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Aug 2, 2017

CyrusOne Reports Second Quarter 2017 Earnings

Signed $30 Million in Annualized GAAP Revenue
Year-over-Year Revenue Growth of 28%
Increasing Normalized FFO per share Guidance Range

DALLAS--(BUSINESS WIRE)--Aug. 2, 2017-- CyrusOne Inc. (NASDAQ: CONE), a premier global data center REIT, today announced second quarter 2017 earnings.

Highlights

Category

     

2Q’17

     

% Change
vs.
2Q’16

Revenue       $166.9 million       28%
Net income / (loss)       $(0.8) million       n/m
Adjusted EBITDA       $90.8 million       30%
Normalized FFO       $67.9 million       28%
Net income / (loss) per share       $(0.01)       n/m
Normalized FFO per share       $0.77       15%
     

  Leased 17 megawatts (MW) and 136,000 colocation square feet (CSF) in the second quarter totaling $30 million in annualized GAAP revenue
     

 

 

-- Signed 451 leases in the second quarter, the second highest quarterly total in the Company’s history

     

  Backlog of $49 million in annualized GAAP revenue as of the end of the second quarter, representing more than $390 million in total contract value
     

  Amended our senior unsecured credit agreement, increasing the total size of the facility by $450 million to $2.0 billion and gaining additional flexibility to pursue various initiatives, including joint ventures and international expansion
     

  Raised $197.5 million in net equity proceeds through our at-the-market equity program
     

  Closed the previously announced acquisition of 48 acres of land in Quincy, Washington, extending the Company’s presence to the Pacific Northwest and positioning it to offer what it believes to be one of the lowest cost data center solutions in the country
     

“We had another outstanding quarter with continued strong financial results and growth rates significantly higher than those of most other REITs. The leasing volume of $30 million annualized reflects the tremendous efforts of our Sales team and the strength of our customer relationships across all industry verticals,” said Gary Wojtaszek, president and chief executive officer of CyrusOne. “We believe this digital wave will continue for years to come as the secular demand drivers remain intact, and I am excited about the position we are in to capitalize on these opportunities and generate attractive returns for our shareholders.”

Second Quarter 2017 Financial Results

Net loss was $(0.8) million for the second quarter, compared to net income of $9.1 million in the same period in 2016. Normalized Funds From Operations (Normalized FFO)1 was $67.9 million for the second quarter, compared to $53.1 million in the same period in 2016, an increase of 28%. Net loss per basic and diluted common share2 was $(0.01) in the second quarter of 2017, compared to net income of $0.11 per basic and diluted common share in the same period in 2016. Normalized FFO per basic and diluted common share was $0.77 in the second quarter of 2017, an increase of 15% over second quarter 2016.

Revenue was $166.9 million for the second quarter, compared to $130.1 million for the same period in 2016, an increase of 28%. The increase in revenue was driven primarily by a 35% increase in leased CSF and additional interconnection services. Net operating income (NOI)3 was $107.3 million for the second quarter, compared to $85.3 million in the same period in 2016, an increase of 26%. Adjusted EBITDA4 was $90.8 million for the second quarter, compared to $69.7 million in the same period in 2016, an increase of 30%.

Leasing Activity

CyrusOne leased approximately 17 MW of power and 136,000 CSF in the second quarter, representing $2.5 million in monthly recurring rent inclusive of the monthly impact of installation charges, or approximately $30 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 86 months (7.2 years), and the weighted average remaining lease term of CyrusOne’s portfolio is 57 months (taking into account the impact of the backlog), an increase of 23 months compared to December 31, 2015. Recurring rent churn6 for the second quarter was 0.8%, compared to 2.7% for the same period in 2016.

Portfolio Utilization and Development

In the second quarter, the Company completed construction on approximately 99,000 CSF and 21 MW of power capacity in Northern Virginia, Dallas and Cincinnati, increasing total CSF across 40 data centers to approximately 2,575,000 CSF. This represents an increase of 570,000 CSF, or 28%, from June 30, 2016. CSF utilization7 as of the end of the second quarter was 93% for stabilized properties8 and 89% overall. The Company has development projects underway in Phoenix, Northern Virginia, Chicago, Dallas, San Antonio, Austin and the New York Metro area that are expected to add approximately 477,000 CSF and 73 MW of power capacity.

Balance Sheet and Liquidity

As of June 30, 2017, the Company had gross assets9 totaling approximately $4.5 billion, an increase of approximately 49% over gross assets as of June 30, 2016. CyrusOne had $1,857.7 million of long-term debt10, cash and cash equivalents of $40.0 million, and $933.8 million available under its unsecured revolving credit facility as of June 30, 2017. Net debt10 was $1,829.4 million as of June 30, 2017, representing approximately 26% of the Company's total enterprise value of $6.9 billion, or 5.0x Adjusted EBITDA for the last quarter annualized. Available liquidity11 was $973.8 million as of June 30, 2017.

In June 2017, CyrusOne’s operating partnership entered into an amendment to its senior unsecured credit agreement that increased the total size of the facility by $450 million to a total of $2.0 billion and provided additional flexibility to pursue various initiatives, including joint venture and international expansion. The amendment increased the size of the term loan maturing in January 2022 from $300 million to $650 million and expanded the revolving credit facility by $100 million to $1.1 billion. Proceeds from the $350 million term loan increase were used to pay down borrowings under the revolving credit facility.

Additionally, during the second quarter, the Company sold approximately 3.6 million shares of its common stock through its at-the-market equity program at an average price of $56.03, raising $197.5 million in net equity proceeds. The Company has approximately $93 million in remaining capacity under the original program authorization.

Dividend

On May 3, 2017, the Company announced a dividend of $0.42 per share of common stock for the second quarter of 2017. The dividend was paid on July 14, 2017, to stockholders of record at the close of business on June 30, 2017.

Additionally, today the Company is announcing a dividend of $0.42 per share of common stock for the third quarter of 2017. The dividend will be paid on October 13, 2017, to stockholders of record at the close of business on September 29, 2017.

Land Acquisition in Allen, TX

Subsequent to the end of the second quarter of 2017, CyrusOne purchased 66 acres of land in Allen, Texas, to support growth in the Dallas market. The Company also has an option to acquire an additional 24 acres of adjacent land.

