Investors

Skip to content
<< Back
Oct 30, 2018

CyrusOne Reports Third Quarter 2018 Earnings

Signed $27 Million in Annualized GAAP Revenue and 15 Megawatts
Year-over-Year Revenue Growth of 18% and Adjusted EBITDA Growth of 16%

DALLAS--(BUSINESS WIRE)--Oct. 30, 2018-- CyrusOne Inc. (NASDAQ: CONE), a premier global data center REIT, today announced third quarter 2018 earnings.

Highlights

Category

     

3Q’18

     

% Change
vs. 3Q’17

Revenue       $206.6 million       18%
Net income / (loss)       $(42.4) million       n/m
Adjusted EBITDA       $110.8 million       16%
Normalized FFO       $78.5 million       10%
Net income / (loss) per diluted share       $(0.43)       n/m
Normalized FFO per diluted share       $0.79       -%
     

  Leased 15 megawatts (“MW”) and 114,000 colocation square feet (“CSF”) in the third quarter, totaling $27 million in annualized GAAP revenue
     

  Backlog of $89 million in annualized GAAP revenue as of the end of the third quarter, representing nearly $850 million in total contract value
     

  Closed acquisition of Zenium, establishing a presence in London and Frankfurt, the two largest data center markets in Europe
     

  Acquired 15 acres of land in Santa Clara, California, establishing a presence in a key West Coast market with an onsite power cogeneration facility
     
    -- Also acquired 40 acres of land in Northern Virginia (in addition to previously announced acquisition of 154,000 square foot powered shell) and 24 acres of land in Dallas to support continued strong growth in these markets
     

  Added seven Fortune 1000 companies as new customers (three through third quarter leasing, four through the acquisition), increasing the total number of Fortune 1000 customers to 208 as of the end of the quarter
     

  Raised nearly $400 million in net proceeds through a common stock offering of 6.7 million shares in late September and entered into a forward sale agreement with respect to an additional 2.5 million shares resulting in estimated net proceeds of nearly $150 million upon settlement by September 15, 2019
     

 

S&P Global Ratings upgraded issue-level credit ratings to investment grade ('BBB-'), reflecting the growth and diversification of the business, strong underlying industry fundamentals, conservative leverage, and a strong balance sheet

     

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

“We had another very strong quarter with many significant accomplishments, including closing Zenium, establishing a West Coast presence with the addition of Santa Clara, and achieving an investment grade credit rating, which is a goal that I have been focused on for a very long time,” said Gary Wojtaszek, president and chief executive officer of CyrusOne. “We are also thrilled to partner with ODATA to provide our customers a compelling alternative in Brazil and other markets in Latin America as we continue to develop solutions to meet their increasingly global needs.”

Third Quarter 2018 Financial Results

Revenue was $206.6 million for the third quarter, compared to $175.3 million for the same period in 2017, an increase of 18%. The increase in revenue was driven primarily by a 26% increase in occupied CSF and additional interconnection services.

Net loss was $(42.4) million for the third quarter, compared to net loss of $(55.1) million in the same period in 2017. Net loss for the third quarter included a $(36.6) million unrealized loss on the Company’s equity investment in GDS Holdings Limited (“GDS”), a leading data center provider in China, due to a decrease in GDS’s share price during the quarter. Net loss per diluted common share1 was $(0.43) in the third quarter of 2018, compared to net loss of $(0.61) per diluted common share in the same period in 2017.

Net operating income (NOI)2 was $128.9 million for the third quarter, compared to $112.3 million in the same period in 2017, an increase of 15%. Adjusted EBITDA3 was $110.8 million for the third quarter, compared to $95.9 million in the same period in 2017, an increase of 16%.

Normalized Funds From Operations (Normalized FFO)4 was $78.5 million for the third quarter, compared to $71.4 million in the same period in 2017, an increase of 10%. Normalized FFO per diluted common share was $0.79 in the third quarter of 2018, equivalent to third quarter 2017.

Leasing Activity

CyrusOne leased approximately 15 MW of power and 114,000 CSF in the third quarter, representing $2.2 million in monthly recurring rent, inclusive of the monthly impact of installation charges, or approximately $26.6 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 60 months (5.0 years), and the weighted average remaining lease term of CyrusOne’s portfolio is 59 months (taking into account the impact of the backlog), the longest in the Company’s history. Recurring rent churn6 for the third quarter was 2.6%, compared to 0.6% for the same period in 2017.

Portfolio Development and CSF Leased

In the third quarter, the Company completed construction on 185,000 CSF and 18 MW of power capacity across two projects in Northern Virginia and Dallas. CSF leased7 as of the end of the third quarter was 91% for stabilized properties8 and 86% overall. In addition, the Company has development projects underway in Northern Virginia, Dallas, the New York Metro area, Raleigh-Durham, Phoenix, San Antonio, Frankfurt and London that are expected to add approximately 393,000 CSF and 103 MW of power capacity.

Balance Sheet and Liquidity

As of September 30, 2018, the Company had gross asset value9 totaling approximately $6.5 billion, an increase of approximately 40% over gross asset value as of September 30, 2017. CyrusOne had $2.60 billion of long-term debt10, cash and cash equivalents of $61.0 million, and $1.7 billion available under its unsecured revolving credit facility as of September 30, 2018. Net debt10 was $2.57 billion as of September 30, 2018, representing approximately 28% of the Company's total enterprise value as of September 30, 2018 of $9.3 billion, or 5.4x Adjusted EBITDA for the last quarter annualized (after further adjusting to reflect a full quarter Adjusted EBITDA contribution from the Zenium data centers based on September results and the pro forma impact of equity proceeds assuming cash settlement under the forward sale agreement). Available liquidity11 was $1.92 billion as of September 30, 2018.

Dividend

On August 1, 2018, the Company announced a dividend of $0.46 per share of common stock for the third quarter of 2018. The dividend was paid on October 12, 2018, to stockholders of record at the close of business on September 28, 2018.

Additionally, today the Company is announcing a dividend of $0.46 per share of common stock for the fourth quarter of 2018. The dividend will be paid on January 11, 2019, to stockholders of record at the close of business on January 2, 2019.

Guidance

CyrusOne is reaffirming guidance for full year 2018. The annual guidance provided below represents forward-looking statements, which are based on current economic conditions, internal assumptions about the Company's existing customer base, and the supply and demand dynamics of the markets in which CyrusOne operates.

CyrusOne does not provide forward-looking guidance for GAAP financial measures (other than Revenue and Capital Expenditures) or reconciliations for the non-GAAP financial measures included in the annual guidance provided below due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for transaction, acquisition, integration and other related expenses, legal claim costs, asset impairments and loss on disposals and other charges in its reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

   

Category

2018 Guidance(1)

Total Revenue $820 - 830 million
Lease and Other Revenues from Customers $725 - 730 million
Metered Power Reimbursements $95 - 100 million
Adjusted EBITDA $454 - 459 million
Normalized FFO per diluted common share $3.25 - 3.30
Capital Expenditures $850 - 900 million
Development $845 - 890 million
Recurring $5 - 10 million
   

(1) Full year 2018 guidance includes the impact of the Zenium acquisition,

which closed in late August. Development capital expenditures include the
acquisition of land for future development.
 

Upcoming Conferences and Events

  • NAREIT’s REITworld on November 7-9 in San Francisco, CA
  • Credit Suisse Technology, Media & Telecom Conference on November 26-29 in Scottsdale, AZ
  • UBS Global Media and Communications Conference on December 3-4 in New York City
  • Raymond James Technology Investors Conference on December 3-5 in New York City

Conference Call Details

CyrusOne will host a conference call on October 31, 2018, at 11:00 AM Eastern Time (10:00 AM Central Time) to discuss its results for the third quarter of 2018. A live webcast of the conference call and the presentation to be made during the call will be available in the “Investors / Events & Presentations” section of the Company's website at http://investor.cyrusone.com/events.cfm. The U.S. conference call dial-in number is 1-844-492-3731, and the international dial-in number is 1-412-542-4121. A replay will be available one hour after the conclusion of the earnings call on October 31, 2018, through November 14, 2018. 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 10124746.

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.

Adoption of New Accounting Standard and Use of Non-GAAP Financial Measurements

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

This press release contains certain non-GAAP financial measures that management believes are helpful in understanding the Company's business, as further discussed within this press release. These financial measures, which include Funds From Operations, Normalized Funds From Operations, Adjusted EBITDA, Net Operating Income, and Net Debt should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of these non-GAAP financial measures to comparable GAAP financial measures have been included in the tables that accompany this release and are available in the Investor Relations section of www.cyrusone.com.

