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May 1, 2019

CyrusOne Reports First Quarter 2019 Earnings

1Q’19 Year-over-Year Revenue Growth of 14%
Signed $27 Million in Annualized GAAP Revenue and 16 Megawatts

 

DALLAS--(BUSINESS WIRE)--May 1, 2019-- CyrusOne Inc. (NASDAQ: CONE), a premier global data center REIT, today announced first quarter 2019 earnings.

Highlights

                 
                % Change vs. 1Q’18

Category

     

1Q’19

     

1Q’18

     

1Q’18 Adjusted
for ASC 8421

Revenue       $225.0 million       14%       14%
Net income / (loss)       $89.4 million       n/m       n/m
Adjusted EBITDA       $119.2 million       9%       13%
Normalized FFO       $89.3 million       9%       12%
Net income / (loss) per diluted share       $0.82       82%       86%
Normalized FFO per diluted share       $0.82       (4)%       (1)%
     

  Leased 16 megawatts (“MW”) and 93,000 colocation square feet (“CSF”) in the first quarter, totaling $27 million in annualized GAAP revenue
     

 

 

-- Backlog of $39 million in annualized GAAP revenue as of the end of the first quarter

     

  As previously announced, acquired 22 acres of land in San Antonio and 8 acres of land in Santa Clara to support growth in those markets
     
    -- Estimated 120 MW of power capacity in San Antonio and nearly 200 MW of power capacity in Santa Clara (inclusive of previously acquired land)
     

  Strategically hedged EUR exposure, synthetically converting $270 million outstanding on the Company’s revolving credit facility into more attractively priced EUR-denominated debt (equivalent to €238 million), resulting in a nearly 300 basis point decrease in the interest rate
     

  Raised approximately $252 million in net proceeds through the sale of approximately 4.9 million shares of common stock under at-the-market (“ATM”) equity program
     

  As previously announced, subsequent to the end of the first quarter raised approximately $200 million through the sale of approximately 5.7 million American depository shares (“ADSs”) of GDS Holdings Limited (“GDS”)
     

 

Increasing 2019 Normalized FFO per diluted share guidance2 by $0.20 at the midpoint of the range, from $3.10 - 3.20 to $3.30 - 3.40

     

“We are off to a great start to the year, with strong operational and financial performance, and leasing contributions across the portfolio as our international expansion creates an increasingly balanced and diversified business with a presence in the most important markets in the world,” said Gary Wojtaszek, president and chief executive officer of CyrusOne. “We continue to maintain a very strong balance sheet to support our growth, and recent initiatives have allowed us to significantly increase our Normalized FFO per share guidance while meeting our equity funding requirements for the year based on our current outlook.”

First Quarter 2019 Financial Results

Revenue was $225.0 million for the first quarter, compared to $196.6 million for the same period in 2018, an increase of 14%. The increase in revenue was driven primarily by a 22% increase in occupied CSF from organic growth and the Zenium acquisition, as well as additional interconnection services.

Net income was $89.4 million for the first quarter, compared to net income of $43.5 million in the same period in 2018. Net income for the first quarter included a $101.2 million unrealized gain on the Company’s equity investment in GDS, a leading data center provider in China, due to an increase in GDS’s share price during the quarter. Net income per diluted common share3 was $0.82 in the first quarter of 2019, compared to net income per diluted common share of $0.45 in the same period in 2018.

Net operating income (“NOI”)4 was $141.7 million for the first quarter, compared to $128.8 million in the same period in 2018, an increase of 10%. Adjusted EBITDA5 was $119.2 million for the first quarter, compared to $109.5 million in the same period in 2018, an increase of 9%.

Normalized Funds From Operations (“Normalized FFO”)6 was $89.3 million for the first quarter, compared to $82.2 million in the same period in 2018, an increase of 9%. Normalized FFO per diluted common share was $0.82 in the first quarter of 2019.

Leasing Activity

CyrusOne leased approximately 16 MW of power and 93,000 CSF in the first quarter, representing $2.3 million in monthly recurring rent, inclusive of the monthly impact of installation charges, or approximately $27.2 million in annualized GAAP revenue7, excluding estimates for pass-through power. The weighted average lease term of the new leases, based on square footage, is 56 months (4.7 years), and the weighted average remaining lease term of CyrusOne’s portfolio is 56 months (taking into account the impact of the backlog). Recurring rent churn8 for the first quarter was 2.1%, compared to 0.5% for the same period in 2018.

Portfolio Development and CSF Leased

In the first quarter, the Company completed construction on 249,000 CSF and 48 MW of power capacity across five projects in Northern Virginia, the New York Metro area, and Raleigh-Durham. CSF leased9 as of the end of the first quarter was 90% for stabilized properties10 and 86% overall. In addition, the Company has development projects underway in Northern Virginia, Dallas, the New York Metro area, Raleigh-Durham, Phoenix, Austin, Frankfurt, London, and Amsterdam that are expected to add approximately 190,000 CSF and 82 MW of power capacity.

Sale of GDS Shares

As previously announced, subsequent to the end of the first quarter the Company raised approximately $200 million through the sale of approximately 5.7 million ADSs of GDS. CyrusOne continues to hold approximately 2.3 million ADSs, valued at approximately $90 million based on the GDS closing price on April 30, 2019, with the remaining ADSs being subject to a six-month lock up period. The commercial agreement between CyrusOne and GDS remains in place, and Gary Wojtaszek remains a member of the GDS Board of Directors.

Balance Sheet and Liquidity

As of March 31, 2019, the Company had gross asset value11 totaling approximately $7.1 billion, an increase of approximately 32% over gross asset value as of March 31, 2018. CyrusOne had $2.92 billion of long-term debt12, $126.0 million of cash and cash equivalents, and $1.28 billion available under its unsecured revolving credit facility as of March 31, 2019. Net debt12 was $2.82 billion as of March 31, 2019, representing approximately 33% of the Company's total enterprise value as of March 31, 2019 of $8.6 billion.

In the first quarter, CyrusOne sold approximately 4.9 million shares of its common stock through its ATM equity program, raising approximately $252 million in net proceeds. The settlement of a portion of the shares and receipt of the associated proceeds occurred in April 2019. As of March 31, 2019, there was approximately $495 million in remaining availability under the current ATM program. Also in the first quarter, CyrusOne strategically hedged its EUR exposure, synthetically converting $270 million outstanding on the Company’s revolving credit facility into more attractively priced EUR-denominated debt (equivalent to €238 million), resulting in a nearly 300 basis point decrease in the interest rate.

Subsequent to the end of the first quarter, CyrusOne paid down $200 million of its $1.0 billion term loan maturing in March 2023, decreasing the remaining balance to $800 million.

