Guarantors

3 Months Ended

Mar. 31, 2020

Condensed Financial Information Disclosure [Abstract]

Guarantors

Guarantors

The 2024 Notes, the 2027 Notes and the 2029 Notes issued by CyrusOne LP (the "LP Co-Issuer") and CyrusOne Finance Corp. (the "Finance Co-Issuer" and, together with the LP Co-Issuer, the "Co-Issuers") are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by CyrusOne Inc. (the "Parent Guarantor").

The indentures governing the 2024 Notes, 2027 Notes and 2029 Notes contain affirmative and negative covenants customarily found in indebtedness of this type, including covenants that restrict, subject to certain exceptions, the Company's ability to incur secured or unsecured indebtedness. The Company and its subsidiaries are also required to maintain total unencumbered assets of at least 150% of their unsecured debt on a consolidated basis, subject to certain qualifications set forth in the indentures. The covenants contained in the indentures do not restrict the Company’s ability to pay dividends or distributions to stockholders.

The Old 2024 Notes and the Old 2027 Notes issued by the LP Co-Issuer and the Finance Co-Issuer were fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis.

The indentures governing the Old 2024 Notes and Old 2027 Notes contained affirmative and negative covenants customarily found in indebtedness of this type, including covenants that restricted, subject to certain exceptions, the Company’s ability to: incur secured or unsecured indebtedness; pay dividends or distributions on its equity interests, or redeem or repurchase equity interests of the Company; make certain investments or other restricted payments; enter into transactions with affiliates; enter into agreements limiting the ability of the Operating Partnership's subsidiaries to pay dividends or make certain transfers and other payments to the Operating Partnership or to other subsidiaries; sell assets; and merge, consolidate or transfer all or substantially all of the operating partnership's assets. The Company and its subsidiaries were also required to maintain total unencumbered assets of at least 150% of their unsecured debt on a consolidated basis, subject to certain qualifications set forth in the indenture.

Notwithstanding the foregoing, the covenants contained in the indentures did not restrict the Company's ability to pay dividends or distributions to stockholders to the extent (i) no default or event of default existed or was continuing under the indentures and (ii) the Company believed in good faith that it qualified as a REIT under the Code and the payment of such dividend or distribution was necessary either to maintain its status as a REIT or to enable it to avoid payment of any tax that could be avoided by reason of such dividend or distribution. Subject to the provisions of the indentures governing the Old 2024 Notes and Old 2027 Notes, in certain circumstances, a Guarantor could have been released from its guarantee obligation, including:

• upon the sale or other disposition (including by way of consolidation or merger) of such Guarantor or of all of the capital stock of such Guarantor such that such Guarantor was no longer a restricted subsidiary under the indentures,

• upon the sale or disposition of all or substantially all of the assets of the Guarantor,

• upon the LP Co-issuer designating such Guarantor as an unrestricted subsidiary under the terms of the indentures,

• if such Guarantor was no longer a guarantor or other obligor of any other indebtedness of the LP Co-issuer or the Parent Guarantor,

• upon the LP Co-issuer designating such Guarantor as an excluded subsidiary under the terms of the indentures,

• upon the defeasance or discharge of the Old 2024 Notes or Old 2027 Notes, as applicable, in accordance with the terms of the indentures, and

• upon the Old 2024 Notes or Old 2027 Notes, as applicable, being rated investment grade by at least two rating agencies and no default or event of default having occurred and continuing.

The term “Guarantor Subsidiaries” refers collectively to the Subsidiary Guarantors and the General Partner, who were guarantors of the Old 2024 Notes and Old 2027 Notes prior to May 9, 2019. The term “Non-Guarantors” refers collectively to the Company’s foreign subsidiaries and certain domestic subsidiaries, which are not, and were not, prior to May 9, 2019, guarantors of the Old 2024 Notes or Old 2027 Notes. On and after May 9, 2019, the term “Non-Guarantor Subsidiaries” refers collectively to the Subsidiary Guarantors and the Non-Guarantors.

The Parent Guarantor is a REIT whose only material asset is its ownership of operating partnership units of the LP Co-Issuer. The LP Co-Issuer and its subsidiaries hold substantially all the assets of the Company. The LP Co-Issuer conducts the operations of the business, along with its subsidiaries. The Finance Co-Issuer does not have any operations or revenues.

