CyrusOne Reports Third Quarter 2019 Earnings

3Q’19 Year-over-Year Revenue Growth of 21%

Achieves Investment-Grade Index Eligibility

DALLAS--()--CyrusOne Inc. (NASDAQ: CONE), a premier global data center REIT, today announced third quarter 2019 earnings.

Highlights

 

 

% Change vs. 3Q’18

Category

3Q’19

3Q’18

3Q’18 Adjusted
for ASC 8421

Revenue

$250.9 million

21%

21%

Net income / (loss)

$12.6 million

n/m

n/m

Adjusted EBITDA

$127.8 million

15%

20%

Normalized FFO

$103.9 million

32%

36%

Net income / (loss) per diluted share

$0.11

n/m

n/m

Normalized FFO per diluted share

$0.91

15%

18%

Leased 35 megawatts (“MW”) and 266,000 colocation square feet (“CSF”) in the third quarter, totaling $52 million in annualized GAAP revenue

 

 

 

Includes 4.5 MW and approximately $5.5 million in annualized GAAP revenue associated with a paid reservation expected to be exercised in the next 12 months

 

 

 

Leased 22 MW totaling $27 million in annualized GAAP revenue across European locations (inclusive of lease associated with paid reservation referenced above), reflecting growing demand in the market from U.S. hyperscale companies, particularly for the larger deployments for which CyrusOne has unique expertise and capabilities

 

 

 

Company record $23 million in annualized GAAP revenue signed with enterprise customers

 

 

 

Backlog of $53 million in annualized GAAP revenue as of the end of the third quarter representing more than $340 million in total contract value (inclusive of lease associated with paid reservation referenced above)

 

 

Subsequent to the end of the quarter, acquired 20 acres of land with 24 MW of power capacity in Council Bluffs, IA to deliver a unique hybrid cloud solution for enterprise customers

 

 

Subsequent to the end of the quarter, Fitch Ratings assigned first-time long-term issuer default and senior unsecured ratings of ‘BBB-’, the Company’s second investment-grade credit rating (S&P Global Ratings: ‘BBB-’), resulting in investment-grade index eligibility and improving access to capital at attractive interest rates

 

 

 

Follows an upgrade by Moody’s Investors Service from Ba2 to Ba1, one notch below an investment-grade credit rating

 

 

Positioned the business for future growth in Europe, synthetically converting $500 million of the Company’s term loan maturing in March 2023 into more attractively priced EUR-denominated debt (equivalent to €451 million), resulting in a nearly 200 basis point decrease in the average interest rate over the remaining term based on the current forward curves

 

 

Reduced variable interest rate exposure by synthetically converting the remaining $300 million of the Company’s term loan maturing in March 2023 into fixed rate debt, decreasing the interest rate on this tranche to approximately 2.5% and increasing the percentage of total fixed rate debt to nearly 55%

“This was one of the strongest and most diversified leasing quarters in the company’s history, with contributions across numerous markets, verticals and product types in the U.S. and Europe,” said Gary Wojtaszek, president and chief executive officer of CyrusOne. “The bookings generate significant momentum for the business, with the $53 million backlog positioning us well for continued strong, profitable growth in 2020. Achieving investment-grade status is extremely important as certainty of access to capital allows us to grow with our hyperscale customers, our strong credit profile reduces their risk, and lower interest rates result in improved profitability for the business.”

Third Quarter 2019 Financial Results

Revenue was $250.9 million for the third quarter, compared to $206.6 million for the same period in 2018, an increase of 21%. The increase in revenue was driven primarily by an 11% increase in occupied CSF, the full quarter impact of the Zenium acquisition (which closed in late August 2018), and additional interconnection services.

Net income was $12.6 million for the third quarter, compared to net loss of $(42.4) million in the same period in 2018. Net income for the third quarter included a $12.4 million gain on the Company’s equity investment in GDS, a leading data center provider in China, and a $5.5 million gain associated with a change in fair value on the undesignated portion of the Company’s cross-currency swaps. Net income per diluted common share2 was $0.11 in the third quarter of 2019, compared to net loss per diluted common share of $(0.43) in the same period in 2018.

Net operating income (“NOI”)3 was $147.9 million for the third quarter, compared to $128.9 million in the same period in 2018, an increase of 15%. Adjusted EBITDA4 was $127.8 million for the third quarter, compared to $110.8 million in the same period in 2018, an increase of 15%.

Normalized Funds From Operations (“Normalized FFO”)5 was $103.9 million for the third quarter, compared to $78.5 million in the same period in 2018, an increase of 32%. Normalized FFO per diluted common share was $0.91 in the third quarter of 2019, compared to $0.79 in the same period in 2018, an increase of 15%.

Leasing Activity

CyrusOne leased approximately 35 MW of power and 266,000 CSF in the third quarter, representing approximately $4.3 million in monthly recurring rent, inclusive of the monthly impact of installation charges. This also includes 4.5 MW and approximately $0.5 million in monthly recurring rent associated with a paid reservation expected to be exercised in the next 12 months. The leasing for the quarter represents approximately $51.9 million in annualized GAAP revenue6, excluding estimates for pass-through power. The weighted average lease term of the new leases, based on square footage, is 99 months (8.2 years), and the weighted average remaining lease term of CyrusOne’s portfolio is 52 months (taking into account the impact of the backlog). Recurring rent churn7 for the third quarter was 1.0%, compared to 2.6% for the same period in 2018.

Portfolio Development and Percentage CSF Leased

In the third quarter, the Company completed construction on 31,000 CSF and 17 MW of power capacity across four projects in Frankfurt, London, Austin and Northern Virginia. Percentage CSF leased8 as of the end of the third quarter was 88% for stabilized properties9 and 85% overall. In addition, the Company has development projects underway in San Antonio, Northern Virginia, Iowa, the New York Metro area, Raleigh-Durham, Dallas, Frankfurt, Amsterdam, Dublin, and London that are expected to add approximately 397,000 CSF and 102 MW of power capacity.

Balance Sheet and Liquidity

As of September 30, 2019, the Company had gross asset value10 totaling approximately $7.2 billion, an increase of approximately 11% over gross asset value as of September 30, 2018. CyrusOne had $2.79 billion of long-term debt11, $51.7 million of cash and cash equivalents, and $1.20 billion available under its unsecured revolving credit facility as of September 30, 2019. Net debt11 was $2.77 billion as of September 30, 2019, representing approximately 24% of the Company's total enterprise value as of September 30, 2019 of $11.7 billion, or 5.4x Adjusted EBITDA for the last quarter annualized. After further adjusting Adjusted EBITDA to exclude the impact of the adoption of ASC 842 as of January 1, 2019, in order to present the leverage metric on a basis comparable to that of periods prior to 2019, net debt to Adjusted EBITDA for the last quarter annualized was 5.3x12. Available liquidity13 was $1.25 billion as of September 30, 2019.

In order to position the business for future growth in Europe, the Company synthetically converted $500 million of its term loan maturing in March 2023 into more attractively priced EUR-denominated debt (equivalent to €451 million), resulting in a nearly 200 basis point decrease in the average interest rate over the remaining term based on the current EURIBOR and LIBOR forward curves.

The Company also reduced its interest rate exposure by synthetically converting the remaining $300 million of its term loan maturing in March 2023 into fixed rate debt, decreasing the interest rate on this tranche to approximately 2.5% and increasing the percentage of total fixed rate debt to nearly 55%.

Dividend

On July 31, 2019, the Company announced a dividend of $0.50 per share of common stock for the third quarter of 2019. The dividend was paid on October 11, 2019, to stockholders of record at the close of business on September 27, 2019.

Additionally, today the Company is announcing a dividend of $0.50 per share of common stock for the fourth quarter of 2019. The dividend will be paid on January 10, 2020, to stockholders of record at the close of business on January 2, 2020.

Guidance

CyrusOne is updating guidance for full year 2019, tightening the guidance range and decreasing the midpoint for Total Revenue, tightening and decreasing the guidance range for Adjusted EBITDA, and tightening the guidance ranges and increasing the midpoints for Normalized FFO per diluted common share, Capital Expenditures and Capital Expenditures - Development. The annual guidance provided below represents forward-looking statements, which are based on current economic conditions, internal assumptions about the Company's existing customer base, and the supply and demand dynamics of the markets in which CyrusOne operates.

CyrusOne does not provide forward-looking guidance for GAAP financial measures (other than Total Revenue and Capital Expenditures) or reconciliations for the non-GAAP financial measures included in the annual guidance provided below due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for transaction, acquisition, integration and other related expenses, legal claim costs, asset impairments and loss on disposals and other charges in its reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

Category

Previous
2019 Guidance

Revised
2019 Guidance

Total Revenue

$970 - 990 million

$970 - 980 million

Lease and Other Revenues from Customers

$842 - 857 million

$838 - 843 million

Metered Power Reimbursements

$128 - 133 million

$132 - 137 million

Adjusted EBITDA

$507 - 517 million

$505 - 510 million

Normalized FFO per diluted common share

$3.50 - 3.60

$3.55 - 3.60

Capital Expenditures

$850 - 950 million

$900 - 950 million

Development(1)

$840 - 935 million

$890 - 935 million

Recurring

$10 - 15 million

$10 - 15 million

 

 

 

(1)Development capital expenditures include the acquisition of land for future development.

Upcoming Conferences and Events

  • NAREIT’s REITworld on November 12-14 in Los Angeles, CA
  • UBS Global TMT Conference on December 9-11 in New York City

Conference Call Details

CyrusOne will host a conference call on October 31, 2019, at 11:00 AM Eastern Time (10:00 AM Central Time) to discuss its results for the third quarter of 2019. A live webcast of the conference call will be available in the “Investors / Events & Presentations” section of the Company's website at http://investor.cyrusone.com/events.cfm. The presentation to be made during the call is now available in this location. The U.S. conference call dial-in number is 1-844-492-3731, and the international dial-in number is 1-412-542-4121. A replay will be available one hour after the conclusion of the earnings call on October 31, 2019, through November 14, 2019. The U.S. toll-free replay dial-in number is 1-877-344-7529 and the international replay dial-in number is 1-412-317-0088. The replay access code is 10134994.

Safe Harbor

This release and the documents incorporated by reference herein contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "predicts," "projects," "intends," "plans," "believes," "seeks," "estimates," "continues," "endeavors," "strives," "may," variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this release and those discussed in other documents we file with the Securities and Exchange Commission (SEC). More information on potential risks and uncertainties is available in our recent filings with the SEC, including CyrusOne’s Form 10-K report, Form 10-Q reports, and Form 8-K reports. We disclaim any obligation other than as required by law to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors or for new information, data or methods, future events or other changes.

Adoption of New Accounting Standard and Use of Non-GAAP Financial Measures and Other Metrics

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02 (codified in ASC 842, Leases (“ASC 842”)) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The ASU requires that a liability be recorded on the balance sheet for all leases where the reporting entity is a lessee, based on the present value of future lease obligations. A corresponding right-of-use asset will also be recorded. Amortization of the lease obligation and the right-of-use asset for leases classified as operating leases are on a straight-line basis. Leases classified as financing leases are required to be accounted for as financing arrangements similar to the accounting treatment for capital leases under ASC 840, Leases (the former accounting standard for all leases).

