CyrusOne
May 3, 2017

CyrusOne Reports First Quarter 2017 Earnings

Signed $32 Million in Annualized GAAP Revenue
Year-over-Year Revenue Growth of 27% and Adjusted EBITDA Growth of 29%
Increasing Normalized FFO per share Guidance Range

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

Highlights

Category

   

1Q'17

       

H/(L) vs. 1Q'16

Revenue $149.3 million 27%
Net income / (loss) $(30.4) million n/m
Adjusted EBITDA $80.7 million 29%
Normalized FFO $61.2 million 33%
Net income / (loss) per share $(0.36) n/m
Normalized FFO per share $0.72 14%
 

-- Signed a company record 480 leases in the first quarter, 22% higher than the previous record of 392 leases

"We had one of the strongest bookings quarters in the company's history and signed a record number of leases, reflecting broad demand for our product offering from both cloud and enterprise customers," said Gary Wojtaszek, president and chief executive officer of CyrusOne. "Our revised guidance highlights the continued strength of our business, and we maintain a robust sales funnel supported by a development pipeline to meet demand across our markets. We also strengthened our balance sheet and debt maturity profile through the successful $800 million notes offering."

First Quarter 2017 Financial Results

Net loss was $(30.4) million for the first quarter, driven by a $36.2 million loss on extinguishment of debt related to the repurchase or early redemption of the 6.375% Senior Notes due 2022, which were refinanced with new notes having a lower coupon. This compares to net income of $5.6 million in the same period in 2016. Normalized Funds From Operations (Normalized FFO)1 was $61.2 million for the first quarter, compared to $45.9 million in the same period in 2016, an increase of 33%. Net loss per basic and diluted common share2 was $(0.36) in the first quarter of 2017, compared to net income of $0.07 per basic and diluted common share in the same period in 2016. Normalized FFO per basic and diluted common share was $0.72 in the first quarter of 2017, an increase of 14% over first quarter 2016.

Revenue was $149.3 million for the first quarter, compared to $117.8 million for the same period in 2016, an increase of 27%. The increase in revenue was driven primarily by a 53% increase in leased CSF and additional interconnection services. Net operating income (NOI)3 was $97.0 million for the first quarter, compared to $77.5 million in the same period in 2016, an increase of 25%. Adjusted EBITDA4 was $80.7 million for the first quarter, compared to $62.7 million in the same period in 2016, an increase of 29%.

Leasing Activity

CyrusOne leased approximately 18 MW of power and 148,000 CSF in the first quarter, representing $2.6 million in monthly recurring rent inclusive of the monthly impact of installation charges, or approximately $32 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 103 months (8.6 years), and the weighted average remaining lease term of CyrusOne's portfolio is 57 months (taking into account the impact of the backlog), more than double the weighted average remaining lease term of the portfolio at the time of the Company's initial public offering. Recurring rent churn6 for the first quarter was 1.4%, compared to 1.3% for the same period in 2016.

Portfolio Utilization and Development

In the first quarter, the Company completed construction on approximately 236,000 CSF and 45 MW of power capacity in San Antonio, Northern Virginia and Chicago, increasing total CSF across 39 data centers to approximately 2,477,000 CSF. This represents an increase of 869,000 CSF, or 54%, from March 31, 2016. CSF utilization7 as of the end of the first quarter was 92% for stabilized properties8 and 88% overall. The Company has development projects underway in Northern Virginia, Phoenix, Dallas, Chicago, San Antonio and Cincinnati that are expected to add approximately 604,000 CSF and 94 MW of power capacity.

Balance Sheet and Liquidity

As of March 31, 2017, the Company had gross assets totaling approximately $4.2 billion, an increase of approximately 41% over gross assets as of March 31, 2016. CyrusOne had $1,755.0 million of long term debt9, cash and cash equivalents of $20.4 million, and $586.5 million available under its unsecured revolving credit facility as of March 31, 2017. Net debt9 was $1,747.0 million as of March 31, 2017, approximately 28% of the Company's total enterprise value of $6.3 billion, or 5.0x Adjusted EBITDA for the last quarter annualized (after adjusting to reflect a full quarter EBITDA contribution from the Sentinel data centers based on March results). Available liquidity10 was $606.9 million as of March 31, 2017.

On March 17, 2017, CyrusOne closed an $800 million senior notes offering, consisting of $500 million of 5.000% Senior Notes due 2024 and $300 million of 5.375% Senior Notes due 2027. Proceeds were used to repurchase and redeem all of the Company's outstanding 6.375% Senior Notes due 2022 and pay down borrowings under the revolving credit facility. The transaction extended the Company's weighted average debt term to 6.2 years.

Dividend

On February 22, 2017, the Company announced a dividend of $0.42 per share of common stock for the first quarter of 2017. The dividend was paid on April 13, 2017, to stockholders of record at the close of business on March 31, 2017.

Additionally, today the Company is announcing a dividend of $0.42 per share of common stock for the second quarter of 2017. The dividend will be paid on July 14, 2017, to stockholders of record at the close of business on June 30, 2017.

Land Acquisition in Pacific Northwest

Subsequent to the end of the first quarter of 2017, CyrusOne exercised its option to purchase 48 acres of land in Quincy, Washington. The purchase positions the Company to offer what it believes to be one of the lowest cost data center solutions in the country and extends its geographic presence to the Pacific Northwest.

Guidance

CyrusOne is updating guidance for full year 2017, increasing the ranges for Revenue, Adjusted EBITDA, Normalized FFO per diluted common share, and Capital Expenditures. The annual guidance provided below represents forward-looking statements, which are based on current economic conditions, internal assumptions about the Company's existing customer base, and the supply and demand dynamics of the markets in which CyrusOne operates.

