SYS-CON MEDIA Authors: Cynthia Dunlop, Mark O'Neill, Kevin Benedict, RealWire News Distribution, Gilad Parann-Nissany

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CyrusOne Reports Fourth Quarter and Full Year 2013 Earnings

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

Highlights

  • Fourth quarter revenue of $72.3 million increased 25% over the fourth quarter of 2012
  • 2013 full year revenue of $263.5 million increased 19% over 2012
  • Fourth quarter Normalized FFO of $23.6 million and AFFO of $20.8 million increased 40% and 54%, respectively, over the fourth quarter of 2012
  • 2013 full year Normalized FFO of $78.7 million and AFFO of $72.4 million increased 17% and 36%, respectively, over 2012
  • Fourth quarter Adjusted EBITDA of $39.9 million and full year Adjusted EBITDA of $138.7 million increased 40% and 20%, respectively, over fourth quarter and full year 2012
  • Announcing a 31% increase in the quarterly dividend for the first quarter of 2014 to $0.21 per share on common shares and common share equivalents, up from $0.16 per share in 2013
  • Purchased 14 acres of land in Northern Virginia, establishing a presence on the East Coast, and 22 acres in Austin for future data center expansion
  • Leased 47,000 colocation square feet in the fourth quarter, with utilization remaining high at 85%

“CyrusOne had a tremendous first year as a public company, with strong revenue and Adjusted EBITDA growth, additions of more than 100 logos and the successful rollout of our National IX platform” said Gary Wojtaszek, president and chief executive officer of CyrusOne. “We are also excited to announce the transaction in Northern Virginia, which supports our strategy of growing our Fortune 1000 customer base by providing a presence on the East Coast and enhancing the geographic diversity of our portfolio.”

Fourth Quarter 2013 Financial Results

Revenue was $72.3 million for the fourth quarter, compared to $58.0 million for the same period in 2012, or an increase of 25%. Operating income improved $5.8 million from the fourth quarter of 2012, as a $14.3 million increase in revenue and a $1.4 million decrease in non-recurring costs were partially offset by increases in depreciation and amortization of $6.2 million, and property operating expenses of $3.7 million. Net loss was $3.8 million for the fourth quarter, compared to a net loss of $6.9 million for the same period in 2012.

Net operating income (NOI)1 was $48.0 million for the fourth quarter, compared to $37.4 million in the same period in 2012, an increase of 28%. The increase in NOI was driven by the increase in revenue, partially offset by additional property operating costs from new facilities and expansions at existing facilities. Adjusted EBITDA2 was $39.9 million for the fourth quarter, compared to $28.4 million in the same period in 2012, an increase of 40%. The Adjusted EBITDA margin of 55.2% in the fourth quarter improved from 49.0% in the same period in 2012 as Sales, General and Administrative expenses were flat year-over-year.

Normalized Funds From Operations (Normalized FFO)3 was $23.6 million for the fourth quarter, compared to $16.8 million in the same period in 2012, an increase of 40%. The increase in Normalized FFO was primarily due to growth in Adjusted EBITDA. Normalized FFO per diluted common share or common share equivalent4 was $0.37 in the fourth quarter of 2013. Adjusted Funds From Operations (AFFO)5 was $20.8 million for the fourth quarter, compared to $13.5 million in the same period in 2012, an increase of 54%.

Full Year 2013 Financial Results

Revenue for the full year was $263.5 million, compared to $220.8 million in 2012, an increase of 19%. Net loss for the full year was $35.8 million compared to $20.3 million in 2012. The Company’s higher Adjusted EBITDA and lower asset impairments were offset by higher depreciation and amortization, transaction-related compensation and income tax expenses.

Adjusted EBITDA increased 20% to $138.7 million from $115.3 million in 2012. Normalized FFO for the full year increased to $78.7 million in 2013 from $67.4 million in 2012, an increase of 17%. AFFO for the full year was $72.4 million, an increase of 36% from $53.2 million in 2012.

Leasing Activity

CyrusOne leased approximately 47,000 colocation square feet (CSF) or 7.3 MW of power in the fourth quarter. The company added one new Fortune 10006 customer in the fourth quarter, bringing the total to 129 customers in the Fortune 1000 and 612 customers in total as of December 31, 2013. The weighted average lease term of the new leases based on square footage was 43 months, and approximately 74% of the CSF was leased to metered customers with the remainder leased on a full service basis. Recurring rent churn7 for the fourth quarter of 2013 was 1.1%, compared to 0.6% for the fourth quarter of 2012. Approximately 85% of the new leases this quarter included CyrusOne National IX services. CyrusOne is also pleased to announce that it is the first data center provider to receive multi-site data center certification from the Open-IX Association as six of its data centers in Cincinnati, Houston, Dallas, Phoenix and Austin are now certified.

Portfolio Utilization and Development

As of December 31, 2013, CyrusOne had approximately 1,052,000 CSF across 25 facilities, an increase of approximately 120,000, or 13%, from a year ago. In the fourth quarter of 2013, the company commissioned the second data hall at its Carrollton facility near Dallas adding 60,000 CSF. CSF utilization8 for the fourth quarter was 85%, compared to 78% in the same period in 2012. During the quarter, the Company purchased 14 acres of land in Northern Virginia and plans to commence construction in early 2014 with completion expected in the fourth quarter. This purchase is CyrusOne’s first expansion into the East Coast, and represents the Company’s commitment to enhancing the geographic diversity of its portfolio to support its strategy of being the preferred data center provider for Fortune 1000 enterprises. The Company also purchased 22 acres of land in Austin during the quarter for future expansion within that market, and started construction on the 22 acres of land in San Antonio that was acquired in the third quarter. The first phase of construction for this facility is expected to be completed in the fourth quarter of 2014.

Balance Sheet and Liquidity

As of December 31, 2013, the company had $525.0 million of long term debt, cash of $148.8 million, and an undrawn $225.0 million senior secured revolving credit facility. Net debt9 was $392.9 million as of December 31, 2013, or approximately 21% of the company's total enterprise value or 2.5x Adjusted EBITDA annualized. Available liquidity10 was $373.8 million as of December 31, 2013.

Dividend

On December 11, 2013, the company announced a dividend of $0.16 per share of common shares and common share equivalents for the fourth quarter of 2013. The dividend was paid on January 10, 2014, to shareholders of record at the close of business on December 27, 2013.

