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Feb 19, 2020

CyrusOne Reports Fourth Quarter and Full Year 2019 Earnings

4Q’19 and Full Year 2019 Year-over-Year Revenue Growth of 15% and 19%, respectively

DALLAS--(BUSINESS WIRE)--Feb. 19, 2020-- CyrusOne Inc. (NASDAQ: CONE), a premier global data center REIT, today announced fourth quarter and full year 2019 earnings.

Highlights

 

 

% Change vs. 4Q’18

 

% Change vs. FY’18

Category

 

4Q’19

 

4Q’18

 

4Q’18 Adj.

for ASC 8421

 

FY’19

 

FY’18

 

FY’18 Adj.
for ASC 8421

Revenue

 

$253.9 million

 

15%

 

15%

 

$981.3 million

 

19%

 

19%

Net income / (loss)

 

$(52.1) million

 

n/m

 

n/m

 

$41.4 million

 

n/m

 

n/m

Adjusted EBITDA

 

$137.9 million

 

14%

 

18%

 

$512.2 million

 

13%

 

18%

Normalized FFO

 

$113.7 million

 

25%

 

29%

 

$409.0 million

 

23%

 

27%

Net income / (loss) per diluted share

 

$(0.46)

 

n/m

 

n/m

 

$0.36

 

n/m

 

n/m

Normalized FFO per diluted share

 

$0.99

 

15%

 

18%

 

$3.63

 

10%

 

13%

 

Leased 5 megawatts (“MW”) and 28,000 colocation square feet (“CSF”) in the fourth quarter, totaling $13 million in annualized GAAP revenue

 

 

 

 

 

– For full year 2019, signed more than 1,800 leases totaling 61 MW and 433,000 CSF, representing $105 million in annualized GAAP revenue(2)

 

 

 

 

Backlog of $52 million in annualized GAAP revenue as of the end of the 4th quarter, representing nearly $340 million in total contract value(2)

 

 

 

 

As previously announced, acquired 20 acres of land with 24 MW of power capacity in Council Bluffs, IA to deliver a unique hybrid cloud solution for enterprise customers

 

 

 

 

As previously announced, Fitch Ratings assigned first-time long-term issuer default and senior unsecured ratings of ‘BBB-’, the Company’s second investment-grade credit rating (S&P Global Ratings: ‘BBB-’), resulting in investment-grade index eligibility and improving access to capital at attractive interest rates

 

 

 

 

As previously announced, refinanced $1.2 billion of senior notes, issuing $600 million of 2.90% Senior Notes due 2024 and $600 million of 3.45% Senior Notes due 2029 to replace previously outstanding notes, decreasing the weighted average coupon by approximately 200 bps

 

 

 

 

Raised approximately $104 million in net proceeds in the fourth quarter through the sale of approximately 1.6 million shares of common stock under at-the-market (“ATM”) equity program

 

 

 

 

 

– Additionally, through the ATM equity program, entered into a forward sale agreement in the fourth quarter with respect to an additional 1.6 million shares, which will result in estimated net proceeds of approximately $99 million upon settlement by November 2020

 

 

 

 

As previously announced, subsequent to the end of the quarter, issued €500 million of 1.45% Senior Notes due 2027, with the proceeds used to repay floating rate Euro denominated obligations and fund continued development in Europe

 

 

 

 

Subsequent to the end of the quarter, executed an agreement to acquire 2 acres of land in Frankfurt, with up to 17 MW of power capacity to support continued growth in one of the leading data center markets in Europe

“We had another very strong year with high growth rates across our financial metrics and significant leasing contributions from many industry verticals and product types across almost all of our locations, with our business becoming increasingly diversified,” said Gary Wojtaszek, president and chief executive officer of CyrusOne. “This was a transformative year for the company, as our European expansion positions us to better support our customers’ global requirements, while achieving investment grade status ensures access to capital at attractive rates to allow us to continue to grow with these customers in the coming years.”

Fourth Quarter 2019 Financial Results

Revenue was $253.9 million for the fourth quarter, compared to $221.3 million for the same period in 2018, an increase of 15%. The increase in revenue was driven primarily by a 6% increase in occupied CSF, lease termination fees totaling $4.7 million and additional interconnection services.

Net loss was $(52.1) million for the fourth quarter, compared to net loss of $(105.8) million in the same period in 2018. Net loss for the fourth quarter included a $71.8 million loss on extinguishment of debt related to the repurchase or early redemption of the 5.000% Senior Notes due 2024 and the 5.375% Senior Notes due 2027. The notes were replaced by new notes, decreasing the weighted average coupon by approximately 200 basis points. Additionally, the Company recognized a $13.0 million loss associated with a change in fair value on the undesignated portion of its cross-currency swaps. Net loss per diluted common share3 was $(0.46) in the fourth quarter of 2019, compared to net loss per diluted common share of $(1.00) in the same period in 2018.

Net operating income (“NOI”)4 was $160.1 million for the fourth quarter, compared to $143.3 million in the same period in 2018, an increase of 12%. Adjusted EBITDA5 was $137.9 million for the fourth quarter, compared to $121.2 million in the same period in 2018, an increase of 14%.

Normalized Funds From Operations (“Normalized FFO”)6 was $113.7 million for the fourth quarter, compared to $90.9 million in the same period in 2018, an increase of 25%. Normalized FFO per diluted common share was $0.99 in the fourth quarter of 2019, compared to $0.86 in the same period in 2018, an increase of 15%.

Leasing Activity

CyrusOne leased approximately 5 MW of power and 28,000 CSF in the fourth quarter, representing approximately $1.1 million in monthly recurring rent, inclusive of the monthly impact of installation charges. The leasing for the quarter represents approximately $12.8 million in annualized GAAP revenue7, excluding estimates for pass-through power. The weighted average lease term of the new leases, based on square footage, is 55 months (4.6 years), and the weighted average remaining lease term of CyrusOne’s portfolio is 53 months (taking into consideration the impact of the backlog). Recurring rent churn percentage8 for the fourth quarter was 0.7%, compared to 0.8% for the same period in 2018.

Portfolio Development and Percentage CSF Leased

In the fourth quarter, the Company completed construction on 18,000 CSF and 10 MW of power capacity across three projects in the New York Metro area, Dallas and Northern Virginia. Percentage CSF leased9 as of the end of the fourth quarter was 88% for stabilized properties10 and 85% overall. In addition, the Company has development projects underway in Frankfurt, Dublin, Amsterdam, London, San Antonio, Northern Virginia, Council Bluffs (IA), and Raleigh-Durham that are expected to add approximately 380,000 CSF and 92 MW of power capacity.

Balance Sheet and Liquidity

As of December 31, 2019, the Company had gross asset value11 totaling approximately $7.5 billion, an increase of approximately 13% over gross asset value as of December 31, 2018. CyrusOne had $2.92 billion of long-term debt12, $76.4 million of cash and cash equivalents, and $1.08 billion available under its unsecured revolving credit facility as of December 31, 2019. Net debt12 was $2.87 billion as of December 31, 2019, representing approximately 28% of the Company's total enterprise value as of December 31, 2019 of $10.4 billion, or 5.0x Adjusted EBITDA for the last quarter annualized (after further adjusting net debt to reflect the pro forma impact of settlement of the forward sale agreement). After further adjusting Adjusted EBITDA to exclude the impact of the adoption of ASC 842 as of January 1, 2019, in order to present the leverage metric on a basis comparable to that of periods prior to 2019, net debt to Adjusted EBITDA for the last quarter annualized was 4.9x13. Available liquidity14 was $1.25 billion as of December 31, 2019.

The Company issued $600 million of 2.90% Senior Notes due 2024 and $600 million of 3.45% Senior Notes due 2029, replacing the Company’s previously outstanding senior notes and decreasing the weighted average coupon by approximately 200 basis points. Additionally, subsequent to the end of the quarter, the Company issued €500 million of 1.45% Senior Notes due 2027, with the proceeds used to repay floating rate Euro denominated obligations and fund continued development in Europe. As adjusted for the Euro notes offering, the Company’s weighted average remaining debt term as of December 31, 2019 was approximately 5.8 years, and it had $1.56 billion available under its unsecured revolving credit facility.

The Company raised approximately $104 million in net proceeds through the sale of approximately 1.6 million shares of common stock under its ATM equity program. Additionally, through the ATM equity program, the Company entered into a forward sale agreement with respect to an additional 1.6 million shares, which will result in estimated net proceeds of approximately $99 million upon settlement by November 2020 (no portion of this forward sale agreement has been settled as of February 19, 2020). As of December 31, 2019, there was approximately $290 million in remaining availability under the current ATM equity program.

Dividend

On October 30, 2019, the Company announced a dividend of $0.50 per share of common stock for the fourth quarter of 2019. The dividend was paid on January 10, 2020, to stockholders of record at the close of business on January 2, 2020.

Additionally, today the Company is announcing a dividend of $0.50 per share of common stock for the first quarter of 2020. The dividend will be paid on April 10, 2020, to stockholders of record at the close of business on March 27, 2020.

Guidance

CyrusOne is issuing guidance for full year 2020. 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 Total 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

 

2019 Results

 

2020 Guidance

Total Revenue

 

$981 million

 

$1,015 - 1,055 million

Lease and Other Revenues from Customers

 

$842 million

 

$870 - 900 million

Metered Power Reimbursements

 

$139 million

 

$145 - 155 million

Adjusted EBITDA

 

$512 million

 

$535 - 555 million

Normalized FFO per diluted common share

 

$3.63

 

$3.75 - 3.90

Capital Expenditures

 

$876 million

 

$750 - 850 million

Development(1)

 

$866 million

 

$735 - 830 million

Recurring

 

$10 million

 

$15 - 20 million

 

 

 

 

 

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

Upcoming Conferences and Events

  • Raymond James Institutional Investors Conference on March 1-4 in Orlando, FL
  • SunTrust Robinson Humphrey Technology, Internet & Services Conference on March 10-11 in New York City
  • Jefferies Technology & Telecom Real Estate Summit on March 31 in New York City

Conference Call Details

CyrusOne will host a conference call on February 20, 2020, at 11:00 AM Eastern Time (10:00 AM Central Time) to discuss its results for the fourth quarter and full year 2019. A live webcast of the conference call will be available in the “Investors / Events & Presentations” section of the Company's website at http://investor.cyrusone.com/events.cfm. The presentation to be made during the call is now available in this location. The U.S. conference call dial-in number is 1-844-492-3731, and the international dial-in number is 1-412-542-4121. A replay will be available one hour after the conclusion of the earnings call on February 20, 2020, through March 5, 2020. 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 10138213.

Safe Harbor

This release and the documents incorporated by reference herein contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. 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. We disclaim any obligation other than as required by law to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors or for new information, data or methods, future events or other changes.

