Quarter-End Backlog of $82 Million in
Annualized GAAP Revenue
Positions Company Well for Continued Growth
CyrusOne Inc. (NASDAQ: CONE), a premier global data center REIT,
today announced third quarter 2020 earnings.
Highlights
Category
3Q’20
vs.
3Q’19
Revenue
262.8 million
5%
Net income / (loss)
$(37.3) million
n/m
Adjusted EBITDA
$132.2 million
3%
Normalized FFO
$114.4 million
10%
Net income / (loss) per diluted common
share
$(0.32)
n/m
Normalized FFO per diluted common
share
$0.96
5%
- Leased 4 megawatts (“MW”) and 15,000 colocation square feet
(“CSF”) in the third quarter, totaling $11 million in annualized
GAAP revenue
- Backlog of $82 million in annualized GAAP revenue as of the end
of the third quarter representing approximately $595 million in
total contract value
- Acquired 33 acres of land in London, with approximately 100 MW
of power capacity to support continued growth in one of the leading
data center markets in Europe
- Entered into forward sale agreements through the at-the-market
(“ATM”) equity program with respect to approximately 3.0 million
shares of common stock, which will result in estimated net proceeds
of approximately $219 million upon settlement by September 2021 –
Combined with forward sale agreements entered into in the second
quarter of 2020, which will result in estimated net proceeds of
approximately $194 million upon settlement by May 2021, the Company
has approximately $413 million in available forward equity –
Settled forward sale agreements entered into in the first and
second quarters of 2020, resulting in net proceeds of approximately
$219 million, which were used to pay down a portion of amounts
outstanding under the Company’s unsecured revolving credit
facility
- As previously announced, issued $400 million of 2.150% senior
notes due 2030, with the net proceeds used to repay $300 million of
outstanding indebtedness under the unsecured term loan maturing in
March 2023 and for general corporate purposes, including the
repayment of a portion of amounts outstanding under the Company's
unsecured revolving credit facility – The transaction smooths and
extends the Company’s debt maturity schedule and increases its
percentage of fixed-rate debt
- Announced pledge to operate carbon-free by 2040, and subsequent
to the end of the quarter published initial sustainability
report
- Subsequent to the end of the quarter, announced Katherine
Motlagh will join the Company as CFO effective October 30,
2020
“This admittedly was a disappointing leasing quarter for us, but
we have consistently stated that leasing in our business can be
lumpy, particularly related to timing on the execution of
hyperscale deals. Given the positive demand outlook and our
productive discussions with customers, we are confident that we
will produce much better results in the fourth quarter,” said Bruce
W. Duncan, president and chief executive officer of CyrusOne.
“Year-to-date bookings have been strong, with the $82 million
revenue backlog positioning us well for 2021 and beyond, and we
have capacity across our markets and $1.7 billion in available
liquidity to support our growth.”
Third Quarter 2020 Financial Results
Revenue was $262.8 million for the third quarter, compared to
$250.9 million for the same period in 2019, an increase of 5%. The
increase in revenue was driven primarily by a 7% increase in
occupied CSF and additional interconnection services, partially
offset by the impact of rent churn.
Net loss was $(37.3) million for the third quarter, compared to
net income of $12.6 million in the same period in 2019. Net loss
for the third quarter included a $(22.9) million loss associated
with a change in fair value on the undesignated portion of the
Company’s net investment hedge compared to a $5.5 million gain in
the third quarter of 2019, an $(8.8) million impairment loss as a
result of damage to equipment held for use in inventory at our U.S.
data centers, and a ($3.1) million loss on early extinguishment of
debt related to the repayment of $300 million of outstanding
indebtedness under the unsecured term loan maturing in March 2023.
Additionally, General and administrative expenses for the third
quarter of 2020 included $9.0 million in cash severance and
management transition costs and severance-related stock
compensation costs. The Company also recognized a $4.7 million gain
during the third quarter of 2020 on its marketable equity
investment in GDS Holdings Limited (“GDS”), a leading data center
provider in China, compared to a $12.4 million gain in the third
quarter of 2019. Net loss per diluted common share1 was $(0.32) in
the third quarter of 2020, compared to net income per diluted
common share of $0.11 in the same period in 2019.
Net operating income (“NOI”)2 was $153.1 million for the third
quarter, compared to $147.9 million in the same period in 2019, an
increase of 4%. Adjusted EBITDA3 was $132.2 million for the third
quarter, compared to $127.8 million in the same period in 2019, an
increase of 3%.
Normalized Funds From Operations (“Normalized FFO”)4 was $114.4
million for the third quarter, compared to $103.9 million in the
same period in 2019, an increase of 10%. Normalized FFO per diluted
common share was $0.96 in the third quarter of 2020, compared to
$0.91 in the same period in 2019, an increase of 5%.
Leasing Activity
CyrusOne leased approximately 4 MW of power and 15,000 CSF in
the third quarter, representing approximately $0.9 million in
monthly recurring rent, inclusive of the monthly impact of
installation charges. The leasing for the quarter represents
approximately $10.7 million in annualized GAAP revenue5, excluding
estimates for pass-through power. The weighted average lease term
of the new leases, based on square footage, is 54 months (4.5
years), and the weighted average remaining lease term of CyrusOne’s
portfolio is 50 months (taking into consideration the impact of the
backlog). Recurring rent churn percentage6 for the third quarter
was 0.6%, compared to 1.0% for the same period in 2019.
Portfolio Development and Percentage CSF Leased
In the third quarter, the Company completed construction on
45,000 CSF and 6 MW of power capacity in the New York Metro area.
Percentage CSF leased7 as of the end of the third quarter was 87%
for stabilized properties8 and 84% overall. In addition, the
Company has development projects underway in Frankfurt, Dublin,
London, San Antonio, the New York Metro area, Council Bluffs (IA),
Phoenix, and Northern Virginia that are expected to add
approximately 345,000 CSF and 78 MW of power capacity plus 321,000
square feet of powered shell.
Balance Sheet and Liquidity
As of September 30, 2020, the Company had gross asset value9
totaling approximately $8.4 billion, an increase of approximately
17% over gross asset value as of September 30, 2019. CyrusOne had
$3.24 billion of long-term debt10, $157 million of cash and cash
equivalents, and $1.14 billion available under its unsecured
revolving credit facility as of September 30, 2020. Net debt10 was
$3.11 billion as of September 30, 2020, representing approximately
27% of the Company's total enterprise value as of September 30,
2020 of $11.5 billion, or 5.1x Adjusted EBITDA for the last quarter
annualized (after further adjusting net debt to reflect the pro
forma impact of settlement of the forward sale agreements). 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 5.0x11. Available liquidity12 was $1.71 billion as of September
30, 2020.
The Company issued $400 million of 2.150% senior notes due 2030,
with the net proceeds used to repay $300 million of outstanding
indebtedness under the unsecured term loan maturing in March 2023
and for general corporate purposes, including the repayment of a
portion of amounts outstanding under the Company's unsecured
revolving credit facility. The transaction smooths and extends the
Company’s debt maturity schedule and increases its percentage of
fixed-rate debt.
Additionally, the Company entered into forward sale agreements
through the ATM equity program with respect to approximately 3.0
million shares of common stock, which will result in estimated net
proceeds of approximately $219 million upon settlement by September
2021. Combined with forward sale agreements entered into in the
second quarter of 2020, which will result in estimated net proceeds
of approximately $194 million upon settlement by May 2021, the
Company has $413 million in available forward equity (no portion of
these forward sale agreements has been settled as of October 28,
2020). As of September 30, 2020, there was approximately $228
million in remaining availability under the ATM equity program.
The Company also settled forward sale agreements entered into in
the first and second quarters of 2020, resulting in net proceeds of
approximately $219 million, which were used to pay down a portion
of amounts outstanding under the Company’s unsecured revolving
credit facility.
Additionally, the Company raised approximately $13.3 million
through the sale of approximately 160,000 American depository
shares (“ADSs”) of GDS. The settlement of a portion of the ADSs and
receipt of the associated proceeds occurred in October 2020. After
taking into account the impact of the sale of ADSs, CyrusOne owned
approximately 1.9 million ADSs with a total value of approximately
$155 million based on GDS’s share price as of September 30, 2020.
Also, as previously disclosed in the second quarter of 2020, the
settlement of a portion of the ADSs sold in June 2020 and receipt
of the associated proceeds occurred in July 2020 (not included in
the $13.3 million referenced above).
