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Feb 20, 2019

CyrusOne Reports Fourth Quarter and Full Year 2018 Earnings

4Q’18 Year-over-Year Revenue Growth of 23%

Record Leasing Year with $153 Million in Annualized GAAP Revenue Signed, up 45% vs. 2017

DALLAS--(BUSINESS WIRE)--Feb. 20, 2019-- CyrusOne Inc. (NASDAQ: CONE), a premier global data center REIT, today announced fourth quarter and full year 2018 earnings.

Highlights

Category

   

4Q’18

   

% Change
vs. 4Q’17

   

FY’18

   

% Change
vs. FY’17

Revenue     $221.3 million     23%     $821.4 million     22%
Net income / (loss)     $(105.8) million     n/m     $1.2 million     n/m
Adjusted EBITDA     $121.2 million     16%     $452.1 million     22%
Normalized FFO     $90.9 million     16%     $332.3 million     19%
                         
Net income / (loss) per diluted share     $(1.00)     n/m     $-     n/m
Normalized FFO per diluted share     $0.86     2%     $3.31     6%
                         

  Leased 7 megawatts (“MW”) and 41,000 colocation square feet (“CSF”) in the fourth quarter, totaling $20 million in annualized GAAP revenue

 

 

-- For full year 2018, signed more than 1,900 leases totaling 103 MW and 686,000 CSF, representing $153 million in annualized GAAP revenue, all of which were full year company records

     

  Backlog of $54 million in annualized GAAP revenue as of the end of the fourth quarter, representing nearly $550 million in total contract value
     

  Added three Fortune 1000 companies as new customers, increasing the total number of Fortune 1000 customers to 211 as of the end of the quarter
     

  Acquired approximately 16 acres of land for development of a campus at PolanenPark location near the Amsterdam metropolitan area with up to 72 MW of power capacity

 

 

-- Subsequent to the end of the quarter, acquired 22 acres of land in San Antonio with up to 120 MW of power capacity and 8 acres of land in Santa Clara with up to 48 MW of power capacity to support growth in those markets

     

  Announced a $12 million investment in exchange for a 10% equity interest in ODATA Brasil S.A. and ODATA Colombia S.A.S. (collectively “ODATA”), a leading data center provider in Brazil, the largest and fastest-growing data center market in Latin America
     

 

Completed settlement of forward sale agreement, issuing 2.5 million shares of common stock in exchange for net proceeds of approximately $148 million“

     

“2018 was a tremendous year with continued strong growth, record leasing that was up nearly 50% over 2017, expansion of our portfolio to the West Coast and into Europe, and the development of a solution for our customers in Brazil,” said Gary Wojtaszek, president and chief executive officer of CyrusOne. “We are working hard to position the company to better serve our customers around the world, capitalizing on the significant value creation opportunity ahead of us and delivering strong growth in the coming years in what is still a very early stage for the industry.”

Fourth Quarter 2018 Financial Results

Revenue was $221.3 million for the fourth quarter, compared to $180.5 million for the same period in 2017, an increase of 23%. The increase in revenue was driven primarily by a 24% increase in occupied CSF from organic growth and the Zenium acquisition, as well as additional interconnection services.

Net loss was $(105.8) million for the fourth quarter, compared to net income of $2.8 million in the same period in 2017. Net loss for the fourth quarter included a $(96.7) million unrealized loss on the Company’s equity investment in GDS Holdings Limited (“GDS”), a leading data center provider in China, due to a decrease in GDS’s share price during the quarter. Net loss per diluted common share1 was $(1.00) in the fourth quarter of 2018, compared to net income of $0.03 per diluted common share in the same period in 2017.

Net operating income (NOI)2 was $143.3 million for the fourth quarter, compared to $120.3 million in the same period in 2017, an increase of 19%. Adjusted EBITDA3 was $121.2 million for the fourth quarter, compared to $104.2 million in the same period in 2017, an increase of 16%.

Normalized Funds From Operations (Normalized FFO)4 was $90.9 million for the fourth quarter, compared to $78.4 million in the same period in 2017, an increase of 16%. Normalized FFO per diluted common share was $0.86 in the fourth quarter of 2018, an increase of 2% over fourth quarter 2017.

Leasing Activity

CyrusOne leased approximately 7 MW of power and 41,000 CSF in the fourth quarter, representing $1.7 million in monthly recurring rent, inclusive of the monthly impact of installation charges, or approximately $20.1 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 73 months (6.1 years), and the weighted average remaining lease term of CyrusOne’s portfolio is 57 months (taking into account the impact of the backlog). Recurring rent churn6 for the fourth quarter was 0.8%, compared to 1.1% for the same period in 2017.

Portfolio Development and CSF Leased

In the fourth quarter, the Company completed construction on 144,000 CSF and 52 MW of power capacity across six projects in Northern Virginia, Dallas, the New York Metro area, Frankfurt, and London. CSF leased7 as of the end of the fourth quarter was 92% for stabilized properties8 and 88% 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 439,000 CSF and 126 MW of power capacity.

Balance Sheet and Liquidity

As of December 31, 2018, the Company had gross asset value9 totaling approximately $6.6 billion, an increase of approximately 30% over gross asset value as of December 31, 2017. CyrusOne had $2.64 billion of long-term debt10, $64.4 million of cash and cash equivalents, and $1.55 billion available under its unsecured revolving credit facility as of December 31, 2018. Net debt10 was $2.61 billion as of December 31, 2018, representing approximately 31% of the Company's total enterprise value as of December 31, 2018 of $8.3 billion, or 5.4x Adjusted EBITDA for the last quarter annualized. Available liquidity11 was $1.61 billion as of December 31, 2018.

Dividend

On October 30, 2018, the Company announced a dividend of $0.46 per share of common stock for the fourth quarter of 2018. The dividend was paid on January 11, 2019, to stockholders of record at the close of business on January 2, 2019.

Additionally, today the Company is announcing a dividend of $0.46 per share of common stock for the first quarter of 2019. The dividend will be paid on April 12, 2019, to stockholders of record at the close of business on March 29, 2019.

Guidance

CyrusOne is issuing guidance for full year 2019. 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

   

2018 Results

   

2018 Results Adjusted
for ASC 842
(1)

   

2019 Guidance

Total Revenue     $821 million     $821 million     $960 - 1,000 million
Lease and Other Revenues from Customers     $717 million     $717 million     $835 - 865 million
Metered Power Reimbursements     $104 million     $104 million     $125 - 135 million
Adjusted EBITDA     $452 million     $435 million     $500 - 525 million
Normalized FFO per diluted common share     $3.31     $3.22     $3.10 - 3.20
Capital Expenditures     $866 million     $866 million     $950 - 1,100 million
Development(2)     $855 million     $855 million     $940 - 1,085 million
Recurring     $11 million     $11 million     $10 - 15 million
     
(1)  

ASC 842 refers to Accounting Standards Codification Topic 842 - Leases, issued by the Financial Accounting Standards Board 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 Company is adopting ASC 842 effective January 1, 2019. The adjusted 2018 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. Adjusted EBITDA for 2018 decreased by $17 million due to higher operating lease expense. Normalized FFO per diluted common share decreased by $0.09 due to higher operating lease expense, partially offset by lower interest expense. The adjusted 2018 results are being shown solely for comparative and investor usefulness purposes with respect to the Company’s 2019 guidance.