We adopted ASU 2016-02 on January 1, 2019, applied the package of practical expedients included therein and utilized the modified retrospective transition method with the cumulative effect of transition recognized on the effective date. By applying the modified retrospective transition method, the presentation of financial information for periods prior to January 1, 2019 was not restated.

This press release contains certain non-GAAP financial measures that management believes are helpful in understanding the Company’s business, as further discussed within this press release. These financial measures, which include Funds From Operations, Normalized Funds From Operations, Normalized Funds From Operations per Diluted Common Share, Adjusted EBITDA, Net Operating Income, and Net Debt should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of these non-GAAP financial measures to comparable GAAP financial measures have been included in the tables that accompany this release and are available in the Investor Relations section of www.cyrusone.com.

Management uses FFO, Normalized FFO, Normalized FFO per Diluted Common Share, Adjusted EBITDA, and NOI, which are non-GAAP financial measures commonly used in the REIT industry, as supplemental performance measures. Management uses these measures as supplemental performance measures because, when compared period over period, they capture trends in occupancy rates, rental rates and operating costs. The Company also believes that, as widely recognized measures of the performance of real estate investment trusts (REITs), these measures are used by investors as a basis to evaluate REITs. Other companies may not calculate these measures in the same manner, and, as presented, they may not be comparable to others. Therefore, FFO, Normalized FFO, NOI, and Adjusted EBITDA should be considered only as supplements to net income as measures of our performance. FFO, Normalized FFO, NOI, and Adjusted EBITDA should not be used as measures of liquidity or as indicative of funds available to fund the Company’s cash needs, including the ability to make distributions. These measures also should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with GAAP. The Company believes that Net Debt provides a useful measure of liquidity and financial health.

1 The Company adopted ASC 842 effective January 1, 2019. The adjusted 3Q’18 results have not been prepared in accordance with GAAP and represent the Company’s estimates as if the standard had been adopted as of January 1, 2018. The percentage changes versus adjusted 3Q’18 results are being shown solely for comparative and investor usefulness purposes with respect to the Company’s 3Q’19 results. There is no impact on 3Q’18 Revenue. The estimated impacts on 3Q’18 Net income (loss), Adjusted EBITDA, Normalized FFO, Net income / (loss) per diluted share, and Normalized FFO per diluted share are $1.3 million, $4.3 million, $2.3 million, $0.01, and $0.02, respectively.

2Net income (loss) per diluted common share is defined as net income (loss) divided by the weighted average diluted common shares outstanding for the period, which were 113.5 million for the third quarter of 2019.

3We use Net Operating Income ("NOI"), which is a non-GAAP financial measure commonly used in the REIT industry, as a supplemental performance measure. We use NOI as a supplemental performance measure because, when compared period over period, it captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of REITs, NOI is used by investors as a basis to evaluate REITs.

We calculate NOI as net income (loss), adjusted for sales and marketing expenses, general and administrative expenses, depreciation and amortization expenses, transaction, acquisition, integration and other related expenses, interest expense, net, (gain) loss on marketable equity investment, loss on early extinguishment of debt, impairment loss on real estate, foreign currency and derivative gains, net, other expense, income tax (benefit) expense and other items as appropriate. Amortization of deferred leasing costs is presented in depreciation and amortization expenses, which is excluded from NOI. Sales and marketing expenses are not property-specific, rather these expenses support our entire portfolio. As a result, we have excluded these sales and marketing expenses from our NOI calculation, consistent with the treatment of general and administrative expenses, which also support our entire portfolio. Because the calculation of NOI excludes various expenses, the utility of NOI as a measure of our performance is limited. Other REITs may not calculate NOI in the same manner. Accordingly, our NOI may not be comparable to others. Therefore, NOI should be considered only as a supplement to net income (loss) presented in accordance with GAAP as a measure of our performance. NOI should not be used as a measure of our liquidity or as indicative of funds available to fund our cash needs, including our ability to make distributions. NOI also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.

4Adjusted EBITDA, which is a non-GAAP financial measure, is defined as net income (loss) as defined by GAAP adjusted for interest expense, net, income tax (benefit) expense, depreciation and amortization, transaction, acquisition, integration and other related expenses, legal claim costs, stock-based compensation expense, severance and management transition costs, loss on early extinguishment of debt, new accounting standards and regulatory compliance and the related system implementation costs, (gain) loss on marketable equity investment, impairment loss on real estate, foreign currency and derivative gains, net, other expense and other items as appropriate. Other companies may not calculate Adjusted EBITDA in the same manner. Accordingly, the Company’s Adjusted EBITDA as presented may not be comparable to others.

5We use funds from operations ("FFO") and normalized funds from operations ("Normalized FFO"), which are non-GAAP financial measures commonly used in the REIT industry, as supplemental performance measures. We use FFO and Normalized FFO as supplemental performance measures because, when compared period over period, they capture trends in occupancy rates, rental rates and operating costs. We also believe that, as widely recognized measures of the performance of REITs, FFO and Normalized FFO are used by investors as a basis to evaluate REITs.

We calculate FFO as net income (loss) computed in accordance with GAAP before real estate depreciation and amortization and asset impairments and loss on disposals. While it is consistent with the definition of FFO promulgated by the National Association of Real Estate Investment Trusts ("NAREIT"), our computation of FFO may differ from the methodology for calculating FFO used by other REITs. Accordingly, our FFO may not be comparable to others.

We calculate Normalized FFO as FFO plus loss on early extinguishment of debt; (gain) loss on marketable equity investment; foreign currency and derivative gains, net; new accounting standards and regulatory compliance and the related system implementation costs; amortization of tradenames; transaction, acquisition, integration and other related expenses; severance and management transition costs; legal claim costs and other items as appropriate. We believe our Normalized FFO calculation provides a comparable measure between different periods. Other REITs may not calculate Normalized FFO in the same manner. Accordingly, our Normalized FFO may not be comparable to others.

In addition, because FFO and Normalized FFO exclude real estate depreciation and amortization, and capture neither the changes in the value of our properties that result from use or from market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO and Normalized FFO as measures of our performance is limited. Therefore, FFO and Normalized FFO should be considered only as supplements to net income (loss) presented in accordance with GAAP as measures of our performance. FFO and Normalized FFO should not be used as measures of our liquidity or as indicative of funds available to fund our cash needs, including our ability to make distributions. FFO and Normalized FFO also should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with GAAP.

6Annualized GAAP revenue is equal to monthly recurring rent, defined as average monthly contractual rent during the term of the lease plus the monthly impact of installation charges, multiplied by 12. It can be shown both inclusive and exclusive of the Company’s estimate of customer reimbursements for metered power.

7Recurring rent churn is calculated as any reduction in recurring rent due to customer terminations, service reductions or net pricing decreases as a percentage of rent at the beginning of the period, excluding any impact from metered power reimbursements or other usage-based billing. 3Q’19 recurring rent churn excludes additional 0.4% impact of a customer exit associated with legal settlement and termination fee received during the quarter; recurring revenue from that lease has not been recognized since mid-2016.

8Percentage CSF leased is calculated by dividing CSF under signed leases for colocation space (whether or not the lease has commenced billing) by total CSF. Percentage CSF leased differs from CSF occupied presented in the Data Center Portfolio table because the leased rate includes CSF for signed leases that have not commenced billing.

9Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% leased.

10Gross asset value is defined as total assets plus accumulated depreciation.

11Long-term debt and net debt exclude adjustments for deferred financing costs and bond premiums. Net debt, which is a non-GAAP financial measure, provides a useful measure of liquidity and financial health. The Company defines net debt as long-term debt and finance lease liabilities, offset by cash and cash equivalents.

12The estimated impact of the adoption of ASC 842 on Adjusted EBITDA for the last quarter annualized is $16.2 million.

13Liquidity is calculated as cash, cash equivalents, and temporary cash investments on hand, plus the undrawn capacity on CyrusOne's revolving credit facility.

About CyrusOne

CyrusOne (NASDAQ: CONE) is a high-growth real estate investment trust (REIT) specializing in highly reliable enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for approximately 1,000 customers, including more than 200 Fortune 1000 companies.

With a track record of meeting and surpassing the aggressive speed-to-market demands of hyperscale cloud providers, as well as the expanding IT infrastructure requirements of the enterprise, CyrusOne provides the flexibility, reliability, security, and connectivity that foster business growth. CyrusOne offers a tailored, customer service-focused platform and is committed to full transparency in communication, management, and service delivery throughout its nearly 50 data centers worldwide. Additional information about CyrusOne can be found at www.CyrusOne.com.

Company Profile

CyrusOne (NASDAQ: CONE) specializes in highly reliable enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for approximately 1,000 customers, including more than 200 Fortune 1000 companies. CyrusOne's data center offerings provide the flexibility, reliability, and security that enterprise customers require and are delivered through a tailored, customer service-focused platform designed to foster long-term relationships. CyrusOne is committed to full transparency in communication, management, and service delivery throughout its nearly 50 data centers worldwide.

  • Best-in-Class Sales Force
  • Flexible Solutions that Scale as Customers Grow
  • Massively Modular® Engineering with Data Hall Builds in 10-14 Weeks
  • Focus on Operational Excellence and Superior Customer Service
  • Proven Leading-Edge Technology Delivering Power Densities up to 900 Watts per Square Foot
  • National IX Replicates Enterprise Data Center Architecture

Corporate Headquarters

Senior Management

2101 Cedar Springs Road, Ste. 900

Gary Wojtaszek, President and CEO

Jonathan Schildkraut, EVP & Chief Strategy Officer

Dallas, Texas 75201

Tesh Durvasula, EVP & President, Europe

John Gould, EVP & Chief Commercial Officer

Phone: (972) 350-0060

Diane Morefield, EVP & Chief Financial Officer

Kellie Teal-Guess, EVP & Chief People Officer

Website: www.cyrusone.com

Kevin Timmons, EVP & Chief Technology Officer

Robert Jackson, EVP General Counsel & Secretary

Analyst Coverage

Firm

Analyst

Phone Number

Bank of America Merrill Lynch

Michael J. Funk

(646) 855-5664

Berenberg Capital Markets

Nate Crossett

(646) 949-9030

BMO Capital Markets

Ari Klein

(212) 885-4103

Citi

Mike Rollins

(212) 816-1116

Cowen and Company

Colby Synesael

(646) 562-1355

Credit Suisse

Sami Badri

(212) 538-1727

Green Street Advisors

Lukas Hartwich

(949) 640-8780

Guggenheim Securities, LLC

Robert Gutman

(212) 518-9148

Jefferies

Jonathan Petersen

(212) 284-1705

J.P. Morgan

Richard Choe

(212) 622-6708

KeyBanc Capital Markets

Jordan Sadler

(917) 368-2280

MoffettNathanson

Nick Del Deo, CFA

(212) 519-0025

Morgan Stanley

Simon Flannery

(212) 761-6432

RBC Capital Markets

Jonathan Atkin

(415) 633-8589

Raymond James

Frank G. Louthan IV

(404) 442-5867

Stifel

Erik Rasmussen

(212) 271-3461

SunTrust Robinson Humphrey

Greg Miller

(212) 303-4169

UBS

John C. Hodulik, CFA

(212) 713-4226

Wells Fargo

Eric Luebchow

(312) 630-2386

William Blair

Jim Breen, CFA

(617) 235-7513

CyrusOne Inc.