Net debt to Adjusted EBITDA for the last quarter annualized was 5.2x, after adjusting net debt to include the impact of proceeds from the April 2019 settlement of shares of common stock sold through the ATM equity program in March 2019, proceeds from the sale of GDS ADSs in April 2019, and the repayment of $200 million of the $1.0 billion term loan in April 2019. 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 prior periods, net debt to Adjusted EBITDA for the last quarter annualized was 5.0x13. Available liquidity14 was $1.55 billion as of March 31, 2019.

Dividend

On February 20, 2019, the Company announced a dividend of $0.46 per share of common stock for the first quarter of 2019. The dividend was paid on April 12, 2019, to stockholders of record at the close of business on March 29, 2019.

Additionally, today the Company is announcing a dividend of $0.46 per share of common stock for the second quarter of 2019. The dividend will be paid on July 12, 2019, to stockholders of record at the close of business on June 28, 2019.

Guidance

CyrusOne is updating guidance for full year 2019, increasing the guidance range for Normalized FFO per diluted common share, decreasing and tightening the guidance ranges for Capital Expenditures and Capital Expenditures - Development, and reaffirming the ranges for all other metrics. 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 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       $960 - 1,000 million       $960 - 1,000 million
Lease and Other Revenues from Customers       $835 - 865 million       $835 - 865 million
Metered Power Reimbursements       $125 - 135 million       $125 - 135 million
Adjusted EBITDA       $500 - 525 million       $500 - 525 million
Normalized FFO per diluted common share       $3.10 - 3.20       $3.30 - 3.40
Capital Expenditures       $950 - 1,100 million       $900 - 1,000 million
Development(1)       $940 - 1,085 million       $890 - 985 million
Recurring       $10 - 15 million       $10 - 15 million
                 

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

Upcoming Conferences and Events

  • MoffettNathanson Media & Communications Summit on May 14-15 in New York City
  • J.P. Morgan Global Technology, Media and Communications Conference on May 13-16 in Boston, Massachusetts
  • RBC C-Level 2019 Global Datacenter and Connectivity Conference on May 29 in the San Francisco Bay Area
  • Cowen Technology, Media & Telecom Conference on May 29-30 in New York City
  • Credit Suisse Communications Conference on June 4-5 in New York City
  • NAREIT’s REITweek Conference on June 4-6 in New York City
  • William Blair Growth Stock Conference on June 5-6 in Chicago
  • NASDAQ Investor Conference on June 13 in London

Conference Call Details

CyrusOne will host a conference call on May 2, 2019, at 11:00 AM Eastern Time (10:00 AM Central Time) to discuss its results for the first quarter of 2019. A live webcast of the conference call and the presentation to be made during the call will be available in the “Investors / Events & Presentations” section of the Company's website at http://investor.cyrusone.com/events.cfm. 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 May 2, 2019, through May 16, 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 10129894.

Safe Harbor

This release and the documents incorporated by reference herein contain forward-looking statements regarding future events and our future results that are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. 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 undertake no obligation to revise or update any forward-looking statements for any reason other than as required by law.

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, including initial recognition of lease assets and liabilities for existing operating leases, recognized as of the effective date, included in ASU 2018-11. By applying ASU 2018-11 at the adoption date, the presentation of financial information for periods prior to January 1, 2019 will remain unchanged.

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 as supplemental performance measures because they provide performance measures that, when compared year over year, 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) and other companies, these measures will be used by investors as a basis to compare its operating performance with that of other companies. 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 substitutes for cash flow from operating activities computed in accordance with U.S. 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 1Q’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 1Q’18 results are being shown solely for comparative and investor usefulness purposes with respect to the Company’s 1Q’19 results. There is no impact on 1Q’18 Revenue. The estimated impacts on 1Q’18 Net income, Adjusted EBITDA, Normalized FFO, Net income per share, and Normalized FFO per share are $1.2 million, $4.1 million, $2.2 million, $0.01, and $0.02, respectively.

2CyrusOne is not providing forward-looking GAAP guidance for GAAP net income (loss) per share or reconciliations of its non-GAAP guidance, see “Guidance” for more information.

3Net 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 108.8 million for the first quarter of 2019.

4We 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 revenue less property operating expenses, each of which are presented in the accompanying consolidated statements of operations and/or net income (loss), which is presented in the accompanying consolidated statements of operations, adjusted for sales and marketing expenses, general and administrative expenses, depreciation and amortization expenses, transaction, acquisition, integration and other related expenses, interest expense, unrealized (gain) loss on marketable equity investment, loss on early extinguishment of debt, other expense, income tax expense and other special 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 revenue and 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.

5Adjusted EBITDA, which is a non-GAAP financial measure, is defined as net income (loss) as defined by GAAP adjusted for interest expense, income tax benefit (expense), depreciation and amortization, impairment losses and loss on disposals, 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, unrealized (gain) loss on marketable equity investment, other expenses and other special 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.

6We 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 impairment losses. 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; unrealized (gain) loss on marketable equity investment; 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; lease exit costs; and other special items as appropriate. The Company believes its 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 impairment losses, 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.

7Annualized 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.

8Recurring 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.

9CSF leased is calculated by dividing CSF under signed leases for colocation space (whether or not the contract has commenced billing) by total CSF. 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.

10Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% leased.

11Gross asset value is defined as total assets plus accumulated depreciation.

12Long-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 capital lease obligations, offset by cash and cash equivalents.

13The estimated impact of the adoption of ASC 842 on Adjusted EBITDA for the last quarter annualized is $16.2 million.

14Liquidity is calculated as cash, cash equivalents, and temporary cash investments on hand, plus the undrawn capacity on CyrusOne's revolving credit facility. Liquidity has been adjusted to include the impact of proceeds from the April 2019 settlement of shares of common stock sold through the ATM equity program in March 2019 and proceeds from the sale of GDS ADSs in April 2019, net of the repayment of $200 million of the $1.0 billion term loan in April 2019.

