percent occupied will be used by investors as a basis to compare our operating performance with that of other REITs. The percent occupied for stabilized data center space would have been 88.6%, rather than 86.9%, if all leases signed in the current and prior periods had commenced. The percent occupied for our total portfolio, including stabilized data center space, pre-stabilized space and office and light-industrial space, would have been 83.8%, rather than 81.6%, if all leases signed in current and prior periods had commenced.

(5) Represents incremental data center capacity currently vacant in existing facilities in our portfolio that requires significant capital investment in order to develop into data center facilities. Includes NRSF under construction for

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which substantial activities are ongoing to prepare the property for its intended use following development and NRSF in pre-construction, which are projects in the design and permitting stages. The NRSF reflects management’s estimate of engineering drawings and required support space and is subject to change based on final demising of space.

(6) In the fourth quarter of 2020, CoreSite made the decision to exit and vacate our leased data center space at LA4 and two computer rooms at LA1 by the end of 2021. These spaces, which represent 21,850 NRSF for LA4 and 6,723 NRSF at LA1, were previously acquired in 2018 through the acquisition of U.S. Colo. Due to this business decision, we have excluded these leased spaces from the reported Los Angeles market operating property portfolio.

(7) Included within our Northern Virginia market is held for development space of 49,799 NRSF that is currently operating as office and light-industrial space.

(8) Represents space that is currently occupied or readily available for lease as space other than data center space, which typically is offered for office or light-industrial uses.

“Same-Store” statistics are based on space within each data center facility that was leased or available to be leased as of December 31, 2018, excluding space for which development was completed and became available to be leased after December 31, 2018. We track Same-Store space leased or available to be leased at the computer room level within each data center facility. The following table shows the December 31, 2020, Same-Store operating statistics. For comparison purposes, the operating activity totals as of December 31, 2019, and 2018, for this space are provided at the bottom of this table.

	Same-Store Property Portfolio
			Data Center			Office and Light-Industrial			Total
	Annualized		Total	Percent		Total	Percent			Percent
Market	Rent ($000)		NRSF	Occupied		NRSF	Occupied		NRSF	Occupied
San Francisco Bay	$	84,295	780,427	84.1	%	233,095	81.2	%	1,013,522	83.5	%
Los Angeles		81,351	535,752	91.3		11,790	75.0		547,542	90.9
Northern Virginia		57,871	516,036	85.6		122,011	86.5		638,047	85.8
New York		22,610	168,266	87.9		20,944	65.4		189,210	85.4
Chicago		16,773	178,408	87.1		4,946	75.8		183,354	86.8
Boston		15,166	122,730	78.0		19,495	51.5		142,225	74.3
Denver		5,483	34,924	77.5		—	—		34,924	77.5
Miami		1,775	30,176	81.5		1,934	56.2		32,110	80.0
Total Facilities at December 31, 2020(1)	$	285,324	2,366,719	86.1	%	414,215	80.2	%	2,780,934	85.2	%
Total Facilities at December 31, 2019	$	287,900		85.9	%		76.8	%		84.7	%
Total Facilities at December 31, 2018	$	289,432		87.8	%		78.6	%		86.5	%

(1) The percent occupied for data center space, office and light-industrial space, and total space as of December 31, 2020, would have been 87.9%, 85.8% and 87.6%, respectively, if all leases signed in the current and prior periods had commenced.

Same-Store annualized rent decreased to $285.3 million at December 31, 2020, compared to $287.9 million at December 31, 2019. The decrease of $2.6 million is primarily due to the move-out of a customer at our SV7 data center during the year ended December 31, 2020, partially offset by the commencement of new and expansion leases.

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Capital Expenditures

The following table sets forth information regarding capital expenditures during the year ended December 31, 2020 (in thousands):

	Year Ended
	December 31, 2020
Data center expansion	$	202,992
Non-recurring investments		3,963
Tenant improvements		5,919
Recurring capital expenditures		8,336
Total capital expenditures	$	221,210

During the year ended December 31, 2020, we incurred approximately $221.2 million of capital expenditures, of which approximately $203.0 million related to data center expansion activities, including new data center construction, the development of capacity within existing data centers and other revenue generating investments. As we construct data center capacity, we work to optimize both the amount of capital we deploy on power and cooling infrastructure and the timing of that capital deployment. As such, we generally construct our power and cooling infrastructure supporting our data center NRSF based on our estimate of customer utilization. This practice can result in our investment at a later time in “Deferred Expansion Capital”. We define Deferred Expansion Capital as our estimate of the incremental capital we may invest in the future to add power or cooling infrastructure to support existing or anticipated future customer utilization of NRSF within our operating data centers.

During the year ended December 31, 2020, we completed (i) one computer room at SV8, which was the final phase of that data center; (ii) a data center core and shell building, and therein one computer room, at CH2, which was the first phase of the project placed into service; (iii) a data center core and shell building, and therein one computer room, at LA3, which was the first phase of the project placed into service; and (iv) one computer room and a power infrastructure project at NY2, which added incremental power capacity to the new computer room and other existing computer rooms. As of December 31, 2020, we had an ongoing construction project at LA3 scheduled to complete development during the year ending December 31, 2021. The following table sets forth capital expenditures spent on data center expansion NRSF placed into service during the year ended December 31, 2020, and under construction as of December 31, 2020:

			NRSF
	Data Center		Placed into	Under
Property	Expansion		Service	Construction(1)
LA3	$	80,131	50,736	54,388
NY2		37,312	34,589	—
CH2		26,381	54,798	—
SV8		20,293	52,201	—
BO1		12,191	—	—
VA3		9,261	—	—
SV9		5,775	—	—
Other		11,648	—	—
Total	$	202,992	192,324	54,388

(1) Represents NRSF under construction for which substantial activities are ongoing to prepare the property for its intended use following development and NRSF in pre-construction, which are projects in the design and permitting stages.

During the year ended December 31, 2020, we incurred approximately $4.0 million in non-recurring investments, which primarily relate to remodel or upgrade projects. Included in non-recurring investments for 2020 is $2.3 million of capitalized internal IT hardware and software development.

During the year ended December 31, 2020, we incurred approximately $5.9 million in tenant improvements, which related to tenant-specific power installations at various properties.

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During the year ended December 31, 2020, we incurred approximately $8.3 million of recurring capital expenditures within our portfolio, which included required equipment upgrades at our various facilities that have a future economic benefit.

Customer Diversification

The following table sets forth information regarding the ten largest customers in our portfolio based on total portfolio annualized rent as of December 31, 2020:

											Weighted
											Average
					Percentage				Percentage		Remaining
			Number	Total	of Total		Annualized		of Total		Lease
			of	Occupied	Operating		Rent		Annualized		Term in
	CoreSite Vertical	Customer Industry	Locations	NRSF(1)	NRSF(2)		($000)		Rent(3)		Months(4)
1	Cloud	Public Cloud	10	210,404	6.6	%	$	41,659	12.9	%	82
2	Enterprise	Digital Content	8	157,560	4.9			21,403	6.6		35
3	Cloud	Public Cloud	11	328,424	10.3			19,797	6.1		37
4	Cloud	Public Cloud	3	118,684	3.7			13,714	4.3		35
5	Network	Global Service Provider	9	44,147	1.4			9,359	2.9		20
6	Enterprise	Travel / Hospitality	2	32,828	1.0			6,950	2.2		9
7	Network	US National Service Provider	14	39,868	1.2			5,112	1.6		31
8	Network	Cable Service Provider	16	21,501	0.7			4,391	1.4		24
9	Enterprise	SI & MSP	1	35,695	1.1			4,301	1.3		24
10	Enterprise	Government	3	25,485	0.8			4,075	1.3		138
	Total/Weighted Average			1,014,596	31.7	%	$	130,761	40.6	%	50

(1) Total occupied NRSF is determined based on contractually leased square feet for leases that have commenced on or before December 31, 2020. We calculate occupancy based on factors in addition to contractually occupied square feet, including required data center support space (such as the mechanical, telecommunications and utility rooms) and building common areas.

(2) Represents the customer’s total occupied square feet divided by the total operating NRSF in the portfolio as of December 31, 2020.

(3) Represents the customer’s total annualized rent divided by the total annualized rent in the portfolio as of December 31, 2020.

(4) Weighted average based on percentage of total annualized rent expiring calculated as of December 31, 2020.

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Lease Expirations

The following summary table sets forth a schedule of the expirations for leases in place as of December 31, 2020, plus unoccupied space, for each of the five full calendar years beginning January 1, 2021, at the properties in our portfolio (excluding space held for development, under construction, or in pre-construction). The information set forth in the table assumes that customers exercise no renewal options or early termination rights.

		Total											Annualized
	Number	Operating	Percentage				Percentage		Annualized		Annualized		Rent Per
	of	NRSF of	of Total		Annualized		of Total		Rent Per		Rent at		Leased
	Leases	Expiring	Operating		Rent		Annualized		Leased		Expiration		NRSF at
Year of Lease Expiration	Expiring(1)	Leases	NRSF		($000)		Rent		NRSF		($000)(2)		Expiration(3)
Unoccupied data center	—	504,562	15.8	%	$	—	—	%	$	—	$	—	$	—
Unoccupied office and light-industrial	—	84,906	2.6			—	—			—		—		—
2021	1,277	633,077	19.7			94,043	29.2			149		94,673		150
2022	571	386,652	12.1			60,675	18.9			157		62,747		162
2023	314	370,763	11.6			54,524	16.9			147		58,947		159
2024	94	115,102	3.6			18,963	5.9			165		20,352		177
2025	66	211,678	6.6			23,671	7.3			113		37,685		180
2026 - Thereafter	24	561,153	17.5			60,697	18.8			108		71,184		127
Office and light-industrial(4)	135	333,204	10.5			9,536	3.0			29		10,007		30
Portfolio Total / Weighted Average	2,481	3,201,097	100.0	%	$	322,109	100.0	%	$	123	$	355,595	$	136

(1) Includes leases that upon expiration will automatically be renewed, primarily on a year-to-year basis. Number of leases represents each agreement with a customer; a lease agreement could include multiple spaces and a customer could have multiple leases.

