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Nov 6, 2013

CyrusOne Reports Third Quarter 2013 Earnings

Record 62,000 CSF Leased and Revenue Growth of 19%

DALLAS--(BUSINESS WIRE)-- Global data center service provider CyrusOne Inc. (NASDAQ:CONE), which specializes in providing highly reliable enterprise-class, carrier-neutral data center properties to the Fortune 1000, today announced third quarter 2013 earnings.

Third Quarter Highlights

  • Record leasing of 62,000 colocation square feet, a 68% increase from the prior quarter and over 500% of the amount leased in the third quarter of 2012, including the previously announced lease signed in July for the San Antonio facility
  • Revenue of $67.5 million increased 19% over the third quarter of 2012. Normalized FFO and AFFOincreased 44% and 46%, respectively, over the third quarter of 2012. Adjusted EBITDA growth of 21% over the third quarter of 2012
  • Completely leased the San Antonio data center one year ahead of schedule, leased over 60% of the Phoenix data center, and pre-leased over 25% of the second data hall in the Carrollton facility
  • Launched CyrusOne Market Place and CyrusOne Express in early October, an innovative online tool and product line that provide simple and efficient data center solutions for small and medium sized businesses
  • Added six Fortune 1000 companies as new customers, bringing total Fortune 1000 customers to 128

"Our results this quarter highlight the broad strength of the platform we have created. This platform is uniquely focused on providing data center solutions to Fortune 1000 customers, who continue to trust CyrusOne to manage their most mission critical applications. This was our strongest leasing quarter ever and positions us well to meet our annual financial guidance for 2013," said Gary Wojtaszek, president and chief executive officer of CyrusOne. "We are excited about the recent launch of the CyrusOne Market Place and CyrusOne Express, which, in addition to the CyrusOne National Internet Exchange (IX) product that was launched last quarter, highlight the creativity and innovation CyrusOne brings to the market."

Financial Results

Revenue was $67.5 million for the third quarter, compared to $56.7 million for the same period in 2012, or an increase of 19%. Revenue growth was entirely organic and driven by strong leasing activity from the past several quarters. Operating income improved $0.8 million from the third quarter of 2012 as increased revenue of $10.8 million was offset by increased property operating expenses of $4.2 million, general and administrative expenses of $1.9 million and depreciation and amortization of $5.1 million, partially offset by fewer non-recurring charges. Net loss was $2.2 million for the third quarter, compared to a net loss of $2.8 million in the same period in 2012.

Net operating income (NOI)1 was $43.3 million for the third quarter, compared to $36.7 million in the same period in 2012, an increase of 18%. The increase in NOI was primarily due to the increase in revenue, partially offset by additional property operating costs from new facilities and expansions at existing facilities. Adjusted EBITDA2 was $36.5 million for the third quarter, compared to $30.1 million in the same period in 2012, an increase of 21%. The Adjusted EBITDA margin of 54.1% in the third quarter improved from 53.1% in the same period in 2012.

Normalized Funds From Operations (Normalized FFO)3 was $21.9 million for the third quarter, compared to $15.2 million in the same period in 2012, an increase of 44%. The increase in Normalized FFO was primarily due to growth in Adjusted EBITDA with lower interest expense as the company is using cash on hand to fund future growth. Normalized FFO per diluted common share or common share equivalent4 was $0.33 in the third quarter of 2013. Adjusted Funds From Operations (AFFO)5 was $19.3 million for the third quarter, compared to $13.2 million in the same period in 2012, an increase of 46%.

Leasing Activity

CyrusOne leased approximately 62,000 colocation square feet (CSF) or 12.8 MW of power in the third quarter, compared to 11,000 CSF in the same period in 2012. The company added six new Fortune 10006 customers in the period, bringing the total to 128 Fortune 1000 companies and 598 customers in total as of September 30, 2013. The weighted average lease term of the new leases based on square footage was 57 months, and approximately 86% of the CSF was leased to metered customers with the remainder leased on a full service basis. Recurring rent churn7 for the third quarter of 2013 was 1.0%, compared to 1.5% for the third quarter of 2012.

The CyrusOne National IX continued to gain traction as approximately 75% of new leases included IX services, up from 68% last quarter. The broad and increased acceptance of the IX suite of services highlights the benefits of our innovative connectivity solution. The CyrusOne National IX creates a virtual data center platform that mirrors the data center architecture deployed by most Fortune 1000 companies. This quarter, IX products increased average rent by 29% for those customers that signed new leases with interconnectivity.

Portfolio Utilization and Development

CSF available as of September 30, 2013 were approximately 992,000 across 25 facilities, an increase of approximately 96,000, or 11%, from a year ago. In the third quarter of 2013, the company added 22,000 CSF. Construction of an additional data hall was completed at West Seventh Street in Cincinnati, Ohio, which is the company's flagship data center in Cincinnati and one of the largest carrier hotels in the Midwest. The company also commissioned and leased the remainder of the San Antonio facility. CSF utilization8 for the third quarter was 85%, compared to 78% in the same period in 2012 and 81% in the second quarter of 2013. In October, the company commissioned approximately 60,000 CSF at its Carrollton facility, of which more than 25% was pre-leased. Lastly, construction on a new San Antonio facility on the 22 acres of land acquired in August will commence in the fourth quarter.

Balance Sheet and Liquidity

As of September 30, 2013, the company had $543.8 million of long-term debt, cash and cash equivalents of $213.2 million, and an undrawn $225.0 million senior secured revolving credit facility. Net debt9 was $330.6 million as of September 30, 2013, or approximately 21% of the company's total enterprise value or 2.3x Adjusted EBITDA annualized. Available liquidity10 was $438.2 million as of September 30, 2013.