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

Upcoming Conferences and Events

  • Morgan Stanley Technology, Media & Telecom Conference on February 25-28 in San Francisco, CA
  • Raymond James Institutional Investors Conference on March 4-6 in Orlando, FL
  • Deutsche Bank Media, Internet and Telecom Conference on March 11-13 in Palm Beach, FL

Conference Call Details

CyrusOne will host a conference call on February 21, 2019, at 11:00 AM Eastern Time (10:00 AM Central Time) to discuss its results for the fourth quarter of 2018. 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 February 21, 2019, through March 7, 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 10127497.

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. Actual results may differ materially and adversely from those expressed in any forward-looking statements. 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

On January 1, 2018, we adopted the new accounting standard with respect to revenue recognition. See “Note 2. Summary of Significant Accounting Policies” and “Note 3, Revenue Recognition” in our financial statements included in our Form 10-Q for the quarter ended March 31, 2018 and in our subsequent filings for additional information. We have adopted the new standard using the modified retrospective transition method, where financial statement presentations prior to the date of adoption are not adjusted. Accordingly, all information related to periods prior to 2018 have not been adjusted, including non-GAAP measurements.

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, 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, 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 pay dividends. 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.

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 105.5 million for the fourth quarter of 2018.

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 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, impairment losses, interest expense, unrealized (gain) loss on marketable equity securities, loss on early extinguishment of debt, 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.

3Adjusted EBITDA, which is a non-GAAP financial measure, is defined as net income (loss) as defined by GAAP adjusted for interest expense, income tax 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 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.

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 income (loss) computed in accordance with GAAP before real estate depreciation and amortization and asset impairments and loss on disposal. 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 trade names, transaction, acquisition and other integration expenses; severance and management transition costs; legal claim 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 real estate impairments, 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 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.

7CSF 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.

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 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.

11Liquidity is calculated as cash, cash equivalents, and temporary cash investments on hand, plus the undrawn capacity on CyrusOne's revolving credit facility.

About CyrusOne

CyrusOne (NASDAQ: CONE) is a high-growth real estate investment trust (REIT) specializing in highly reliable enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for approximately 1,000 customers, including 211 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 211 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       John Gould, EVP & Chief Commercial Officer
Dallas, Texas 75201       Tesh Durvasula, EVP & President, Europe       Kellie Teal-Guess, EVP & Chief People Officer
Phone: (972) 350-0060       Diane Morefield, EVP & Chief Financial Officer       Robert Jackson, EVP General Counsel & Secretary

Website: www.cyrusone.com

      Kevin Timmons, EVP & Chief Technology Officer       John Hatem, EVP Design, Construction & Operations
        Jonathan Schildkraut, EVP & Chief Strategy Officer        
 

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    
      December 31,   September 30,   December 31,   Growth %
      2018   2018   2017   Yr/Yr
Revenue     $ 221.3     $ 206.6     $ 180.5     23 %
Net operating income       143.3       128.9       120.3     19 %
Net income (loss)       (105.8 )     (42.4 )     2.8     n/m  
Funds from Operations ("FFO") - Nareit defined       (10.3 )     39.5       71.7     n/m  
Normalized Funds from Operations ("Normalized FFO")       90.9       78.5       78.4     16 %
Weighted average number of common shares outstanding - diluted for Normalized FFO       106.1       99.5       93.5     13 %
Income (loss) per share - basic     $ (1.00 )   $ (0.43 )   $ 0.03     n/m  
Income (loss) per share - diluted     $ (1.00 )   $ (0.43 )   $ 0.03     n/m  
Normalized FFO per diluted common share     $ 0.86     $ 0.79     $ 0.84     2 %
Adjusted EBITDA     $ 121.2     $ 110.8     $ 104.2     16 %
Adjusted EBITDA as a % of Revenue       54.8 %     53.6 %     57.7 %   (2.9) pts
                           
                           
                           
      As of        
      December 31,     September 30,     December 31,     Growth %
      2018     2018     2017     Yr/Yr
Balance Sheet Data                          
Gross investment in real estate     $ 5,347.5     $ 5,093.2     $ 3,840.8     39 %
Accumulated depreciation       (1,054.5 )     (973.4 )     (782.4 )   35 %
Total investment in real estate, net       4,293.0       4,119.8       3,058.4     40 %
Cash and cash equivalents       64.4       61.0       151.9     (58 )%
Market value of common equity       5,728.5       6,709.9       5,723.1     %
Long-term debt       2,643.0       2,595.6       2,100.0     26 %
Net debt       2,612.0       2,571.5       1,958.2     33 %
Total enterprise value       8,340.5       9,281.4       7,681.3     9 %
Net debt to LQA Adjusted EBITDA(a)    

5.4

x

 

5.4

x

 

4.7

x

 

0.7

x

                           
Dividend Activity                          
Dividends per share     $ 0.46     $ 0.46     $ 0.42     10 %
                           
Portfolio Statistics                          
Data centers       48       47       45     7 %
Stabilized CSF (000)       3,540       3,396       2,653     33 %
Stabilized CSF % leased       92 %     91 %     93 %   (1) pts
Total CSF (000)       3,819       3,674       3,267     17 %
Total CSF % leased       88 %     86 %     83 %   5 pts
Total NRSF (000)       6,726       6,527       5,717     18 %
     
(a)   September 30, 2018 period adjusted to reflect a full quarter Adjusted EBITDA contribution from the Zenium data centers based on September results and the pro forma impact of equity proceeds assuming settlement under the forward sale agreement.
                               