(2) Represents the final monthly contractual rent under existing customer leases as of December 31, 2020, multiplied by 12. This amount reflects total annualized base rent before any one-time or non-recurring rent abatements and excludes power revenue, interconnection revenue and operating expense reimbursement. Leases expiring during 2021 include annualized rent of $6.1 million associated with lease terms currently on a month-to-month basis.

(3) Annualized rent at expiration, as defined, divided by the square footage of leases expiring in the given year. This metric reflects the rent growth inherent in the existing base of lease agreements.

(4) The occupied office and light-industrial leases are scheduled to expire as follows:

	NRSF of	Annualized
	Expiring	Rent
Year	Leases	($000)
2021	50,904	$	1,792
2022	67,624		1,549
2023	141,284		3,985
2024	9,983		256
2025	14,933		573
Thereafter	48,476		1,381
Total OLI	333,204	$	9,536

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Lease Distribution

Within our operating portfolio, we manage three primary types of customer deployments, including (i) Data center deployments, which represent customers who lease a defined amount of space and power within our data centers, (ii) Powered shell deployments, which are typically larger deployments of raw physical space with available power connectivity, and (iii) Office and light-industrial deployments, which represent customers utilizing space within our properties for office or light-industrial purposes. The following table sets forth information relating to the NRSF distribution of leases in the properties in our portfolio, based on type of deployment (excluding space held for development, under construction, or in pre-construction) under lease as of December 31, 2020:

				Total	Percentage				Percentage
	Number	Percentage		Operating	of Total		Annualized		of Total
	of	of All		NRSF of	Operating		Rent		Annualized
Lease Deployment Type(1)	Leases(2)	Leases		Leases	NRSF		($000)		Rent
Unoccupied data center
Leased but not commenced	—	—	%	51,272	1.6	%	$	—	—	%
Available capacity	—	—		453,290	14.2			—	—
Unoccupied office and light-industrial
Leased but not commenced	—	—		23,642	0.7			—	—
Available capacity	—	—		61,264	1.9			—	—
Data center deployment by CkW:
Retail Colocation (< 130 CkW)	2,123	85.6		514,978	16.1			78,017	24.2
Small Scale (130 - 500 CkW)	147	5.9		425,734	13.3			69,786	21.6
Large Scale (501 - 2,000 CkW)	47	1.9		419,950	13.1			63,685	19.8
Hyperscale (> 2,000 CkW)	12	0.5		494,912	15.5			84,599	26.3
Powered shell	17	0.7		422,851	13.2			16,486	5.1
Office and light-industrial	135	5.4		333,204	10.4			9,536	3.0
Portfolio Total	2,481	100.0	%	3,201,097	100.0	%	$	322,109	100.0	%

(1) Represents all leases in our portfolio, including data center and office and light-industrial leases. We break out our data center deployments by critical kilowatts (“CkW”), which represents the maximum amount of power that customers can draw per their contractual lease agreement.

(2) Number of leases represents each agreement with a customer; a lease agreement could include multiple spaces and a customer could have multiple leases.

Competition

We compete with numerous developers, public and private owners and operators of technology-related real estate and data center. Many of these companies own properties similar to ours in the same markets in which our properties are located, including CyrusOne, Inc., Cyxtera Technologies, Inc., Digital Realty Trust, Inc., Equinix, Inc., Evoque (formerly AT&T, Inc. Data Centers), Flexential, Internap Network Services Corporation, Quality Technology Services, RagingWire Data Centers, a NTT Communications company, SABEY Corporation, Stack Infrastructure, Switch, Inc., and zColo. In addition, we may face competition from new entrants into the data center market. Some of our current and potential competitors may have significant advantages over us, including greater name recognition, longer operating histories, pre-existing relationships with current or potential customers, significantly greater financial, marketing and other resources, ownership of more data centers more broadly distributed geographically, access to less expensive power, and more robust interconnected hubs in certain geographic markets. All of these potential advantages could allow competitors to respond more quickly to new or changing opportunities. If our competitors offer space, power and/or interconnection services at rates below current market rates, or below the rates we currently charge our customers, we may lose potential customers or be pressured to reduce our rental rates below those we currently charge in order to retain customers when our customers’ leases expire.

As a developer of data center space and provider of interconnection services, we also compete for the services of key third-party service providers, including engineers and contractors with expertise in the development of data centers. The competition for the services of specialized contractors and other third-party providers required for the development of data centers is intense, increasing the cost of engaging such providers and the risk of delays in completing our development projects.

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Finally, we face competition from real estate developers in our sector and in other industries for the acquisition of additional properties suitable for data center development. Such competition may reduce the number of properties available for acquisition or development, increase the price of these properties and reduce the demand for data center space in the markets we seek to serve.

Regulation

General

Data centers in our markets are subject to various laws, ordinances and regulations, including regulations relating to common areas. We believe that each of our properties has the necessary permits and approvals to operate our business.

Americans with Disabilities Act

Our properties must comply with Title III of the American with Disabilities Act, or the ADA, to the extent that such properties are places of “public accommodation” or “commercial facilities” as defined by the ADA. The ADA requires properties that are places of “public accommodation” to, among other things, remove existing barriers to access by persons with disabilities where such removal is readily achievable. The ADA also requires places of “public accommodation” as well as “commercial facilities” undergoing new construction or alterations to conform to the ADA Accessibility Guidelines, which provide design standards that permit accessibility by individuals with disabilities. Further, if entities on our properties offer certain examinations or courses (i.e., those related to applications, licensing, certification, or credentialing for secondary or postsecondary education, professional, or trade purposes), they must be offered in an accessible place and manner or with alternative accessible arrangements. We believe that our properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to those properties to address the requirements of the ADA. However, noncompliance with the ADA could result in imposition of monetary damages and civil penalties in lawsuits brought by the Attorney General or an award of attorneys’ fees to private litigants. The obligation to make readily achievable accommodations as required by the ADA is an ongoing one, and we will continue to assess our properties and make alterations as appropriate.

Environmental Matters

Under various federal, state and local laws and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for contamination resulting from the presence or discharge of hazardous or toxic substances at that property, and may be required to investigate and clean up such contamination at that property or emanating from that property. Such laws and regulations often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of the contaminants, and a party may be liable for all of the cleanup costs, even when more than one person was responsible for the contamination. Previous owners used some of our properties for industrial and retail purposes, so those properties may contain some level of environmental contamination. The presence of contamination or the failure to remediate contamination at our properties may expose us to third-party liability or materially adversely affect our ability to sell, lease or develop the real estate or to borrow using the real estate as collateral. In addition, we could incur costs to comply with such laws and regulations, the violation of which could lead to substantial fines and penalties.

Environmental laws and regulations also require that asbestos-containing building materials be properly managed and maintained and may impose fines and penalties on building owners or operators for failure to comply with these requirements. Further, third parties could potentially seek recovery from owners or operators for personal injury associated with exposure to asbestos-containing building materials.

In addition, certain of our customers, particularly those that lease light-industrial space from us, routinely handle hazardous substances and wastes as part of their operations at our properties. Environmental laws and regulations subject our customers, and potentially us, to liability resulting from these activities or from previous industrial or other uses of those properties. Environmental liabilities could also affect a customer’s ability to make rental payments to us. We require our customers to comply with these environmental laws and regulations and to indemnify us for any related liabilities.

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Independent environmental consultants have conducted Phase I or similar environmental site assessments on all owned properties in our portfolio. Each of the site assessments has been either completed or updated since 2005. Site assessments are intended to collect and evaluate information regarding the environmental condition of the surveyed property and surrounding properties. These assessments do not generally include soil sampling, subsurface investigations or asbestos sampling. Although prior commercial or industrial operations at some of our properties may have released hazardous materials and some of our properties contain or may contain asbestos-containing building materials, none of the recent site assessments revealed any past or present environmental liability that we believe would have a material adverse effect on our business, assets or results of operations. However, the assessments may have failed to reveal all environmental conditions, liabilities or compliance concerns. Material environmental conditions, liabilities or compliance concerns may have arisen after the reviews were completed or may arise in the future; and future laws, ordinances or regulations may impose material additional environmental liability. See “Risk Factors—Risks Related to Our Business and Operations—Environmental problems are possible and can be costly.”

Insurance

We carry comprehensive liability, fire, extended coverage, earthquake, business interruption, rental loss, and umbrella liability insurance covering all of the properties in our portfolio augmented by excess liability coverage in an amount that we believe to be appropriate. We select policy specifications and insured limits which we believe to be appropriate given the relative risk of loss, the cost of the coverage and industry practice and, in the opinion of our management, the properties in our portfolio are currently adequately insured. We do not carry insurance for generally uninsured losses such as loss from riots, war or acts of God. In addition, we carry earthquake insurance on our properties in an amount and with deductibles which we believe are commercially reasonable. Certain of the properties in our portfolio are located in areas believed to be seismically active. Potential losses to our properties may not be covered by insurance or may exceed our policy coverage limits. See “Risk Factors—Risks Related to Our Business and Operations—Potential losses to our properties may not be covered by insurance or may exceed our policy coverage limits” in Item 1A. of this Annual Report.