Additionally, today the company is announcing that its Board of Directors has authorized a 31% increase in the cash dividend which will now be $0.21 per share on the company’s common shares and common share equivalents. The dividend will be paid on April 15, 2014, to shareholders of record at the close of business on March 28, 2014.

Guidance

CyrusOne is issuing the following guidance for full year 2014:

Category

   

2013 Results

   

2014 Guidance

Revenue $263 million $305 - $315 million
Adjusted EBITDA $139 million $160 - $165 million
Normalized FFO per diluted common share or common share equivalent $1.22 $1.55 - $1.65
Capital Expenditures
Development* $216 million $275 - $300 million
Recurring $4 million $5 - $10 million
Acquisition of leased facilities** $28 million -
 
*   Development capital is inclusive of capital used for the acquisition of land for future development.
** Of the $28.2 million paid for the acquisition of previously leased properties, $8.4 million is presented as capital expenditures in the GAAP cash flow statement and $19.8 million is presented as repayment of debt.
 

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.

Upcoming Conferences and Events

  • Citi Global Property CEO Conference on March 2-5 in Palm Beach
  • Oppenheimer 7th Annual Cloud Services 1-on-1 Conference on March 6 in New York City

Conference Call Details

CyrusOne will host a conference call on February 20, 2014, at 8:00 AM Eastern Time (7:00 AM Central Time) to discuss its results for the fourth quarter and full year of 2013. A live webcast of the conference call will also be available on the investor relations page of the company's website at http://investor.cyrusone.com/index.cfm. The U.S. conference call dial-in number is 1-866-652-5200, and the international dial-in number is 1-412-317-6060. Passcode for the call is 10039875. A replay will be available one hour after the conclusion of the earnings call on February 20, 2014, until 9:00 AM (ET) on February 28, 2014. The U.S. toll-free replay dial-in number is 1-877-344-7529 and the international replay dial-in number is 1-412-317-0088. Replay passcode is 10039875. An archived version of the webcast will also be available on the investor relations page of the company's website at http://investor.cyrusone.com/index.cfm.

Safe Harbor

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

Use of Non-GAAP Financial Measures

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

1Net Operating Income (NOI) is defined as revenue less property operating expenses. Amortization of deferred leasing costs is presented in depreciation and amortization, which is excluded from NOI. CyrusOne has not historically incurred any tenant improvement costs. Our sales and marketing costs consist of salaries and benefits for our internal sales staff, travel and entertainment, office supplies, marketing and advertising costs. General and administrative costs include salaries and benefits of our senior management and support functions, legal and consulting costs, and other administrative costs. Marketing and advertising costs are not property specific, rather these costs support our entire portfolio. As a result, we have excluded these marketing and advertising costs from our NOI calculation, consistent with the treatment of general and administrative costs, which also support our entire portfolio.

2Adjusted EBITDA is defined as net (loss) income as defined by U.S. GAAP before noncontrolling interests plus interest expense, income tax (benefit) expense, depreciation and amortization, non-cash compensation, transaction costs and transaction-related compensation, including acquisition pursuit costs, loss on sale of receivables to affiliate, restructuring costs, loss on extinguishment of debt, asset impairments, (gain) loss on sale of real estate improvements, and other special items. Other companies may not calculate Adjusted EBITDA in the same manner. Accordingly, the company's Adjusted EBITDA as presented may not be comparable to others.

3Normalized Funds From Operations (Normalized FFO) is defined as Funds From Operations (FFO) plus transaction costs, including acquisition pursuit costs, transaction-related compensation, (gain) loss on extinguishment of debt, restructuring costs and other special items. FFO is net (loss) income computed in accordance with U.S. GAAP before noncontrolling interests, (gain) loss from sales of real estate improvements, real estate-related depreciation and amortization, amortization of customer relationship intangibles, and real estate and customer relationship intangible impairments. Because the value of the customer relationship intangibles is inextricably connected to the real estate acquired, CyrusOne believes the amortization and impairments of such intangibles is analogous to real estate depreciation and impairments; therefore, the company adds the customer relationship intangible amortization and impairments back for similar treatment with real estate depreciation and impairments. CyrusOne's customer relationship intangibles are primarily associated with the acquisition of Cyrus Networks in 2010 and, at the time of acquisition, represented 22% of the value of the assets acquired. The company believes its Normalized FFO calculation provides a comparable measure to others in the industry.

4Normalized FFO per diluted common share or common share equivalent is defined as Normalized FFO divided by the average diluted common shares and common share equivalents outstanding for the quarter, which were 64,594,155 for the fourth quarter of 2013.

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

Management uses FFO, Normalized FFO, Adjusted EBITDA, NOI and AFFO as supplemental performance measures because they provide performance measures that, when compared year over year, capture trends in occupancy rates, rental rates and operating costs. The company also believes that, as widely recognized measures of the performance of real estate investment trusts (REITs) and other companies, these measures will be used by investors as a basis to compare its operating performance with that of other companies. Other companies may not calculate these measures in the same manner, and, as presented, they may not be comparable to others. Therefore, FFO, Normalized FFO, NOI, AFFO and Adjusted EBITDA should be considered only as supplements to net income as measures of our performance. FFO, Normalized FFO, NOI, AFFO and Adjusted EBITDA should not be used as measures of liquidity 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 U.S. GAAP.

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

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

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

9Net debt provides a useful measure of liquidity and financial health. The company defines net debt as long-term debt and capital lease obligations, offset by cash, cash equivalents, and temporary cash investments.

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

About CyrusOne

CyrusOne (NASDAQ:CONE) specializes in highly reliable enterprise-class, carrier-neutral data center properties. The company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for more than 600 customers, including nine of the Fortune 20 and more than 125 of the Fortune 1000 companies.

CyrusOne's data center offerings provide the flexibility, reliability, and security that enterprise customers require and are delivered through a tailored, customer service-focused platform designed to foster long-term relationships. CyrusOne is committed to full transparency in communication, management, and service delivery throughout its 25 data centers worldwide.

 

CyrusOne Inc.