Management uses FFO, Normalized FFO, Adjusted EBITDA, and NOI as supplemental performance measures because they provide performance measures that, when compared year over year, capture trends in occupancy rates, rental rates and operating costs. The Company also believes that, as widely recognized measures of the performance of real estate investment trusts (REITs) and other companies, these measures will be used by investors as a basis to compare its operating performance with that of other companies. Other companies may not calculate these measures in the same manner, and, as presented, they may not be comparable to others. Therefore, FFO, Normalized FFO, NOI, and Adjusted EBITDA should be considered only as supplements to net income as measures of our performance. FFO, Normalized FFO, NOI, and Adjusted EBITDA should not be used as measures of liquidity or as indicative of funds available to fund the Company's cash needs, including the ability to pay dividends. These measures also should not be used as substitutes for cash flow from operating activities computed in accordance with U.S. GAAP. The Company believes that Net Debt provides a useful measure of liquidity and financial health.

1Net income / (loss) per diluted common share is defined as net income / (loss) divided by the weighted average diluted common shares outstanding for the period, which were 98.8 million for the third quarter of 2018.

2We use Net Operating Income ("NOI"), which is a non-GAAP financial measure commonly used in the REIT industry, as a supplemental performance measure. We use NOI as a supplemental performance measure because, when compared period over period, it captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of REITs, NOI is used by investors as a basis to evaluate REITs.

We calculate NOI as revenue less property operating expenses, each of which are presented in the accompanying consolidated statements of operations. Amortization of deferred leasing costs is presented in depreciation and amortization expenses, which is excluded from NOI. Sales and marketing expenses are not property-specific, rather these expenses support our entire portfolio. As a result, we have excluded these sales and marketing expenses from our NOI calculation, consistent with the treatment of general and administrative expenses, which also support our entire portfolio. Because the calculation of NOI excludes various expenses, the utility of NOI as a measure of our performance is limited. Other REITs may not calculate NOI in the same manner. Accordingly, our NOI may not be comparable to others. Therefore, NOI should be considered only as a supplement to revenue and to net income (loss) presented in accordance with GAAP as a measure of our performance. NOI should not be used as a measure of our liquidity or as indicative of funds available to fund our cash needs, including our ability to make distributions. NOI also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.

3Adjusted EBITDA, which is a non-GAAP financial measure, is defined as net income (loss) as defined by GAAP plus interest expense, income tax expense, depreciation and amortization, impairment losses and loss on disposals, transaction, acquisition, integration and other related expenses, legal claim costs, stock-based compensation expense, severance and management transition costs, loss on early extinguishment of debt, new accounting standards and regulatory compliance and the related system implementation costs, unrealized (gain) loss on marketable equity investment and other special items as appropriate. Other companies may not calculate Adjusted EBITDA in the same manner. Accordingly, the Company's Adjusted EBITDA as presented may not be comparable to others.

4We use funds from operations ("FFO") and normalized funds from operations ("Normalized FFO"), which are non-GAAP financial measures commonly used in the REIT industry, as supplemental performance measures. We use FFO and Normalized FFO as supplemental performance measures because, when compared period over period, they capture trends in occupancy rates, rental rates and operating costs. We also believe that, as widely recognized measures of the performance of REITs, FFO and Normalized FFO are used by investors as a basis to evaluate REITs.

We calculate FFO as net income (loss) computed in accordance with GAAP before real estate depreciation and amortization and asset impairments and gain or loss on disposal. While it is consistent with the definition of FFO promulgated by the National Association of Real Estate Investment Trusts ("NAREIT"), our computation of FFO may differ from the methodology for calculating FFO used by other REITs. Accordingly, our FFO may not be comparable to others.

We calculate Normalized FFO as FFO plus loss on early extinguishment of debt, unrealized (gain) loss on marketable equity investment, new accounting standards and regulatory compliance and the related system implementation costs, amortization of customer relationship intangibles, transaction, acquisition, integration and other related expenses, severance and management transition costs, legal claim costs and other special items as appropriate. Because the value of the customer relationship intangibles is inextricably connected to the real estate acquired, the Company 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 between different periods. Other REITs may not calculate Normalized FFO in the same manner. Accordingly, our Normalized FFO may not be comparable to others.

In addition, because FFO and Normalized FFO exclude real estate depreciation and amortization and real estate impairments, and capture neither the changes in the value of our properties that result from use or from market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO and Normalized FFO as measures of our performance is limited. Therefore, FFO and Normalized FFO should be considered only as supplements to net income (loss) presented in accordance with GAAP as measures of our performance. FFO and Normalized FFO should not be used as measures of our liquidity or as indicative of funds available to fund our cash needs, including our ability to make distributions. FFO and Normalized FFO also should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with GAAP.

5Annualized GAAP revenue is equal to monthly recurring rent, defined as average monthly contractual rent during the term of the lease plus the monthly impact of installation charges, multiplied by 12. It can be shown both inclusive and exclusive of the Company’s estimate of customer reimbursements for metered power.

6Recurring rent churn is calculated as any reduction in recurring rent due to customer terminations, service reductions or net pricing decreases as a percentage of rent at the beginning of the period, excluding any impact from metered power reimbursements or other usage-based billing.

7CSF leased is calculated by dividing CSF under signed leases for available space (whether or not the contract has commenced billing) by total CSF. CSF leased differs from CSF Occupied presented in the Data Center Portfolio table because the leased rate includes CSF for signed leases that have not commenced billing.

8Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% leased.

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

10Long-term debt and net debt exclude adjustments for deferred financing costs and bond premiums. Net debt, which is a non-GAAP financial measure, provides a useful measure of liquidity and financial health. The Company defines net debt as long-term debt and capital lease obligations, offset by cash and cash equivalents.

11Liquidity is calculated as cash, cash equivalents, and temporary cash investments on hand, plus the undrawn capacity on CyrusOne's revolving credit facility and the EUR construction facility, plus the impact of equity proceeds assuming cash settlement under the forward sale agreement.

About CyrusOne

CyrusOne (NASDAQ: CONE) is a high-growth real estate investment trust (REIT) specializing in highly reliable enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for approximately 1,000 customers, including 208 Fortune 1000 companies.

With a track record of meeting and surpassing the aggressive speed-to-market demands of hyperscale cloud providers, as well as the expanding IT infrastructure requirements of the enterprise, CyrusOne provides the flexibility, reliability, security, and connectivity that foster business growth. CyrusOne offers a tailored, customer service-focused platform and is committed to full transparency in communication, management, and service delivery throughout its 47 data centers worldwide. Additional information about CyrusOne can be found at www.CyrusOne.com.

Company Profile

CyrusOne (NASDAQ: CONE) specializes in highly reliable enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for approximately 1,000 customers, including 208 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 47 data centers worldwide.

  • Best-in-Class Sales Force
  • Flexible Solutions that Scale as Customers Grow
  • Massively Modular® Engineering with Data Hall Builds in 10-14 Weeks
  • Focus on Operational Excellence and Superior Customer Service
  • Proven Leading-Edge Technology Delivering Power Densities up to 900 Watts per Square Foot
  • National IX Replicates Enterprise Data Center Architecture
           

Corporate Headquarters

       

Senior Management

2101 Cedar Springs Road, Ste. 900         Gary Wojtaszek, President and CEO         Jonathan Schildkraut, EVP & Chief Strategy Officer
Dallas, Texas 75201         Diane Morefield, EVP & Chief Financial Officer         Kellie Teal-Guess, EVP & Chief People Officer
Phone: (972) 350-0060         Kevin Timmons, EVP & Chief Technology Officer         Robert Jackson, EVP General Counsel & Secretary

Website: www.cyrusone.com

        Tesh Durvasula, EVP & Chief Commercial Officer         John Hatem, EVP Design, Construction & Operations
                     

Analyst Coverage

                     

Firm

       

Analyst

       

Phone Number

Bank of America Merrill Lynch         Michael J. Funk         (646) 855-5664
Barclays         Amir Rozwadowski         (212) 526-4043
Berenberg Capital Markets         Nate Crossett         (646) 949-9030
BMO Capital Markets         Ari Klein         (212) 885-4103
Citi         Mike Rollins         (212) 816-1116
Cowen and Company         Colby Synesael         (646) 562-1355
Credit Suisse         Sami Badri         (212) 538-1727
Deutsche Bank         Matthew Niknam         (212) 250-4711
Guggenheim Securities, LLC         Robert Gutman         (212) 518-9148
Jefferies         Jonathan Petersen         (212) 284-1705
J.P. Morgan         Richard Choe         (212) 622-6708
KeyBanc Capital Markets         Jordan Sadler         (917) 368-2280
MoffettNathanson         Nick Del Deo, CFA         (212) 519-0025
Morgan Stanley         Simon Flannery         (212) 761-6432
MUFG Securities         Stephen Bersey         (212) 405-7032
RBC Capital Markets         Jonathan Atkin         (415) 633-8589
Raymond James         Frank G. Louthan IV         (404) 442-5867
Stifel         Erik Rasmussen         (212) 271-3461
SunTrust Robinson Humphrey         Greg Miller         (212) 303-4169
UBS         John C. Hodulik, CFA         (212) 713-4226
Wells Fargo         Eric Luebchow         (312) 630-2386
William Blair         Jim Breen, CFA         (617) 235-7513
                   

CyrusOne Inc.