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

 
                               
      Three Months             Twelve Months          
      Ended December 31,   Change   Ended December 31,   Change
      2018   2017   $   %   2018   2017   $   %
Revenue:                                      
Lease and other revenues from customers     $ 192.2     $ 161.6     $ 30.6     19 %   $ 717.4     $ 602.4     $ 115.0     19 %
Metered power reimbursements       29.1       18.9       10.2     54 %     104.0       69.6       34.4     49 %
Revenue     $ 221.3     $ 180.5     $ 40.8     23 %   $ 821.4     $ 672.0       149.4     22 %
Operating expenses:                                      
Property operating expenses       78.0       60.2       17.8     30 %     292.4       235.1       57.3     24 %
Sales and marketing       5.6       3.9       1.7     44 %     19.6       17.0       2.6     15 %
General and administrative       23.4       16.4       7.0     43 %     80.6       67.0       13.6     20 %
Depreciation and amortization       97.9       70.8       27.1     38 %     334.1       258.9       75.2     29 %
Transaction, acquisition, integration and other related expenses       1.6       5.3       (3.7 )   (70 )%     5.0       11.9       (6.9 )   (58 )%
Impairment losses                       n/m             58.0       (58.0 )   n/m  
Total operating expenses       206.5       156.6       49.9     32 %     731.7       647.9       83.8     13 %
Operating income       14.8       23.9       (9.1 )   n/m       89.7       24.1       65.6     n/m  
Interest expense       (25.3 )     (20.1 )     (5.2 )   26 %     (94.7 )     (68.1 )     (26.6 )   39 %
Unrealized gain (loss) on marketable equity investment       (96.7 )           (96.7 )   n/m       9.9             9.9     n/m  
Loss on early extinguishment of debt                       n/m       (3.1 )     (36.5 )     33.4     (92 )%
Net income (loss) before income taxes       (107.2 )     3.8       (111.0 )   n/m       1.8       (80.5 )     82.3     n/m  
Income tax expense       1.4       (1.0 )     2.4     n/m       (0.6 )     (3.0 )     2.4     (80 )%
Net income (loss)     $ (105.8 )   $ 2.8     $ (108.6 )   n/m     $ 1.2     $ (83.5 )   $ 84.7     n/m  
Income (loss) per share - basic     $ (1.00 )   $ 0.03     $ (1.03 )   n/m     $     $ (0.95 )   $ 0.95     n/m  
Income (loss) per share - diluted     $ (1.00 )   $ 0.03     $ (1.03 )   n/m           $ (0.95 )   $ 0.95     n/m  
                     

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

                     
      December 31,     December 31,     Change
      2018     2017     $     %
Assets                          
Investment in real estate:                          
Land     $ 118.5       $ 104.6       $ 13.9       13 %
Buildings and improvements       1,677.5         1,371.4         306.1       22 %
Equipment       2,630.2         1,813.9         816.3       45 %
Gross operating real estate       4,426.2         3,289.9         1,136.3       35 %
Less accumulated depreciation       (1,054.5 )       (782.4 )       (272.1 )     35 %
Net operating real estate       3,371.7         2,507.5         864.2       34 %
Construction in progress, including land under development       744.9         487.1         257.8       53 %
Land held for future development       176.4         63.8         112.6       n/m  
Total investment in real estate, net       4,293.0         3,058.4         1,234.6       40 %
Cash and cash equivalents       64.4         151.9         (87.5 )     (58 )%
Rent and other receivables, net       106.2         87.2         19.0       22 %
Equity investment       198.1         175.6         22.5       13 %
Goodwill       455.1         455.1               %
Intangible assets, net       235.7         203.0         32.7       16 %
Other assets       240.0         180.9         59.1       33 %
Total assets     $ 5,592.5       $ 4,312.1       $ 1,280.4       30 %
Liabilities and equity                          
Debt, net     $ 2,624.7       $ 2,089.4       $ 535.3       26 %
Capital lease obligations       33.4         10.1         23.3       n/m  
Lease financing arrangements       123.3         131.9         (8.6 )     (7 )%
Construction costs payable       195.3         115.5         79.8       69 %
Accounts payable and accrued expenses       121.3         97.9         23.4       24 %
Dividends payable       51.0         41.8         9.2       22 %
Deferred revenue and prepaid rents       148.6         111.6         37.0       33 %
Deferred tax liability       68.9                 68.9       n/m  
Total liabilities       3,366.5         2,598.2         768.3       30 %
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 108,329,314 and 96,137,874 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively       1.1         1.0         0.1       %
Additional paid in capital       2,837.4         2,125.6         711.8       33 %
Accumulated deficit       (600.2 )       (486.9 )       (113.3 )     23 %
Accumulated other comprehensive income (loss)       (12.3 )       74.2         (86.5 )     n/m  
Total stockholders’ equity       2,226.0         1,713.9         512.1       30 %
Total liabilities and equity     $ 5,592.5       $ 4,312.1       $ 1,280.4       30 %
                               

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

                               
For the three months ended:     December 31,     September 30,     June 30,     March 31,     December 31,
      2018     2018     2018     2018     2017
Revenue:                              
Lease and other revenues from customers     $ 192.2       $ 177.6       $ 172.4       $ 175.2       $ 161.6  
Metered power reimbursements     29.1       29.0       24.5       21.4       18.9  
Revenue     221.3       206.6       196.9       196.6       180.5  
Operating expenses:                              
Property operating expenses     78.0       77.7       68.9       67.8       60.2  
Sales and marketing     5.6       4.3       4.4       5.3       3.9  
General and administrative     23.4       19.3       18.6       19.3       16.4  
Depreciation and amortization     97.9       84.0       77.6       74.6       70.8  
Transaction, acquisition, integration and other related expenses     1.6       1.1       0.4       1.9       5.3  
Impairment losses                              
Total operating expenses     206.5       186.4       169.9       168.9       156.6  
Operating income     14.8       20.2       27.0       27.7       23.9  
Interest expense     (25.3 )     (25.8 )     (22.8 )     (20.8 )     (20.1 )
Unrealized gain (loss) on marketable equity investment     (96.7 )     (36.6 )     102.7       40.5        
Loss on early extinguishment of debt                       (3.1 )      
Net income (loss) before income taxes     (107.2 )     (42.2 )     106.9       44.3       3.8  
Income tax expense     1.4       (0.2 )     (1.0 )     (0.8 )     (1.0 )
Net income (loss)     $ (105.8 )     $ (42.4 )     $ 105.9       $ 43.5       $ 2.8  
Income (loss) per share - basic     $ (1.00 )     $ (0.43 )     $ 1.07       $ 0.45       $ 0.03  
Income (loss) per share - diluted     $ (1.00 )     $ (0.43 )     $ 1.06       $ 0.45       $ 0.03  
                               