Adoption of New Accounting Standard and Use of Non-GAAP Financial Measures and Other Metrics

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02 (codified in ASC 842, Leases (“ASC 842”)) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The ASU requires that a liability be recorded on the balance sheet for all leases where the reporting entity is a lessee, based on the present value of future lease obligations. A corresponding right-of-use asset will also be recorded. Amortization of the lease obligation and the right-of-use asset for leases classified as operating leases are on a straight-line basis. Leases classified as financing leases are required to be accounted for as financing arrangements similar to the accounting treatment for capital leases under ASC 840, Leases (the former accounting standard for all leases).

We adopted ASU 2016-02 on January 1, 2019, applied the package of practical expedients included therein and utilized the modified retrospective transition method with the cumulative effect of transition recognized on the effective date. By applying the modified retrospective transition method, the presentation of financial information for periods prior to January 1, 2019 was not restated.

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, Normalized Funds From Operations per Diluted Common Share, Adjusted EBITDA, Net Operating Income, and Net Debt should not be construed as being more important than, or a substitute for, 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, Normalized FFO per Diluted Common Share, Adjusted EBITDA, and NOI, which are non-GAAP financial measures commonly used in the REIT industry, as supplemental performance measures. Management uses these measures as supplemental performance measures because, when compared period over period, they 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), these measures are used by investors as a basis to evaluate REITs. 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 make distributions. These measures also should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with GAAP. The Company believes that Net Debt provides a useful measure of liquidity and financial health.

1 The Company adopted ASC 842 effective January 1, 2019. The adjusted 4Q’18 and FY‘18 results have not been prepared in accordance with GAAP and represent the Company’s estimates as if the standard had been adopted as of January 1, 2018. The percentage changes versus adjusted 4Q’18 and FY’18 results are being shown solely for comparative and investor usefulness purposes with respect to the Company’s 4Q’19 and FY’19 results, respectively. There is no impact on 4Q’18 Revenue or FY’18 Revenue. The estimated impacts on 4Q’18 Net income (loss), Adjusted EBITDA, Normalized FFO, Net income / (loss) per diluted share, and Normalized FFO per diluted share are $1.5 million, $4.5 million, $2.6 million, $0.01, and $0.02, respectively. The estimated impacts on FY’18 Net income (loss), Adjusted EBITDA, Normalized FFO, Net income / (loss) per diluted share, and Normalized FFO per diluted share are $5.4 million, $17.2 million, $9.4 million, $0.05, and $0.09, respectively.

2Inclusive of 4.5 MW and approximately $5.5 million in annualized GAAP revenue associated with a paid reservation signed in 3Q’19 expected to be exercised in the next nine months.

3Net 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 114.4 million for the fourth quarter of 2019 and 105.5 million for the fourth quarter of 2018.

4We 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 net income (loss), adjusted for sales and marketing expenses, general and administrative expenses, depreciation and amortization expenses, transaction, acquisition, integration and other related expenses, interest expense, net, (gain) loss on marketable equity investment, loss on early extinguishment of debt, impairment losses, gain on asset disposals, foreign currency and derivative losses, net, other expense and income tax (benefit) expense. 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 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.

5Adjusted EBITDA, which is a non-GAAP financial measure, is defined as net income (loss) as defined by GAAP adjusted for interest expense, net; income tax (benefit) expense; depreciation and amortization; impairment losses; 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; (gain) loss on marketable equity investment; (gain) loss on asset disposals; foreign currency and derivative losses (gains), net; and other expense. 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.

6We 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 impairment losses and loss on disposal of assets. 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; (gain) loss on marketable equity investment; foreign currency and derivative losses (gains), net; new accounting standards and regulatory compliance and the related system implementation costs; amortization of tradenames; transaction, acquisition, integration and other related expenses; severance and management transition costs; and legal claim costs. We believe our 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 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.

7Annualized 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.

8Recurring rent churn percentage 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.

9Percentage CSF leased is calculated by dividing CSF under signed leases for colocation space (whether or not the lease has commenced billing) by total CSF. Percentage 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.

10Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% leased.

11Gross asset value is defined as total assets plus accumulated depreciation.

12Long-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 finance lease liabilities, offset by cash and cash equivalents.

13The estimated impact of the adoption of ASC 842 on Adjusted EBITDA for the last quarter annualized is $16.2 million.

14Liquidity is calculated as cash, cash equivalents, and temporary cash investments on hand, plus the undrawn capacity on CyrusOne’s revolving credit facility, plus the pro forma impact of settlement of the forward sale agreement.

About CyrusOne

CyrusOne (NASDAQ: CONE) is a 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 more than 200 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 nearly 50 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 more than 200 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 nearly 50 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

2850 N. Harwood Street, Ste. 2200

 

Gary Wojtaszek, President and CEO

 

Jonathan Schildkraut, EVP & Chief Strategy Officer

Dallas, Texas 75201

 

Tesh Durvasula, EVP & President, Europe

 

John Gould, EVP & Chief Commercial Officer

Phone: (972) 350-0060

 

Diane Morefield, EVP & Chief Financial Officer

 

Kellie Teal-Guess, EVP & Chief People Officer

Website: www.cyrusone.com

 

Kevin Timmons, EVP & Chief Technology Officer

 

Robert Jackson, EVP General Counsel & Secretary

Analyst Coverage

Firm

 

Analyst

 

Phone Number

Bank of America Merrill Lynch

 

Michael J. Funk

 

(646) 855-5664

Berenberg Capital Markets

 

Nate Crossett

 

(646) 949-9030

BMO Capital Markets

 

Ari Klein

 

(212) 885-4103

Citi

 

Mike Rollins

 

(212) 816-1116

Cowen and Company

 

Colby Synesael

 

(646) 562-1355

Credit Suisse

 

Sami Badri

 

(212) 538-1727

Green Street Advisors

 

David Guarino

 

(949) 640-8780

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

RBC Capital Markets

 

Jonathan Atkin

 

(415) 633-8589

Raymond James

 

Frank G. Louthan IV

 

(404) 442-5867

Stifel

 

Erik Rasmussen

 

(212) 271-3461

SunTrust Robinson Humphrey

 

Greg Miller

 

(212) 303-4169

UBS

 

John C. Hodulik, CFA

 

(212) 713-4226

Wells Fargo

 

Eric Luebchow

 

(312) 630-2386

William Blair

 

Jim Breen, CFA

 

(617) 235-7513

CyrusOne Inc.

Summary of Financial Data

(Dollars in millions, except per share amounts)

         

 

 

Three Months

 

 

 

 

December 31,

 

September 30,

 

December 31,

 

Growth %

 

 

2019

 

2019

 

2018

 

Yr/Yr

Revenue

 

$

253.9

 

 

$

250.9

 

 

$

221.3

 

 

15

%

Net operating income

 

160.1

 

 

147.9

 

 

143.3

 

 

12

%

Net income (loss)

 

(52.1

)

 

12.6

 

 

(105.8

)

 

n/m

Funds from Operations ("FFO") - Nareit defined

 

53.6

 

 

116.2

 

 

(10.3

)

 

n/m

Normalized Funds from Operations ("Normalized FFO")

 

113.7

 

 

103.9

 

 

90.9

 

 

25

%

Weighted average number of common shares outstanding - diluted for Normalized FFO

 

114.4

 

 

113.5

 

 

106.1

 

 

8

%

Income (loss) per share - basic

 

$

(0.46

)

 

$

0.11

 

 

$

(1.00

)

 

n/m

Income (loss) per share - diluted

 

$

(0.46

)

 

$

0.11

 

 

$

(1.00

)

 

n/m

Normalized FFO per diluted common share

 

$

0.99

 

 

$

0.91

 

 

$

0.86

 

 

15

%

Adjusted EBITDA

 

$

137.9

 

 

$

127.8

 

 

$

121.2

 

 

14

%

Adjusted EBITDA as a % of Revenue

 

54.3

%

 

50.9

%

 

54.8

%

 

(0.5) pts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

 

December 31,

 

September 30,

 

December 31,

 

Growth %

 

 

2019

 

2019

 

2018

 

Yr/Yr

Balance Sheet Data

 

 

 

 

 

 

 

 

Gross investment in real estate

 

$

6,089.5

 

 

$

5,870.8

 

 

$

5,347.5

 

 

14

%

Accumulated depreciation

 

(1,379.2

)

 

(1,292.7

)

 

(1,054.5

)

 

31

%

Total investment in real estate, net

 

4,710.3

 

 

4,578.1

 

 

4,293.0

 

 

10

%

Cash and cash equivalents

 

76.4

 

 

51.7

 

 

64.4

 

 

19

%

Market value of common equity

 

7,511.9

 

 

8,953.8

 

 

5,728.5

 

 

31

%

Long-term debt

 

2,915.0

 

 

2,791.0

 

 

2,643.0

 

 

10

%

Net debt

 

2,870.4

 

 

2,770.0

 

 

2,612.0

 

 

10

%

Total enterprise value

 

10,382.3

 

 

11,723.8

 

 

8,340.5

 

 

24

%

Net debt to LQA Adjusted EBITDA(a)

 

5.0x

 

5.4x

 

5.4x

 

(0.4)x

 

 

 

 

 

 

 

 

 

Dividend Activity

 

 

 

 

 

 

 

 

Dividends per share

 

$

0.50

 

 

$

0.50

 

 

$

0.46

 

 

9

%

 

 

 

 

 

 

 

 

 

Portfolio Statistics

 

 

 

 

 

 

 

 

Data centers

 

47

 

 

47

 

 

48

 

 

(2

)%

Stabilized CSF (000)

 

3,937

 

 

3,935

 

 

3,540

 

 

11

%

Stabilized CSF % leased

 

88

%

 

88

%

 

92

%

 

(4) pts

Total CSF (000)

 

4,165

 

 

4,148

 

 

3,819

 

 

9

%

Total CSF % leased

 

85

%

 

85

%

 

88

%

 

(3) pts

Total NRSF (000)

 

7,135

 

 

7,117

 

 

6,726

 

 

6

%

 

 

 

 

 

 

 

 

 

(a)

 

December 31, 2019 period adjusted to reflect the pro forma impact of settlement of the forward sale agreement.