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 212 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 48 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 212 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 48 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
Deutsche Bank       Matthew Niknam       (212) 250-4711
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
MUFG Securities       Stephen Bersey       (212) 405-7032
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      
      March 31,     December 31,     March 31,     Growth %
      2019     2018     2018     Yr/Yr
Revenue     $ 225.0       $ 221.3       $ 196.6       14 %
Net operating income       141.7         143.3         128.8       10 %
Net income (loss)       89.4         (105.8 )       43.5       n/m
Funds from Operations ("FFO") - Nareit defined       189.5         (10.3 )       116.0       63 %
Normalized Funds from Operations ("Normalized FFO")       89.3         90.9         82.2       9 %
Weighted average number of common shares outstanding - diluted for Normalized FFO       108.8         106.1         96.6       13 %
Income (loss) per share - basic     $ 0.82       $ (1.00 )     $ 0.45       82 %
Income (loss) per share - diluted     $ 0.82       $ (1.00 )     $ 0.45       82 %
Normalized FFO per diluted common share     $ 0.82       $ 0.86       $ 0.85       (4 )%
Adjusted EBITDA     $ 119.2       $ 121.2       $ 109.5       9 %
Adjusted EBITDA as a % of Revenue       53.0 %       54.8 %       55.7 %     (2.7) pts
                                 
                                 
     

As of

     
      March 31,      

December 31,

    March 31,     Growth %
      2019     2018     2018     Yr/Yr
Balance Sheet Data                                
Gross investment in real estate     $ 5,508.8       $ 5,347.5       $ 3,954.6       39 %
Accumulated depreciation       (1,122.5 )       (1,054.5 )       (836.4 )     34 %
Total investment in real estate, net       4,386.3         4,293.0         3,118.2       41 %
Cash and cash equivalents       126.0         64.4         228.7       (45 )%
Market value of common equity       5,785.0         5,728.5         5,066.4       14 %
Long-term debt       2,915.8         2,643.0         2,200.0       33 %
Net debt       2,823.2         2,612.0         1,987.2       42 %
Total enterprise value       8,608.2         8,340.5         7,053.6       22 %
Net debt to LQA Adjusted EBITDA(a)    

5.2

x

   

5.4

x

   

4.5

x

   

0.7

x

                                 
Dividend Activity                                
Dividends per share     $ 0.46       $ 0.46       $ 0.46       -  
                                 
Portfolio Statistics                                
Data centers       48         48         45       7 %
Stabilized CSF (000)       3,721         3,540         3,024       23 %
Stabilized CSF % leased       90 %       92 %       92 %     (2) pts
Total CSF (000)       4,061         3,819         3,348       21 %
Total CSF % leased       86 %       88 %       86 %     0 pts
Total NRSF (000)       7,004         6,726         5,824       20 %
     
(a)   March 31, 2019 period adjusted to reflect the impact of proceeds from the April 2019 settlement of shares of common stock sold through the Company's ATM equity program in March 2019, proceeds from the sale of GDS ADSs in April 2019, and the repayment of $200 million of the $1.0 billion term loan in April 2019.
               

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

               
      Three Months        
      Ended March 31,   Change
      2019   2018   $   %
Revenue(a)     $ 225.0     $ 196.6     $ 28.4     14 %
Operating expenses:                  
Property operating expenses       83.3       67.8       15.5     23 %
Sales and marketing       5.3       5.3           n/m
General and administrative       22.2       19.3       2.9     15 %
Depreciation and amortization       102.1       74.6       27.5     37 %
Transaction, acquisition, integration and other related expenses       0.3       1.9       (1.6 )   (84 )%
Total operating expenses       213.2       168.9       44.3     26 %
Operating income       11.8       27.7       (15.9 )   (57 )%
Interest expense       (23.7 )     (20.8 )     (2.9 )   14 %
Unrealized gain on marketable equity investment       101.2       40.5       60.7     n/m
Loss on early extinguishment of debt             (3.1 )     3.1     n/m
Other expense       (0.1 )           (0.1 )   n/m
Net income before income taxes       89.2       44.3       44.9     n/m
Income tax benefit (expense)       0.2       (0.8 )     1.0     n/m
Net income     $ 89.4     $ 43.5     $ 45.9     n/m
Income per share - basic     $ 0.82     $ 0.45     $ 0.37     82 %
Income per share - diluted     $ 0.82     $ 0.45     $ 0.37     82 %
     
(a)   The Company adopted the new accounting standard, ASC 842, “Leases”, in the first quarter of 2019. Revenue includes metered power reimbursements of $28.5 million and $21.6 million for the three months ended March 31, 2019 and 2018, respectively.
                   

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

                   
      March 31,     December 31,     Change
      2019     2018     $     %
Assets                        
Investment in real estate:                        
Land     $ 124.9       $ 118.5       $ 6.4       5 %
Buildings and improvements       1,649.2         1,677.5         (28.3 )     (2 )%
Equipment       2,799.6         2,630.2         169.4       6 %
Gross operating real estate       4,573.7         4,426.2         147.5       3 %
Less accumulated depreciation       (1,122.5 )       (1,054.5 )       (68.0 )     6 %
Net operating real estate       3,451.2         3,371.7         79.5       2 %
Construction in progress, including land under development       734.7         744.9         (10.2 )     (1 )%
Land held for future development       200.4         176.4         24.0       14 %
Total investment in real estate, net       4,386.3         4,293.0         93.3       2 %
Cash and cash equivalents       126.0         64.4         61.6       96 %
Rent and other receivables       248.7         234.9         13.8       6 %
Restricted cash       1.3                 1.3       %
Operating lease right-of-use assets       83.8                 83.8       %
Equity investments       299.3         198.1         101.2       51 %
Goodwill       455.1         455.1               %
Intangible assets, net       226.1         235.7         (9.6 )     (4 )%
Other assets       114.8         111.3         3.5       3 %
Total assets     $ 5,941.4       $ 5,592.5       $ 348.9       6 %
Liabilities and equity                        
Debt     $ 2,898.6       $ 2,624.7       $ 273.9       10 %
Capital lease obligations       33.4         33.4               %
Operating lease liabilities       119.6                 119.6       %
Lease financing arrangements               123.3         (123.3 )     %
Construction costs payable       155.5         195.3         (39.8 )     (20 )%
Accounts payable and accrued expenses       81.6         121.3         (39.7 )     (33 )%
Dividends payable       51.5         51.0         0.5       1 %
Deferred revenue and prepaid rents       155.9         148.6         7.3       5 %
Deferred tax liability       67.2         68.9         (1.7 )     (2 )%
Total liabilities       3,563.3         3,366.5         196.8       6 %
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 110,316,652 and 108,329,314                                      
shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively       1.1         1.1              

%
Additional paid in capital       2,938.2         2,837.4         100.8       4 %
Accumulated deficit       (552.2 )       (600.2 )       48.0       (8 )%
Accumulated other comprehensive loss       (9.0 )       (12.3 )       3.3       (27 )%
Total stockholders’ equity       2,378.1         2,226.0         152.1       7 %
Total liabilities and equity     $ 5,941.4       $ 5,592.5       $ 348.9       6 %
                               