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

                               
      December 31,     September 30,     June 30,     March 31,     December 31,
      2018     2018     2018     2018     2017
Assets                              
Investment in real estate:                              
Land     $ 118.5       $ 125.2       $ 107.4       $ 104.6       $ 104.6  
Buildings and improvements     1,677.5       1,587.3       1,461.1       1,400.8       1,371.4  
Equipment     2,630.2       2,452.5       2,050.3       1,959.5       1,813.9  
Gross operating real estate     4,426.2       4,165.0       3,618.8       3,464.9       3,289.9  
Less accumulated depreciation     (1,054.5 )     (973.4 )     (900.3 )     (836.4 )     (782.4 )
Net operating real estate     3,371.7       3,191.6       2,718.5       2,628.5       2,507.5  
Construction in progress, including land under development     744.9       738.6       452.6       435.3       487.1  
Land held for future development     176.4       189.6       74.2       54.4       63.8  
Total investment in real estate, net     4,293.0       4,119.8       3,245.3       3,118.2       3,058.4  
Cash and cash equivalents     64.4       61.0       116.2       228.7       151.9  
Rent and other receivables, net     106.2       104.5       87.7       93.1       87.2  
Equity investment     198.1       282.2       318.8       216.1       175.6  
Goodwill     455.1       455.1       455.1       455.1       455.1  
Intangible assets, net     235.7       248.4       190.5       196.8       203.0  
Other assets     240.0       222.1       215.1       190.3       180.9  
Total assets     $ 5,592.5       $ 5,493.1       $ 4,628.7       $ 4,498.3       $ 4,312.1  
Liabilities and equity                              
Debt, net     $ 2,624.7       $ 2,576.2       $ 2,179.5       $ 2,178.3       $ 2,089.4  
Capital lease obligations     33.4       36.9       14.9       15.9       10.1  
Lease financing arrangements     123.3       125.8       127.8       131.3       131.9  
Construction costs payable     195.3       160.5       113.3       89.0       115.5  
Accounts payable and accrued expenses     121.3       96.8       91.4       66.7       97.9  
Dividends payable     51.0       49.7       46.5       46.4       41.8  
Deferred revenue and prepaid rents     148.6       139.5       127.1       116.1       111.6  
Deferred tax liability     68.9       68.7                    
Total liabilities     3,366.5       3,254.1       2,700.5       2,643.7       2,598.2  
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 108,329,314 and 96,137,874 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively     1.1       1.1       1.0       1.0       1.0  
Additional paid in capital     2,837.4       2,685.3       2,281.5       2,268.0       2,125.6  
Accumulated deficit     (600.2 )     (444.3 )     (353.0 )     (413.1 )     (486.9 )
Accumulated other comprehensive income (loss)     (12.3 )     (3.1 )     (1.3 )     (1.3 )     74.2  
Total stockholders' equity     2,226.0       2,239.0       1,928.2       1,854.6       1,713.9  
Total liabilities and equity     $ 5,592.5       $ 5,493.1       $ 4,628.7       $ 4,498.3       $ 4,312.1  
                         

CyrusOne Inc.

Condensed Consolidated Statements of Cash Flow

(Dollars in millions)

(Unaudited)

                         
     

Twelve Months
Ended December
31, 2018

   

Twelve Months
Ended December
31, 2017

   

Three Months
Ended December
31, 2018

   

Three Months
Ended December
31, 2017

Cash flows from operating activities:                        
Net income (loss)     $ 1.2       $ (83.5 )     $ (105.8 )     $ 2.8  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                        
Depreciation and amortization     334.1       258.9       97.9       70.8  
Interest expense amortization, net     4.0       4.2       1.0       0.8  
Stock-based compensation expense     17.5       14.7       4.5       3.1  
Provision for bad debt expense     2.6       0.2       2.0       (0.3 )
Unrealized (gain) loss on marketable equity investment     (9.9 )           96.7        
Loss on early extinguishment of debt     3.1       36.5              
Impairment losses           58.0              
Other     (0.6 )     1.5       (0.6 )     0.2  
Change in operating assets and liabilities:                        
Rent and other receivables, net and other assets     (80.2 )     (64.3 )     (24.8 )     (10.6 )
Accounts payable and accrued expenses     3.0       29.3       26.4       25.8  
Deferred revenue and prepaid rents     34.5       34.0       9.1       6.8  
Net cash provided by operating activities     309.3       289.5       106.4       99.4  
Cash flows from investing activities:                        
Asset acquisitions, primarily real estate, net of cash acquired     (462.8 )     (492.3 )     (1.0 )      
Investment in real estate     (865.7 )     (914.5 )     (234.5 )     (205.4 )
Equity investment     (12.6 )     (100.0 )     (12.6 )     (100.0 )
Net cash used in investing activities     (1,341.1 )     (1,506.8 )     (248.1 )     (305.4 )
Cash flows from financing activities:                        
Issuance of common stock, net     699.6       705.7       147.7       296.9  
Dividends paid     (181.1 )     (145.7 )     (48.8 )     (38.3 )
Proceeds from debt, net     1,988.3       2,558.4       323.2       612.4  
Payments on debt     (1,547.4 )     (1,749.8 )     (274.7 )     (537.7 )
Payments on capital lease obligations and lease financing arrangements     (9.5 )     (9.8 )     (1.7 )     (2.5 )
Interest paid by lenders on the issuance of the senior notes           2.7             2.7  
Tax payment upon exercise of equity awards     (5.2 )     (6.9 )     (0.1 )     (0.3 )
Net cash provided by financing activities     944.7       1,354.6       145.6       333.2  
Effect of exchange rate changes on cash, cash equivalents and restricted cash     (0.4 )           (0.5 )      
Net increase (decrease) in cash, cash equivalents and restricted cash     (87.5 )     137.3       3.4       127.2  
Cash, cash equivalents and restricted cash at beginning of period     151.9       14.6       61.0       24.7  
Cash, cash equivalents and restricted cash at end of period     $ 64.4       $ 151.9       $ 64.4       $ 151.9  
                         
Supplemental disclosure of cash flow information:                        
Cash paid for interest, net of amounts capitalized of $24.4 million and $17.0 million in 2018 and 2017, respectively     $ 115.4       $ 68.8       $ 16.9       $ 10.6  
Cash paid for income taxes     3.4       2.2       0.1       0.3  
Capitalized interest     24.4       17.0       8.5       4.6  
Non-cash investing and financing activities:                        
Construction costs and other payables     195.3       115.5       195.3       115.5  
Dividends payable     51.0       41.8       51.0       41.8  
Debt assumed in asset acquisition     86.3                    
Capital lease obligation assumed     25.0       2.2              
                   