Guidance

CyrusOne is updating guidance for full year 2017, increasing the ranges for Normalized FFO per diluted common share and Capital Expenditures. 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 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 and acquisition integration costs, legal claim costs, lease exit costs, asset impairments and loss on disposals and other charges in its reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

             

Category

   

Previous
2017
Guidance(1)

   

Revised
2017
Guidance(1)(2)

Total Revenue     $666 - 681 million     $666 - 681 million
Base Revenue     $591 - 601 million     $591 - 601 million
Metered Power Reimbursements     $75 - 80 million     $75 - 80 million
Adjusted EBITDA     $364 - 374 million     $364 - 374 million
Normalized FFO per diluted common share     $2.95 - 3.05     $3.00 - 3.10
Capital Expenditures     $600 - 650 million     $700 - 750 million
Development     $595 - 640 million     $695 - 740 million
Recurring     $5 - 10 million     $5 - 10 million
             

(1) Full year 2017 guidance includes the impact of the Sentinel data center acquisition from 3/1-12/31

(2) Includes impact of approximately 3.6 million shares issued in 2Q’17, with approximately 91.3 million shares outstanding as of June 30, 2017.

 

Upcoming Conferences and Events

  • Cowen and Company 3rd Annual Communications Infrastructure Summit on August 7-8 in Boulder, Colorado

Conference Call Details

CyrusOne will host a conference call on August 3, 2017, at 11:00 AM Eastern Time (10:00 AM Central Time) to discuss its results for the second quarter of 2017. A live webcast of the conference call and the presentation to be made during the call will be available under the “Company” tab in the “Investors / Events and 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 August 3, 2017, through August 17, 2017. 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 10109684.

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.

Use of Non-GAAP Financial Measures

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, Adjusted 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, NOI, and Adjusted 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, Adjusted NOI, and Adjusted EBITDA should be considered only as supplements to net income as measures of our performance. FFO, Normalized FFO, NOI, Adjusted 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.

1Normalized Funds From Operations (Normalized FFO) is defined as Funds From Operations (FFO) plus amortization of customer relationship intangibles, transaction and acquisition integration costs, legal claim costs and lease exit costs, and other special items including loss on extinguishment of debt, severance and management transition costs, and new accounting standards and systems implementation costs, as appropriate. FFO is net (loss) income computed in accordance with U.S. GAAP before real estate depreciation and amortization and Asset impairments and loss on disposal. Because the value of the customer relationship intangibles is inextricably connected to the real estate acquired, CyrusOne believes the amortization of such intangibles and impairments of such intangibles is analogous to real estate depreciation and impairments; therefore, the Company adds the customer relationship intangible amortization and impairments back for similar treatment with real estate depreciation and impairments. The Company believes its Normalized FFO calculation provides a comparable measure to that used by others in the industry. However, other REITs may not calculate Normalized FFO in the same manner. Accordingly, the Company’s Normalized FFO may not be comparable to others.

2Net loss per common share is defined as net loss divided by the weighted average common shares outstanding for the period, which were 88,097,529 for the second quarter of 2017.

3Net Operating Income (NOI) is defined as revenue less property operating expenses. Amortization of deferred leasing costs is presented in depreciation and amortization, which is excluded from NOI. CyrusOne has not historically incurred any tenant improvement costs. Our sales and marketing costs consist of salaries and benefits for our internal sales staff, travel and entertainment, office supplies, marketing and advertising costs. General and administrative costs include salaries and benefits of our senior management and support functions, legal and consulting costs, and other administrative costs. Marketing and advertising costs are not property-specific, rather these costs support our entire portfolio. As a result, we have excluded these marketing and advertising costs from our NOI calculation, consistent with the treatment of general and administrative costs, which also support our entire portfolio. From time to time, there may be non-recurring costs in property operating expenses, and as a result the Company may present Adjusted Net Operating Income (Adjusted NOI) to exclude the impacts of those costs.

4Adjusted EBITDA is defined as net income (loss) as defined by U.S. GAAP plus interest expense, income tax (benefit) expense, depreciation and amortization, stock-based compensation, transaction and integration costs, severance and management transition costs, asset impairments and (gain) loss on disposals, lease exit costs, legal claim costs and other special items. 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.

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.

7Utilization is calculated by dividing CSF under signed leases for available space (whether or not the contract has commenced billing) by total CSF. CSF Utilized differs from CSF Leased presented in the Data Center Portfolio table because the utilization 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% utilized.

9Gross asset value is defined as total assets plus accumulated depreciation.

10Long-term debt and net debt exclude adjustments for deferred financing costs. Net debt 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 nearly 1,000 customers, including 190 Fortune 1000 companies.

CyrusOne's data center offerings provide the flexibility, reliability, and security that enterprise and cloud 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 40 data centers worldwide.

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 nearly 1,000 customers, including 190 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 40 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       Robert Jackson, EVP General Counsel & Secretary
Dallas, Texas 75201       Diane Morefield, EVP & Chief Financial Officer       John Hatem, EVP Design, Construction & Operations
Phone: (972) 350-0060       Kevin Timmons, EVP & Chief Technology Officer       Blake Hankins, Chief Information Officer

Website: www.cyrusone.com

      Tesh Durvasula, EVP & Chief Commercial Officer       John Gould, EVP Global Sales
        Jonathan Schildkraut, EVP & Chief Strategy Officer       Brent Behrman, EVP Strategic Sales
        Kellie Teal-Guess, EVP & Chief People Officer       Amitabh Rai, SVP & Chief Accounting Officer
                 

Analyst Coverage

                 

Firm

     

Analyst

     

Phone Number

Bank of America Merrill Lynch       Michael J. Funk       (646) 855-5664
Barclays       Amir Rozwadowski       (212) 526-4043
Citi       Mike Rollins       (212) 816-1116
Cowen and Company       Colby Synesael       (646) 562-1355
Credit Suisse       Sami Badri       (212) 538-1727
Deutsche Bank       Vin Chao       (212) 250-6799
Gabelli & Company       Sergey Dluzhevskiy       (914) 921-8355
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
Morgan Stanley       Simon Flannery       (212) 761-6432
Macquarie Capital (USA) Inc.       Andrew DeGasperi       (212) 231-0649
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       Matthew S. Heinz, CFA       (443) 224-1382
SunTrust Robinson Humphrey       Greg Miller       (212) 303-4169
UBS       John C. Hodulik, CFA       (212) 713-4226
Wells Fargo       Eric Luebchow       (312) 630-2386
                           

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

                           
      Three Months           Six Months        
      Ended June 30,   Change   Ended June 30,   Change
      2017   2016   $   %   2017   2016   $   %
Revenue:                                  
Base revenue and other     $ 151.1     $ 118.2     $ 32.9     28

%

  $ 285.3     $ 224.7     $ 60.6     27 %
Metered power reimbursements     15.8     11.9     3.9     33 %   30.9     23.2     7.7     33 %
Revenue     $ 166.9     $ 130.1     $ 36.8     28 %   316.2     247.9     68.3     28 %
Costs and expenses:                                  
Property operating expenses     59.6     44.8     14.8     33 %   111.9     85.1     26.8     31 %
Sales and marketing     4.3     4.2     0.1     2 %   9.2     8.2     1.0     12 %
General and administrative     17.3     14.9     2.4     16 %   33.1     28.9     4.2     15 %
Depreciation and amortization     63.7     44.7     19.0     43 %   119.4     84.0     35.4     42 %
Transaction and acquisition integration costs     1.7     0.4     1.3     n/m   2.3     2.7     (0.4 )   (15 )%
Asset impairments and loss on disposal     3.6    