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

 

 

 

 

Twelve Months

 

 

 

 

 

 

Ended December 31,

 

Change

 

Ended December 31,

 

Change

 

 

2019

 

2018

 

$

 

%

 

2019

 

2018

 

$

 

%

Revenue(a)

 

$

253.9

 

 

$

221.3

 

 

$

32.6

 

 

15

%

 

$

981.3

 

 

$

821.4

 

 

159.9

 

 

19

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

93.8

 

 

78.0

 

 

15.8

 

 

20

%

 

383.4

 

 

292.4

 

 

91.0

 

 

31

%

Sales and marketing

 

4.5

 

 

5.6

 

 

(1.1

)

 

(20

)%

 

20.2

 

 

19.6

 

 

0.6

 

 

3

%

General and administrative

 

21.8

 

 

23.4

 

 

(1.6

)

 

(7

)%

 

83.5

 

 

80.6

 

 

2.9

 

 

4

%

Depreciation and amortization

 

108.1

 

 

97.9

 

 

10.2

 

 

10

%

 

417.7

 

 

334.1

 

 

83.6

 

 

25

%

Transaction, acquisition, integration and other related expenses

 

2.7

 

 

1.6

 

 

1.1

 

 

69

%

 

8.8

 

 

5.0

 

 

3.8

 

 

76

%

Impairment losses

 

0.7

 

 

 

 

0.7

 

 

n/m

 

0.7

 

 

 

 

0.7

 

 

n/m

Total operating expenses

 

231.6

 

 

206.5

 

 

25.1

 

 

12

%

 

914.3

 

 

731.7

 

 

182.6

 

 

25

%

Operating income

 

22.3

 

 

14.8

 

 

7.5

 

 

51

%

 

67.0

 

 

89.7

 

 

(22.7

)

 

(25

)%

Interest expense, net

 

(17.6

)

 

(25.3

)

 

7.7

 

 

(30

)%

 

(82.0

)

 

(94.7

)

 

12.7

 

 

(13

)%

Gain (loss) on marketable equity investment

 

27.2

 

 

(96.7

)

 

123.9

 

 

n/m

 

132.3

 

 

9.9

 

 

122.4

 

 

n/m

Loss on early extinguishment of debt

 

(71.8

)

 

 

 

(71.8

)

 

n/m

 

(71.8

)

 

(3.1

)

 

(68.7

)

 

n/m

Foreign currency and derivative losses, net

 

(13.0

)

 

 

 

(13.0

)

 

n/m

 

(7.5

)

 

 

 

(7.5

)

 

n/m

Other income (expense)

 

0.7

 

 

 

 

0.7

 

 

n/m

 

(0.3

)

 

 

 

(0.3

)

 

n/m

Net income (loss) before income taxes

 

(52.2

)

 

(107.2

)

 

55.0

 

 

(51

)%

 

37.7

 

 

1.8

 

 

35.9

 

 

n/m

Income tax benefit (expense)

 

0.1

 

 

1.4

 

 

(1.3

)

 

(93

)%

 

3.7

 

 

(0.6

)

 

4.3

 

 

n/m

Net income (loss)

 

$

(52.1

)

 

$

(105.8

)

 

$

53.7

 

 

(51

)%

 

$

41.4

 

 

$

1.2

 

 

$

40.2

 

 

n/m

Income (loss) per share - basic

 

$

(0.46

)

 

$

(1.00

)

 

$

0.54

 

 

(54

)%

 

$

0.36

 

 

$

 

 

$

0.36

 

 

n/m

Income (loss) per share - diluted

 

$

(0.46

)

 

$

(1.00

)

 

$

0.54

 

 

(54

)%

 

$

0.36

 

 

$

 

 

$

0.36

 

 

n/m

(a)

 

The Company adopted the new accounting standard, ASC 842, “Leases”, in the first quarter of 2019. Revenue includes metered power reimbursements of $37.5 million and $28.4 million for the three months ended December 31, 2019 and 2018, respectively, and includes metered power reimbursements of $138.8 million and $104.0 million for the years ended December 31, 2019 and 2018, respectively.

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

   

 

 

 

 

 

 

 

December 31,

 

December 31,

 

Change

 

 

2019

 

2018

 

$

 

%

Assets

 

 

 

 

 

 

 

 

Investment in real estate:

 

 

 

 

 

 

 

 

Land

 

$

147.6

 

 

$

118.5

 

 

$

29.1

 

 

25

%

Buildings and improvements

 

1,761.4

 

 

1,677.5

 

 

83.9

 

 

5

%

Equipment

 

3,028.2

 

 

2,630.2

 

 

398.0

 

 

15

%

Gross operating real estate

 

4,937.2

 

 

4,426.2

 

 

511.0

 

 

12

%

Less accumulated depreciation

 

(1,379.2

)

 

(1,054.5

)

 

(324.7

)

 

31

%

Net operating real estate

 

3,558.0

 

 

3,371.7

 

 

186.3

 

 

6

%

Construction in progress, including land under development

 

946.3

 

 

744.9

 

 

201.4

 

 

27

%

Land held for future development

 

206.0

 

 

176.4

 

 

29.6

 

 

17

%

Total investment in real estate, net

 

4,710.3

 

 

4,293.0

 

 

417.3

 

 

10

%

Cash and cash equivalents

 

76.4

 

 

64.4

 

 

12.0

 

 

19

%

Rent and other receivables, net

 

291.9

 

 

234.9

 

 

57.0

 

 

24

%

Restricted cash

 

1.3

 

 

 

 

1.3

 

 

n/m

Operating lease right-of-use assets, net

 

161.9

 

 

 

 

161.9

 

 

n/m

Equity investments

 

135.1

 

 

198.1

 

 

(63.0

)

 

(32

)%

Goodwill

 

455.1

 

 

455.1

 

 

 

 

n/m

Intangible assets, net

 

196.1

 

 

235.7

 

 

(39.6

)

 

(17

)%

Other assets

 

113.9

 

 

111.3

 

 

2.6

 

 

2

%

Total assets

 

$

6,142.0

 

 

$

5,592.5

 

 

$

549.5

 

 

10

%

Liabilities and equity

 

 

 

 

 

 

 

 

Debt

 

$

2,886.6

 

 

$

2,624.7

 

 

$

261.9

 

 

10

%

Finance lease liabilities

 

31.8

 

 

156.7

 

 

(124.9

)

 

(80

)%

Operating lease liabilities

 

195.8

 

 

 

 

195.8

 

 

n/m

Construction costs payable

 

176.3

 

 

195.3

 

 

(19.0

)

 

(10

)%

Accounts payable and accrued expenses

 

122.7

 

 

121.3

 

 

1.4

 

 

1

%

Dividends payable

 

58.6

 

 

51.0

 

 

7.6

 

 

15

%

Deferred revenue and prepaid rents

 

163.7

 

 

148.6

 

 

15.1

 

 

10

%

Deferred tax liability

 

60.5

 

 

68.9

 

 

(8.4

)

 

(12

)%

Other liabilities

 

11.4

 

 

 

 

11.4

 

 

n/m

Total liabilities

 

3,707.4

 

 

3,366.5

 

 

340.9

 

 

10

%

Stockholders' equity

 

 

 

 

 

 

 

 

Preferred stock, $.01 par value, 100,000,000 authorized; no shares issued or outstanding

 

 

 

 

 

 

 

n/m

Common stock, $.01 par value, 500,000,000 shares authorized and 114,808,898 and 108,329,314 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively

 

1.1

 

 

1.1

 

 

 

 

n/m

Additional paid in capital

 

3,202.0

 

 

2,837.4

 

 

364.6

 

 

13

%

Accumulated deficit

 

(767.3

)

 

(600.2

)

 

(167.1

)

 

28

%

Accumulated other comprehensive loss

 

(1.2

)

 

(12.3

)

 

11.1

 

 

(90

)%

Total stockholders’ equity

 

2,434.6

 

 

2,226.0

 

 

208.6

 

 

9

%

Total liabilities and equity

 

$

6,142.0

 

 

$

5,592.5

 

 

$

549.5

 

 

10

%

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

                     

For the three months ended:

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

 

2019

 

2019

 

2019

 

2019

 

2018

Revenue(a)

 

253.9

 

 

250.9

 

 

251.5

 

 

225.0

 

 

221.3

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

93.8

 

 

103.0

 

 

103.3

 

 

83.3

 

 

78.0

 

Sales and marketing

 

4.5

 

 

5.1

 

 

5.3

 

 

5.3

 

 

5.6

 

General and administrative

 

21.8

 

 

19.8

 

 

19.7

 

 

22.2

 

 

23.4

 

Depreciation and amortization

 

108.1

 

 

105.4

 

 

102.1

 

 

102.1

 

 

97.9

 

Transaction, acquisition, integration and other related expenses

 

2.7

 

 

4.4

 

 

1.4

 

 

0.3

 

 

1.6

 

Impairment losses

 

0.7

 

 

 

 

 

 

 

 

 

Total operating expenses

 

231.6

 

 

237.7

 

 

231.8

 

 

213.2

 

 

206.5

 

Operating income

 

22.3

 

 

13.2

 

 

19.7

 

 

11.8

 

 

14.8

 

Interest expense, net

 

(17.6

)

 

(19.6

)

 

(21.1

)

 

(23.7

)

 

(25.3

)

Gain (loss) on marketable equity investment

 

27.2

 

 

12.4

 

 

(8.5

)

 

101.2

 

 

(96.7

)

Loss on early extinguishment of debt

 

(71.8

)

 

 

 

 

 

 

 

 

Foreign currency and derivative (losses) gains, net

 

(13.0

)

 

5.5

 

 

 

 

 

 

 

Other income (expense)

 

0.7

 

 

(0.9

)

 

 

 

(0.1

)

 

 

Net (loss) income before income taxes

 

(52.2

)

 

10.6

 

 

(9.9

)

 

89.2

 

 

(107.2

)

Income tax benefit

 

0.1

 

 

2.0

 

 

1.4

 

 

0.2

 

 

1.4

 

Net (loss) income

 

$

(52.1

)

 

$

12.6

 

 

$

(8.5

)

 

$

89.4

 

 

$

(105.8

)

(Loss) income per share - basic

 

$

(0.46

)

 

$

0.11

 

 

$

(0.08

)

 

$

0.82

 

 

$

(1.00

)

(Loss) income per share - diluted

 

$

(0.46

)

 

$

0.11

 

 

$

(0.08

)

 

$

0.82

 

 

$

(1.00

)

(a)

 

The Company adopted the new accounting standard, ASC 842, “Leases”, in the first quarter of 2019. Revenue includes metered power reimbursements of $37.5 million, $41.1 million, $31.7 million, $28.5 million and $28.4 million for the three months ended December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively.