Dividend
On July 29, 2020, the Company announced a dividend of $0.51 per
share of common stock for the third quarter of 2020, a 2% increase
in the quarterly dividend compared to the second quarter of 2020.
The dividend was paid on October 9, 2020, to stockholders of record
at the close of business on September 25, 2020.
Additionally, today the Company is announcing a dividend of
$0.51 per share of common stock for the fourth quarter of 2020. The
dividend will be paid on January 8, 2021, to stockholders of record
at the close of business on January 4, 2021.
Guidance
CyrusOne is updating guidance for full year 2020, tightening the
guidance ranges for Total Revenue and Adjusted EBITDA, increasing
the lower end of the guidance range for Normalized FFO per diluted
common share, and increasing the upper and lower ends of the
guidance range for 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. The COVID-19 pandemic continues to evolve
rapidly and the potential impact on our business remains uncertain
and unpredictable.
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, Impairment losses and loss on disposal of assets and other
charges in its reconciliation of historic numbers, the amount of
which, based on historical experience, could be significant.
Category
Previous
2020 Guidance
Current
2020 Guidance
Total Revenue
$1,010 - 1,045 million
$1,020 - 1,035 million
Lease and Other Revenues from
Customers
$865 - 890 million
$865 - 875 million
Metered Power Reimbursements
$145 - 155 million
$155 - 160 million
Adjusted EBITDA
$525 - 550 million
$535 - 540 million
Normalized FFO per diluted common
share
$3.75 - 3.90
$3.80 - 3.90
Capital Expenditures
$850 - 950 million
$900 - 1,000 million
Development(1)
$835 - 930 million
$885 - 980 million
Recurring
$15 - 20 million
$15 - 20 million
(1)Development capital
expenditures include the acquisition of land for future
development.
Upcoming Conferences and Events
- Berenberg Virtual U.S. CEO Conference 2020 on November
12-13
- NAREIT’s Virtual REITworld on November 17-19
- Morgan Stanley Virtual European Technology, Media &
Telecoms Conference on November 18-20
- BofA Securities Virtual Global Data Center Conference on
November 24-25
- Wells Fargo Virtual TMT Summit 2020 on December 1-2
- NASDAQ Virtual Investor Conference on December 1-4
- UBS Global TMT Virtual Conference on December 7-9
- Mizuho Virtual Data Center Series on December 14-15
Conference Call Details
CyrusOne will host a conference call on October 29, 2020, at
11:00 AM Eastern Time (10:00 AM Central Time) to discuss its
results for the third quarter 2020. 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 29, 2020, through
November 12, 2020. 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 10148433.
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 and
our customers’ respective businesses and industries, 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, (i) the potential widespread and highly uncertain
impact of public health outbreaks, epidemics and pandemics, such as
the COVID-19 pandemic; (ii) loss of key customers; (iii) economic
downturn, natural disaster or oversupply of data centers in the
limited geographic areas that we serve; (iv) risks related to the
development of our properties including, without limitation,
obtaining applicable permits, power and connectivity and our
ability to successfully lease those properties; (v) weakening in
the fundamentals for data center real estate, including but not
limited to, decreases in or slowed growth of global data,
e-commerce and demand for outsourcing of data storage and
cloud-based applications; (vi) loss of access to key third-party
service providers and suppliers; (vii) risks of loss of power or
cooling which may interrupt our services to our customers; (viii)
inability to identify and complete acquisitions and operate
acquired properties; (ix) our failure to obtain necessary outside
financing on favorable terms, or at all; (x) restrictions in the
instruments governing our indebtedness; (xi) risks related to
environmental matters; (xii) unknown or contingent liabilities
related to our acquisitions; (xiii) significant competition in our
industry; (xiv) loss of key personnel; (xv) risks associated with
real estate assets and the industry; (xvi) failure to maintain our
status as a REIT (as defined below) or to comply with the highly
technical and complex REIT provisions of the Internal Revenue Code
of 1986, as amended; (xvii) REIT distribution requirements could
adversely affect our ability to execute our business plan; (xviii)
insufficient cash available for distribution to stockholders; (xix)
future offerings of debt may adversely affect the market price of
our common stock; (xx) increases in market interest rates will
increase our borrowings costs and may drive potential investors to
seek higher dividend yields and reduce demand for our common stock;
(xxi) market price and volume of stock could be volatile; (xxii)
risks related to regulatory changes impacting our customers and
demand for colocation space in particular geographies; (xxiii) our
international activities, including those conducted as a result of
land acquisitions and with respect to leased land and buildings,
are subject to special risks different from those faced by us in
the United States; (xxiv) the significant uncertainty that remains
about the future relationship between the United Kingdom and the
European Union as a result of the United Kingdom’s withdrawal from
the European Union; (xxv) expanded and widened price increases in
certain selective materials for data center development capital
expenditures due to international trade negotiations; (xxvi) a
failure to comply with anti-corruption laws and regulations;
(xxvii) legislative or other actions relating to taxes; (xxviii)
the ongoing trade conflict and political tensions between the
United States and the People's Republic of China; and (xxix) other
factors affecting the real estate and technology industries
generally. More information on potential risks and uncertainties is
available in our recent filings with the Securities and Exchange
Commission (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, or a
substitute for, 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 REITs 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 presented in
accordance with GAAP 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
our cash needs, including our 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.
1Net 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 118.7 million for the third
quarter of 2020 and 113.5 million for the third quarter of
2019.
2We 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 (loss) income, 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
on marketable equity investment, Loss on early extinguishment of
debt, Impairment losses, Foreign currency and derivative losses
(gains), net, Other expense, Income tax benefit 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 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.
3Adjusted 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; Depreciation and
amortization expenses; Impairment losses; Transaction, acquisition,
integration and other related expenses; Legal claim costs;
Stock-based compensation expense; Cash severance and management
transition costs; Severance-related stock compensation costs; Loss
on early extinguishment of debt; New accounting standards and
regulatory compliance and the related system implementation costs;
Gain on marketable equity investment; Foreign currency and
derivative losses (gains), net; Other expense (income) 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.
4We 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 (loss) income computed in accordance
with GAAP before Real estate depreciation and amortization and
Impairment losses and gain on disposal of assets. 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 adjusted for Loss on early
extinguishment of debt; Gain on marketable equity investment;
Foreign currency and derivative losses (gains), net; New accounting
standards and regulatory compliance and the related system
implementation costs; Amortization of tradenames; Transaction,
acquisition, integration and other related expenses; Cash severance
and management transition costs; Severance-related stock
compensation 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.
5Annualized 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.
6Recurring rent churn percentage 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.
7Percentage 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.
8Stabilized properties include data halls that have been in
service for at least 24 months or are at least 85% leased.
9Gross asset value is defined as total assets plus accumulated
depreciation.
10Long-term debt and net debt exclude adjustments for deferred
financing costs and bond discounts / 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.
11The estimated impact of the adoption of ASC 842 on Adjusted
EBITDA for the last quarter annualized is $15.8 million.
12Liquidity is calculated as cash, cash equivalents, and
temporary cash investments on hand, plus the undrawn capacity on
CyrusOne’s revolving credit facility, plus the pro forma impact of
the net proceeds from the settlement of the forward sale
agreements.
About CyrusOne
CyrusOne (NASDAQ: CONE) is a premier global REIT specializing in
design, construction and operation of more than 50 high-performance
data centers worldwide. The Company provides mission-critical
facilities that ensure the continued operation of IT infrastructure
for approximately 1,000 customers, including approximately 200
Fortune 1000 companies.
A leader in hybrid-cloud and multi-cloud deployments, CyrusOne
offers colocation, hyperscale, and build-to-suit environments that
help customers enhance the strategic connection of their essential
data infrastructure and support achievement of sustainability
goals. CyrusOne data centers offer world-class flexibility,
enabling clients to modernize, simplify, and rapidly respond to
changing demand. Combining exceptional financial strength with a
broad global footprint, CyrusOne provides customers with long-term
stability and strategic advantage at scale.
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 approximately 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 more
than 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
2850 N. Harwood Street, Ste. 2200
Bruce W. Duncan, President & Chief
Executive Officer
Brent Behrman, EVP of Sales
Dallas, Texas 75201
Diane M. Morefield, EVP & Chief
Financial Officer*
Matt Pullen, EVP & Managing Director,
Europe
Phone: (972) 350-0060
John Hatem, EVP & Chief Operating
Officer
Robert M. Jackson, EVP General Counsel
& Secretary
Website: www.cyrusone.com
Jonathan Schildkraut, EVP & Chief
Strategy Officer
*Effective October 30, 2020, Katherine
Motlagh will assume this role
Analyst Coverage
Firm
Analyst
Phone
Number
BofA Securities
Michael J. Funk
(646) 855-5664
Barclays
Tim Long
(212) 526-4043
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
Deutsche Bank
Matthew Niknam
(212) 250-4711
Green Street
David Guarino
(949) 640-8780
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
TD Securities Inc.