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

                   
      Twelve Months Ended           Three Months Ended
      December 31,   Change   December 31,   September 30,   June 30,   March 31,   December 31,
      2018   2017   $   %   2018   2018   2018   2018   2017
Net Operating Income                                      
Revenue     $ 821.4     $ 672.0     $ 149.4     22 %   $ 221.3     $ 206.6     $ 196.9     $ 196.6     $ 180.5  
Property operating expenses       292.4       235.1       57.3     24 %     78.0       77.7       68.9       67.8       60.2  
Net Operating Income (NOI)     $ 529.0     $ 436.9     $ 92.1     21 %   $ 143.3     $ 128.9     $ 128.0     $ 128.8     $ 120.3  
NOI as a % of Revenue       64.4 %     65.0 %             64.8 %     62.4 %     65.0 %     65.5 %     66.6 %
Reconciliation of Net Income (Loss) to Adjusted EBITDA:                                      
Net income (loss)     $ 1.2     $ (83.5 )   $ 84.7     n/m     $ (105.8 )   $ (42.4 )   $ 105.9     $ 43.5     $ 2.8  
Interest expense       94.7       68.1       26.6     39 %     25.3       25.8       22.8       20.8       20.1  
Income tax expense       0.6       3.0       (2.4 )   (80 )%     (1.4 )     0.2       1.0       0.8       1.0  
Depreciation and amortization       334.1       258.9       75.2     29 %     97.9       84.0       77.6       74.6       70.8  
Impairment losses and loss on disposals             58.0       (58.0 )   n/m                               0.2  
EBITDA (Nareit definition)(a)     $ 430.6     $ 304.5       126.1     41 %   $ 16.0     $ 67.6     $ 207.3     $ 139.7     $ 94.9  
                                       
Transaction, acquisition, integration and other related expenses       4.8       11.9       (7.1 )   (60 )%     1.4       1.1       0.4       1.9       5.1  
Legal claim costs       0.6       1.1       (0.5 )   (45 )%     0.2       0.1       0.1       0.2        
Stock-based compensation expense       17.5       14.7       2.8     19 %     4.5       4.6       4.5       3.9       3.1  
Severance and management transition costs       2.3       0.5       1.8     n/m       1.6                   0.7        
Loss on early extinguishment of debt       3.1       36.5       (33.4 )   n/m                         3.1        
New accounting standards and regulatory compliance and the related system implementation costs       3.0       2.4       0.6     25 %     0.7       0.8       1.0       0.5       1.1  
Unrealized (gain) loss on marketable equity investment       (9.9 )           (9.9 )   n/m       96.7       36.6       (102.7 )     (40.5 )      
Other expenses       0.1             0.1     n/m       0.1                          
Adjusted EBITDA     $ 452.1     $ 371.6       80.5     22 %   $ 121.2     $ 110.8     $ 110.6     $ 109.5     $ 104.2  
Adjusted EBITDA as a % of Revenue       55.0 %     55.3 %             54.8 %     53.6 %     56.2 %     55.7 %     57.7 %
     
(a)   We calculate Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) as GAAP net income (loss) plus interest expense, income tax 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                 Twelve Months Ended            
      December 31,     Change     December 31,     Change
    2018     2017     $     %     2018     2017     $     %
Net Income (Loss)     $ (105.8 )     $ 2.8     $ (108.6 )     n/m       $ 1.2       $ (83.5 )     $ 84.7       n/m  
Sales and marketing expenses       5.6         3.9       1.7       44 %       19.6         17.0         2.6       15 %
General and administrative expenses       23.4         16.4       7.0       43 %       80.6         67.0         13.6       20 %
Depreciation and amortization expenses       97.9         70.8       27.1       38 %       334.1         258.9         75.2       29 %
Transaction, acquisition, integration and other related expenses       1.6         5.1       (3.5 )     (69 )%       5.0         11.9         (6.9 )     (58 )%
Impairment losses and loss on disposal               0.2       (0.2 )     n/m                 58.0         (58.0 )     n/m  
Interest expense       25.3         20.1       5.2       26 %       94.7         68.1         26.6       39 %
Unrealized (gain) loss on marketable equity investment       96.7               96.7       n/m         (9.9 )               (9.9 )     n/m  
Loss on early extinguishment of debt                           %       3.1         36.5         (33.4 )     (92 )%
Income tax expense       (1.4 )       1.0       (2.4 )     n/m         0.6         3.0         (2.4 )     (80 )%
Net Operating Income     $ 143.3       $ 120.3     $ 23.0       19 %     $ 529.0       $ 436.9       $ 92.1       21 %
 

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

                           
        Twelve Months Ended                 Three Months Ended
        December 31,     Change   December 31,   September 30,   June 30,   March 31,   December 31,
      2018   2017     $   %   2018   2018   2018   2018   2017
Reconciliation of Net Income (Loss) to FFO and Normalized FFO:                                              
Net income (loss)       $ 1.2     $ (83.5 )     $ 84.7       n/m     $ (105.8 )   $ (42.4 )   $ 105.9     $ 43.5     $ 2.8  
Real estate depreciation and amortization         325.5       250.6         74.9       30 %     95.5       81.9       75.6       72.5       68.9  
Impairment losses               58.0         (58.0 )     n/m                                
Funds from Operations ("FFO") - Nareit defined       $ 326.7     $ 225.1       $ 101.6       45 %   $ (10.3 )   $ 39.5     $ 181.5     $ 116.0     $ 71.7  
                                               
Loss on early extinguishment of debt         3.1       36.5         (33.4 )     n/m                         3.1        
Unrealized (gain) loss on marketable equity investment         (9.9 )             (9.9 )     n/m       96.7       36.6       (102.7 )     (40.5 )      
New accounting standards and regulatory compliance and the related system implementation costs         3.0       2.4         0.6       n/m       0.7       0.8       1.0       0.5       1.1  
Amortization of tradenames         1.7       1.4         0.3       21 %     0.6       0.4       0.4       0.3       0.3  
Transaction, acquisition, integration and other related expenses         4.8       11.9         (7.1 )     (60 )%     1.4       1.1       0.4       1.9       5.3  
Severance and management transition costs         2.3       0.5         1.8       n/m       1.6                   0.7        
Legal claim costs         0.6       1.1         (0.5 )     (45 )%     0.2       0.1       0.1       0.2        
Normalized Funds from Operations (Normalized FFO)       $ 332.3     $ 278.9       $ 53.4       19 %   $ 90.9     $ 78.5     $ 80.7     $ 82.2     $ 78.4  
Normalized FFO per diluted common share       $ 3.31     $ 3.12       $ 0.19       6 %   $ 0.86     $ 0.79     $ 0.81     $ 0.85     $ 0.84  
Weighted average diluted common shares outstanding         100.4       89.4         11.0       12 %     106.1       99.5       99.4       96.6       93.5  
                                               