Summary of Financial Data

(Dollars in millions, except per share amounts)

 

 

Three Months

 

 

 

September 30,

June 30,

September 30,

Growth %

 

2019

2019

2018

Yr/Yr

Revenue

$

250.9

 

$

251.5

 

$

206.6

 

21

%

Net operating income

147.9

 

148.2

 

128.9

 

15

%

Net income (loss)

12.6

 

(8.5

)

(42.4

)

n/m

Funds from Operations ("FFO") - Nareit defined

116.2

 

91.7

 

39.5

 

n/m

Normalized Funds from Operations ("Normalized FFO")

103.9

 

102.1

 

78.5

 

32

%

Weighted average number of common shares outstanding - diluted for Normalized FFO

113.5

 

113.1

 

99.5

 

14

%

Income (loss) per share - basic

$

0.11

 

$

(0.08

)

$

(0.43

)

n/m

Income (loss) per share - diluted

$

0.11

 

$

(0.08

)

$

(0.43

)

n/m

Normalized FFO per diluted common share

$

0.91

 

$

0.90

 

$

0.79

 

15

%

Adjusted EBITDA

$

127.8

 

$

127.3

 

$

110.8

 

15

%

Adjusted EBITDA as a % of Revenue

50.9

%

50.6

%

53.6

%

(2.7) pts

 

As of

 

 

 

September 30,

June 30,

September 30,

Growth %

 

2019

2019

2018

Yr/Yr

Balance Sheet Data

 

 

 

 

Gross investment in real estate

$

5,870.8

 

$

5,707.0

 

$

5,093.2

 

15

%

Accumulated depreciation

(1,292.7

)

(1,207.4

)

(973.4

)

33

%

Total investment in real estate, net

4,578.1

 

4,499.6

 

4,119.8

 

11

%

Cash and cash equivalents

51.7

 

144.1

 

61.0

 

(15

)%

Market value of common equity

8,953.8

 

6,532.5

 

6,709.9

 

33

%

Long-term debt

2,791.0

 

2,729.9

 

2,595.6

 

8

%

Net debt

2,770.0

 

2,617.4

 

2,571.5

 

8

%

Total enterprise value

11,723.8

 

9,149.9

 

9,281.4

 

26

%

Net debt to LQA Adjusted EBITDA

5.4

x

5.1

x

5.4

x

-

 

 

 

 

 

Dividend Activity

 

 

 

 

Dividends per share

$

0.50

 

$

0.46

 

$

0.46

 

9

%

 

 

 

 

 

Portfolio Statistics

 

 

 

 

Data centers

47

 

47

 

47

 

-

Stabilized CSF (000)

3,935

 

3,744

 

3,396

 

16

%

Stabilized CSF % leased

88

%

89

%

91

%

(3) pts

Total CSF (000)

4,148

 

4,116

 

3,674

 

13

%

Total CSF % leased

85

%

84

%

86

%

(1) pts

Total NRSF (000)

7,117

 

7,085

 

6,527

 

9

%

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

 

 

Three Months

 

 

Nine Months

 

 

 

Ended September 30,

Change

Ended September 30,

Change

 

2019

2018

$

%

2019

2018

$

%

Revenue(a)

$

250.9

 

$

206.6

 

$

44.3

 

21

%

$

727.4

 

$

600.1

 

127.3

 

21

%

Operating expenses:

 

 

 

 

 

 

 

 

Property operating expenses

103.0

 

77.7

 

25.3

 

33

%

289.6

 

214.4

 

75.2

 

35

%

Sales and marketing

5.1

 

4.3

 

0.8

 

19

%

15.7

 

14.0

 

1.7

 

12

%

General and administrative

19.8

 

19.3

 

0.5

 

3

%

61.6

 

57.2

 

4.4

 

8

%

Depreciation and amortization

105.4

 

84.0

 

21.4

 

25

%

309.6

 

236.2

 

73.4

 

31

%

Transaction, acquisition, integration and other related expenses

4.4

 

1.1

 

3.3

 

n/m

6.2

 

3.4

 

2.8

 

82

%

Total operating expenses

237.7

 

186.4

 

51.3

 

28

%

682.7

 

525.2

 

157.5

 

30

%

Operating income

13.2

 

20.2

 

(7.0

)

(35

)%

44.7

 

74.9

 

(30.2

)

(40

)%

Interest expense, net

(19.6

)

(25.8

)

6.2

 

(24

)%

(64.4

)

(69.4

)

5.0

 

(7

)%

Gain (loss) on marketable equity investment

12.4

 

(36.6

)

49.0

 

n/m

105.1

 

106.6

 

(1.5

)

(1

)%

Loss on early extinguishment of debt

 

 

 

n/m

 

(3.1

)

3.1

 

n/m

Impairment loss on real estate

(0.7

)

 

(0.7

)

n/m

(0.7

)

 

(0.7

)

n/m

Foreign currency and derivative gains, net

5.5

 

 

5.5

 

n/m

5.5

 

 

5.5

 

n/m

Other expense

(0.2

)

 

(0.2

)

n/m

(0.3

)

 

(0.3

)

n/m

Net income (loss) before income taxes

10.6

 

(42.2

)

52.8

 

n/m

89.9

 

109.0

 

(19.1

)

(18

)%

Income tax benefit (expense)

2.0

 

(0.2

)

2.2

 

n/m

3.6

 

(2.0

)

5.6

 

n/m

Net income (loss)

$

12.6

 

$

(42.4

)

$

55.0

 

n/m

$

93.5

 

$

107.0

 

$

(13.5

)

(13

)%

Income (loss) per share - basic

$

0.11

 

$

(0.43

)

$

0.54

 

n/m

$

0.83

 

$

1.09

 

$

(0.26

)

(24

)%

Income (loss) per share - diluted

$

0.11

 

$

(0.43

)

$

0.54

 

n/m

$

0.83

 

$

1.08

 

$

(0.25

)

(23

)%

(a)

The Company adopted the new accounting standard, ASC 842, “Leases”, in the first quarter of 2019. Revenue includes metered power reimbursements of $41.1 million and $29.3 million for the three months ended September 30, 2019 and 2018, respectively, and includes metered power reimbursements of $101.3 million and $75.7 million for the nine months ended September 30, 2019 and 2018, respectively.

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

 

 

September 30,

December 31,

Change

 

2019

2018

$

%

Assets

 

 

 

 

Investment in real estate:

 

 

 

 

Land

$

147.3

 

$

118.5

 

$

28.8

 

24

%

Buildings and improvements

1,732.0

 

1,677.5

 

54.5

 

3

%

Equipment

2,950.3

 

2,630.2

 

320.1

 

12

%

Gross operating real estate

4,829.6

 

4,426.2

 

403.4

 

9

%

Less accumulated depreciation

(1,292.7

)

(1,054.5

)

(238.2

)

23

%

Net operating real estate

3,536.9

 

3,371.7

 

165.2

 

5

%

Construction in progress, including land under development

836.9

 

744.9

 

92.0

 

12

%

Land held for future development

204.3

 

176.4

 

27.9

 

16

%

Total investment in real estate, net

4,578.1

 

4,293.0

 

285.1

 

7

%

Cash and cash equivalents

51.7

 

64.4

 

(12.7

)

(20

)%

Rent and other receivables, net

279.3

 

234.9

 

44.4

 

19

%

Restricted cash

1.3

 

 

1.3

 

n/m

Operating lease right-of-use assets, net

90.7

 

 

90.7

 

n/m

Equity investments

104.3

 

198.1

 

(93.8

)

(47

)%

Goodwill

455.1

 

455.1

 

 

n/m

Intangible assets, net

203.7

 

235.7

 

(32.0

)

(14

)%

Other assets

128.7

 

111.3

 

17.4

 

16

%

Total assets

$

5,892.9

 

$

5,592.5

 

$

300.4

 

5

%

Liabilities and equity

 

 

 

 

Debt

$

2,776.1

 

$

2,624.7

 

$

151.4

 

6

%

Finance lease liabilities

30.7

 

33.4

 

(2.7

)

(8

)%

Operating lease liabilities

124.3

 

 

124.3

 

n/m

Lease financing arrangements

 

123.3

 

(123.3

)

n/m

Construction costs payable

131.2

 

195.3

 

(64.1

)

(33

)%

Accounts payable and accrued expenses

132.4

 

121.3

 

11.1

 

9

%

Dividends payable

57.7

 

51.0

 

6.7

 

13

%

Deferred revenue and prepaid rents

164.0

 

148.6

 

15.4

 

10

%

Deferred tax liability

59.6

 

68.9

 

(9.3

)

(13

)%

Total liabilities

3,476.0

 

3,366.5

 

109.5

 

3

%

Stockholders' equity

 

 

 

 

Preferred stock, $.01 par value, 100,000,000 authorized; no shares issued or outstanding

 

 

 

n/m

Common stock, $.01 par value, 500,000,000 shares authorized and 113,196,585 and 108,329,314 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

1.1

 

1.1

 

 

n/m

Additional paid in capital

3,094.2

 

2,837.4

 

256.8

 

9

%

Accumulated deficit

(657.4

)

(600.2

)

(57.2

)

10

%

Accumulated other comprehensive loss

(21.0

)

(12.3

)

(8.7

)

71

%

Total stockholders’ equity

2,416.9

 

2,226.0

 

190.9

 

9

%

Total liabilities and equity

$

5,892.9

 

$

5,592.5

 

$

300.4

 

5

%

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

 

For the three months ended:

September 30,

June 30,

March 31,

December 31,

September 30,

 

2019

2019

2019

2018

2018

Revenue(a)

$

250.9

 

$

251.5

 

$

225.0

 

$

221.3

 

$

206.6

 

Operating expenses:

 

 

 

 

 

Property operating expenses

103.0

 

103.3

 

83.3

 

78.0

 

77.7

 

Sales and marketing

5.1

 

5.3

 

5.3

 

5.6

 

4.3

 

General and administrative

19.8

 

19.7

 

22.2

 

23.4

 

19.3

 

Depreciation and amortization

105.4

 

102.1

 

102.1

 

97.9

 

84.0

 

Transaction, acquisition, integration and other related expenses

4.4

 

1.4

 

0.3

 

1.6

 

1.1

 

Total operating expenses

237.7

 

231.8

 

213.2

 

206.5

 

186.4

 

Operating income

13.2

 

19.7

 

11.8

 

14.8

 

20.2

 

Interest expense, net

(19.6

)

(21.1

)

(23.7

)

(25.3

)

(25.8

)

Gain (loss) on marketable equity investment

12.4

 

(8.5

)

101.2

 

(96.7

)

(36.6

)

Impairment loss on real estate

(0.7

)

 

 

 

 

Foreign currency and derivative gains, net

5.5

 

 

 

 

 

Other expense

(0.2

)

 

(0.1

)

 

 

Net income (loss) before income taxes

10.6

 

(9.9

)

89.2

 

(107.2

)

(42.2

)

Income tax benefit (expense)

2.0

 

1.4

 

0.2

 

1.4

 

(0.2

)

Net income (loss)

$

12.6

 

$

(8.5

)

$

89.4

 

$

(105.8

)

$

(42.4

)

Income (loss) per share - basic

$

0.11

 

$

(0.08

)

$

0.82

 

$

(1.00

)

$

(0.43

)

Income (loss) per share - diluted

$

0.11

 

$

(0.08

)

$

0.82

 

$

(1.00

)

$

(0.43

)

(a)

The Company adopted the new accounting standard, ASC 842, “Leases”, in the first quarter of 2019. Revenue includes metered power reimbursements of $41.1 million, $31.7 million, $28.5 million, $28.4 million and $29.3 million for the three months ended September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018, and September 30, 2018, respectively.