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

       

Category

Original

2017

Guidance(1)

Revised

2017

Guidance(1)

Total Revenue $663 - 678 million $666 - 681 million
Base Revenue $588 - 598 million $591 - 601 million
Metered Power Reimbursements $75 - 80 million $75 - 80 million
Adjusted EBITDA $359 - 369 million $364 - 374 million
Normalized FFO per diluted common share $2.85 - 2.95 $2.95 - 3.05
Capital Expenditures $550 - 600 million $600 - 650 million
Development $545 - 590 million $595 - 640 million
Recurring $5 - 10 million $5 - 10 million

 

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

 

Upcoming Conferences and Events

Conference Call Details

CyrusOne will host a conference call on May 4, 2017, at 11:00 AM Eastern Time (10:00 AM Central Time) to discuss its results for the first quarter of 2017. A live webcast of the conference call and the presentation to be made during the call will be available under the "Investor Relations" tab in the "Events and Presentations" section of the Company's website at http://investor.cyrusone.com/events.cfm. The U.S. conference call dial-in number is 1-844-492-3731, and the international dial-in number is 1-412-542-4121. A replay will be available one hour after the conclusion of the earnings call on May 4, 2017, through May 18, 2017. The U.S. toll-free replay dial-in number is 1-877-344-7529 and the international replay dial-in number is 1-412-317-0088. The replay access code is 10104124.

Safe Harbor

This release and the documents incorporated by reference herein contain forward-looking statements regarding future events and our future results that are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "predicts," "projects," "intends," "plans," "believes," "seeks," "estimates," "continues," "endeavors," "strives," "may," variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this release and those discussed in other documents we file with the Securities and Exchange Commission (SEC). More information on potential risks and uncertainties is available in our recent filings with the SEC, including CyrusOne's Form 10-K report, Form 10-Q reports, and Form 8-K reports. Actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

Use of Non-GAAP Financial Measures

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

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

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

2Net loss per common share is defined as net loss divided by the weighted average common shares outstanding for the period, which were 83,978,977 for the first quarter of 2017.

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

4Adjusted EBITDA is defined as net income (loss) as defined by U.S. GAAP plus interest expense, income tax (benefit) expense, depreciation and amortization, stock-based compensation, transaction and integration costs, severance and management transition costs, asset impairments and (gain) loss on disposals, lease exit costs, legal claim costs and other special items. Other companies may not calculate Adjusted EBITDA in the same manner. Accordingly, the Company's Adjusted EBITDA as presented may not be comparable to others.

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

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

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

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

9Long term debt and net debt exclude adjustments for deferred financing costs. Net debt provides a useful measure of liquidity and financial health. The Company defines net debt as long-term debt and capital lease obligations, offset by cash, cash equivalents, and temporary cash investments.

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

About CyrusOne

CyrusOne (NASDAQ: CONE) is a high-growth real estate investment trust (REIT) specializing in highly reliable enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for more than 970 customers, including 190 Fortune 1000 companies.

CyrusOne's data center offerings provide the flexibility, reliability, and security that enterprise and cloud customers require and are delivered through a tailored, customer service-focused platform designed to foster long-term relationships. CyrusOne is committed to full transparency in communication, management, and service delivery throughout its 39 data centers worldwide.

Company Profile

CyrusOne (NASDAQ: CONE) specializes in highly reliable enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for more than 970 customers, including 190 Fortune 1000 companies. CyrusOne's data center offerings provide the flexibility, reliability, and security that enterprise customers require and are delivered through a tailored, customer service-focused platform designed to foster long-term relationships. CyrusOne is committed to full transparency in communication, management, and service delivery throughout its 39 data centers worldwide.

           

Corporate Headquarters

Senior Management

2101 Cedar Springs Road, Ste. 900 Gary Wojtaszek, President and CEO Robert Jackson, EVP General Counsel & Secretary
Dallas, Texas 75201 Diane Morefield, EVP & Chief Financial Officer John Hatem, EVP Design, Construction & Operations
Phone: (972) 350-0060 Kevin Timmons, Chief Technology Officer Blake Hankins, Chief Information Officer

Website: www.cyrusone.com

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

Analyst Coverage

           

Firm

Analyst

Phone Number

Bank of America Merrill Lynch Michael J. Funk (646) 855-5664
Barclays Amir Rozwadowski (212) 526-4043
Citi Mike Rollins (212) 816-1116
Cowen and Company Colby Synesael (646) 562-1355
Deutsche Bank Vin Chao (212) 250-6799
Gabelli & Company Sergey Dluzhevskiy (914) 921-8355
Guggenheim Securities, LLC Robert Gutman (212) 518-9148
Jefferies Jonathan Petersen (212) 284-1705
J.P. Morgan Richard Choe (212) 622-6708
KeyBanc Capital Markets Jordan Sadler (917) 368-2280
Morgan Stanley Simon Flannery (212) 761-6432
Macquarie Capital (USA) Inc. Andrew DeGasperi (212) 231-0649
MUFG Securities Stephen Bersey (212) 405-7032
RBC Capital Markets Jonathan Atkin (415) 633-8589
Raymond James Frank G. Louthan IV (404) 442-5867
Stifel Matthew S. Heinz, CFA (443) 224-1382
SunTrust Robinson Humphrey Greg Miller (212) 303-4169
UBS John C. Hodulik, CFA (212) 713-4226
Wells Fargo Eric Luebchow (312) 630-2386
 

CyrusOne Inc.

Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

           
Three Months
Ended March 31, Change
2017     2016     $     %
Revenue:    
Base revenue and other $ 134.2 $ 106.5 $ 27.7 26 %
Metered power reimbursements 15.1       11.3       3.8       34 %
Revenue 149.3 117.8 31.5 27 %
Costs and expenses:
Property operating expenses 52.3 40.3 12.0 30 %
Sales and marketing 4.9 4.0 0.9 23 %
General and administrative 15.8 14.0 1.8 13 %
Depreciation and amortization 55.7 39.3 16.4 42 %
Transaction and acquisition integration costs 0.6 2.3 (1.7 ) (74 )%
Loss on disposal 0.2      

-

      0.2       n/m
Total costs and expenses 129.5       99.9       29.6       30 %
Operating income 19.8 17.9 1.9 11 %
Interest expense 13.6 12.1 1.5 12 %
Loss on extinguishment of debt 36.2      

-

      36.2       n/m
Net (loss) income before income taxes (30.0 ) 5.8 (35.8 ) n/m
Income tax expense (0.4 )     (0.2 )     (0.2 )     100 %
Net (loss) income attributed to common stockholders $ (30.4 )     $ 5.6       $ (36.0 )     n/m
(Loss) income per share - basic and diluted $ (0.36 ) $ 0.07 $ (0.43 ) n/m
 

CyrusOne Inc.

Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

               
March 31, December 31, Change
2017     2016     $     %
Assets
Investment in real estate:
Land $155.8 $142.7 $13.1 9%
Buildings and improvements 1,274.9 1,008.9 266.0 26%
Equipment 1,427.9 1,042.9 385.0 37%
Construction in progress 385.1     407.1     (22.0)     (5)%
Subtotal 3,243.7 2,601.6 642.1 25%
Accumulated depreciation (625.9)     (578.5)     (47.4)     8%
Net investment in real estate 2,617.8     2,023.1     594.7     29%
Cash and cash equivalents 20.4 14.6 5.8 40%
Rent and other receivables, net 89.4 83.3 6.1 7%
Restricted cash 0.6

-

0.6 n/m
Goodwill 455.1 455.1

-

-%

Intangible assets, net 217.0 150.2 66.8 44%
Other assets 143.5     126.1     17.4     14%
Total assets $3,543.8     $2,852.4     $691.4     24%
Liabilities and Equity
Accounts payable and accrued expenses $268.2 $227.1 $41.1 18%
Deferred revenue 93.3 76.7 16.6 22%
Capital lease obligations 12.4 10.8 1.6 15%
Long-term debt, net 1,731.8 1,240.1 491.7 40%
Lease financing arrangements 134.5     135.7     (1.2)     (1)%
Total liabilities 2,240.2     1,690.4     549.8     33%
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 87,725,494 and 83,536,250

shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively

0.9 0.8 0.1 13%
Additional paid in capital 1,620.5 1,412.3 208.2 15%
Accumulated deficit (316.5) (249.8) (66.7) 27%
Accumulated other comprehensive loss (1.3)     (1.3)    

-

   

-%

Total stockholders' equity 1,303.6     1,162.0     141.6     12%
Total liabilities and equity $3,543.8     $2,852.4     $691.4     24%
                   

CyrusOne Inc.

Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

 
For the three months ended: March 31, December 31, September 30, June 30, March 31,
2017     2016     2016     2016     2016
Revenue:
Base revenue and other $ 134.2 $ 123.2 $ 128.8 $ 118.2 $ 106.5
Metered power reimbursements 15.1       14.2       15.0       11.9       11.3  
Revenue 149.3       137.4       143.8       130.1       117.8  
Costs and expenses:
Property operating expenses 52.3 47.8 54.6 44.8 40.3
Sales and marketing 4.9 4.0 4.7 4.2 4.0
General and administrative 15.8 17.9 13.9 14.9 14.0
Depreciation and amortization 55.7 49.3 50.6 44.7 39.3
Transaction and acquisition integration costs 0.6 0.4 1.2 0.4 2.3
Asset impairments and loss on disposal 0.2       5.3      

-

     

-

     

-

 
Total costs and expenses 129.5       124.7       125.0       109.0       99.9  
Operating income 19.8 12.7 18.8 21.1 17.9
Interest expense 13.6 11.4 13.8 11.5 12.1
Loss on extinguishment of debt 36.2      

-

     

-

     

-

     

-

 
Net (loss) income before income taxes (30.0 ) 1.3 5.0 9.6

5.8

Income tax expense (0.4 )     (0.5 )     (0.6 )     (0.5 )     (0.2 )
Net (loss) income attributed to common stockholders $ (30.4 )     $ 0.8       $ 4.4       $ 9.1       $ 5.6  
(Loss) income per share - basic and diluted $ (0.36 ) $ 0.01 $ 0.05 $ 0.11 $ 0.07
                   

CyrusOne Inc.

Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

 
March 31, December 31, September 30, June 30, March 31,
2017     2016     2016     2016     2016
Assets
Investment in real estate:
Land $ 155.8 $ 142.7 $ 143.1 $ 122.9 $ 98.8
Buildings and improvements 1,274.9 1,008.9 1,009.3 995.2 942.0
Equipment 1,427.9 1,042.9 976.9 917.8 715.6
Construction in progress   385.1         407.1         304.0         178.9         327.7  
Subtotal 3,243.7 2,601.6 2,433.3 2,214.8 2,084.1
Accumulated depreciation   (625.9 )       (578.5 )       (546.4 )       (503.2 )       (467.2 )
Net investment in real estate   2,617.8         2,023.1         1,886.9         1,711.6         1,616.9  
Cash and cash equivalents 20.4 14.6 11.0 13.2 87.7
Rent and other receivables, net 89.4 83.3 73.0 66.4 67.1
Restricted cash 0.6

-

-

0.3 0.7
Goodwill 455.1 455.1 455.1 453.4 453.4
Intangible assets, net 217.0 150.2 155.8 160.6 165.5
Other assets   143.5         126.1         114.5         105.8         92.2  
Total assets $ 3,543.8       $ 2,852.4       $ 2,696.3       $ 2,511.3       $ 2,483.5  
Liabilities and Equity
Accounts payable and accrued expenses $ 268.2 $ 227.1 $ 214.6 $ 163.7 $ 196.2
Deferred revenue 93.3 76.7 72.5 71.7 76.4
Capital lease obligations 12.4 10.8 11.9 10.9 11.5
Long-term debt, net 1,731.8 1,240.1 1,065.7 1,096.2 1,010.3
Lease financing arrangements   134.5         135.7         141.9         144.3         147.0  
Total liabilities   2,240.2         1,690.4         1,506.6         1,486.8         1,441.4  
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 87,725,494 and 83,536,250

shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively

0.9 0.8 0.8 0.8 0.8
Additional paid in capital 1,620.5 1,412.3 1,408.9 1,215.7 1,212.0
Accumulated deficit (316.5 ) (249.8 ) (218.8 ) (191.5 ) (170.3 )
Accumulated other comprehensive loss   (1.3 )       (1.3 )       (1.2 )       (0.5 )       (0.4 )
Total stockholders' equity   1,303.6         1,162.0         1,189.7         1,024.5         1,042.1  
Total liabilities and equity $ 3,543.8       $ 2,852.4       $ 2,696.3       $ 2,511.3       $ 2,483.5  
 

CyrusOne Inc.