Jonathan Kelcher, CFA
(416) 307-9931
Truist
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 %
2020
2020
2019
Yr/Yr
Revenue
$
262.8
$
256.4
$
250.9
5
%
Net operating income
153.1
157.4
147.9
4
%
Net income (loss)
(37.3
)
45.0
12.6
n/m
Funds from Operations ("FFO") - Nareit
defined
82.2
154.9
116.2
(29
)%
Normalized Funds from Operations
("Normalized FFO")
114.4
118.9
103.9
10
%
Weighted average number of common shares
outstanding - diluted for Normalized FFO
119.2
115.7
113.5
5
%
Income (loss) per share - basic
$
(0.32
)
$
0.39
$
0.11
n/m
Income (loss) per share - diluted
$
(0.32
)
$
0.39
$
0.11
n/m
Normalized FFO per diluted common
share
$
0.96
$
1.03
$
0.91
5
%
Adjusted EBITDA
$
132.2
$
136.8
$
127.8
3
%
Adjusted EBITDA as a % of Revenue
50.3
%
53.4
%
50.9
%
(0.6) pts
As of
September 30,
June 30,
September 30,
Growth %
2020
2020
2019
Yr/Yr
Balance Sheet Data
Gross investment in real estate
$
6,791.6
$
6,504.9
$
5,870.8
16
%
Accumulated depreciation
(1,663.4
)
(1,562.7
)
(1,292.7
)
29
%
Total investment in real estate, net
5,128.2
4,942.2
4,578.1
12
%
Cash and cash equivalents
156.5
70.7
51.7
n/m
Market value of common equity
8,433.2
8,501.0
8,953.8
(6
)%
Long-term debt
3,236.3
3,191.3
2,791.0
16
%
Net debt
3,109.0
3,149.4
2,770.0
12
%
Total enterprise value
11,542.2
11,650.4
11,723.8
(2
)%
Net debt to LQA Adjusted EBITDA(a)
5.1x
5.0x
5.4x
(0.3)x
Dividend Activity
Dividends per share
$
0.51
$
0.50
$
0.50
2
%
Portfolio Statistics
Data centers
51
51
47
9
%
Stabilized CSF (000)
4,134
4,055
3,935
5
%
Stabilized CSF % leased
87
%
88
%
88
%
(1) pts
Total CSF (000)
4,471
4,427
4,148
8
%
Total CSF % leased
84
%
83
%
85
%
(1) pts
Total GSF (000)
7,710
7,605
7,117
8
%
(a)
September 30, 2020 and June 30, 2020
periods adjusted to reflect the pro forma impact of the net
proceeds from the settlement of the forward sale agreements.
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
2020
2019
$
%
2020
2019
$
%
Revenue(a)
$
262.8
$
250.9
$
11.9
5
%
$
765.1
$
727.4
$
37.7
5
%
Operating expenses:
Property operating expenses
109.7
103.0
6.7
7
%
301.3
289.6
11.7
4
%
Sales and marketing
4.5
5.1
(0.6
)
(12
)%
13.0
15.7
(2.7
)
(17
)%
General and administrative
29.7
19.8
9.9
50
%
76.9
61.6
15.3
25
%
Depreciation and amortization
113.1
105.4
7.7
7
%
330.9
309.6
21.3
7
%
Transaction, acquisition, integration and
other related expenses
1.6
4.4
(2.8
)
(64
)%
2.1
6.2
(4.1
)
(66
)%
Impairment losses
8.8
0.7
8.1
n/m
11.2
0.7
10.5
n/m
Total operating expenses
267.4
238.4
29.0
12
%
735.4
683.4
52.0
8
%
Operating income
(4.6
)
12.5
(17.1
)
n/m
29.7
44.0
(14.3
)
(33
)%
Interest expense, net
(13.3
)
(19.6
)
6.3
(32
)%
(43.2
)
(64.4
)
21.2
(33
)%
Gain on marketable equity investment
4.7
12.4
(7.7
)
(62
)%
69.8
105.1
(35.3
)
(34
)%
Loss on early extinguishment of debt
(3.1
)
—
(3.1
)
n/m
(6.5
)
—
(6.5
)
n/m
Foreign currency and derivative (losses)
gains, net
(22.9
)
5.5
(28.4
)
n/m
(31.7
)
5.5
(37.2
)
n/m
Other expense
—
(0.2
)
0.2
(100
)
—
(0.3
)
0.3
(100
)%
Net (loss) income before income
taxes
(39.2
)
10.6
(49.8
)
n/m
18.1
89.9
(71.8
)
(80
)%
Income tax benefit
1.9
2.0
(0.1
)
(5
)%
4.3
3.6
0.7
19
%
Net (loss) income
$
(37.3
)
$
12.6
$
(49.9
)
n/m
$
22.4
$
93.5
$
(71.1
)
(76
)%
(Loss) income per share - basic
$
(0.32
)
$
0.11
$
(0.43
)
n/m
$
0.19
$
0.83
$
(0.64
)
(77
)%
(Loss) income per share -
diluted
$
(0.32
)
$
0.11
$
(0.43
)
n/m
$
0.19
$
0.83
$
(0.64
)
(77
)%
(a)
Revenue includes metered power
reimbursements of $44.6 million and $41.1 million for the three
months ended September 30, 2020 and 2019, respectively, and
includes metered power reimbursements of $116.5 million and $101.3
million for the nine months ended September 30, 2020 and 2019,
respectively.
CyrusOne Inc.
Condensed Consolidated Balance
Sheets
(Dollars in millions)
(Unaudited)
September 30,
December 31,
Change
2020
2019
$
%
Assets
Investment in real estate:
Land
$
181.2
$
147.6
$
33.6
23
%
Buildings and improvements
1,918.4
1,761.4
157.0
9
%
Equipment
3,341.7
3,028.2
313.5
10
%
Gross operating real estate
5,441.3
4,937.2
504.1
10
%
Less accumulated depreciation
(1,663.4
)
(1,379.2
)
(284.2
)
21
%
Net operating real estate
3,777.9
3,558.0
219.9
6
%
Construction in progress, including land
under development
1,085.9
946.3
139.6
15
%
Land held for future development
264.4
206.0
58.4
28
%
Total investment in real estate, net
5,128.2
4,710.3
417.9
9
%
Cash and cash equivalents
156.5
76.4
80.1
n/m
Rent and other receivables, net
306.9
291.9
15.0
5
%
Restricted cash
1.4
1.3
0.1
8
Operating lease right-of-use assets,
net
206.9
161.9
45.0
28
%
Equity investments
178.1
135.1
43.0
32
%
Goodwill
455.1
455.1
—
n/m
Intangible assets, net
166.4
196.1
(29.7
)
(15
)%
Other assets
112.8
113.9
(1.1
)
(1
)%
Total assets
$
6,712.3
$
6,142.0
$
570.3
9
%
Liabilities and equity
Debt
$
3,197.8
$
2,886.6
$
311.2
11
%
Finance lease liabilities
29.2
31.8
(2.6
)
(8
)%
Operating lease liabilities
244.3
195.8
48.5
25
%
Construction costs payable
168.2
176.3
(8.1
)
(5
)%
Accounts payable and accrued expenses
145.3
122.7
22.6
18
%
Dividends payable
63.1
58.6
4.5
8
%
Deferred revenue and prepaid rents
166.8
163.7
3.1
2
%
Deferred tax liability
55.4
60.5
(5.1
)
(8
)%
Other liabilities
37.8
11.4
26.4
n/m
Total liabilities
4,107.9
3,707.4
400.5
11
%
Stockholders' equity
Preferred stock, $.01 par value,
100,000,000 authorized; no shares issued or outstanding
—
—
—
n/m
Common stock, $0.01 par value, 500,000,000
shares authorized and 120,422,556 and 114,808,898 shares issued and
outstanding at September 30, 2020 and December 31, 2019,
respectively
1.2
1.1
0.1
9
%
Additional paid in capital
3,532.9
3,202.0
330.9
10
%
Accumulated deficit
(923.9
)
(767.3
)
(156.6
)
20
%
Accumulated other comprehensive loss
(5.8
)
(1.2
)
(4.6
)
n/m
Total stockholders’ equity
2,604.4
2,434.6
169.8
7
%
Total liabilities and equity
$
6,712.3
$
6,142.0
$
570.3
9
%
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,
2020
2020
2020
2019
2019
Revenue(a)
$
262.8
$
256.4
$
245.9
$
253.9
$
250.9
Operating expenses:
Property operating expenses
109.7
99.0
92.6
93.8
103.0
Sales and marketing
4.5
3.8
4.7
4.5
5.1
General and administrative
29.7
20.3
26.9
21.8
19.8
Depreciation and amortization
113.1
109.7
108.1
108.1
105.4
Transaction, acquisition, integration and
other related expenses
1.6
0.1
0.4
2.7
4.4
Impairment losses
8.8
2.4
—
0.7
—
Total operating expenses
267.4
235.3
232.7
231.6
237.7
Operating (loss) income
(4.6
)
21.1
13.2
22.3
13.2
Interest expense, net
(13.3
)
(13.9
)
(16.0
)
(17.6
)
(19.6
)
Gain on marketable equity investment
4.7
50.4
14.7
27.2
12.4
Loss on early extinguishment of debt
(3.1
)
—
(3.4
)
(71.8
)
—
Foreign currency and derivative (losses)
gains, net
(22.9
)
(13.9
)
5.1
(13.0
)
5.5
Other income (expense)
—
0.1
(0.1
)
0.7
(0.9
)
Net (loss) income before income
taxes
(39.2
)
43.8
13.5
(52.2
)
10.6
Income tax benefit
1.9
1.2
1.2
0.1
2.0
Net (loss) income
$
(37.3
)
$
45.0
$
14.7
$
(52.1
)
$
12.6
(Loss) income per share - basic
$
(0.32
)
$
0.39
$
0.13
$
(0.46
)
$
0.11
(Loss) income per share -
diluted
$
(0.32
)
$
0.39
$
0.13
$
(0.46
)
$
0.11
(a)
Revenue includes metered power
reimbursements of $44.6 million, $37.1 million, $34.8 million,
$37.5 million and $41.1 million for the three months ended
September 30, 2020, June 30, 2020, March 31, 2020, December 31,
2019, and September 30, 2019, respectively.