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

 

 

September 30,

June 30,

March 31,

December 31,

September 30,

 

2019

2019

2019

2018

2018

Assets

 

 

 

 

 

Investment in real estate:

 

 

 

 

 

Land

$

 

147.3

 

$

 

148.0

 

$

 

124.9

 

$

 

118.5

 

$

 

125.2

 

Buildings and improvements

 

1,732.0

 

 

1,689.7

 

 

1,649.2

 

 

1,677.5

 

 

1,587.3

 

Equipment

 

2,950.3

 

 

2,869.7

 

 

2,799.6

 

 

2,630.2

 

 

2,452.5

 

Gross operating real estate

 

4,829.6

 

 

4,707.4

 

 

4,573.7

 

 

4,426.2

 

 

4,165.0

 

Less accumulated depreciation

 

(1,292.7

)

 

(1,207.4

)

 

(1,122.5

)

 

(1,054.5

)

 

(973.4

)

Net operating real estate

 

3,536.9

 

 

3,500.0

 

 

3,451.2

 

 

3,371.7

 

 

3,191.6

 

Construction in progress, including land under development

 

836.9

 

 

799.2

 

 

734.7

 

 

744.9

 

 

738.6

 

Land held for future development

 

204.3

 

 

200.4

 

 

200.4

 

 

176.4

 

 

189.6

 

Total investment in real estate, net

 

4,578.1

 

 

4,499.6

 

 

4,386.3

 

 

4,293.0

 

 

4,119.8

 

Cash and cash equivalents

 

51.7

 

 

144.1

 

 

126.0

 

 

64.4

 

 

61.0

 

Rent and other receivables, net

 

279.3

 

 

268.4

 

 

248.7

 

 

234.9

 

 

224.6

 

Restricted cash

 

1.3

 

 

1.3

 

 

1.3

 

 

 

Operating lease right-of-use assets, net

 

90.7

 

 

78.5

 

 

83.8

 

 

 

Equity investments

 

104.3

 

 

91.9

 

 

299.3

 

 

198.1

 

 

282.2

 

Goodwill

 

455.1

 

 

455.1

 

 

455.1

 

 

455.1

 

 

455.1

 

Intangible assets, net

 

203.7

 

 

215.3

 

 

226.1

 

 

235.7

 

 

248.4

 

Other assets

 

128.7

 

 

115.5

 

 

114.8

 

 

111.3

 

 

102.0

 

Total assets

$

 

5,892.9

 

$

 

5,869.7

 

$

 

5,941.4

 

$

 

5,592.5

 

$

 

5,493.1

 

Liabilities and equity

 

 

 

 

 

Debt

$

 

2,776.1

 

$

 

2,713.8

 

$

 

2,898.6

 

$

 

2,624.7

 

$

 

2,576.2

 

Finance lease liabilities

 

30.7

 

 

31.6

 

 

33.4

 

 

33.4

 

 

36.9

 

Operating lease liabilities

 

124.3

 

 

114.1

 

 

119.6

 

 

 

Lease financing arrangements

 

 

 

 

123.3

 

 

125.8

 

Construction costs payable

 

131.2

 

 

149.5

 

 

155.5

 

 

195.3

 

 

160.5

 

Accounts payable and accrued expenses

 

132.4

 

 

112.8

 

 

81.6

 

 

121.3

 

 

96.8

 

Dividends payable

 

57.7

 

 

53.0

 

 

51.5

 

 

51.0

 

 

49.7

 

Deferred revenue and prepaid rents

 

164.0

 

 

166.8

 

 

155.9

 

 

148.6

 

 

139.5

 

Deferred tax liability

 

59.6

 

 

65.5

 

 

67.2

 

 

68.9

 

 

68.7

 

Total liabilities

 

3,476.0

 

 

3,407.1

 

 

3,563.3

 

 

3,366.5

 

 

3,254.1

 

Stockholders' equity

 

 

 

 

 

Preferred stock, $.01 par value, 100,000,000 authorized; no shares issued or outstanding

 

 

 

 

 

Common stock, $.01 par value, 500,000,000 shares authorized and 113,196,585 and 108,329,314 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

 

1.1

 

 

1.1

 

 

1.1

 

 

1.1

 

 

1.1

 

Additional paid in capital

 

3,094.2

 

 

3,089.5

 

 

2,938.2

 

 

2,837.4

 

 

2,685.3

 

Accumulated deficit

 

(657.4

)

 

(613.0

)

 

(552.2

)

 

(600.2

)

 

(444.3

)

Accumulated other comprehensive loss

 

(21.0

)

 

(15.0

)

 

(9.0

)

 

(12.3

)

 

(3.1

)

Total stockholders' equity

 

2,416.9

 

 

2,462.6

 

 

2,378.1

 

 

2,226.0

 

 

2,239.0

 

Total liabilities and equity

$

 

5,892.9

 

$

 

5,869.7

 

$

 

5,941.4

 

$

 

5,592.5

 

$

 

5,493.1

 

CyrusOne Inc.

Condensed Consolidated Statements of Cash Flow

(Dollars in millions)

(Unaudited)

 

 

 

 

 

 

Nine Months Ended September 30, 2019

Nine Months Ended September 30, 2018

Three Months Ended September 30, 2019

Three Months Ended September 30, 2018

Cash flows from operating activities:

 

 

 

 

Net income

$

 

93.5

 

$

 

107.0

 

$

 

12.6

 

$

 

(42.4

)

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

309.6

 

 

236.2

 

 

105.4

 

 

84.0

 

Provision for bad debt expense

 

(0.2

)

 

0.6

 

 

0.1

 

 

0.2

 

Unrealized gain on marketable equity investment

 

(38.2

)

 

(106.6

)

 

(12.4

)

 

36.6

 

Realized gain on marketable equity investment

 

(66.9

)

 

 

 

Foreign currency and derivative gains, net

 

 

(5.5

)

 

 

(5.5

)

 

Loss on asset disposals

 

 

0.2

 

 

 

0.2

 

 

Impairment loss on real estate

 

0.7

 

 

 

0.7

 

 

Loss on early extinguishment of debt

 

 

3.1

 

 

 

Interest expense amortization, net

 

3.5

 

 

3.0

 

 

1.2

 

 

1.2

 

Stock-based compensation expense

 

12.4

 

 

13.0

 

 

4.2

 

 

4.6

 

Deferred income tax expense

 

(6.4

)

 

 

(3.0

)

 

Operating lease cost

 

14.6

 

 

 

5.0

 

 

Other

 

 

 

0.2

 

 

 

 

 

 

 

Change in operating assets and liabilities:

 

 

 

 

Rent and other receivables, net and other assets

 

(51.5

)

 

(55.4

)

 

(10.4

)

 

(18.6

)

Accounts payable and accrued expenses

 

11.8

 

 

(23.4

)

 

20.0

 

 

(20.3

)

Deferred revenue and prepaid rents

 

16.1

 

 

25.4

 

 

(1.9

)

 

9.1

 

Operating lease liabilities

 

(16.7

)

 

 

(6.9

)

 

Net cash provided by operating activities

 

277.0

 

 

202.9

 

 

109.5

 

 

54.4

 

Cash flows from investing activities:

 

 

 

 

Investment in real estate

 

(727.3

)

 

(631.2

)

 

(212.5

)

 

(308.5

)

Asset acquisitions, primarily real estate, net of cash acquired

 

 

(461.8

)

 

 

(461.8

)

Proceeds from sale of equity investments

 

199.8

 

 

 

 

Equity investments

 

(0.3

)

 

 

 

Proceeds from the sale of real estate assets

 

0.9

 

 

 

0.9

 

 

Net cash used in investing activities

 

(526.9

)

 

(1,093.0

)

 

(211.6

)

 

(770.3

)

Cash flows from financing activities:

 

 

 

 

Issuance of common stock, net

 

253.3

 

 

551.9

 

 

0.7

 

 

399.7

 

Dividends paid

 

(153.5

)

 

(132.3

)

 

(52.2

)

 

(45.7

)

Proceeds from revolving credit facility

 

534.3

 

 

370.0

 

 

246.5

 

 

370.0

 

Repayments of revolving credit facility

 

 

(183.2

)

 

(370.0

)

 

(183.2

)

 

(370.0

)

Proceeds from unsecured term loan

 

 

1,665.1

 

 

 

679.7

 

Repayments of unsecured term loan

 

(200.0

)

 

(1,272.7

)

 

 

(370.0

)

Payments on finance lease liabilities

 

(2.1

)

 

(7.8

)

 

(0.9

)

 

(2.7

)

Tax payment upon exercise of equity awards

 

(9.0

)

 

(5.1

)

 

(0.2

)

 

(0.4

)

Net cash provided by financing activities

 

239.8

 

 

799.1

 

 

10.7

 

 

660.6

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(1.3

)

 

0.1

 

 

(1.0

)

 

0.1

 

Net decrease in cash, cash equivalents and restricted cash

 

(11.4

)

 

(90.9

)

 

(92.4

)

 

(55.2

)

Cash, cash equivalents and restricted cash at beginning of period

 

64.4

 

 

151.9

 

 

145.4

 

 

116.2

 

Cash, cash equivalents and restricted cash at end of period

$

 

53.0

 

$

 

61.0

 

$

 

53.0

 

$

 

61.0

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

Cash paid for interest, including amounts capitalized of $26.2 million and $15.9 million in 2019 and 2018, respectively

$

 

109.0

 

$

 

98.5

 

$

 

46.3

 

$

 

45.2

 

Cash paid for income taxes

 

3.0

 

 

3.3

 

 

0.2

 

 

0.4

 

Non-cash investing and financing activities:

 

 

 

 

Construction costs payable

 

131.2

 

 

160.5

 

 

131.2

 

 

160.5

 

Dividends payable

 

57.7

 

 

49.7

 

 

57.7

 

 

49.7

 

CyrusOne Inc.