Consolidated Statements of Cash Flow

(Dollars in millions)

(Unaudited)

     

 

     

Three Months Ended
March 31, 2017

     

Three Months Ended
March 31, 2016

Cash flows from operating activities:
Net (loss) income $ (30.4 ) $ 5.6
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 55.7 39.3
Non-cash interest expense and change in interest accrual (1.0 ) 0.9
Stock-based compensation expense 3.7 3.0
Provision for bad debt

-

0.1
Loss on extinguishment of debt 36.2

-

Loss on disposal 0.2

-

Change in operating assets and liabilities:
Rent receivables and other assets (20.0 ) 6.2
Accounts payable and accrued expenses (4.9 )

-

Deferred revenues 15.7         (2.3 )
Net cash provided by operating activities 55.2         52.8  
Cash flows from investing activities:
Capital expenditures - asset acquisitions, net of cash acquired (492.3 ) (131.1 )
Capital expenditures - other development (182.5 ) (78.5 )
Changes in restricted cash (0.6 )       0.8  
Net cash used in investing activities (675.4 )       (208.8 )
Cash flows from financing activities:
Issuance of common stock 211.0 256.0
Dividends paid (32.4 ) (22.8 )
Borrowings from credit facility 440.0 320.0
Payments on credit facility (270.0 ) (305.0 )
Payments on senior notes (474.8 )

-

Proceeds from issuance of debt 800.0

-

Payments on capital leases and lease financing arrangements (2.3 ) (3.1 )
Debt issuance costs (8.8 ) (2.1 )
Payment of debt extinguishment costs (30.3 )

-

Tax payment upon exercise of equity awards (6.4 )       (13.6 )
Net cash provided by financing activities 626.0         229.4  
Net increase in cash and cash equivalents 5.8 73.4
Cash and cash equivalents at beginning of period 14.6         14.3  
Cash and cash equivalents at end of period $ 20.4         $ 87.7  
 
Supplemental disclosures
Cash paid for interest, net of amount capitalized $ 18.3 $ 6.2
Cash paid for income taxes

-

0.1
Capitalized interest 3.6 2.1
Non-cash investing and financing activities
Acquisition and development of properties in accounts payable and other liabilities 174.3 111.9
Dividends payable 37.7 31.5
Debt issuance cost payable 1.5

-

                 

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

 

Three Months
Ended

Three Months Ended
March 31, Change March 31, December 31, September 30, June 30, March 31,
2017   2016   $   %   2017   2016   2016   2016   2016
Net Operating Income
Revenue $ 149.3 $ 117.8 $ 31.5 27 % $ 149.3 $ 137.4 $ 143.8 $ 130.1 $ 117.8
Property operating expenses   52.3       40.3   12.0 30 %   52.3       47.8       54.6       44.8       40.3  
Net Operating Income (NOI) $ 97.0     $ 77.5   $ 19.5 25 % $ 97.0     $ 89.6     $ 89.2     $ 85.3     $ 77.5  
NOI as a % of Revenue 65.0 % 65.8 % 65.0 % 65.2 % 62.0 % 65.6 % 65.8 %
Reconciliation of Net (Loss) Income to Adjusted EBITDA:
Net (loss) income (30.4 ) $ 5.6 $ (36.0 ) n/m $ (30.4 ) $ 0.8 $ 4.4 $ 9.1 $ 5.6
Interest expense 13.6 12.1 1.5 12 % 13.6 11.4 13.8 11.5 12.1
Income tax expense 0.4 0.2 0.2 100 % 0.4 0.5 0.6 0.5 0.2
Depreciation and amortization 55.7 39.3 16.4 42 % 55.7 49.3 50.6 44.7 39.3
Transaction and acquisition integration costs 0.6 2.3 (1.7 ) (74 )% 0.6 0.4 1.2 0.4 2.3
Legal claim costs 0.2 0.2

-

-

%

0.2 0.4 0.2 0.3 0.2
Stock-based compensation 3.7 3.0 0.7 23 % 3.7 3.0 2.3 3.2 3.0
Severance and management transition costs 0.5

-

0.5 n/m 0.5 1.9

-

-

-

Loss on extinguishment of debt 36.2

-

36.2 n/m 36.2

-

-

-

-

Asset impairments and loss on disposals   0.2      

-

  0.2 n/m   0.2       5.3      

-

     

-

     

-

 
Adjusted EBITDA $ 80.7     $ 62.7   $ 18.0 29 % $ 80.7     $ 73.0     $ 73.1     $ 69.7     $ 62.7  
Adjusted EBITDA as a % of Revenue 54.1 % 53.2 % 54.1 % 53.1 % 50.8 % 53.6 % 53.2 %
 

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

               
Three Months Ended
March 31, Change
2017     2016     $     %
Revenue $ 149.3 $ 117.8 $ 31.5 27 %
Property operating expenses   52.3         40.3         12.0       30 %
Net Operating Income $ 97.0       $ 77.5       $ 19.5       25 %
Sales and marketing 4.9 4.0 0.9 23 %
General and administrative 15.8 14.0 1.8 13 %
Depreciation and amortization 55.7 39.3 16.4 42 %
Transaction and acquisition integration costs 0.6 2.3 (1.7 ) (74 )%
Loss on disposal 0.2

-

0.2 n/m
Interest expense 13.6 12.1 1.5 12 %
Loss on extinguishment of debt 36.2

-

36.2 n/m
Income tax expense   0.4         0.2         0.2       100 %
Net (loss) income $ (30.4 )     $ 5.6       $ (36.0 )     n/m
                   

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

 

Three Months
Ended

Three Months Ended
March 31, Change March 31, December 31, September 30, June 30, March 31,
2017   2016   $   %   2017   2016   2016   2016   2016
Reconciliation of Net (Loss) Income to FFO and Normalized FFO:
Net (loss) income $ (30.4 ) $ 5.6 $ (36.0 ) n/m $ (30.4 ) $ 0.8 $ 4.4 $ 9.1 $ 5.6
Real estate depreciation and amortization 48.7 33.0 15.7 48 % 48.7 42.0 44.2 38.4 33.0
Asset impairments and loss on disposal   0.2      

-

  0.2 n/m   0.2       5.3      

-

     

-

     

-

 
Funds from Operations (FFO) $ 18.5 $ 38.6 $ (20.1 ) (52 )% $ 18.5 $ 48.1 $ 48.6 $ 47.5 $ 38.6
 
Loss on extinguishment of debt 36.2

-

36.2 n/m 36.2

-

-

-

-

Amortization of customer relationship intangibles 5.2 4.8 0.4 8 % 5.2 5.6 4.8 4.9 4.8
Transaction and acquisition integration costs 0.6 2.3 (1.7 ) (74 )% 0.6 0.4 1.2 0.4 2.3
Severance and management transition costs 0.5