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

                               
For the three months ended:     March 31,     December 31,     September 30,     June 30,     March 31,
      2019     2018     2018     2018     2018
Revenue(a)     $ 225.0       $ 221.3       $ 206.6       $ 196.9       $ 196.6  
Operating expenses:                              
Property operating expenses     83.3       78.0       77.7       68.9       67.8  
Sales and marketing     5.3       5.6       4.3       4.4       5.3  
General and administrative     22.2       23.4       19.3       18.6       19.3  
Depreciation and amortization     102.1       97.9       84.0       77.6       74.6  
Transaction, acquisition, integration and other related expenses     0.3       1.6       1.1       0.4       1.9  
Total operating expenses     213.2       206.5       186.4       169.9       168.9  
Operating income     11.8       14.8       20.2       27.0       27.7  
Interest expense     (23.7 )     (25.3 )     (25.8 )     (22.8 )     (20.8 )
Unrealized gain (loss) on marketable equity investment     101.2       (96.7 )     (36.6 )     102.7       40.5  
Loss on early extinguishment of debt                             (3.1 )
Other expense     (0.1 )                        
Net income (loss) before income taxes     89.2       (107.2 )     (42.2 )     106.9       44.3  
Income tax benefit (expense)     0.2       1.4       (0.2 )     (1.0 )     (0.8 )
Net income (loss)     $ 89.4       $ (105.8 )     $ (42.4 )     $ 105.9       $ 43.5  
Income (loss) per share - basic     $ 0.82       $ (1.00 )     $ (0.43 )     $ 1.07       $ 0.45  
Income (loss) per share - diluted     $ 0.82       $ (1.00 )     $ (0.43 )     $ 1.06       $ 0.45  
     
(a)   The Company adopted the new accounting standard, ASC 842, “Leases”, in the first quarter of 2019. Revenue includes metered power reimbursements of $28.5 million, $28.4 million, $29.3 million, $24.8 million and $21.6 million for the three months ended March 31, 2019, December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018, respectively.
                               

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

                               
      March 31,     December 31,     September 30,     June 30,     March 31,
      2019     2018     2018     2018     2018
Assets                              
Investment in real estate:                              
Land     $ 124.9       $ 118.5       $ 125.2       $ 107.4       $ 104.6  
Buildings and improvements     1,649.2       1,677.5       1,587.3       1,461.1       1,400.8  
Equipment     2,799.6       2,630.2       2,452.5       2,050.3       1,959.5  
Gross operating real estate     4,573.7       4,426.2       4,165.0       3,618.8       3,464.9  
Less accumulated depreciation     (1,122.5 )     (1,054.5 )     (973.4 )     (900.3 )     (836.4 )
Net operating real estate     3,451.2       3,371.7       3,191.6       2,718.5       2,628.5  
Construction in progress, including land under development     734.7       744.9       738.6       452.6       435.3  
Land held for future development     200.4       176.4       189.6       74.2       54.4  
Total investment in real estate, net     4,386.3       4,293.0       4,119.8       3,245.3       3,118.2  
Cash and cash equivalents     126.0       64.4       61.0       116.2       228.7  
Rent and other receivables     248.7       234.9       224.6       201.4       200.5  
Restricted cash     1.3                          
Operating lease right-of-use assets     83.8                          
Equity investments     299.3       198.1       282.2       318.8       216.1  
Goodwill     455.1       455.1       455.1       455.1       455.1  
Intangible assets, net     226.1       235.7       248.4       190.5       196.8  
Other assets     114.8       111.3       102.0       101.4       82.9  
Total assets     $ 5,941.4       $ 5,592.5       $ 5,493.1       $ 4,628.7       $ 4,498.3  
Liabilities and equity                              
Debt     $ 2,898.6       $ 2,624.7       $ 2,576.2       $ 2,179.5       $ 2,178.3  
Capital lease obligations     33.4       33.4       36.9       14.9       15.9  
Operating lease liabilities     119.6                          
Lease financing arrangements           123.3       125.8       127.8       131.3  
Construction costs payable     155.5       195.3       160.5       113.3       89.0  
Accounts payable and accrued expenses     81.6       121.3       96.8       91.4       66.7  
Dividends payable     51.5       51.0       49.7       46.5       46.4  
Deferred revenue and prepaid rents     155.9       148.6       139.5       127.1       116.1  
Deferred tax liability     67.2       68.9       68.7              
Total liabilities     3,563.3       3,366.5       3,254.1       2,700.5       2,643.7  
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                                        
110,316,652 and 108,329,314 shares issued and outstanding at March 31,                                        
2019 and December 31, 2018, respectively     1.1       1.1       1.1       1.0       1.0  
Additional paid in capital     2,938.2       2,837.4       2,685.3       2,281.5       2,268.0  
Accumulated deficit     (552.2 )     (600.2 )     (444.3 )     (353.0 )     (413.1 )
Accumulated other comprehensive loss     (9.0 )     (12.3 )     (3.1 )     (1.3 )     (1.3 )
Total stockholders' equity     2,378.1       2,226.0       2,239.0       1,928.2       1,854.6  
Total liabilities and equity     $ 5,941.4       $ 5,592.5       $ 5,493.1       $ 4,628.7       $ 4,498.3  
             

CyrusOne Inc.

Condensed Consolidated Statements of Cash Flow

(Dollars in millions)

(Unaudited)

             
     

Three Months
Ended March 31,
2019

   

Three Months
Ended March 31,
2018

Cash flows from operating activities:            
Net income     $ 89.4       $ 43.5  
Adjustments to reconcile net income to net cash provided by operating activities:            
Depreciation and amortization     102.1       74.6  
Provision for bad debt expense           0.5  
Unrealized gain on marketable equity investment     (101.2 )     (40.5 )
Loss on early extinguishment of debt           3.1  
Interest expense amortization, net     1.2       0.7  
Stock-based compensation expense     4.5       3.9  
Provision for taxes     (0.8 )      
Operating lease ROU amortization and liability accretion     5.0        
Other     (0.5 )      
             
Change in operating assets and liabilities:            
Rent and other receivables, net and other assets     (18.0 )     (18.0 )
Accounts payable and accrued expenses     (39.8 )     (28.9 )
Deferred revenue and prepaid rents     7.1       5.3  
Operating leases     (5.1 )      
Net cash provided by operating activities     43.9       44.2  
Cash flows from investing activities:            
Investment in real estate     (301.9 )     (145.2 )
Net cash used in investing activities     (301.9 )     (145.2 )
Cash flows from financing activities:            
Issuance of common stock, net     105.0       142.9  
Dividends paid     (50.4 )     (41.0 )
Proceeds from revolving credit facility     275.7        
Proceeds from unsecured term loan           985.6  
Repayments of unsecured term loan           (902.7 )
Payments on capital lease obligations     (0.6 )     (2.6 )
Tax payment upon exercise of equity awards     (8.7 )     (4.4 )
Net cash provided by financing activities     321.0       177.8  
Effect of exchange rate changes on cash, cash equivalents and restricted cash     (0.1 )      
Net increase in cash, cash equivalents and restricted cash     62.9       76.8  
Cash, cash equivalents and restricted cash at beginning of period     64.4       151.9  
Cash, cash equivalents and restricted cash at end of period     $ 127.3       $ 228.7  
             
Supplemental disclosure of cash flow information:            
Cash paid for interest, including amounts capitalized of $9.3 million and $5.1 million in 2019 and 2018, respectively     $ 46.7       $ 42.2  
Cash paid for income taxes           0.3  
             