Dividend

On September 4, 2013, the company announced a dividend of $0.16 per share of common stock and common stock equivalent for the third quarter of 2013. The dividend was paid on October 15, 2013 to shareholders of record at the close of business on September 27, 2013.

2013 Guidance

CyrusOne is refining guidance for the full-year of 2013 at this time with improved visibility on results. Revenue guidance ranges has been narrowed to $260 to $265 million from the prior range of $260 of $270 million. Also, the capital expenditures categories for development and land acquisition have been combined.

         

Category

   

Guidance

Revenue $260 - $265 million
Adjusted EBITDA $133 - $137 million
Normalized FFO per diluted common share or common share equivalent* $1.15 - $1.25
Capital Expenditures
Development $210 - $216 million
Recurring $4 - $6 million
Acquisition of Leased Facilities** $28 million

*

 

Calculated as if all diluted common shares and common share equivalents were issued and outstanding on January 1, 2013.

**

Inclusive of all amounts spent on acquisition of leased facilities, including dollars not reported through the capital expenditures captions on the GAAP cash flow statement.

 

The annual guidance provided above represents forward-looking projections, 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. Further, the guidance does not include the impact of any future financing, investment or disposition activities.

Upcoming Conferences and Events

  • REITWorld 2013: NAREIT's Annual Convention for All Things REIT on November 13-15 in San Francisco
  • Raymond James Systems, Semiconductors, Software and Supply Chain Conference on December 9-10 in New York
  • Citi 2014 Internet Media & Telecom Conference on January 6-8 in Las Vegas

Conference Call Details

CyrusOne will host a conference call on November 6, 2013 at 5:00 PM Eastern Time (4:00 PM Central Time) to discuss its results for the third quarter of 2013. A live webcast of the conference call will also be available on the investor relations page of the company's website at http://investor.cyrusone.com/index.cfm. The conference call dial-in number is 1-866-652-5200, and the international dial-in number is 1-412-317-6060. Passcode for the call is 10036203. A replay will be available one hour after the conclusion of the earnings call on November 6, 2013, until 9:00 AM (ET) on November 14, 2013. 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. Replay passcode is 10036203. An archived version of the webcast will also be available on the investor relations page of the company's website at http://investor.cyrusone.com/index.cfm.

Safe Harbor

This release contains 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 (including annual guidance for the remainder of 2013), 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 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, Net Operating Income, Adjusted Funds From Operations, Adjusted EBITDA, and Net debt should not be construed as being more important than or substitutes for comparable GAAP measures. Detailed reconciliations of these non-GAAP financial measures to comparable GAAP financial measures have been included in the tables distributed with this release and are available in the Investor Relations section of www.cyrusone.com.

Management uses FFO, Normalized FFO, NOI, AFFO and Adjusted EBITDA 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. Management uses net debt as a supplemental measure of the Company's liquidity and financial health. The company also believes that, as widely recognized measures of the performance and financial position of real estate investment trusts (REITs) and other companies, these measures are used by investors as a basis to compare its operating performance and financial position 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, AFFO and Adjusted EBITDA should be considered only as supplements to net income as measures of our performance. FFO, Normalized FFO, NOI, AFFO and Adjusted EBITDA should not be used as measures of liquidity nor as indicative of funds available to fund the company's cash needs, including the ability to make distributions. These measures also should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with U.S. GAAP.

1Net Operating Income (NOI) is defined as revenue less property operating expenses. Unlike operating income, net operating income excludes depreciation and amortization (including deferred leasing costs). Net operating income also excludes certain costs that are not property specific, but rather support our entire portfolio, such as sales and marketing costs (consisting of salaries and benefits for our internal sales staff, travel and entertainment, office supplies, marketing and advertising costs) and general and administrative costs (consisting of salaries and benefits of our senior management and support functions, legal and consulting costs, and other administrative costs). CyrusOne has not historically incurred any tenant improvement costs.

2Adjusted EBITDA is defined as net (loss) income before noncontrolling interests as defined by U.S. GAAP plus interest expense, other income, income tax (benefit) expense, depreciation and amortization, restructuring charges, legal claim costs, transaction costs and transaction-related compensation, including acquisition pursuit costs, loss on sale of receivables to affiliate, non-cash compensation, (gain) loss on extinguishment of debt, asset impairments, (gain) loss on sale of real estate improvements, and other special items.

3Normalized Funds From Operations (Normalized FFO) is defined as Funds From Operations (FFO) plus transaction costs, including acquisition pursuit costs, transaction-related compensation, (gain) loss on extinguishment of debt, restructuring charges, legal claim costs and other special items. FFO represents net (loss) income before noncontrolling interests computed in accordance with U.S. GAAP, real estate-related depreciation and amortization, amortization of customer relationship intangibles, real estate and customer relationship intangible impairments, and (gain) loss from sales of real estate improvements. Because the value of the customer relationship intangibles is inextricably connected to the real estate acquired, CyrusOne believes the amortization 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. CyrusOne's customer relationship intangibles are primarily associated with the acquisition of Cyrus Networks in 2010 and, at the time of acquisition, represented 22% of the value of the assets acquired.

4Normalized FFO per diluted common share or common share equivalent is defined as Normalized FFO divided by the average diluted common shares and common share equivalents outstanding for the quarter, which were approximately 64.7 million for the third quarter of 2013.

5Adjusted Funds From Operations (AFFO) is defined as Normalized FFO plus amortization of deferred financing costs, non-cash compensation, and non-real estate depreciation and amortization, less deferred revenue and straight line rent adjustments, leasing commissions, recurring capital expenditures, and non-cash corporate income tax benefit and expense.

6Fortune 1000 customers include subsidiaries whose ultimate parent is a Fortune 1000 company or a foreign or private company of equivalent size.