CyrusOne Inc.
Condensed Consolidated Balance
Sheets
(Dollars in millions)
(Unaudited)
September 30,
June 30,
March 31,
December 31,
September 30,
2020
2020
2020
2019
2019
Assets
Investment in real estate:
Land
$
181.2
$
175.5
$
172.2
$
147.6
$
147.3
Buildings and improvements
1,918.4
1,857.9
1,786.3
1,761.4
1,732.0
Equipment
3,341.7
3,229.5
3,106.4
3,028.2
2,950.3
Gross operating real estate
5,441.3
5,262.9
5,064.9
4,937.2
4,829.6
Less accumulated depreciation
(1,663.4
)
(1,562.7
)
(1,469.5
)
(1,379.2
)
(1,292.7
)
Net operating real estate
3,777.9
3,700.2
3,595.4
3,558.0
3,536.9
Construction in progress, including land
under development
1,085.9
1,024.8
990.6
946.3
836.9
Land held for future development
264.4
217.2
205.4
206.0
204.3
Total investment in real estate, net
5,128.2
4,942.2
4,791.4
4,710.3
4,578.1
Cash and cash equivalents
156.5
70.7
57.3
76.4
51.7
Rent and other receivables, net
306.9
307.0
305.3
291.9
279.3
Restricted cash
1.4
1.3
1.3
1.3
1.3
Operating lease right-of-use assets,
net
206.9
204.7
208.6
161.9
90.7
Equity investments
178.1
184.9
153.1
135.1
104.3
Goodwill
455.1
455.1
455.1
455.1
455.1
Intangible assets, net
166.4
174.9
184.5
196.1
203.7
Other assets
112.8
127.3
121.9
113.9
128.7
Total assets
$
6,712.3
$
6,468.1
$
6,278.5
$
6,142.0
$
5,892.9
Liabilities and equity
Debt
$
3,197.8
$
3,156.9
$
3,047.0
$
2,886.6
$
2,776.1
Finance lease liabilities
29.2
28.8
29.4
31.8
30.7
Operating lease liabilities
244.3
240.5
243.0
195.8
124.3
Construction costs payable
168.2
155.7
183.4
176.3
131.2
Accounts payable and accrued expenses
145.3
127.0
121.0
122.7
132.4
Dividends payable
63.1
59.7
58.7
58.6
57.7
Deferred revenue and prepaid rents
166.8
166.2
167.3
163.7
164.0
Deferred tax liability
55.4
55.8
57.0
60.5
59.6
Other liabilities
37.8
16.8
7.9
11.4
—
Total liabilities
4,107.9
4,007.4
3,914.7
3,707.4
3,476.0
Stockholders' equity
Preferred stock, $.01 par value,
100,000,000 authorized; no shares issued or outstanding
—
—
—
—
—
Common stock, $0.01 par value, 500,000,000
shares authorized and 120,422,556 and 114,808,898 shares issued and
outstanding at September 30, 2020 and December 31, 2019,
respectively
1.2
1.2
1.2
1.1
1.1
Additional paid in capital
3,532.9
3,305.9
3,199.9
3,202.0
3,094.2
Accumulated deficit
(923.9
)
(824.7
)
(811.0
)
(767.3
)
(657.4
)
Accumulated other comprehensive loss
(5.8
)
(21.7
)
(26.3
)
(1.2
)
(21.0
)
Total stockholders' equity
2,604.4
2,460.7
2,363.8
2,434.6
2,416.9
Total liabilities and equity
$
6,712.3
$
6,468.1
$
6,278.5
$
6,142.0
$
5,892.9
CyrusOne Inc.
