3Q’19 Year-over-Year Revenue Growth of 21%
Achieves Investment-Grade Index Eligibility
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191030006044/en/
Investor Relations Michael Schafer Vice President,
Capital Markets & Investor Relations 972-350-0060
investorrelations@cyrusone.com
CyrusOne (NASDAQ:CONE)
Historical Stock Chart
From Mar 2024 to Apr 2024
CyrusOne (NASDAQ:CONE)
Historical Stock Chart
From Apr 2023 to Apr 2024