7Recurring rent churn is calculated as any reduction in recurring rent due to customer terminations, service reductions or net pricing decreases as a percentage of annualized rent at the beginning of the period, excluding any impact from metered power reimbursements or other usage-based billing.

8Utilization rate is calculated by dividing CSF under signed leases for available space (whether or not the contract has commenced billing) by total CSF. Utilization rate differs from percent leased presented in the Data Center Portfolio table because utilization rate excludes office space and supporting infrastructure net rentable square footage and includes CSF for signed leases that have not commenced billing.

9Net debt is defined as long-term debt and capital lease obligations, offset by cash, cash equivalents, and temporary cash investments.

10Available liquidity is calculated as cash, cash equivalents, and temporary cash investments on hand plus the undrawn capacity on CyrusOne's corporate revolving credit facility.

About CyrusOne

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 more than 575 customers, including nine of the Fortune 20 and more than 100 of the 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 25 data centers worldwide.

                       

CyrusOne Inc.

Combined Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

 

Three Months Ended
September 30,

Nine Months Ended
September 30,

Change Change
2013     2012 $ %   2013     2012 $ %
Revenue $ 67.5 $ 56.7 $ 10.8 19 % $ 191.2 $ 162.8 $ 28.4 17 %
Costs and expenses:
Property operating expenses 24.2 20.0 4.2 21 % 68.9 55.3 13.6 25 %
Sales and marketing 2.3 2.1 0.2 10 % 8.0 5.8 2.2 38 %
General and administrative 7.2 5.3 1.9 36 % 21.2 15.4 5.8 38 %
Transaction-related compensation n/m 20.0 20.0 n/m
Depreciation and amortization 23.9 18.8 5.1 27 % 68.6 52.9 15.7 30 %
Restructuring charges 0.7 0.7 n/m 0.7 0.7 n/m
Transaction costs 0.7 0.6 0.1 17 % 1.2 1.3 (0.1 ) (8 )%
Management fees charged by CBI 0.9 (0.9 ) n/m 2.1 (2.1 ) n/m
Loss on sale of receivables to affiliate 1.3 (1.3 ) n/m 3.7 (3.7 ) n/m
Asset impairments       n/m     13.3   (13.3 ) n/m  
Total costs and expenses 59.0   49.0   10.0   20 % 188.6   149.8   38.8   26 %
Operating income 8.5 7.7 0.8 10 % 2.6 13.0 (10.4 ) (80 )%
Interest expense 10.5 11.3 (0.8 ) (7 )% 32.2 31.2 1.0 3 %
Other income (0.1 ) (0.1 ) n/m (0.1 ) (0.1 ) n/m
Loss on extinguishment of debt       n/m   1.3     1.3   n/m  
Loss before income taxes (1.9 ) (3.6 ) 1.7 (47 )% (30.8 ) (18.2 ) (12.6 ) 69 %
Income tax (expense) benefit (0.3 ) 0.7   (1.0 ) (143 )% (1.2 ) 4.7   (5.9 ) n/m  
Net loss (2.2 ) (2.9 ) 0.7   (24 )% (32.0 ) (13.5 ) (18.5 ) n/m  
Gain on sale of real estate improvements 0.1 (0.1 ) n/m 0.1 (0.1 ) n/m
Net loss attributed to Predecessor (2.8 ) 2.8 (100 )% (20.2 ) (13.4 ) (6.8 ) n/m
Noncontrolling interest in net loss 1.4     1.4   n/m   7.8     7.8   n/m  
Net loss attributed to common stockholders $ (0.8 ) $   $ (0.8 ) n/m   $ (4.0 ) $   $ (4.0 ) n/m  
Loss per common share - basic and diluted $ (0.05 ) n/a $ (0.22 ) n/a
 
           

CyrusOne Inc.

Combined Balance Sheets

(Dollars in millions)

(Unaudited)

 
September 30, December 31, Change
2013 2012 $     %
Assets
Investment in real estate:
Land $ 81.5 $ 44.5 $ 37.0 83 %
Buildings and improvements 778.2 722.5 55.7 8 %
Equipment 134.3 52.4 81.9 n/m
Construction in progress 63.2   64.2   (1.0 ) (2 )%  
Subtotal 1,057.2 883.6 173.6 20 %
Accumulated depreciation (218.6 ) (176.7 ) (41.9 ) 24 %  
Net investment in real estate 838.6   706.9   131.7   19 %  
Cash and cash equivalents 213.2 16.5 196.7 n/m
Rent and other receivables 33.9 33.2 0.7 2 %
Restricted cash 6.3 (6.3 ) n/m
Goodwill 276.2 276.2 0 %
Intangible assets, net 89.9 102.6 (12.7 ) (12 )%
Due from affiliates 0.9 2.2 (1.3 ) (59 )%
Other assets 67.2   67.0   0.2   0 %
Total assets $ 1,519.9   $ 1,210.9   $ 309.0   26 %  
Liabilities and Equity
Accounts payable and accrued expenses $ 67.8 $ 37.1 $ 30.7 83 %
Deferred revenue 55.1 52.8 2.3 4 %
Due to affiliates 7.0 2.9 4.1 n/m
Capital lease obligations 18.8 32.2 (13.4 ) (42 )%
Long-term debt 525.0 525.0 0 %
Other financing arrangements 55.8   60.8   (5.0 ) (8 )%  
Total liabilities 729.5   710.8   18.7   3 %  
Shareholders' Equity / Parent's net investment:
Preferred stock, $.01 par value, 100,000,000 authorized; no shares issued or outstanding n/m
Common stock, $.01 par value, 500,000,000 shares authorized and 22,116,172 shares issued and outstanding at September 30, 2013 0.2 0.2 n/m
Common stock, $.01 par value, 1,000 shares authorized and 100 shares issued and outstanding at December 31, 2012 n/m
Paid in capital 339.4 7.1 332.3 n/m
Accumulated deficit (14.2 ) (14.2 ) n/m
Partnership capital   493.0   (493.0 ) n/m  
Total shareholders' equity / parent's net investment 325.4 500.1 (174.7 ) (35 )%
Noncontrolling interests 465.0     465.0   n/m  
Total Equity 790.4   500.1   290.3   58 %  
Total liabilities and shareholders' equity / parent's net investment $ 1,519.9   $ 1,210.9   $ 309.0   26 %  
 
                   

CyrusOne Inc.