-

0.5 n/m 0.5 1.9

-

-

-

Legal claim costs   0.2       0.2  

-

-

%

  0.2       0.4       0.2       0.3       0.2  
Normalized Funds from Operations (Normalized FFO) $ 61.2     $ 45.9   $ 15.3 33 % $ 61.2     $ 56.4     $ 54.8     $ 53.1     $ 45.9  
Normalized FFO per diluted common share $ 0.72 $ 0.63 $ 0.09 14 % $ 0.72 $ 0.68 $ 0.67 $ 0.67 $ 0.63
Weighted Average diluted common shares outstanding 84.5 72.8 11.7 16 % 84.5 82.9 81.3 79.0 72.8
 
Additional Information:
Amortization of deferred financing costs 1.0 0.9 0.1 11 % 1.0 1.1 1.0 1.1 0.9
Stock-based compensation 3.7 3.0 0.7 23 % 3.7 3.0 2.3 3.2 3.0
Non-real estate depreciation and amortization 1.8 1.5 0.3 20 % 1.8 1.7 1.6 1.4 1.5
Deferred revenue and straight line rent adjustments (9.4 ) (2.0 ) (7.4 ) n/m (9.4 ) (2.5 ) (10.7 ) (5.0 ) (2.0 )
Leasing commissions (3.9 ) (1.9 ) (2.0 ) 105 % (3.9 ) (3.8 ) (3.0 ) (3.4 ) (1.9 )
Recurring capital expenditures (1.5 ) (0.9 ) (0.6 ) 67 % (1.5 ) (1.9 ) (1.7 ) (0.9 ) (0.9 )
 

CyrusOne Inc.

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

(Unaudited)

             

Market Capitalization

(dollars in millions) Shares or

Equivalents

Outstanding

    Market Price

as of

March 31, 2017

    Market Value

Equivalents

(in millions)

Common shares 87,725,494 $ 51.47 $ 4,515.2
Net Debt 1,747.0
Total Enterprise Value (TEV) $ 6,262.2
       

Reconciliation of Net Debt

(dollars in millions) March 31, December 31
2017     2016
Long-term debt(a) $ 1,755.0 $ 1,262.3
Capital lease obligations 12.4 10.8
Less:
Cash and cash equivalents (20.4 )     (14.6 )
Net Debt $ 1,747.0       $ 1,258.5  
 

(a)  Excludes adjustment for deferred financing costs.

 
           

Debt Schedule (as of March 31, 2017)

(dollars in millions)
Long-term debt: Amount     Interest Rate     Maturity Date
5.000% senior notes due 2024 $ 500.0 5.000 % March 2024
5.375% senior notes due 2027 300.0 5.375 % March 2027
Revolving credit facility 405.0 L + 155 bps November 2021(a)
Term loan 300.0 2.48 % January 2022
Term loan 250.0       2.48 % September 2021
Total long-term debt(b) $ 1,755.0   3.69 %
 
Weighted average term of debt:

6.2 years

 

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

(b)  Excludes adjustment for deferred financing costs.

       

CyrusOne Inc.

Colocation Square Footage (CSF) and Utilization

(Unaudited)

 
As of March 31, 2017   As of December 31, 2016   As of March 31, 2016

Market

Colocation
Space (CSF)(a)

 

CSF
Utilized(b)

 

Colocation
Space (CSF)(a)

 

CSF
Utilized(b)

 

Colocation
Space (CSF)(a)

 

CSF
Utilized(b)

Dallas 431,287   87 % 431,287   83 % 347,926   93 %
Cincinnati 386,556 91 % 386,508 92 % 386,484 91 %
Northern Virginia 356,751 100 % 277,629 100 % 74,653 100 %
Houston 308,074 74 % 308,074 73 % 255,142 88 %
San Antonio 239,879 100 % 108,112 99 % 43,843 100 %
New York Metro 218,448 83 % 121,530 79 % 121,434 87 %
Phoenix 215,892 100 % 215,892 94 % 147,931 100 %
Chicago 136,306 86 % 111,660 82 % 95,024 89 %
Austin 105,610 59 % 105,610 50 % 121,833 47 %
Raleigh-Durham 64,559 80 %

-

n/a

-

n/a
International 13,200     74 %   13,200     70 %   13,200     80 %
Total 2,476,562     88 %   2,079,502     85 %   1,607,470     89 %
Stabilized Properties(c) 2,292,927     92 %   1,895,867     92 %
 
(a) CSF represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment.
(b) Utilization is calculated by dividing CSF under signed leases for colocation space (whether or not the lease has commenced billing) by total CSF.
(c) Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% utilized.
         

CyrusOne Inc.

2017 Guidance

 

Category

Original
2017
Guidance(1)

Revised
2017
Guidance(1)

Total Revenue $663 - 678 million $666 - 681 million

Base Revenue

$588 - 598 million $591 - 601 million
Metered Power Reimbursements $75 - 80 million $75 - 80 million
Adjusted EBITDA $359 - 369 million $364 - 374 million
Normalized FFO per diluted common share $2.85 - 2.95 $2.95 - 3.05
Capital Expenditures $550 - 600 million $600 - 650 million
Development $545 - 590 million $595 - 640 million
Recurring $5 - 10 million $5 - 10 million

(1)

 

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

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

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

           

CyrusOne Inc.

Data Center Portfolio

As of March 31, 2017

(Unaudited)

 
Operating Net Rentable Square Feet (NRSF)(a)

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

Available
Critical
Load
Capacity
(MW)(l)

Stabilized Properties(b)

Metro
Area

 

Annualized
Rent(c)

 

Colocation
Space
(CSF)(d)

 

CSF
Leased(e)

 

CSF
Utilized(f)

 

Office &
Other(g)

 

Office &
Other
Leased(h)

 

Supporting
Infrastructure(i)

  Total(j)    
Dallas - Carrollton Dallas $ 53,548,867 235,733   88 %   88 %   64,317   61 %   100,844   400,894 27,000 26
Houston - Houston West I Houston 44,292,523 112,133 96 % 97 % 11,163 99 % 37,243 160,539 3,000 28
Dallas - Lewisville* Dallas 36,472,286 114,054 96 % 96 % 11,374 89 % 54,122 179,550

-

21
Cincinnati - 7th Street*** Cincinnati 34,495,475 178,997 91 % 91 % 5,744 100 % 167,241 351,982 46,000 13
Northern Virginia - Sterling II Northern Virginia 31,471,220 158,998 100 % 100 % 8,651 100 % 55,306 222,955