Condensed Consolidated
Statements of Cash Flow
(Dollars in millions)
(Unaudited)
Nine Months Ended September
30, 2020
Nine Months Ended September
30, 2019
Three Months Ended September
30, 2020
Three Months Ended September
30, 2019
Cash flows from operating activities:
Net income (loss)
$
22.4
$
93.5
$
(37.3
)
$
12.6
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
330.9
309.6
113.1
105.4
Provision for bad debt expense
0.3
(0.2
)
0.3
0.1
Gain on marketable equity investment
(69.8
)
(105.1
)
(4.7
)
(12.4
)
Foreign currency and derivative losses
(gains), net
31.7
(5.5
)
22.9
(5.5
)
Proceeds from swap terminations
2.9
—
—
—
(Gain) loss on asset disposals
(0.1
)
0.2
(0.1
)
0.2
Impairment losses
11.2
0.7
9.0
0.7
Loss on early extinguishment of debt
6.5
—
3.1
—
Interest expense amortization, net
5.2
3.5
1.6
1.2
Stock-based compensation expense
13.7
12.4
6.7
4.2
Deferred income tax benefit
(7.1
)
(6.4
)
(2.9
)
(3.0
)
Operating lease cost
15.0
14.6
2.0
5.0
Other income
0.6
—
0.1
0.2
Change in operating assets and
liabilities:
Rent and other receivables, net and other
assets
(29.1
)
(51.5
)
1.9
(10.4
)
Accounts payable and accrued expenses
22.0
11.8
17.3
20.0
Deferred revenue and prepaid rents
2.3
16.1
0.3
(1.9
)
Operating lease liabilities
(16.7
)
(16.7
)
(5.6
)
(6.9
)
Net cash provided by operating
activities
341.9
277.0
127.7
109.5
Cash flows from investing activities:
Investments in real estate
(692.2
)
(727.3
)
(234.2
)
(212.5
)
Proceeds from sale of equity
investments
31.8
199.8
23.6
—
Equity investments
(6.5
)
(0.3
)
(1.8
)
—
Proceeds from the sale of real estate
assets
0.3
0.9
—
0.9
Net cash used in investing
activities
(666.6
)
(526.9
)
(212.4
)
(211.6
)
Cash flows from financing activities:
Issuance of common stock, net
325.9
253.3
222.6
0.7
Dividends paid
(174.7
)
(153.5
)
(58.6
)
(52.2
)
Payment of deferred financing costs
(15.1
)
—
(2.6
)
—
Proceeds from revolving credit
facility
595.5
534.3
156.7
246.5
Repayments of revolving credit
facility
(966.7
)
(183.2
)
(243.6
)
(183.2
)
Proceeds from Euro bond
561.2
—
11.0
—
Proceeds from unsecured term loan
1,100.0
—
—
—
Repayments of unsecured term loan
(1,400.0
)
(200.0
)
(300.0
)
—
Proceeds from issuance of senior notes
395.2
—
395.2
—
Payments on finance lease liabilities
(2.0
)
(2.1
)
(0.7
)
(0.9
)
Tax payment upon exercise of equity
awards
(8.6
)
(9.0
)
(2.2
)
(0.2
)
Net cash provided by financing
activities
410.7
239.8
177.8
10.7
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(5.8
)
(1.3
)
(7.2
)
(1.0
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
80.2
(11.4
)
85.9
(92.4
)
Cash, cash equivalents and restricted cash
at beginning of period
77.7
64.4
72.0
145.4
Cash, cash equivalents and restricted
cash at end of period
$
157.9
$
53.0
$
157.9
$
53.0
Supplemental disclosure of cash flow
information:
Cash paid for interest, including amounts
capitalized of $17.0 million and $26.2 million in 2020 and 2019,
respectively
$
36.3
$
109.0
$
6.3
$
46.3
Cash paid for income taxes
3.2
3.0
3.1
0.2
Non-cash investing and financing
activities:
Construction costs payable
168.2
131.2
168.2
131.2
Dividends payable
63.1
57.7
63.1
57.7
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
2020
2019
$
%
2020
2019
$
%
Net (loss) income
$
(37.3
)
$
12.6
$
(49.9
)
n/m
$
22.4
$
93.5
$
(71.1
)
(76
)%
Sales and marketing expenses
4.5
5.1
(0.6
)
(12
)%
13.0
15.7
(2.7
)
(17
)%
General and administrative expenses
29.7
19.8
9.9
50
%
76.9
61.6
15.3
25
%
Depreciation and amortization expenses
113.1
105.4
7.7
7
%
330.9
309.6
21.3
7
%
Transaction, acquisition, integration and
other related expenses
1.6
4.4
(2.8
)
(64
)%
2.1
6.2
(4.1
)
(66
)%
Interest expense, net
13.3
19.6
(6.3
)
(32
)%
43.2
64.4
(21.2
)
(33
)%
Gain on marketable equity investment
(4.7
)
(12.4
)
7.7
(62
)%
(69.8
)
(105.1
)
35.3
(34
)%
Loss on early extinguishment of debt
3.1
—
3.1
n/m
6.5
—
6.5
n/m
Impairment losses
8.8
0.7
8.1
n/m
11.2
0.7
10.5
n/m
Foreign currency and derivative losses
(gains), net
22.9
(5.5
)
28.4
n/m
31.7
(5.5
)
37.2
n/m
Other expense
—
0.2
(0.2
)
n/m
—
0.3
(0.3
)
n/m
Income tax benefit
(1.9
)
(2.0
)
0.1
(5
)%
(4.3
)
(3.6
)
(0.7
)
19
%
Net Operating Income
$
153.1
$
147.9
$
5.2
4
%
$
463.8
$
437.8
$
26.0
6
%
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,
2020
2019
$
%
2020
2020
2020
2019
2019
Net Operating Income
Revenue
$
765.1
$
727.4
$
37.7
5
%
$
262.8
$
256.4
$
245.9
$
253.9
$
250.9
Property operating expenses
301.3
289.6
11.7
4
%
109.7
99.0
92.6
93.8
103.0
Net Operating Income (NOI)
$
463.8
$
437.8
$
26.0
6
%
$
153.1
$
157.4
$
153.3
$
160.1
$
147.9
NOI as a % of Revenue
60.6
%
60.2
%
58.3
%
61.4
%
62.3
%
63.1
%
58.9
%
Reconciliation of Net Income (Loss) to
Adjusted EBITDA:
Net income (loss)
$
22.4
$
93.5
$
(71.1
)
(76
)%
$
(37.3
)
$
45.0
$
14.7
$
(52.1
)
$
12.6
Interest expense, net
43.2
64.4
(21.2
)
(33
)%
13.3
13.9
16.0
17.6
19.6
Income tax benefit
(4.3
)
(3.6
)
(0.7
)
19
(1.9
)
(1.2
)
(1.2
)
(0.1
)
(2.0
)
Depreciation and amortization expenses
330.9
309.6
21.3
7
%
113.1
109.7
108.1
108.1
105.4
Impairment losses and (gain) loss on
disposal of assets
11.1
1.0
10.1
n/m
8.8
2.4
0.1
—
1.0
EBITDA (Nareit definition)(a)
$
403.3
$
464.9
$
(61.6
)
(13
)%
$
96.0
$
169.8
$
137.7
$
73.5
$
136.6
Transaction, acquisition, integration and
other related expenses
2.2
6.2
(4.0
)
(65
)%
1.6
0.1
0.5
2.7
4.4
Legal claim costs
0.3
0.6
(0.3
)
(50
)
0.1
0.1
0.1
0.5
0.4
Stock-based compensation expense
11.1
12.4
(1.3
)
(10
)%
4.2
3.4
3.5
4.3
4.2
Cash severance and management transition
costs
13.2
—
13.2
n/m
6.4
—
6.8
(0.7
)
—
Severance-related stock compensation
costs
2.7
—
2.7
n/m
2.6
—
0.1
—
—
Loss on early extinguishment of debt
6.5
—
6.5
n/m
3.1
—
3.4
71.8
—
New accounting standards and regulatory
compliance and the related system implementation costs
—
0.8
(0.8
)
n/m
—
—
—
—
0.2
Gain on marketable equity investment
(69.8
)
(105.1
)
35.3
(34
)%
(4.7
)
(50.4
)
(14.7
)
(27.2
)
(12.4
)
Foreign currency and derivative losses
(gains), net
31.7
(5.5
)
37.2
n/m
22.9
13.9
(5.1
)
13.0
(5.5
)
Other expense (income)
—
—
—
n/m
—
(0.1
)
0.1
—
(0.1
)
Adjusted EBITDA
$
401.2
$
374.3
$
26.9
7
%
$
132.2
$
136.8
$
132.4
$
137.9
$
127.8
Adjusted EBITDA as a % of Revenue
52.4
%
51.5
%
50.3
%
53.4
%
53.8
%
54.3
%
50.9
%
(a)
We calculate Earnings Before Interest,
Taxes, Depreciation and Amortization for Real Estate (EBITDAre) as
GAAP Net income (loss) plus Interest expense, net, Income tax
benefit, Depreciation and amortization expenses and Impairment
losses. 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,
2020
2019
$
%
2020
2020
2020
2019
2019
Reconciliation of Net Income (Loss) to
FFO and Normalized FFO:
Net income (loss)
$
22.4
$
93.5
$
(71.1
)
(76
)%
$
(37.3
)
$
45.0
$
14.7
$
(52.1
)
$
12.6
Real estate depreciation and
amortization
324.0
302.9
21.1
7
%
110.7
107.5
105.8
105.6
102.6
Impairment losses and (gain) loss on
disposal of assets
11.1
1.0
10.1
n/m
8.8
2.4
(0.1
)
0.1
1.0
Funds from Operations ("FFO") - Nareit
defined
$
357.5
$
397.4
$
(39.9
)
(10
)%
$
82.2
$
154.9
$
120.4
$
53.6