Combined Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

 
For the three months ended: September 30, June 30, March 31, December 31, September 30,
2013 2013 2013 2012 2012
Revenue $ 67.5 $ 63.6 $ 60.1 $ 58.0 $ 56.7
Costs and expenses:
Property operating expenses 24.2 24.6 20.1 20.6 20.0
Sales and marketing 2.3 2.9 2.8 4.0 2.1
General and administrative 7.2 7.1 6.9 5.4 5.3
Transaction-related compensation 20.0
Depreciation and amortization 23.9 23.0 21.7 20.4 18.8
Restructuring charges 0.7
Transaction costs 0.7 0.4 0.1 4.4 0.6
Management fees charged by CBI 0.4 0.9
(Gain) loss on sale of receivables to affiliate (0.4 ) 1.3
Asset impairments          
Total costs and expenses 59.0   58.0   71.6   54.8   49.0  
Operating income (loss) 8.5 5.6 (11.5 ) 3.2 7.7
Interest expense 10.5 10.8 10.9 10.5 11.3
Other income (0.1 )
Loss on extinguishment of debt   1.3        
Loss before income taxes (1.9 ) (6.5 ) (22.4 ) (7.3 ) (3.6 )
Income tax (expense) benefit (0.3 ) (0.3 ) (0.6 ) 0.4   0.7  
Net loss from continuing operations (2.2 ) (6.8 ) (23.0 ) (6.9 ) (2.9 )
Gain on sale of real estate improvements 0.1
Net loss attributed to Predecessor (20.2 ) (6.9 ) (2.8 )
Noncontrolling interest in net loss 1.4   4.5   1.9      
Net loss attributed to common stockholders $ (0.8 ) $ (2.3 ) $ (0.9 ) $   $  
Loss per common share - basic diluted $ (0.05 ) $ (0.12 ) $ (0.05 ) n/a n/a
 
           

CyrusOne Inc.

Combined Balance Sheets

(Dollars in millions)

(Unaudited)

 
September 30, June 30, March 31, December 31, September 30,
2013 2013 2013 2012 2012
Assets
Investment in real estate:
Land $ 81.5 $ 74.6 $ 44.4 $ 44.5 $ 41.2
Buildings and improvements 778.2 778.5 740.7 722.5 666.5
Equipment 134.3 97.4 68.7 52.4 43.2
Construction in progress 63.2   48.2   92.6   64.2   56.6  
Subtotal 1,057.2 998.7 946.4 883.6 807.5
Accumulated depreciation (218.6 ) (208.7 ) (192.1 ) (176.7 ) (162.9 )
Net investment in real estate 838.6   790.0   754.3   706.9   644.6  
Cash and cash equivalents 213.2 267.1 328.6 16.5 3.2
Rent and other receivables 33.9 27.2 30.0 33.2
Restricted cash 2.6 6.3 10.4
Goodwill 276.2 276.2 276.2 276.2 276.2
Intangible assets, net 89.9 94.1 98.4 102.6 106.7
Due from affiliates 0.9 1.6 23.2 2.2 9.6
Other assets 67.2   63.6   60.7   67.0   40.1  
Total assets $ 1,519.9   $ 1,519.8   $ 1,574.0   $ 1,210.9   $ 1,090.8  
Liabilities and Equity
Accounts payable and accrued expenses $ 67.8 $ 59.3 $ 78.7 $ 37.1 $ 41.9
Deferred revenue 55.1 52.8 51.7 52.8 52.1
Due to affiliates 7.0 7.7 8.2 2.9
Capital lease obligations 18.8 19.8 31.0 32.2 38.0
Long-term debt 525.0 525.0 525.0 525.0
Related party notes payable 612.1
Other financing arrangements 55.8   54.0   62.9   60.8   49.2  
Total liabilities 729.5   718.6   757.5   710.8   793.3  
Shareholders' Equity / Parent's net investment:
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 22,116,172 shares issued and outstanding at September 30, 2013 0.2 0.2 0.2
Common stock, $.01 par value, 1,000 shares authorized and 100 shares issued and outstanding at December 31, 2012
Paid in capital 339.4 337.5 335.7 7.1
Accumulated deficit (14.2 ) (9.7 ) (3.9 )
Partnership capital       493.0   297.5  
Total shareholders' equity / parent's net investment 325.4 328.0 332.0 500.1 297.5
Noncontrolling interests 465.0   473.2   484.5      
Total Equity 790.4   801.2   816.5   500.1   297.5  
Total liabilities and shareholders' equity / parent's net investment $ 1,519.9   $ 1,519.8   $ 1,574.0   $ 1,210.9   $ 1,090.8  
 
           

CyrusOne Inc.

