3 Things Moving (The Formerly) Red-Hot Data Center REIT QTS Realty
Investors on Wall Street who follow the fast-growing data center REIT sector, woke up on Monday, February 23 to three announcements from QTS Realty Trust Inc (NYSE: QTS).
1. Secondary Offering: QTS announced a 4,350,000 share secondary stock offering, as well as an identical 4,350,000 sale by affiliate General Atlantic LLC, and a related 1,305,000 share underwriter option.
2. Earnings Report/Call: Q4 2014 earnings announcement, which was not anticipated until after the bell. The QTS conference call -- originally scheduled for Tuesday morning -- moved up to 8:30 ET on Monday.
3. Dividends: QTS announced a quarterly dividend increase to $0.32, a 10.3 percent increase over the $0.29 dividend paid to shareholders in 2014.
According to CFO Bill Schafer, "The 2015 dividend rate is estimated to approximate QTS' 2015 REIT taxable income in order to maximize retained capital."
QTS shares opened lower at $36.45 on the news, compared to a previous close of $37.65.
Mr. Market has rewarded QTS Realty and its data center REIT peers: CoreSite Realty (NYSE: COR), CyrusOne (NASDAQ: CONE), Digital Realty (NYSE: DLR) and DuPont Fabros (NYSE: DFT) generously this past year.
These data center REITs have all been the beneficiaries of secular growth trends, including: big data, cloud computing, enterprise outsourcing, and the increasing complexity of security/compliance requirements for data.
On February 5, MLV & Co. initiated coverage on QTS Realty with a Buy rating and a $45 price target, noting that the company has a knack for purchasing large, infrastructure rich facilities, along with adjacent land for expansion, at a low cost basis.
QTS Realty - Q4/FY 2914 Earnings Highlights
Record Operating FFO: Q4 of $20.4 million and FY 2014 $74 million, up 24.3 percent and 49.8 percent, respectively.
Adjusted EBITDA: Q4 $29 million, up 36.7 percent Y/Y; FY 2014 $100 million, up 32.6 percent Y/Y.
Net Operating Income: Q4 $39.8 million, up 30.7 percent Y/Y; FY 2014 $141.2 million, up 25.3 percent Y/Y.
Total Revenues: Q4 $59.6 million, up 25.6 percent Y/Y; FY 2014 $217.8 million, up 22.4 percent Y/Y.
Monthly Recurring Revenue ("MRR"): "as of December 31, 2014 increased by 21.2% to $17.1 million compared to MRR as of December 31, 2013."
Leasing: Executed new and modified leases during the quarter and year ended December 31, 2014 aggregating to a net increase of $4.1 million and $58.0 million, respectively, in incremental annualized rent, net of downgrades.
Booked-Not-Billed: increased "booked-not-billed annualized rent to $57.8 million as of December 31, 2014 compared to $28.2 million as of December 31, 2013."
"We continue to be pleased with the performance of our business. Our fully integrated technology services platform enables us to deliver consistent performance driven by the engine of our business, C2 colocation and C3 cloud and managed services, while targeting strategic C1 to accelerate our growth during certain quarters," said Chad Williams, Chairman and CEO of QTS.
Development, Redevelopment & Acquisitions
During Q4 and FY2014, QTS continued its redevelopment of the Dallas-Fort Worth, Atlanta Metro, Richmond and Atlanta-Suwanee facilities.
The company said it "placed into service $150 million of capital and approximately 180,000 raised floor net rentable square feet (none of which occurred during Q4 2014), and added that it " acquired an additional $54 million of real estate assets and 58,000 raised floor NRSF in connection with the Princeton facility acquisition."
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Latest Ratings for QTS
|Jan 2017||Stifel Nicolaus||Upgrades||Hold||Buy|
|Dec 2016||Guggenheim||Initiates Coverage On||Buy|
|Oct 2016||Raymond James||Initiates Coverage on||Outperform|
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