Reconciliation of Net Income (Loss) to Net Operating Income

(Dollars in millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

September 30,

 

Change

 

September 30,

 

Change

2019

 

2018

 

$

 

%

 

2019

 

2018

 

$

 

%

Net income (loss)

$

12.6

 

$

(42.4

)

$

55.0

 

n/m

$

93.5

 

$

107.0

 

$

(13.5

)

(13

)%

Sales and marketing expenses

5.1

 

4.3

 

0.8

 

19

%

15.7

 

14.0

 

1.7

 

12

%

General and administrative expenses

19.8

 

19.3

 

0.5

 

3

%

61.6

 

57.2

 

4.4

 

8

%

Depreciation and amortization expenses

105.4

 

84.0

 

21.4

 

25

%

309.6

 

236.2

 

73.4

 

31

%

Transaction, acquisition, integration and other related expenses

4.4

 

1.1

 

3.3

 

n/m

6.2

 

3.4

 

2.8

 

82

%

Interest expense, net

19.6

 

25.8

 

(6.2

)

(24

)%

64.4

 

69.4

 

(5.0

)

(7

)%

(Gain) loss on marketable equity investment

(12.4

)

36.6

 

(49.0

)

n/m

(105.1

)

(106.6

)

1.5

 

(1

)%

Loss on early extinguishment of debt

 

 

 

n/m

 

3.1

 

(3.1

)

n/m

Impairment loss on real estate

0.7

 

 

0.7

 

n/m

0.7

 

 

0.7

 

n/m

Foreign currency and derivative gains, net

(5.5

)

 

(5.5

)

n/m

(5.5

)

 

(5.5

)

n/m

Other expense

0.2

 

 

0.2

 

n/m

0.3

 

 

0.3

 

n/m

Income tax (benefit) expense

(2.0

)

0.2

 

(2.2

)

n/m

(3.6

)

2.0

 

(5.6

)

n/m

Net Operating Income

$

147.9

 

$

128.9

 

$

19.0

 

15

%

$

437.8

 

$

385.7

 

$

52.1

 

14

%

CyrusOne Inc.

Net Operating Income and Reconciliation of Net Income (Loss) to Adjusted EBITDA

(Dollars in millions)

(Unaudited)

 

 

Nine Months Ended

 

 

 

 

 

Three Months Ended

 

September 30,

 

Change

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

2019

 

2018

 

$

 

%

 

2019

 

2019

 

2019

 

2018

 

2018

Net Operating Income

 

 

 

 

 

 

 

 

 

Revenue

$

 

727.4

 

$

 

600.1

 

$

 

127.3

 

21

%

$

250.9

 

$

 

251.5

 

$

225.0

 

$

221.3

 

$

206.6

 

Property operating expenses

 

289.6

 

 

214.4

 

 

75.2

 

35

%

 

103.0

 

 

103.3

 

 

83.3

 

 

78.0

 

 

77.7

 

Net Operating Income (NOI)

$

 

437.8

 

$

 

385.7

 

$

 

52.1

 

14

%

$

147.9

 

$

 

148.2

 

$

141.7

 

$

143.3

 

$

128.9

 

NOI as a % of Revenue

 

60.2

%

 

64.3

%

 

 

 

58.9

%

 

58.9

%

 

63.0

%

 

64.8

%

 

62.4

%

Reconciliation of Net Income (Loss) to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

Net income (loss)

$

 

93.5

 

$

 

107.0

 

$

 

(13.5

)

(13

)%

$

12.6

 

$

 

(8.5

)

$

89.4

 

$

(105.8

)

$

(42.4

)

Interest expense, net

 

64.4

 

 

69.4

 

 

(5.0

)

(7

)%

 

19.6

 

 

21.1

 

 

23.7

 

 

25.3

 

 

25.8

 

Income tax (benefit) expense

 

(3.6

)

 

2.0

 

 

(5.6

)

n/m

 

(2.0

)

 

(1.4

)

 

(0.2

)

 

(1.4

)

 

0.2

 

Depreciation and amortization

 

309.6

 

 

236.2

 

 

73.4

 

31

%

 

105.4

 

 

102.1

 

 

102.1

 

 

97.9

 

 

84.0

 

EBITDA (Nareit definition)(a)

$

 

463.9

 

$

 

414.6

 

$

 

49.3

 

12

%

$

135.6

 

$

 

113.3

 

$

215.0

 

$

16.0

 

$

67.6

 

 

 

 

 

 

 

 

 

 

 

Transaction, acquisition, integration and other related expenses

 

6.2

 

 

3.4

 

 

2.8

 

82

%

 

4.4

 

 

1.4

 

 

0.3

 

 

1.4

 

 

1.1

 

Legal claim costs

 

0.6

 

 

0.4

 

 

0.2

 

50

%

 

0.4

 

 

0.1

 

 

0.1

 

 

0.2

 

 

0.1

 

Stock-based compensation expense

 

12.4

 

 

13.0

 

 

(0.6

)

(5

)%

 

4.2

 

 

3.7

 

 

4.5

 

 

4.5

 

 

4.6

 

Severance and management transition costs

 

 

0.7

 

 

(0.7

)

n/m

 

 

 

0.1

 

 

1.6

 

 

Loss on early extinguishment of debt

 

 

3.1

 

 

(3.1

)

n/m

 

 

 

 

 

New accounting standards and regulatory compliance and the related system implementation costs

 

0.8

 

 

2.3

 

 

(1.5

)

(65

)%

 

0.2

 

 

0.3

 

 

0.3

 

 

0.7

 

 

0.8

 

(Gain) loss on marketable equity investment

 

(105.1

)

 

(106.6

)

 

1.5

 

(1

)%

 

(12.4

)

 

8.5

 

 

(101.2

)

 

96.7

 

 

36.6

 

Impairment loss on real estate

 

0.7

 

 

 

0.7

 

n/m

 

0.7

 

 

 

 

 

Foreign currency and derivative gains, net

 

(5.5

)

 

 

(5.5

)

n/m

 

(5.5

)

 

 

 

 

Other expense

 

0.3

 

 

 

0.3

 

n/m

 

0.2

 

 

 

0.1

 

 

0.1

 

 

Adjusted EBITDA

$

 

374.3

 

$

 

330.9

 

$

 

43.4

 

13

%

$

127.8

 

$

 

127.3

 

$

119.2

 

$

121.2

 

$

110.8

 

Adjusted EBITDA as a % of Revenue

 

51.5

%

 

55.1

%

 

 

 

50.9

%

 

50.6

%

 

53.0

%

 

54.8

%

 

53.6

%

(a)

We calculate Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) as GAAP net income (loss) plus interest expense, income tax benefit (expense) and depreciation and amortization. While it is consistent with the definition of EBITDAre promulgated by the National Association of Real Estate Investment Trusts ("Nareit"), our computation of EBITDAre may differ from the methodology for calculating EBITDAre used by other REITs. Accordingly, our EBITDAre may not be comparable to others.

CyrusOne Inc.

Reconciliation of Net Income (Loss) to FFO and Normalized FFO

(Dollars in millions)

(Unaudited)

 

 

Nine Months Ended

 

 

 

 

 

Three Months Ended

 

September 30,

 

Change

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

2019

 

2018

 

$

 

%

 

2019

 

2019

 

2019

 

2018

 

2018

Reconciliation of Net Income (Loss) to FFO and Normalized FFO:

 

 

 

 

 

 

 

 

 

Net income (loss)

$

93.5

 

$

107.0

 

$

(13.5

)

(13

)%

$

12.6

 

$

(8.5

)

$

89.4

 

$

(105.8

)

$

(42.4

)

Real estate depreciation and amortization

302.9

 

230.0

 

72.9

 

32

%

102.6

 

100.2

 

100.1

 

95.5

 

81.9

 

Asset impairments and loss on disposals

1.0

 

 

 

 

1.0

 

 

 

 

 

Funds from Operations ("FFO") - Nareit defined

$

397.4

 

$

337.0

 

$

59.4

 

18

%

$

116.2

 

$

91.7

 

$

189.5

 

$

(10.3

)

$

39.5

 

 

Loss on early extinguishment of debt

 

3.1

 

(3.1

)

n/m

 

 

 

 

 

(Gain) loss on marketable equity investment

(105.1

)

(106.6

)

1.5

 

(1

)%

(12.4

)

8.5

 

(101.2

)

96.7

 

36.6

 

Foreign currency and derivative gains, net

(5.5

)

 

(5.5

)

n/m

(5.5

)

 

 

 

 

New accounting standards and regulatory compliance and the related system implementation costs

0.8

 

2.3

 

(1.5

)

(65

)%

0.2

 

0.3

 

0.3

 

0.7

 

0.8

 

Amortization of tradenames

0.9

 

1.1

 

(0.2

)

(18

)%

0.6

 

0.1

 

0.2

 

0.6

 

0.4

 

Transaction, acquisition, integration and other related expenses

6.2

 

3.4

 

2.8

 

82

%

4.4

 

1.4

 

0.3

 

1.4

 

1.1

 

Severance and management transition costs

 

0.7

 

(0.7

)

n/m

 

 

0.1

 

1.6

 

 

Legal claim costs

0.6

 

0.4

 

0.2

 

50

%

0.4

 

0.1

 

0.1

 

0.2

 

0.1

 

Normalized Funds from Operations (Normalized FFO)

$

295.3

 

$

241.4

 

$

52.9

 

22

%

$

103.9

 

$

102.1

 

$

89.3

 

$

90.9

 

$

78.5

 

Normalized FFO per diluted common share

$

2.63

 

$

2.45

 

$

0.18

 

7

%

$

0.91

 

$

0.90

 

$

0.82

 

$

0.86

 

$

0.79

 

Weighted average diluted common shares outstanding

111.9

 

98.4

 

13.5

 

14

%

113.5

 

113.1

 

108.8

 

106.1

 

99.5

 

 

Additional Information:

 

 

 

 

 

 

 

 

 

Amortization of deferred financing costs and bond premium

3.6

 

2.9

 

0.7

 

24

%

1.2

 

1.2

 

1.2

 

1.1

 

1.1

 

Stock-based compensation expense

12.4

 

13.0

 

(0.6

)

(5

)%

4.2

 

3.7

 

4.5

 

4.5

 

4.6

 

Non-real estate depreciation and amortization

5.8

 

5.1

 

0.7

 

14

%

2.0

 

1.9

 

1.9

 

1.8

 

1.7

 

Straight line rent adjustments(a)

(22.8

)

(18.8

)

(4.0

)

21

%

(5.9

)

(6.8

)

(10.1

)

(8.9

)

(5.8

)

Deferred revenue, primarily installation revenue(b)

8.9

 

13.2

 

(4.3

)

(33

)%

(1.7

)

4.7

 

5.9

 

16.1

 

7.6

 

Leasing commissions

(9.6

)

(10.2

)

0.6

 

(6

)%

(2.8

)

(3.1

)

(3.7

)

(6.5

)

(3.3

)

Recurring capital expenditures

(8.8

)

(8.4

)

(0.4

)

5

%

(4.5

)

(1.6

)

(2.7

)

(2.1

)

(3.7

)

(a)

Straight line rent adjustments:

Represents the difference between revenue recognized on a straight line basis under GAAP over the term of the lease compared to the contractual rental payments. Lease agreements typically include payments that escalate over the term of the contract or, to a lesser extent, a ramp period.

 

 

(b)

Deferred revenue, primarily installation revenue:

 

Represents payments received from customers in excess of revenue recognized under GAAP. This primarily relates to specific customer-requested buildouts that CyrusOne does not include in its basic data center design. The company charges customers up front for these buildouts rather than incorporating into rent and billing them over time. The cash payments for these buildouts are non-recurring, and may vary significantly from quarter to quarter, but revenue is amortized over the life of the lease.