Additional Information:                                              
Amortization of deferred financing costs and bond premium         4.0       4.3         (0.3 )     (7 )%     1.1       1.1       1.1       0.7       0.9  
Stock-based compensation expense         17.5       14.7         2.8       19 %     4.5       4.6       4.5       3.9       3.1  
Non-real estate depreciation and amortization         6.9       6.9               n/m       1.8       1.7       1.6       1.8       1.6  
Straight line rent adjustments(a)         (27.7 )     (32.5 )       4.8       (15 )%     (8.9 )     (5.8 )     (5.8 )     (7.2 )     (7.4 )
Deferred revenue, primarily installation revenue(b)         29.3       23.3         6.0       26 %     16.1       7.6       2.4       3.2       3.8  
Leasing commissions         (16.7 )     (17.3 )       0.6       (3 )%     (6.5 )     (3.3 )     (3.7 )     (3.2 )     (3.5 )
Recurring capital expenditures         (10.5 )     (4.4 )       (6.1 )     n/m       (2.1 )     (3.7 )     (2.3 )     (2.4 )     (1.6 )
             
        (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 December 31, 2018)

                         
(dollars in millions)      

Shares or
Equivalents
Outstanding

     

Market Price
as of
December 31, 2018

     

Market Value
Equivalents
(in millions)

Common shares       108,329,314         $ 52.88         $ 5,728.5
Net Debt                       2,612.0
Total Enterprise Value (TEV)                       $ 8,340.5
                 

Reconciliation of Net Debt

               
                 
        December 31,       September 30,
(dollars in millions)      

2018

      2018
Long-term debt(a)       $ 2,643.0         $ 2,595.6  
Capital lease obligations       33.4         36.9  
Less:                
Cash and cash equivalents       (64.4 )       (61.0 )
Net Debt       $ 2,612.0         $ 2,571.5  
(a)   Excludes adjustment for deferred financing costs and bond premiums.
                         

Debt Schedule (as of December 31, 2018)

                       
(dollars in millions)                        
Long-term debt:       Amount       Interest Rate       Maturity Date
Revolving credit facility - EUR(a)       $ 143.0         E + 145bps(b)       March 2023(c)
Revolving credit facility - USD               L + 145bps       March 2023(c)
Term loan       1,000.0         L + 140bps(d)       March 2023
Term loan       300.0         L + 170bps(e)       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(f)       $ 2,643.0         4.38%        
                         
Weighted average term of debt:       5.5years        
(a)   Amount outstanding is USD equivalent of €125 million.
(b)   Interest rate as of December 31, 2018: 1.45%.
(c)   Assuming exercise of one-year extension option.
(d)   Interest rate as of December 31, 2018: 3.92%.
(e)   Interest rate as of December 31, 2018: 4.23%.
(f)   Excludes adjustment for deferred financing costs.
                         

Interest Summary

    Three Months Ended      
      December 31,     September 30,     December 31,     Growth %
(dollars in millions)     2018     2018     2017     Yr/Yr
Interest expense and fees     $ 32.7       $ 30.2       $ 23.8       37 %
Amortization of deferred financing costs and bond premium       1.1         1.1         0.9       22 %
Capitalized interest       (8.5 )       (5.5 )       (4.6 )     85 %
Total interest expense     $ 25.3       $ 25.8       $ 20.1       26 %
                                                 

CyrusOne Inc.

Colocation Square Footage (CSF) and CSF Leased

(Unaudited)

                                                 
        As of December 31, 2018       As of September 30, 2018       As of December 31, 2017

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       881       96 %       780       94 %       640       79 %
Dallas       621       70 %       621       69 %       506       85 %
Phoenix       509       100 %       509       100 %       509       91 %
Cincinnati       402       92 %       402       93 %       404       91 %
Houston       308       73 %       308       74 %       308       74 %
San Antonio       300       100 %       300       100 %       273       88 %
New York Metro       218       86 %       218       83 %       218       82 %
Chicago       213       69 %       213       67 %       213       64 %
Austin       106       80 %       106       78 %       106       67 %
Raleigh-Durham       76       97 %       76       88 %       76       88 %
Total - Domestic       3,633       87 %       3,533       86 %       3,253       83 %
Frankfurt       98       99 %       62       98 %             %
London       84       99 %       77       99 %       10       94 %
Singapore       3       22 %       3       22 %       3       22 %
Total - International       185       98 %       142       97 %       13       76 %
Total - Portfolio       3,819       88 %       3,674       86 %       3,267       83 %
Stabilized Properties(c)       3,540       92 %       3,396       91 %       2,653       93 %
 
(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

                         
               

2018 Results Adjusted

       

Category

     

2018 Results

     

for ASC 842(1)

     

2019 Guidance

Total Revenue       $821 million       $821 million       $960 - 1,000 million
Lease and Other Revenues from Customers       $717 million       $717 million       $835 - 865 million
Metered Power Reimbursements       $104 million       $104 million       $125 - 135 million
Adjusted EBITDA       $452 million       $435 million       $500 - 525 million
Normalized FFO per diluted common share       $3.31       $3.22       $3.10 - 3.20
Capital Expenditures       $866 million       $866 million       $950 - 1,100 million
Development(2)       $855 million       $855 million       $940 - 1,085 million
Recurring       $11 million       $11 million       $10 - 15 million
     
(1)  

ASC 842 refers to Accounting Standards Codification Topic 842 - Leases, issued by the Financial Accounting Standards Board 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 Company is adopting ASC 842 effective January 1, 2019. The adjusted 2018 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. Adjusted EBITDA for 2018 decreased by $17 million due to higher operating lease expense. Normalized FFO per diluted common share decreased by $0.09 due to higher operating lease expense, partially offset by lower interest expense. The adjusted 2018 results are being shown solely for comparative and investor usefulness purposes with respect to the Company’s 2019 guidance.

(2)   Development capital expenditures include the acquisition of land for future development.
     
    The annual guidance provided above represents forward-looking statements, which are based on current economic conditions, internal assumptions about the Company's existing customer base and the supply and demand dynamics of the markets in which CyrusOne operates.
     
   

CyrusOne does not provide forward-looking guidance for GAAP financial measures (other than 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 December 31, 2018