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

 

2019

 

2019

 

2019

 

2019

 

2018

Assets

 

 

 

 

 

 

 

 

 

 

Investment in real estate:

 

 

 

 

 

 

 

 

 

 

Land

 

$

147.6

 

 

$

147.3

 

 

$

148.0

 

 

$

124.9

 

 

$

118.5

 

Buildings and improvements

 

1,761.4

 

 

1,732.0

 

 

1,689.7

 

 

1,649.2

 

 

1,677.5

 

Equipment

 

3,028.2

 

 

2,950.3

 

 

2,869.7

 

 

2,799.6

 

 

2,630.2

 

Gross operating real estate

 

4,937.2

 

 

4,829.6

 

 

4,707.4

 

 

4,573.7

 

 

4,426.2

 

Less accumulated depreciation

 

(1,379.2

)

 

(1,292.7

)

 

(1,207.4

)

 

(1,122.5

)

 

(1,054.5

)

Net operating real estate

 

3,558.0

 

 

3,536.9

 

 

3,500.0

 

 

3,451.2

 

 

3,371.7

 

Construction in progress, including land under development

 

946.3

 

 

836.9

 

 

799.2

 

 

734.7

 

 

744.9

 

Land held for future development

 

206.0

 

 

204.3

 

 

200.4

 

 

200.4

 

 

176.4

 

Total investment in real estate, net

 

4,710.3

 

 

4,578.1

 

 

4,499.6

 

 

4,386.3

 

 

4,293.0

 

Cash and cash equivalents

 

76.4

 

 

51.7

 

 

144.1

 

 

126.0

 

 

64.4

 

Rent and other receivables, net

 

291.9

 

 

279.3

 

 

268.4

 

 

248.7

 

 

234.9

 

Restricted cash

 

1.3

 

 

1.3

 

 

1.3

 

 

1.3

 

 

 

Operating lease right-of-use assets, net

 

161.9

 

 

90.7

 

 

78.5

 

 

83.8

 

 

 

Equity investments

 

135.1

 

 

104.3

 

 

91.9

 

 

299.3

 

 

198.1

 

Goodwill

 

455.1

 

 

455.1

 

 

455.1

 

 

455.1

 

 

455.1

 

Intangible assets, net

 

196.1

 

 

203.7

 

 

215.3

 

 

226.1

 

 

235.7

 

Other assets

 

113.9

 

 

128.7

 

 

115.5

 

 

114.8

 

 

111.3

 

Total assets

 

$

6,142.0

 

 

$

5,892.9

 

 

$

5,869.7

 

 

$

5,941.4

 

 

$

5,592.5

 

Liabilities and equity

 

 

 

 

 

 

 

 

 

 

Debt

 

$

2,886.6

 

 

$

2,776.1

 

 

$

2,713.8

 

 

$

2,898.6

 

 

$

2,624.7

 

Finance lease liabilities

 

31.8

 

 

30.7

 

 

31.6

 

 

33.4

 

 

156.7

 

Operating lease liabilities

 

195.8

 

 

124.3

 

 

114.1

 

 

119.6

 

 

 

Construction costs payable

 

176.3

 

 

131.2

 

 

149.5

 

 

155.5

 

 

195.3

 

Accounts payable and accrued expenses

 

122.7

 

 

132.4

 

 

112.8

 

 

81.6

 

 

121.3

 

Dividends payable

 

58.6

 

 

57.7

 

 

53.0

 

 

51.5

 

 

51.0

 

Deferred revenue and prepaid rents

 

163.7

 

 

164.0

 

 

166.8

 

 

155.9

 

 

148.6

 

Deferred tax liability

 

60.5

 

 

59.6

 

 

65.5

 

 

67.2

 

 

68.9

 

Other liabilities

 

11.4

 

 

 

 

 

 

 

 

 

Total liabilities

 

3,707.4

 

 

3,476.0

 

 

3,407.1

 

 

3,563.3

 

 

3,366.5

 

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 114,808,898 and 108,329,314 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively

 

1.1

 

 

1.1

 

 

1.1

 

 

1.1

 

 

1.1

 

Additional paid in capital

 

3,202.0

 

 

3,094.2

 

 

3,089.5

 

 

2,938.2

 

 

2,837.4

 

Accumulated deficit

 

(767.3

)

 

(657.4

)

 

(613.0

)

 

(552.2

)

 

(600.2

)

Accumulated other comprehensive loss

 

(1.2

)

 

(21.0

)

 

(15.0

)

 

(9.0

)

 

(12.3

)

Total stockholders' equity

 

2,434.6

 

 

2,416.9

 

 

2,462.6

 

 

2,378.1

 

 

2,226.0

 

Total liabilities and equity

 

$

6,142.0

 

 

$

5,892.9

 

 

$

5,869.7

 

 

$

5,941.4

 

 

$

5,592.5

 

CyrusOne Inc.

Condensed Consolidated Statements of Cash Flow

(Dollars in millions)

(Unaudited)

                 

 

 

Twelve Months
Ended December
31, 2019

 

Twelve Months
Ended December
31, 2018

 

Three Months
Ended December
31, 2019

 

Three Months
Ended December
31, 2018

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

41.4

 

 

$

1.2

 

 

$

(52.1

)

 

$

(105.8

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

417.7

 

 

334.1

 

 

108.1

 

 

97.9

 

Provision for bad debt expense

 

1.7

 

 

2.6

 

 

1.9

 

 

2.0

 

Unrealized (gain) loss on marketable equity investment

 

(65.6

)

 

(9.9

)

 

(27.4

)

 

96.7

 

Realized gain on marketable equity investment

 

(66.7

)

 

 

 

0.2

 

 

 

Foreign currency and derivative losses, net

 

7.5

 

 

 

 

13.0

 

 

 

Proceeds from swap terminations

 

3.6

 

 

 

 

3.6

 

 

 

Loss on asset disposals

 

0.4

 

 

 

 

0.2

 

 

 

Impairment loss on real estate

 

0.7

 

 

 

 

 

 

 

Loss on early extinguishment of debt

 

71.8

 

 

3.1

 

 

71.8

 

 

 

Interest expense amortization, net

 

5.0

 

 

4.0

 

 

1.5

 

 

1.0

 

Stock-based compensation expense

 

16.7

 

 

17.5

 

 

4.3

 

 

4.5

 

Deferred income tax benefit

 

(7.5

)

 

 

 

(1.1

)

 

 

Operating least cost

 

20.3

 

 

 

 

5.7

 

 

 

Other

 

0.2

 

 

(0.6

)

 

0.2

 

 

(0.6

)

 

 

 

 

 

 

 

 

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Rent and other receivables, net and other assets

 

(74.2

)

 

(80.2

)

 

(22.7

)

 

(24.8

)

Accounts payable and accrued expenses

 

(0.8

)

 

3.0

 

 

(12.6

)

 

26.4

 

Deferred revenue and prepaid rents

 

15.6

 

 

34.5

 

 

(0.5

)

 

9.1

 

Operating lease liabilities

 

(22.1

)

 

 

 

(5.4

)

 

 

Net cash provided by operating activities

 

365.7

 

 

309.3

 

 

88.7

 

 

106.4

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Investment in real estate

 

(876.4

)

 

(865.7

)

 

(149.1

)

 

(234.5

)

Asset acquisitions, primarily real estate, net of cash acquired

 

 

 

(462.8

)

 

 

 

(1.0

)

Proceeds from sale of equity investments

 

199.0

 

 

 

 

(0.8

)

 

 

Equity investments

 

(3.8

)

 

(12.6

)

 

(3.5

)

 

(12.6

)

Proceeds from the sale of real estate assets

 

1.3

 

 

 

 

0.4

 

 

 

Net cash used in investing activities

 

(679.9

)

 

(1,341.1

)

 

(153.0

)

 

(248.1

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Issuance of common stock, net

 

357.2

 

 

699.6

 

 

103.9

 

 

147.7

 

Dividends paid

 

(210.4

)

 

(181.1

)

 

(56.9

)

 

(48.8

)

Proceeds from revolving credit facility

 

656.7

 

 

688.3

 

 

122.4

 

 

318.3

 

Repayments of revolving credit facility

 

(182.5

)

 

(647.4

)

 

0.7

 

 

(274.7

)

Proceeds from unsecured term loan

 

 

 

1,300.0

 

 

 

 

4.9

 

Repayments of unsecured term loan

 

(200.0

)

 

(900.0

)

 

 

 

 

Proceeds from senior notes

 

1,197.4

 

 

 

 

1,197.4

 

 

 

Repayments of senior notes

 

(1,200.0

)

 

 

 

(1,200.0

)

 

 

Payment of debt extinguishment costs

 

(72.0

)

 

 

 

(72.0

)

 

 

Payment of deferred financing costs

 

(9.4

)

 

 

 

(9.4

)

 

 

Payments on finance lease liabilities

 

(2.9

)

 

(9.5

)

 

(0.8

)

 

(1.7

)

Tax payment upon exercise of equity awards

 

(9.3

)

 

(5.2

)

 

(0.3

)

 

(0.1

)

Net cash provided by financing activities

 

324.8

 

 

944.7

 

 

85.0

 

 

145.6

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

2.7

 

 

(0.4

)

 

4.0

 

 

(0.5

)

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

 

13.3

 

 

(87.5

)

 

24.7

 

 

3.4

 

Cash, cash equivalents and restricted cash at beginning of period

 

64.4

 

 

151.9

 

 

53.0

 

 

61.0

 

Cash, cash equivalents and restricted cash at end of period

 

$

77.7

 

 

$

64.4

 

 

$

77.7

 

 

$

64.4

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest, including amounts capitalized of $32.9 million and $24.4 million in 2019 and 2018, respectively

 

$

123.0

 

 

$

115.4

 

 

$

123.0

 

 

$

16.9

 

Cash paid for income taxes

 

3.5

 

 

3.4

 

 

3.5

 

 

0.1

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Construction costs payable

 

176.3

 

 

195.3

 

 

176.3

 

 

195.3

 

Dividends payable

 

58.6

 

 

51.0

 

 

58.6

 

 

51.0

 

CyrusOne Inc.

Reconciliation of Net Income (Loss) to Net Operating Income

(Dollars in millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

Twelve Months Ended

 

 

 

 

 

 

December 31,

 

Change

 

December 31,

 

Change

 

2019

 

2018

 

$

 

%

 

2019

 

2018

 

$

 

%

Net Income (Loss)

 

$

(52.1

)

 

$

(105.8

)

 

$

53.7

 

 

(51

)%

 

$

41.4

 

 

$

1.2

 

 

$

40.2

 

 

n/m

Sales and marketing expenses

 

4.5

 

 

5.6

 

 

(1.1

)

 

(20

)%

 

20.2

 

 

19.6

 

 

0.6

 

 

3

%

General and administrative expenses

 

21.8

 

 

23.4

 

 

(1.6

)

 

(7

)%

 

83.5

 

 

80.6

 

 

2.9

 

 

4

%

Depreciation and amortization expenses

 

108.1

 

 

97.9

 

 

10.2

 

 

10

%

 

417.7

 

 

334.1

 

 

83.6

 

 

25

%

Transaction, acquisition, integration and other related expenses

 

2.7

 

 

1.6

 

 

1.1

 

 

69

%

 

8.8

 

 

5.0

 

 

3.8

 

 

76

%

Interest expense, net

 

17.6

 

 

25.3

 

 

(7.7

)

 

(30

)%

 

82.0

 

 

94.7

 

 

(12.7

)

 

(13

)%

(Gain) loss on marketable equity investment

 

(27.2

)

 

96.7

 

 

(123.9

)

 

n/m

 

(132.3

)

 

(9.9

)

 

(122.4

)

 

n/m

Loss on early extinguishment of debt

 

71.8

 

 

 

 

71.8

 

 

n/m

 

71.8

 

 

3.1

 

 

68.7

 

 

n/m

Impairment losses

 

0.7

 

 

 

 

0.7

 

 

n/m

 

0.7

 