CyrusOne Inc.

Market Capitalization Summary, Reconciliation of Net Debt, Debt Schedule and Interest Summary

(Unaudited)

Market Capitalization (as of September 30, 2019)

(dollars in millions)

Shares or

Equivalents

Outstanding

Market Price

as of

September 30, 2019

Market Value

Equivalents

(in millions)

Common shares

113,196,585

 

$

79.10

 

$

8,953.8

 

Net Debt

 

 

2,770.0

 

Total Enterprise Value (TEV)

 

 

$

11,723.8

 

 

Reconciliation of Net Debt

 

September 30,

June 30,

September 30,

(dollars in millions)

2019

2019

2018

Long-term debt(a)

$

2,791.0

 

$

2,729.9

 

$

2,595.6

 

Finance lease liabilities

30.7

 

31.6

 

36.9

 

Less:

 

 

 

Cash and cash equivalents

(51.7

)

(144.1

)

(61.0

)

Net Debt

$

2,770.0

 

$

2,617.4

 

$

2,571.5

 

(a) Excludes adjustment for deferred financing costs and bond premiums.

Debt Schedule (as of September 30, 2019)

(dollars in millions)

 

 

 

Long-term debt:

Amount

Interest Rate

Maturity Date

Revolving credit facility - GBP(a)(b)

16.0

 

GBP LIBOR + 120 bps(c)

March 2023(d)

Revolving credit facility - USD(b)(e)

475.0

 

USD LIBOR + 120 bps(f)

March 2023(d)

Term loan(b)(g)

800.0

 

USD LIBOR + 135 bps(g)

March 2023

Term loan(b)

300.0

 

USD LIBOR + 165 bps(h)

March 2025

5.000% senior notes due 2024, excluding bond premium

700.0

 

5.000%

March 2024

5.375% senior notes due 2027, excluding bond premium

500.0

 

5.375%

March 2027

Total long-term debt(i)

$

2,791.0

 

3.22%(j)

 

 

 

 

 

Weighted average term of debt:

4.7

years

 

(a)

Amount outstanding is USD equivalent of £13 million.

(b)

Credit rating-based pricing grid replaced leverage-based grid, resulting in a 0.25% margin reduction for revolving credit facility borrowings and a 0.05% margin reduction for term loans, elimination of 0.25% commitment fee on undrawn portion of revolving credit facility commitment, and introduction of 0.25% facility fee on entire revolving credit facility commitment.

(c)

Interest rate as of September 30, 2019: 1.92%.

(d)

Assuming exercise of one-year extension option.

(e)

$450 million of $475 million synthetically converted into €401 million pursuant to USD-EUR cross currency swaps.

(f)

Interest rate as of September 30, 2019: 3.25%; adjusted rate on $450 million synthetically converted pursuant to USD-EUR cross currency swaps: 0.84%.

(g)

$500 million of $800 million synthetically converted into €451 million pursuant to a USD-EUR cross currency swap; remaining $300 million swapped pursuant to USD floating to fixed interest rate swap. Interest rate as of September 30, 2019: 3.40%; weighted average interest rate pursuant to swaps: 1.50%.

(h)

Interest rate as of September 30, 2019: 3.70%.

(i)

Excludes adjustment for deferred financing costs.

(j)

Weighted average interest rate calculated using lower interest rate on swapped amount.

Interest Summary

Three Months Ended

 

 

September 30,

June 30,

September 30,

Growth %

(dollars in millions)

2019

2019

2018

Yr/Yr

Interest expense and fees

$

26.4

 

$

28.8

 

$

30.2

 

(13

)%

Amortization of deferred financing costs and bond premium

1.2

 

1.2

 

1.1

 

9

%

Capitalized interest

(8.0

)

(8.9

)

(5.5

)

45

%

Total interest expense

$

19.6

 

$

21.1

 

$

25.8

 

(24

)%

CyrusOne Inc.

Colocation Square Footage (CSF) and CSF Leased

(Unaudited)

 

 

As of September 30, 2019

As of June 30, 2019

As of September 30, 2018

Market

Colocation
Space (CSF)(a) (000)

CSF
Leased(b)

Colocation
Space (CSF)(a) (000)

CSF
Leased(b)

Colocation
Space (CSF)(a) (000)

CSF
Leased(b)

Northern Virginia

1,113

 

91

%

1,113

 

91

%

780

 

94

%

Dallas

621

 

71

%

621

 

70

%

621

 

69

%

Phoenix

509

 

100

%

509

 

100

%

509

 

100

%

Cincinnati

402

 

78

%

402

 

79

%

402

 

93

%

Houston

308

 

64

%

308

 

68

%

308

 

74

%

San Antonio

300

 

100

%

300

 

100

%

300

 

100

%

New York Metro

228

 

76

%

228

 

77

%

218

 

83

%

Chicago

203

 

73

%

203

 

72

%

213

 

67

%

Austin

106

 

81

%

106

 

81

%

106

 

78

%

Raleigh-Durham

83

 

100

%

83

 

100

%

76

 

88

%

Total - Domestic

3,872

 

84

%

3,872

 

84

%

3,533

 

86

%

Frankfurt

144

 

99

%

125

 

99

%

62

 

98

%

London

128

 

81

%

116

 

72

%

77

 

99

%

Singapore

3

 

22

%

3

 

22

%

3

 

22

%

Total - International

275

 

90

%

244

 

85

%

142

 

97

%

Total - Portfolio

4,148

 

85

%

4,116

 

84

%

3,674

 

86

%

Stabilized Properties(c)

3,935

 

88

%

3,744

 

89

%

3,396

 

91

%

(a)

CSF represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment. May not sum to total due to rounding.

(b)

CSF Leased is calculated by dividing CSF under signed leases for colocation space (whether or not the lease has commenced billing) by total CSF.

(c)

Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% leased.

CyrusOne Inc.

2019 Guidance

 

Category

Previous
2019 Guidance

Revised
2019 Guidance

Total Revenue

$970 - 990 million

$970 - 980 million

Lease and Other Revenues from Customers

$842 - 857 million

$838 - 843 million

Metered Power Reimbursements

$128 - 133 million

$132 - 137 million

Adjusted EBITDA

$507 - 517 million

$505 - 510 million

Normalized FFO per diluted common share

$3.50 - 3.60

$3.55 - 3.60

Capital Expenditures

$850 - 950 million

$900 - 950 million

Development(1)

$840 - 935 million

$890 - 935 million

Recurring

$10 - 15 million

$10 - 15 million

 

(1)Development capital expenditures include the acquisition of land for future development.

CyrusOne is updating guidance for full year 2019, tightening the guidance range and decreasing the midpoint for Total Revenue, tightening and decreasing the guidance range for Adjusted EBITDA, and tightening the guidance ranges and increasing the midpoints for Normalized FFO per diluted common share, Capital Expenditures and Capital Expenditures - Development.

The annual guidance provided above represents forward-looking statements, which are based on current economic conditions, internal assumptions about the Company's existing customer base and the supply and demand dynamics of the markets in which CyrusOne operates.

CyrusOne does not provide forward-looking guidance for GAAP financial measures (other than Total Revenue and Capital Expenditures) or reconciliations for the non-GAAP financial measures included in the annual guidance provided above due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for transaction, acquisition, integration and other related expenses, legal claim costs, asset impairments and loss on disposals and other charges in its reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

CyrusOne Inc.

Data Center Portfolio

As of September 30, 2019

(Unaudited)

 

 

 

 

Operating Net Rentable Square Feet (NRSF)(a)

Powered
Shell
Available
for Future
Development
(NRSF)(k) (000)

Available Critical Load Capacity
(MW)(l)

Stabilized Properties(b)

Metro
Area

Annualized Rent(c) ($000)

Colocation Space (CSF)(d) (000)

CSF Occupied(e)

CSF
Leased(f)

Office & Other(g) (000)

Office & Other Occupied(h)

Supporting
Infrastructure(i) (000)

Total(j) (000)

Dallas - Carrollton

Dallas

$

103,364

 

379

 

82

%

82

%

82

 

46

%

133

 

595

 

 

50

 

Northern Virginia - Sterling V

Northern Virginia

55,796

 

383

 

85

%

93

%

11

 

100

%

145

 

539

 

64

 

65

 

Northern Virginia - Sterling VI

Northern Virginia

45,193

 

272

 

88

%

88

%

35

 

%

 

307

 

 

57

 

Houston - Houston West I

Houston

36,012

 

112

 

75

%

75

%

11

 

100

%

37

 

161

 

3

 

28

 

Northern Virginia - Sterling II

Northern Virginia

34,303

 

159

 

100

%

100

%

9

 

100

%

55

 

223

 

 

30

 

San Antonio III

San Antonio

32,837

 

132

 

100

%

100

%

9

 

100

%

43

 

184

 

 

24

 

Somerset I

New York Metro

31,918

 

106

 

80

%

80

%

27

 

99

%

89

 

222

 

186

 

15

 

Cincinnati - 7th Street***

Cincinnati

31,340

 

197

 

65

%

65

%

6

 

61

%

175

 

378

 

46

 

16

 

Dallas - Lewisville*

Dallas

31,158

 

114

 

82

%

82

%

11

 

84

%

54

 

180

 

 

21

 

Chicago - Aurora I

Chicago

28,122

 

113

 

98

%

98

%

34

 

100

%

223

 

371

 

27

 

71

 

Totowa - Madison**

New York Metro

27,218

 

51

 

89

%

89

%

22

 

93

%

59

 

133

 

 

6

 

Houston - Houston West II

Houston

26,837

 

80

 

75

%

75

%

4

 

88

%

55

 

139

 

11

 

12

 

Phoenix - Chandler VI

Phoenix

26,370

 

148

 

100

%

100

%

6

 

100

%

32

 

187

 

279

 

24

 

Cincinnati - North Cincinnati

Cincinnati

24,978

 

65

 

98

%

98

%

45

 

79

%

53

 

163

 

65

 

14

 

Phoenix - Chandler II

Phoenix

23,998

 

74

 

100

%

100

%

6

 

53

%

26

 

105

 

 

12

 

Frankfurt I

Frankfurt

22,768

 

53

 

97

%

97

%

8

 

91

%

57

 

118

 

 

18

 

Phoenix - Chandler I

Phoenix

22,322

 

74

 

100

%

100

%

35

 

12

%

39

 

147

 

31

 

16

 

San Antonio I

San Antonio

21,778

 

44

 

100

%

100

%

6

 

83

%

46

 

96

 

11

 

12

 

Phoenix - Chandler III

Phoenix

21,776

 

68

 

100

%

100

%

2

 

%

30

 

101

 

 

14

 

Austin III

Austin

20,490

 

62

 

69

%

69

%

15

 

98

%

21

 

98

 

67

 

9

 

Wappingers Falls I**

New York Metro

20,163

 

37

 

65

%

65

%

20

 

91

%

15

 

72

 

 

3

 

Northern Virginia - Sterling III

Northern Virginia

19,471

 

79

 