(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       $ 75,701       305       88 %       89 %       82       44 %       111       498             44
Northern Virginia - Sterling V       Northern Virginia         42,039       383       83 %       92 %       11       100 %       138       532       64       57
Houston - Houston West I       Houston         41,911       112       97 %       97 %       11       100 %       37       161       3       28
Northern Virginia - Sterling II       Northern Virginia         35,853       159       100 %       100 %       9       100 %       55       223             30
Cincinnati - 7th Street***       Cincinnati         33,493       197       91 %       92 %       6       61 %       175       378       46       16
San Antonio III       San Antonio         30,781       132       100 %       100 %       9       100 %       43       184             24
Somerset I       New York Metro         29,786       97       85 %       92 %       27       89 %       89       213       203       13
Chicago - Aurora I       Chicago         27,797       113       98 %       98 %       34       100 %       223       371       27       71
Dallas - Lewisville*       Dallas         27,050       114       76 %       83 %       11       84 %       54       180             21
Totowa - Madison**       New York Metro         26,469       51       89 %       92 %       22       100 %       59       133             6
Cincinnati - North Cincinnati       Cincinnati         24,322       65       99 %       100 %       45       79 %       53       163       65       14
Wappingers Falls I**       New York Metro         23,705       37       92 %       92 %       20       99 %       15       72             3
Frankfurt I       Frankfurt         21,973       53       97 %       97 %       8       91 %       57       118             18
San Antonio I       San Antonio         21,586       44       100 %       100 %       6       83 %       46       96       11       12
Phoenix - Chandler VI       Phoenix         21,190       148       99 %       99 %       6       100 %       32       186       10       24
Houston - Houston West II       Houston         20,822       80       77 %       77 %       4       79 %       55       139       11       12
Phoenix - Chandler II       Phoenix         20,501       74       100 %       100 %       6       38 %       26       105             12
Northern Virginia - Sterling I       Northern Virginia         19,878       78       100 %       100 %       6       81 %       49       132             12
Phoenix - Chandler I       Phoenix         19,456       74       100 %       100 %       35       12 %       39       147       31       16
Phoenix - Chandler III       Phoenix         18,548       68       100 %       100 %       2       %       30       101             14
Raleigh-Durham I       Raleigh-Durham         18,522       76       92 %       97 %       13       100 %       82       171       246       12
Northern Virginia - Sterling III       Northern Virginia         18,172       79       100 %       100 %       7       100 %       34       120             15
Austin III       Austin         16,427       62       67 %       69 %       15       98 %       21       98       67       6
Houston - Galleria       Houston         16,021       63       59 %       59 %       23       49 %       25       112             14
Austin II       Austin         14,860       44       95 %       95 %       2       100 %       22       68             5
San Antonio II       San Antonio         14,106       64       100 %       100 %       11       100 %       41       117             12
Florence       Cincinnati         13,518       53       99 %       99 %       47       87 %       40       140             9
Northern Virginia - Sterling VI       Northern Virginia         12,384       101       68 %       100 %             %             101             21
Phoenix - Chandler IV       Phoenix         11,285       73       100 %       100 %       3       100 %       27       103             12
Phoenix - Chandler V       Phoenix         11,162       72       100 %       100 %       1       95 %       16       89       94       12
Cincinnati - Hamilton*       Cincinnati         10,803       47       74 %       74 %       1       100 %       35       83             10
Northern Virginia - Sterling IV       Northern Virginia         10,349       81       100 %       100 %       7       100 %       34       122             15
San Antonio IV       San Antonio         10,271       60       100 %       100 %       12       100 %       27       99             12

London I**

      London         8,527       25       100 %       100 %       12       56 %       58       95       9       10

London II**

      London         8,304       49       100 %       100 %       10       100 %       93       151       4       15

London - Great Bridgewater**

      London         6,274       10       94 %       94 %             %       1       11             1
Houston - Houston West III       Houston         5,569       53       34 %       34 %       10       100 %       32       95       209       6
Cincinnati - Mason       Cincinnati         5,374       34       100 %       100 %       26       98 %       17       78             4
Stamford - Riverbend**       New York Metro         5,340       20       23 %       23 %             %       8       28             2
Norwalk I**       New York Metro         4,378       13       99 %       99 %       4       61 %       41       58       87       2
Chicago - Lombard       Chicago         2,427       14       62 %       62 %       4       100 %       12       30       29       3
Stamford - Omega**       New York Metro         1,242             %       %       19       84 %       4       22            
Frankfurt II       Frankfurt         1,185       45       100 %       100 %       7       100 %       72       123       10       25
Cincinnati - Blue Ash*       Cincinnati         657       6       36 %       36 %       7       100 %       2       15             1
South Bend - Crescent*       Chicago         567       3       41 %       41 %             %       5       9       11       1
Totowa - Commerce**       New York Metro         567             %       %       20       38 %       6       26            
Singapore - Inter Business Park**       Singapore         379       3       22 %       22 %             %             3             1
South Bend - Monroe       Chicago         123       6       23 %       23 %             %       6       13       4       1
Stabilized Properties - Total               $ 811,653       3,540       90 %       92 %       621       77 %       2,148       6,309       1,241       669
                                                                   
CyrusOne Inc.
Data Center Portfolio
As of December 31, 2018
(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           $ 811,653     3,540     90 %     92 %     621     77 %     2,148     6,309     1,241     669
                                                                   
Pre-Stabilized Properties(b)                                                                  
Dallas - Carrollton (DH #6)     Dallas       7,346     75     76 %     76 %         %     21     96         6
Chicago - Aurora II (DH #1)     Chicago       2,107     77     29 %     34 %     45     %     14     136     272     16
Dallas - Carrollton (DH #7)     Dallas       868     48     21 %     21 %         %         48         6
Dallas - Allen (DH #1)     Dallas           79     %     %         %     58     137     158     6
All Properties - Total           $ 821,975     3,819     85 %     88 %     666     72 %     2,241     6,726     1,670     703
     
*   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 December 31, 2018, multiplied by 12. For the month of December 2018, customer reimbursements were $112.0 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 January 1, 2017 through December 31, 2018, 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 December 31, 2018 was $829.6 million. Our annualized effective rent was greater than our annualized rent as of December 31, 2018 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 December 31, 2018 divided by total CSF. Leases signed but that have not commenced billing as of December 31, 2018 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 December 31, 2018 divided by total Office & Other space. Leases signed but not commenced as of December 31, 2018 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 December 31, 2018

(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
Dallas - Allen     Dallas     1Q'19         25     21         46         $       7-9       7-9
Northern Virginia - Sterling V     Northern Virginia     1Q'19             7         7     6.0             25-28       25-28
Phoenix - Chandler VII     Phoenix     1Q'19                 269     269           15       44-50       59-65
Raleigh-Durham I     Raleigh-Durham     1Q'19     7                 7     3.0       1       6-8       7-9
Dallas - Carrollton     Dallas     2Q'19                         6.0       2       17-18       19-20
Northern Virginia - Sterling VI     Northern Virginia     2Q'19     171     35     52         258     36.0       43       95-119       138-162
Somerset II     New York Metro     2Q'19     9                 9                 4-6       4-6
London I     London     2Q'19     13                 13     5.0             12-14       12-14
Northern Virginia - Sterling VII     Northern Virginia     3Q'19                 93     93                 33-37       33-37
Northern Virginia - Sterling VIII     Northern Virginia     3Q'19     122     4     25         151     30.0       24       142-159       166-183
Austin III     Austin     3Q'19                         3.0             17-19       17-19
London II     London     3Q'19     32                 32     13.0             30-34       30-34
Frankfurt II     Frankfurt     3Q'19     45     3             48     18.0             50-60       50-60
Amsterdam I     Amsterdam     4Q'19     39     28     40     194     301     6.0       1       65-76       66-77
Frankfurt III     Frankfurt     2Q'20                 258     258                 66-77       66-77
Total                 439     96     144     814     1,492     126.0     $ 86     $ 613-714     $ 699-800
     
(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 1.27. Frankfurt and Amsterdam development costs are EUR-denominated and shown as USD-equivalent using exchange rate of 1.14.
(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 December 31, 2018. 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

    Twelve months ended
            March 31,     June 30,     September 30,     December 31,     December 31,
(dollars in millions)           2018     2018     2018     2018     2018
Capital expenditures - investment in real estate           $142.8     $175.2     $304.8     $232.4     $855.2
       

CyrusOne Inc.