Non-cash investing and financing activities:            
Construction costs and other payables     155.5       89.0  
Dividends payable     51.5       46.4  
                         

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

                         
      Three Months Ended                 Three Months Ended
      March 31,     Change     March 31,     December 31,     September 30,     June 30,     March 31,
      2019     2018     $     %     2019     2018     2018     2018     2018
Net Operating Income                                                      
Revenue     $ 225.0       $ 196.6       $ 28.4       14 %     $ 225.0       $ 221.3       $ 206.6       $ 196.9       $ 196.6  
Property operating expenses       83.3         67.8         15.5       23 %       83.3         78.0         77.7         68.9         67.8  
Net Operating Income (NOI)     $ 141.7       $ 128.8       $ 12.9       10 %     $ 141.7       $ 143.3       $ 128.9       $ 128.0       $ 128.8  
NOI as a % of Revenue       63.0 %       65.5 %                   63.0 %       64.8 %       62.4 %       65.0 %       65.5 %
Reconciliation of Net Income (Loss) to Adjusted EBITDA:                                                      
Net income (loss)     $ 89.4       $ 43.5       $ 45.9       n/m     $ 89.4       $ (105.8 )     $ (42.4 )     $ 105.9       $ 43.5  
Interest expense       23.7         20.8         2.9       14 %       23.7         25.3         25.8         22.8         20.8  
Income tax benefit (expense)       (0.2 )       0.8         (1.0 )     n/m       (0.2 )       (1.4 )       0.2         1.0         0.8  
Depreciation and amortization       102.1         74.6         27.5       37 %       102.1         97.9         84.0         77.6         74.6  
EBITDA (Nareit definition)(a)     $ 215.0       $ 139.7       $ 75.3       54 %     $ 215.0       $ 16.0       $ 67.6       $ 207.3       $ 139.7  
                                                       
Transaction, acquisition, integration and other related expenses       0.3         1.9         (1.6 )     (84 )%       0.3         1.4         1.1         0.4         1.9  
Legal claim costs       0.1         0.2         (0.1 )     (50 )%       0.1         0.2         0.1         0.1         0.2  
Stock-based compensation expense       4.5         3.9         0.6       15 %       4.5         4.5         4.6         4.5         3.9  
Severance and management transition costs       0.1         0.7         (0.6 )     (86 )%       0.1         1.6                         0.7  
Loss on early extinguishment of debt               3.1         (3.1 )     n/m                                       3.1  
New accounting standards and regulatory compliance and the related system implementation costs       0.3         0.5         (0.2 )     (40 )%       0.3         0.7         0.8         1.0         0.5  
Unrealized (gain) loss on marketable equity investment       (101.2 )       (40.5 )       (60.7 )     n/m       (101.2 )       96.7         36.6         (102.7 )       (40.5 )
Other expenses       0.1                 0.1       n/m       0.1         0.1                          
Adjusted EBITDA     $ 119.2       $ 109.5       $ 9.7       9 %     $ 119.2       $ 121.2       $ 110.8       $ 110.6       $ 109.5  
Adjusted EBITDA as a % of Revenue       53.0 %       55.7 %                   53.0 %       54.8 %       53.6 %       56.2 %       55.7 %
     
(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), depreciation and amortization plus impairment losses and loss on disposals. 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 Net Operating Income

(Dollars in millions)

(Unaudited)

                   
      Three Months Ended            
      March 31,     Change
    2019     2018     $     %
Net Income (Loss)     $ 89.4       $ 43.5       $ 45.9       n/m
Sales and marketing expenses     5.3       5.3             n/m
General and administrative expenses     22.2       19.3       2.9       15 %
Depreciation and amortization expenses     102.1       74.6       27.5       37 %
Transaction, acquisition, integration and other related expenses     0.3       1.9       (1.6 )     (84 )%
Interest expense     23.7       20.8       2.9       14 %
Unrealized gain on marketable equity investment     (101.2 )     (40.5 )     (60.7 )     n/m
Loss on early extinguishment of debt           3.1       (3.1 )     n/m
Other expense     0.1             0.1       n/m
Income tax benefit (expense)     (0.2 )     0.8       (1.0 )     n/m
Net Operating Income     $ 141.7       $ 128.8       $ 12.9       10 %
                           

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

                           
      Three Months Ended                 Three Months Ended
      March 31,     Change     March 31,     December 31,     September 30,     June 30,     March 31,
    2019     2018     $     %     2019     2018     2018     2018     2018
Reconciliation of Net Income (Loss) to FFO and Normalized FFO:                                                        
Net income (loss)     $ 89.4       $ 43.5       $ 45.9       n/m     $ 89.4       $ (105.8 )     $ (42.4 )     $ 105.9       $ 43.5  
Real estate depreciation and amortization     100.1       72.5       27.6       38 %     100.1       95.5       81.9       75.6       72.5  
Funds from Operations ("FFO") - Nareit defined     $ 189.5       $ 116.0       $ 73.5       63 %     $ 189.5       $ (10.3 )     $ 39.5       $ 181.5       $ 116.0  
                                                         
Loss on early extinguishment of debt           3.1       (3.1 )     n/m                             3.1  
Unrealized (gain) loss on marketable equity investment     (101.2 )     (40.5 )     (60.7 )     n/m     (101.2 )     96.7       36.6       (102.7 )     (40.5 )
New accounting standards and regulatory compliance and the related system implementation costs     0.3       0.5       (0.2 )     (40 )%     0.3       0.7       0.8       1.0       0.5  
Amortization of tradenames     0.2       0.3       (0.1 )     (33 )%     0.2       0.6       0.4       0.4       0.3  
Transaction, acquisition, integration and other related expenses     0.3       1.9       (1.6 )     (84 )%     0.3       1.4       1.1       0.4       1.9  
Severance and management transition costs     0.1       0.7       (0.6 )     (86 )%     0.1       1.6                   0.7  
Legal claim costs     0.1       0.2       (0.1 )     (50 )%     0.1       0.2       0.1       0.1       0.2  
Normalized Funds from Operations (Normalized FFO)     $ 89.3       $ 82.2       $ 7.1       9 %     $ 89.3       $ 90.9       $ 78.5       $ 80.7       $ 82.2  
Normalized FFO per diluted common share     $ 0.82       $ 0.85       $ (0.03 )     (4 )%     $ 0.82       $ 0.86       $ 0.79       $ 0.81       $ 0.85  
Weighted average diluted common shares outstanding     108.8       96.6       12.2       13 %     108.8     106.1       99.5       99.4       96.6  
                                                         