-

30
Totowa - Madison** New York Metro 26,058,138 51,290 86 % 87 % 22,477 100 % 58,964 132,731

-

6
Somerset I New York Metro 25,645,209 96,918 86 % 86 % 26,613 85 % 88,991 212,522 2,000 11
Cincinnati - North Cincinnati Cincinnati 25,303,075 65,303 97 % 97 % 44,886 72 % 52,950 163,139 65,000 14
Wappingers Falls I** New York Metro 24,271,680 37,000 95 % 96 % 20,167 97 % 15,077 72,244

-

3
Chicago - Aurora I Chicago 23,476,851 113,008 93 % 93 % 34,008 100 % 223,478 370,494 27,000 71
Houston - Houston West II Houston 23,069,910 79,540 93 % 93 % 3,355 74 % 55,023 137,918 12,000 12
San Antonio I San Antonio 21,757,208 43,891 99 % 99 % 5,989 83 % 45,650 95,530 11,000 12
Phoenix - Chandler II Phoenix 19,375,295 74,058 100 % 100 % 5,639 38 % 25,519 105,216

-

12
Houston - Galleria Houston 18,548,913 63,469 62 % 62 % 23,259 51 % 24,927 111,655

-

14
Raleigh-Durham I Raleigh-Durham 15,274,231 64,559 80 % 80 % 9,507 100 % 82,119 156,185 257,000 10
Florence Cincinnati 15,100,422 52,698 100 % 100 % 46,848 87 % 40,374 139,920

-

9
Northern Virginia - Sterling I Northern Virginia 14,498,072 77,961 98 % 98 % 5,618 77 % 48,598 132,177

-

12
Austin II Austin 14,464,696 43,772 94 % 94 % 1,821 100 % 22,433 68,026

-

5
Phoenix - Chandler I Phoenix 13,222,530 73,921 92 % 100 % 34,582 12 % 38,572 147,075 31,000 16
San Antonio II San Antonio 12,886,504 64,221 100 % 100 % 11,255 100 % 41,127 116,603

-

12
Phoenix - Chandler III Phoenix 11,585,765 67,913 93 % 100 % 2,440

-

% 30,415 100,768

-

14
Cincinnati - Hamilton* Cincinnati 8,991,791 46,565 77 % 77 % 1,077 100 % 35,336 82,978

-

10
Northern Virginia - Sterling III Northern Virginia 7,097,032 79,122 100 % 100 % 7,264 100 % 33,603 119,989

-

15
Dallas - Midway** Dallas 5,354,114 8,390 100 % 100 %

-

-

%

-

8,390

-

1
Cincinnati - Mason Cincinnati 5,237,121 34,072 100 % 100 % 26,458 98 % 17,193 77,723

-

4
Stamford - Riverbend** New York Metro 4,962,496 20,000 29 % 31 %

-

-

% 8,484 28,484

-

2
London - Great Bridgewater** International 4,352,018 10,000 85 % 91 %

-

-

% 514 10,514

-

1
San Antonio III San Antonio 3,636,000 131,767 100 % 100 % 9,309 100 % 43,126 184,202

-

24
Norwalk I** New York Metro 3,370,835 13,240 83 % 85 % 4,085 72 % 40,610 57,935 87,000 2
Dallas - Marsh** Dallas 2,473,978 4,245 100 % 100 %

-

-

%

-

4,245

-

1
Chicago - Lombard Chicago 2,176,790 13,516 61 % 61 % 4,115 100 % 12,230 29,861 29,000 3
Northern Virginia - Sterling IV Northern Virginia 1,709,689 40,670 100 % 100 % 5,523 100 % 32,433 78,626 14,000 6
Stamford - Omega** New York Metro 1,617,482

-

-

%

-

% 18,552 87 % 3,796 22,348

-

-

Totowa - Commerce** New York Metro 640,429

-

-

%

-

% 20,460 41 % 5,540 26,000

-

-

Cincinnati - Blue Ash* Cincinnati 555,092 6,193 36 % 36 % 6,821 100 % 2,165 15,179

-

1
South Bend - Crescent* Chicago 553,705 3,432 43 % 43 %

-

-

% 5,125 8,557 11,000 1
Houston - Houston West III Houston 482,491

-

-

%

-

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

-

Singapore - Inter Business Park** International 317,006 3,200 22 % 22 %

-

-

%

-

3,200

-

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

-

-

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

-

%  

-

%   5,280     100 %   16,481     24,489     14,000     1
Stabilized Properties - Total $ 558,610,604     2,292,927     92 %   92 %   517,752     77 %   1,582,739     4,393,418     849,000     420
 

Pre-Stabilized Properties(b)

Austin III Austin 5,598,477 61,838 19 % 33 % 15,055 44 % 20,629 97,522 67,000 3
Dallas - Carrollton (DH #5) Dallas 4,525,493 68,865 54 % 66 %

-

-

% 10,539 79,404

-

6
Houston - Houston West III (DH #1) Houston 1,001,862     52,932     10 %   10 %  

-

   

-

%   21,992     74,924    

-

    6
All Properties - Total $ 569,736,436     2,476,562     87 %   88 %   532,807     77 %   1,635,899     4,645,268     916,000     435
 
* Indicates properties in which we hold a leasehold interest in the building shell and land. All data center infrastructure has been constructed by us and owned by us.
** Indicates properties in which we hold a leasehold interest in the building shell, land, and all data center infrastructure.
*** The information provided for the Cincinnati - 7th Street property includes data for two facilities, one of which we lease and one of which we own.
 