Land Available for Future Development (Acres)

As of December 31, 2018

(Unaudited)

       
      As of
Market     December 31, 2018
Amsterdam     8  
Atlanta     44  
Austin     22  
Chicago     23  
Cincinnati     98  
Dallas     57  
Houston     20  
Northern Virginia     40  
Phoenix     96  
Quincy, Washington     48  
Santa Clara     15  
Total Available(a)     470  
Book Value of Total Available     $ 176.4

million

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

                                       

CyrusOne Inc.

Leasing Statistics - Lease Signings

As of December 31, 2018

(Unaudited)

                                       
Period    

Number
of Leases(a)

     

Total CSF
Signed(b)

     

Total kW
Signed(c)

     

Total MRR
Signed (000)(d)

     

Weighted
Average
Lease Term(e)

4Q'18     482       41,000       6,768       $1,678       73
Prior 4Q Avg.     460       182,750       26,250       $3,126       85
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
4Q'17     395       86,000       8,600       $1,463       61
     
(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 4Q'17 and 1Q'18, 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 December 31, 2018

(Dollars in thousands)

(Unaudited)

New MRR(a) Signed ($000)

                                                 
      1Q'17     2Q'17     3Q'17     4Q'17     1Q'18     2Q'18     3Q'18     4Q'18
Existing Customers     $ 2,247       $ 2,322       $ 1,418       $ 1,063       $ 3,149       $ 4,429       $ 2,072       $ 1,226  
New Customers     $ 385       $ 145       $ 810       $ 400       $ 221       $ 1,024       $ 146       $ 452  
Total     $ 2,632       $ 2,467       $ 2,228       $ 1,463       $ 3,370       $ 5,453       $ 2,218       $ 1,678  
                                                 
% from Existing Customers       85 %       94 %       64 %       73 %       93 %       81 %       93 %       73 %
     

(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 $0.1 million in 1Q'17 and 4Q'18.

                         

CyrusOne Inc.

Customer Sector Diversification(a)

As of December 31, 2018

(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     $ 156,064     19.0 %   95.8
2   Information Technology     5       52,716     6.4 %   67.6
3   Information Technology     10       44,325     5.4 %   39.4
4   Information Technology     7       29,937     3.6 %   32.8
5   Financial Services     1       19,097     2.3 %   147.0
6   Research and Consulting Services     3       15,791     1.9 %   25.1
7   Information Technology     4       15,585     1.9 %   44.0
8   Healthcare     2       15,099     1.8 %   108.0
9   Telecommunication Services     2       13,513     1.6 %   31.0
10   Energy     1       12,610     1.5 %   19.7
11   Information Technology     6       12,004     1.5 %   23.0
12   Industrials     5       11,400     1.4 %   9.5
13   Telecommunication Services     7       9,950     1.2 %   22.1
14   Financial Services     2       9,506     1.2 %   56.6
15   Consumer Staples     3       9,162     1.1 %   25.7
16   Information Technology     2       7,994     1.0 %   66.2
17   Telecommunication Services     1       7,823     1.0 %   106.6
18   Information Technology     3       7,819     1.0 %   109.8
19   Information Technology     2       7,187     0.9 %   11.3
20   Financial Services     1       6,600     0.8 %   17.0
                $ 464,182     56.5 %   67.2
 
(a)   Customers and their affiliates are consolidated.
(b)   Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of December 31, 2018, multiplied by 12. For the month of December 2018, customer reimbursements were $112.0 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 January 1, 2017 through December 31, 2018, 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 December 31, 2018 was $829.6 million. Our annualized effective rent was greater than our annualized rent as of December 31, 2018 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 December 31, 2018, which was approximately $822.0 million.
(d)   Weighted average based on customer’s percentage of total annualized rent expiring and is as of December 31, 2018, 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 December 31, 2018

(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     672     68 %     127     2 %     $ 71,531       9 %
1,000-2,499     119     12 %     187     4 %       43,709       5 %
2,500-4,999     74     7 %     264     5 %       44,912       6 %
5,000-9,999     45     5 %     319     6 %       52,946       6 %
10,000+     82     8 %     4,466     83 %       608,877       74 %
Total     992     100 %     5,363     100 %     $ 821,975       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 December 31, 2018. 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 December 31, 2018, multiplied by 12. For the month of December 2018, customer reimbursements were $112.0 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 January 1, 2017 through December 31, 2018, 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 December 31, 2018 was $829.6 million. Our annualized effective rent was greater than our annualized rent as of December 31, 2018 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 December 31, 2018

(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           1,363     20 %                        
Month-to-Month     759     100     1 %     $ 32,002     4 %     $ 34,396     4 %
2019     2,250     574     9 %       107,469     13 %       108,352     12 %
2020     1,686     594     9 %       104,107     13 %       106,016     11 %
2021     1,851     722     11 %       127,330     15 %       136,913     15 %
2022     337     539     8 %       77,359     9 %       83,552     9 %
2023     266     720     11 %       86,821     11 %       119,285     13 %
2024     60     266     4 %       39,767     5 %       48,527     5 %
2025     46     186     3 %       29,672     4 %       34,024     4 %
2026     31     590     9 %       86,809     10 %       92,627     10 %
2027     19     438     6 %       66,807     8 %       86,233     9 %
2028     16     265     4 %       29,576     4 %       34,941     4 %
2029 - Thereafter     13     369     5 %       34,256     4 %       41,324     4 %
Total     7,334     6,726     100 %     $ 821,975     100 %     $ 926,190     100 %
 
(a)   Leases that were auto-renewed prior to December 31, 2018 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 December 31, 2018, multiplied by 12. For the month of December 2018, customer reimbursements were $112.0 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 January 1, 2017 through December 31, 2018, 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 December 31, 2018 was $829.6 million. Our annualized effective rent was greater than our annualized rent as of December 31, 2018 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 December 31, 2018, multiplied by 12.

 

Source: CyrusOne Inc.

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