-

    3.6     n/m   3.8    

-

    3.8     n/m
Total costs and expenses     150.2     109.0     41.2     38 %   279.7     208.9     70.8     34 %
Operating income     16.7     21.1     (4.4 )   (21 )%   36.5     39.0     (2.5 )   (6 )%
Interest expense     16.5     11.5     5.0     43 %   30.1     23.6     6.5     28 %
Loss on extinguishment of debt     0.3    

-

    0.3     n/m   36.5    

-

    36.5     n/m
Net (loss) income before income taxes     (0.1 )   9.6     (9.7 )   n/m   (30.1 )   15.4     (45.5 )   n/m
Income tax expense     (0.7 )   (0.5 )   (0.2 )   40 %   (1.1 )   (0.7 )   (0.4 )   57 %
Net (loss) income     $ (0.8 )   $ 9.1     $ (9.9 )   n/m   $ (31.2 )   $ 14.7     $ (45.9 )   n/m
(Loss) income per share - basic and diluted     $ (0.01 )   $ 0.11     $ (0.12 )   n/m   $ (0.37 )   $ 0.19     $ (0.56 )   n/m
               

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

               
      June 30,   December 31,   Change
      2017   2016   $   %
Assets                  
Investment in real estate:                  
Land     $ 160.0     $ 142.7     $ 17.3     12 %
Buildings and improvements     1,291.7     1,008.9     282.8     28 %
Equipment     1,525.3     1,042.9     482.4     46 %
Construction in progress     555.8     407.1     148.7     37 %
Subtotal     3,532.8     2,601.6     931.2     36 %
Accumulated depreciation     (679.6 )   (578.5 )   (101.1 )   17 %
Net investment in real estate     2,853.2     2,023.1     830.1     41 %
Cash and cash equivalents     40.0     14.6     25.4     n/m
Rent and other receivables, net     93.4     83.3     10.1     12 %
Restricted cash     0.8    

-

    0.8     n/m
Goodwill     455.1     455.1    

-

   

-

%
Intangible assets, net     216.3     150.2     66.1     44 %
Other assets     157.8     126.1     31.7     25 %
Total assets     $ 3,816.6     $ 2,852.4     $ 964.2     34 %
Liabilities and Equity                  
Accounts payable and accrued expenses     $ 276.0     $ 227.1     $ 48.9     22 %
Deferred revenue     96.5     76.7     19.8     26 %
Capital lease obligations     11.7     10.8     0.9     8 %
Long-term debt, net     1,832.5     1,240.1     592.4     48 %
Lease financing arrangements     134.0     135.7     (1.7 )   (1 )%
Total liabilities     2,350.7     1,690.4     660.3     39 %
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 91,291,228 and 83,536,250 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively     0.9     0.8     0.1     13 %
Additional paid in capital     1,821.9     1,412.3     409.6     29 %
Accumulated deficit     (355.7 )   (249.8 )   (105.9 )   42 %
Accumulated other comprehensive loss     (1.2 )   (1.3 )   0.1    

-

%
Total stockholders’ equity     1,465.9     1,162.0     303.9     26 %
Total liabilities and equity     $ 3,816.6     $ 2,852.4     $ 964.2     34 %
                               

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

                               
For the three months ended:     June 30,     March 31,     December 31,     September 30,     June 30,
      2017     2017     2016     2016     2016
Revenue:                              
Base revenue and other     $ 151.1       $ 134.2       $ 123.2       $ 128.8       $ 118.2  
Metered power reimbursements     15.8       15.1       14.2       15.0       11.9  
Revenue     166.9       149.3       137.4       143.8       130.1  
Costs and expenses:                              
Property operating expenses     59.6       52.3       47.8       54.6       44.8  
Sales and marketing     4.3       4.9       4.0       4.7       4.2  
General and administrative     17.3       15.8       17.9       13.9       14.9  
Depreciation and amortization     63.7       55.7       49.3       50.6       44.7  
Transaction and acquisition integration costs     1.7       0.6       0.4       1.2       0.4  
Asset impairments and loss on disposal     3.6       0.2       5.3      

-

     

-

 
Total costs and expenses     150.2       129.5       124.7       125.0       109.0  
Operating income     16.7       19.8       12.7       18.8       21.1  
Interest expense     16.5       13.6       11.4       13.8       11.5  
Loss on extinguishment of debt     0.3       36.2      

-

     

-

     

-

 
Net (loss) income before income taxes     (0.1 )     (30.0 )     1.3       5.0       9.6  
Income tax expense     (0.7 )     (0.4 )     (0.5 )     (0.6 )     (0.5 )
Net (loss) income     $ (0.8 )     $ (30.4 )     $ 0.8       $ 4.4       $ 9.1  
(Loss) income per share - basic and diluted     $ (0.01 )     $ (0.36 )     $ 0.01       $ 0.05       $ 0.11  
                               

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

                               
      June 30,     March 31,     December 31,     September 30,     June 30,
      2017     2017     2016     2016     2016
Assets                              
Investment in real estate:                              
Land     $ 160.0       $ 156.9       $ 142.7       $ 143.1       $ 122.9  
Buildings and improvements     1,291.7       1,270.9       1,008.9       1,009.3       995.2  
Equipment     1,525.3       1,438.0       1,042.9       976.9       917.8  
Construction in progress     555.8       371.7       407.1       304.0       178.9  
Subtotal     3,532.8       3,237.5       2,601.6       2,433.3       2,214.8  
Accumulated depreciation     (679.6 )     (625.9 )     (578.5 )     (546.4 )     (503.2 )
Net investment in real estate     2,853.2       2,611.6       2,023.1       1,886.9       1,711.6  
Cash and cash equivalents     40.0       20.4       14.6       11.0       13.2  
Rent and other receivables, net     93.4       89.4       83.3       73.0       66.4  
Restricted cash     0.8       0.6      

-

     

-

      0.3  
Goodwill     455.1       455.1       455.1       455.1       453.4  
Intangible assets, net     216.3       223.1       150.2       155.8       160.6  
Other assets     157.8       143.6       126.1       114.5       105.8  
Total assets     $ 3,816.6       $ 3,543.8       $ 2,852.4       $ 2,696.3       $ 2,511.3  
Liabilities and Equity                              
Accounts payable and accrued expenses     $ 276.0       $ 268.2       $ 227.1       $ 214.6       $ 163.7  
Deferred revenue     96.5       93.3       76.7       72.5       71.7  
Capital lease obligations     11.7       12.4       10.8       11.9       10.9  
Long-term debt, net     1,832.5       1,731.8       1,240.1       1,065.7       1,096.2  
Lease financing arrangements     134.0       134.5       135.7       141.9       144.3  
Total liabilities     2,350.7       2,240.2       1,690.4       1,506.6       1,486.8  
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 91,291,228 and 83,536,250 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively     0.9       0.9       0.8       0.8       0.8  
Additional paid in capital     1,821.9       1,620.5       1,412.3       1,408.9       1,215.7  
Accumulated deficit     (355.7 )     (316.5 )     (249.8 )     (218.8 )     (191.5 )
Accumulated other comprehensive loss     (1.2 )     (1.3 )     (1.3 )     (1.2 )     (0.5 )
Total stockholders' equity     1,465.9       1,303.6       1,162.0       1,189.7       1,024.5  
Total liabilities and equity     $ 3,816.6       $ 3,543.8       $ 2,852.4       $ 2,696.3       $ 2,511.3  
                         

CyrusOne Inc.