Human Capital Resource Management

As of December 31, 2020, our workforce is comprised of 481 full-time employees, including approximately 257 in data center operations, 71 in sales and marketing, 23 in construction, engineering and product and 130 in corporate operations. All employees are located in the United States.

The success of our employees drives the success of the business, and supports our goal of long-term value creation for our shareholders. We offer competitive benefits and training programs to develop employees’ expertise and skillsets, use training, communication, appropriate investments and clear corporate policies to strive to provide a safe, harassment-free work environment guided by principles of fair and equal treatment, and prioritize employee engagement. As a result, we believe our employees are committed to building strong, innovative and long-term relationships with each other and with our customers.

We track key human capital metrics including demographics, talent pipeline, diversity, and employee engagement. We have a stable workforce with an average tenure of 4.8 years and voluntary employee turnover of approximately 9% during the year ended December 31, 2020. To attract diversity in our applicant pools, we post our openings to a wide variety of job boards and deploy appropriate language in our postings. During the year ended December 31, 2020, our applicant pool was 50% minority and our hiring trend of minorities was 51%. Overall, as of December 31, 2020, our workforce is approximately 54% non-minority and 46% minority. During the year ended December 31, 2020, our applicant pool was 26% identifying as female with our hiring trend of self-identified females at 28%. As of December 31, 2020, our employee base self-identified as 78% male and 22% female, and our senior leadership team, which has an average tenure with the Company of 8.3 years, consists of 30% executives identifying as female and 10% minority executives. As of February 4, 2021, our board of directors consists of 30% directors identifying as female and 10% as minority.

We invest in employee development by offering a number of training opportunities, including a data center technician training course and career path to enable non-technicians (such as security personnel) to develop technical skills and create a path for upward mobility. This is a six-tiered program that educates employees on the basics of data center operations and guides employees through the specifics of operating a data center. During the year ended December 31, 2020, 40 employees were promoted through this program.

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COVID-19 Health and Safety

As a result of the COVID-19 pandemic, we have put into place a number of health and safety measures to enable our operations team to continue to work from our data centers. We implemented an Information Technology application to enable and track daily employee health screening and a daily compliance process for all vendors. We also required social distancing in accordance with the Centers for Disease Control and Prevention (“CDC”) and local health agency guidelines, made modifications to our facilities (including upgrades to air ventilation and filtration), engaged in regular sanitation, posted signage, required all visitors and employees to wear facial coverings and provided N-95 masks to our essential data center employees to reduce the potential for disease transmission. We worked with our operations teams to implement innovative approaches to maintain our high standards of customer service, including virtual data center tours to ensure activities typically accomplished on-site or in-person continued throughout periods of reduced travel. Our non-essential and corporate personnel adopted a work-from-home approach beginning in March 2020 which has continued past the end of the year, without significant impacts to productivity. Refer to the discussion in Item 7. Management’s Discussion and Analysis for further information related to the impact of the pandemic on our business.

Offices

Our corporate offices are located at 1001 17th Street, Suite 500, Denver, CO 80202.

How to Obtain Our SEC Filings

All reports we file with the SEC are available free of charge via EDGAR through the SEC website at www.sec.gov. We also provide copies of our Forms 8-K, 10-K, 10-Q, Proxy Statement, Annual Report and amendments to those documents at no charge to investors upon request and make electronic copies of such reports available through our website at www.coresite.com as soon as reasonably practicable after filing such material with the SEC. The information found on, or otherwise accessible through, our website is not incorporated by reference into, nor does it form a part of, this Annual Report on Form 10-K, or any other document that we file with the SEC.

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ITEM 1A. RISK FACTORS

Any of the following risks could materially and adversely affect our business, results of operations or financial condition. The risks and uncertainties described below are those that we currently believe may materially affect our Company. Additional risks and uncertainties of which we are unaware or that we currently deem immaterial also may become important factors that affect our Company. See “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business and Operations

Industry, Market and Customer Risks

Our portfolio of properties consists primarily of data centers geographically concentrated in certain markets and any adverse developments in local economic conditions or the demand for data center space in these markets may negatively impact our operating results.

Our portfolio of properties consists of data centers geographically concentrated in the San Francisco Bay area, Los Angeles, the Northern Virginia area (including Washington D.C.), the New York area, Chicago, Boston, Denver and Miami. These markets comprised 32.7%, 29.2%, 18.5%, 7.2%, 5.3%, 4.8%, 1.8%, and 0.5%, respectively, of our annualized data center rent as of December 31, 2020. As such, we are susceptible to local economic conditions and the supply of and demand for data center space in these markets. If there is a downturn in the economy or an oversupply of or decrease in demand for data centers in these markets, our business could be materially adversely affected to a greater extent than if we owned a real estate portfolio that was more diversified in terms of both geography and industry focus.

A small number of customers account for a significant portion of our operating revenues, and the loss or default of any of these customers could significantly harm our business, financial condition and results of operations.

We currently depend, and expect to continue to depend, upon a relatively small number of customers for a significant percentage of our operating revenue. Our top ten customers accounted for an aggregate of approximately 40.6% of our total portfolio annualized rent as of December 31, 2020. The loss of one or more of our significant customers or a significant customer exerting significant pricing pressure on us could also have a material adverse effect on our results of operations. Some of our customers may experience a downturn in their businesses or other factors that may weaken their financial condition and result in them failing to make timely rental payments, defaulting on their leases, reducing the level of interconnection services they obtain or the amount of space they lease from us or terminating their relationship with us. However, if any customer becomes a debtor in a case under the federal Bankruptcy Code, we cannot evict the customer solely because of the bankruptcy. In addition, the bankruptcy court might authorize the customer to reject and terminate its lease with us. Our claim against the customer for unpaid, future rent would be subject to a statutory cap that might be substantially less than the remaining rent actually owed under the lease. In any of these cases, our claim for unpaid rent would likely not be paid in full. As of December 31, 2020, we had no material customers in bankruptcy.

In addition, our largest customers may choose to develop new data centers or expand existing data centers of their own and may seek to negotiate rent reductions in the future. In the event that any of our key customers were to do so, it could result in a loss of business to us or increase pricing pressure on us. If we lose a customer, there is no guarantee that we would be able to replace that customer at a comparative rental rate or at all. Some of our largest customers may also compete with one another in various aspects of their businesses. The competitive pressures on our customers may have a negative impact on our operations. For instance, one customer could determine that it is not in that customer’s interest to house mission-critical servers or other telecommunications or information technology equipment in a facility operated by the same company that relies on a key competitor for a significant part of its operating annual revenue. Our loss of a large customer for this or any other reason could have a material adverse effect on our results of operations.

Because we depend on the development and growth of a balanced customer base, including key customers, failure to attract, grow and retain this base of customers or future consolidation in the technology industry could harm our business and operating results.

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Our ability to maximize operating revenues depends on our ability to develop and grow a balanced customer base, consisting of a variety of companies, including enterprises, cloud and IT service providers and network providers. We consider certain of these customers to be key in that they attract and assist in retaining other customers. The more balanced the customer base within each data center, the better we will be able to generate significant interconnection revenues, which in turn increases our overall operating revenues. Our ability to attract customers to our data centers will depend on a variety of factors, including the demand for data center space, Internet gateway facilities or other technology-related real estate, the presence of multiple network carriers and cloud operators in our facilities, the mix of products and services offered by us, the overall mix of customers, the presence of key customers attracting business through vertical market ecosystems, the data center’s operating reliability and security and our ability to effectively market and sell our services. However, some of our customers may face competitive pressures and may ultimately not be successful or may be consolidated through merger or acquisition, resulting in a reduced number of customers or potential customers. If these customers do not continue to use our data centers it may be disruptive to our business. Finally, an uncertain economic climate may harm our ability to attract and retain customers if customers slow spending, or delay decision-making, on our products and services, or if customers begin to have difficulty paying us and we experience increased churn in our customer base. Any of these factors may hinder the development, growth and retention of a balanced customer base and adversely affect our business, financial condition and results of operations.

Our products and services have a long sales cycle that may harm our revenues and operating results.

A customer’s decision to lease space in one of our data centers and to purchase additional services typically involves a significant commitment of resources. As a result, we have a long sales cycle. Furthermore, we may expend significant time and resources in pursuing a particular sale or customer that ultimately does not result in revenue. Macroeconomic conditions may further impact this long sales cycle by making it difficult for customers to accurately forecast and plan future business activities. This could cause customers to slow spending or delay decision-making on our products and services, which would delay and lengthen our sales cycle. Delays due to the length of our sales cycle may materially and adversely affect our revenues and operating results.

We face significant competition and may be unable to lease vacant space, renew existing leases or release space as leases expire, which may have a material adverse effect on our business and results of operations.