Summary of Financial Data

(Dollars in millions, except per share amounts)

                   
      Three Months    
      September 30,   June 30,   September 30,   Growth %
      2018   2018   2017   Yr/Yr
Revenue     $ 206.6     $ 196.9     $ 175.3     18 %
Net operating income     128.9     128.0     112.3     15 %
Net income (loss)     (42.4 )   105.9     (55.1 )   n/m  
Funds from Operations ("FFO") - NAREIT defined     33.6     175.7     59.6     (44 )%
Normalized Funds from Operations ("Normalized FFO")     78.5     80.7     71.4     10 %
Weighted average number of common shares outstanding - diluted for Normalized FFO     99.5     99.4     90.9     9 %
Income (loss) per share - basic     $ (0.43 )   $ 1.07     $ (0.61 )   n/m  
Income (loss) per share - diluted     $ (0.43 )   $ 1.06     $ (0.61 )   n/m  
Normalized FFO per diluted common share     $ 0.79     $ 0.81     $ 0.79     %
Adjusted EBITDA     110.8     110.6     95.9     16 %
Adjusted EBITDA as a % of Revenue     53.6 %   56.2 %   54.7 %   (1.1) pts
                   
                   
     

 

 

As of

       
      September 30,   June 30,   September 30,   Growth %
      2018   2018   2017   Yr/Yr
Balance Sheet Data                  
Gross investment in real estate     $ 5,093.2     $ 4,145.6     $ 3,656.1     39 %
Accumulated depreciation     (973.4 )   (900.3 )   (722.1 )   35 %
Total investment in real estate, net     4,119.8     3,245.3     2,934.0     40 %
Cash and cash equivalents     61.0     116.2     24.7     n/m  
Market value of common equity     6,709.9     5,784.3     5,379.7     25 %
Long-term debt     2,595.6     2,200.0     2,037.7     27 %
Net debt     2,571.5     2,098.7     2,024.0     27 %
Total enterprise value     9,281.4     7,883.0     7,403.7     25 %
Net debt to LQA Adjusted EBITDA(a)     5.4x   4.7x   5.3x   0.1x
                   
Dividend Activity                  
Dividends per share     $ 0.46     $ 0.46     $ 0.42     10 %
                   
Portfolio Statistics                  
Data centers     47     43     44     7 %
Stabilized CSF (000)     3,396     3,097     2,494     36 %
Stabilized CSF % leased     91 %   92 %   93 %   (2) pts
Total CSF (000)     3,674     3,369     3,130     17 %
Total CSF % leased     86 %   88 %   82 %   4 pts
Total NRSF (000)     6,527     5,842     5,565     17 %
                           

(a) September 30, 2018 period adjusted to reflect a full quarter Adjusted EBITDA contribution from the Zenium data centers based on September results and the pro forma impact of equity proceeds assuming cash settlement under the forward sale agreement.

                                                   

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

                                                   
      Three Months                       Nine Months                    
      Ended September 30,       Change     Ended September 30,         Change
      2018     2017       $     %     2018       2017         $     %
Revenue:                                                                    
Lease and other revenues from customers     $ 177.6       $ 155.5         $ 22.1       14 %     $ 525.2       $ 440.8         $ 84.4       19 %
Metered power reimbursements     29.0       19.8         9.2       46 %     74.9       50.7         24.2       48 %
Revenue     $ 206.6       $ 175.3         $ 31.3       18 %     600.1       491.5         108.6       22 %
Operating expenses:                                                                    
Property operating expenses     77.7       63.0         14.7       23 %     214.4       174.9         39.5       23 %
Sales and marketing     4.3       3.9         0.4       10 %     14.0       13.1         0.9       7 %
General and administrative     19.3       17.5         1.8       10 %     57.2       50.6         6.6       13 %
Depreciation and amortization     84.0       68.7         15.3       22 %     236.2       188.1         48.1       26 %
Transaction, acquisition, integration and other related expenses     1.1       4.1         (3.0 )     (73 )%     3.4       6.6         (3.2 )     (48 )%
Impairment losses           54.4         (54.4 )     n/m             58.0         (58.0 )     n/m  
Total operating expenses     186.4       211.6         (25.2 )     (12 )%     525.2       491.3         33.9       7 %
Operating income     20.2       (36.3 )       56.5       n/m       74.9       0.2         74.7       n/m  
Interest expense     (25.8 )     (17.9 )       (7.9 )     44 %     (69.4 )     (48.0 )       (21.4 )     45 %
Unrealized gain (loss) on marketable equity investment     (36.6 )             (36.6 )     n/m       106.6               106.6       n/m  
Loss on early extinguishment of debt                         n/m       (3.1 )     (36.5 )       33.4       (92 )%
Net income (loss) before income taxes     (42.2 )     (54.2 )       12.0       n/m       109.0       (84.3 )       193.3       n/m  
Income tax expense     (0.2 )     (0.9 )       0.7       (78 )%     (2.0 )     (2.0 )             n/m  
Net income (loss)     $ (42.4 )     $ (55.1 )       $ 12.7       n/m       $ 107.0       $ (86.3 )       $ 193.3       n/m  
Income (loss) per share - basic     $ (0.43 )     $ (0.61 )       $ 0.18       n/m       $ 1.09       $ (0.99 )       $ 2.08       n/m  
Income (loss) per share - diluted     $ (0.43 )     $ (0.61 )       $ 0.18       n/m       $ 1.08       $ (0.99 )       $ 2.07       n/m  
                   

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

                   
      September 30,     December 31,     Change
      2018     2017     $     %
Assets                        
Investment in real estate:                        
Land     $ 125.2       $ 104.6       $ 20.6       20 %
Buildings and improvements     1,587.3       1,371.4       215.9       16 %
Equipment     2,452.5       1,813.9       638.6       35 %
Gross operating real estate     4,165.0       3,289.9       875.1       27 %
Less accumulated depreciation     (973.4 )     (782.4 )     (191.0 )     24 %
Net operating real estate     3,191.6       2,507.5       684.1       27 %
Construction in progress, including land under development     738.6       487.1       251.5       52 %
Land held for future development     189.6       63.8       125.8       n/m
Total investment in real estate, net     4,119.8       3,058.4       1,061.4       35 %
Cash and cash equivalents     61.0       151.9       (90.9 )     (60 )%
Rent and other receivables, net     104.5       87.2       17.3       20 %
Equity investment     282.2       175.6       106.6       61 %
Restricted cash                       n/m
Goodwill     455.1       455.1             %
Intangible assets, net     248.4       203.0       45.4       22 %
Other assets     222.1       180.9       41.2       23 %
Total assets     $ 5,493.1       $ 4,312.1       $ 1,181.0       27 %
Liabilities and equity                        
Debt, net     $ 2,576.2       $ 2,089.4       $ 486.8       23 %
Capital lease obligations     36.9       10.1       26.8       n/m
Lease financing arrangements     125.8       131.9       (6.1 )     (5 )%
Construction costs payable     160.5       115.5       45.0       39 %
Accounts payable and accrued expenses     96.8       97.9       (1.1 )     (1 )%
Dividends payable     49.7       41.8       7.9       19 %
Deferred revenue and prepaid rents     139.5       111.6       27.9       25 %
Deferred tax liability     68.7             68.7       n/m
Total liabilities     3,254.1       2,598.2       655.9       25 %
Stockholders' equity                        
Preferred stock, $.01 par value, 100,000,000 authorized; no shares issued or outstanding                       %
Common stock, $.01 par value, 500,000,000 shares authorized and 105,834,067 and 96,137,874 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively     1.1       1.0       0.1       %
Additional paid in capital     2,685.3       2,125.6       559.7       26 %
Accumulated deficit     (444.3 )     (486.9 )     42.6       (9 )%
Accumulated other comprehensive income (loss)     (3.1 )     74.2       (77.3 )     n/m
Total stockholders’ equity     2,239.0       1,713.9       525.1       31 %
Total liabilities and equity     $ 5,493.1       $ 4,312.1       $ 1,181.0       27 %
                               