Reconciliation of Statement of Operations for the Three Months Ended March 31, 2013

(Dollars in millions, except per share amounts)

(Unaudited)

 
Predecessor Successor Combined
January 1, 2013

to January 23, 2013

January 24, 2013

to March 31, 2013

Three Months Ended

March 31, 2013

Revenue $ 15.1 $ 45.0 $ 60.1
Costs and expenses:
Property operating expenses 4.8 15.3 20.1
Sales and marketing 0.7 2.1 2.8
General and administrative 1.5 5.4 6.9
Transaction-related compensation 20.0 20.0
Depreciation and amortization 5.3 16.4 21.7
Transaction costs 0.1     0.1  
Total costs and expenses 32.4 39.2 71.6
Operating income (loss) (17.3 ) 5.8 (11.5 )
Interest expense 2.5   8.4   10.9  
Loss before income taxes (19.8 ) (2.6 ) (22.4 )
Income tax (expense) benefit (0.4 ) (0.2 ) (0.6 )
Net loss (20.2 ) (2.8 ) (23.0 )
Net loss attributed to Predecessor (20.2 ) (20.2 )
Noncontrolling interest in net loss   1.9   1.9  
Net loss attributed to common stockholders $   $ (0.9 ) $ (0.9 )
Loss per common share - basic and diluted n/a $ (0.05 ) $ (0.05 )
 
         

CyrusOne Inc.

Reconciliation of Statement of Operations for the Nine Months Ended September 30, 2013

(Dollars in millions, except per share amounts)

(Unaudited)

 
Predecessor Successor Combined
January 1, 2013 January 24, 2013 to Nine Months Ended
to January 23, 2013 September 30, 2013 September 30, 2013
Revenue $ 15.1 $ 176.1 $ 191.2
Costs and expenses:
Property operating expenses 4.8 64.1 68.9
Sales and marketing 0.7 7.3 8.0
General and administrative 1.5 19.7 21.2
Transaction-related compensation 20.0 20.0
Depreciation and amortization 5.3 63.3 68.6
Restructuring charges 0.7 0.7
Transaction costs 0.1   1.1   1.2  
Total costs and expenses 32.4   156.2   188.6  
Operating income (loss) (17.3 ) 19.9 2.6
Interest expense 2.5 29.7 32.2
Other income (0.1 ) (0.1 )
Loss on extinguishment of debt   1.3   1.3  
Loss before income taxes (19.8 ) (11.0 ) (30.8 )
Income tax (expense) benefit (0.4 ) (0.8 ) (1.2 )
Net loss (20.2 ) (11.8 ) (32.0 )
Net loss attributed to Predecessor (20.2 ) (20.2 )
Noncontrolling interest in net loss   7.8   7.8  
Net loss attributed to common stockholders $   $ (4.0 ) $ (4.0 )
Loss per common share - basic and diluted n/a $ (0.22 ) $ (0.22 )
 
               

CyrusOne Inc.

Net Operating Income and Reconciliation of Net Loss to Adjusted EBITDA

(Dollars in millions)

(Unaudited)

 
Nine Months Ended Three Months Ended
September 30, Change September 30,     June 30,     March 31,     December 31,     September 30,
2013     2012 $ % 2013 2013 2013 2012 2012
Net Operating Income
Revenue $ 191.2 $ 162.8 $ 28.4 17 % $ 67.5 $ 63.6 $ 60.1 $ 58.0 $ 56.7
Property operating expenses 68.9   55.3   13.6 25 % 24.2   24.6   20.1   20.6   20.0  
Net Operating Income (NOI) $ 122.3   $ 107.5   $ 14.8 14 % $ 43.3   $ 39.0   $ 40.0   $ 37.4   $ 36.7  
NOI as a % of Revenue 64.0 % 66.0 % 64.1 % 61.3 % 66.6 % 64.5 % 64.7 %
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss $ (32.0 ) $ (13.4 ) $ (18.6 ) n/m $ (2.2 ) $ (6.8 ) $ (23.0 ) $ (6.9 ) $ (2.8 )
Adjustments:
Interest expense 32.2 31.2 1.0 3 % 10.5 10.8 10.9 10.5 11.3
Other income (0.1 ) (0.1 ) n/m (0.1 )
Income tax (benefit) expense 1.2 (4.7 ) 5.9 n/m 0.3 0.3 0.6 (0.4 ) (0.7 )
Depreciation and amortization 68.6 52.9 15.7 30 % 23.9 23.0 21.7 20.4 18.8
Restructuring charges 0.7 0.7 n/m 0.7
Legal claim costs 0.7 0.7 n/m 0.7
Transaction costs 1.2 1.3 (0.1 ) (8 )% 0.7 0.4 0.1 4.4 0.6
Loss on sale of receivables to affiliate 3.7 (3.7 ) n/m (0.4 ) 1.3
Non-cash compensation 5.0 2.6 2.4 92 % 2.0 1.8 1.2 0.8 1.7
Asset impairments 13.3 (13.3 ) n/m
Loss on extinguishment of debt 1.3 1.3 n/m 1.3
Gain on sale of real estate improvements (0.1 ) 0.1 n/m (0.1 )
Transaction-related compensation 20.0     20.0 n/m     20.0      
Adjusted EBITDA $ 98.8   $ 86.8   $ 12.0 14 % $ 36.5   $ 30.8   $ 31.5   $ 28.4   $ 30.1  
Adjusted EBITDA as a % of Revenue 51.7 % 53.3 % 54.1 % 48.4 % 52.4 % 49.0 % 53.1 %
 
           

CyrusOne Inc.