Combined Statements of Operations

(Dollars and shares in millions, except per share amounts)

(Unaudited)

 
   

Three Months
Ended December 31,

           

Twelve Months Ended
December 31,

       
Change Change
2013     2012 $ % 2013     2012 $ %
Revenue $ 72.3 $ 58.0 $ 14.3 25% $ 263.5 $ 220.8 $ 42.7 19%
Costs and expenses:
Property operating expenses 24.3 20.6 3.7 18% 93.2 76.0 17.2 23%
Sales and marketing 2.6 4.0 (1.4 ) (35)% 10.6 9.7 0.9 9%
General and administrative 6.8 5.4 1.4 26% 28.0 20.7 7.3 35%
Transaction-related compensation n/m 20.0 20.0 n/m
Depreciation and amortization 26.6 20.4 6.2 30% 95.2 73.4 21.8 30%
Restructuring charges n/m 0.7 0.7 n/m
Transaction costs 0.2 4.4 (4.2 ) (95)% 1.4 5.7 (4.3 ) (75)%
Management fees charged by CBI 0.4 (0.4 ) n/m 2.5 (2.5 ) n/m
(Gain) loss on sale of receivables to affiliate (0.4 ) 0.4 n/m 3.2 (3.2 ) n/m
Asset impairments 2.8     2.8   n/m 2.8   13.3   (10.5 ) (79)%
Total costs and expenses 63.3   54.8   8.5   16% 251.9   204.5   47.4   23%
Operating income 9.0 3.2 5.8 181% 11.6 16.3 (4.7 ) (29)%
Interest expense 11.5 10.5 1.0 10% 43.7 41.8 1.9 5%
Other income n/m (0.1 ) (0.1 ) n/m
Loss on extinguishment of debt       n/m 1.3     1.3   n/m
Loss before income taxes (2.5 ) (7.3 ) 4.8 (66)% (33.3 ) (25.5 ) (7.8 ) 31%
Income tax (expense) benefit (1.1 ) 0.4   (1.5 ) n/m (2.3 ) 5.1   (7.4 ) n/m
Loss from continuing operations (3.6 ) (6.9 ) 3.3   (48)% (35.6 ) (20.4 ) (15.2 ) 75%
(Loss) gain on sale of real estate improvements (0.2 ) (0.2 ) n/m (0.2 ) 0.1 (0.3 ) n/m
Net loss attributed to Predecessor (6.9 ) 6.9 n/m (20.2 ) (20.2 ) n/m
Noncontrolling interest in net loss 2.5     2.5   n/m 10.3     10.3   n/m
Net loss attributed to common stockholders $ (1.3 ) $   $ (1.3 ) n/m $ (5.3 ) $ (20.3 ) $ 15.0   (74)%
Loss per common share - basic and diluted $ (0.06 ) n/a $ (0.28 ) n/a
Basic weighted average common shares 20.9 20.9
Diluted weighted average common shares 20.9 20.9
 
 

CyrusOne Inc.

Combined Balance Sheets

(Dollars in millions)

(Unaudited)

 
    December 31,     December 31,     Change
2013 2012 $     %
Assets
Investment in real estate:
Land $ 89.3 $ 44.5 $ 44.8 101 %
Buildings and improvements 783.7 722.5 61.2 8 %
Equipment 190.2 52.4 137.8 n/m
Construction in progress 57.3   64.2   (6.9 ) (11 )%
Subtotal 1,120.5 883.6 236.9 27 %
Accumulated depreciation (236.7 ) (176.7 ) (60.0 ) 34 %
Net investment in real estate 883.8   706.9   176.9   25 %
Cash and cash equivalents 148.8 16.5 132.3 n/m
Rent and other receivables 41.2 33.2 8.0 24 %
Restricted cash 6.3 (6.3 ) n/m
Goodwill 276.2 276.2 0%
Intangible assets, net 85.9 102.6 (16.7 ) (16 )%
Due from affiliates 0.6 2.2 (1.6 ) (73 )%
Other assets 70.3   67.0   3.3   5 %
Total assets $ 1,506.8   $ 1,210.9   $ 295.9   24 %
Liabilities and Equity
Accounts payable and accrued expenses $ 66.8 $ 37.1 $ 29.7 80 %
Deferred revenue 55.9 52.8 3.1 6 %
Due to affiliates 8.5 2.9 5.6 n/m
Capital lease obligations 16.7 32.2 (15.5 ) (48 )%
Long-term debt 525.0 525.0 0%
Other financing arrangements 56.3   60.8   (4.5 ) (7 )%
Total liabilities 729.2   710.8   18.4   3 %
Shareholders’ Equity / Parent’s net investment:
Preferred stock, $.01 par value, 100,000,000 authorized; no shares issued or outstanding n/m
Common stock, $.01 par value, 500,000,000 shares authorized and 21,991,669 shares issued and outstanding at December 31, 2013 0.2 0.2 n/m
Common stock, $.01 par value, 1,000 shares authorized and 100 shares issued and outstanding at December 31, 2012 n/m
Paid in capital 340.7 7.1 333.6 n/m
Accumulated deficit (18.9 ) (18.9 ) n/m
Partnership capital   493.0   (493.0 ) n/m
Total shareholders’ equity / parent’s net investment 322.0 500.1 (178.1 ) (36 )%
Noncontrolling interests 455.6     455.6   n/m
Total Equity 777.6   500.1   277.5   55 %
Total liabilities and shareholders’ equity / parent’s net investment $ 1,506.8   $ 1,210.9   $ 295.9   24 %
 
 

CyrusOne Inc.