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

                               
For the three months ended:     September 30,     June 30,     March 31,     December 31,     September 30,
      2018     2018     2018     2017     2017
Revenue:                              
Lease and other revenues from customers     $ 177.6       $ 172.4       $ 175.2       $ 161.6       $ 155.5  
Metered power reimbursements     29.0       24.5       21.4       18.9       19.8  
Revenue     206.6       196.9       196.6       180.5       175.3  
Operating expenses:                              
Property operating expenses     77.7       68.9       67.8       60.2       63.0  
Sales and marketing     4.3       4.4       5.3       3.9       3.9  
General and administrative     19.3       18.6       19.3       16.4       17.5  
Depreciation and amortization     84.0       77.6       74.6       70.8       68.7  
Transaction, acquisition, integration and other related expenses     1.1       0.4       1.9       5.3       4.1  
Impairment losses                             54.4  
Total operating expenses     186.4       169.9       168.9       156.6       211.6  
Operating income     20.2       27.0       27.7       23.9       (36.3 )
Interest expense     (25.8 )     (22.8 )     (20.8 )     (20.1 )     (17.9 )
Unrealized gain (loss) on marketable equity investment     (36.6 )     102.7       40.5              
Loss on early extinguishment of debt                 (3.1 )            
Net income (loss) before income taxes     (42.2 )     106.9       44.3       3.8       (54.2 )
Income tax expense     (0.2 )     (1.0 )     (0.8 )     (1.0 )     (0.9 )
Net income (loss)     $ (42.4 )     $ 105.9       $ 43.5       $ 2.8       $ (55.1 )
Income (loss) per share - basic     $ (0.43 )     $ 1.07       $ 0.45       $ 0.03       $ (0.61 )
Income (loss) per share - diluted     $ (0.43 )     $ 1.06       $ 0.45       $ 0.03       $ (0.61 )
                               

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

                               
      September 30,     June 30,     March 31,     December 31,     September 30,
      2018     2018     2018     2017     2017
Assets                              
Investment in real estate:                              
Land     $ 125.2       $ 107.4       $ 104.6       $ 104.6       $ 102.8  
Buildings and improvements     1,587.3       1,461.1       1,400.8       1,371.4       1,344.0  
Equipment     2,452.5       2,050.3       1,959.5       1,813.9       1,721.2  
Gross operating real estate     4,165.0       3,618.8       3,464.9       3,289.9       3,168.0  
Less accumulated depreciation     (973.4 )     (900.3 )     (836.4 )     (782.4 )     (722.1 )
Net operating real estate     3,191.6       2,718.5       2,628.5       2,507.5       2,445.9  
Construction in progress, including land under development     738.6       452.6       435.3       487.1       429.4  
Land held for future development     189.6       74.2       54.4       63.8       58.7  
Total investment in real estate, net     4,119.8       3,245.3       3,118.2       3,058.4       2,934.0  
Cash and cash equivalents     61.0       116.2       228.7       151.9       24.7  
Rent and other receivables, net     104.5       87.7       93.1       87.2       89.2  
Equity investment     282.2       318.8       216.1       175.6        
Goodwill     455.1       455.1       455.1       455.1       455.1  
Intangible assets, net     248.4       190.5       196.8       203.0       209.7  
Other assets     222.1       215.1       190.3       180.9       171.1  
Total assets     $ 5,493.1       $ 4,628.7       $ 4,498.3       $ 4,312.1       $ 3,883.8  
Liabilities and equity                              
Debt, net     $ 2,576.2       $ 2,179.5       $ 2,178.3       $ 2,089.4       $ 2,013.7  
Capital lease obligations     36.9       14.9       15.9       10.1       10.9  
Lease financing arrangements     125.8       127.8       131.3       131.9       133.3  
Construction costs payable     160.5       113.3       89.0       115.5       133.6  
Accounts payable and accrued expenses     96.8       91.4       66.7       97.9       71.5  
Dividends payable     49.7       46.5       46.4       41.8       39.6  
Deferred revenue and prepaid rents     139.5       127.1       116.1       111.6       104.8  
Deferred tax liability     68.7                          
Total liabilities     3,254.1       2,700.5       2,643.7       2,598.2       2,507.4  
Stockholders' equity                              
Preferred stock, $.01 par value, 100,000,000 authorized; no shares issued or outstanding                              
Common stock, $.01 par value, 500,000,000 shares authorized and 105,834,067 and 96,137,874 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively     1.1       1.0       1.0       1.0       0.9  
Additional paid in capital     2,685.3       2,281.5       2,268.0       2,125.6       1,826.0  
Accumulated deficit     (444.3 )     (353.0 )     (413.1 )     (486.9 )     (449.2 )
Accumulated other comprehensive income (loss)     (3.1 )     (1.3 )     (1.3 )     74.2       (1.3 )
Total stockholders' equity     2,239.0       1,928.2       1,854.6       1,713.9       1,376.4  
Total liabilities and equity     $ 5,493.1       $ 4,628.7       $ 4,498.3       $ 4,312.1       $ 3,883.8  
                         

CyrusOne Inc.

Condensed Consolidated Statements of Cash Flow

(Dollars in millions)

(Unaudited)

                         
     

Nine Months Ended
September 30,
2018

   

Nine Months Ended
September 30,
2017

   

Three Months Ended
September 30,
2018

   

Three Months Ended
September 30,
2017

Cash flows from operating activities:                        
Net income (loss)     $ 107.0       $ (86.3 )     $ (42.4 )     $ (55.1 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                        
Depreciation and amortization     236.2       188.1       84.0       68.7  
Interest expense amortization, net     3.0       3.4       1.2       1.2  
Stock-based compensation expense     13.0       11.6       4.6       3.9  
Provision for bad debt expense     0.6       0.5       0.2       0.2  
Unrealized (gain) loss on marketable equity investment     (106.6 )           36.6        
Loss on early extinguishment of debt     3.1       36.5              
Impairment losses           58.0             54.4  
Other           1.3             1.1  
Change in operating assets and liabilities:                        
Rent and other receivables, net and other assets     (55.4 )     (53.7 )     (18.6 )     (12.4 )
Accounts payable and accrued expenses     (23.4 )     3.5       (20.3 )     (1.7 )
Deferred revenue and prepaid rents     25.4       27.2       9.1       8.3  
Net cash provided by operating activities     202.9       190.1       54.4       68.6  
Cash flows from investing activities:                        
Asset acquisitions, primarily real estate, net of cash acquired     (461.8 )     (492.3 )     (461.8 )      
Investment in real estate     (631.2 )     (709.1 )     (308.5 )     (224.1 )
Net cash used in investing activities     (1,093.0 )     (1,201.4 )     (770.3 )     (224.1 )
Cash flows from financing activities:                        
Issuance of common stock, net     551.9       408.8       399.7       0.2  
Dividends paid     (132.3 )     (107.4 )     (45.7 )     (38.3 )
Proceeds from debt, net     1,665.1       1,946.0       679.7       180.0  
Payments on debt     (1,272.7 )     (1,212.1 )     (370.0 )      
Payments on capital lease obligations and lease financing arrangements     (7.8 )     (7.3 )     (2.7 )     (2.5 )
Tax payment upon exercise of equity awards     (5.1 )     (6.6 )     (0.4 )      
Net cash provided by financing activities     799.1       1,021.4       660.6       139.4  
Effect of exchange rate changes on cash, cash equivalents and restricted cash     0.1            

0.1

       
Net increase (decrease) in cash, cash equivalents and restricted cash     (90.9 )     10.1      

(55.2

)     (16.1 )
Cash, cash equivalents and restricted cash at beginning of period     151.9       14.6       116.2       40.8  
Cash, cash equivalents and restricted cash at end of period     $ 61.0       $ 24.7       $

61.0

      $ 24.7  
                         
Supplemental disclosure of cash flow information:                        
Cash paid for interest, net of amounts capitalized of $15.9 million and $12.4 million in 2018 and 2017, respectively     $ 98.5       $ 58.2       $ 45.2       $ 30.7  
Cash paid for income taxes     3.3       1.9       0.4       0.3  
Non-cash investing and financing activities:                        
Construction costs and other payables     160.5       133.6       160.5       133.6  
Dividends payable     49.7       39.6       49.7       39.6  
Debt assumed     86.3             86.3        
Capital lease obligation assumed     25.0             25.0        
Real estate additions from entering into and modifying capital leases     4.6             (2.0 )      
Transfer of land held for future development to construction in progress     13.5       12.6       4.2       6.0  
Transfer of construction in progress to gross operating real estate     554.7       733.9       217.0       318.3  
                       

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

                       
      Nine Months Ended               Three Months Ended
      September 30,     Change   September 30,     June 30,     March 31,     December 31,     September 30,
      2018     2017     $     % 2018     2018     2018     2017     2017
Net Operating Income                                                    
Revenue     $ 600.1       $ 491.5       $ 108.6       22 %   $ 206.6       $ 196.9       $ 196.6       $ 180.5       $ 175.3  
Property operating expenses     214.4       174.9       39.5       23 %   77.7       68.9       67.8       60.2       63.0  
Net Operating Income (NOI)     $ 385.7       $ 316.6       $ 69.1       22 %   $ 128.9       $ 128.0       $ 128.8       $ 120.3       $ 112.3  
NOI as a % of Revenue     64.3 %     64.4 %               62.4 %     65.0 %     65.5 %     66.6 %     64.1 %
Reconciliation of Net Income (Loss) to Adjusted EBITDA:                                                    
Net income (loss)     $ 107.0       $ (86.3 )     $ 193.3       n/m     $ (42.4 )     $ 105.9       $ 43.5       $ 2.8       $ (55.1 )
Interest expense     69.4       48.0       21.4       45 %   25.8       22.8       20.8       20.1       17.9  
Income tax expense     2.0       2.0             n/m     0.2       1.0       0.8       1.0       0.9  
Depreciation and amortization     236.2       188.1       48.1       26 %   84.0       77.6       74.6       70.8       68.7  
Impairment losses and loss on disposals           59.3       (59.3 )     n/m                       0.2       55.5  
EBITDA (NAREIT definition)(a)     $ 414.6       $ 211.1       203.5       96 %   $ 67.6       $ 207.3       $ 139.7       $ 94.9       $ 87.9  
                                                     