 

 

 

0.7

 

 

n/m

Foreign currency and derivative losses, net

 

13.0

 

 

 

 

13.0

 

 

n/m

 

7.5

 

 

 

 

7.5

 

 

n/m

Other (income) expense

 

(0.7

)

 

 

 

(0.7

)

 

n/m

 

0.3

 

 

 

 

0.3

 

 

n/m

Income tax (benefit) expense

 

(0.1

)

 

(1.4

)

 

1.3

 

 

(93

)%

 

(3.7

)

 

0.6

 

 

(4.3

)

 

n/m

Net Operating Income

 

$

160.1

 

 

$

143.3

 

 

$

16.8

 

 

12

%

 

$

597.9

 

 

$

529.0

 

 

$

68.9

 

 

13

%

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

 

 

 

 

Three Months Ended

 

 

December 31,

 

Change

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

 

2019

 

2018

 

$

 

%

 

2019

 

2019

 

2019

 

2019

 

2018

Net Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

981.3

 

 

$

821.4

 

 

$

159.9

 

 

19%

 

$

253.9

 

 

$

250.9

 

 

$

251.5

 

 

$

225.0

 

 

$

221.3

 

Property operating expenses

 

383.4

 

 

292.4

 

 

91.0

 

 

31%

 

93.8

 

 

103.0

 

 

103.3

 

 

83.3

 

 

78.0

 

Net Operating Income (NOI)

 

$

597.9

 

 

$

529.0

 

 

$

68.9

 

 

13%

 

$

160.1

 

 

$

147.9

 

 

$

148.2

 

 

$

141.7

 

 

$

143.3

 

NOI as a % of Revenue

 

60.9

%

 

64.4

%

 

 

 

 

 

63.1

%

 

58.9

%

 

58.9

%

 

63.0

%

 

64.8

%

Reconciliation of Net Income (Loss) to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

41.4

 

 

$

1.2

 

 

$

40.2

 

 

n/m

 

$

(52.1

)

 

$

12.6

 

 

$

(8.5

)

 

$

89.4

 

 

$

(105.8

)

Interest expense, net

 

82.0

 

 

94.7

 

 

(12.7

)

 

(13)%

 

17.6

 

 

19.6

 

 

21.1

 

 

23.7

 

 

25.3

 

Income tax (benefit) expense

 

(3.7

)

 

0.6

 

 

(4.3

)

 

n/m

 

(0.1

)

 

(2.0

)

 

(1.4

)

 

(0.2

)

 

(1.4

)

Depreciation and amortization expenses

 

417.7

 

 

334.1

 

 

83.6

 

 

25%

 

108.1

 

 

105.4

 

 

102.1

 

 

102.1

 

 

97.9

 

Impairment losses

 

0.7

 

 

 

 

0.7

 

 

n/m

 

0.7

 

 

 

 

 

 

 

 

 

EBITDA (Nareit definition)(a)

 

$

538.1

 

 

$

430.6

 

 

107.5

 

 

25%

 

$

74.2

 

 

$

135.6

 

 

$

113.3

 

 

$

215.0

 

 

$

16.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction, acquisition, integration and other related expenses

 

8.8

 

 

4.8

 

 

4.0

 

 

83%

 

2.7

 

 

4.4

 

 

1.4

 

 

0.3

 

 

1.4

 

Legal claim costs

 

1.1

 

 

0.6

 

 

0.5

 

 

83%

 

0.5

 

 

0.4

 

 

0.1

 

 

0.1

 

 

0.2

 

Stock-based compensation expense

 

16.7

 

 

17.5

 

 

(0.8

)

 

(5)%

 

4.3

 

 

4.2

 

 

3.7

 

 

4.5

 

 

4.5

 

Severance and management transition costs

 

(0.6

)

 

2.3

 

 

(2.9

)

 

n/m

 

(0.7

)

 

 

 

 

 

0.1

 

 

1.6

 

Loss on early extinguishment of debt

 

71.8

 

 

3.1

 

 

68.7

 

 

n/m

 

71.8

 

 

 

 

 

 

 

 

 

New accounting standards and regulatory compliance and the related system implementation costs

 

0.8

 

 

3.0

 

 

(2.2

)

 

(73)%

 

 

 

0.2

 

 

0.3

 

 

0.3

 

 

0.7

 

(Gain) loss on marketable equity investment

 

(132.3

)

 

(9.9

)

 

(122.4

)

 

n/m

 

(27.2

)

 

(12.4

)

 

8.5

 

 

(101.2

)

 

96.7

 

Foreign currency and derivative losses (gains), net

 

7.5

 

 

 

 

7.5

 

 

n/m

 

13.0

 

 

(5.5

)

 

 

 

 

 

 

Other (income) expense

 

0.3

 

 

0.1

 

 

0.2

 

 

n/m

 

(0.7

)

 

0.9

 

 

 

 

0.1

 

 

0.1

 

Adjusted EBITDA

 

$

512.2

 

 

$

452.1

 

 

60.1

 

 

13%

 

$

137.9

 

 

$

127.8

 

 

$

127.3

 

 

$

119.2

 

 

$

121.2

 

Adjusted EBITDA as a % of Revenue

 

52.2

%

 

55.0

%

 

 

 

 

 

54.3

%

 

50.9

%

 

50.6

%

 

53.0

%

 

54.8

%

(a)

 

We calculate Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) as GAAP net income (loss) plus interest expense, income tax benefit (expense), depreciation and amortization and 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 FFO and Normalized FFO

(Dollars in millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

 

 

 

 

Three Months Ended

 

 

December 31,

 

Change

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

2019

 

2018

 

$

 

%

 

2019

 

2019

 

2019

 

2019

 

2018

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

41.4

 

 

$

1.2

 

 

$

40.2

 

 

n/m

 

$

(52.1

)

 

$

12.6

 

 

$

(8.5

)

 

$

89.4

 

 

$

(105.8

)

Real estate depreciation and amortization

 

408.5

 

 

325.5

 

 

83.0

 

 

25

%

 

105.6

 

 

102.6

 

 

100.2

 

 

100.1

 

 

95.5

 

Impairment losses and loss on disposal of assets

 

1.1

 

 

 

 

1.1

 

 

n/m

 

0.1

 

 

1.0

 

 

 

 

 

 

 

Funds from Operations ("FFO") - Nareit defined

 

$

451.0

 

 

$

326.7

 

 

$

124.3

 

 

38

%

 

$

53.6

 

 

$

116.2

 

 

$

91.7

 

 

$

189.5

 

 

$

(10.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on early extinguishment of debt

 

71.8

 

 

3.1

 

 

68.7

 

 

n/m

 

71.8

 

 

 

 

 

 

 

 

 

(Gain) loss on marketable equity investment

 

(132.3

)

 

(9.9

)

 

(122.4

)

 

n/m

 

(27.2

)

 

(12.4

)

 

8.5

 

 

(101.2

)

 

96.7

 

Foreign currency and derivative losses (gains), net

 

7.5

 

 

 

 

7.5

 

 

n/m

 

13.0

 

 

(5.5

)

 

 

 

 

 

 

New accounting standards and regulatory compliance and the related system implementation costs

 

0.8

 

 

3.0

 

 

(2.2

)

 

(73

)%

 

 

 

0.2

 

 

0.3

 

 

0.3

 

 

0.7

 

Amortization of tradenames

 

1.3

 

 

1.7

 

 

(0.4

)

 

(24

)%

 

0.4

 

 

0.6

 

 

0.1

 

 

0.2

 

 

0.6

 

Transaction, acquisition, integration and other related expenses

 

8.4

 

 

4.8

 

 

3.6

 

 

75

%

 

2.3

 

 

4.4

 

 

1.4

 

 

0.3

 

 

1.4

 

Severance and management transition costs

 

(0.6

)

 

2.3

 

 

(2.9

)

 

n/m

 

(0.7

)

 

 

 

 

 

0.1

 

 

1.6

 

Legal claim costs

 

1.1

 

 

0.6

 

 

0.5

 

 

83

%

 

0.5

 

 

0.4

 

 

0.1

 

 

0.1

 

 

0.2

 

Normalized Funds from Operations (Normalized FFO)

 

$

409.0

 

 

$

332.3

 

 

$

76.7

 

 

23

%

 

$

113.7

 

 

$

103.9

 

 

$

102.1

 

 

$

89.3

 

 

$

90.9

 

Normalized FFO per diluted common share

 

$

3.63

 

 

$

3.31

 

 

$

0.32

 

 

10

%

 

$

0.99

 

 

$

0.91

 

 

$

0.90

 

 

$

0.82

 

 

$

0.86

 

Weighted average diluted common shares outstanding

 

112.5

 

 

100.4

 

 

12.1

 

 

12

%

 

114.4

 

 

113.5

 

 

113.1

 

 

108.8

 

 

106.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of deferred financing costs and bond premium

 

5.0

 

 

4.0

 

 

1.0

 

 

25

%

 

1.4

 

 

1.2

 

 

1.2

 

 

1.2

 

 

1.1

 

Stock-based compensation expense

 

16.7

 

 

17.5

 

 

(0.8

)

 

(5

)%

 

4.3

 

 

4.2

 

 

3.7

 

 

4.5

 

 

4.5

 

Non-real estate depreciation and amortization

 

7.9

 

 

6.9

 

 

1.0

 

 

14

%

 

2.1

 

 

2.0

 

 

1.9

 

 

1.9

 

 

1.8

 

Straight line rent adjustments(a)

 

(26.6

)

 

(27.7

)

 

1.1

 

 

(4

)%

 

(3.8

)

 

(5.9

)

 

(6.8

)

 

(10.1

)

 

(8.9

)

Deferred revenue, primarily installation revenue(b)

 

6.6

 

 

29.3

 

 

(22.7

)

 

(77

)%

 

(2.3

)

 

(1.7

)

 

4.7

 

 

5.9

 

 

16.1

 

Leasing commissions

 

(14.4

)

 

(16.7

)

 

2.3

 

 

(14

)%

 

(4.8

)

 

(2.8

)

 

(3.1

)

 

(3.7

)

 

(6.5

)

Recurring capital expenditures

 

(9.9

)

 

(10.5

)

 

0.6

 

 

(6

)%

 

(1.1

)

 

(4.5

)

 

(1.6

)

 

(2.7

)

 

(2.1

)

(a)

 

Straight line rent adjustments:

 

 

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

 

 

 

(b)

 

Deferred revenue, primarily installation revenue:

 

 

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

CyrusOne Inc.