We compete with numerous developers, owners and operators of technology-related real estate and data centers, many of which own properties similar to ours in the same markets. In addition, we may face competition from new entrants into the data center market. Some of our competitors have significant advantages over us, including greater name recognition, longer operating histories, lower operating costs, lower levels of leverage, pre-existing relationships with current or potential customers, greater financial, marketing and other resources, access to better networks and access to less expensive power. These advantages could allow our competitors to respond more quickly or effectively to strategic opportunities or changes in our industries or markets. If our competitors offer data center space that our existing or potential customers perceive to be superior to ours based on numerous factors, including cost and availability of power, security considerations, location or network connectivity, or if they offer rental rates below our current market rates, we may lose existing or potential customers, incur costs to improve our properties or be forced to reduce our rental rates. This risk is compounded by the fact that a significant percentage of our customer leases expire every year. For example, as of December 31, 2020, data center leases representing 29.2%, 18.9% and 16.9% of our total portfolio annualized rent are currently set to expire during 2021, 2022, and 2023, respectively. If the rental rates for our properties decrease, our existing customers do not renew their leases or we are unable to lease vacant data center space or re-lease data center space for which leases are scheduled to expire at or above current lease rates, our business and results of operations could be materially adversely affected.

In addition, certain of our leases contain early termination provisions that allow our customers to reduce the term of their leases subject, in some cases, to payment of an early termination charge that is often a specified portion of the remaining contractual rent payable under such leases. The exercise by customers of early termination options could have an adverse effect on our business, financial condition and results of operations.

Our growth depends on the successful development of our properties and any delays or unexpected costs associated with such projects may harm our growth prospects, future operating results and financial condition.

As of December 31, 2020, we had the ability to expand our operating data center square footage by approximately 1,487,000 NRSF, or 53%, as set forth in our development table in Item 1. Our growth depends upon the

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successful completion of the development of this space and similar projects in the future. Current and future development projects and expansion into new markets will involve substantial planning, allocation of significant company resources and certain risks, including risks related to the acquisition of real property, financing, zoning, regulatory approvals, construction costs and delays. We continually evaluate the market for available properties and may acquire data centers or properties suited for data center development when opportunities exist.

These development projects will also require us to carefully select and rely on the experience of one or more general contractors and associated subcontractors during the construction process. Should a general contractor or significant subcontractor experience financial or other problems during the construction process, we could experience significant delays, increased costs to complete the project and other negative impacts to our expected financial returns. Site selection in current and expansion markets is also a critical factor in our expansion plans, and there may not be suitable properties available in our markets at a location that is attractive to our customers and has the necessary combination of access to multiple network providers, a significant supply of electrical power, high ceilings and the ability to sustain heavy floor loading. Furthermore, while we may prefer to locate new data centers adjacent to or in close proximity to our existing data centers, we may be limited by the size and location of suitable properties.

In addition, we will be subject to risks and, potentially, unanticipated costs associated with obtaining access to a sufficient amount of power from local utilities, including the need, in some cases, to develop utility substations on our properties in order to accommodate our power needs, constraints on the amount of electricity that a particular locality’s power grid is capable of providing at any given time, and risks associated with the negotiation of long-term power contracts with utility providers. There can be no assurance that we will be able to successfully negotiate such contracts on acceptable terms or at all. Any inability to negotiate utility contracts on a timely basis or on acceptable financial terms or in volumes sufficient to supply the requisite power for our development properties would have a material negative impact on our growth and future results of operations and financial condition.

If we are unable to successfully acquire, develop and operate data center properties, our ability to grow our business, compete and meet market expectations will be significantly impaired, which would have a material adverse effect on the price of our common stock.

Furthermore, we typically do not require pre-leasing commitments from customers before we develop or expand a data center, and we may not have sufficient customer demand to lease the new data center space when completed. Once development of a data center is complete, we incur a certain amount of operating expenses even if there are no customers occupying the space. A lack of customer demand for data center space or excess capacity in the data center market could impair our ability to achieve our expected rate of return on our investment, which could have a material adverse effect on our financial condition, operating results and the market price of our common stock.

We may be unable to identify and complete acquisitions and successfully operate acquired properties.

We are continually evaluating the market for expansion opportunities. Our ability to acquire attractive properties or companies on favorable terms and successfully develop and operate them involves significant risks including, but not limited to, (i) our inability to acquire a desired company or property because of competition from other data center companies or real estate investors; (ii) competition from other potential acquirers may increase the purchase price; (iii) our inability to realize the intended benefits from acquisitions; (iv) our inability to finance the acquisition on favorable terms or at all; (v) underestimating the costs to make necessary improvements to acquired properties; (vi) our inability to quickly and efficiently integrate new acquisitions into our existing operations; (vii) acquired properties that may be subject to tax reassessments, which may result in higher than expected real estate tax payments; (viii) our inability to access sufficient utility power on favorable terms or at all; and (ix) market conditions that may result in higher than expected vacancy rates and lower than expected rental rates. If we are unable to successfully acquire, develop and operate data center properties, our ability to grow our business, compete and meet market expectations will be significantly impaired, which would have a material adverse effect on the price of our common stock.

Our interconnection and value-add power services depend on establishing highly evolved customer ecosystems and we may not be able to establish those ecosystems within a particular market.

One of our corporate objectives is to increase the volume of higher margin interconnection services and value-add power services, as well as to increase rental rates and obtain attractive customers, by developing highly evolved ecosystems comprised of cross-connected customers within each market. We have attained varying levels of

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success in developing these customer ecosystems across our markets. While we believe that we are able to attract network and cloud deployments and to grow the customer ecosystem to some degree in all markets, it may be difficult in some markets to develop ecosystems on the scale of our most highly evolved interconnected ecosystems due to the presence of incumbent interconnection and network-dense data centers in those markets. Our ability to establish highly interconnected data centers in certain markets may be further negatively impacted by industry consolidation. If we are unable to establish highly evolved customer ecosystems within a particular market, we may have difficulty attracting or retaining customer deployments requiring such ecosystems, and increasing the volume of higher margin interconnection services and value-add power services within that market to levels that are comparable to our most highly evolved interconnected ecosystems, which may have a material adverse effect on our financial condition and results of operations.

We may be subject to unknown or contingent liabilities related to properties or businesses that we acquire for which we may have limited or no recourse against the sellers.

Assets and entities that we have acquired or may acquire in the future, including the properties contributed by the Funds or their affiliates, may be subject to unknown or contingent liabilities for which we may have limited or no recourse against the sellers. Unknown or contingent liabilities might include liabilities for clean-up or remediation of environmental conditions, claims of customers, vendors or other persons dealing with the acquired entities, tax liabilities and other liabilities whether incurred in the ordinary course of business or otherwise. In the future we may enter into transactions with limited representations and warranties or with representations and warranties that do not survive the closing of the transactions, in which event we would have no or limited recourse against the sellers of such properties. While we usually require the sellers to indemnify us with respect to breaches of representations and warranties that survive, such indemnification (including the indemnification by the Funds or their affiliates) is often limited and subject to various materiality thresholds, a significant deductible or an aggregate cap on losses. As a result, there is no guarantee that we will recover any amounts with respect to losses due to breaches by the sellers of their representations and warranties. Indemnification agreements between us and the sellers typically provide that the sellers will retain certain specified liabilities relating to the assets and entities acquired by us. While the sellers are generally contractually obligated to pay all losses and other expenses relating to such retained liabilities, there can be no guarantee that such arrangements will not require us to incur losses or other expenses as well.

Operations and Infrastructure Risks

Our data center infrastructure may become obsolete and we may not be able to upgrade our power and cooling systems cost-effectively or at all.

The markets for the data centers that we own and operate, as well as the industries in which our customers operate, are characterized by rapidly changing technology, evolving industry standards, frequent new product introductions and changing customer demands. Changes in industry practice or in technology, such as virtualization technology, more efficient or miniaturization of computing or networking devices, or devices that require higher power densities than today’s devices, could also reduce demand for the physical data center space and infrastructure we provide or make the tenant improvements in our facilities obsolete or in need of significant upgrades to remain viable. Our ability to deliver technologically sophisticated infrastructure, including power and cooling, is a significant factor in our customers’ decisions to lease space in our data centers. Our data center infrastructure may become obsolete due to the development of new systems that deliver power to, or eliminate heat from, the servers and other customer equipment that we house or the development of new technology that requires levels of power and cooling that our facilities are not designed to provide. Our power and cooling systems are also sophisticated, expensive and time consuming to upgrade. Accordingly, we may not be able to efficiently upgrade or change these systems to meet new demands without incurring significant costs. In addition, evolving customer demand could require services or infrastructure improvements that we do not provide or that would be difficult or expensive for us to provide in our current data centers, and we may be unable to adequately adapt our properties or acquire new properties that can compete successfully. We could risk losing customers to our competitors if we are unable to adapt. Furthermore, potential future regulations that apply to industries we serve may require customers in those industries to seek specific requirements from their data centers that we are unable to provide.

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Any failure of our physical infrastructure or services could lead to significant costs and disruptions that could reduce our revenues, harm our business reputation and have a material adverse effect on our financial results.

Our business depends on providing customers with highly reliable service. We may fail to provide such service as a result of numerous factors, including human error, power loss, equipment failure, exposure to temperature, humidity, smoke and other environmental hazards, improper building maintenance by our landlords in the buildings that we lease, physical, electronic or cyber security breaches, fire, earthquake, hurricane, flood and other natural disasters, water damage, war, terrorism, including domestic terrorism, and any related conflicts or similar events worldwide, and sabotage and vandalism.

Problems at one or more of our data centers, whether or not within our control, could result in service interruptions or equipment damage. We provide service level commitments to substantially all of our customers. As a result, service interruptions or equipment damage in our data centers could result in billing abatements to these customers. In addition, although we have given such abatements to our customers in the past, there can be no assurance that our customers will accept these abatements as compensation in the future. Service interruptions and equipment failures may also expose us to additional legal liability and damage our brand image and reputation. Service interruptions, especially if significant or frequent, could cause our customers to terminate or not renew their leases. In addition, we may be unable to attract new customers if we have a reputation for significant or frequent service disruptions in our data centers.