Transaction, acquisition, integration and other related expenses     3.4       5.3       (1.9 )     (36 )%   1.1       0.4       1.9       5.1       3.0  
Legal claim costs     0.4       1.1       (0.7 )     (64 )%   0.1       0.1       0.2             0.3  
Stock-based compensation expense     13.0       11.6       1.4       12 %   4.6       4.5       3.9       3.1       3.9  
Severance and management transition costs     0.7       0.5       0.2       40 %               0.7              
Loss on early extinguishment of debt     3.1       36.5       (33.4 )     n/m                 3.1              
New accounting standards and regulatory compliance and the related system implementation costs     2.3       1.3       1.0       n/m     0.8       1.0       0.5       1.1       0.8  
Unrealized (gain) loss on marketable equity investment     (106.6 )           (106.6 )     n/m     36.6       (102.7 )     (40.5 )            
Adjusted EBITDA     $ 330.9       $ 267.4       63.5       24 %   $ 110.8       $ 110.6       $ 109.5       $ 104.2       $ 95.9  
Adjusted EBITDA as a % of Revenue     55.1 %     54.4 %               53.6 %     56.2 %     55.7 %     57.7 %     54.7 %
     
(a)   We calculate Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) as GAAP net income (loss) plus interest expense, income tax expense, depreciation and amortization plus or minus losses and gains on the disposition of depreciable property, plus impairment losses. While it is consistent with the definition of EBITDAre promulgated by the National Association of Real Estate Investment Trusts ("NAREIT"), our computation of EBITDAre may differ from the methodology for calculating EBITDAre used by other REITs. Accordingly, our EBITDAre may not be comparable to others.
                                     

CyrusOne Inc.

Reconciliation of Net Income (Loss) to Net Operating Income

(Dollars in millions)

(Unaudited)

                                     
      Three Months Ended                 Nine Months Ended            
      September 30,     Change     September 30,     Change
    2018     2017     $     %     2018     2017     $     %
Net Income (Loss)     $ (42.4 )     $ (55.1 )     $ 12.7       n/m     $ 107.0       $ (86.3 )     $ 193.3       n/m
Sales and marketing expenses     4.3       3.9       0.4       10 %     14.0       13.1       0.9       7 %
General and administrative expenses     19.3       17.5       1.8       10 %     57.2       50.6       6.6       13 %
Depreciation and amortization expenses     84.0       68.7       15.3       22 %     236.2       188.1       48.1       26 %
Transaction, acquisition, integration and other related expenses     1.1       4.1       (3.0 )     (73 )%     3.4       6.6       (3.2 )     (48 )%
Impairment losses           54.4       (54.4 )     n/m           58.0       (58.0 )     n/m
Interest expense     25.8       17.9       7.9       44 %     69.4       48.0       21.4       45 %
Unrealized (gain) loss on marketable equity investment     36.6             36.6       n/m     (106.6 )           (106.6 )     n/m
Loss on early extinguishment of debt                       %     3.1       36.5       (33.4 )     (92 )%
Income tax expense     0.2       0.9       (0.7 )     (78 )%     2.0       2.0             %
Net Operating Income     $ 128.9       $ 112.3       $ 16.6       15 %     $ 385.7       $ 316.6       $ 69.1       22 %
                         

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

                         
      Nine Months Ended                 Three Months Ended
      September 30,     Change     September 30,     June 30,     March 31,     December 31,     September 30,
    2018     2017     $     %     2018     2018     2018     2017     2017
Reconciliation of Net Income (Loss) to FFO and Normalized FFO:                                                      
Net income (loss)     $ 107.0       $ (86.3 )     $ 193.3       n/m     $ (42.4 )     $ 105.9       $ 43.5       $ 2.8       $ (55.1 )
Real estate depreciation and amortization     212.5       164.3       48.2       29 %     76.0       69.8       66.7       62.6       60.3  
Impairment losses           58.0       (58.0 )     n/m                             54.4  
Funds from Operations ("FFO") - NAREIT defined     $ 319.5       $ 136.0       $ 183.5       135 %     $ 33.6       $ 175.7       $ 110.2       $ 65.4       $ 59.6  
                                                       
Loss on early extinguishment of debt     3.1       36.5       (33.4 )     n/m                 3.1              
Unrealized (gain) loss on marketable equity investment     (106.6 )           (106.6 )     n/m     36.6       (102.7 )     (40.5 )            
New accounting standards and regulatory compliance and the related system implementation costs     2.3       1.3       1.0       n/m     0.8       1.0       0.5       1.1       0.8  
Amortization of customer relationship intangibles     18.6       18.5       0.1       1 %     6.3       6.2       6.1       6.6       6.6  
Transaction, acquisition, integration and other related expenses     3.4       6.6       (3.2 )     (48 )%     1.1       0.4       1.9       5.3       4.1  
Severance and management transition costs     0.7       0.5       0.2       40 %                 0.7              
Legal claim costs     0.4       1.1       (0.7 )     (64 )%     0.1       0.1       0.2             0.3  
Normalized Funds from Operations (Normalized FFO)     $ 241.4       $ 200.5       $ 40.9       20 %     $ 78.5       $ 80.7       $ 82.2       $ 78.4       $ 71.4  
Normalized FFO per diluted common share     $ 2.45       $ 2.28       $ 0.17       7 %     $ 0.79       $ 0.81       $ 0.85       $ 0.84       $ 0.79  
Weighted average diluted common shares outstanding     98.4       88.0       10.4       12 %     99.5       99.4       96.6       93.5       90.9  
                                                       
Additional Information:                                                      
Amortization of deferred financing costs and bond premium     2.9       3.4       (0.5 )     (15 )%     1.1       1.1       0.7       0.9       1.2  
Stock-based compensation expense     13.0       11.6       1.4       12 %     4.6       4.5       3.9       3.1       3.9  
Non-real estate depreciation and amortization     5.1       5.3       (0.2 )     (4 )%     1.7       1.6       1.8       1.6       1.8  
Straight line rent adjustments(a)     (18.8 )     (24.9 )     6.1       (24 )%     (5.8 )     (5.8 )     (7.2 )     (7.4 )     (6.4 )
Deferred revenue, primarily installation revenue(b)     13.2       19.3       (6.1 )     (32 )%     7.6       2.4       3.2       3.8       12.9  
Leasing commissions     (10.2 )     (13.8 )     3.6       (26 )%     (3.3 )     (3.7 )     (3.2 )     (3.5 )     (6.1 )
Recurring capital expenditures     (8.4 )     (2.8 )     (5.6 )     n/m     (3.7 )     (2.3 )     (2.4 )     (1.6 )     (0.6 )
               
          (a)  

Straight line rent adjustments:

              Represents the difference between revenue recognized on a straight line basis under GAAP over the term of the lease compared to the contractual rental payments. Lease agreements typically include payments that escalate over the term of the contract or, to a lesser extent, a ramp period.
           
          (b)  

Deferred revenue, primarily installation revenue:

              Represents payments received from customers in excess of revenue recognized under GAAP. This primarily relates to specific customer-requested buildouts that CyrusOne does not include in its basic data center design. The company charges customers up front for these buildouts rather than incorporating into rent and billing them over time. The cash payments for these buildouts are non-recurring, and may vary significantly from quarter to quarter, but revenue is amortized over the life of the lease.
 

CyrusOne Inc.