Additional Information:                                                        
Amortization of deferred financing costs and bond premium     1.2       0.7       0.5       71 %     1.2       1.1       1.1       1.1       0.7  
Stock-based compensation expense     4.5       3.9       0.6       15 %     4.5       4.5       4.6       4.5       3.9  
Non-real estate depreciation and amortization     1.9       1.8       0.1       6 %     1.9       1.8       1.7       1.6       1.8  
Straight line rent adjustments(a)     (10.1 )     (7.2 )     (2.9 )     40 %     (10.1 )     (8.9 )     (5.8 )     (5.8 )     (7.2 )
Deferred revenue, primarily installation revenue(b)     5.9       3.2       2.7       84 %     5.9       16.1       7.6       2.4       3.2  
Leasing commissions     (3.7 )     (3.2 )     (0.5 )     16 %     (3.7 )     (6.5 )     (3.3 )     (3.7 )     (3.2 )
Recurring capital expenditures     (2.7 )     (2.4 )     (0.3 )     13 %     (2.7 )     (2.1 )     (3.7 )     (2.3 )     (2.4 )
          (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 March 31, 2019)

                   
(dollars in millions)     Shares or

Equivalents

Outstanding

    Market Price

as of

March 31, 2019

    Market Value

Equivalents

(in millions)

Common shares     110,316,652       $ 52.44       $ 5,785.0
Net Debt                 2,823.2
Total Enterprise Value (TEV)                 $ 8,608.2
             

Reconciliation of Net Debt

           
      March 31,     December 31,
(dollars in millions)     2019     2018
Long-term debt(a)     $ 2,915.8       $ 2,643.0  
Capital lease obligations     33.4       33.4  
Less:            
Cash and cash equivalents     (126.0 )     (64.4 )
Net Debt     $ 2,823.2       $ 2,612.0  

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

                   

Debt Schedule (as of March 31, 2019)

                 
(dollars in millions)                  
Long-term debt:     Amount     Interest Rate     Maturity Date
Revolving credit facility - EUR(a)     $ 145.8       E + 145bps(b)     March 2023(c)
Revolving credit facility - USD(d)     270.0       L + 145bps(e)     March 2023(c)
Term loan(f)     1,000.0       L + 140bps(g)     March 2023
Term loan     300.0       L + 170bps(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)     $ 2,915.8       4.06%(j)      
                   
Weighted average term of debt:     5.1   years      
     
(a)   Amount outstanding is USD equivalent of €130 million.
(b)   Interest rate as of March 31, 2019: 1.45%.
(c)   Assuming exercise of one-year extension option.
(d)   Amount converted into €238 million pursuant to USD-EUR cross currency swap.
(e)   Interest rate as of March 31, 2019: 3.94%, adjusted interest rate pursuant to USD-EUR cross currency swap: 1.00%.
(f)   In April 2019, paid down $200 million of term loan, decreasing remaining balance to $800 million.
(g)   Interest rate as of March 31, 2019: 3.90%.
(h)   Interest rate as of March 31, 2019: 4.20%.
(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      
      March 31,     December 31,     March 31,     Growth %
(dollars in millions)     2019     2018     2018     Yr/Yr
Interest expense and fees     $ 31.8       $ 32.7       $ 25.2       26 %
Amortization of deferred financing costs and bond premium     1.2       1.1       0.7       71 %
Capitalized interest     (9.3 )     (8.5 )     (5.1 )     82 %
Total interest expense     $ 23.7       $ 25.3       $ 20.8       14 %
                         

CyrusOne Inc.

Colocation Square Footage (CSF) and CSF Leased

(Unaudited)

                         
    As of March 31, 2019   As of December 31, 2018   As of March 31, 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 %   881     96 %   673     94 %
Dallas   621     70 %   621     70 %   555     81 %
Phoenix   509     100 %   509     100 %   509     91 %
Cincinnati   402     85 %   402     92 %   404     92 %
Houston   308     70 %   308     73 %   308     74 %
San Antonio   300     100 %   300     100 %   273     100 %
New York Metro   228     77 %   218     86 %   218     83 %
Chicago   207     71 %   213     69 %   213     67 %
Austin   106     80 %   106     80 %   106     73 %
Raleigh-Durham   83     99 %   76     97 %   76     88 %
Total - Domestic   3,876     85 %   3,633     87 %   3,335     87 %
Frankfurt   98     99 %   98     99 %       %
London   84     100 %   84     99 %   10     94 %
Singapore   3     22 %   3     22 %   3     22 %
Total - International   185     98 %   185     98 %   13     76 %
Total - Portfolio   4,061     86 %   3,819     88 %   3,348     86 %
Stabilized Properties(c)   3,721     90 %   3,540     92 %   3,024     92 %
     
(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.
(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

             
      Previous     Revised

Category

   

2019 Guidance

   