Combined Statements of Operations

(Dollars and shares in millions, except per share amounts)

(Unaudited)

 
For the three months ended:    

December 31,

    September 30,     June 30,     March 31,     December 31,
2013 2013 2013 2013 2012
Revenue $ 72.3 $ 67.5 $ 63.6 $ 60.1 $ 58.0
Costs and expenses:
Property operating expenses 24.3 24.2 24.6 20.1 20.6
Sales and marketing 2.6 2.3 2.9 2.8 4.0
General and administrative 6.8 7.2 7.1 6.9 5.4
Transaction-related compensation 20.0
Depreciation and amortization 26.6 23.9 23.0 21.7 20.4
Restructuring charges 0.7
Transaction costs 0.2 0.7 0.4 0.1 4.4
Management fees charged by CBI 0.4
Gain on sale of receivables to affiliate (0.4 )
Asset impairments 2.8          
Total costs and expenses 63.3   59.0   58.0   71.6   54.8  
Operating income (loss) 9.0 8.5 5.6 (11.5 ) 3.2
Interest expense 11.5 10.5 10.8 10.9 10.5
Other income (0.1 )
Loss on extinguishment of debt     1.3      
Loss before income taxes (2.5 ) (1.9 ) (6.5 ) (22.4 ) (7.3 )
Income tax (expense) benefit (1.1 ) (0.3 ) (0.3 ) (0.6 ) 0.4  
Loss from continuing operations (3.6 ) (2.2 ) (6.8 ) (23.0 ) (6.9 )
Loss on sale of real estate improvements (0.2 )
Net loss attributed to Predecessor (20.2 ) (6.9 )
Noncontrolling interest in net loss 2.5   1.4   4.5   1.9    
Net loss attributed to common stockholders $ (1.3 ) $ (0.8 ) $ (2.3 ) $ (0.9 ) $  
Loss per common share - basic diluted $ (0.06 ) $ (0.05 ) $ (0.12 ) $ (0.05 ) n/a
Basic weighted average common shares 20.9 20.9 20.9 20.9
Diluted weighted average common shares 20.9 20.9 20.9 20.9
 
 

CyrusOne Inc.

Combined Balance Sheets

(Dollars in millions)

(Unaudited)

 
    December 31,     September 30,     June 30,     March 31,     December 31,
2013 2013 2013 2013 2012
Assets
Investment in real estate:
Land $ 89.3 $ 81.5 $ 74.6 $ 44.4 $ 44.5
Buildings and improvements 783.7 778.2 778.5 740.7 722.5
Equipment 190.2 134.3 97.4 68.7 52.4
Construction in progress 57.3   63.2   48.2   92.6   64.2  
Subtotal 1,120.5 1,057.2 998.7 946.4 883.6
Accumulated depreciation (236.7 ) (218.6 ) (208.7 ) (192.1 ) (176.7 )
Net investment in real estate 883.8   838.6   790.0   754.3   706.9  
Cash and cash equivalents 148.8 213.2 267.1 328.6 16.5
Rent and other receivables 41.2 33.9 27.2 30.0 33.2
Restricted cash 2.6 6.3
Goodwill 276.2 276.2 276.2 276.2 276.2
Intangible assets, net 85.9 89.9 94.1 98.4 102.6
Due from affiliates 0.6 0.9 1.6 23.2 2.2
Other assets 70.3   67.2   63.6   60.7   67.0  
Total assets $ 1,506.8   $ 1,519.9   $ 1,519.8   $ 1,574.0   $ 1,210.9  
Liabilities and Equity
Accounts payable and accrued expenses $ 66.8 $ 67.8 $ 59.3 $ 78.7 $ 37.1
Deferred revenue 55.9 55.1 52.8 51.7 52.8
Due to affiliates 8.5 7.0 7.7 8.2 2.9
Capital lease obligations 16.7 18.8 19.8 31.0 32.2
Long-term debt 525.0 525.0 525.0 525.0 525.0
Other financing arrangements 56.3   55.8   54.0   62.9   60.8  
Total liabilities 729.2   729.5   718.6   757.5   710.8  
Shareholders’ Equity / Parent’s net investment:
Preferred stock, $.01 par value, 100,000,000 authorized; no shares issued or outstanding
Common stock, $.01 par value, 500,000,000 shares authorized and 21,991,669 shares issued and outstanding at December 31, 2013 0.2 0.2 0.2 0.2
Common stock, $.01 par value, 1,000 shares authorized and 100 shares issued and outstanding at December 31, 2012
Paid in capital 340.7 339.4 337.5 335.7 7.1
Accumulated deficit (18.9 ) (14.2 ) (9.7 ) (3.9 )
Partnership capital         493.0  
Total shareholders’ equity / parent’s net investment 322.0 325.4 328.0 332.0 500.1
Noncontrolling interests 455.6   465.0   473.2   484.5    
Total Equity 777.6   790.4   801.2   816.5   500.1  
Total liabilities and shareholders’ equity / parent’s net investment $ 1,506.8   $ 1,519.9   $ 1,519.8   $ 1,574.0   $ 1,210.9  
 
 

CyrusOne Inc.

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

(Dollars and shares in millions, except per share amounts)

(Unaudited)

 
    Predecessor     Successor     Combined

January 1, 2013
to January 23, 2013

January 24, 2013
to March 31, 2013

Three Months Ended
March 31, 2013

Revenue $ 15.1 $ 45.0 $ 60.1
Costs and expenses:
Property operating expenses 4.8 15.3 20.1
Sales and marketing 0.7 2.1 2.8
General and administrative 1.5 5.4 6.9
Transaction-related compensation 20.0 20.0
Depreciation and amortization 5.3 16.4 21.7
Transaction costs 0.1     0.1  
Total costs and expenses 32.4 39.2 71.6
Operating income (loss) (17.3 ) 5.8 (11.5 )
Interest expense 2.5   8.4   10.9  
Loss before income taxes (19.8 ) (2.6 ) (22.4 )
Income tax (expense) benefit (0.4 ) (0.2 ) (0.6 )
Loss from continuing operations (20.2 ) (2.8 ) (23.0 )
Net loss attributed to Predecessor (20.2 ) (20.2 )
Noncontrolling interest in net loss   1.9   1.9  
Net loss attributed to common stockholders $   $ (0.9 ) $ (0.9 )
Loss per common share - basic and diluted n/a $ (0.05 ) $ (0.05 )
Basic weighted average common shares 20.9
Diluted weighted average common shares 20.9
 
 

CyrusOne Inc.