Market Capitalization Summary, Reconciliation of Net Debt, and Debt Schedule

(Unaudited)

 

Market Capitalization (as of September 30, 2018)

                             
          (dollars in millions)    

Shares or
Equivalents
Outstanding

   

Market Price
as of
September 30, 2018

   

Market Value
Equivalents
(in millions)

          Common shares     105,834,067       $ 63.40       $ 6,709.9
          Net Debt                 2,571.5
          Total Enterprise Value (TEV)                 $ 9,281.4
                       

Reconciliation of Net Debt

                       
                September 30,     June 30,
          (dollars in millions)     2018     2018
          Long-term debt(a)     $ 2,595.6       $ 2,200.0  
          Capital lease obligations     36.9       14.9  
          Less:            
          Cash and cash equivalents     (61.0 )     (116.2 )
          Net Debt     $ 2,571.5       $ 2,098.7  
                               
     

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

                                     

Debt Schedule (as of September 30, 2018)

                                     
          (dollars in millions)                          
          Long-term debt:     Amount     Interest Rate         Maturity Date
          Revolving credit facility     $         L + 145bps         March 2023(a)
          Term loan     1,000.0         L + 140bps(b)         March 2023
          Term loan     300.0         L + 170bps(c)         March 2025
          EUR construction facility     95.6         E + 325bps(d)         June 2023
          5.000% senior notes due 2024, excluding bond premium     700.0         5.000%         March 2024
          5.375% senior notes due 2027, excluding bond premium     500.0         5.375%         March 2027
          Total long-term debt(e)     $ 2,595.6         4.36%          
                                     
          Weighted average term of debt:    

5.7

 

years

         
                               
         

(a)  Assuming exercise of one-year extension option.

         

(b)  Interest rate as of September 30, 2018: 3.64%.

         

(c)  Interest rate as of September 30, 2018: 3.95%.

         

(d)  Interest rate as of September 30, 2018: 3.25%.

         

(e)  Excludes adjustment for deferred financing costs.

             

Interest Summary

    Three Months Ended      
      September 30,     June 30,     September 30,     Growth %
(dollars in millions)     2018     2018     2017     Yr/Yr
Interest expense and fees     $ 30.2       $ 27.0       $ 21.0       44 %
Amortization of deferred financing costs and bond premium     1.1       1.1       1.2       (8 )%
Capitalized interest     (5.5 )     (5.3 )     (4.3 )     28 %
Total interest expense     $ 25.8       $ 22.8       $ 17.9       44 %
                   

CyrusOne Inc.

Colocation Square Footage (CSF) and CSF Leased

(Unaudited)

                   
      As of September 30, 2018     As of June 30, 2018     As of September 30, 2017

Market

   

Colocation
Space (CSF)(a)
(000)

    CSF
Leased(b)
   

Colocation
Space (CSF)(a)
(000)

    CSF
Leased(b)
   

Colocation
Space (CSF)(a)
(000)

   

CSF
Leased(b)

Northern Virginia     780       94 %     673       98 %     559       86 %
Dallas     621       69 %     550       81 %     506       82 %
Phoenix     509       100 %     509       92 %     438       83 %
Cincinnati     402       93 %     402       93 %     404       91 %
Houston     308       74 %     308       76 %     308       76 %
San Antonio     300       100 %     300       100 %     300       80 %
New York Metro     218       83 %     218       82 %     218       83 %
Chicago     213       67 %     213       67 %     213       61 %
Austin     106       78 %     106       72 %     106       68 %
Raleigh-Durham     76       88 %     76       88 %     65       84 %
Total - Domestic     3,533       86 %     3,356       88 %     3,117       82 %
London     77       99 %     10       94 %     10       97 %
Frankfurt     62       98 %           %           %
Singapore     3       22 %     3       22 %     3       22 %
Total - International     142       97 %     13       76 %     13       79 %
Total - Portfolio     3,674       86 %     3,369       88 %     3,130       82 %
Stabilized Properties(c)     3,396       91 %     3,097       92 %     2,494       93 %
     
(a)   CSF represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment.
(b)   CSF Leased is calculated by dividing CSF under signed leases for colocation space (whether or not the lease has commenced billing) by total CSF.
(c)   Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% leased.
 

CyrusOne Inc.

2018 Guidance

           

Category

       

2018 Guidance(1)

Total Revenue         $820 - 830 million
Lease and Other Revenues from Customers         $725 - 730 million
Metered Power Reimbursements         $95 - 100 million
Adjusted EBITDA         $454 - 459 million
Normalized FFO per diluted common share         $3.25 - 3.30
Capital Expenditures         $850 - 900 million
Development         $845 - 890 million
Recurring         $5 - 10 million
           

(1)Full year 2018 guidance includes the impact of the Zenium acquisition,

which closed in late August. Development capital expenditures include the
acquisition of land for future development.
 

CyrusOne is reaffirming guidance for full year 2018. The annual guidance provided above represents forward-looking statements, which are based on current economic conditions, internal assumptions about the Company's existing customer base and the supply and demand dynamics of the markets in which CyrusOne operates.

CyrusOne does not provide forward-looking guidance for GAAP financial measures (other than Revenue and Capital Expenditures) or reconciliations for the non-GAAP financial measures included in the annual guidance provided above due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for transaction, acquisition, integration and other related expenses, legal claim costs, asset impairments and loss on disposals and other charges in its reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

                                         

CyrusOne Inc.

Data Center Portfolio

As of September 30, 2018

(Unaudited)

                                         
                        Operating Net Rentable Square Feet (NRSF)(a)      

Powered
Shell
Available
for Future
Development
(NRSF)(k)
(000)

     

Available
Critical
Load
Capacity
(MW)(l)

Stabilized Properties(b)

      Metro
Area
     

Annualized
Rent(c)
($000)

     

Colocation
Space
(CSF)(d)
(000)

     

CSF
Occupied(e)

     

CSF
Leased(f)

     

Office &
Other(g)
(000)

     

Office &
Other
Occupied(h)

     

Supporting
Infrastructure(i)
(000)

     

Total(j)
(000)

           
Dallas - Carrollton       Dallas       $ 75,863       305       89 %       89 %       82       44 %       111       498      

-

      38
Houston - Houston West I       Houston       42,688       112       97 %       97 %       11       100 %       37       161       3       28
Northern Virginia - Sterling II       Northern Virginia       35,775       159       100 %       100 %       9       100 %       55       223      

-

      30
San Antonio III       San Antonio       34,328       132       100 %       100 %       9       100 %       43       184      

-

      24
Cincinnati - 7th Street***       Cincinnati       33,451       197       94 %       94 %       6       100 %       175       378       46       16
Northern Virginia - Sterling V       Northern Virginia       31,775       383       78 %       88 %       11       100 %       138       532       64       51
Somerset I       New York Metro       29,883       97       85 %       85 %       27       89 %       89       213       203       11
Dallas - Lewisville*       Dallas       28,750       114       77 %       77 %       11       84 %       54       180      

-

      21
Totowa - Madison**       New York Metro       26,670       51       89 %       91 %       22       100 %       59       133      

-

      6
Chicago - Aurora I       Chicago       26,171       113       98 %       98 %       34       100 %       223       371       27       71
Cincinnati - North Cincinnati       Cincinnati       24,478       65       99 %       99 %       45       79 %       53       163       65       14
Phoenix - Chandler II       Phoenix       24,037       74       100 %       100 %       6       38 %       26       105      

-

      12

Wappingers Falls I**

      New York Metro       22,148       37       90 %       91 %       20       99 %       15       72      

-

      3
San Antonio I       San Antonio       22,038       44       100 %       100 %       6       83 %       46       96       11       12
Houston - Houston West II       Houston       21,414       80       77 %       78 %       4       88 %       55       139       11       12
Phoenix - Chandler I       Phoenix       20,784       74       100 %       100 %       35       12 %       39       147       31       16
Phoenix - Chandler III       Phoenix       20,299       68       100 %       100 %       2      

-

%

      30       101      

-

      14
Northern Virginia - Sterling I       Northern Virginia       19,528       78       100 %       100 %       6       77 %       49       132      

-

      12
Raleigh-Durham I       Raleigh-Durham       18,137       76       88 %       88 %       13       100 %       82       171       246       12
Houston - Galleria       Houston       17,951       63       59 %       59 %       23       51 %       25       112      

-

      14
Phoenix - Chandler VI       Phoenix       17,387       148       99 %       99 %       6       100 %       32       186       10       24
Northern Virginia - Sterling III       Northern Virginia       16,918       79       100 %       100 %       7       100 %       34       120      

-

      15
Frankfurt I       Frankfurt       16,127       53       97 %       97 %       8       91 %       57       118      

-

      18
Austin II       Austin       15,571       44       95 %       95 %       2       100 %       22       68      

-

      5
San Antonio II       San Antonio       14,490       64       100 %       100 %       11       100 %       41       117      

-

      12
Florence       Cincinnati       13,544       53       99 %       99 %       47       87 %       40       140      

-

      9
Austin III       Austin       13,508       62       55 %       66 %       15       98 %       21       98       67       6
Phoenix - Chandler IV       Phoenix       11,551       73       100 %       100 %       3       100 %       27       103      

-

      12
San Antonio IV       San Antonio       11,250       60       100 %       100 %       4      

-

%

      27       91      

-

      12
Cincinnati - Hamilton*       Cincinnati       10,673       47       74 %       74 %       1       100 %       35       83      

-

      10
Northern Virginia - Sterling IV       Northern Virginia       9,381       81       100 %       100 %       7       100 %       34       122      