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

(Unaudited)

Market Capitalization (as of December 31, 2019)

           
             
(dollars in millions)  

Shares or
Equivalents
Outstanding

 

Market Price
as of
December 31, 2019

 

Market Value
Equivalents
(in millions)

Common shares

 

114,808,898

 

 

$

65.43

 

 

$

7,511.9

 

Net Debt

 

 

 

 

 

2,870.4

 

Total Enterprise Value (TEV)

 

 

 

 

 

$

10,382.3

 

Reconciliation of Net Debt

           
             
   

December 31,

 

September 30,

 

December 31,

(dollars in millions)

 

2019

 

2019

 

2018

Long-term debt(a)

 

$

2,915.0

 

 

$

2,791.0

 

 

$

2,643.0

 

Finance lease liabilities

 

31.8

 

 

30.7

 

 

33.4

 

Less:

 

 

 

 

 

 

Cash and cash equivalents

 

(76.4

)

 

(51.7

)

 

(64.4

)

Net Debt

 

$

2,870.4

 

 

$

2,770.0

 

 

$

2,612.0

 

(a)

 

Excludes adjustment for deferred financing costs and bond premiums.

Debt Schedule (as of December 31, 2019)

           
             
(dollars in millions)  

 

 

 

 

 

Long-term debt:

 

Amount

 

Interest Rate

 

Maturity Date

Revolving credit facility - EUR(a)(b)

 

$

33.6

 

 

EURIBOR + 120bps(c)

 

March 2023(d)

Revolving credit facility - GBP(a)(b)

 

26.4

 

 

GBP LIBOR + 120bps(e)

 

March 2023(d)

Revolving credit facility - USD(b)(f)

 

555.0

 

 

USD LIBOR + 120bps(g)

 

March 2023(d)

Term loan(b)(h)

 

800.0

 

 

USD LIBOR + 135bps(h)

 

March 2023

Term loan(b)

 

300.0

 

 

USD LIBOR + 165bps(i)

 

March 2025

2.900% senior notes due 2024

 

600.0

 

 

2.900%

 

November 2024

3.450% senior notes due 2029

 

600.0

 

 

3.450%

 

November 2029

Total long-term debt(j)

 

$

2,915.0

 

 

2.34%(k)

 

 

 

 

 

 

 

 

 

Weighted average term of debt:

 

5.2

 

 

years

 

 

(a)  

EUR amount outstanding is USD equivalent of €30 million. GBP amount outstanding is USD equivalent of £20 million.

(b)

 

Credit rating-based pricing grid replaced leverage-based grid in 3Q'19, resulting in a 0.25% margin reduction for revolving credit facility borrowings and a 0.05% margin reduction for term loans, elimination of 0.25% commitment fee on undrawn portion of revolving credit facility commitment, and introduction of 0.25% facility fee on entire revolving credit facility commitment.

(c)

 

Interest rate as of December 31, 2019: 1.20%.

(d)

 

Assuming exercise of one-year extension option.

(e)

 

Interest rate as of December 31, 2019: 1.91%

(f)

 

$450 million of $555 million synthetically converted into €401 million pursuant to USD-EUR cross currency swaps.

(g)

 

Interest rate as of December 31, 2019: 3.22%; adjusted rate on $450 million synthetically converted pursuant to USD-EUR cross currency swaps: 0.79%.

(h)

 

$500 million of $800 million synthetically converted into €451 million pursuant to a USD-EUR cross currency swap; remaining $300 million swapped pursuant to USD floating to fixed interest rate swap. Interest rate as of December 31, 2019: 3.15%; weighted average interest rate pursuant to swaps: 1.49%.

(i)

 

Interest rate as of December 31, 2019: 3.45%.

(j)

 

Excludes adjustment for deferred financing costs.

(k)

 

Weighted average interest rate calculated using lower interest rate on swapped amount.

Interest Summary

 

Three Months Ended

 

 

 

 

December 31,

 

September 30,

 

December 31,

 

Growth %

(dollars in millions)

 

2019

 

2019

 

2018

 

Yr/Yr

Interest expense and fees

 

$

22.9

 

 

$

26.4

 

 

$

32.7

 

 

(30

)%

Amortization of deferred financing costs and bond premium

 

1.4

 

 

1.2

 

 

1.1

 

 

27

%

Capitalized interest

 

(6.7

)

 

(8.0

)

 

(8.5

)

 

(21

)%

Total interest expense

 

$

17.6

 

 

$

19.6

 

 

$

25.3

 

 

(30

)%

CyrusOne Inc.

Colocation Square Footage (CSF) and CSF Leased

(Unaudited)

 

 

 

 

 

 

 

 

 

As of December 31, 2019

 

As of September 30, 2019

 

As of December 31, 2018

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

 

1,113

 

 

92

%

 

1,113

 

 

91

%

 

881

 

 

96

%

Dallas

 

621

 

 

70

%

 

621

 

 

71

%

 

621

 

 

70

%

Phoenix

 

509

 

 

100

%

 

509

 

 

100

%

 

509

 

 

100

%

Cincinnati

 

402

 

 

78

%

 

402

 

 

78

%

 

402

 

 

92

%

Houston

 

308

 

 

64

%

 

308

 

 

64

%

 

308

 

 

73

%

San Antonio

 

300

 

 

100

%

 

300

 

 

100

%

 

300

 

 

100

%

New York Metro

 

245

 

 

74

%

 

228

 

 

76

%

 

218

 

 

86

%

Chicago

 

203

 

 

77

%

 

203

 

 

73

%

 

213

 

 

69

%

Austin

 

106

 

 

79

%

 

106

 

 

81

%

 

106

 

 

80

%

Raleigh-Durham

 

83

 

 

95

%

 

83

 

 

100

%

 

76

 

 

97

%

Total - Domestic

 

3,890

 

 

84

%

 

3,872

 

 

84

%

 

3,633

 

 

87

%

Frankfurt

 

144

 

 

99

%

 

144

 

 

99

%

 

98

 

 

99

%

London

 

128

 

 

81

%

 

128

 

 

81

%

 

84

 

 

99

%

Singapore

 

3

 

 

20

%

 

3

 

 

22

%

 

3

 

 

22

%

Total - International

 

275

 

 

90

%

 

275

 

 

90

%

 

185

 

 

98

%

Total - Portfolio

 

4,165

 

 

85

%

 

4,148

 

 

85

%

 

3,819

 

 

88

%

Stabilized Properties(c)

 

3,937

 

 

88

%

 

3,935

 

 

88

%

 

3,540

 

 

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. May not sum to total due to rounding.

(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.

2020 Guidance

         

Category

 

2019 Results

 

2020 Guidance

Total Revenue

 

$981 million

 

$1,015 - 1,055 million

Lease and Other Revenues from Customers

 

$842 million

 

$870 - 900 million

Metered Power Reimbursements

 

$139 million

 

$145 - 155 million

Adjusted EBITDA

 

$512 million

 

$535 - 555 million

Normalized FFO per diluted common share

 

$3.63

 

$3.75 - 3.90

Capital Expenditures

 

$876 million

 

$750 - 850 million

Development(1)

 

$866 million

 

$735 - 830 million

Recurring

 

$10 million

 

$15 - 20 million

 

 

 

 

 

(1)

 

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

CyrusOne is issuing guidance for full year 2020. 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 Total Revenue and Capital Expenditures) or reconciliations for the non-GAAP financial measures included in the annual guidance provided above due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for transaction, acquisition, integration and other related expenses, legal claim costs, asset impairments and loss on disposals and other charges in its reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

CyrusOne Inc.

Data Center Portfolio

As of December 31, 2019

(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

 

$

84,063

 

 

379

 

 

81

%

 

81

%

 

82

 

 

46

%

 

133

 

 

595

 

 

 

 

56

 

Northern Virginia - Sterling V

 

Northern Virginia

 

60,046

 

 

383

 

 

86

%

 

93

%

 

11

 

 

100

%

 

145

 

 

539

 

 

64

 

 

66

 

Northern Virginia - Sterling VI

 

Northern Virginia

 

47,424

 

 

272

 

 

88

%

 

91

%

 

35

 

 

%

 

 

 

307

 

 

 

 

57

 

Northern Virginia - Sterling II

 

Northern Virginia

 

35,498

 

 

159

 

 

100

%

 

100

%

 

9

 

 

100

%

 

55

 

 

223

 

 

 

 

30

 

San Antonio III

 

San Antonio

 

32,733

 

 

132

 

 

100

%

 

100

%

 

9

 

 

100

%

 

43

 

 

184

 

 

 

 

24

 

Somerset I

 

New York Metro

 

31,991

 

 

108

 

 

81

%

 

81

%

 

27

 

 

99

%

 

89

 

 

224

 

 

186

 

 

16

 

Chicago - Aurora I

 

Chicago

 

31,445

 

 

113

 

 

98

%

 

98

%

 

34

 

 

100

%

 

223

 

 

371

 

 

27

 

 

71

 

Cincinnati - 7th Street***

 

Cincinnati

 

31,285

 

 

197

 

 

65

%

 

65

%

 

6

 

 

61

%

 

175

 

 

378

 

 

46

 

 

16

 

Houston - Houston West I

 

Houston

 

28,687

 

 

112

 

 

75

%

 

75

%

 

11

 

 

100

%

 

37

 

 

161

 

 

3

 

 

28

 

Totowa - Madison**

 

New York Metro

 

26,656

 

 

51

 

 

87

%

 

87

%

 

22

 

 

89

%

 

59

 

 

133

 

 

 

 

6

 

Dallas - Lewisville*

 

Dallas

 

26,527

 

 

114

 

 

81

%

 

81

%

 

11

 

 

63

%

 

54

 

 

180

 

 

 

 

21

 

Cincinnati - North Cincinnati

 

Cincinnati

 

24,910

 

 

65

 

 

99

%

 

99

%

 

45

 

 

79

%

 

53

 

 

163

 

 

65

 

 

14

 

Phoenix - Chandler VI

 

Phoenix

 

24,778

 

 

148

 

 

100

%

 

100

%

 

6

 

 

100

%

 

32

 

 

187

 

 

279

 

 

24

 

Frankfurt I

 

Frankfurt

 

22,280

 

 

53

 

 

97

%

 

97

%

 

8

 

 

91

%

 

57

 

 

118

 

 

 

 

18

 

Houston - Houston West II

 

Houston

 

21,190

 

 

80

 

 

75

%

 

75

%

 

4

 

 

88

%

 

55

 

 

139

 

 

11

 

 

12

 

Austin III

 

Austin

 

20,811

 

 

62

 

 

69

%

 

69

%

 

15

 

 

98

%

 

21

 

 

98

 

 

67

 

 

9

 

San Antonio I

 

San Antonio

 

20,258

 

 

44

 

 

99

%

 

99

%

 

6

 

 

83

%

 

46

 

 

96

 

 

11

 

 

12

 

Phoenix - Chandler II

 

Phoenix

 

20,145

 

 

74

 

 

100

%

 

100

%

 

6

 

 

53

%

 

26

 

 

105

 

 

 

 

12

 

Wappingers Falls I**

 

New York Metro

 

19,962

 

 

37

 

 

65

%

 

65

%

 

20

 

 

87

%

 

15

 

 

72

 

 

 

 

3

 

Phoenix - Chandler I

 

Phoenix

 

19,927

 

 

74

 

 