The following schedules present the Condensed Consolidating Balance Sheets as of March 31, 2020 and December 31, 2019, and the Condensed Consolidating Statements of Operations, comprehensive income (loss) and cash flows for the three months ended March 31, 2020 for the Parent Guarantor, General Partner, each Co-Issuer and Non-Guarantor Subsidiaries. Prior to the release of the Subsidiary Guarantors on May 9, 2019, the following schedules present the Condensed Consolidating Statements of Operations, comprehensive income (loss) and cash flows for the three months ended March 31, 2019 for the Parent Guarantor, General Partner, each Co-Issuer, Guarantor Subsidiaries, and Non-Guarantors. Eliminations and consolidation adjustments primarily relate to the elimination of investments in subsidiaries and equity earnings (loss) related to investments in subsidiaries (in millions).

Condensed Consolidating Balance Sheets

	As of March 31, 2020
	Parent Guarantor		General Partner		LP Co-issuer		Finance Co-issuer		Non-Guarantor Subsidiaries		Eliminations/Consolidations			Total
Total investment in real estate, net	$	—	$	—	$	—	$	—	$	4,715.5	$	75.9		$	4,791.4
Cash and cash equivalents	0.2		—		0.4		—		56.7		—			57.3
Investment in subsidiaries	2,329.8		16.4		3,683.2		—		—		(6,029.4		)	—
Rent and other receivables, net	—		—		—		—		305.3		—			305.3
Restricted cash	—		—		—		—		1.3		—			1.3
Operating lease right-of-use assets, net	—		—		—		—		208.6		—			208.6
Intercompany receivable	16.6		—		1,733.3		—		38.9		(1,788.8		)	—
Equity investments	—		—		—		—		153.1		—			153.1
Goodwill	—		—		—		—		455.1		—			455.1
Intangible assets, net	—		—		—		—		184.5		—			184.5
Other assets	—		—		0.6		—		121.3		—			121.9
Total assets	$	2,346.6	$	16.4	$	5,417.5	$	—	$	6,240.3	$	(7,742.3	)	$	6,278.5
Debt	$	—	$	—	$	3,047.0	$	—	$	—	$	—		$	3,047.0
Intercompany payable	—		—		16.6		—		1,772.2		(1,788.8		)	—
Finance lease liabilities	—		—		—		—		29.4		—			29.4
Operating lease liabilities	—		—		—		—		243.0		—			243.0
Construction costs payable	—		—		—		—		183.4		—			183.4
Accounts payable and accrued expenses	—		—		16.2		—		104.8		—			121.0
Dividends payable	58.7		—		—		—		—		—			58.7
Deferred revenue and prepaid rents	—		—		—		—		167.3		—			167.3
Deferred tax liability	—		—		—		—		57.0		—			57.0
Other liabilities	—		—		7.9		—		—		—			7.9
Total liabilities	58.7		—		3,087.7		—		2,557.1		(1,788.8		)	3,914.7
Total stockholders' equity	2,287.9		16.4		2,329.8		—		3,683.2		(5,953.5		)	2,363.8
Total liabilities and equity	$	2,346.6	$	16.4	$	5,417.5	$	—	$	6,240.3	$	(7,742.3	)	$	6,278.5

	As of December 31, 2019
	Parent Guarantor		General Partner		LP Co-issuer		Finance Co-issuer		Non-Guarantor Subsidiaries		Eliminations/Consolidations			Total
Total investment in real estate, net	$	—	$	—	$	—	$	—	$	4,640.4	$	69.9		$	4,710.3
Cash and cash equivalents	—		—		0.6		—		75.8		—			76.4
Investment in subsidiaries	2,402.2		16.8		3,569.0		—		—		(5,988.0		)	—
Rent and other receivables, net	—		—		—		—		291.9		—			291.9
Restricted cash	—		—		—		—		1.3		—			1.3
Operating lease right-of-use assets, net	—		—		—		—		161.9		—			161.9
Intercompany receivable	21.1		—		1,753.3		—		38.8		(1,813.2		)	—
Equity investments	—		—		—		—		135.1		—			135.1
Goodwill	—		—		—		—		455.1		—			455.1
Intangible assets, net	—		—		—		—		196.1		—			196.1
Other assets	—		—		3.5		—		110.4		—			113.9
Total assets	$	2,423.3	$	16.8	$	5,326.4	$	—	$	6,106.8	$	(7,731.3	)	$	6,142.0
Debt	$	—	$	—	$	2,886.6	$	—	$	—	$	—		$	2,886.6
Intercompany payable	—		—		21.1		—		1,792.1		(1,813.2		)	—
Finance lease liabilities	—		—		—		—		31.8		—			31.8
Operating lease liabilities	—		—		—		—		195.8		—			195.8
Construction costs payable	—		—		—		—		176.3		—			176.3
Accounts payable and accrued expenses	—		—		5.1		—		117.6		—			122.7
Dividends payable	58.6		—		—		—		—		—			58.6
Deferred revenue and prepaid rents	—		—		—		—		163.7		—			163.7
Deferred tax liability	—		—		—		—		60.5		—			60.5
Other liabilities	—		—		11.4		—		—		—			11.4
Total liabilities	58.6		—		2,924.2		—		2,537.8		(1,813.2		)	3,707.4
Total stockholders' equity	2,364.7		16.8		2,402.2		—		3,569.0		(5,918.1		)	2,434.6
Total liabilities and equity	$	2,423.3	$	16.8	$	5,326.4	$	—	$	6,106.8	$	(7,731.3	)	$	6,142.0