Condensed Consolidated Statements of Cash Flow

(Dollars in millions)

(Unaudited)

                         
     

Six Months Ended
June 30, 2017

   

Six Months Ended
June 30, 2016

   

Three Months
Ended June 30, 2017

   

Three Months
Ended June 30, 2016

Cash flows from operating activities:                        
Net (loss) income     $ (31.2 )     $ 14.7       $ (0.8 )     $ 9.1  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:                        
Depreciation and amortization     119.4       84.0       63.7       44.7  
Non-cash interest expense and change in interest accrual     10.7       1.5       11.7       0.6  
Stock-based compensation expense     7.7       6.2       4.0       3.2  
Provision for bad debt     0.3       0.7       0.3       0.6  
Loss on extinguishment of debt     36.5      

-

      0.3      

-

 
Asset impairments and loss on disposal     3.8      

-

      3.6      

-

 
Change in operating assets and liabilities:                        
Rent receivables and other assets     (41.3 )     (8.9 )     (21.3 )     (15.1 )
Accounts payable and accrued expenses     (3.3 )     1.7       1.6       1.7  
Deferred revenues     18.9       (7.0 )     3.2       (4.7 )
Net cash provided by operating activities     121.5       92.9       66.3       40.1  
Cash flows from investing activities:                        
Capital expenditures – asset acquisitions, net of cash acquired     (492.3 )     (131.1 )    

-

     

-

 
Capital expenditures – other development     (485.0 )     (247.1 )     (302.5 )     (168.6 )
Changes in restricted cash     (0.8 )     1.2       (0.2 )     0.4  
Net cash used in investing activities     (978.1 )     (377.0 )     (302.7 )     (168.2 )
Cash flows from financing activities:                        
Issuance of common stock     408.6       256.5       197.6       0.5  
Stock issuance costs    

-

      (0.5 )    

-

      (0.5 )
Dividends paid     (69.1 )     (52.9 )     (36.7 )     (30.1 )
Borrowings from credit facility     1,010.0       415.0       570.0       95.0  
Payments on credit facility     (737.3 )     (315.0 )     (467.3 )     (10.0 )
Payments on senior notes     (474.8 )    

-

     

-

     

-

 
Proceeds from issuance of debt     800.0      

-

     

-

     

-

 
Payments on capital leases and lease financing arrangements     (4.8 )     (4.4 )     (2.5 )     (1.3 )
Debt issuance costs     (13.6 )     (2.1 )     (4.8 )    

-

 
Payment of debt extinguishment costs     (30.4 )    

-

      (0.1 )    

-

 
Tax payment upon exercise of equity awards     (6.6 )     (13.6 )     (0.2 )    

-

 
Net cash provided by financing activities     882.0       283.0       256.0       53.6  
Net increase (decrease) in cash and cash equivalents     25.4       (1.1 )     19.6       (74.5 )
Cash and cash equivalents at beginning of period     14.6       14.3       20.4       87.7  
Cash and cash equivalents at end of period     $ 40.0       $ 13.2       $ 40.0       $ 13.2  
                         
Supplemental disclosures                        
Cash paid for interest     $ 27.5       $ 27.2       $ 9.2       $ 21.0  
Cash paid for income taxes     1.6       1.2       1.6       1.1  
Capitalized interest     8.1       5.0       4.5       2.9  
Non-cash investing and financing activities                        
Acquisition and development of properties in accounts payable and other liabilities     163.4       77.4       163.4       77.4  
Dividends payable     39.4       31.8       39.4       31.8  
Debt issuance cost payable     0.1      

-

      0.1      

-

 
                   

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

                   
      Six Months Ended           Three Months Ended
      June 30,   Change   June 30,   March 31,   December 31,   September 30,   June 30,
      2017   2016   $   %   2017   2017   2016   2016   2016
Net Operating Income                                      
Revenue     $ 316.2     $ 247.9     $ 68.3     28 %   $ 166.9     $ 149.3     $ 137.4     $ 143.8     $ 130.1  
Property operating expenses     111.9     85.1     26.8     31 %   59.6     52.3     47.8     54.6     44.8  
Net Operating Income (NOI)     $ 204.3     $ 162.8     $ 41.5     25 %   $ 107.3     $ 97.0     $ 89.6     $ 89.2     $ 85.3  
NOI as a % of Revenue     64.6 %   65.7 %           64.3 %   65.0 %   65.2 %   62.0 %   65.6 %
Reconciliation of Net (Loss) Income to Adjusted EBITDA:                                      
Net (loss) income     $ (31.2 )   $ 14.7     $ (45.9 )   n/m   $ (0.8 )   $ (30.4 )   $ 0.8     $ 4.4     $ 9.1  
Interest expense     30.1     23.6     6.5     28 %   16.5     13.6     11.4     13.8     11.5  
Income tax expense     1.1     0.7     0.4     57 %   0.7     0.4     0.5     0.6     0.5  
Depreciation and amortization     119.4     84.0     35.4     42 %   63.7     55.7     49.3     50.6     44.7  
Transaction and acquisition integration costs     2.3     2.7     (0.4 )   (15 )%   1.7     0.6     0.4     1.2     0.4  
Legal claim costs     0.8     0.5     0.3     60 %   0.6     0.2     0.4     0.2     0.3  
Stock-based compensation     7.7     6.2     1.5     24 %   4.0     3.7     3.0     2.3     3.2  
Severance and management transition costs     0.5    

-

    0.5     n/m  

-

    0.5     1.9    

-

   

-

 
Loss on extinguishment of debt     36.5    

-

    36.5     n/m   0.3     36.2    

-

   

-

   

-

 
New accounting standards and system implementation costs     0.5    

-

    0.5     n/m   0.5    

-

   

-

   

-

   

-

 
Asset impairments and loss on disposals     3.8    

-

    3.8     n/m   3.6     0.2     5.3    

-

   

-

 
Adjusted EBITDA     $ 171.5     $ 132.4     $ 39.1     30 %   $ 90.8     $ 80.7     $ 73.0     $ 73.1     $ 69.7  
Adjusted EBITDA as a % of Revenue     54.2 %   53.4 %           54.4 %   54.1 %   53.1 %   50.8 %   53.6 %
                                     

CyrusOne Inc.