100

%

 

100

%

 

35

 

 

12

%

 

39

 

 

147

 

 

31

 

 

16

 

Northern Virginia - Sterling III

 

Northern Virginia

 

19,444

 

 

79

 

 

100

%

 

100

%

 

7

 

 

100

%

 

34

 

 

120

 

 

 

 

15

 

Phoenix - Chandler III

 

Phoenix

 

19,194

 

 

68

 

 

100

%

 

100

%

 

2

 

 

%

 

30

 

 

101

 

 

 

 

14

 

Northern Virginia - Sterling I

 

Northern Virginia

 

17,956

 

 

78

 

 

100

%

 

100

%

 

6

 

 

69

%

 

49

 

 

132

 

 

 

 

12

 

Raleigh-Durham I

 

Raleigh-Durham

 

17,945

 

 

83

 

 

88

%

 

95

%

 

13

 

 

93

%

 

82

 

 

178

 

 

235

 

 

15

 

Northern Virginia - Sterling IV

 

Northern Virginia

 

15,742

 

 

81

 

 

100

%

 

100

%

 

7

 

 

100

%

 

34

 

 

122

 

 

 

 

15

 

Frankfurt II

 

Frankfurt

 

15,616

 

 

90

 

 

100

%

 

100

%

 

9

 

 

100

%

 

72

 

 

171

 

 

10

 

 

35

 

San Antonio II

 

San Antonio

 

14,631

 

 

64

 

 

100

%

 

100

%

 

11

 

 

100

%

 

41

 

 

117

 

 

 

 

12

 

Austin II

 

Austin

 

14,621

 

 

44

 

 

89

%

 

92

%

 

2

 

 

100

%

 

22

 

 

68

 

 

 

 

5

 

Phoenix - Chandler V

 

Phoenix

 

14,025

 

 

72

 

 

100

%

 

100

%

 

1

 

 

95

%

 

16

 

 

89

 

 

94

 

 

12

 

Houston - Galleria

 

Houston

 

13,994

 

 

63

 

 

48

%

 

48

%

 

23

 

 

40

%

 

25

 

 

112

 

 

 

 

14

 

Florence

 

Cincinnati

 

13,661

 

 

53

 

 

99

%

 

99

%

 

47

 

 

87

%

 

40

 

 

140

 

 

 

 

9

 

London I*

 

London

 

12,083

 

 

30

 

 

100

%

 

100

%

 

12

 

 

56

%

 

58

 

 

100

 

 

9

 

 

12

 

Phoenix - Chandler IV

 

Phoenix

 

11,570

 

 

73

 

 

100

%

 

100

%

 

3

 

 

100

%

 

27

 

 

103

 

 

 

 

12

 

Cincinnati - Hamilton*

 

Cincinnati

 

11,104

 

 

47

 

 

73

%

 

73

%

 

1

 

 

100

%

 

35

 

 

83

 

 

 

 

10

 

San Antonio IV

 

San Antonio

 

10,823

 

 

60

 

 

100

%

 

100

%

 

12

 

 

100

%

 

27

 

 

99

 

 

 

 

12

 

London II*

 

London

 

9,989

 

 

64

 

 

100

%

 

100

%

 

10

 

 

100

%

 

93

 

 

166

 

 

4

 

 

21

 

Houston - Houston West III

 

Houston

 

6,947

 

 

53

 

 

41

%

 

42

%

 

10

 

 

100

%

 

32

 

 

95

 

 

209

 

 

6

 

London - Great Bridgewater**

 

London

 

6,808

 

 

10

 

 

96

%

 

96

%

 

 

 

%

 

1

 

 

11

 

 

 

 

1

 

Stamford - Riverbend**

 

New York Metro

 

6,053

 

 

20

 

 

23

%

 

23

%

 

 

 

%

 

8

 

 

28

 

 

 

 

2

 

Cincinnati - Mason

 

Cincinnati

 

5,212

 

 

34

 

 

100

%

 

100

%

 

26

 

 

98

%

 

17

 

 

78

 

 

 

 

4

 

Chicago - Aurora II (DH #1)

 

Chicago

 

4,760

 

 

77

 

 

47

%

 

49

%

 

45

 

 

%

 

14

 

 

136

 

 

272

 

 

16

 

Norwalk I**

 

New York Metro

 

4,692

 

 

13

 

 

100

%

 

100

%

 

4

 

 

65

%

 

41

 

 

58

 

 

87

 

 

2

 

Chicago - Lombard

 

Chicago

 

2,414

 

 

14

 

 

64

%

 

64

%

 

4

 

 

45

%

 

12

 

 

30

 

 

29

 

 

3

 

Stamford - Omega**

 

New York Metro

 

1,234

 

 

 

 

%

 

%

 

19

 

 

79

%

 

4

 

 

22

 

 

 

 

 

Totowa - Commerce**

 

New York Metro

 

666

 

 

 

 

%

 

%

 

20

 

 

44

%

 

6

 

 

26

 

 

 

 

 

Cincinnati - Blue Ash*

 

Cincinnati

 

633

 

 

6

 

 

36

%

 

36

%

 

7

 

 

100

%

 

2

 

 

15

 

 

 

 

1

 

Singapore - Inter Business Park**

 

Singapore

 

368

 

 

3

 

 

20

%

 

20

%

 

 

 

%

 

 

 

3

 

 

 

 

1

 

Stabilized Properties - Total

 

 

 

$

902,801

 

 

3,937

 

 

87

%

 

88

%

 

705

 

 

66

%

 

2,178

 

 

6,820

 

 

1,739

 

 

767

 

CyrusOne Inc.

Data Center Portfolio

As of December 31, 2019

(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

 

 

 

$

902,801

 

 

3,937

 

 

87

%

 

88

%

 

705

 

 

66

%

 

2,178

 

 

6,820

 

 

1,739

 

 

767

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-Stabilized Properties(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northern Virginia - Sterling VIII

 

Northern Virginia

 

8,805

 

 

61

 

 

37

%

 

37

%

 

4

 

 

%

 

25

 

 

90

 

 

 

 

6

 

Dallas - Carrollton (DH #7)

 

Dallas

 

4,100

 

 

48

 

 

38

%

 

57

%

 

 

 

%

 

 

 

48

 

 

 

 

6

 

Dallas - Allen (DH #1)

 

Dallas

 

1,056

 

 

79

 

 

9

%

 

9

%

 

 

 

%

 

58

 

 

137

 

 

204

 

 

6

 

London II* -(DH #3)

 

London

 

 

 

17

 

 

%

 

%

 

 

 

%

 

 

 

17

 

 

 

 

7

 

London I* -(DH #1)

 

London

 

 

 

8

 

 

%

 

%

 

 

 

%

 

 

 

8

 

 

 

 

3

 

Somerset I (DH #14)

 

New York Metro

 

 

 

16

 

 

%

 

40

%

 

 

 

%

 

 

 

16

 

 

 

 

2

 

All Properties - Total

 

 

 

$

916,763

 

 

4,165

 

 

83

%

 

85

%

 

709

 

 

66

%

 

2,261

 

 

7,135

 

 

1,942

 

 

797

 

*  

Indicates properties in which we hold a leasehold interest in the building shell and land. All data center infrastructure has been constructed by us and is owned by us.

**

 

Indicates properties in which we hold a leasehold interest in the building shell, land, and all data center infrastructure.

***

 

The information provided for the Cincinnati - 7th Street property includes data for two facilities, one of which we lease and one of which we own.

 

 

 

 

 

 

(a)

 

Represents the total square feet of a building under lease or available for lease based on engineers' drawings and estimates but does not include space held for development or space used by CyrusOne.

(b)

 

Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% leased. Pre-stabilized properties include data halls that have been in service for less than 24 months and are less than 85% leased.

(c)

 

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of December 31, 2019 multiplied by 12. For the month of December 2019, customer reimbursements were $137.6 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From January 1, 2018 through December 31, 2019, customer reimbursements under leases with separately metered power constituted between 11.6% and 19.4% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of December 31, 2019 was $906.7 million. Our annualized effective rent was lower than our annualized rent as of December 31, 2019 because our negative straight-line and other adjustments and amortization of deferred revenue exceeded our positive straight-line adjustments due to factors such as the timing of contractual rent escalations and customer payments for services.

(d)

 

CSF represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment.

(e)

 

Percent occupied is determined based on CSF billed to customers under signed leases as of December 31, 2019 divided by total CSF. Leases signed but that have not commenced billing as of December 31, 2019 are not included.

(f)

 

Percent leased is calculated by dividing CSF under signed leases for colocation space (whether or not the lease has commenced billing) by total CSF.

(g)

 

Represents the NRSF at an operating facility that is currently leased or readily available for lease as space other than CSF, which is typically office and other space.

(h)

 

Percent occupied is determined based on Office & Other space being billed to customers under signed leases as of December 31, 2019 divided by total Office & Other space. Leases signed but not commenced as of December 31, 2019 are not included.

(i)

 

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

(j)

 

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

(k)

 

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

(l)

 

Critical load capacity represents the aggregate power available for lease and exclusive use by customers expressed in terms of megawatts. The capacity reported is for non-redundant megawatts, as we can develop flexible solutions to our customers at multiple resiliency levels. Does not sum to total due to rounding.

CyrusOne Inc.

NRSF Under Development

As of December 31, 2019

(Dollars in millions)

(Unaudited)

                     

 

 

 

 

 

 

NRSF Under Development(a)

 

 

 

Under Development Costs(b)

Facilities

 

Metropolitan
Area

 

Estimated
Completion
Date

 

Colocation
Space
(CSF)
(000)

 

Office &
Other
(000)

 

Supporting
Infrastructure
(000)

 

Powered
Shell(c)
(000)

 

Total
(000)

 

Critical
Load
MW
Capacity(d)

 

Actual
to
Date(e)

 

Estimated
Costs to
Completion(f)

 

Total

Northern Virginia - Sterling IX

 

Northern Virginia

 

1Q'20

 

 

 

 

 

 

 

307

 

 

307

 

 

 

 

46

 

 

$41-50

 

$87-96

Amsterdam I

 

Amsterdam

 

1Q'20

 

39

 

 

28

 

 

40

 

 

194

 

 

301

 

 

4.0

 

 

56

 

 

9-20

 

65-76

Northern Virginia - Sterling VIII

 

Northern Virginia

 

2Q'20

 

61

 

 

 

 

 

 

 

 

61

 

 

24.0

 

 

43

 

 

65-77

 

108-120

London III

 

London

 

2Q'20

 

20

 

 

2

 

 

45

 

 

20

 

 

87

 

 

6.0

 

 

19

 

 

22-27

 

41-46

Raleigh-Durham I

 

Raleigh-Durham

 

2Q'20

 

11

 

 

3

 

 

 

 

 

 

14

 

 

2.0

 

 

1

 

 

9-11

 

10-12

Frankfurt III

 

Frankfurt

 

3Q'20

 

101

 

 

9

 

 

109

 

 

39

 

 

258

 

 

35.0

 

 

28

 

 

155-175

 

183-203

Northern Virginia - Sterling VII

 

Northern Virginia

 

3Q'20

 

 

 

 

 

 

 

167

 

 

167

 

 

 

 

27

 

 

64-73

 

91-100

San Antonio V

 

San Antonio

 

3Q'20

 

67

 

 

7

 

 

21

 

 

105

 

 

199

 

 

9.0

 

 

21

 

 

65-74

 

86-95

Council Bluffs I

 

Council Bluffs, IA

 

3Q'20

 

42

 

 

14

 

 

18

 

 

42

 

 

115

 

 

6.0

 

 

1

 

 

59-65

 

60-66

Dublin I

 

Dublin

 

4Q'20

 

39

 

 

10

 

 

33

 

 

113

 

 

195

 

 

6.0

 

 

12

 

 

55-62

 

67-74

Total

 

 

 

 

 

380

 

 

73

 

 

265

 

 

985

 

 

1,704

 

 

92.0

 

 

$

254

 

 

$544-634

 

$798-888

                                                             

(a)

 

Represents NRSF at a facility for which activities have commenced or are expected to commence in the next 2 quarters to prepare the space for its intended use. Estimates and timing are subject to change. May not sum to total due to rounding.