Reconciliation of Net Loss to FFO, Normalized FFO, and AFFO

(Dollars in millions)

(Unaudited)

 
Nine Months Ended   Three Months Ended
September 30, Change

September 30, 2013

  June 30,

2013

  March 31,

2013

  December 31,

2012

  September 30,

2012

 
2013   2012   $ %  
Reconciliation of Net Loss to FFO and Normalized FFO:
Net income (loss) $ (32.0 ) $ (13.4 ) $ (18.6 ) n/m $ (2.2 ) $ (6.8 ) $ (23.0 ) $ (6.9 ) $ (2.8 )
Adjustments:
Real estate depreciation and amortization 50.6 37.5 13.1 35 % 17.8 16.9 15.9 15.4 13.6
Amortization of customer relationship intangibles 12.6 12.1 0.5 4 % 4.2 4.2 4.2 3.9 4.0
Real estate impairments 11.7 (11.7 ) n/m (0.1 )
Customer relationship intangible impairments 1.5 (1.5 ) n/m
Gain on sale of real estate improvements   (0.1 ) 0.1 n/m         (0.1 )
Funds from Operations (FFO) $ 31.2 $ 49.3 (18.1 ) n/m $ 19.8 $ 14.3 $ (2.9 ) $ 12.4 $ 14.6
Transaction-related compensation 20.0 20.0 n/m 20.0
Loss on extinguishment of debt 1.3 1.3 n/m 1.3
Restructuring charges 0.7 0.7 n/m 0.7
Legal claim costs 0.7 0.7 n/m 0.7
Transaction costs 1.2   1.3   (0.1 ) (8 )% $ 0.7   $ 0.4   $ 0.1   4.4   0.6  
Normalized Funds from Operations (Normalized FFO) $ 55.1   $ 50.6   $ 4.5 9 % $ 21.9   $ 16.0   $ 17.2   $ 16.8   $ 15.2  
Normalized FFO per diluted common share or common share equivalent* $ 0.85 n/a $ n/m $ 0.33 0.25 0.27 n/a n/a
Reconciliation of Normalized FFO to AFFO:
Normalized FFO $ 55.1 $ 50.6 4.5 9 % $ 21.9 $ 16.0 $ 17.2 $ 16.8 $ 15.2
Adjustments:
Amortization of deferred financing costs 2.8 2.8 n/m 0.5 1.7 0.6 0.3
Non-cash compensation 5.0 2.6 2.4 92 % 2.0 1.8 1.2 0.8 1.7
Non-real estate depreciation and amortization 5.4 3.4 2.0 59 % 1.9 1.9 1.6 1.1 1.2
Deferred revenue and straight line rent adjustments (9.7 ) (6.0 ) (3.7 ) 62 % (3.7 ) (3.7 ) (2.3 ) (2.3 ) (2.0 )
Leasing commissions (5.1 ) (3.3 ) (1.8 ) 55 % (1.7 ) (2.5 ) (0.9 ) (1.1 ) (1.0 )
Recurring capital expenditures (2.3 ) (2.3 ) % (1.6 ) (0.4 ) (0.3 ) (1.6 ) (1.0 )
Corporate income tax (benefit) expense 0.4   (5.3 ) 5.7 n/m     0.4   (0.5 ) (0.9 )
Adjusted Funds from Operations (AFFO) $ 51.6   $ 39.7   $ 11.9 30 % $ 19.3   $ 14.8   $ 17.5   $ 13.5   $ 13.2  
*   Assumes diluted common shares and common share equivalents were outstanding as of January 1, 2013 for the Three Months Ended March 31, 2013.
 
           

CyrusOne Inc.

Market Capitalization Summary and Reconciliation of Net Debt

(Unaudited)

 

Market Capitalization

 
Shares or

Equivalents

Outstanding

Market Price

as of

September 30, 2013

Market Value

Equivalents

(in millions)

Common shares 22,116,172 $ 19.00 $ 420.2
Operating Partnership units 42,586,835 $ 19.00 809.1
Net Debt 330.6  
Total Enterprise Value (TEV) $ 1,559.9  
Net Debt as a % of TEV 21.2 %
Net Debt to LQA Adjusted EBITDA 2.3x
 

Reconciliation of Net Debt

               
 
(Dollars in millions) September 30, June 30, March 31, December 31,
2013 2013 2013 2012
Long-term debt $ 525.0 $ 525.0 $ 525.0 $ 525.0
Capital lease obligations 18.8 19.8 31.0 32.2
Less:
Cash and cash equivalents (213.2 ) (267.1 ) (328.6 ) (16.5 )
Net Debt $ 330.6   $ 277.7   $ 227.4   $ 540.7  
 
           

CyrusOne Inc.

Colocation Square Footage (CSF) and Utilization

(Unaudited)

 
As of September 30, 2013 As of December 31, 2012 As of September 30, 2012

Market

CSF Capacity

(Sq Ft)

  % Utilized CSF Capacity

(Sq Ft)

  % Utilized CSF Capacity

(Sq Ft)

  % Utilized
Cincinnati 419,231 87 % 411,730 92 % 411,730 92 %
Dallas 171,780 93 % 171,100 69 % 171,100 67 %
Houston 230,718 85 % 188,602 93 % 188,602 87 %
Austin 54,003 63 % 57,078 32 % 57,078 30 %
Phoenix 36,366 64 % 36,222 0% 0%
San Antonio 43,487 99 % 35,765 61 % 35,765 17 %
Chicago 23,298 52 % 23,278 52 % 23,278 58 %
International 13,200   78 % 8,200   52 % 8,200   24 %
Total Footprint 992,083   85 % 931,975   78 % 895,753   78 %
 
   

CyrusOne Inc.

2013 Guidance

(Unaudited)

 
Full Year 2013
Revenue $260 - $265 million
Adjusted EBITDA $133 - $137 million
Normalized FFO per diluted common share or common share equivalent* $1.15 - $1.25
 
Capital Expenditures
Development $210 - $216 million
Recurring $4 - $6 million
Acquisition of Leased Facilities** $28 million
*   Calculated as if all diluted common shares and common share equivalents were issued and outstanding as of January 1, 2013.
** Inclusive of all amounts spent on acquisition of leased facilities, including dollars not reported through the capital expenditures captions on the GAAP cash flow statement.
                   