Reconciliation of Revenue to Net Operating Income to Net (Loss) Income

(Dollars in millions)

(Unaudited)

                                     
      Three Months Ended                 Six Months Ended            
      June 30,     Change     June 30,     Change
    2017     2016     $     %     2017     2016     $     %
Revenue     $ 166.9       $ 130.1       $ 36.8       28 %     $ 316.2       $ 247.9       $ 68.3       28 %
Property operating expenses     59.6       44.8       14.8       33 %     111.9       85.1       26.8       31 %
Net Operating Income     $ 107.3       $ 85.3       $ 22.0       26 %     $ 204.3       $ 162.8       $ 41.5       25 %
Sales and marketing     4.3       4.2       0.1       2 %     9.2       8.2       1.0       12 %
General and administrative     17.3       14.9       2.4       16 %     33.1       28.9       4.2       15 %
Depreciation and amortization     63.7       44.7       19.0       43 %     119.4       84.0       35.4       42 %
Transaction and acquisition integration costs     1.7       0.4       1.3       n/m     2.3       2.7       (0.4 )     (15 )%
Asset impairments and loss on disposal     3.6      

-

      3.6       n/m     3.8      

-

      3.8       n/m
Interest expense     16.5       11.5       5.0       43 %     30.1       23.6       6.5       28 %
Loss on extinguishment of debt     0.3      

-

      0.3       n/m     36.5      

-

      36.5       n/m
Income tax expense     0.7       0.5       0.2       40 %     1.1       0.7       0.4       57 %
Net (loss) income     $ (0.8 )     $ 9.1       $ (9.9 )     n/m     $ (31.2 )     $ 14.7       $ (45.9 )     n/m
                         

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

                         
      Six Months Ended                 Three Months Ended
      June 30,     Change     June 30,     March 31,     December 31,     September 30,     June 30,
    2017     2016     $     %     2017     2017     2016     2016     2016
Reconciliation of Net (Loss) Income to FFO and Normalized FFO:                                                      
Net (loss) income     $ (31.2 )     $ 14.7       $ (45.9 )     n/m     $ (0.8 )     $ (30.4 )     $ 0.8       $ 4.4       $ 9.1  
Real estate depreciation and amortization     104.0       71.4       32.6       46 %     55.3       48.7       42.0       44.2       38.4  
Asset impairments and loss on disposal     3.8      

-

      3.8       n/m     3.6       0.2       5.3      

-

     

-

 
Funds from Operations (FFO)     $ 76.6       $ 86.1       $ (9.5 )     (11 )%     $ 58.1       $ 18.5       $ 48.1       $ 48.6       $ 47.5  
                                                       
Loss on extinguishment of debt     36.5      

-

      36.5       n/m     0.3       36.2      

-

     

-

     

-

 
New accounting standards and system implementation costs     0.5      

-

      0.5       n/m     0.5      

-

     

-

     

-

     

-

 
Amortization of customer relationship intangibles     11.9       9.7       2.2       23 %     6.7       5.2       5.6       4.8       4.9  
Transaction and acquisition integration costs     2.3       2.7       (0.4 )     (15 )%     1.7       0.6       0.4       1.2       0.4  
Severance and management transition costs     0.5      

-

      0.5       n/m    

-

      0.5       1.9      

-

     

-

 
Legal claim costs     0.8       0.5       0.3       60 %     0.6       0.2       0.4       0.2       0.3  
Normalized Funds from Operations (Normalized FFO)     $ 129.1       $ 99.0       $ 30.1       30 %     $ 67.9       $ 61.2       $ 56.4       $ 54.8       $ 53.1  
Normalized FFO per diluted common share     $ 1.49       $ 1.30       $ 0.19       15 %     $ 0.77       $ 0.72       $ 0.68       $ 0.67       $ 0.67  
Weighted Average diluted common shares outstanding     86.5       76.0       10.5       14 %     88.5       84.5       82.9       81.3       79.0  
                                                       
Additional Information:                                                      
Amortization of deferred financing costs     2.2       2.0       0.2       10 %     1.2       1.0       1.1       1.0       1.1  
Stock-based compensation     7.7       6.2       1.5       24 %     4.0       3.7       3.0       2.3       3.2  
Non-real estate depreciation and amortization     3.5       2.9       0.6       21 %     1.7       1.8       1.7       1.6       1.4  
Deferred revenue and straight line rent adjustments     (12.1 )     (7.0 )     (5.1 )     73 %     (2.7 )     (9.4 )     (2.5 )     (10.7 )     (5.0 )
Leasing commissions     (7.7 )     (5.3 )     (2.4 )     45 %     (3.8 )     (3.9 )     (3.8 )     (3.0 )     (3.4 )
Recurring capital expenditures     (2.2 )     (1.8 )     (0.4 )     22 %     (0.7 )     (1.5 )     (1.9 )     (1.7 )     (0.9 )
 

CyrusOne Inc.

Market Capitalization Summary, Reconciliation of Net Debt, and Debt Schedule
(Unaudited)

                   

Market Capitalization

                 

(dollars in millions)

    Shares or

Equivalents

Outstanding

    Market Price

as of

June 30, 2017

    Market Value

Equivalents

(in millions)

Common shares     91,291,228       $ 55.75       $ 5,089.5
Net Debt                 1,829.4
Total Enterprise Value (TEV)                 $ 6,918.9
                 

Reconciliation of Net Debt

               
(dollars in millions)       June 30,       March 31
        2017       2017
Long-term debt(a)       $ 1,857.7         $ 1,755.0  
Capital lease obligations       11.7         12.4  
Less:                
Cash and cash equivalents       (40.0 )       (20.4 )
Net Debt       $ 1,829.4         $ 1,747.0  
 

(a)  Excludes adjustment for deferred financing costs.

                   

Debt Schedule (as of June 30, 2017)

                 
(dollars in millions)                  
Long-term debt:     Amount     Interest Rate     Maturity Date
Revolving credit facility     $ 157.7       L + 155bps     November 2021(a)
Term loan     250.0       2.72 %     September 2021
Term loan     650.0       2.67 %     January 2022
5.000% senior notes due 2024     500.0       5.000 %     March 2024
5.375% senior notes due 2027     300.0       5.375 %     March 2027
Total long-term debt(b)     $ 1,857.7       3.74 %      
                   
Weighted average term of debt:     5.9years      
             
(a) Assuming exercise of one-year extension option.
(b) Excludes adjustment for deferred financing costs.
                                     

CyrusOne Inc.