We depend on third parties to provide network connectivity, power, and certain other services within and between certain of our data centers, and any disruptions or changes in the cost of this connectivity, power or other services, may adversely affect our operating results and cash flow.

Due to our hub-and-spoke go-to-market strategy, we depend upon carriers and other network providers to deliver network connectivity to customers within our data centers as well as the fiber network interconnection between certain of our data centers. We also rely on third parties to provide power to our data centers, and we cannot ensure that these third parties will deliver such power in adequate quantities or on a consistent basis. Since our properties have access to a finite amount of power, it may be inadequate to support our customer requirements. As current and future customers increase their power usage in our facilities over time, the remaining available power for future customers could limit our ability to grow our business and increase occupancy rates.

Our data centers are also susceptible to power outages and shortages. If highly reliable network connectivity within and between certain of our data centers is not established, is materially delayed, is discontinued, fails, or is significantly interrupted, our reputation could be harmed, which could have a material adverse effect on our ability to attract new customers or retain existing ones. Furthermore, a significant interruption in or loss of these services could impair our ability to attract and retain customers and have a material adverse effect on our business. Additionally, increases in the cost of power at any of our data centers impacted by municipal utilities or price increases for a particular type of fuel, such as coal, oil, or natural gas, would put those locations at a competitive disadvantage relative to data centers served by utilities that can provide less expensive power.

Even if our operating revenue decreases, we remain liable for a certain level of expenses.

Most of the expenses associated with our business, such as debt service payments, real estate, personal property and ad valorem taxes, insurance, utilities, employee wages and benefits and corporate expenses are relatively inflexible and do not necessarily decrease in tandem with a reduction in operating revenue from our business. Our expenses also will be affected by inflationary increases and certain of our costs may exceed the rate of inflation in any given period. As a result, we may not be able to fully offset our expenses through higher customer lease rates, which could have a material adverse effect on our results of operations and financial performance.

We do not own all of the buildings in which our data centers are located. Instead, we lease certain of our data center space from third parties and the ability to renew these leases materially impacts our ongoing operations.

We do not own the buildings for all of our data centers and our business could be harmed if we are unable to renew the leases for these data centers at favorable terms or at all. The following table summarizes the remaining primary term and renewal rights associated with each of our leased properties:

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		Current Lease
Property	NRSF	Term Expiration	Renewal Rights	Base Rent Increases at Renewal
NY1	48,404	Apr. 2023	2 × 5 years	FMR(1)
LA1	171,016	July 2029	3 × 5 years	103% of previous monthly base rent
LA1(2)	6,723	Dec. 2021	1 × 5 years	Greater of 104% of previous monthly base rent or FMR(1)
LA4(2)	21,850	July 2023	2 × 5 years	Greater of 100% of previous monthly base rent or FMR(1)
DC1	22,137	March 2032	3 × 65 months	101% of the previous monthly base rent
DC2	24,563	July 2035	3 × 5 years	106% of previous monthly base rent for the renewal and 103% of previous monthly base rent thereafter
DE1	5,878	Oct. 2024	3 × 5 years	102.5% of previous monthly base rent
DE1	23,906	Dec. 2026	4 × 5 years	102.5% of previous monthly base rent
DE2	5,140	Dec. 2024	N/A

(1) FMR represents “fair market rent” as determined by mutual agreement between landlord and tenant, or in the case of a disagreement, mutual agreement by third party appraisers.

(2) In the fourth quarter of 2020, CoreSite made the decision to exit and vacate our leased data center space at LA4 and two computer rooms at LA1 by the end of 2021. These spaces, which represent 21,850 NRSF for LA4 and 6,723 NRSF at LA1, were previously acquired in 2018 through the acquisition of U.S. Colo.

When the primary terms of our leases expire, we generally have the right to extend the terms of our leases as indicated above. For three of these leases, the rent will be determined based on the fair market value of rental rates for the property and the then prevailing rental rates may be higher than rental rates under the applicable lease. To maintain the operating profitability associated with our present cost structure, we must increase operating revenues within existing data centers to offset any potential increase in lease payments at the end of the original and renewal terms. Failure to increase operating revenues to sufficiently offset these projected higher lease costs would adversely impact our operating income. Additionally, we may be unable to maintain good working relationships with the landlords of our leased properties, which would adversely affect our relationship with our customers and could result in the loss of current customers. Furthermore, if we are not able to renew the lease at any of our data centers, the costs of relocating the equipment in such data centers and developing a new location into a high-quality data center could be prohibitive. In addition, we could lose customers due to the disruptions in their operations caused by the relocation.

We may be vulnerable to physical and electronic security breaches and cyber-attacks that could disrupt our operations and have a material adverse effect on our financial performance and operating results.

A party who is able to compromise the security measures on our networks or the security of our infrastructure could, among other things, misappropriate our proprietary information and the personal information of our customers and employees, cause interruptions or malfunctions in our or our customers’ operations, cause delays or interruptions to our ability to meet customer needs, cause us to breach our legal, regulatory or contractual obligations, create an inability to access or rely upon critical business records or cause other disruptions in our operations. These breaches may result from human errors, equipment failure, or fraud or malice on the part of employees or third parties. Our exposure to cybersecurity threats and negative consequences of cybersecurity breaches will likely increase as we store increasing amounts of customer data. Additionally, as we increasingly market the security features in our data centers, our data centers may be targeted by computer hackers seeking to compromise data security.

We expend significant financial resources to protect against such threats and may be required to further expend financial resources to alleviate problems caused by physical, electronic, and cyber security breaches. As techniques used to breach security are growing in frequency and sophistication and are generally not recognized until launched against a target, regardless of our expenditures and protection efforts, we may not be able to implement security measures in a timely manner or, if and when implemented, these measures could be circumvented. Any breaches that may occur could expose us to increased risk of lawsuits, loss of existing or potential future customers, harm to our reputation and increases in our security costs, which could have a material adverse effect on our financial performance and operating results.

In the event of a breach resulting in loss of data, such as personally identifiable information or other such data protected by data privacy or other laws, we may be liable for damages, fines and penalties for such losses under applicable regulatory frameworks despite not handling the data. Furthermore, if a high profile security breach or cyber-

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attack occurs with respect to another provider of mission-critical data center facilities, our customers and potential customers may lose trust in the security of these business models generally, which could harm our reputation and brand image as well as our ability to retain existing customers or attract new ones. In addition, the regulatory framework around data custody, data privacy and breaches varies by jurisdiction and is an evolving area of law. We may not be able to limit our liability or damages in the event of such a loss.

If we are unable to recruit or retain qualified personnel, our business could be harmed.

We must continue to identify, hire, train, and retain IT professionals, technical engineers, operations employees, and sales, marketing, finance and senior management personnel who maintain relationships with our customers and who can provide the technical, strategic and marketing skills required for our Company to grow. There is a shortage of qualified personnel in these fields, and we compete with other companies for the limited pool of talent. The failure to recruit and retain personnel, including, but not limited to, members of our executive team, could harm our business and our ability to grow our Company.

Our data center properties may not be suitable for use other than as data centers, which could make it difficult to sell or reposition them if we are not able to lease available space and could materially adversely affect our business, results of operations and financial condition.

Our data centers are specifically designed to house and run computer servers and related information technology equipment and, therefore, contain extensive electrical and mechanical systems and infrastructure unique to data center operations. As a result, significant capital expenditures would be required or we may be unable to repurpose a property in order for us to re-lease vacant space for more traditional uses, or for us to sell a property to a buyer for use other than as a data center.

Financial Risks

To fund our growth strategy and refinance our indebtedness, we depend on external sources of capital, which may not be available to us on commercially reasonable terms or at all.

In order to maintain our qualification as a REIT, we are required under the Internal Revenue Code (the “Code”) to distribute at least 90% of our net taxable income annually, determined without regard to the dividends paid deduction and excluding any net capital gains. We will also be subject to income tax at regular corporate rates to the extent that we distribute less than 100% of our net taxable income, including any net capital gains. These distribution requirements may limit our ability to fund future capital needs, including any necessary acquisition financing, from operating cash flow. Consequently, we intend to rely on third-party sources for debt or equity financing to fund our growth strategy. In addition, we may need external sources of capital to refinance our indebtedness at maturity. We may not be able to obtain such financing or refinancing on favorable terms or at all.

Our access to third-party sources of capital depend, in part, on general economic and financial market conditions, a limited subset of lenders that have historically committed debt capital to REITs that own technology based real estate, the market’s perception of our growth potential, our then current debt levels, our historical and expected future earnings, cash flows and cash distributions, changes in our credit rating, and the market price per share of our capital stock. In addition, our ability to access additional capital may be limited by the terms of our existing indebtedness, which restricts our incurrence of additional indebtedness. If we cannot obtain capital when needed, we may not be able to acquire or develop properties when strategic opportunities arise or refinance our debt at maturity, which could have a material adverse effect on our business.

Our level of indebtedness and debt service obligations could have adverse effects on our business, including the restrictions in place by the agreements governing our indebtedness reducing operational flexibility and creating default risk.