100

%

100

%

7

 

100

%

34

 

120

 

 

15

 

Raleigh-Durham I

Raleigh-Durham

19,431

 

83

 

93

%

100

%

13

 

100

%

82

 

178

 

235

 

15

 

Northern Virginia - Sterling I

Northern Virginia

17,356

 

78

 

100

%

100

%

6

 

69

%

49

 

132

 

 

12

 

San Antonio II

San Antonio

14,795

 

64

 

100

%

100

%

11

 

100

%

41

 

117

 

 

12

 

Phoenix - Chandler V

Phoenix

14,234

 

72

 

100

%

100

%

1

 

95

%

16

 

89

 

94

 

12

 

Austin II

Austin

14,184

 

44

 

94

%

99

%

2

 

100

%

22

 

68

 

 

5

 

Houston - Galleria

Houston

14,126

 

63

 

49

%

49

%

23

 

40

%

25

 

112

 

 

14

 

Florence

Cincinnati

13,643

 

53

 

99

%

99

%

47

 

87

%

40

 

140

 

 

9

 

Phoenix - Chandler IV

Phoenix

11,976

 

73

 

100

%

100

%

3

 

100

%

27

 

103

 

 

12

 

Northern Virginia - Sterling IV

Northern Virginia

11,901

 

81

 

100

%

100

%

7

 

100

%

34

 

122

 

 

15

 

Frankfurt II

Frankfurt

11,634

 

90

 

100

%

100

%

9

 

100

%

72

 

171

 

10

 

35

 

London I*

London

11,287

 

30

 

100

%

100

%

12

 

56

%

58

 

100

 

9

 

12

 

San Antonio IV

San Antonio

11,009

 

60

 

100

%

100

%

12

 

100

%

27

 

99

 

 

12

 

Cincinnati - Hamilton*

Cincinnati

10,871

 

47

 

73

%

73

%

1

 

100

%

35

 

83

 

 

10

 

London II*

London

8,886

 

64

 

100

%

100

%

10

 

100

%

93

 

166

 

4

 

21

 

Houston - Houston West III

Houston

7,311

 

53

 

41

%

42

%

10

 

100

%

32

 

95

 

209

 

6

 

London - Great Bridgewater**

London

6,060

 

10

 

96

%

96

%

 

%

1

 

11

 

 

1

 

Stamford - Riverbend**

New York Metro

5,954

 

20

 

23

%

23

%

 

%

8

 

28

 

 

2

 

Cincinnati - Mason

Cincinnati

5,173

 

34

 

100

%

100

%

26

 

98

%

17

 

78

 

 

4

 

Norwalk I**

New York Metro

4,424

 

13

 

100

%

100

%

4

 

65

%

41

 

58

 

87

 

2

 

Chicago - Aurora II (DH #1)

Chicago

3,981

 

77

 

36

%

38

%

45

 

%

14

 

136

 

272

 

16

 

Chicago - Lombard

Chicago

2,367

 

14

 

64

%

64

%

4

 

45

%

12

 

30

 

29

 

3

 

Stamford - Omega**

New York Metro

1,239

 

 

%

%

19

 

79

%

4

 

22

 

 

 

Totowa - Commerce**

New York Metro

672

 

 

%

%

20

 

44

%

6

 

26

 

 

 

Cincinnati - Blue Ash*

Cincinnati

624

 

6

 

36

%

36

%

7

 

100

%

2

 

15

 

 

1

 

Singapore - Inter Business Park**

Singapore

386

 

3

 

22

%

22

%

 

%

 

3

 

 

1

 

Stabilized Properties - Total

 

$

931,738

 

3,935

 

87

%

88

%

704

 

67

%

2,178

 

6,817

 

1,739

 

759

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CyrusOne Inc.

Data Center Portfolio

As of September 30, 2019

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Net Rentable Square Feet (NRSF)(a)

Powered
Shell
Available
for Future
Development
(NRSF)(k) (000)

Available Critical Load Capacity
(MW)(l)

 

Metro
Area

Annualized Rent(c) ($000)

Colocation Space (CSF)(d) (000)

CSF Occupied(e)

CSF
Leased(f)

Office & Other(g) (000)

Office & Other Occupied(h)

Supporting
Infrastructure(i) (000)

Total(j) (000)

Stabilized Properties - Total

 

$

931,738

 

3,935

 

87

%

88

%

704

 

67

%

2,178

 

6,817

 

1,739

 

759

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-Stabilized Properties(b)

 

 

 

 

 

 

 

 

 

 

 

Northern Virginia - Sterling VIII

Northern Virginia

8,192

 

61

 

37

%

37

%

4

 

%

25

 

90

 

 

6

 

Dallas - Carrollton (DH #7)

Dallas

4,263

 

48

 

38

%

57

%

 

%

 

48

 

 

6

 

Dallas - Allen (DH #1)

Dallas

903

 

79

 

8

%

8

%

 

%

58

 

137

 

204

 

6

 

London I* (DH #1)

London

 

8

 

%

%

 

%

 

8

 

 

3

 

London II* (DH #3)

London

 

17

 

%

%

 

%

 

17

 

 

7

 

All Properties - Total

 

$

945,096

 

4,148

 

84

%

85

%

709

 

67

%

2,261

 

7,117

 

1,942

 

787

 

*

Indicates properties in which we hold a leasehold interest in the building shell and land. All data center infrastructure has been constructed by us and is owned by us.

**

Indicates properties in which we hold a leasehold interest in the building shell, land, and all data center infrastructure.

***

The information provided for the Cincinnati - 7th Street property includes data for two facilities, one of which we lease and one of which we own.

(a)

Represents the total square feet of a building under lease or available for lease based on engineers' drawings and estimates but does not include space held for development or space used by CyrusOne.

(b)

Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% leased. Pre-stabilized properties include data halls that have been in service for less than 24 months and are less than 85% leased.

(c)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2019 multiplied by 12. For the month of September 2019, customer reimbursements were $183.1 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From October 1, 2017 through September 30, 2019, customer reimbursements under leases with separately metered power constituted between 10.2% and 19.4% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2019 was $941.6 million. Our annualized effective rent was lower than our annualized rent as of September 30, 2019 because our negative straight-line and other adjustments and amortization of deferred revenue exceeded our positive straight-line adjustments due to factors such as the timing of contractual rent escalations and customer payments for services.

(d)

CSF represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment.

(e)

Percent occupied is determined based on CSF billed to customers under signed leases as of September 30, 2019 divided by total CSF. Leases signed but that have not commenced billing as of September 30, 2019 are not included.

(f)

Percent leased is calculated by dividing CSF under signed leases for colocation space (whether or not the lease has commenced billing) by total CSF.

(g)

Represents the NRSF at an operating facility that is currently leased or readily available for lease as space other than CSF, which is typically office and other space.

(h)

Percent occupied is determined based on Office & Other space being billed to customers under signed leases as of September 30, 2019 divided by total Office & Other space. Leases signed but not commenced as of September 30, 2019 are not included.

(i)

Represents infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.

(j)

Represents the NRSF at an operating facility that is currently leased or readily available for lease. This excludes existing vacant space held for development.

(k)

Represents space that is under roof that could be developed in the future for operating NRSF, rounded to the nearest 1,000.

(l)

Critical load capacity represents the aggregate power available for lease and exclusive use by customers expressed in terms of megawatts. The capacity reported is for non-redundant megawatts, as we can develop flexible solutions to our customers at multiple resiliency levels. Does not sum to total due to rounding.

CyrusOne Inc.

NRSF Under Development

As of September 30, 2019

(Dollars in millions)

(Unaudited)

 

 

 

 

NRSF Under Development(a)

 

Under Development Costs(b)

Facilities

Metropolitan

Area

Estimated
Completion
Date

Colocation Space

(CSF) (000)

Office & Other (000)

Supporting

Infrastructure (000)

Powered Shell(c) (000)

Total (000)

Critical Load MW Capacity(d)

Actual to

Date(e)

Estimated

Costs to

Completion(f)

Total

Northern Virginia - Sterling V

Northern Virginia

4Q'19

 

 

 

 

 

1.0

 

 

4-6

4-6

Dallas - Carrollton

Dallas

4Q'19

 

 

 

 

 

6.0

 

21

 

7-8

28-29

Somerset II

New York Metro

4Q'19

17

 

 

 

 

17

 

3.0

 

5

 

15-20

20-25

Northern Virginia - Sterling IX

Northern Virginia

1Q'20

 

 

 

307

 

307

 

 

34

 

53-62

87-96

Amsterdam I

Amsterdam

1Q'20

39

 

28

 

40

 

194

 

301

 

4.0

 

45

 

18-29

63-74

Northern Virginia - Sterling VIII

Northern Virginia

2Q'20

61

 

 

 

 

61

 

24.0

 

43

 

65-77

108-120

London III

London

2Q'20

20

 

2

 

45

 

20

 

87

 

6.0

 

5

 

34-38

39-43

Raleigh-Durham I

Raleigh-Durham

2Q'20

11

 

3

 

 

 

14

 

2.0

 

 

10-12

10-12

Frankfurt III

Frankfurt

3Q'20

101

 

9

 

109

 

39

 

258

 

35.0

 

14

 

164-183

178-197

Northern Virginia - Sterling VII

Northern Virginia

3Q'20

 

 

 

167

 

167

 

 

21

 

70-79

91-100

San Antonio V

San Antonio

3Q'20

67

 

7

 

21

 

105

 

199

 

9.0

 

 

86-95

86-95

Council Bluffs I

Council Bluffs, IA

3Q'20

42

 

14

 

18

 

42

 

115

 

6.0

 

 

60-66

60-66

Dublin I

Dublin

4Q'20

39

 

10

 

33

 

113

 

195

 

6.0

 

4

 

61-68

65-72

Total

 

 

397

 

74

 

265

 

985

 

1,721

 

102.0

 

192

 

647-743

839-935

(a)

Represents NRSF at a facility for which activities have commenced or are expected to commence in the next 2 quarters to prepare the space for its intended use. Estimates and timing are subject to change. May not sum to total due to rounding.

(b)

London development costs are GBP-denominated and shown as USD-equivalent using exchange rate of 1.23. Frankfurt, Dublin and Amsterdam development costs are EUR-denominated and shown as USD-equivalent using exchange rate of 1.09.

(c)

Represents NRSF under construction that, upon completion, will be powered shell available for future development into operating NRSF.

(d)

Critical load capacity represents the aggregate power available for lease and exclusive use by customers expressed in terms of megawatts. The capacity reported is for non-redundant megawatts, as we can develop flexible solutions to our customers at multiple resiliency levels.

(e)

Actual to date is the cash investment as of September 30, 2019. There may be accruals above this amount for work completed, for which cash has not yet been paid.

(f)

Represents management’s estimate of the total costs required to complete the current NRSF under development. There may be an increase in costs if customers require greater power density.

Capital Expenditures - Investment in Real Estate

Three Months Ended

Nine Months Ended

 

March 31

June 30

September 30

September 30

(dollars in millions)

2019

2019

2019

2019

Capital expenditures - investment in real estate

$299.2

$211.3

$208.0

$718.5

CyrusOne Inc.