Reconciliation of Statement of Operations for the Twelve Months Ended December 31, 2013

(Dollars and shares in millions, except per share amounts)

(Unaudited)

 
    Predecessor     Successor     Combined

January 1, 2013
to January 23, 2013

January 24, 2013
to December 31, 2013

Twelve Months Ended
December 31, 2013

Revenue $ 15.1 $ 248.4 $ 263.5
Costs and expenses:
Property operating expenses 4.8 88.4 93.2
Sales and marketing 0.7 9.9 10.6
General and administrative 1.5 26.5 28.0
Transaction-related compensation 20.0 20.0
Depreciation and amortization 5.3 89.9 95.2
Restructuring charges 0.7 0.7
Transaction costs 0.1 1.3 1.4
Impairment charges   2.8   2.8  
Total costs and expenses 32.4   219.5   251.9  
Operating income (loss) (17.3 ) 28.9 11.6
Interest expense 2.5 41.2 43.7
Other income (0.1 ) (0.1 )
Loss on extinguishment of debt   1.3   1.3  
Loss before income taxes (19.8 ) (13.5 ) (33.3 )
Income tax (expense) benefit (0.4 ) (1.9 ) (2.3 )
Loss from continuing operations (20.2 ) (15.4 ) (35.6 )
Loss on sale of real estate improvement (0.2 ) (0.2 )
Net loss attributed to Predecessor (20.2 ) (20.2 )
Noncontrolling interest in net loss   10.3   10.3  
Net loss attributed to common stockholders $   $ (5.3 ) $ (5.3 )
Loss per common share - basic and diluted n/a $ (0.28 ) $ (0.28 )
Basic weighted average common shares 20.9 20.9
Diluted weighted average common shares 20.9 20.9
 
 

CyrusOne Inc.

Net Operating Income and Reconciliation of Net 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,
2013     2012 $ % 2013 2013 2013 2013 2012
Net Operating Income
Revenue $ 263.5 $ 220.8 $ 42.7 19% $ 72.3 $ 67.5 $ 63.6 $ 60.1 $ 58.0
Property operating expenses 93.2   76.0   17.2 23% 24.3   24.2   24.6   20.1   20.6  
Net Operating Income (NOI) $ 170.3   $ 144.8   $ 25.5 18% $ 48.0   $ 43.3   $ 39.0   $ 40.0   $ 37.4  
NOI as a % of Revenue 64.6% 65.6% 66.4% 64.1% 61.3% 66.6% 64.5%
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss $ (35.8 ) $ (20.3 ) $ (15.5 ) 76% $ (3.8 ) $ (2.2 ) $ (6.8 ) $ (23.0 ) $ (6.9 )
Adjustments:
Interest expense 43.7 41.8 1.9 5% 11.5 10.5 10.8 10.9 10.5
Other income (0.1 ) (0.1 ) n/m (0.1 )
Income tax (benefit) expense 2.3 (5.1 ) 7.4 n/m 1.1 0.3 0.3 0.6 (0.4 )
Depreciation and amortization 95.2 73.4 21.8 30% 26.6 23.9 23.0 21.7 20.4
Restructuring charges 0.7 0.7 n/m 0.7
Legal claim costs 0.7 0.7 n/m 0.7
Transaction costs 1.4 5.7 (4.3 ) (75)% 0.2 0.7 0.4 0.1 4.4
(Gain) loss on sale of receivables to affiliate 3.2 (3.2 ) (100)% (0.4 )
Non-cash compensation 6.3 3.4 2.9 85% 1.3 2.0 1.8 1.2 0.8
Asset impairments 2.8 13.3 (10.5 ) n/m 2.8
Loss on extinguishment of debt 1.3 1.3 n/m 1.3
Loss (gain) on sale of real estate improvements 0.2 (0.1 ) 0.3 n/m 0.2
Transaction-related compensation 20.0     20.0 n/m       20.0    
Adjusted EBITDA $ 138.7   $ 115.3   $ 23.4 20% $ 39.9   $ 36.5   $ 30.8   $ 31.5   $ 28.4  
Adjusted EBITDA as a % of Revenue 52.6% 52.2% 55.2% 54.1% 48.4% 52.4% 49.0%
 
 

CyrusOne Inc.

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

(Dollars in millions, except per share amounts)

(Unaudited)

 
   

Twelve Months Ended

            Three Months Ended
December 31, Change December 31,     September 30,     June 30,     March 31,     December 31,
2013     2012 $ % 2013 2013 2013 2013 2012
Reconciliation of Net Loss to FFO and Normalized FFO:
Net income (loss) $ (35.8 ) $ (20.3 ) $ (15.5 ) 76 % $ (3.8 ) $ (2.2 ) $ (6.8 ) $ (23.0 ) $ (6.9 )
Adjustments:
Real estate depreciation and amortization 70.6 52.9 17.7 33 % 20.0 17.8 16.9 15.9 15.4
Amortization of customer relationship intangibles 16.8 16.0 0.8 5 % 4.2 4.2 4.2 4.2 3.9
Real estate impairments 2.8 11.7 (8.9 ) (76 )% 2.8
Customer relationship intangible impairments 1.5 (1.5 ) n/m
Loss (gain) on sale of real estate improvements 0.2   (0.1 ) 0.3 n/m 0.2          
Funds from Operations (FFO) $ 54.6 $ 61.7 (7.1 ) (12 )% $ 23.4 $ 19.8 $ 14.3 $ (2.9 ) $ 12.4
Transaction-related compensation 20.0 20.0 n/m 20.0
Loss on extinguishment of debt 1.3 1.3 n/m 1.3
Restructuring charges 0.7 0.7 n/m 0.7
Legal claim costs 0.7 0.7 n/m 0.7
Transaction costs 1.4   5.7   (4.3 ) (75 )% $ 0.2   $ 0.7   $ 0.4   $ 0.1   4.4  
Normalized Funds from Operations (Normalized FFO) $ 78.7   $ 67.4   $ 11.3 17 % $ 23.6   $ 21.9   $ 16.0   $ 17.2   $ 16.8  
Normalized FFO per diluted common share or common share equivalent* $ 1.22 n/a $ n/m $ 0.37 $ 0.33 $ 0.25 $ 0.27 n/a
Weighted Average diluted common share and common share equivalent outstanding* 64.6 n/a n/m 64.6 64.7 64.7 64.5
Reconciliation of Normalized FFO to AFFO:
Normalized FFO $ 78.7 $ 67.4 $ 11.3 17 % $ 23.6 $ 21.9 $ 16.0 $ 17.2 $ 16.8
Adjustments:
Amortization of deferred financing costs 4.1 0.3 3.8 n/m 1.3 0.5 1.7 0.6 0.3
Non-cash compensation 6.3 3.4 2.9 85 % 1.3 2.0 1.8 1.2 0.8
Non-real estate depreciation and amortization 7.8 4.5 3.3 73 % 2.4 1.9 1.9 1.6 1.1
Deferred revenue and straight line rent adjustments (13.9 ) (8.3 ) (5.6 ) 67 % (4.2 ) (3.7 ) (3.7 ) (2.3 ) (2.3 )
Leasing commissions (6.8 ) (4.4 ) (2.4 ) 55 % (1.7 ) (1.7 ) (2.5 ) (0.9 ) (1.1 )
Recurring capital expenditures (4.2 ) (3.9 ) (0.3 ) 8 % (1.9 ) (1.6 ) (0.4 ) (0.3 ) (1.6 )
Corporate income tax (benefit) expense 0.4   (5.8 ) 6.2 n/m       0.4   (0.5 )
Adjusted Funds from Operations (AFFO) $ 72.4   $ 53.2   $ 19.2 36 % $ 20.8   $ 19.3   $ 14.8   $ 17.5   $ 13.5  
 