-

      15
Phoenix - Chandler V       Phoenix       8,551       72       100 %       100 %       1       95 %       16       89       94       12

London II**

      London       8,211       49       100 %       100 %       10       100 %       93       151      

36

      15

London I**

      London       6,808       18       100 %       100 %       12       56 %       39       69      

20

      7
London - Great Bridgewater**       London       6,245       10       94 %       94 %      

-

     

-

%

      1       11      

-

      1
Cincinnati - Mason       Cincinnati       5,266       34       100 %       100 %       26       98 %       17       78      

-

      4
Stamford - Riverbend**       New York Metro       5,207       20       23 %       23 %      

-

     

-

%

      8       28      

-

      2
Houston - Houston West III       Houston       5,079       53       32 %       36 %       10       100 %       32       95       209       6
Norwalk I**       New York Metro       4,242       13       99 %       99 %       4       68 %       41       58       87       2
Chicago - Lombard       Chicago       2,421       14       62 %       62 %       4       100 %       12       30       29       3
Stamford - Omega**       New York Metro       1,238      

-

     

-

%

     

-

%

      19       84 %       4       22      

-

     

-

Cincinnati - Blue Ash*       Cincinnati       652       6       36 %       36 %       7       100 %       2       15      

-

      1
Totowa - Commerce**       New York Metro       567      

-

     

-

%

     

-

%

      20       38 %       6       26      

-

     

-

South Bend - Crescent*       Chicago       566       3       41 %       41 %      

-

     

-

%

      5       9       11       1
Singapore - Inter Business Park**       Singapore       384       3       22 %       22 %      

-

     

-

%

     

-

      3      

-

      1
Frankfurt II       Frankfurt       320       9       100 %       100 %       1       100 %       49       59       58       11
South Bend - Monroe       Chicago       123       6       23 %       23 %      

-

     

-

%

      6       13       4       1
Stabilized Properties - Total               $ 782,450       3,396       89 %       91 %       608       76 %       2,107       6,110       1,333       617
 
CyrusOne Inc.
Data Center Portfolio
As of September 30, 2018
(Unaudited)
                                                                                         
                        Operating Net Rentable Square Feet (NRSF)(a)      

Powered
Shell
Available
for Future
Development
(NRSF)(k)
(000)

     

Available
Critical
Load
Capacity
(MW)(l)

       

Metro
Area

     

Annualized
Rent(c)
($000)

     

Colocation
Space
(CSF)(d)
(000)

     

CSF
Occupied(e)

     

CSF
Leased(f)

     

Office &
Other(g)
(000)

     

Office &
Other
Occupied(h)

     

Supporting
Infrastructure(i)
(000)

     

Total(j)
(000)

           

Stabilized Properties - Total

              $ 782,450       3,396       89 %       91 %       608       76 %       2,107       6,110       1,333       617
                                                                                         

Pre-Stabilized Properties(b)

                                                                                       
Dallas - Carrollton (DH #6)       Dallas       6,890       75       76 %       76 %      

-

     

-

%

      21       96      

-

      6
Chicago - Aurora II (DH #1)       Chicago       1,438       77       26 %       28 %       45      

-

%

      14       136       272       16
Dallas - Carrollton (DH #7)       Dallas       840       48       19 %       19 %      

-

     

-

%

     

-

      48      

-

      6
Dallas - Allen (DH #1)       Dallas      

-

      79      

-

%

     

-

%

     

-

     

-

%

      58       137       158       6
All Properties - Total               $ 791,618       3,674       85 %       86 %       653       71 %       2,200       6,527       1,762       651
     
*   Indicates properties in which we hold a leasehold interest in the building shell and land. All data center infrastructure has been constructed by us and is owned by us.
**   Indicates properties in which we hold a leasehold interest in the building shell, land, and all data center infrastructure.
***   The information provided for the Cincinnati - 7th Street property includes data for two facilities, one of which we lease and one of which we own.
     
(a)   Represents the total square feet of a building under lease or available for lease based on engineers' drawings and estimates but does not include space held for development or space used by CyrusOne.
(b)   Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% leased. Pre-stabilized properties include data halls that have been in service for less than 24 months and are less than 85% leased.
(c)   Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2018, multiplied by 12. For the month of September 2018, customer reimbursements were $119.5 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, 2016 through September 30, 2018, customer reimbursements under leases with separately metered power constituted between 10.2% and 15.1% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2018 was $802.7 million. Our annualized effective rent was greater than our annualized rent as of September 30, 2018 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
(d)   CSF represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment.
(e)   Percent occupied is determined based on CSF billed to customers under signed leases as of September 30, 2018 divided by total CSF. Leases signed but that have not commenced billing as of September 30, 2018 are not included.
(f)   Percent leased is calculated by dividing CSF under signed leases for colocation space (whether or not the lease has commenced billing) by total CSF.
(g)   Represents the NRSF at an operating facility that is currently leased or readily available for lease as space other than CSF, which is typically office and other space.
(h)   Percent occupied is determined based on Office & Other space being billed to customers under signed leases as of September 30, 2018 divided by total Office & Other space. Leases signed but not commenced as of September 30, 2018 are not included.
(i)   Represents infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.
(j)   Represents the NRSF at an operating facility that is currently leased or readily available for lease. This excludes existing vacant space held for development.
(k)   Represents space that is under roof that could be developed in the future for operating NRSF, rounded to the nearest 1,000.
(l)   Critical load capacity represents the aggregate power available for lease and exclusive use by customers expressed in terms of megawatts. The capacity reported is for non-redundant megawatts, as we can develop flexible solutions to our customers at multiple resiliency levels. Does not sum to total due to rounding.
 

CyrusOne Inc.

NRSF Under Development

As of September 30, 2018

(Dollars in millions)

(Unaudited)

                                     
                        NRSF Under Development(a)           Under Development Costs
Facilities        

Metropolitan

Area

     

Estimated
Completion
Date

   

Colocation
Space

(CSF)
(000)

   

Office &
Other
(000)

   

Supporting

Infrastructure
(000)

   

Powered Shell(b)
(000)

   

Total
(000)

   

Critical
Load MW
Capacity(c)

   

Actual
to

Date(d)

   

Estimated

Costs to

Completion(e)

      Total
Dallas - Carrollton         Dallas       4Q'18    

-

     

-

     

-

     

-

     

-

      6.0       $ 10       7-9       17-19
Somerset II         New York Metro       4Q'18     9      

-

     

-

     

-

      9       2.0         1       11-13       12-14
San Antonio IV         San Antonio       4Q'18    

-

      8      

-

     

-

      8      

-

       

-

      1-2       1-2
London I         London       4Q'18     7      

-

      19      

-

      26       3.0         5       0-1       5-6
Frankfurt II         Frankfurt       4Q'18     36       5       23      

-

      64       14.0         31       9-13       40-44
Dallas - Allen         Dallas       1Q'19    

-

      25       21      

-

      46      

-

       

-

      7-9       7-9
Northern Virginia - Sterling V         Northern Virginia       1Q'19    

-

     

-

      7      

-

      7       12.0         2       43-46       45-48
Phoenix - Chandler VII         Phoenix       1Q'19    

-

     

-

     

-

      269       269      

-

        2       57-63       59-65
Northern Virginia - Sterling VI         Northern Virginia       1Q'19     272       30       52       71       425       57.0         60       241-273       301-333
Northern Virginia - Sterling VIII         Northern Virginia       1Q'19     61       4       25       60       150       6.0         1       50-56       51-57
Raleigh-Durham I         Raleigh-Durham       1Q'19     7      

-

     

-

     

-

      7       3.0        

-

      7-9       7-9
Northern Virginia - Sterling VII         Northern Virginia       3Q'19    

-

     

-

     

-

      93       93      

-

       

-

      33-37       33-37
Total                       393       73       145       493       1,104       103.0       $ 112       466-531       578-643
 
(a)   Represents NRSF at a facility for which activities have commenced or are expected to commence in the next 2 quarters to prepare the space for its intended use. Estimates and timing are subject to change. May not sum to total due to rounding.
(b)   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 September 30, 2018. 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.
                     

Capital Expenditures - Investment in Real Estate

        Three months ended         Nine months ended
          March 31,         June 30,         September 30,         September 30,
(dollars in millions)         2018         2018         2018         2018
Capital expenditures - investment in real estate         $142.8         $175.2         $304.8         $622.8
           

CyrusOne Inc.

Land Available for Future Development (Acres)

As of September 30, 2018

(Unaudited)

           
        As of
Market       September 30, 2018
Atlanta       44    
Austin       22    
Chicago       23    
Cincinnati       98    
Dallas       57    
Frankfurt       7    
Houston       20    
Northern Virginia       40    
Phoenix       96    
Quincy, Washington       48    
Santa Clara       15    
Total Available(a)       469    
Book Value of Total Available       $

189.6

million

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

 
                                         

CyrusOne Inc.