As of December 31, 2020, we had total principal indebtedness of approximately $1.7 billion and the ability to borrow up to an additional $295.4 million under our revolving credit facility, subject to satisfying certain financial and covenant tests. While there are limits in our revolving credit facility, senior unsecured term loans, and senior unsecured notes on the amount of debt that we may incur, and additional limits on our indebtedness which may be imposed by future agreements or by a policy adopted by our board of directors, we have the ability to increase our indebtedness over current levels. A substantial increase in our indebtedness may have adverse consequences for our business, results of

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operations and financial condition because it could, among other things, (i) require us to dedicate a substantial portion of our cash flow from operations to make principal and interest payments on our indebtedness (ii) make it more difficult for us to satisfy our financial obligations, including borrowings under our revolving credit facility (iii) increase our vulnerability to general adverse economic and industry conditions, (iv) expose us to increases in interest rates for our variable rate debt, (v) limit our ability to borrow additional funds on favorable terms or at all, (vi) limit our ability to refinance all or a portion of our indebtedness on or before maturity on the same or more favorable terms or at all, (vii) limit our flexibility in planning for, or reacting to, changes in our business and our industry, (viii) place us at a competitive disadvantage relative to competitors that have less indebtedness, and (viii) require us to dispose of one or more of our properties at disadvantageous prices or raise equity that may dilute the value of our common stock in order to service our indebtedness or to raise funds to pay such indebtedness at maturity.

In addition, the agreements governing our indebtedness contain covenants that place restrictions on us and our subsidiaries. These covenants may restrict, among other things, our and our subsidiaries’ ability to merge, consolidate or transfer all or substantially all of our or our subsidiaries’ assets, incur additional debt, including use of our existing capacity under our revolving credit facility, make certain investments or acquisitions, create liens on our or our subsidiaries’ assets, sell assets, make capital expenditures, pay dividends on or repurchase our capital, enter into transactions with affiliates, and issue or sell stock of our subsidiaries, and change the nature of our business. As a result, these covenants could impair our ability to grow our business, take advantage of attractive business opportunities or successfully compete. In addition, our revolving credit facility requires us to maintain specified financial ratios and satisfy financial condition tests. Our ability to comply with these ratios or tests may be affected by events beyond our control, including prevailing economic, financial and industry conditions. A breach of any of these covenants or covenants under any other agreements governing our indebtedness could result in an event of default. Cross-default provisions in our debt agreements could cause an event of default under one debt agreement to trigger an event of default under our other debt agreements. Upon the occurrence of an event of default under any of our debt agreements, the lenders could elect to declare all outstanding debt under such agreements to be immediately due and payable. If we were unable to repay or refinance the accelerated debt, the lenders could proceed against any assets pledged to secure that debt, including foreclosing on or requiring the sale of our data centers, and our assets may not be sufficient to repay such debt in full.

Fluctuations in interest rates could materially affect our financial results.

Because a portion of our debt bears interest at variable rates, increases in interest rates could materially increase our interest expense. Potential future increases in interest rates and credit spreads may increase our interest expense and therefore negatively affect our financial condition and results of operations, and reduce our access to the debt or equity capital markets.

In July 2017, the Financial Conduct Authority (“FCA”) (the authority that regulates LIBOR) announced it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021. Further, on November 30, 2020 the ICE Benchmark Administration Limited (“ICE”) announced its plan to extend the date that most USD-LIBOR values would cease being computed to June 30, 2023. The Alternative Reference Rates Committee (“ARRC”) and the International Swaps and Derivatives Association (“ISDA”) have identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for USD-LIBOR in debt, derivatives, and other financial contracts.

As of December 31, 2020 we have $848.5 million of USD-LIBOR based variable-rate debt and six effective interest rate swap agreements in place to fix the interest rate on $700.0 million of our one-month USD-LIBOR variable rate debt. In the event that USD-LIBOR is not available, each of our financial contracts contain fallback provisions to determine the applicable replacement base rate. We anticipate managing the transitioning to an alternative rate using the language set out in our agreements and through potentially modifying our debt and derivative instruments. However, future market conditions may not allow immediate implementation of our desired modifications and we may incur significant associated costs in doing so. We will continue to monitor and evaluate the potential impact any such event could have on our financial results, however, we are unable to predict when the publication of USD-LIBOR will cease, nor can we predict exactly what the future replacement rate will be.

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Interest rate hedging transactions involve costs and may limit our gains or result in material losses.

Hedging agreements enable us to convert floating rate liabilities to fixed rate liabilities or fixed rate liabilities to floating rate liabilities. We may use derivatives to hedge our liabilities from time to time. As of December 31, 2020, we are a party to six interest rate swap agreements effectively fixing the interest rate on $700 million of outstanding variable rate debt in aggregate. These and any other hedging transactions into which we enter could expose us to certain risks, including losses on a hedge position reducing the cash available for distribution to stockholders and such losses exceeding the amount invested in such instruments, counterparties to a hedging arrangement defaulting on their obligations, paying certain fees, such as transaction or brokerage fees, and incurring costs if we elect to terminate a hedging agreement early.

Potential losses to our properties may not be covered by insurance or may exceed our policy coverage limits.

We do not carry insurance for generally uninsured losses, such as acts of war. Our properties in our portfolio are subject to risks from earthquakes, tropical storms, hurricanes, floods and other natural disasters. While we do carry earthquake, hurricane and flood insurance on our properties, the amount of our insurance coverage may not be sufficient to fully cover such losses. In addition, we may discontinue earthquake, hurricane or flood insurance on some or all of our properties in the future if the cost of premiums for any of these policies exceeds, in our judgment, the value of the coverage relative to the risk of loss.

If we experience a loss which is uninsured or which exceeds our policy coverage limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. In addition, even if damage to our properties is covered by insurance, a disruption of our business caused by a casualty event may result in the loss of business or customers. We carry business interruption insurance, but such insurance may not fully compensate us for the loss of business or customers due to an interruption caused by a casualty event. While we monitor the solvency of our insurance carriers, it can be difficult to evaluate the stability and net assets or capitalization of insurance companies, and any insurer’s ability to meet its claim payment obligations.

Increases in our property taxes and other state and local taxes could adversely affect our ability to make distributions to our stockholders if they cannot be passed on to our customers.

We are subject to a variety of state and local taxes, including real and personal property taxes and sales and use taxes that may increase materially due to factors outside our control. In particular, real estate taxes on our properties may increase as tax rates change and as the properties are assessed or reassessed by taxing authorities. We expect to be notified by local taxing authorities if the assessed values of certain of our properties increase. We would likely appeal these increased assessments, but may not be successful in our efforts. Our leases with our customers generally do not allow us to increase their rent as a result of an increase in real estate or other taxes. If real estate or other taxes increase and we cannot pass these increases on to our customers through increased rent for new leases or upon lease renewals, our result of operations, cash flows and ability to make distributions to our stockholders would be adversely affected.

Regulatory, Legal, and Environmental Risks

We may incur significant costs complying with various federal, state and local regulations.

Our properties are subject to various federal, state and local regulations, such as state and local fire and life safety regulations and Americans with Disabilities Act (“ADA”) federal requirements. If one of our properties is not in compliance with these regulations, we may be required to pay fines or private damage awards. We do not know whether existing regulations will change or whether future regulations will require us to make significant unanticipated expenditures that will materially adversely impact our financial condition, results of operations, cash flows and ability to make distributions to our stockholders.

We may be subject to securities class action and other periodic litigation and our contracts with customers could subject us to significant liability, which could result in unexpected expense of time and resources, and may harm our business, results of operations and financial condition.

From time to time, we may also be called on to defend ourselves against lawsuits relating to our business operations. Some of these claims may seek significant damage amounts due to the nature of our business. Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of any such current or future

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proceedings. A future unfavorable outcome in a legal proceeding or any future legal proceedings could have an adverse impact on our business, financial condition and results of operations. In addition, any significant current and future litigation, regardless of its merits, could result in substantial legal fees, settlement or judgment costs and a diversion of management’s attention and resources that are needed to successfully run our business.

Further, in the ordinary course of business, our customer contracts typically contain indemnification and liability provisions, in addition to service level commitments, which could potentially impose a significant liability on us in the event of losses arising out of certain breaches of such agreements, services to be provided by us or our subcontractors or from third-party claims. Additionally, in connection with our acquisitions, we have assumed existing agreements with customers that may subject us to greater liability for such an event of loss. If such an event of loss occurred, we could be liable for material monetary damages and could incur significant legal fees in defending against such an action, which could adversely affect our financial condition and results of operations.

In addition, we may be subject to securities class action or other periodic litigation from time to time. Companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and/or damages, and divert management’s attention from other business concerns, which could seriously harm our business, results of operations, financial condition or cash flows.

Environmental problems are possible and can be costly, and we may be adversely affected by climate change and regulations related to climate change.

Environmental liabilities, such as contamination, asbestos-containing building materials, and mold or other air quality issues at some of our properties, could arise and have a material adverse effect on our financial condition and performance. Federal, state and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and remediate hazardous or toxic substances or petroleum product releases at or from the property. In addition, we could incur costs to comply with such laws and regulations, the violation of which could lead to substantial fines and penalties, and third parties could potentially seek recovery from owners or operators for any personal injury associated. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our customers, employees of our customers and others if property damage or health concerns arise.

Additionally, extreme, and oftentimes unpredictable, weather events such as droughts, heat waves, fires, hurricanes, tornadoes, rising sea levels and flooding pose a threat to our business through physical damage to, a decrease in demand for, and/or a decrease in rent from and value of, our data centers located in the areas affected by these events. For example, changes in average daily temperatures as a result of climate change could increase the cost of cooling our data centers, which would have an adverse effect on our business. These weather events may also lead to power supply disruption to our data centers, which could also negatively impact our business operations.