 
(a) Represents the total square feet of a building under lease or available for lease based on engineers' drawings and estimates but does not include space held for development or space used by CyrusOne.
(b) Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% utilized. Pre-stabilized properties include data halls that have been in service for less than 24 months and are less than 85% utilized.
(c) Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of March 31, 2017, multiplied by 12. For the month of March 2017, customer reimbursements were $62.3 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From April 1, 2015 through March 31, 2017, customer reimbursements under leases with separately metered power constituted between 10.6% and 12.6% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of March 31, 2017 was $607.4 million. Our annualized effective rent was greater than our annualized rent as of March 31, 2017 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
(d) CSF represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment.
(e) Percent leased is determined based on CSF being billed to customers under signed leases as of March 31, 2017 divided by total CSF. Leases signed but not commenced as of March 31, 2017 are not included.
(f) Utilization is calculated by dividing CSF under signed leases for colocation space (whether or not the lease has commenced billing) by total CSF.
(g) Represents the NRSF at an operating facility that is currently leased or readily available for lease as space other than CSF, which is typically office and other space.
(h) Percent leased is determined based on Office & Other space being billed to customers under signed leases as of March 31, 2017 divided by total Office & Other space. Leases signed but not commenced as of March 31, 2017 are not included.
(i) Represents infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.
(j) Represents the NRSF at an operating facility that is currently leased or readily available for lease. This excludes existing vacant space held for development.
(k) Represents space that is under roof that could be developed in the future for operating NRSF, rounded to the nearest 1,000.
(l) Critical load capacity represents the aggregate power available for lease and exclusive use by customers expressed in terms of megawatts. The capacity reported is for non-redundant megawatts, as we can develop flexible solutions to our customers at multiple resiliency levels. Does not sum to total due to rounding.
         

CyrusOne Inc.

NRSF Under Development

As of March 31, 2017

(Dollars in millions)

(Unaudited)

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

Metropolitan
Area

 

Estimated
Completion
Date

 

Colocation
Space
(CSF)

 

Office &
Other

 

Supporting
Infrastructure

 

Powered
Shell(b)

  Total  

Critical
Load MW
Capacity(c)

 

Actual
to
Date(d)

 

Estimated
Costs to
Completion(e)

  Total
Cincinnati - 7th Street Cincinnati 2Q'17   18,000  

-

  8,000  

-

  26,000 3.0 $

-

  $ 12-13   $ 12-13
Phoenix - Chandler IV Phoenix 2Q'17 73,000 3,000 27,000

-

103,000 12.0 27 25-28 52-55
Northern Virginia - Sterling IV Northern Virginia 2Q'17 27,000

-

2,000

-

29,000 9.0 1 37-41 38-42
San Antonio IV San Antonio 3Q'17 60,000 16,000 21,000

-

97,000 12.0

-

56-62 56-62
Phoenix - Chandler V Phoenix 3Q'17

-

-

-

185,000 185,000

-

2 17-19 19-21
Phoenix - Chandler VI Phoenix 3Q'17 74,000

-

23,000 96,000 193,000 12.0

-

60-67 60-67
Northern Virginia - Sterling V Northern Virginia 3Q'17 159,000 1,000 101,000 380,000 641,000 24.0 52 116-129 168-181
Chicago - Aurora II Chicago 3Q'17 77,000 10,000 14,000 272,000 373,000 16.0 9 86-95 95-104
Dallas - Carrollton Dallas 3Q'17 116,000    

-

    21,000    

-

    137,000     6.0     1       38-41     39-42
Total 604,000     30,000     217,000     933,000     1,784,000     94.0     $ 92     $ 447-495   $ 539-587
 
(a) Represents NRSF at a facility for which activities have commenced or are expected to commence in the next 2 quarters to prepare the space for its intended use. Estimates and timing are subject to change.
(b) Represents NRSF under construction that, upon completion, will be powered shell available for future development into operating NRSF.
(c) Critical load capacity represents the aggregate power available for lease and exclusive use by customers expressed in terms of megawatts. The capacity reported is for non-redundant megawatts, as we can develop flexible solutions to our customers at multiple resiliency levels. Does not sum to total due to rounding.
(d) Actual to date is the cash investment as of March 31, 2017. There may be accruals above this amount for work completed, for which cash has not yet been paid.
(e) Represents management's estimate of the total costs required to complete the current NRSF under development. There may be an increase in costs if customers require greater power density.
   

CyrusOne Inc.

Land Available for Future Development (Acres)

As of March 31, 2017

(Unaudited)

 
As of
Market     March 31, 2017
Cincinnati 98
Dallas

-

Houston 20
Northern Virginia 16
Austin 22
Phoenix 39
San Antonio

-

Chicago 23
New York Metro

-

International

-

Total Available 218
           

CyrusOne Inc.

Leasing Statistics - Lease Signings

As of March 31, 2017

(Dollars in thousands)

(Unaudited)

 
Period    

Number
of Leases(a)(f)

 

Total CSF
Signed(b)(f)

 

Total kW
Signed(c)(f)

 

Total MRR
Signed ($000)(d)(f)

 

Weighted
Average
Lease Term(e)(f)

1Q'17 480 148,000 18,259 $2,632 103
Prior 4Q Avg. 371 160,500 22,927 $3,079 96
4Q'16 358 74,000 9,038 $1,590 63
3Q'16 389 105,000 16,930 $2,250 63
2Q'16 363 282,000 40,272 $4,866 112
1Q'16 375 181,000 25,468 $3,610 144
 
(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 $0.1 million in each quarter.
(e) Calculated on a CSF-weighted basis.
(f) 1Q'16 includes the CME lease. Non-CME signings represent approximately 60% of total CSF, kW, and MRR signed.
             

CyrusOne Inc.

New MRR Signed - Existing vs. New Customers

As of March 31, 2017

(Dollars in thousands)

(Unaudited)

 
New MRR(a) Signed ($000)
   
2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17
Existing Customers $ 677 $ 578 $ 2,984 $ 1,767 $ 4,406 $ 1,796 $ 1,332 $ 2,247
New Customers $ 442   $ 534   $ 646   $ 1,843   $ 460   $ 454   $ 258   $ 385  
Total $ 1,119 $ 1,112 $ 3,630 $ 3,610 $ 4,866 $ 2,250 $ 1,590 $ 2,632
 
% from Existing Customers 61 % 52 % 82 % 49 % 91 % 80 % 84 % 85 %
 

(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 $0.1 million in each of 2Q'15-1Q'17. 1Q'16 includes the CME lease, with non-CME signings representing approximately 60% of total MRR signed.

             

CyrusOne Inc.