*         Assumes diluted common shares and common share equivalents were outstanding as of January 1, 2013 for the Three Months Ended March 31, 2013.
 
 

CyrusOne Inc.

Market Capitalization Summary and Reconciliation of Net Debt

(Unaudited)

 

Market Capitalization

           
 

Shares or
Equivalents
Outstanding

Market Price
as of
December 31, 2013

Market Value
Equivalents
(in millions)

Common shares 21,991,669 $ 22.33 $ 491.1
Operating Partnership units 42,586,835 $ 22.33 951.0
Net Debt 392.9  
Total Enterprise Value (TEV) $ 1,835.0  
Net Debt as a % of TEV 21.4 %
Net Debt to LQA Adjusted EBITDA 2.5x
 
 

Reconciliation of Net Debt

                   
 
(Dollars in millions) December 31, September 30, June 30, March 31, December 31,
2013 2013 2013 2013 2012
Long-term debt $ 525.0 $ 525.0 $ 525.0 $ 525.0 $ 525.0
Capital lease obligations 16.7 18.8 19.8 31.0 32.2
Less:
Cash and cash equivalents (148.8 ) (213.2 ) (267.1 ) (328.6 ) (16.5 )
Net Debt $ 392.9   $ 330.6   $ 277.7   $ 227.4   $ 540.7  
 
 

CyrusOne Inc.

Colocation Square Footage (CSF) and Utilization

(Unaudited)

 
    As of December 31, 2013     As of December 31, 2012

Market

CSF Capacity
(Sq Ft)

    % Utilized

CSF Capacity
(Sq Ft)

    % Utilized
Cincinnati 419,231 89% 411,730 92%
Dallas 231,598 80% 171,100 69%
Houston 230,718 91% 188,602 93%
Austin 54,003 69% 57,078 32%
Phoenix 36,654 67% 36,222

0%

San Antonio 43,487 100% 35,765 61%
Chicago 23,298 52% 23,278 52%
International 13,200   78% 8,200   52%
Total Footprint 1,052,189   85% 931,975   78%
 
 

CyrusOne Inc.

2014 Guidance

(Unaudited)

 
    2013 Results     Full Year 2014
Revenue $263 million $305 - $315 million
Adjusted EBITDA $139 million $160 - $165 million
Normalized FFO per diluted common share or common share equivalent $1.22 $1.55 - $1.65
 
Capital Expenditures
Development* $216 million $275 - $300 million
Recurring $4 million $5 - $10 million
Acquisition of leased facilities** $28 million
 
*   Development capital is inclusive of capital used for the acquisition of land for future development.
** Of the $28.2 million paid for the acquisition of previously leased properties, $8.4 million is presented as capital expenditures in the GAAP cash flow statement and $19.8 million is presented as repayment of debt.
 
 

CyrusOne Inc.

Data Center Portfolio

As of December 31, 2013

(Unaudited)

 
            Operating Net Rentable Square Feet (NRSF)(a)        

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

   

Available
UPS
Capacity (MW)(j)

Facilities

Metropolitan
Area

Annualized
Rent(b)

Colocation
Space
(CSF)(c)

   

Office &
Other(d)

   

Supporting
Infrastructure(e)

    Total(f)    

Percent
Leased(g)

CSF
Utilized (h)

Westway Park Blvd. (Houston West 1) Houston 46,835,178 112,133 12,735 36,732 161,600 97% 97% 3,000 28
Southwest Fwy. (Galleria) Houston 41,548,783 63,469 17,259 23,203 103,931 91% 97% 14
S. State Hwy 121 Business (Lewisville)* Dallas 36,204,739 108,687 11,279 59,344 179,310 94% 95% 18
West Seventh Street (7th St.)*** Cincinnati 33,236,556 211,672 5,744 171,561 388,977 90% 90% 37,000 13
Kingsview Drive (Lebanon) Cincinnati 19,628,121 65,303 36,261 49,159 150,723 82% 78% 72,000 14
Industrial Road (Florence) Cincinnati 15,240,711 52,698 46,848 40,374 139,920 94% 100% 9
Westover Hills Blvd. (San Antonio 1) San Antonio 12,113,780 43,487 2,351 35,955 81,793 98% 100% 23,000 12
Knightsbridge Drive (Hamilton)* Cincinnati 11,052,761 46,565 1,077 35,336 82,978 90% 90% 10
W. Frankford Road (Carrollton) Dallas 9,270,138 107,256 19,706 53,588 180,550 54% 64% 345,000 9
E. Ben White Blvd. (Austin 1)* Austin 6,372,547 16,223 21,376 7,516 45,115 94% 85% 2
Parkway Dr. (Mason) Cincinnati 5,943,770 34,072 26,458 17,193 77,723 99% 100% 4
Midway Rd.** Dallas 5,397,262 8,390 8,390 100% 100% 1
Metropolis Drive (Austin 2) Austin 4,863,285 37,780 4,128 18,444 60,352 55% 61% 5
Kestral Way (London)** London 3,482,515 10,000 10,000 99% 99% 1
Westway Park Blvd. (Houston West 2) Houston 3,022,611 42,116 6,286 28,379 76,781 49% 61% 12,000 6
Springer Street (Lombard) Chicago 2,318,443 13,516 4,115 12,230 29,861 59% 47% 29,000 3
South Ellis Street (Phoenix) Phoenix 2,126,536 36,654 36,135 38,410 111,199 34% 67% 76,000 6
Marsh Ln.** Dallas 2,113,567 4,245 4,245 100% 100% 1
Goldcoast Drive (Goldcoast) Cincinnati 1,463,863 2,728 5,280 16,481 24,489 100% 100% 14,000 1
E. Monroe Street (Monroe St.) South Bend 1,055,610 6,350 6,478 12,828 64% 64% 4,000 1
North Fwy. (Greenspoint)** Houston 1,034,598 13,000 1,449 14,449 100% 100% 1
Bryan St.** Dallas 1,012,018 3,020 3,020 57% 57% 1
Crescent Circle (Blackthorn)* South Bend 649,159 3,432 5,125 8,557 49% 49% 11,000 1
McAuley Place (Blue Ash)* Cincinnati 592,804 6,193 6,950 2,166 15,309 71% 39% 1
Jurong East (Singapore)** Singapore 332,772   3,200       3,200   12% 12%   1
Total $ 266,912,127   1,052,189   265,437   657,674   1,975,300   82% 85% 626,000   158
 