Colocation Square Footage (CSF) and Utilization

(Unaudited)

                                     
      As of June 30, 2017     As of December 31, 2016     As of June 30, 2016

Market

    Colocation
Space (CSF)(a)
    CSF
Utilized(b)
    Colocation
Space (CSF)(a)
    CSF
Utilized(b)
    Colocation
Space (CSF)(a)
    CSF
Utilized(b)
Northern Virginia     437,847     90 %     277,629     100 %     236,863     99 %
Dallas     431,287     93 %     431,287     83 %     431,119     78 %
Cincinnati     404,207     92 %     386,508     92 %     386,484     91 %
Houston     308,074     75 %     308,074     73 %     308,074     70 %
San Antonio     239,879     100 %     108,112     99 %     108,064     99 %
New York Metro     218,448     83 %     121,530     79 %     121,530     89 %
Phoenix     215,964     100 %     215,892     94 %     183,511     94 %
Chicago     136,306     88 %     111,660     82 %     95,024     89 %
Austin     105,610     64 %     105,610     50 %     121,833     49 %
Raleigh-Durham     64,559     80 %    

-

    n/a    

-

    n/a
International     13,200     77 %     13,200     70 %     13,200     80 %
Total     2,575,381     89 %     2,079,502     85 %     2,005,702     84 %
Stabilized Properties(c)     2,379,515     93 %     1,895,867     92 %     1,822,067     92 %
     
(a)   CSF represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment.
(b)   Utilization 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% utilized.
                 

CyrusOne Inc.

2017 Guidance

                 

Category

     

Previous
2017
Guidance(1)

     

Revised
2017
Guidance(1)(2)

Total Revenue       $666 - 681 million       $666 - 681 million
Base Revenue       $591 - 601 million       $591 - 601 million
Metered Power Reimbursements       $75 - 80 million       $75 - 80 million
Adjusted EBITDA       $364 - 374 million       $364 - 374 million
Normalized FFO per diluted common share       $2.95 - 3.05       $3.00 - 3.10
Capital Expenditures       $600 - 650 million       $700 - 750 million
Development       $595 - 640 million       $695 - 740 million
Recurring       $5 - 10 million       $5 - 10 million
                 

(1) Full year 2017 guidance includes the impact of the Sentinel data center acquisition from 3/1-12/31.

(2) Includes impact of approximately 3.6 million shares issued in 2Q’17, with approximately 91.3 million shares outstanding as of June 30, 2017.

 

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 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 and acquisition integration costs, legal claim costs, lease exit 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 June 30, 2017

(Unaudited)

 

                                             
              Operating Net Rentable Square Feet (NRSF)(a)  

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

 

Available
Critical
Load
Capacity
(MW)(l)

Stabilized Properties(b)

    Metro
Area
 

Annualized
Rent(c)

 

Colocation
Space
(CSF)(d)

 

CSF
Leased(e)

 

CSF
Utilized(f)

 

Office &
Other(g)

 

Office &
Other
Leased (h)

 

Supporting
Infrastructure(i)

 

Total(j)

   
Dallas - Carrollton     Dallas   $ 60,409,360   304,598   80 %   93 %   64,317   61 %   111,383   480,298   68,000   38
Houston - Houston West I     Houston     45,067,350   112,133   96 %   97 %   11,163   99 %   37,243   160,539   3,000   28
Dallas - Lewisville*     Dallas     36,677,714   114,054   94 %   94 %   11,374   89 %   54,122   179,550  

-

  21
Cincinnati - 7th Street***     Cincinnati     35,566,063   196,648   92 %   92 %   5,744   100 %   175,148   377,540   46,000   16
Northern Virginia - Sterling II     Northern Virginia     30,650,020   158,998   100 %   100 %   8,651   100 %   55,306   222,955  

-

  30
Somerset I     New York Metro     27,501,179   96,918   86 %   86 %   26,613   85 %   88,991   212,522   2,000   11
Totowa - Madison**     New York Metro     25,766,445   51,290   84 %   84 %   22,477   100 %   58,964   132,731  

-

  6
Cincinnati - North Cincinnati     Cincinnati     25,218,325   65,303   97 %   97 %   44,886   72 %   52,950   163,139   65,000   14
Wappingers Falls I**     New York Metro     24,976,582   37,000   96 %   97 %   20,167   97 %   15,077   72,244  

-

  3
Chicago - Aurora I     Chicago     24,748,318   113,008   96 %   96 %   34,008   100 %   223,478   370,494   27,000   71
Houston - Houston West II     Houston     23,697,450   79,540   93 %   93 %   3,355   74 %   55,023   137,918   12,000   12
San Antonio I     San Antonio     21,991,617   43,891   99 %   100 %   5,989   83 %   45,650   95,530   11,000   12
Phoenix - Chandler II     Phoenix     21,297,731   74,082   100 %   100 %   5,639   38 %   25,519   105,240  

-

  12
Houston - Galleria     Houston     17,828,949   63,469   62 %   62 %   23,259   51 %   24,927   111,655  

-

  14
Phoenix - Chandler I     Phoenix     17,193,070   73,969   100 %   100 %   34,582   12 %   38,524   147,075   31,000   16
San Antonio III     San Antonio     16,261,404   131,767   100 %   100 %   9,309   100 %   43,126   184,202  

-

  24
Raleigh-Durham I     Raleigh-Durham     15,782,996   64,559   80 %   80 %   9,507   100 %   82,119   156,185   257,000   10
Phoenix - Chandler III     Phoenix     15,583,970   67,913   100 %   100 %   2,440  

-

%

  30,415   100,768  

-

  14
Northern Virginia - Sterling I     Northern Virginia     15,001,443   77,961   98 %   99 %   5,618   77 %   48,598   132,177  

-

  12
Austin II     Austin     14,630,041   43,772   94 %   94 %   1,821   100 %   22,433   68,026  

-

  5
Northern Virginia - Sterling III     Northern Virginia     14,502,400   79,122   100 %   100 %   7,264   100 %   33,603   119,989  

-

  15
San Antonio II     San Antonio     13,807,583   64,221   100 %   100 %   11,255   100 %   41,127   116,603  

-

  12
Florence     Cincinnati     13,315,702   52,698   100 %   100 %   46,848   87 %   40,374   139,920  

-

  9
Cincinnati - Hamilton*     Cincinnati     8,880,542   46,565   77 %   77 %   1,077   100 %   35,336   82,978  

-

  10
Cincinnati - Mason     Cincinnati     5,401,402   34,072   100 %   100 %   26,458   98 %   17,193   77,723  

-

  4
Dallas - Midway**     Dallas     5,356,920   8,390   100 %   100 %  

-

 

-

%

 

-

  8,390  

-

  1
Stamford - Riverbend**     New York Metro     5,051,087   20,000   30 %   31 %  

-

 