$
116.2
Loss on early extinguishment of debt
6.5
—
6.5
n/m
3.1
—
3.4
71.8
—
Gain on marketable equity investment
(69.8
)
(105.1
)
35.3
(34
)%
(4.7
)
(50.4
)
(14.7
)
(27.2
)
(12.4
)
Foreign currency and derivative losses
(gains), net
31.7
(5.5
)
37.2
n/m
22.9
13.9
(5.1
)
13.0
(5.5
)
New accounting standards and regulatory
compliance and the related system implementation costs
—
0.8
(0.8
)
n/m
—
—
—
—
0.2
Amortization of tradenames
0.8
0.9
(0.1
)
(11
)%
0.2
0.3
0.3
0.4
0.6
Transaction, acquisition, integration and
other related expenses
2.2
6.2
(4.0
)
(65
)%
1.6
0.1
0.5
2.3
4.4
Cash severance and management transition
costs
13.2
—
13.2
n/m
6.4
—
6.8
(0.7
)
—
Severance-related stock compensation
costs
2.7
—
2.7
n/m
2.6
—
0.1
—
—
Legal claim costs
0.3
0.6
(0.3
)
(50
)
0.1
0.1
0.1
0.5
0.4
Normalized Funds from Operations
(Normalized FFO)
$
345.1
$
295.3
$
49.8
17
%
$
114.4
$
118.9
$
111.8
$
113.7
$
103.9
Normalized FFO per diluted common
share
$
2.96
$
2.63
$
0.33
13
%
$
0.96
$
1.03
$
0.97
$
0.99
$
0.91
Weighted average diluted common shares
outstanding
116.7
111.9
4.8
4
%
119.2
115.7
115.1
114.4
113.5
Additional Information:
Amortization of deferred financing costs
and bond premium / discount
5.2
3.6
1.6
44
%
1.6
1.6
2.0
1.4
1.2
Stock-based compensation expense
11.1
12.4
(1.3
)
(10
)%
4.2
3.4
3.5
4.3
4.2
Non-real estate depreciation and
amortization
6.1
5.8
0.3
5
%
2.1
2.0
2.0
2.1
2.0
Straight line rent adjustments(a)
(7.0
)
(22.8
)
15.8
(69
)%
(6.6
)
(2.1
)
1.7
(3.8
)
(5.9
)
Deferred revenue, primarily installation
revenue(b)
0.3
8.9
(8.6
)
(97
)%
0.2
2.3
(2.2
)
(2.3
)
(1.7
)
Leasing commissions
(10.9
)
(9.6
)
(1.3
)
14
%
(5.3
)
(3.2
)
(2.4
)
(4.8
)
(2.8
)
Recurring capital expenditures
(13.0
)
(8.8
)
(4.2
)
48
%
(3.1
)
(6.4
)
(3.5
)
(1.1
)
(4.5
)
(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 and Interest Summary
(Unaudited)
Market
Capitalization (as of September 30, 2020)
(dollars in millions)
Shares or
Equivalents Outstanding
Market Price as of September
30, 2020
Market Value
Equivalents (in millions)
Common shares
120,422,556
$
70.03
$
8,433.2
Net Debt
3,109.0
Total Enterprise Value (TEV)
$
11,542.2
Reconciliation of
Net Debt
September 30,
June 30,
September 30,
(dollars in millions)
2020
2020
2019
Long-term debt(a)
$
3,236.3
$
3,191.3
$
2,791.0
Finance lease liabilities
29.2
28.8
30.7
Less:
Cash and cash equivalents
(156.5
)
(70.7
)
(51.7
)
Net Debt
$
3,109.0
$
3,149.4
$
2,770.0
(a) Excludes adjustment for
deferred financing costs and unamortized bond discounts.
Interest
Summary
Three Months Ended
September 30,
June 30,
September 30,
% Change
(dollars in millions)
2020
2020
2019
Yr/Yr
Interest expense and fees, net
$
17.3
$
17.7
$
26.4
(34
)%
Amortization of deferred financing costs
and bond premium / discount
1.6
1.6
1.2
33
%
Capitalized interest
(5.6
)
(5.4
)
(8.0
)
(30
)%
Total interest expense, net
$
13.3
$
13.9
$
19.6
(32
)%
CyrusOne Inc.
Debt Schedule and Debt
Covenants
(Unaudited)
Debt
Schedule (as of September 30, 2020)
(dollars in millions)
Long-term debt:
Amount
Interest
Rate
Maturity
Date
Revolving credit facility - EUR(a)(b)
140.7
EURIBOR + 100 bps(c)
March 2025(d)
Revolving credit facility - GBP(a)(e)
109.4
GBP LIBOR + 100 bps(f)
March 2025(d)
Term loan(g)
800.0
USD LIBOR + 120 bps(h)
March 2025(i)
2.900% USD senior notes due 2024
600.0
2.900%
November 2024
1.450% EUR senior notes due 2027(j)
586.2
1.450%
January 2027
3.450% USD senior notes due 2029
600.0
3.450%
November 2029
2.150% USD senior notes due 2030
400.0
2.150%
November 2030
Total long-term debt(k)
$3,236.3
2.13%(l)
Weighted average term of debt:
6.3
years
(a)
Revolving credit facility includes 0.20%
facility fee on entire revolving credit facility commitment of $1.4
billion.
(b)
Amount outstanding is USD-equivalent of
€120 million.
(c)
Interest rate as of September 30, 2020:
1.00%.
(d)
Assuming exercise of 12-month extension
option.
(e)
Amount outstanding is USD-equivalent of
£85 million.
(f)
Interest rate as of September 30, 2020:
1.05%.
(g)
$500 million of $800 million synthetically
converted into €451 million pursuant to a USD-EUR cross currency
swap; $300 million swapped pursuant to USD floating to fixed
interest rate swap.
(h)
Interest rate as of September 30, 2020:
1.35%; weighted average interest rate pursuant to swaps: 1.38%.
(i)
Assumes exercise of two 12-month extension
options on $100 million tranche.
(j)
Amount outstanding is USD-equivalent of
€500 million.
(k)
Excludes adjustment for deferred financing
costs and unamortized bond discounts.
(l)
Weighted average interest rate calculated
using lower interest rate on swapped amount.
Debt Covenants -
Senior Notes (as of September 30, 2020)
Ratios
Requirement
September 30, 2020
Total Outstanding Indebtedness to Total
Assets
≤ 60%
40%
Secured Indebtedness to Total Assets
≤ 40%
0%
Consolidated EBITDA to Interest
Expense
≥ 1.50x
6.99x
Total Unencumbered Assets to Unsecured
Indebtedness
≥ 150%
248%
CyrusOne Inc.
Colocation Square Footage
(CSF) and CSF Leased
(Unaudited)
As of September 30,
2020
As of June 30, 2020
As of September 30,
2019
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
1,166
93
%
1,166
92
%
1,113
91
%
Dallas
621
71
%
621
71
%
621
71
%
Phoenix
581
92
%
581
92
%
509
100
%
Cincinnati
402
73
%
402
73
%
402
78
%
San Antonio
367
96
%
367
96
%
300
100
%
Houston
308
62
%
308
62
%
308
64
%
New York Metro
290
79
%
245
76
%
228
76
%
Chicago
203
79
%
203
78
%
203
73
%
Austin
106
77
%
106
76
%
106
81
%
Raleigh-Durham
94
95
%
94
96
%
83
100
%
Total - Domestic
4,138
84
%
4,093
83
%
3,872
84
%
London
148
83
%
148
70
%
128
81
%
Frankfurt
144
99
%
144
99
%
144
99
%
Amsterdam
39
100
%
39
100
%
—
—
%
Singapore
3
20
%
3
20
%
3
22
%
Total - International
334
91
%
334
85
%
275
90
%
Total - Portfolio
4,471
84
%
4,427
83
%
4,148
85
%
Stabilized Properties(c)
4,134
87
%
4,055
88
%
3,935
88
%
(a)
CSF represents the GSF 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.
2020 Guidance
Category
Previous 2020 Guidance
Current 2020 Guidance
Total Revenue
$1,010 - 1,045 million
$1,020 - 1,035 million
Lease and Other Revenues from
Customers
$865 - 890 million
$865 - 875 million
Metered Power Reimbursements
$145 - 155 million
$155 - 160 million
Adjusted EBITDA
$525 - 550 million
$535 - 540 million
Normalized FFO per diluted common
share
$3.75 - 3.90
$3.80 - 3.90
Capital Expenditures
$850 - 950 million
$900 - 1,000 million
Development(1)
$835 - 930 million
$885 - 980 million
Recurring
$15 - 20 million
$15 - 20 million
(1)Development capital
expenditures include the acquisition of land for future
development.
CyrusOne is updating guidance for full year 2020, tightening the
guidance ranges for Total Revenue and Adjusted EBITDA, increasing
the lower end of the guidance range for Normalized FFO per diluted
common share, and increasing the upper and lower ends of the
guidance range for 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. The COVID-19 pandemic continues to evolve
rapidly and the potential impact on our business remains uncertain
and unpredictable.