*   Indicates properties in which we hold a leasehold interest in the building shell and land. All data center infrastructure has been constructed by us and owned by us.
** Indicates properties in which we hold a leasehold interest in the building shell, land, and all data center infrastructure.
*** The information provided for the West Seventh Street (7th St.) property includes data for two facilities, one of which we lease and one of which we own.
(a) Represents the total square feet of a building under lease or available for lease based on engineers’ drawings and estimates but does not include space held for development or space used by CyrusOne.
(b) Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of December 31, 2013, multiplied by 12. For the month of December 2013, customer reimbursements were $24.1 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, 2012, through December 31, 2013, customer reimbursements under leases with separately metered power constituted between 7.3% and 9.7% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of December 31, 2013, was $282,358,919. Our annualized effective rent was greater than our annualized rent as of December 31, 2013, because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
(c) CSF represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment.
(d) Represents the NRSF at an operating facility that is currently leased or readily available for lease as space other than CSF, which is typically office and other space.
(e) Represents infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.
(f) Represents the NRSF at an operating facility that is currently leased or readily available for lease. This excludes existing vacant space held for development.
(g) Percent leased is determined based on NRSF being billed to customers under commenced leases as of December 31, 2013, divided by total NRSF. Leases signed but not commenced as of December 31, 2013, are not included. Supporting infrastructure has been allocated to leased NRSF on a proportionate basis for purposes of this calculation.
(h) Utilization is calculated by dividing CSF under signed leases for available space (whether or not the contract has commenced billing) by total CSF.
(i) Represents space that is under roof that could be developed in the future for operating NRSF, rounded to the nearest 1,000.
(j) UPS Capacity (also referred to as critical load) represents the aggregate power available for lease to and exclusive use by customers from the facility’s installed universal power supplies (UPS) expressed in terms of megawatts. The capacity presented is for non-redundant megawatts as we can develop flexible solutions to our customers at multiple resiliency levels. May not foot due to rounding.
 
 

CyrusOne Inc.

NRSF Under Development

As of December 31, 2013

(Dollars in millions)

(Unaudited)

 
       

NRSF Under Development(a)

        Under Development Costs(b)
Facilities

Metropolitan
Area

   

Colocation
Space
(CSF)

   

Office &
Other

   

Supporting
Infrastructure

   

Powered
Shell(c)

    Total

UPS MW
Capacity(d)

Actual
to Date

   

Estimated Costs
to Completion

    Total
W. Frankford Rd. (Carrollton) Dallas 60,000 8,000 28,000 96,000 9 $ 2 $24-29 $26-31
Westover Hills Blvd. (San Antonio 2) San Antonio 30,000 20,000 25,000 40,000 115,000 3 32-38 32-38
Westway Park Blvd. (Houston West 2) Houston 38,000 22,000 60,000 6 4 17-21 21-25
Westway Park Blvd. (Houston West 3) Houston 320,000 320,000 1 18-24 19-25
South Ellis Street, Chandler, AZ (Phoenix) Phoenix 3 3 4-5 7-8
Ridgetop Circle, Sterling, VA (Northern VA) Northern Virginia 30,000 5,000 30,000 50,000 115,000 3 26-30 26-30
Metropolis Dr., Austin, TX (Austin 2) Austin 5,000         5,000       0.5-1.0 0.5-1.0
Total 163,000   33,000   105,000   410,000   711,000   24   $ 10   $121.5-148.0 $131.5-158.0
 
(a)   Represents NRSF at a facility for which activities have commenced or are expected to commence in the next 2 quarters to prepare the space for its intended use. Estimates and timing are subject to change.
(b) Represents management’s estimate of the total costs required to complete the current NRSF under development. There may be an increase in costs if customers require greater power density.
(c) Represents NRSF under construction that, upon completion, will be powered shell available for future development into operating NRSF.
(d) UPS Capacity (also referred to as critical load) represents the aggregate power available for lease to and exclusive use by customers from the facility’s installed universal power supplies (UPS) expressed in terms of megawatts. The capacity presented is for non-redundant megawatts, as we can develop flexible solutions to our customers at multiple resiliency levels. May not foot due to rounding.
 

 

CyrusOne Inc.