Land Available for Future Development (Acres)

As of September 30, 2019

(Unaudited)

 

 

As of

Market

September 30, 2019

Amsterdam

8

 

Atlanta

44

 

Austin

22

 

Chicago

23

 

Cincinnati

98

 

Dallas

57

 

Dublin

15

 

Houston

20

 

Northern Virginia

24

 

Phoenix

96

 

Quincy, Washington

48

 

San Antonio

12

 

Santa Clara

23

 

Total Available(a)

489

 

Book Value of Total Available

$

204.3

million

(a) Does not sum to total due to rounding.

CyrusOne Inc.

Leasing Statistics - Lease Signings

As of September 30, 2019

(Unaudited)

 

Period

Number
of Leases(a)(f)

Total CSF
Signed(b)(f)

Total kW
Signed(c)(f)

Total MRR
Signed (000)(d)(f)

Weighted Average
Lease Term(e)(f)

3Q'19

452

266,000

35,269

$4,324

99

Prior 4Q Avg.

476

73,500

10,847

$1,813

64

2Q'19

500

46,000

5,946

$1,090

67

1Q'19

422

93,000

15,557

$2,267

56

4Q'18

482

41,000

6,768

$1,678

73

3Q'18

500

114,000

15,118

$2,218

60

(a)

Number of leases represents each agreement with a customer. A lease agreement could include multiple spaces, and a customer could have multiple leases.

(b)

CSF represents the NRSF at an operating facility that is leased as colocation space, where customers locate their servers and other IT equipment.

(c)

Represents maximum contracted kW that customers may draw during lease period. Additionally, we can develop flexible solutions for our customers at multiple resiliency levels, and the kW signed is unadjusted for this factor.

(d)

Monthly recurring rent is defined as the average monthly contractual rent during the term of the lease. It includes the monthly impact of installation charges of approximately $0.3 million in 3Q'18, $0.2 million in 1Q'19, and $0.1 million in 4Q'18, 2Q'19 and 3Q'19.

(e)

Calculated on a CSF-weighted basis.

(f)

Includes 30,000 CSF, 4.5 MW, and approximately $0.5 million in monthly recurring rent associated with a paid reservation expected to be exercised in the next 12 months.

CyrusOne Inc.

New MRR Signed - Existing vs. New Customers

As of September 30, 2019

(Dollars in thousands)

(Unaudited)

New MRR(a) Signed ($000)

4Q'17

 

1Q'18

 

2Q'18

 

3Q'18

 

4Q'18

 

1Q'19

 

2Q'19

 

3Q'19(b)

Existing Customers

$1,063

 

$3,149

 

$4,429

 

$2,072

 

$1,226

 

$2,102

 

$974

 

$2,849

New Customers

$400

 

$221

 

$1,024

 

$146

 

$452

 

$165

 

$116

 

$1,475

Total

$1,463

 

$3,370

 

$5,453

 

$2,218

 

$1,678

 

$2,267

 

$1,090

 

$4,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% from Existing Customers

73%

 

93%

 

81%

 

93%

 

73%

 

93%

 

89%

 

66%

(a)

Monthly recurring rent is defined as the average monthly contractual rent during the term of the lease. It includes the monthly impact of installation charges of approximately $0.3 million in 2Q'18 and 3Q'18, $0.2 million in 4Q'17, 1Q'18 and 1Q'19, and $0.1 million in 4Q'18, 2Q'19 and 3Q'19.

(b)

Includes approximately $0.5 million in monthly recurring rent associated with a paid reservation expected to be exercised within the next 12 months.

CyrusOne Inc.

Customer Sector Diversification(a)

As of September 30, 2019

(Unaudited)

 

Principal Customer Industry

Number of
Locations

Annualized
Rent(b) (000)

Percentage of
Portfolio
Annualized
Rent(c)

Weighted
Average
Remaining
Lease Term in
Months(d)

1

Information Technology

11

$

188,496

 

19.9

%

99.7

 

2

Information Technology

5

59,464

 

6.3

%

60.1

 

3

Information Technology

11

55,952

 

5.9

%

33.8

 

4

Information Technology

7

37,941

 

4.0

%

29.7

 

5

Information Technology

7

31,890

 

3.4

%

44.0

 

6

Information Technology

6

18,006

 

1.9

%

23.9

 

7

Financial Services

1

16,805

 

1.8

%

138.0

 

8

Healthcare

2

15,612

 

1.7

%

99.0

 

9

Research and Consulting Services

3

15,451

 

1.6

%

28.1

 

10

Consumer Staples

3

13,070

 

1.4

%

17.3

 

11

Telecommunication Services

2

12,836

 

1.4

%

24.8

 

12

Industrials

5

11,252

 

1.2

%

8.8

 

13

Information Technology

4

11,240

 

1.2

%

47.4

 

14

Information Technology

4

10,601

 

1.1

%

101.7

 

15

Financial Services

2

9,916

 

1.0

%

48.2

 

16

Information Technology

2

9,889

 

1.0

%

58.0

 

17

Telecommunication Services

7

9,530

 

1.0

%

15.9

 

18

Energy

2

8,379

 

0.9

%

20.0

 

19

Information Technology

2

8,038

 

0.9

%

16.3

 

20

Energy

1

7,951

 

0.8

%

25.0

 

 

 

 

$

552,321

 

58.4

%

64.2

 

(a)

Customers and their affiliates are consolidated.

(b)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2019, multiplied by 12. For the month of September 2019, customer reimbursements were $183.1 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From October 1, 2017 through September 30, 2019, customer reimbursements under leases with separately metered power constituted between 10.2% and 19.4% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2019 was $941.6 million. Our annualized effective rent was lower than our annualized rent as of September 30, 2019 because our negative straight-line and other adjustments and amortization of deferred revenue exceeded our positive straight-line adjustments due to factors such as the timing of contractual rent escalations and customer payments for services.

(c)

Represents the customer’s total annualized rent divided by the total annualized rent in the portfolio as of September 30, 2019, which was approximately $945.1 million.

(d)

Weighted average based on customer’s percentage of total annualized rent expiring and is as of September 30, 2019, assuming that customers exercise no renewal options and exercise all early termination rights that require payment of less than 50% of the remaining rents. Early termination rights that require payment of 50% or more of the remaining lease payments are not assumed to be exercised because such payments approximate the profitability margin of leasing that space to the customer, such that we do not consider early termination to be economically detrimental to us.

CyrusOne Inc.

Lease Distribution

As of September 30, 2019

(Unaudited)

NRSF Under Lease(a)

Number of

Customers(b)

Percentage of

All Customers

Total

Leased

NRSF(c) (000)

Percentage of

Portfolio

Leased NRSF

Annualized

Rent(d) (000)

Percentage of

Annualized Rent

0-999

643

 

67

%

136

 

3

%

$

78,556

 

9

%

1,000-2,499

122

 

13

%

189

 

3

%

46,928

 

5

%

2,500-4,999

71

 

7

%

250

 

5

%

47,460

 

5

%

5,000-9,999

48

 

5

%

341

 

6

%

58,918

 

6

%

10,000+

79

 

8

%

4,593

 

83

%

713,234

 

75

%

Total

963

 

100

%

5,509

 

100

%

$

945,096

 

100

%

(a)

Represents all leases in our portfolio, including colocation, office and other leases.

(b)

Represents the number of customers occupying data center, office and other space as of September 30, 2019. This may vary from total customer count as some customers may be under contract, but have yet to occupy space.

(c)

Represents the total square feet at a facility under lease and that has commenced billing, excluding space held for development or space used by CyrusOne. A customer’s leased NRSF is estimated based on such customer’s direct CSF or office and light-industrial space plus management’s estimate of infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.

(d)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2019, multiplied by 12. For the month of September 2019, customer reimbursements were $183.1 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From October 1, 2017 through September 30, 2019, customer reimbursements under leases with separately metered power constituted between 10.2% and 19.4% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2019 was $941.6 million. Our annualized effective rent was lower than our annualized rent as of September 30, 2019 because our negative straight-line and other adjustments and amortization of deferred revenue exceeded our positive straight-line adjustments due to factors such as the timing of contractual rent escalations and customer payments for services.

CyrusOne Inc.

Lease Expirations

As of September 30, 2019

(Unaudited)

Year(a)

Number of
Leases
Expiring(b)

Total Operating
NRSF Expiring
(000)

Percentage of
Total NRSF

Annualized
Rent(c) (000)

Percentage of
Annualized Rent

Annualized Rent
at Expiration(d)
(000)

Percentage of
Annualized Rent
at Expiration

Available

 

1,608

 

23

%

 

 

 

 

Month-to-Month

812

 

71

 

1

%

$

22,347

 

2

%

$

24,741

 

2

%

2019

489

 

137

 

2

%

30,142

 

3

%

30,187

 

3

%

2020

2,833

 

761

 

11

%

145,913

 

15

%

147,138

 

15

%

2021

1,923

 

667

 

9

%

158,309

 

17

%

161,082

 

16

%

2022

1,271

 

602

 

8

%

109,395

 

11

%

115,797

 

11

%

2023

313

 

698

 

10

%

102,393

 

11

%

115,919

 

11

%

2024

185

 

464

 

6

%

76,832

 

8

%

87,471

 

9

%

2025

50

 

187

 

3

%

34,886

 

4

%

38,391

 

4

%

2026

39

 

619

 

9

%

96,131

 

10

%

103,708

 

10

%

2027

22

 

456

 

6

%

71,860

 

8

%

79,985

 

8

%

2028

17

 

277

 

4

%

33,837

 

4

%

39,054

 

4

%

2029 - Thereafter

23

 

569

 

8

%

$

63,050

 

7

%

$

75,432

 

7

%

Total

7,977

 

7,117

 

100

%

$

945,096

 

100

%

$

1,018,906

 

100

%

(a)

Leases that were auto-renewed prior to September 30, 2019 are shown in the calendar year in which their current auto-renewed term expires. Unless otherwise stated in the footnotes, the information set forth in the table assumes that customers exercise no renewal options and exercise all early termination rights that require payment of less than 50% of the remaining rents. Early termination rights that require payment of 50% or more of the remaining lease payments are not assumed to be exercised.

(b)

Number of leases represents each agreement with a customer. A lease agreement could include multiple spaces and a customer could have multiple leases.

(c)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2019, multiplied by 12. For the month of September 2019, customer reimbursements were $183.1 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From October 1, 2017 through September 30, 2019, customer reimbursements under leases with separately metered power constituted between 10.2% and 19.4% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2019 was $941.6 million. Our annualized effective rent was lower than our annualized rent as of September 30, 2019 because our negative straight-line and other adjustments and amortization of deferred revenue exceeded our positive straight-line adjustments due to factors such as the timing of contractual rent escalations and customer payments for services.

(d)

Represents the final monthly contractual rent under existing customer leases that had commenced as of September 30, 2019, multiplied by 12.

 

Contacts

Investor Relations
Michael Schafer
Vice President, Capital Markets & Investor Relations
972-350-0060

investorrelations@cyrusone.com

Contacts

Investor Relations
Michael Schafer
Vice President, Capital Markets & Investor Relations
972-350-0060

investorrelations@cyrusone.com