Customer Sector Diversification(a)

As of March 31, 2017

(Unaudited)

 
Principal Customer Industry    

Number of
Locations

 

Annualized
Rent(b)

 

Percentage of
Portfolio
Annualized
Rent(c)

 

Weighted
Average
Remaining
Lease Term in
Months(d)

1 Information Technology 8 $ 79,135,703 13.9 % 90.9
2 Financial Services 1 20,799,563 3.7 % 168.0
3 Information Technology 2 19,377,348 3.4 % 95.8
4 Telecommunication Services 2 15,610,577 2.7 % 18.1
5 Healthcare 2 14,262,081 2.5 % 129.0
6 Research and Consulting Services 3 14,173,261 2.5 % 46.2
7 Energy 5 13,371,423 2.3 % 16.6
8 Energy 1 12,673,272 2.2 % 35.1
9 Industrials 4 11,456,053 2.0 % 27.1
10 Telecommunication Services 7 10,527,010 1.9 % 13.5
11 Information Technology 2 8,322,296 1.5 % 62.9
12 Financial Services 2 7,074,147 1.2 % 75.1
13 Energy 2 6,999,077 1.2 % 16.4
14 Financial Services 1 6,600,225 1.2 % 38.0
15 Information Technology 3 5,921,013 1.0 % 131.3
16 Information Technology 5 5,821,907 1.0 % 51.4
17 Telecommunication Services 5 5,610,348 1.0 % 25.1
18 Consumer Staples 4 5,241,430 0.9 % 46.8
19 Financial Services 3 5,091,124 0.9 % 5.3
20 Financial Services 1 4,971,029     0.9 %   56.0
$ 273,038,887     47.9 %   71.9
 
(a) Customers and their affiliates are consolidated.
(b) Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of March 31, 2017, multiplied by 12. For the month of March 2017, customer reimbursements were $62.3 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From April 1, 2015 through March 31, 2017, customer reimbursements under leases with separately metered power constituted between 10.6% and 12.6% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of March 31, 2017 was $607.4 million. Our annualized effective rent was greater than our annualized rent as of March 31, 2017 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
(c) Represents the customer's total annualized rent divided by the total annualized rent in the portfolio as of March 31, 2017, which was approximately $569.7 million.
(d) Weighted average based on customer's percentage of total annualized rent expiring and is as of March 31, 2017, assuming that customers exercise no renewal options and exercise all early termination rights that require payment of less than 50% of the remaining rents. Early termination rights that require payment of 50% or more of the remaining lease payments are not assumed to be exercised because such payments approximate the profitability margin of leasing that space to the customer, such that we do not consider early termination to be economically detrimental to us.
 

CyrusOne Inc.

Lease Distribution

As of March 31, 2017

(Unaudited)

 
NRSF Under Lease(a)     Number of

Customers(b)

    Percentage of

All Customers

    Total

Leased

NRSF(c)

    Percentage of

Portfolio

Leased NRSF

    Annualized

Rent(d)

    Percentage of

Annualized Rent

0-999 678     71 %     140,535     4 %     $ 67,541,547     12 %
1,000-2,499 110 11 % 170,122 4 % 36,872,166 6 %
2,500-4,999 70 7 % 246,793 6 % 46,849,856 8 %
5,000-9,999 36 4 % 242,654 6 % 50,665,946 9 %
10,000+ 71     7 %     3,182,485     80 %       367,806,921       65 %
Total 965     100 %     3,982,589     100 %     $ 569,736,436       100 %
 
(a)   Represents all leases in our portfolio, including colocation, office and other leases.
(b) Represents the number of customers occupying data center, office and other space as of March 31, 2017. This may vary from total customer count as some customers may be under contract, but have yet to occupy space.
(c) Represents the total square feet at a facility under lease and that has commenced billing, excluding space held for development or space used by CyrusOne. A customer's leased NRSF is estimated based on such customer's direct CSF or office and light-industrial space plus management's estimate of infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.
(d) Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of March 31, 2017, multiplied by 12. For the month of March 2017, customer reimbursements were $62.3 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From April 1, 2015 through March 31, 2017, customer reimbursements under leases with separately metered power constituted between 10.6% and 12.6% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of March 31, 2017 was $607.4 million. Our annualized effective rent was greater than our annualized rent as of March 31, 2017 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
                           

CyrusOne Inc.

Lease Expirations

As of March 31, 2017

(Unaudited)

 
Year(a)

Number of
Leases
Expiring(b)

   

Total Operating
NRSF Expiring

    Percentage of
Total NRSF
    Annualized
Rent(c)
    Percentage of
Annualized Rent
    Annualized Rent
at Expiration(d)
    Percentage of
Annualized Rent
at Expiration
Available 662,679 14 %
Month-to-Month 401 33,079 1 % $ 9,351,536 2 % $ 9,551,757 1 %
2017 1,424 337,081 7 % 57,867,443 10 % 58,191,033 9 %
2018 1,625 469,567 10 % 122,936,910 22 % 124,992,353 19 %
2019 1,048 428,965 9 % 70,571,390 12 % 74,839,117 11 %
2020 665 416,503 9 % 54,342,873 10 % 57,733,918 9 %
2021 505 432,833 9 % 65,687,866 12 % 89,555,305 14 %
2022 87 241,966 5 % 19,355,676 3 % 21,162,200 3 %
2023 72 101,987 2 % 9,314,331 2 % 12,460,855 2 %
2024 26 131,801 3 % 19,491,573 3 % 22,519,581 3 %
2025 36 180,338 4 % 25,651,350 4 % 31,180,228 5 %
2026 22 574,659 13 % 64,966,145 11 % 83,011,981 13 %
2027 - Thereafter 30     633,810     14 %       50,199,343       9 %       76,001,090       11 %
Total 5,941     4,645,268     100 %     $ 569,736,436       100 %     $ 661,199,418       100 %
 
(a) Leases that were auto-renewed prior to March 31, 2017 are shown in the calendar year in which their current auto-renewed term expires. Unless otherwise stated in the footnotes, the information set forth in the table assumes that customers exercise no renewal options and exercise all early termination rights that require payment of less than 50% of the remaining rents. Early termination rights that require payment of 50% or more of the remaining lease payments are not assumed to be exercised.
(b) Number of leases represents each agreement with a customer. A lease agreement could include multiple spaces and a customer could have multiple leases.
(c) Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of March 31, 2017, multiplied by 12. For the month of March 2017, customer reimbursements were $62.3 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From April 1, 2015 through March 31, 2017, customer reimbursements under leases with separately metered power constituted between 10.6% and 12.6% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of March 31, 2017 was $607.4 million. Our annualized effective rent was greater than our annualized rent as of March 31, 2017 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
(d) Represents the final monthly contractual rent under existing customer leases that had commenced as of March 31, 2017, multiplied by 12.

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

Source: CyrusOne Inc.

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