-

%

  8,484   28,484  

-

  2
London - Great Bridgewater**     International     4,094,117   10,000   85 %   94 %  

-

 

-

%

  514   10,514  

-

  1
Norwalk I**     New York Metro     3,476,288   13,240   88 %   90 %   4,085   72 %   40,610   57,935   87,000   2
Northern Virginia - Sterling IV     Northern Virginia     2,589,764   40,670   100 %   100 %   5,523   100 %   32,433   78,626  

-

  6
Dallas - Marsh**     Dallas     2,534,506   4,245   100 %   100 %  

-

 

-

%

 

-

  4,245  

-

  1
Chicago - Lombard     Chicago     2,268,093   13,516   61 %   61 %   4,115   100 %   12,230   29,861   29,000   3
Stamford - Omega**     New York Metro     1,315,757  

-

 

-

%

 

-

%

  18,552   87 %   3,796   22,348  

-

 

-

Totowa - Commerce**     New York Metro     691,429  

-

 

-

%

 

-

%

  20,460   43 %   5,540   26,000  

-

 

-

Cincinnati - Blue Ash*     Cincinnati     575,172   6,193   36 %   36 %   6,821   100 %   2,165   15,179  

-

  1
South Bend - Crescent*     Chicago     555,137   3,432   43 %   43 %  

-

 

-

%

  5,125   8,557   11,000   1
Houston - Houston West III     Houston     493,602  

-

 

-

%

 

-

%

  9,095   100 %   10,652   19,747   209,000  

-

Singapore - Inter Business Park**     International     344,565   3,200   22 %   22 %  

-

 

-

%

 

-

  3,200  

-

  1
South Bend - Monroe     Chicago     167,576   6,350   22 %   22 %  

-

 

-

%

  6,478   12,828   4,000   1
Cincinnati - Goldcoast     Cincinnati     96,089   2,728  

-

%

 

-

%

  5,280   100 %   16,481   24,489   14,000   1
Stabilized Properties - Total         $ 601,367,758   2,379,515   91 %   93 %   517,752   78 %   1,601,137   4,498,404   876,000   435
                                               

Pre-Stabilized Properties(b)

                                             
Austin III     Austin     7,061,018   61,838   33 %   42 %   15,055   83 %   20,629   97,522   67,000   3
Northern Virginia - Sterling V     Northern Virginia     4,594,400   81,096   45 %   48 %  

-

 

-

%

  31,365   112,461   380,000   12
Houston - Houston West III (DH #1)     Houston     1,844,688   52,932   11 %   20 %  

-

 

-

%

  21,992   74,924  

-

  6
All Properties - Total         $ 614,867,864   2,575,381   87 %   89 %   532,807   78 %   1,675,123   4,783,311   1,323,000   456
     
*   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 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% utilized. Pre-stabilized properties include data halls that have been in service for less than 24 months and are less than 85% utilized.
(c)   Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of June 30, 2017, multiplied by 12. For the month of June 2017, customer reimbursements were $70.4 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From July 1, 2015 through June 30, 2017, customer reimbursements under leases with separately metered power constituted between 10.6% and 12.6% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of June 30, 2017 was $634.0 million. Our annualized effective rent was greater than our annualized rent as of June 30, 2017 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 leased is determined based on CSF being billed to customers under signed leases as of June 30, 2017 divided by total CSF. Leases signed but not commenced as of June 30, 2017 are not included.
(f)   Utilization 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 leased is determined based on Office & Other space being billed to customers under signed leases as of June 30, 2017 divided by total Office & Other space. Leases signed but not commenced as of June 30, 2017 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 June 30, 2017

(Dollars in millions)

(Unaudited)

                                                                   
            NRSF Under Development(a)           Under Development Costs(b)
Facilities    

Metropolitan
Area

   

Estimated
Completion
Date

   

Colocation
Space
(CSF)

   

Office &
Other

   

Supporting
Infrastructure

   

Powered
Shell(b)

    Total    

Critical
Load MW
Capacity(c)

   

Actual
to
Date(d)

   

Estimated
Costs to
Completion(e)

    Total
San Antonio IV     San Antonio     3Q'17     60,000     16,000     21,000    

-

    97,000     12.0     $ 36     $ 23-25     $ 59-61
Phoenix - Chandler IV     Phoenix     3Q'17     73,000     3,000     27,000    

-

    103,000     12.0       56       1       56-57
Phoenix - Chandler V     Phoenix     3Q'17    

-

   

-

   

-

    185,000     185,000    

-

      10       10-11       20-21
Northern Virginia - Sterling IV     Northern Virginia     3Q'17     41,000    

-

    2,000    

-

    43,000     9.0       24       19-21       43-45
Northern Virginia - Sterling V     Northern Virginia     3Q'17     77,000     1,000     69,000    

-

    147,000     6.0       11       24-27       35-38
Chicago - Aurora II     Chicago     3Q'17     77,000     10,000     14,000     272,000     373,000     16.0       49       48-53       97-102
Dallas - Carrollton     Dallas     3Q'17     75,000    

-

    21,000    

-

    96,000     3.0       3       22-25       25-28
Phoenix - Chandler VI     Phoenix     4Q'17     74,000    

-

    23,000     96,000     193,000     12.0       26       27-30       53-56
Austin III     Austin     4Q'17    

-

   

-

   

-

   

-

   

-

    3.0      

-

      11-13       11-13
Somerset II     New York Metro     1Q'18    

-

   

-

   

-

    210,000     210,000    

-

      10       14-15       24-25
Total                 477,000     30,000     177,000     763,000     1,447,000     73.0     $ 225     $ 199-221     $ 424-446
 
(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.
(b)   Represents NRSF under construction that, upon completion, will be powered shell available for future development into operating NRSF.
(c)   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.
(d)   Actual to date is the cash investment as of June 30, 2017. There may be accruals above this amount for work completed, for which cash has not yet been paid.
(e)   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.
 

CyrusOne Inc.

Land Available for Future Development (Acres)

As of June 30, 2017

(Unaudited)

   
  As of
Market June 30, 2017
Austin 22
Chicago 23
Cincinnati 98
Dallas
Houston 20
International
New York Metro
Northern Virginia 16
Phoenix 39
Quincy, Washington 48
Raleigh-Durham
San Antonio
Total Available 266
                                         

CyrusOne Inc.

Leasing Statistics - Lease Signings

As of June 30, 2017

(Dollars in thousands)

(Unaudited)

                                         
Period      

Number
of Leases(a)

     

Total CSF
Signed(b)

     

Total kW
Signed(c)

     

Total MRR
Signed ($000)(d)

     

Weighted
Average
Lease Term(e)

2Q'17       451       136,000       16,673       $2,467       86
Prior 4Q Avg.       398       152,250       21,125       $2,835       85
1Q'17       480       148,000       18,259       $2,632       103
4Q'16       358       74,000       9,038       $1,590       63
3Q'16       389       105,000       16,930       $2,250       63
2Q'16       363       282,000       40,272       $4,866       112
     
(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 $0.2 million in 2Q'17 and $0.1 million in each of the other quarters.
(e)   Calculated on a CSF-weighted basis.
 