CyrusOne Inc.

Data Center Portfolio

As of September 30, 2013

(Unaudited)

 
Operating Net Rentable Square Feet (NRSF)(a) Powered

Shell

Available

for Future

Development

(NRSF)(h)

Available
UPS
Capacity
(MW)(i)

Facilities Metropolitan

Area

Annualized

Rent(b)

Colocation

Space

(CSF)(c)

    Office &

Other(d)

    Supporting

Infrastructure

(e)

    Total(f)     Percent

Leased(g)

Southwest Fwy. (Galleria) Houston $ 45,273,693 63,469 17,259 23,203 103,931 90 % 14
Westway Park Blvd. (Houston West 1) Houston 41,053,448 112,133 12,735 37,636 162,504 96 % 3,000 28
S. State Hwy 121 Business (Lewisville)* Dallas 36,208,463 108,687 11,399 59,346 179,432 91 % 18
West Seventh Street (7th St.)*** Cincinnati 34,743,159 211,672 5,744 171,561 388,977 88 % 37,000 13
Fujitec Drive (Lebanon) Cincinnati 19,386,260 65,303 36,261 49,159 150,723 76 % 72,000 14
Industrial Road (Florence) Cincinnati 14,942,902 52,698 46,848 40,374 139,920 94 % 9
Knightsbridge Drive (Hamilton)* Cincinnati 12,231,822 46,565 1,077 35,336 82,978 90 % 10
W. Frankford Road (Carrollton) Dallas 7,256,565 47,438 19,706 35,592 102,736 57 % 441,000 3
Westover Hills Blvd. (San Antonio 1) San Antonio 6,162,321 43,487 2,351 35,955 81,793 97 % 23,000 12
Parkway Dr. (Mason) Cincinnati 5,877,943 34,072 26,458 17,193 77,723 99 % 4
E. Ben White Blvd. (Austin 1)* Austin 5,682,784 16,223 21,376 7,516 45,115 95 % 2
Midway Rd.** Dallas 5,397,262 8,390 8,390 100 % 1
Metropolis Drive (Austin 2) Austin 5,375,381 37,780 4,128 18,444 60,352 38 % 5
Kestral Way (London)** London 4,492,884 10,000 10,000 99 % 1
Springer Street (Lombard) Chicago 2,283,510 13,516 4,115 12,230 29,861 59 % 29,000 3
Marsh Ln.** Dallas 2,073,446 4,245 4,245 100 %
Westway Park Blvd. (Houston West 2) Houston 1,776,560 42,116 3,065 31,344 76,525 26 % 77,000 6
Goldcoast Drive (Goldcoast) Cincinnati 1,517,714 2,728 5,280 16,481 24,489 100 % 14,000 1
E. Monroe Street (Monroe St.) South Bend 1,161,531 6,350 6,478 12,828 65 % 4,000
North Fwy. (Greenspoint)** Houston 1,034,598 13,000 1,449 14,449 100 %
Bryan St.** Dallas 1,029,418 3,020 3,020 58 %
South Ellis Street (Phoenix) Phoenix 816,715 36,366 36,135 38,411 110,912 28 % 76,000 3
Crescent Circle (Blackthorn)* South Bend 734,883 3,432 5,125 8,557 49 % 11,000
McAuley Place (Blue Ash)* Cincinnati 551,268 6,193 6,950 2,166 15,309 71 %
Jurong East (Singapore)** Singapore 325,240   3,200       3,200   12 %   2
Total $ 257,389,770   992,083   262,336   643,550   1,897,969   80 % 787,000   143

*

 

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 West Seventh Street (7th St.) 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)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2013, multiplied by 12. For the month of September 2013, customer reimbursements were $22.9 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From October 1, 2011 through September 30, 2013, customer reimbursements under leases with separately metered power constituted between 7.2% and 9.7% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2013 was $274,859,776. Our annualized effective rent was greater than our annualized rent as of September 30, 2013 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)

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.

(d)

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.

(e)

Represents infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.

(f)

Represents the NRSF at an operating facility that is currently leased or readily available for lease. This excludes existing vacant space held for development.

(g)

Percent leased is determined based on NRSF being billed to customers under signed leases as of September 30, 2013 divided by total NRSF. Leases signed but not commenced as of September 30, 2013 are not included. Supporting infrastructure has been allocated to leased NRSF on a proportionate basis for purposes of this calculation.

(h)

Represents space that is under roof that could be developed in the future for operating NRSF, rounded to the nearest 1,000.

(i)

UPS Capacity (also referred to as critical load) represents the aggregate power available for lease to and exclusive use by customers from the facility's installed universal power supplies (UPS) expressed in terms of megawatts. The capacity presented is for non-redundant megawatts, as we can develop flexible solutions to our customers at multiple resiliency levels. May not foot due to rounding.

 
       

CyrusOne Inc.

NRSF Under Development

As of September 30, 2013

(Dollars in millions)

(Unaudited)

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

Area

    Colocation Space

(CSF)

    Office & Other     Supporting

Infrastructure

    Powered Shell(c)     Total Actual to

Date

    Estimated Costs to

Completion

    Total

Westway Park Blvd (Houston West 2)

Houston 8,000 8,000 $ $ 1 $ 1
W Frankford Road (Carrollton) Dallas 60,000     28,000     88,000   12   7   19
Total 60,000   8,000   28,000     96,000   $ 12   $ 8   $ 20
 

(a)

 

Represents NRSF at a facility for which substantial activities have commenced to prepare the space for its intended use.

(b)

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.

(c)

Represents NRSF under construction that, upon completion, will be powered shell available for future development into operating NRSF.