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)

	Three Months Ended March 31, 2020
	Parent Guarantor			General Partner			LP Co-issuer			Finance Co-issuer		Non-Guarantor Subsidiaries			Eliminations/ Consolidations		Total
Revenue	$	—		$	—		$	—		$	—	$	245.9		$	—	$	245.9
Total operating expenses	—			—			—			—		232.7			—		232.7
Operating income	—			—			—			—		13.2			—		13.2
Interest (expense) income, net	—			—			(21.5		)	—		(0.5		)	6.0		(16.0		)
Gain on marketable equity investment	—			—			—			—		14.7			—		14.7
Foreign currency and derivative gains, net	—			—			5.1			—		—			—		5.1
Loss on early extinguishment of debt	—			—			(3.4		)	—		—			—		(3.4		)
Other expense	—			—			—			—		(0.1		)	—		(0.1		)
(Loss) income before income taxes	—			—			(19.8		)	—		27.3			6.0		13.5
Income tax benefit	—			—			—			—		1.2			—		1.2
Equity earnings (loss) related to investment in subsidiaries	(16.4		)	(0.1		)	4.5			—		—			12.0		—
Net income (loss)	(16.4		)	(0.1		)	(15.3		)	—		28.5			18.0		14.7
Other comprehensive loss	—			—			(1.1		)	—		(24.0		)	—		(25.1		)
Comprehensive income (loss)	$	(16.4	)	$	(0.1	)	$	(16.4	)	$	—	$	4.5		$	18.0	$	(10.4	)

	Three Months Ended March 31, 2019
	Parent Guarantor		General Partner		LP Co-issuer			Finance Co-issuer		Guarantor Subsidiaries			Non- Guarantors			Eliminations/Consolidations			Total
Revenue	$	—	$	—	$	—		$	—	$	209.2		$	15.8		$	—		$	225.0
Total operating expenses	—		—		—			—		189.3			23.9			—			213.2
Operating income (loss)	—		—		—			—		19.9			(8.1		)	—			11.8
Interest (expense) income, net	—		—		(32.5		)	—		—			(0.4		)	9.2			(23.7		)
Unrealized gain on marketable equity investment	—		—		—			—		—			101.2			—			101.2
Other expense	—		—		—			—		—			(0.1		)	—			(0.1		)
(Loss) income before income taxes	—		—		(32.5		)	—		19.9			92.6			9.2			89.2
Income tax (expense) benefit	—		—		—			—		(0.8		)	1.0			—			0.2
Equity earnings (loss) related to investment in subsidiaries	83.5		0.8		113.3			—		—			—			(197.6		)	—
Net income (loss)	83.5		0.8		80.8			—		19.1			93.6			(188.4		)	89.4
Other comprehensive income	—		—		2.7			—		—			0.6			—			3.3
Comprehensive income (loss)	$	83.5	$	0.8	$	83.5		$	—	$	19.1		$	94.2		$	(188.4	)	$	92.7