CyrusOne Inc.

New MRR Signed - Existing vs. New Customers

As of June 30, 2017

(Dollars in thousands)

(Unaudited)

                                   
    New MRR(a) Signed ($000)
                                   
    3Q'15     4Q'15   1Q'16   2Q'16   3Q'16   4Q'16   1Q'17   2Q'17
Existing Customers   $ 578       $ 2,984     $ 1,767     $ 4,406     $ 1,796     $ 1,332     $ 2,247     $ 2,322  
New Customers   $ 534       $ 646     $ 1,843     $ 460     $ 454     $ 258     $ 385     $ 145  
Total   $ 1,112       $ 3,630     $ 3,610     $ 4,866     $ 2,250     $ 1,590     $ 2,632     $ 2,467  
                                   
% from Existing Customers     52 %       82 %     49 %     91 %     80 %     84 %     85 %     94 %
                                   
(a) Monthly recurring rent is defined as the average monthly contractual rent during the term of the lease. It includes the
monthly impact of installation charges of approximately $0.2 million in 2Q'17 and $0.1 million in each of the other quarters.
                                 

CyrusOne Inc.

Customer Sector Diversification(a)

As of June 30, 2017

(Unaudited)

                                 
      Principal Customer Industry    

Number of
Locations

      Annualized
Rent(b)
    Percentage of
Portfolio
Annualized
Rent(c)
    Weighted
Average
Remaining
Lease Term in
Months(d)
1     Information Technology     8       $ 99,972,920     16.3 %     93.0
2     Information Technology     2         21,299,785     3.5 %     92.7
3     Financial Services     1         19,954,132     3.2 %     165.0
4     Information Technology     7         17,878,391     2.9 %     49.5
5     Telecommunication Services     2         16,260,032     2.6 %     15.3
6     Healthcare     2         14,437,506     2.3 %     126.0
7     Research and Consulting Services     3         14,307,523     2.3 %     43.1
8     Energy     5         13,578,787     2.2 %     14.1
9     Energy     1         13,452,122     2.2 %     33.3
10     Telecommunication Services     7         12,271,232     2.0 %     17.0
11     Industrials     4         11,329,208     1.8 %     26.6
12     Financial Services     2         8,886,662     1.4 %     74.5
13     Energy     2         7,314,286     1.2 %     13.6
14     Information Technology     3         6,850,232     1.1 %     126.8
15     Information Technology     2         6,672,237     1.1 %     85.1
16     Financial Services     1         6,600,225     1.1 %     35.0
17     Telecommunication Services     5         5,838,748     1.0 %     22.1
18     Consumer Staples     4         5,225,591     0.9 %     43.9
19     Financial Services     7         5,036,533     0.9 %     46.8
20     Financial Services     1         4,991,418     0.8 %     53.0
                    $ 312,157,570     50.8 %     72.3
 
(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 June 30, 2017, multiplied by 12. For the month of June 2017, customer reimbursements were $70.4 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From July 1, 2015 through June 30, 2017, customer reimbursements under leases with separately metered power constituted between 10.6% and 12.6% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of June 30, 2017 was $634.0 million. Our annualized effective rent was greater than our annualized rent as of June 30, 2017 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 June 30, 2017, which was approximately $614.9 million.
(d)   Weighted average based on customer’s percentage of total annualized rent expiring and is as of June 30, 2017, 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 June 30, 2017

(Unaudited)

                                       
NRSF Under Lease(a)      

Number of
Customers(b)

   

Percentage of
All Customers

    Total

Leased

NRSF(c)

    Percentage of

Portfolio

Leased NRSF

    Annualized

Rent(d)

    Percentage of

Annualized Rent

0-999       672     70 %     144,748     4 %     $ 66,197,193       11 %
1,000-2,499       112     12 %     173,614     4 %       37,858,066       6 %
2,500-4,999       67     7 %     234,795     6 %       43,983,353       7 %
5,000-9,999       43     4 %     296,184     7 %       61,211,783       10 %
10,000+       70     7 %     3,251,762     79 %       405,617,469       66 %
Total       964     100 %     4,101,103     100 %     $ 614,867,864       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 June 30, 2017. 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 June 30, 2017, multiplied by 12. For the month of June 2017, customer reimbursements were $70.4 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From July 1, 2015 through June 30, 2017, customer reimbursements under leases with separately metered power constituted between 10.6% and 12.6% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of June 30, 2017 was $634.0 million. Our annualized effective rent was greater than our annualized rent as of June 30, 2017 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 June 30, 2017

(Unaudited)

                                         
Year(a)  

Number of
Leases
Expiring(b)

   

Total Operating
NRSF Expiring

    Percentage of
Total NRSF
    Annualized
Rent(c)
    Percentage of
Annualized Rent
    Annualized Rent
at Expiration(d)
    Percentage of
Annualized Rent
at Expiration
Available         682,208     14 %                        
Month-to-Month   446     37,262     1 %     $ 9,591,436     2 %     $ 9,631,636     1 %
2017   956     282,202     6 %     40,388,824     7 %       40,420,017     6 %
2018   1,922     469,568     10 %     131,657,070     21 %       132,947,225     19 %
2019   1,114     453,337     10 %     73,086,437     12 %       75,037,921     11 %
2020   911     442,871     9 %     59,226,721     10 %       63,643,461     9 %
2021   525     437,759     9 %     74,251,311     12 %       86,867,565     13 %
2022   131     261,353     5 %     26,738,875     4 %       34,387,446     5 %
2023   72     103,305     2 %     9,465,633     2 %       12,365,117     2 %
2024   37     204,653     4 %     27,900,551     4 %       32,938,784     5 %
2025   38     179,083     4 %     26,724,022     4 %       32,002,840     5 %
2026   22     577,274     12 %     74,169,754     12 %       84,452,779     12 %
2027 - Thereafter   30     652,436     14 %     61,667,230     10 %       84,860,253     12 %
Total   6,204     4,783,311     100 %     $ 614,867,864     100 %     $ 689,555,044     100 %
 
(a)   Leases that were auto-renewed prior to June 30, 2017 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 June 30, 2017, multiplied by 12. For the month of June 2017, customer reimbursements were $70.4 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From July 1, 2015 through June 30, 2017, customer reimbursements under leases with separately metered power constituted between 10.6% and 12.6% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of June 30, 2017 was $634.0 million. Our annualized effective rent was greater than our annualized rent as of June 30, 2017 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 June 30, 2017, multiplied by 12.

 

Source: CyrusOne Inc.

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