We maintain disaster recovery and business continuity plans that we have utilized in the past and that would be utilized if severe weather events interrupt our business. While these plans are designed to help us recover from natural disasters or other events that could interrupt our business, such as extreme weather events related to climate change, we cannot assure you that our plans will adequately or completely protect us or our customers from all such disasters or events. Furthermore, an increase in the frequency, duration and severity of such extreme weather events and/or our failure to prevent or mitigate the impact of such events on our customers could have a material adverse effect on our business.

In addition, climate change regulation is a rapidly developing area. New laws relating to climate change, including potential cap-and-trade systems, carbon taxes and other requirements relating to reduction of carbon footprints and/or greenhouse gas emissions could negatively affect our business operations, results of operations and cash flow. Other countries have enacted climate change laws and regulations, and the United States has been involved in discussions regarding international climate change treaties. The U.S. Environmental Protection Agency, or EPA, and some of the states and localities in which we operate, have also enacted certain climate change laws and regulations and/or have begun regulating carbon footprints and greenhouse gas emissions. In addition, the EPA and the states and localities in which we operate may adopt new regulations related to the use of fossil fuels or requiring the use of alternative fuel or renewable energy sources to power energy resources that serve our data centers. The cost of procuring such electricity may exceed the costs of procuring electricity from existing sources. Efforts to support and enhance

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renewable electricity generation may increase our costs of electricity above those that would be incurred through procurement of conventional electricity.

Furthermore, our customers, investors and/or other stakeholders may require us to take steps to demonstrate that we are taking actions towards improving the operation of our business in a measurably sustainable manner and reducing our carbon footprint. However, our customers, investors and/or other stakeholders might not be satisfied with our sustainability efforts or the speed of their adoption. If we do not meet such expectations, our business may be harmed and/or our share price may decline. Given the nature of our business, our data centers require and consume significant amounts of power, including electricity generated by the burning of fossil fuels. These laws, regulations and stakeholder requests could limit our ability to develop new facilities or result in substantial compliance costs, maintenance costs, repair costs, retrofit costs and construction costs, including capital expenditures for environmental control facilities and other new equipment. For example, in the normal course of business, we enter into agreements with providers of electric power for our data centers, and the costs of electric power comprise a significant component of our operating expenses. Changes in regulations that affect electric power providers such as regulations related to the control of greenhouse gas emissions or other climate change related matters could adversely affect the costs of electric power and increase our operating costs, which could adversely affect our business, financial condition and results of operations or those of our customers. Failure to comply with applicable laws and regulations or other requirements imposed on us could also lead to fines and/or lost revenue. We could also face a negative impact on our reputation with the public and our customers if we violate climate change laws or regulations.

We have government customers, which subjects us to risks including early termination, audits, investigations, sanctions and penalties.

We derive some revenues from contracts with the U.S. government, state and local governments and their respective agencies. Some of these customers may terminate all or part of their contracts at any time, without cause. There is increased pressure for governments and their agencies to reduce spending. Some of our federal government contracts are subject to the approval of appropriations being made by the U.S. Congress to fund the expenditures under these contracts. Similarly, some of our contracts at the state and local levels are subject to government funding authorizations. Additionally, government contracts are generally subject to audits and investigations which could result in various civil and criminal penalties and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business. Furthermore, future regulations may include physical security requirements applicable to the defense industry and government contractors, which we may not be able to provide.

Risks Related to Our Organizational Structure

Corporate Governance and Ownership Risks

The interests of the funds and their affiliates may differ from or conflict with the interests of our stockholders.

As of December 31, 2020, the Funds and their affiliates had an aggregate beneficial common ownership interest in our Operating Partnership of approximately 12.3%, which, if exchanged for our common stock, would represent approximately 12.2% of our outstanding common stock. In addition, the operating agreement for our Operating Partnership grants the Funds and their affiliates the right to nominate one director to our Board of Directors for so long as the Funds hold at least 10% of our outstanding common stock or common stock equivalents. As a result, the Funds and their affiliates have the ability to exercise influence over our Company, including with respect to decisions relating to our capital structure and material business transactions. In any of these matters, the interests of the Funds and their affiliates may differ from or conflict with the interests of our other stockholders.

Our charter and bylaws contain provisions that may delay, defer or prevent an acquisition of our common stock or a change in control, which may not be in the best interests of our stockholders.

Our charter and bylaws contain a number of provisions, the exercise or existence of which could delay, defer or prevent a transaction or a change in control that might involve a premium price for our stockholders or otherwise be in their best interests, including, provisions that (i) prohibit any person or entity (other than a person who or entity that has been granted an exception) from actually or constructively owning more than 9.8% (by value or by number of shares, whichever is more restrictive) of our common stock, or more than 9.8% (by value) of our capital stock (such provisions being intended to, among other purposes, assist us in complying with certain federal income tax requirements

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applicable to REITs), and (ii) authorize our Board of Directors to, without stockholder approval, amend our charter to increase or decrease the aggregate number of our shares of stock or the number of shares of stock of any class or series that we have authority to issue and classify or reclassify any unissued shares of common or preferred stock and set the preferences, rights and other terms of the classified or reclassified shares.

The number of shares available for future sale could adversely affect the market price of our common stock.

We cannot predict whether future issuances of shares of our common stock or the availability of shares of our common stock for resale in the open market will decrease the market price per share of our common stock. Sales of a substantial number of shares of our common stock in the public market, either by us or by holders of Operating Partnership units upon exchange of such Operating Partnership units for our common stock, or the perception that such sales might occur, could adversely affect the market price of the shares of our common stock. The Funds, as holders of the Operating Partnership units issued in the formation transactions, have the right to require us to register with the SEC the resale of the common stock issuable, if we so elect, upon redemption of these Operating Partnership units. In addition, we registered shares of common stock that we have reserved for issuance under our Long Term Incentive Plan, and they generally can be freely sold in the public market, assuming any applicable restrictions and vesting requirements are satisfied. If any or all of these holders, including the Funds, cause a large number of their shares to be sold in the public market, the sales could reduce the trading price of our common stock and could impede our ability to raise future capital. During the year ended December 31, 2020, 4,854,873 common Operating Partnership units held by third parties were redeemed for shares of our common stock. Refer to Item 8—Note 11 Noncontrolling Interests—Operating Partnership in “Financial Statements and Supplementary Data” included in this Annual Report.

Certain provisions of Maryland law may limit the ability of a third party to acquire control of us.

Certain provisions of the Maryland General Corporation Law, or MGCL, may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

● “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding shares of voting stock or an affiliate or associate of the corporation who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding stock of the corporation) or an affiliate of any interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder and thereafter imposes two super-majority stockholder voting requirements on these combinations; and

● “control share” provisions that provide with certain exceptions, that a holder of “control shares” of a Maryland corporation acquired in a “control share acquisition” has no voting rights with respect to those shares except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquiring person or by our officers or by our directors who are our employees.

We have opted out of these provisions of the MGCL, in the case of the business combination provisions of the MGCL, by resolution of our Board of Directors and, in the case of the control share provisions of the MGCL, by a provision in our bylaws. However, our Board of Directors may elect to opt into these provisions, if approved by our stockholders by the affirmative vote of a majority of votes cast and with the consent of the Funds or their affiliates, provided that the consent of the Funds will not be required unless, in the case of the control share provisions, such provisions would apply to the Funds and their affiliates or in either case at such time they own less than 10% of our outstanding common stock (assuming all common Operating Partnership units are exchanged into common stock). Additionally, the MGCL permits our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain takeover defenses, such as a classified board, some of which we do not yet have.

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REIT Qualifications Risks

Failure to qualify as a REIT, specifically a domestically-controlled REIT, would have material adverse consequences to us and the value of our stock and could subject our non-U.S. stockholders to adverse federal income tax consequences.

We have elected to be taxed and to operate in a manner that will allow us to qualify as a REIT for federal income tax purposes under the Code. However, there can be no assurance that we will remain qualified as a REIT. For example, if the IRS reverses previous rulings on REIT qualifying activities, our REIT status could be impacted. Our failure to qualify as a REIT could also impair our ability to expand our business and raise capital, and would materially adversely affect the value of our common stock.

In addition, if, in any taxable year, we lose our REIT status, we would face serious tax consequences that could substantially reduce our cash available for distribution to our stockholders for each of the years involved because (i) we would not be allowed a deduction for distributions to stockholders in computing our taxable income and we would be subject to federal income tax at regular corporate rates, (ii) we could be subject to increased state and local taxes, and (iii) unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified.

Additionally, we will remain a domestically controlled REIT if, at all times during a specified testing period, less than 50% in value of our shares is held directly or indirectly by non-U.S. stockholders. However, because our shares are publicly traded, we cannot guarantee that we will maintain the qualifications to be a domestically-controlled REIT. If we fail to qualify as a domestically-controlled REIT, our non-U.S. stockholders that otherwise would not be subject to federal income tax on the gain attributable to a sale of our shares of common stock would be subject to taxation upon such a sale if either (1) the shares of common stock were not considered to be regularly traded under applicable Treasury Regulations on an established securities market, such as the NYSE, or (2) the selling non-U.S. stockholder owned, actually or constructively, more than 5% in value of the outstanding shares of common stock being sold during specified testing periods. If gain on the sale or exchange of our shares of common stock was subject to taxation for these reasons, the non-U.S. stockholder would be subject to regular U.S. income tax with respect to any gain on a net basis in a manner similar to the taxation of a taxable U.S. stockholder, subject to any applicable alternative minimum tax and special alternative minimum tax in the case of nonresident alien individuals, and corporate non-U.S. stockholders may be subject to an additional branch profits tax.