Customer Diversification(a)

As of December 31, 2013

(Unaudited)

 
    Principal Customer Industry    

Number of
Locations

   

Annualized
Rent(b)

   

Percentage of
Portfolio
Annualized
Rent(c)

   

Weighted
Average Remaining
Lease Term in
Months(d)

1 Telecommunications (CBI)(e) 7 $ 21,768,198 8.2% 27.1
2 Energy

2

19,710,295 7.4% 10.4
3 Energy 4 14,946,572 5.6% 11.4
4 Research and Consulting Services 3 12,513,879 4.7% 7.1
5 Telecommunication Services 1 11,164,966 4.2% 48.4
6 Information Technology 3 9,775,173 3.7% 54.3
7 Information Technology 3 8,271,195 3.1% 41.1
8 Financials 1 6,000,225 2.2% 77.0
9 Telecommunication Services 3 5,005,493 1.9% 64.0
10 Energy 2 4,737,000 1.8% 31.0
11 Information Technology 1 4,732,856 1.8% 24.0
12 Consumer Staples 1 4,523,035 1.7% 99.5
13 Energy 1 4,152,405 1.6% 11.8
14 Information Technology 1 4,055,016 1.5% 86.0
15 Energy 3 3,882,179 1.5% 4.1
16 Information Technology 2 3,838,140 1.4% 86.0
17 Energy 1 3,612,639 1.4% 29.3
18 Energy 4 3,446,913 1.3% 33.2
19 Energy 1 3,299,383 1.2% 13.3
20 Consumer Discretionary 1 3,290,127   1.2% 10.3
$ 152,725,689   57.4% 32.7
 
(a)   Includes customer affiliates.
(b) Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of December 31, 2013, multiplied by 12. For the month of December 2013, our total portfolio annualized rent was $266.9 million and customer reimbursements were $24.1 million annualized, consisting of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately metered power vary from month-to-month based on factors such as our customers’ utilization of power and the suppliers’ pricing of power. From January 1, 2012 through December 31, 2013, customer reimbursements under leases with separately metered power constituted between 7.3% and 9.7% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent for our total portfolio as of December 31, 2013 was $282,358,919. Our annualized effective rent was greater than our annualized rent as of December 31, 2013 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
(c) Represents the customer’s total annualized rent divided by the total annualized rent in the portfolio as of December 31, 2013, which was approximately $266.9 million.
(d) Weighted average based on customer’s percentage of total annualized rent expiring and is as of December 31, 2013, assuming that customers exercise no renewal options and exercise all early termination rights that require payment of less than 50% of the remaining rents. Early termination rights that require payment of 50% or more of the remaining lease payments are not assumed to be exercised because such payments approximate the profitability margin of leasing that space to the customer, such that we do not consider early termination to be economically detrimental to us.
(e) Includes information for both Cincinnati Bell Technology Solutions (CBTS) and Cincinnati Bell Telephone and two customers that have contracts with CBTS. We expect the contracts for these two customers to be assigned to us, but the consents for such assignments have not yet been obtained. Excluding these customers, Cincinnati Bell Inc. and subsidiaries represented 2.9% of our annualized rent as of December 31, 2013.
 
 

CyrusOne Inc.

Lease Distribution

As of December 31, 2013

(Unaudited)

 
NRSF Under Lease(a)    

Number of
Customers(b)

   

Percentage of
All Customers

   

Total
Leased
NRSF(c)

   

Percentage of
Portfolio
Leased NRSF

   

Annualized
Rent(d)

   

Percentage of
Annualized Rent

0-999 458 77% 86,801 5% $ 34,407,299 13%
1,000-2,499 46 8% 73,656 5% 13,658,013 5%
2,500-4,999 31 5% 113,295 7% 24,489,702 9%
5,000-9,999 28 5% 195,001 12% 52,544,811 20%
10,000+ 32   5% 1,141,957   71% 141,812,302   53%
Total 595   100% 1,610,710   100% $ 266,912,127   100%
 
(a)   Represents all leases in our portfolio, including colocation, office and other leases.
(b) Represents the number of customers in our portfolio leasing data center, office and other space.
(c) Represents the total square feet at a facility under lease and that has commenced billing, excluding space held for development or space used by CyrusOne. A customer’s leased NRSF is estimated based on such customer’s direct CSF or office and light-industrial space plus management’s estimate of infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.
(d) Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of December 31, 2013, multiplied by 12. For the month of December 2013, customer reimbursements were $24.1 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, 2012, through December 31, 2013, customer reimbursements under leases with separately metered power constituted between 7.3% and 9.7% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of December 31, 2013, was $282,358,919. Our annualized effective rent was greater than our annualized rent as of December 31, 2013, because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
 
 

CyrusOne Inc.

Lease Expirations

As of December 31, 2013

(Unaudited)

 
Year(a)    

Number of
Leases
Expiring(b)

   

Total Operating
NRSF Expiring

   

Percentage of
Total NRSF

   

Annualized
Rent(c)

   

Percentage of
Annualized Rent

   

Annualized Rent
at Expiration(d)

   

Percentage of
Annualized Rent
at Expiration

Available 364,590 18%
Month-to-Month 215 31,084 2% $ 9,094,261 3% $ 9,094,261 2%
2014 881 434,697 22% 94,692,969 35% 96,525,370 33%
2015 505 271,436 14% 40,239,102 15% 42,876,722 15%
2016 441 116,316 6% 37,473,047 14% 40,496,601 14%
2017 127 244,624 12% 28,609,914 11% 29,889,056 10%
2018 130 145,591 7% 27,421,947 10% 30,791,401 11%
2019 16 99,205 5% 5,349,615 2% 5,786,692 2%
2020 36 124,259 6% 9,449,453 4% 12,429,996 4%
2021 13 32,010 2% 4,163,781 2% 4,607,532 2%
2022 6 39,734 2% 5,892,252 2% 10,350,039 4%
2023 - Thereafter 26   71,754   4% 4,525,786   2% 7,616,436   3%
Total 2,396   1,975,300   100% $ 266,912,127   100% $ 290,464,106   100%
 
(a)   Leases that were auto-renewed prior to December 31, 2013, are shown in the calendar year in which their current auto-renewed term expires. Unless otherwise stated in the footnotes, the information set forth in the table assumes that customers exercise no renewal options and exercise all early termination rights that require payment of less than 50% of the remaining rents. Early termination rights that require payment of 50% or more of the remaining lease payments are not assumed to be exercised because such payments approximate the profitability margin of leasing that space to the customer, such that we do not consider early termination to be economically detrimental to us.
(b) Number of leases represents each agreement with a customer. A lease agreement could include multiple spaces and a customer could have multiple leases.
(c) Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of December 31, 2013, multiplied by 12. For the month of December 2013, customer reimbursements were $24.1 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, 2012 through December 31, 2013, customer reimbursements under leases with separately metered power constituted between 7.3% and 9.7% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of December 31, 2013, was $282,358,919. Our annualized effective rent was greater than our annualized rent as of December 31, 2013, because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.
(d) Represents the final monthly contractual rent under existing customer leases that had commenced as of December 31, 2013, multiplied by 12.
 

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