Condensed Consolidating Statements of Cash Flows

	Three Months Ended March 31, 2020
	Parent Guarantor			General Partner		LP Co-issuer			Finance Co-issuer		Non-Guarantor Subsidiaries			Eliminations/Consolidations			Total
Net cash (used in) provided by operating activities	$	—		$	—	$	50.0		$	—	$	30.3		$	6.0		$	86.3
Cash flows from investing activities:
Investment in real estate	—			—		—			—		(190.5		)	(6.0		)	(196.5		)
Investment in subsidiaries	0.6			—		(164.5		)	—		—			163.9			—
Equity investments	—			—		—			—		(3.3		)	—			(3.3		)
Proceeds from sale of equity investments	—			—		—			—		—			—			—
Proceeds from the sale of real estate assets	—			—		—			—		—			—			—
Return of investment	58.4			—		—			—		—			(58.4		)	—
Intercompany borrowings	5.3			—		20.3			—		0.1			(25.7		)	—
Net cash (used in) provided by investing activities	64.3			—		(144.2		)	—		(193.7		)	73.8			(199.8		)
Cash flows from financing activities:
Issuance of common stock, net	0.6			—		—			—		—			—			0.6
Dividends paid	(58.4		)	—		(58.4		)	—		—			58.4			(58.4		)
Payment of deferred financing costs	—			—		(13.6		)	—		—			—			(13.6		)
Proceeds from revolving credit facility	—			—		244.4			—		—			—			244.4
Repayments of revolving credit facility	—			—		(623.1		)	—		—			—			(623.1		)
Proceeds from Euro bond	—			—		550.6			—		—			—			550.6
Intercompany borrowings	—			—		(5.3		)	—		(20.4		)	25.7			—
Proceeds from unsecured term loan	—			—		1,100.0			—		—			—			1,100.0
Repayments of unsecured term loan	—			—		(1,100.0		)	—		—			—			(1,100.0		)
Payments on finance lease liabilities	—			—		—			—		(0.7		)	—			(0.7		)
Tax payment upon exercise of equity awards	(6.3		)	—		—			—		—			—			(6.3		)
Contributions/distributions from parent	—			—		(0.6		)	—		164.5			(163.9		)	—
Net cash provided by (used in) financing activities	(64.1		)	—		94.0			—		143.4			(79.8		)	93.5
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—		—			—		0.9			—			0.9
Net increase (decrease) in cash, cash equivalents and restricted cash	0.2			—		(0.2		)	—		(19.1		)	—			(19.1		)
Cash, cash equivalents and restricted cash at beginning of period	—			—		0.6			—		77.1			—			77.7
Cash, cash equivalents and restricted cash at end of period	$	0.2		$	—	$	0.4		$	—	$	58.0		$	—		$	58.6

	Three Months Ended March 31, 2019
	Parent Guarantor			General Partner			LP Co-issuer			Finance Co-issuer		Guarantor Subsidiaries			Non- Guarantors			Eliminations/Consolidations			Total
Net cash (used in) provided by operating activities	$	—		$	—		$	(46.5	)	$	—	$	79.9		$	1.3		$	9.2		$	43.9
Cash flows from investing activities:
Investment in real estate	—			—			—			—		(258.6		)	(34.1		)	(9.2		)	(301.9		)
Investment in subsidiaries	(105.0		)	(0.8		)	(106.0		)	—		—			—			211.8			—
Return of investment	50.4			—			—			—		—			—			(50.4		)	—
Intercompany borrowings	8.7			—			(169.1		)	—		(2.0		)	—			162.4			—
Net cash (used in) provided by investing activities	(45.9		)	(0.8		)	(275.1		)	—		(260.6		)	(34.1		)	314.6			(301.9		)
Cash flows from financing activities:
Issuance of common stock, net	105.0			—			—			—		—			—			—			105.0
Dividends paid	(50.4		)	—			(50.4		)	—		—			—			50.4			(50.4		)
Intercompany borrowings	—			—			(8.7		)	—		169.1			2.0			(162.4		)	—
Proceeds from revolving credit facility	—			—			275.7			—		—			—			—			275.7
Payments on finance lease liabilities	—			—			—			—		(0.3		)	(0.3		)	—			(0.6		)
Tax payment upon exercise of equity awards	(8.7		)	—			—			—		—			—			—			(8.7		)
Contributions/distributions from parent	—			0.8			105.0			—		91.6			14.4			(211.8		)	—
Net cash provided by (used in) financing activities	45.9			0.8			321.6			—		260.4			16.1			(323.8		)	321.0
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			—			—		—			(0.1		)	—			(0.1		)
Net increase (decrease) in cash, cash equivalents and restricted cash	—			—			—			—		79.7			(16.8		)	—			62.9
Cash, cash equivalents and restricted cash at beginning of period	—			—			—			—		27.2			37.2			—			64.4
Cash, cash equivalents and restricted cash at end of period	$	—		$	—		$	—		$	—	$	106.9		$	20.4		$	—		$	127.3