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, Impairment losses and loss on disposal of assets 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,
2020
(Unaudited)
Gross Square Feet
(GSF)(a)
Powered Shell Available for
Future Development (GSF)(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
$
94,021
428
79
%
79
%
83
46
%
133
644
—
62
Northern Virginia - Sterling V
Northern Virginia
68,326
383
99
%
99
%
11
100
%
145
539
64
66
Northern Virginia - Sterling VI
Northern Virginia
56,199
272
100
%
100
%
35
—
%
—
307
—
57
Northern Virginia - Sterling II
Northern Virginia
34,770
159
100
%
100
%
9
100
%
55
223
—
30
Somerset I
New York Metro
34,421
108
81
%
81
%
27
99
%
149
284
28
16
San Antonio III
San Antonio
32,288
132
100
%
100
%
9
100
%
43
184
—
24
Chicago - Aurora I
Chicago
30,138
113
98
%
98
%
34
100
%
223
371
27
71
Phoenix - Chandler VI
Phoenix
30,007
148
100
%
100
%
6
100
%
32
187
279
24
Houston - Houston West I
Houston
29,322
112
75
%
75
%
11
100
%
37
161
3
28
Frankfurt II
Frankfurt
28,637
90
100
%
100
%
9
100
%
72
171
10
35
Dallas - Lewisville*
Dallas
28,061
114
79
%
79
%
11
60
%
54
180
—
21
Cincinnati - 7th Street***
Cincinnati
26,784
197
54
%
54
%
6
61
%
175
378
46
16
Totowa - Madison**
New York Metro
26,258
51
87
%
87
%
22
86
%
59
133
—
6
Cincinnati - North Cincinnati
Cincinnati
26,010
65
99
%
99
%
45
79
%
53
163
65
14
Frankfurt I
Frankfurt
24,238
53
97
%
97
%
8
91
%
57
118
—
18
Phoenix - Chandler II
Phoenix
24,121
74
100
%
100
%
6
53
%
26
105
—
12
Phoenix - Chandler I
Phoenix
23,081
74
99
%
99
%
35
12
%
39
147
31
16
Phoenix - Chandler III
Phoenix
22,455
68
100
%
100
%
2
—
%
30
101
—
14
Houston - Houston West II
Houston
22,188
80
73
%
73
%
4
97
%
55
139
11
12
Austin III
Austin
22,122
62
69
%
69
%
15
81
%
21
98
67
9
Raleigh-Durham I
Raleigh-Durham
20,306
94
88
%
95
%
16
95
%
82
192
235
17
San Antonio I
San Antonio
19,404
44
99
%
99
%
6
83
%
46
96
11
12
Northern Virginia - Sterling III
Northern Virginia
19,364
79
100
%
100
%
7
100
%
34
120
—
15
Wappingers Falls I**
New York Metro
18,904
37
62
%
62
%
20
87
%
15
72
—
3
Northern Virginia - Sterling I
Northern Virginia
18,139
78
100
%
100
%
6
69
%
49
132
—
12
Northern Virginia - Sterling IV
Northern Virginia
17,397
81
100
%
100
%
7
100
%
34
122
—
15
Phoenix - Chandler V
Phoenix
16,891
72
100
%
100
%
1
95
%
16
89
13
12
Austin II
Austin
15,739
44
90
%
90
%
2
100
%
22
68
—
5
San Antonio II
San Antonio
15,617
64
100
%
100
%
11
100
%
41
117
—
12
London I*
London
13,420
30
100
%
100
%
12
56
%
58
100
9
12
Phoenix - Chandler IV
Phoenix
12,876
73
100
%
100
%
3
100
%
27
103
—
12
London II*
London
12,252
64
100
%
100
%
10
100
%
93
166
4
21
San Antonio IV
San Antonio
11,862
60
100
%
100
%
12
100
%
27
99
—
12
Cincinnati - Hamilton*
Cincinnati
11,254
47
73
%
73
%
1
100
%
35
83
—
10
Florence
Cincinnati
11,089
53
99
%
99
%
47
87
%
40
140
—
9
Houston - Galleria
Houston
9,818
63
39
%
39
%
23
24
%
25
112
—
14
Houston - Houston West III
Houston
7,170
53
44
%
46
%
10
13
%
32
95
209
6
London - Great Bridgewater**
London
7,053
10
96
%
96
%
—
—
%
1
11
—
1
Stamford - Riverbend**
New York Metro
7,052
20
23
%
23
%
—
—
%
8
28
—
2
Chicago - Aurora II (DH #1)
Chicago
6,422
77
53
%
53
%
45
1
%
14
136
272
16
Norwalk I**
New York Metro
5,315
13
100
%
100
%
4
49
%
41
58
87
2
Cincinnati - Mason
Cincinnati
4,996
34
100
%
100
%
26
98
%
17
78
—
4
Dallas - Allen (DH #1)
Dallas
2,506
79
15
%
15
%
—
—
%
58
137
204
6
Chicago - Lombard
Chicago
2,494
14
66
%
66
%
4
45
%
12
30
29
3
Amsterdam I
Amsterdam
2,331
39
100
%
100
%
15
100
%
40
94
207
4
Stamford - Omega**
New York Metro
941
—
—
%
—
%
19
53
%
4
22
—
—
Totowa - Commerce**
New York Metro
635
—
—
%
—
%
20
44
%
6
26
—
—
Cincinnati - Blue Ash*
Cincinnati
630
6
36
%
36
%
7
100
%
2
15
—
1
Singapore - Inter Business Park**
Singapore
376
3
20
%
20
%
—
—
%
—
3
—
1
London III*
London
4
20
100
%
100
%
2
100
%
45
67
1
6
Stabilized Properties - Total
$
975,706
4,134
87
%
87
%
725
64
%
2,381
7,240
1,912
791
CyrusOne Inc.
Data Center Portfolio
As of September 30,
2020
(Unaudited)
Gross Square Feet
(GSF)(a)
Powered Shell Available for
Future Development (GSF)(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
$
975,706
4,134
87
%
87
%
725
64
%
2,381
7,240
1,912
791
Pre-Stabilized
Properties(b)
Northern Virginia - Sterling VIII
Northern Virginia
8,745
61
37
%
37
%
4
—
%
25
90
—
6
Somerset I (DH #14)
New York Metro
1,575
16
71
%
79
%
—
—
%
—
16
—
2
Northern Virginia - Sterling IX
Northern Virginia
454
53
10
%
26
%
1
—
%
66
120
187
6
Phoenix - Chandler V (DH #2)
Phoenix
288
71
35
%
35
%
1
100
%
8
81
—
6
San Antonio V
San Antonio
280
67
79
%
79
%
7
100
%
21
94
9
9
London I*(DH #1)
London
—
8
—
%
—
%
—
—
%
—
8
—
3
London II*(DH #3)
London
—
17
—
%
—
%
—
—
%
—
17
—
7
Somerset I (DH #15)
New York Metro
—
45
—
%
100
%
—
—
%
—
45
—
6
All Properties - Total
$
987,049
4,471
83
%
84
%
738
63
%
2,501
7,710
2,107
836
*
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, 2020
multiplied by 12. For the month of September 2020, customer
reimbursements were $183.4 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, 2018 through September 30, 2020, customer
reimbursements under leases with separately metered power
constituted between 13.5% 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, 2020
was $977.2 million. Our annualized effective rent was lower than
our annualized rent as of September 30, 2020 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 GSF 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,
2020 divided by total CSF. Leases signed but that have not
commenced billing as of September 30, 2020 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 GSF 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, 2020 divided by total Office & Other
space. Leases signed but not commenced as of September 30, 2020 are
not included.
(i)
Represents infrastructure support space,
including mechanical, telecommunications and utility rooms, as well
as building common areas.
(j)
Represents the GSF 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 GSF, 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.
GSF Under Development
As of September 30,
2020
(Dollars in millions)
(Unaudited)
GSF 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
Frankfurt III (DH #1)
Frankfurt
4Q'20
85
13
72
—
170
31.0
134
22-56
156-190
Northern Virginia - Sterling VII
Northern Virginia
4Q'20
—
—
—
167
167
—
56
35-44
91-100
Council Bluffs I
Iowa
4Q'20
42
14
18
42
115
5.0
34
26-32
60-66
San Antonio V
San Antonio
4Q'20
67
—
18
—
85
6.0
14
21-25
35-39
Chandler V
Phoenix
4Q'20
—
—
—
—
—
6.0
3
21-23
24-26
London III
London
1Q'21
19
—
—
—
19
6.0
—
29-34
29-34
Somerset I (DH #15 and #16)
New York
1Q'21
54
—
9
—
63
5.0
3
33-38
36-41
Dublin I
Dublin
1Q'21
39
10
33
113
195
6.0
51
29-36
80-87
Frankfurt III (DH #2, #3 and #4)
Frankfurt
2Q'21
39
6
43
—
88
13.0
11
42-53
53-64
Total
345
44
192
321
902
78.0
$
306
$258-341
$564-647
(a)
Represents GSF 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
1.29. Dublin and Frankfurt development costs are EUR-denominated
and shown as USD-equivalent using exchange rate of 1.17 as of
September 30, 2020.