2019 Guidance

Total Revenue     $960 - 1,000 million     $960 - 1,000 million
Lease and Other Revenues from Customers     $835 - 865 million     $835 - 865 million
Metered Power Reimbursements     $125 - 135 million     $125 - 135 million
Adjusted EBITDA     $500 - 525 million     $500 - 525 million
Normalized FFO per diluted common share     $3.10 - 3.20     $3.30 - 3.40
Capital Expenditures     $950 - 1,100 million     $900 - 1,000 million
Development(1)     $940 - 1,085 million     $890 - 985 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, increasing the guidance range for Normalized FFO per diluted common share, decreasing and tightening the guidance ranges for Capital Expenditures and Capital Expenditures - Development, and reaffirming the ranges for all other metrics. 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 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 March 31, 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     $ 72,569     305     85 %   85 %   82     44 %   111   498     44
Northern Virginia - Sterling V     Northern Virginia     47,126     383     83 %   92 %   11     100 %   145   539   64   63
Northern Virginia - Sterling VI     Northern Virginia     43,513     272     88 %   88 %   35     %     307     57
Northern Virginia - Sterling II     Northern Virginia     34,163     159     100 %   100 %   9     100 %   55   223     30
Houston - Houston West I     Houston     31,118     112     89 %   89 %   11     100 %   37   161   3   28
San Antonio III     San Antonio     30,940     132     100 %   100 %   9     100 %   43   184     24
Somerset I     New York Metro     30,764     106     79 %   80 %   27     89 %   89   222   203   13
Cincinnati - 7th Street***     Cincinnati     30,716     197     77 %   77 %   6     61 %   175   378   46   16
Chicago - Aurora I     Chicago     28,531     113     98 %   98 %   34     100 %   223   371   27   71
Dallas - Lewisville*     Dallas     26,451     114     76 %   83 %   11     84 %   54   180     21
Totowa - Madison**     New York Metro     26,192     51     92 %   92 %   22     100 %   59   133     6
Cincinnati - North Cincinnati     Cincinnati     25,150     65     99 %   99 %   45     79 %   53   163   65   14
Phoenix - Chandler VI     Phoenix     22,265     148     100 %   100 %   6     100 %   32   187   10   24
Frankfurt I     Frankfurt     21,803     53     97 %   97 %   8     91 %   57   118     18
San Antonio I     San Antonio     21,286     44     100 %   100 %   6     83 %   46   96   11   12
Wappingers Falls I**     New York Metro     20,690     37     69 %   69 %   20     99 %   15   72     3
Phoenix - Chandler II     Phoenix     20,529     74     100 %   100 %   6     53 %   26   105     12
Houston - Houston West II     Houston     20,300     80     77 %   77 %   4     79 %   55   139   11   12
Northern Virginia - Sterling I     Northern Virginia     19,780     78     100 %   100 %   6     81 %   49   132     12
Phoenix - Chandler I     Phoenix     19,633     74     100 %   100 %   35     13 %   39   147   31   16
Raleigh-Durham I     Raleigh-Durham     18,809     83     93 %   99 %   13     100 %   82   178   246   12
Phoenix - Chandler III     Phoenix     18,780     68     100 %   100 %   2     %   30   101     14
Northern Virginia - Sterling III     Northern Virginia     17,921     79     100 %   100 %   7     100 %   34   120     15
Austin III     Austin     16,950     62     69 %   69 %   15     98 %   21   98   67   6
Houston - Galleria     Houston     15,842     63     54 %   54 %   23     50 %   25   112     14
Austin II     Austin     14,409     44     95 %   95 %   2     100 %   22   68     5
San Antonio II     San Antonio     14,188     64     100 %   100 %   11     100 %   41   117     12
Florence     Cincinnati     13,574     53     99 %   99 %   47     87 %   40   140     9
Phoenix - Chandler V     Phoenix     12,216     72     100 %   100 %   1     95 %   16   89   94   12
Phoenix - Chandler IV     Phoenix     11,272     73     100 %   100 %   3     100 %   27   103     12
Cincinnati - Hamilton*     Cincinnati     10,800     47     74 %   74 %   1     100 %   35   83     10
Northern Virginia - Sterling IV     Northern Virginia     10,728     81     100 %   100 %   7     100 %   34   122     15
San Antonio IV     San Antonio     10,657     60     100 %   100 %   12     100 %   27   99     12
London I*     London     9,143     25     100 %   100 %   12     56 %   58   95   9   10
London II*     London     8,745     49     100 %   100 %   10     100 %   93   151   4   15
London - Great Bridgewater**     London     6,485     10     94 %   96 %       %   1   11     1
Houston - Houston West III     Houston     6,089     53     35 %   36 %   10     100 %   32   95   209   6
Stamford - Riverbend**     New York Metro     5,392     20     23 %   23 %       %   8   28     2
Cincinnati - Mason     Cincinnati     5,227     34     100 %   100 %   26     98 %   17   78     4
Norwalk I**     New York Metro     4,362     13     99 %   99 %   4     61 %   41   58   87   2
Frankfurt II     Frankfurt     3,974     45     100 %   100 %   7     100 %   72   123   10   25
Chicago - Lombard     Chicago     2,419     14     62 %   62 %   4     100 %   12   30   29   3
Stamford - Omega**     New York Metro     1,244         %   %   19     84 %   4   22    
Totowa - Commerce**     New York Metro     644         %   %   20     44 %   6   26    
Cincinnati - Blue Ash*     Cincinnati     643     6     36 %   36 %   7     100 %   2   15     1
Singapore - Inter Business Park**     Singapore     376     3     22 %   22 %       %     3     1
South Bend - Crescent*     Chicago     55     3     3 %   3 %       %   5   9   11   1
Stabilized Properties - Total           $ 834,464     3,721     89 %   90 %   657     73 %   2,148   6,526   1,237   710
 
CyrusOne Inc.
Data Center Portfolio
As of March 31, 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           $ 834,464     3,721     89 %   90 %   657     73 %   2,148     6,526     1,237     710
                                                 

Pre-Stabilized Properties(b)

                                               
Dallas - Carrollton (DH #6)     Dallas     6,994     75     76 %   76 %       %   21     96         6
Chicago - Aurora II (DH #1)     Chicago     2,835     77     31 %   36 %   45     %   14     136     272     16
Dallas - Carrollton (DH #7)     Dallas     1,354     48     21 %   35 %       %       48         6
Dallas - Allen (DH #1)     Dallas     83     79     1 %   7 %       %   58     137     204     6
Northern Virginia - Sterling VIII     Northern Virginia         61     %   37 %       %       61         6
All Properties - Total           $ 845,729     4,061     83 %   86 %   702     69 %   2,241     7,004     1,712     750
     
*   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 March 31, 2019 multiplied by 12. For the month of March 2019, customer reimbursements were $114.0 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 April 1, 2017 through March 31, 2019, customer reimbursements under leases with separately metered power constituted between 10.2% and 15.1% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of March 31, 2019 was $851.9 million. Our annualized effective rent was greater than our annualized rent as of March 31, 2019 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments 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 March 31, 2019 divided by total CSF. Leases signed but that have not commenced billing as of March 31, 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 March 31, 2019 divided by total Office & Other space. Leases signed but not commenced as of March 31, 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 March 31, 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
Phoenix - Chandler VII     Phoenix   2Q'19               269     269         60     1-3     61-63
Somerset II     New York Metro   2Q'19                       2.0         2-3     2-3
Raleigh-Durham I     Raleigh-Durham   2Q'19                       3.0     3     1-3     4-6
London I     London   2Q'19   13                 13     5.0     2     10-12     12-14
Northern Virginia - Sterling V     Northern Virginia   3Q'19                       2.0         9-11     9-11
Northern Virginia - Sterling VIII     Northern Virginia   3Q'19   61     4     25         90     24.0     11     103-115     114-126
Austin III     Austin   3Q'19                       3.0         17-19     17-19
Dallas - Carrollton     Dallas   3Q'19                       6.0     8     11-12     19-20
London II     London   3Q'19   32                 32     13.0     6     24-28     30-34
Frankfurt II     Frankfurt   3Q'19   45     3             48     18.0     10     40-50     50-60
Amsterdam I     Amsterdam   4Q'19   39     28     40     194     301     6.0     11     55-66     66-77
Northern Virginia - Sterling VII     Northern Virginia   1Q'20               167     167         2     89-98     91-100
Northern Virginia - Sterling IX     Northern Virginia   1Q'20               307     307         2     85-94     87-96
Frankfurt III     Frankfurt   2Q'20               258     258         2     64-75     66-77
Total             190     35     65     1,195     1,484     82.0     $ 117     511-589     628-706
(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 1.30. Frankfurt and Amsterdam development costs are EUR-denominated and shown as USD-equivalent using exchange rate of 1.12.
(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 March 31, 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
          March 31
(dollars in millions)         2019
Capital expenditures - investment in real estate         $299.2
 

CyrusOne Inc.