(b)

 

London development costs are GBP-denominated and shown as USD-equivalent using exchange rate of 1.32. Frankfurt, Dublin and Amsterdam development costs are EUR-denominated and shown as USD-equivalent using exchange rate of 1.12 as of December 31, 2019.

(c)

 

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

(d)

 

Critical load capacity represents the aggregate power available for lease and exclusive use by customers expressed in terms of megawatts. The capacity reported is for non-redundant megawatts, as we can develop flexible solutions to our customers at multiple resiliency levels.

(e)

 

Actual to date is the cash investment as of December 31, 2019. There may be accruals above this amount for work completed, for which cash has not yet been paid.

(f)

 

Represents management’s estimate of the total costs required to complete the current NRSF under development. There may be an increase in costs if customers require greater power density.

Capital Expenditures - Investment in Real Estate

 

Three months ended

 

Twelve months ended

 

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 

December 31,

(dollars in millions)

 

2019

 

2019

 

2019

 

2019

 

2019

Capital expenditures - investment in real estate

 

$299.2

 

$211.3

 

$208.0

 

$148.0

 

$866.5

CyrusOne Inc.

Land Available for Future Development (Acres)

As of December 31, 2019

(Unaudited)

     

 

 

As of

Market

 

December 31, 2019

Amsterdam

 

8

 

Atlanta

 

44

 

Austin

 

22

 

Chicago

 

23

 

Cincinnati

 

98

 

Council Bluffs, Iowa

 

10

 

Dallas

 

57

 

Dublin

 

15

 

Houston

 

20

 

Northern Virginia

 

24

 

Phoenix

 

96

 

Quincy, Washington

 

48

 

San Antonio

 

12

 

Santa Clara

 

23

 

Total Available(a)

 

499

 

Book Value of Total Available

 

$

206.0

million

(a)

 

Does not sum to total due to rounding.

CyrusOne Inc.

Leasing Statistics - Lease Signings

As of December 31, 2019

(Unaudited)

                     

Period

 

Number
of Leases(a)

 

Total CSF
Signed(b)

 

Total kW
Signed(c)

 

Total MRR
Signed (000)(d)

 

Weighted
Average
Lease Term(e)

4Q'19

 

450

 

28,000

 

4,703

 

$1,063

 

55

Prior 4Q Avg.

 

464

 

111,500

 

15,885

 

$2,340

 

74

3Q'19(f)

 

452

 

266,000

 

35,269

 

$4,324

 

99

2Q'19

 

500

 

46,000

 

5,946

 

$1,090

 

67

1Q'19

 

422

 

93,000

 

15,557

 

$2,267

 

56

4Q'18

 

482

 

41,000

 

6,768

 

$1,678

 

73

(a)

 

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

(b)

 

CSF represents the NRSF at an operating facility that is leased as colocation space, where customers locate their servers and other IT equipment.

(c)

 

Represents maximum contracted kW that customers may draw during lease period. Additionally, we can develop flexible solutions for our customers at multiple resiliency levels, and the kW signed is unadjusted for this factor.

(d)

 

Monthly recurring rent is defined as the average monthly contractual rent during the term of the lease. It includes the monthly impact of installation charges of approximately $0.2 million in 1Q'19 and 4Q'19, and $0.1 million in 4Q'18, 2Q'19 and 3Q'19.

(e)

 

Calculated on a CSF-weighted basis.

(f)

 

Includes 30,000 CSF, 4.5 MW, and approximately $0.5 million in monthly recurring rent associated with a paid reservation expected to be exercised in the next nine months.

CyrusOne Inc.

New MRR Signed - Existing vs. New Customers

As of December 31, 2019

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1Q'18

 

2Q'18

 

3Q'18

 

4Q'18

 

1Q'19

 

2Q'19

 

3Q'19(b)

 

4Q'19

Existing Customers  

$3,149

 

$4,429

 

$2,072

 

$1,226

 

$2,102

 

$974

 

$2,849

 

$843

New Customers  

$221

 

$1,024

 

$146

 

$452

 

$165

 

$116

 

$1,475

 

$220

Total  

$3,370

 

$5,453

 

$2,218

 

$1,678

 

$2,267

 

$1,090

 

$4,324

 

$1,063

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% from Existing Customers  

93%

 

81%

 

93%

 

73%

 

93%

 

89%

 

66%

 

79%

(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 1Q'18, 1Q'19 and 4Q'19, and $0.1 million in 4Q'18, 2Q'19 and 3Q'19.

(b)

 

Includes approximately $0.5 million in monthly recurring rent associated with a paid reservation expected to be exercised in the next nine months.

CyrusOne Inc.

Customer Sector Diversification(a)

As of December 31, 2019

(Unaudited)

                     

 

 

Principal Customer Industry

 

Number of
Locations

 

Annualized
Rent(b) (000)

 

Percentage of
Portfolio
Annualized
Rent(c)

 

Weighted
Average
Remaining
Lease Term in
Months(d)

1

 

Information Technology

 

11

 

$

188,006

 

 

20.5

%

 

99.6

 

2

 

Information Technology

 

11

 

58,852

 

 

6.4

%

 

30.9

 

3

 

Information Technology

 

5

 

54,674

 

 

6.0

%

 

55.5

 

4

 

Information Technology

 

7

 

35,175

 

 

3.8

%

 

51.4

 

5

 

Information Technology

 

7

 

33,659

 

 

3.7

%

 

41.4

 

6

 

Information Technology

 

6

 

20,186

 

 

2.2

%

 

34.2

 

7

 

Financial Services

 

1

 

19,486

 

 

2.1

%

 

135.0

 

8

 

Healthcare

 

2

 

15,442

 

 

1.7

%

 

96.0

 

9

 

Research and Consulting Services

 

3

 

15,435

 

 

1.7

%

 

24.8

 

10

 

Information Technology

 

4

 

14,236

 

 

1.6

%

 

44.6

 

11

 

Industrials

 

5

 

11,182

 

 

1.2

%

 

8.2

 

12

 

Telecommunication Services

 

2

 

9,966

 

 

1.1

%

 

21.4

 

13

 

Information Technology

 

3

 

9,954

 

 

1.1

%

 

54.9

 

14

 

Financial Services

 

2

 

9,795

 

 

1.1

%

 

47.0

 

15

 

Telecommunication Services

 

8

 

9,637

 

 

1.0

%

 

13.5

 

16

 

Consumer Staples

 

3

 

9,230

 

 

1.0

%

 

13.9

 

17

 

Information Technology

 

4

 

8,735

 

 

1.0

%

 

98.7

 

18

 

Telecommunication Services

 

1

 

8,131

 

 

0.9

%

 

94.3

 

19

 

Information Technology

 

1

 

7,726

 

 

0.8

%

 

12.0

 

20

 

Financial Services

 

1

 

6,600

 

 

0.7

%

 

5.0

 

 

 

 

 

 

 

$

546,108

 

 

59.5

%

 

65.8

 

(a)

 

Customers and their affiliates are consolidated.

(b)

 

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of December 31, 2019, multiplied by 12. For the month of December 2019, customer reimbursements were $137.6 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From January 1, 2018 through December 31, 2019, customer reimbursements under leases with separately metered power constituted between 11.6% and 19.4% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of December 31, 2019 was $906.7 million. Our annualized effective rent was lower than our annualized rent as of December 31, 2019 because our negative straight-line and other adjustments and amortization of deferred revenue exceeded our positive straight-line adjustments due to factors such as the timing of contractual rent escalations and customer payments for services.

(c)

 

Represents the customer’s total annualized rent divided by the total annualized rent in the portfolio as of December 31, 2019, which was approximately $916.8 million.

(d)

 

Weighted average based on customer’s percentage of total annualized rent expiring and is as of December 31, 2019, assuming that customers exercise no renewal options and exercise all early termination rights that require payment of less than 50% of the remaining rents. Early termination rights that require payment of 50% or more of the remaining lease payments are not assumed to be exercised because such payments approximate the profitability margin of leasing that space to the customer, such that we do not consider early termination to be economically detrimental to us.

CyrusOne Inc.

Lease Distribution

As of December 31, 2019

(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

 

639

 

 

67

%

 

136

 

 

3

%

 

$

82,219

 

 

9

%

1,000-2,499

 

120

 

 

13

%

 

185

 

 

3

%

 

45,014

 

 

5

%

2,500-4,999

 

72

 

 

7

%

 

253

 

 

5

%

 

47,890

 

 

5

%

5,000-9,999

 

48

 

 

5

%

 

342

 

 

6

%

 

55,093

 

 

6

%

10,000+

 

78

 

 

8

%

 

4,563

 

 

83

%

 

686,547

 

 

75

%

Total

 

957

 

 

100

%

 

5,480

 

 

100

%

 

$

916,763

 

 

100

%

(a)

 

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

(b)

 

Represents the number of customers occupying data center, office and other space as of December 31, 2019. This may vary from total customer count as some customers may be under contract, but have yet to occupy space.

(c)

 

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

(d)

 

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of December 31, 2019, multiplied by 12. For the month of December 2019, customer reimbursements were $137.6 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers' utilization of power and the suppliers' pricing of power. From January 1, 2018 through December 31, 2019, customer reimbursements under leases with separately metered power constituted between 11.6% and 19.4% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of December 31, 2019 was $906.7 million. Our annualized effective rent was lower than our annualized rent as of December 31, 2019 because our negative straight-line and other adjustments and amortization of deferred revenue exceeded our positive straight-line adjustments due to factors such as the timing of contractual rent escalations and customer payments for services.

CyrusOne Inc.

Lease Expirations

As of December 31, 2019

(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

 

 

 

1,655

 

 

23