 
               

CyrusOne Inc.

Customer Diversification(a)

As of September 30, 2013

(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 Telecommunications (CBI)(e) 7 $ 23,710,914 9.2 % 31.0
2 Energy 2 19,032,482 7.4 % 2.8
3 Energy 4 14,942,972 5.8 % 4.4
4 Research and Consulting Services 3 13,208,719 5.1 % 0.3
5 Telecommunication Services 1 10,056,455 3.9 % 50.0
6 Information Technology 3 7,440,740 2.9 % 43.1
7 Financials 1 6,000,225 2.3 % 80.0
8 Telecommunication Services 1 5,013,892 1.9 % 67.0
9 Information Technology 1 4,845,316 1.9 % 27.0
10 Consumer Staples 1 4,743,436 1.8 % 102.9
11 Energy 2 4,731,000 1.8 % 34.0
12 Information Technology 3 4,625,641 1.8 % 55.7
13 Energy 1 4,101,396 1.6 % 13.7
14 Information Technology 1 4,006,477 1.6 % 89.0
15 Energy 3 3,870,111 1.5 % 7.1
16 Information Technology 2 3,831,921 1.5 % 89.0
17 Energy 1 3,612,639 1.4 % 32.3
18 Consumer Discretionary 1 3,303,607 1.3 % 3.2
19 Information Technology 2 3,283,480 1.3 % 36.1
20 Energy 1 3,236,416   1.3 % 13.6
$ 147,597,839   57.3 % 31.2
 

(a)

 

Includes affiliates.

(b)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2013, multiplied by 12. For the month of September 2013, our total portfolio annualized rent was $257.4 million, and customer reimbursements were $22.9 million annualized, consisting of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From October 1, 2011 through September 30, 2013, customer reimbursements under leases with separately metered power constituted between 7.2% and 9.7% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent for our total portfolio as of September 30, 2013 was $274,859,776. Our annualized effective rent was greater than our annualized rent as of September 30, 2013 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 September 30, 2013, which was approximately $257.4 million.

(d)

Weighted average based on customer's percentage of total annualized rent expiring and is as of September 30, 2013, 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.

(e)

Includes information for both Cincinnati Bell Technology Solutions (CBTS) and Cincinnati Bell Telephone and two customers that have contracts with CBTS. We expect the contracts for these two customers to be assigned to us, but the consents for such assignments have not yet been obtained. Excluding these customers, Cincinnati Bell Inc. and subsidiaries represented 3.6% of our annualized rent as of September 30, 2013.

 
                     

CyrusOne Inc.

Lease Distribution

As of September 30, 2013

(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

0-999 447 79 % 81,819 5 % $ 33,655,624 13 %
1,000-2,499 39 7 % 66,987 4 % 15,444,873 6 %
2,500-4,999 27 5 % 102,141 7 % 20,661,725 8 %
5,000-9,999 23 4 % 162,750 11 % 51,439,853 20 %
10,000+ 31   5 % 1,099,879   73 % 136,187,695   53 %
Total 567   100 % 1,513,576   100 % $ 257,389,770   100 %
 

(a)

 

Represents all leases in our portfolio, including colocation, office and other leases.

(b)

Represents the number of customers in our portfolio leasing data center, office and other space.

(c)

Represents the total square feet at a facility under lease and that has commenced billing, excluding space held for development or space used by CyrusOne. A customer's leased NRSF is estimated based on such customer's direct CSF or office and light-industrial space plus management's estimate of infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.

(d)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2013, multiplied by 12. For the month of September 2013, customer reimbursements were $22.9 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From October 1, 2011 through September 30, 2013, customer reimbursements under leases with separately metered power constituted between 7.2% and 9.7% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2013 was $274,859,776. Our annualized effective rent was greater than our annualized rent as of September 30, 2013 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 September 30, 2013

(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 384,393 20 %
Month-to-Month 216 36,552 2 % $ 8,979,903 3 % $ 8,979,903 3 %
Remainder of 2013 289 217,844 11 % 57,815,166 22 % 57,886,248 20 %
2014 612 228,146 12 % 45,403,980 18 % 45,455,010 16 %
2015 487 252,150 13 % 38,832,786 15 % 40,535,270 15 %
2016 338 84,138 5 % 31,379,039 12 % 36,536,531 13 %
2017 112 228,329 12 % 27,250,450 11 % 30,982,627 11 %
2018 86 114,447 6 % 18,914,460 7 % 22,343,777 8 %
2019 9 96,271 5 % 5,432,091 2 % 5,849,905 2 %
2020 20 115,930 6 % 8,150,441 3 % 10,384,144 4 %
2021 9 30,754 2 % 4,133,641 2 % 4,577,392 2 %
2022 6 40,087 2 % 7,138,173 3 % 10,406,465 4 %
2023 - Thereafter 21   68,928   4 % 3,959,640   2 % 4,581,453   2 %
Total 2,205   1,897,969   100 % $ 257,389,770   100 % $ 278,518,725   100 %
 

(a)

 

Leases that were auto-renewed prior to September 30, 2013 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 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.

(b)

Number of leases represents each agreement with a customer. A lease agreement could include multiple spaces and a customer could have multiple leases.

(c)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2013, multiplied by 12. For the month of September 2013, customer reimbursements were $22.9 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From October 1, 2011 through September 30, 2013, customer reimbursements under leases with separately metered power constituted between 7.2% and 9.7% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2013 was $274,859,776. Our annualized effective rent was greater than our annualized rent as of September 30, 2013 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 September 30, 2013, multiplied by 12.

CyrusOne
Investor Relations:
Idalia Rodriguez or Jamie Lillis, 972-350-0060
investorrelations@cyrusone.com

Source: CyrusOne Inc

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