Leasing Statistics - Lease Signings

As of September 30, 2018

(Unaudited)

                                         
Period      

Number
of Leases(a)

     

Total CSF
Signed(b)

     

Total kW
Signed(c)

     

Total MRR
Signed (000)(d)

     

Weighted
Average
Lease Term(e)

3Q'18       500       114,000       15,118       $2,218       60
Prior 4Q Avg.       438       192,000       26,178       $3,129       87
2Q'18       506       305,000       51,919       $5,453       143
1Q'18       439       226,000       29,364       $3,370       77
4Q'17       395       86,000       8,600       $1,463       61
3Q'17       411       151,000       14,830       $2,228       68
     
(a)   Number of leases represents each agreement with a customer. A lease agreement could include multiple spaces, and a customer could have multiple leases.
(b)   CSF represents the NRSF at an operating facility that is leased as colocation space, where customers locate their servers and other IT equipment.
(c)   Represents maximum contracted kW that customers may draw during lease period. Additionally, we can develop flexible solutions for our customers at multiple resiliency levels, and the kW signed is unadjusted for this factor.
(d)   Monthly recurring rent is defined as the average monthly contractual rent during the term of the lease. It includes the monthly impact of installation charges of approximately $0.3 million in 2Q'18 and 3Q'18 and $0.2 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 September 30, 2018

(Dollars in thousands)

(Unaudited)

                                                 

New MRR(a) Signed ($000)

                                                 
      4Q'16     1Q'17     2Q'17     3Q'17     4Q'17     1Q'18     2Q'18     3Q'18
Existing Customers     $ 1,332       $ 2,247       $ 2,322       $ 1,418       $ 1,063       $ 3,149       $ 4,429       $ 2,072  
New Customers     $ 258       $ 385       $ 145       $ 810       $ 400       $ 221       $ 1,024       $ 146  
Total     $ 1,590       $ 2,632       $ 2,467       $ 2,228       $ 1,463       $ 3,370       $ 5,453       $ 2,218  
                                                 
% from Existing Customers       84 %       85 %       94 %       64 %       73 %       93 %       81 %       93 %
     
(a)   Monthly recurring rent is defined as the average monthly contractual rent during the term of the lease. It includes the monthly impact of installation charges of approximately $0.3 million in 2Q'18 and 3Q'18, $0.2 million in 2Q'17-1Q'18 and $0.1 million in each of the other quarters.
 

CyrusOne Inc.

Customer Sector Diversification(a)

As of September 30, 2018

(Unaudited)

                               
      Principal Customer Industry     Number of
Locations
    Annualized
Rent(b) (000)
    Percentage of
Portfolio
Annualized
Rent(c)
    Weighted
Average
Remaining
Lease Term in
Months(d)
1     Information Technology     10     $ 148,939     18.8 %     91.6
2     Information Technology     5     47,711     6.0 %    

73.4

3     Information Technology     10     43,692     5.5 %     40.5
4     Information Technology     7     28,752     3.6 %     36.3
5     Financial Services     1     17,756     2.2 %     150.0
6     Research and Consulting Services     3     15,807     2.0 %     27.5
7     Healthcare     2     15,253     1.9 %     111.0
8     Telecommunication Services     2     13,877     1.8 %     13.9
9     Energy     1     12,936     1.6 %     21.8
10     Industrials     4     11,401     1.4 %     12.8
11     Information Technology     3     11,055     1.4 %     44.8
12     Telecommunication Services     7     9,903     1.3 %     24.6
13     Financial Services     2     9,472     1.2 %     59.8
14     Consumer Staples     3     8,665     1.1 %     28.6
15     Information Technology     3     8,121     1.0 %     112.8
16     Telecommunication Services     1     8,050     1.0 %     33.0
17     Information Technology     2     7,983     1.0 %     69.2
18     Financial Services     1     6,600     0.8 %     20.0
19     Telecommunication Services     10     6,463     0.8 %     10.2
20     Information Technology     5     5,850     0.7 %     22.9
                  $ 438,285     55.4 %     66.1
 
(a)   Customers and their affiliates are consolidated.
(b)   Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2018, multiplied by 12. For the month of September 2018, customer reimbursements were $119.5 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, 2016 through September 30, 2018, customer reimbursements under leases with separately metered power constituted between 10.2% and 15.1% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2018 was $802.7 million. Our annualized effective rent was greater than our annualized rent as of September 30, 2018 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
(c)   Represents the customer’s total annualized rent divided by the total annualized rent in the portfolio as of September 30, 2018, which was approximately $791.6 million.
(d)   Weighted average based on customer’s percentage of total annualized rent expiring and is as of September 30, 2018, assuming that customers exercise no renewal options and exercise all early termination rights that require payment of less than 50% of the remaining rents. Early termination rights that require payment of 50% or more of the remaining lease payments are not assumed to be exercised because such payments approximate the profitability margin of leasing that space to the customer, such that we do not consider early termination to be economically detrimental to us.
                                       

CyrusOne Inc.

Lease Distribution

As of September 30, 2018

(Unaudited)

                                       
NRSF Under Lease(a)       Number of

Customers(b)

    Percentage of

All Customers

    Total

Leased

NRSF(c) (000)

    Percentage of

Portfolio

Leased NRSF

    Annualized

Rent(d) (000)

    Percentage of

Annualized Rent

0-999       676     68 %     146     3 %     $ 70,218     9 %
1,000-2,499       120     12 %     187     4 %     42,456     5 %
2,500-4,999       74     7 %     263     5 %     44,976     6 %
5,000-9,999       47     5 %     332     6 %     57,237     7 %
10,000+       81     8 %     4,327     82 %     576,732     73 %
Total       998     100 %     5,256     100 %     $ 791,618     100 %
     
(a)   Represents all leases in our portfolio, including colocation, office and other leases.
(b)   Represents the number of customers occupying data center, office and other space as of September 30, 2018. This may vary from total customer count as some customers may be under contract, but have yet to occupy space.
(c)   Represents the total square feet at a facility under lease and that has commenced billing, excluding space held for development or space used by CyrusOne. A customer’s leased NRSF is estimated based on such customer’s direct CSF or office and light-industrial space plus management’s estimate of infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.
(d)   Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2018, multiplied by 12. For the month of September 2018, customer reimbursements were $119.5 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, 2016 through September 30, 2018, customer reimbursements under leases with separately metered power constituted between 10.2% and 15.1% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2018 was $802.7 million. Our annualized effective rent was greater than our annualized rent as of September 30, 2018 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
                                           

CyrusOne Inc.

Lease Expirations

As of September 30, 2018

(Unaudited)

                                           
Year(a)    

Number of
Leases
Expiring(b)

   

Total Operating
NRSF Expiring
(000)

   

Percentage of
Total NRSF

   

Annualized
Rent(c) (000)

   

Percentage of
Annualized Rent

   

Annualized Rent
at Expiration(d)
(000)

   

Percentage of
Annualized Rent
at Expiration

Available           1,271       19 %                        
Month-to-Month     709     95       1 %     $ 30,848       4 %     $ 33,287     4 %
2018     441     139       2 %     20,962       3 %     20,962     2 %
2019     2,296     588       9 %     116,042       15 %     117,568     14 %
2020     1,412     557       9 %     92,005       12 %     93,969     11 %
2021     1,623     680       10 %     121,686       15 %     126,505     15 %
2022     292     558       9 %     72,792       9 %     80,738     9 %
2023     229     651       10 %     67,908       9 %     79,622     9 %
2024     46     248       4 %     36,968       5 %     45,746     5 %
2025     45     185       3 %     31,315       4 %     35,928     4 %
2026     29     586       9 %     87,003       11 %     93,422     11 %
2027     16     419       6 %     62,709       8 %     72,028     8 %
2028 - Thereafter     24     549       9 %     51,380       7 %     62,111     7 %
Total     7,162     6,527       100 %     $ 791,618       100 %     $ 861,884     100 %
     
(a)   Leases that were auto-renewed prior to September 30, 2018 are shown in the calendar year in which their current auto-renewed term expires. Unless otherwise stated in the footnotes, the information set forth in the table assumes that customers exercise no renewal options and exercise all early termination rights that require payment of less than 50% of the remaining rents. Early termination rights that require payment of 50% or more of the remaining lease payments are not assumed to be exercised.
(b)   Number of leases represents each agreement with a customer. A lease agreement could include multiple spaces and a customer could have multiple leases.
(c)   Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2018, multiplied by 12. For the month of September 2018, customer reimbursements were $119.5 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, 2016 through September 30, 2018, customer reimbursements under leases with separately metered power constituted between 10.2% and 15.1% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2018 was $802.7 million. Our annualized effective rent was greater than our annualized rent as of September 30, 2018 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
(d)   Represents the final monthly contractual rent under existing customer leases that had commenced as of September 30, 2018, multiplied by 12.

 

Source: CyrusOne Inc.

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