(c)
Represents GSF under construction that,
upon completion, will be powered shell available for future
development into operating GSF.
(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, 2020. 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 GSF under development.
There may be an increase in costs if customers require greater
power density.
Capital Expenditures - Investment in Real
Estate(a)
Three Months Ended
Nine Months Ended
(dollars in millions)
September 30, 2020
September 30, 2020
Capital expenditures - investment in real
estate
$231.1
$679.2
(a) Excludes recurring capital
expenditures.
CyrusOne Inc.
Land Available for Future
Development (Acres)
As of September 30,
2020
(Unaudited)
As of
Market
September 30, 2020
Amsterdam
8
Atlanta
44
Austin
22
Chicago
23
Cincinnati
98
Council Bluffs, Iowa
10
Dallas
57
Dublin
15
Frankfurt
2
Houston
20
London
33
Northern Virginia
24
Phoenix
96
Quincy, Washington
48
San Antonio
12
Santa Clara
23
Total Available(a)
534
Book Value of Total Available
$
264.4
million
(a) Does not sum to total due to
rounding.
CyrusOne Inc.
Leasing Statistics - Lease
Signings
As of September 30,
2020
(Unaudited)
Period
Number of Leases(a)
Total CSF Signed(b)
Total kW Signed(c)
Total MRR Signed
(000)(d)
Weighted Average Lease
Term(e)
3Q'20
415
15,000
3,756
$894
54
Prior 4Q Avg.
439
175,750
25,254
$3,246
85
2Q'20
396
150,000
21,956
$3,070
84
1Q'20
460
289,000
43,586
$4,994
98
4Q'19
450
28,000
4,703
$1,063
55
3Q'19(f)
451
236,000
30,769
$3,856
104
(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 GSF 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, and subject to full build
out of projects subject to additional conditions. 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 1Q'20, $0.2 million in 4Q'19, 2Q'20
and 3Q'20, and $0.1 million in 3Q'19.
(e)
Calculated on a CSF-weighted basis.
(f)
3Q'19 leasing statistics updated from
those reported in 3Q'19-1Q'20 earnings materials to remove the
prior inclusion of the paid reservation that was exercised in 2Q'20
and included in the 2Q'20 leasing results (30,000 CSF, 4.5 MW, and
approximately $0.5 million in monthly recurring rent).
CyrusOne Inc.
New MRR Signed - Existing vs.
New Customers
As of September 30,
2020
(Dollars in thousands)
(Unaudited)
New MRR(a) Signed
($000)
4Q'18 1Q'19 2Q'19 3Q'19(b) 4Q'19
1Q'20 2Q'20 3Q'20 Existing Customers
$1,226
$2,102
$974
$2,849
$843
$4,756
$2,872
$841
New Customers
$452
$165
$116
$1,007
$220
$238
$198
$53
Total
$1,678
$2,267
$1,090
$3,856
$1,063
$4,994
$3,070
$894
% from Existing Customers
73%
93%
89%
74%
79%
95%
94%
94%
(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 1Q'20, $0.2 million in 1Q'19, 4Q'19,
2Q'20 and 3Q'20, and $0.1 million in 4Q'18, 2Q'19 and 3Q'19.
(b)
3Q'19 leasing statistics updated from
those reported in 3Q'19-1Q'20 earnings materials to remove the
prior inclusion of the paid reservation that was exercised in 2Q'20
and included in the 2Q'20 leasing results (30,000 CSF, 4.5 MW, and
approximately $0.5 million in monthly recurring rent).
CyrusOne Inc.
Customer Sector
Diversification(a)
As of September 30,
2020
(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
$
195,861
19.8
%
92.5
2
Information Technology
11
71,042
7.2
%
23.3
3
Information Technology
5
61,076
6.2
%
48.1
4
Information Technology
7
40,112
4.1
%
43.4
5
Information Technology
7
34,282
3.5
%
35.7
6
Information Technology
5
32,765
3.3
%
30.6
7
Information Technology
6
18,456
1.9
%
36.2
8
Financial Services
1
17,260
1.7
%
126.0
9
Healthcare
2
16,051
1.6
%
87.0
10
Research and Consulting Services
3
15,670
1.6
%
14.4
11
Industrials
5
10,941
1.1
%
14.7
12
Financial Services
4
10,851
1.1
%
90.0
13
Telecommunication Services
2
10,486
1.1
%
12.5
14
Telecommunication Services
2
10,151
1.0
%
42.3
15
Information Technology
1
9,757
1.0
%
41.6
16
Consumer Staples
3
9,575
1.0
%
5.2
17
Telecommunication Services
8
9,573
1.0
%
6.7
18
Telecommunication Services
1
8,042
0.8
%
85.3
19
Information Technology
1
7,609
0.8
%
9.6
20
Information Technology
3
7,212
0.7
%
44.2
$
596,771
60.5
%
57.7
(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, 2020,
multiplied by 12. For the month of September 2020, customer
reimbursements were $183.4 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, 2018 through September 30, 2020, customer
reimbursements under leases with separately metered power
constituted between 13.5% 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, 2020
was $977.2 million. Our annualized effective rent was lower than
our annualized rent as of September 30, 2020 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, 2020, which was approximately $987.0 million.
(d)
Weighted average based on customer’s
percentage of total annualized rent expiring and is as of September
30, 2020, 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,
2020
(Unaudited)
GSF Under Lease(a)
Number of Customers(b)
Percentage of All
Customers
Total Leased GSF(c)
(000)
Percentage of
Portfolio Leased GSF
Annualized Rent(d)
(000)
Percentage of
Annualized Rent
0-999
634
67
%
132
2
%
$
87,351
9
%
1000-2499
114
12
%
177
3
%
45,729
5
%
2500-4999
72
7
%
253
5
%
52,047
5
%
5000-9999
49
5
%
348
6
%
57,912
6
%
10000+
82
9
%
4,927
84
%
744,010
75
%
Total
951
100
%
5,837
100
%
$
987,049
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,
2020. 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 GSF 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, 2020,
multiplied by 12. For the month of September 2020, customer
reimbursements were $183.4 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, 2018 through September 30, 2020, customer
reimbursements under leases with separately metered power
constituted between 13.5% 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, 2020
was $977.2 million. Our annualized effective rent was lower than
our annualized rent as of September 30, 2020 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,
2020
(Unaudited)
Year(a)
Number of Leases
Expiring(b)
Total Operating GSF
Expiring (000)
Percentage of Total
GSF
Annualized Rent(c)
(000)
Percentage of
Annualized Rent
Annualized Rent at
Expiration(d) (000)
Percentage of
Annualized Rent at Expiration
Available
1,872
24
%
Month-to-Month
1,202
99
1
%
$
23,420
2
%
$
23,804
2
%
2020
538
229
3
%
46,932
5
%
47,099
4
%
2021
3,594
789
10
%
179,248
18
%
180,619
17
%
2022
1,639
716
9
%
130,378
13
%
135,563
13
%
2023
1,292
985
13
%
155,217
16
%
163,328
15
%
2024
249
544
7
%
107,671
11
%
116,582
11
%
2025
134
272
4
%
42,874
4
%
54,214
5
%
2026
61
660
9
%
97,811
10
%
104,246
10
%
2027
43
532
7
%
90,151
9
%
100,734
9
%
2028
17
278
4
%
36,010
4
%
40,567
4
%
2029
7
83
1
%
6,777
1
%
8,801
1
%
2030 - Thereafter
27
650
8
%
70,560
7
%
96,171
9
%
Total
8,803
7,710
100
%
$
987,049
100
%
$
1,071,728
100
%
(a)
Leases that were auto-renewed prior to
September 30, 2020 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, 2020,
multiplied by 12. For the month of September 2020, customer
reimbursements were $183.4 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, 2018 through September 30, 2020, customer
reimbursements under leases with separately metered power
constituted between 13.5% 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, 2020
was $977.2 million. Our annualized effective rent was lower than
our annualized rent as of September 30, 2020 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, 2020, multiplied by 12.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201028006155/en/
Investor Relations Michael Schafer Vice President,
Capital Markets & Investor Relations 972-350-0060
investorrelations@cyrusone.com
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