Applicable REIT laws may restrict certain business activities and may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.

As a REIT we are subject to various restrictions on our income, assets and activities. These include restrictions on our ability to pursue certain strategic acquisitions or business combinations and our ability to enter into other lines of business. Due to these restrictions, we anticipate that we will conduct certain business activities in one or more taxable REIT subsidiaries. Our taxable REIT subsidiaries are taxable as regular C corporations and are subject to federal, state, local and, if applicable, foreign taxation on their taxable income at applicable corporate income tax rates. However, we may still be limited in the business activities we can pursue.

To qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, our sources of income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our capital stock. If we fail to comply with one or more of the asset tests at the end of any calendar quarter, we must correct the failure within 30 days after the end of such calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. In order to meet these tests, we may be required to forego investments we might otherwise make or to liquidate otherwise attractive investments. Thus, compliance with the REIT requirements may hinder our financial performance and reduce amounts available for distribution to our stockholders.

Legislative or other regulatory actions affecting REITs could have a negative effect on our business.

The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive application, could materially and adversely affect our stockholders, Operating Partnership unit holders and/or

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us. We cannot predict how changes in the tax laws might affect our investors and/or us. New legislation, Treasury Regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT or the federal income tax consequences of such qualification.

If tax rates were to change in a manner comparably favorable for regular corporate taxable income and dividends to that of REITs, investors could perceive investments in REITs to be relatively less attractive than investment in dividend paying non-REIT corporations, which could adversely affect the value of our common stock. Stockholders and potential investors should consult their tax advisors regarding their respective tax considerations and rates.

Distribution Risks

Our cash available for distribution to stockholders may not be sufficient to pay distributions at expected levels or at all, and we may be required to borrow funds on a short-term basis during unfavorable market conditions.

In order to maintain our qualification as a REIT, we are required under the Code to distribute at least 90% of our net taxable income annually to our stockholders. In any period our net taxable income may be greater than our cash flow from operations if our properties do not generate sufficient distributable cash flow to satisfy our REIT distribution obligations. As a result, we may be required to fund distributions from working capital, borrowings under our revolving credit facility, the sale of assets or debt or equity financing, some or all of which may not be available or may not be available on favorable market conditions. As a result, any failure to generate cash greater than our REIT distribution obligation could have a material adverse effect on the price of our common stock.

Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

For taxable years beginning on or after January 1, 2018, the maximum tax rate applicable to “qualified dividends” paid to U.S. shareholders that are individuals, trusts and estates is 23.8% (taking into account the 3.8% Medicare tax applicable to net investment income). Dividends payable by REITs, however, generally are not eligible for the same reduced tax rate. Rather, as provided for in the Tax Cuts and Jobs Act signed into law December 22, 2017, REIT dividends are subject to tax at rates applicable to ordinary income reduced by 20%, resulting in rates as high as 33.4% (taking into account the 3.8% Medicare tax applicable to net investment income). The more favorable tax rates applicable to regular corporate qualified dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the shares of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common shares. Further, the applicable tax rates to which our dividends are currently subject are contingent on possible future regulatory updates resulting from future changes in the U.S. Presidential administration, the U.S. House of Representatives, and the U.S. Senate.

General Risks

Pandemics or disease outbreaks, such as the novel coronavirus (“COVID-19”), may disrupt our business, as a result of, among other things, increased customer lease defaults, increased customer bankruptcies or insolvencies, delays in the development and lease-up of our properties, and severe disruption in the U.S. and global economies, which may further disrupt financial markets, and could materially adversely impact our financial condition, operations, and liquidity.

Our business could be materially and adversely affected by the outbreak of pandemics or disease outbreaks, such as COVID-19, or fear of such event, particularly in regions where we derive a significant amount of revenue or where our suppliers and customers are located, including North America. The COVID-19 outbreak is ongoing, and its dynamic nature, including uncertainties relating to the ultimate spread of the virus, severity of the disease, the duration of the outbreak, the total impact, financial and otherwise, that it will have on our suppliers and customers, and actions that may be taken by governmental authorities to contain the outbreak or treat its impact, makes it difficult to forecast the extent of the effects of the COVID-19 outbreak on our results of operations. The outbreak of COVID-19 continues to adversely impact global economic activity and has contributed to significant volatility and negative pressure in financial markets, which may cause a material adverse impact on our financial condition, operations and liquidity.

Although the pandemic has not had a significant impact on our operations to date, the future effects of COVID-19 could affect our ability to successfully operate, in many ways, including, but not limited to, the following factors:

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● the continued service and availability of our employees, including executive officers and other key personnel, and the ability to recruit, attract, and retain skilled personnel – to the extent management or personnel are impacted in significant numbers by the outbreak of the pandemic or epidemic disease and are not available or allowed to conduct work or business;

● difficulty accessing debt and equity on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our or our customers’ ability to access capital necessary to fund business operations or replace or renew maturing liabilities on a timely basis, and may adversely affect the valuation of financial assets;

● ability to operate in affected areas, or delays in the supply of products or services from our vendors that are needed to operate efficiently or continue development activities;

● ability to complete ongoing construction projects, or to commence new projects, due to governmental restrictions on construction activities or “shelter in place” orders or the ability of our general contractors and other vendors to maintain employee availability;

● continued weakness in national, regional, local and global economies that negatively impacts the demand for data center space in our markets;

● customers’ ability to pay rent on their leases and in the event of a significant number of lease defaults and/or customer bankruptcies, it may be difficult, costly, and time consuming to attract new customers and lease the space on terms as favorable as the previous leases or at all;

● vendors’ ability to perform scheduled maintenance on time or other delays that may be encountered due to travel restrictions, “shelter in place” orders and resource constraints;

● our ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during a disruption;

● the ability of our employees who do not work at our data centers to work effectively from remote locations in compliance with “shelter in place” orders; and

● our ability to operate, which may cause our business and operating results to decline or impact our ability to comply with regulatory obligations leading to reputational harm and regulatory issues or fines.

The rapid development and fluidity of this situation precludes any prediction as to the ultimate impact of COVID-19. The full extent of the impact and effects of COVID-19 on our future financial condition and performance are uncertain at this time. The impact will depend on future developments, including, among other factors, the duration and spread of the outbreak, along with related restrictions on movement and commercial activities, the recovery time of disrupted supply chains, consequential staffing shortages, development delays, and the uncertainty with respect to the accessibility of additional liquidity or to the capital markets. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion regarding the impacts of COVID-19.

Global economic conditions, real estate valuations and impairment charges could adversely affect our liquidity, financial condition, earnings, and the value of an investment in our common stock.

General economic conditions and the cost and availability of capital may be adversely affected in some or all of the markets in which we own properties and conduct our operations. In addition, our access to funds under our revolving credit facility and other lines of credit we may enter into depend on the ability of the lenders that are parties to such facilities to meet their funding commitments to us. There can be no assurance that long-term disruptions in the global economy will not have an adverse effect on our lenders, which may result in adverse effects on our business, results of operations, cash flows and financial condition.

Additionally, we periodically review each of our properties for indicators of impairment. When impairment indicators exist, we review an estimate of future cash flows expected to result from the real estate investment’s use and eventual disposal. This evaluation is highly subjective and is in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual future results. A decline in real estate prices where we operate may cause us to reevaluate these assumptions used in our impairment analysis. Impairment charges could adversely affect our financial condition, results of operations, and the market price of our stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

The information set forth under the caption “Our Portfolio” in Item 1 of this Annual Report is incorporated by reference herein.

ITEM 3. LEGAL PROCEEDINGS

Refer to Item 8. Financial Statements — Note 16 — Commitments and Contingencies for a description of our current pending legal proceedings.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Holders

Our common stock is listed and traded on the New York Stock Exchange (“NYSE”) under the symbol “COR”. As of February 4, 2021, we had five holders of record of our common stock. This figure does not reflect the beneficial ownership of shares held in nominee name.

Distributions and Dividends

In order to comply with the REIT requirements of the Code, we generally are required to make annual distributions to our stockholders of at least 90% of our net taxable income. Our common stock distribution policy is to distribute as dividends, at a minimum, a percentage of our cash flow that ensures that we will meet the distribution requirements of the Code and any subsequent increases and/or anticipated increases are correlated to increases in our growth of cash flow.

We have made distributions every quarter since the completion of our initial public offering. During the year ended December 31, 2020, we declared quarterly dividends totaling $4.89 per share of common stock and Operating Partnership unit. While we plan to continue to make quarterly distributions, no assurances can be made as to the frequency or amounts of any future distributions. The payment of common stock distributions is dependent upon our financial condition, operating results and REIT distribution requirements and may be adjusted at the discretion of our Board of Directors during the year.

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Performance Graph

The following line graph sets forth, for the period from December 31, 2015, through December 31, 2020, a comparison of the percentage change in the cumulative total stockholder return on our common stock compared to the cumulative total return of the S&P 500 Market Index and the MSCI US REIT Index. The graph assumes that $100 was invested on December 31, 2015, in shares of our common stock and each of the aforementioned indices and that all dividends were reinvested without the payment of any commissions. There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below.

Pricing Date COR