Land Available for Future Development (Acres)

As of March 31, 2019

 (Unaudited)

 

    As of
Market     March 31, 2019

Amsterdam

    8  
Atlanta     44  
Austin     22  
Chicago     23  
Cincinnati    

98

 
Dallas     57  
Houston     20  
Northern Virginia     24  
Phoenix     96  
Quincy, Washington     48  
San Antonio     22  
Santa Clara     23  
Total Available(a)     484  
Book Value of Total Available     $ 200.4 million

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

                                         

CyrusOne Inc.

Leasing Statistics - Lease Signings

As of March 31, 2019

(Unaudited)

                                         
Period      

Number
of Leases(a)

     

Total CSF
Signed(b)

     

Total kW
Signed(c)

     

Total MRR
Signed (000)(d)

     

Weighted
Average
Lease Term(e)

1Q'19       422       93,000       15,557       $2,267       56
Prior 4Q Avg.       482       171,500       25,792       $3,180       88
4Q'18       482       41,000       6,768       $1,678       73
3Q'18       500       114,000       15,118       $2,218       60
2Q'18       506       305,000       51,919       $5,453       143
1Q'18       439       226,000       29,364       $3,370       77
     
(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 2Q'18 and 3Q'18, $0.2 million in 1Q'18 and 1Q'19, and $0.1 million in 4Q'18.
(e)   Calculated on a CSF-weighted basis.
                                 

CyrusOne Inc.

New MRR Signed - Existing vs. New Customers

As of March 31, 2019

(Dollars in thousands)

(Unaudited)

New MRR(a) Signed ($000)

                                 
    2Q'17   3Q'17   4Q'17   1Q'18   2Q'18   3Q'18   4Q'18   1Q'19
Existing Customers   $ 2,322     $ 1,418     $ 1,063     $ 3,149     $ 4,429     $ 2,072     $ 1,226     $ 2,102  
New Customers   $ 145     $ 810     $ 400     $ 221     $ 1,024     $ 146     $ 452     $ 165  
Total   $ 2,467     $ 2,228     $ 1,463     $ 3,370     $ 5,453     $ 2,218     $ 1,678     $ 2,267  
                                 
% from Existing Customers     94 %     64 %     73 %     93 %     81 %     93 %     73 %     93 %
                                 

(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 2Q'17-1Q'18 and 1Q'19, and $0.1 million in 4Q'18.

 

CyrusOne Inc.

Customer Sector Diversification(a)

As of March 31, 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     $ 182,949       21.6 %     106.5
2   Information Technology     5     53,621       6.3 %     64.7
3   Information Technology     10     46,747       5.5 %     36.6
4   Information Technology     7     30,674       3.6 %     29.6
5   Information Technology     5     19,262       2.3 %     43.8
6   Financial Services     1     19,142       2.3 %     144.0
7   Research and Consulting Services     3     15,983       1.9 %     21.3
8   Healthcare     2     15,141       1.8 %     105.0
9   Information Technology     7     14,143       1.7 %     27.3
10   Industrials     5     11,178       1.3 %     14.8
11   Telecommunication Services     7     10,140       1.2 %     20.6
12   Telecommunication Services     2     9,645       1.1 %     30.1
13   Financial Services     2     9,428       1.1 %     53.9
14   Consumer Staples     3     8,820       1.1 %     22.7
15   Telecommunication Services     1     8,140       1.0 %     103.6
16   Information Technology     2     7,998       1.0 %     63.3
17   Information Technology     4     7,718       0.9 %     107.2
18   Information Technology     2     7,136       0.8 %     17.0
19   Financial Services     1     6,600       0.8 %     14.0
20   Information Technology     4     6,587       0.8 %     52.3
                $ 491,052       58.1 %     72.5
 
(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 March 31, 2019, multiplied by 12. For the month of March 2019, customer reimbursements were $114.0 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 April 1, 2017 through March 31, 2019, customer reimbursements under leases with separately metered power constituted between 10.2% and 15.1% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of March 31, 2019 was $851.9 million. Our annualized effective rent was greater than our annualized rent as of March 31, 2019 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
(c)   Represents the customer’s total annualized rent divided by the total annualized rent in the portfolio as of March 31, 2019, which was approximately $845.7 million.
(d)   Weighted average based on customer’s percentage of total annualized rent expiring and is as of March 31, 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 March 31, 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     673       68 %     145       3 %     $ 73,764       9 %
1,000-2,499     122       12 %     189       3 %     44,243       5 %
2,500-4,999     75       7 %     265       5 %     45,607       5 %
5,000-9,999     45       5 %     321       6 %     50,661       6 %
10,000+     81       8 %     4,579       83 %     631,454       75 %
Total     996       100 %     5,498       100 %     $ 845,729       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 March 31, 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 March 31, 2019, multiplied by 12. For the month of March 2019, customer reimbursements were $114.0 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 April 1, 2017 through March 31, 2019, customer reimbursements under leases with separately metered power constituted between 10.2% and 15.1% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of March 31, 2019 was $851.9 million. Our annualized effective rent was greater than our annualized rent as of March 31, 2019 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
 

CyrusOne Inc.

Lease Expirations

As of March 31, 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           1,505       21 %                        
Month-to-Month     763       83       1 %     $ 27,307       3 %     $ 29,687       3 %
2019     1,702       305       4 %     58,850       7 %     58,954       6 %
2020     2,074       687       10 %     128,439       15 %     130,553       14 %
2021     1,875       714       10 %     127,074       15 %     135,849       14 %
2022     603       542       8 %     82,748       10 %     89,636       9 %
2023     279       789       11 %     97,696       12 %     125,172       13 %
2024     97       294       4 %     41,920       5 %     55,366       6 %
2025     47       185       3 %     29,543       4 %     33,471       4 %
2026     34       621       9 %     88,450       10 %     96,293       10 %
2027     20       456       7 %     67,667       8 %     87,520       9 %
2028     17       266       4 %     29,888       4 %     35,252       4 %
2029 - Thereafter     18       558       8 %     $ 66,148       7 %     $ 77,437       8 %
Total     7,529       7,004       100 %     $ 845,729       100 %     $ 955,190       100 %
 
(a)   Leases that were auto-renewed prior to March 31, 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 March 31, 2019, multiplied by 12. For the month of March 2019, customer reimbursements were $114.0 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 April 1, 2017 through March 31, 2019, customer reimbursements under leases with separately metered power constituted between 10.2% and 15.1% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of March 31, 2019 was $851.9 million. Our annualized effective rent was greater than our annualized rent as of March 31, 2019 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
(d)   Represents the final monthly contractual rent under existing customer leases that had commenced as of March 31, 2019, multiplied by 12.

 

Source: CyrusOne Inc.

Investor Relations
Michael Schafer
Vice President, Capital Markets & Investor Relations
972-350-0060
investorrelations@cyrusone.com