Market Overview

CyrusOne Reports Second Quarter 2018 Earnings

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Signed Quarterly Company Record $65 Million in Annualized GAAP
Revenue and 52 Megawatts

Year-over-Year Revenue Growth of
18% and Adjusted EBITDA Growth of 22%

CyrusOne Inc. (NASDAQ:CONE), a premier global data center REIT, today
announced second quarter 2018 earnings.

Highlights

       

Category

2Q'18

% Change
vs. 2Q'17

Revenue $196.9 million 18%
Net income $105.9 million n/m
Adjusted EBITDA $110.6 million 22%
Normalized FFO $80.7 million 19%
Net income per diluted share $1.06 n/m
Normalized FFO per diluted share $0.81 5%
 
 

Leased 52 megawatts ("MW") and 305,000 colocation square feet
("CSF") in the second quarter, totaling $65 million in annualized
GAAP revenue, all company records
 

 

-- Leasing results also included company records for number of
leases signed (506), weighted average lease term (11.9 years on a
CSF-weighted basis), and total interconnection revenue signed
($2.8 million annualized)

 

-- Includes leases totaling more than 10 MW signed with two
hyperscale customers based in China

 

Backlog of $85 million in annualized GAAP revenue as of the end of
the second quarter, representing nearly $850 million in total
contract value
 

Completed construction of a 350-foot telecommunications tower at the
Aurora I facility, creating the first on-campus wireless access and
supporting both microwave and millimeter wireless antenna colocation
services for financial ecosystem customers
 

Acquired 68 acres of land in Mesa, Arizona, and subsequent to the
end of the quarter, acquired a 154,000 square foot shell in Northern
Virginia with up to 33 MW of power capacity
 

 

-- Transactions support the company's continued growth in two of
the strongest data center markets in the U.S.

 

"We are thrilled with our record bookings this quarter, which followed
very strong leasing in the first quarter," said Gary Wojtaszek,
president and chief executive officer of CyrusOne. "The 52 megawatts
signed this quarter included leases totaling more than 10 megawatts
signed with Chinese hyperscale customers, reflecting the growing needs
of these companies as they continue to expand into and within the U.S.
Further, the $106 million in annualized revenue signed year-to-date
through June positions us very well for continued strong, profitable
growth in 2019."

Second Quarter 2018 Financial Results

Revenue was $196.9 million for the second quarter, compared to $166.9
million for the same period in 2017, an increase of 18%. The increase in
revenue was driven primarily by a 28% increase in occupied CSF and
additional interconnection services.

Net income was $105.9 million for the second quarter, compared to net
loss of $0.8 million in the same period in 2017. Net income for the
second quarter included a $102.7 million unrealized gain on the
Company's equity investment in GDS Holdings Limited ("GDS"), a leading
data center provider in China, due to an increase in GDS's share price
during the quarter. Net income per diluted common share1 was
$1.06 in the second quarter of 2018, compared to net loss of $(0.01) per
diluted common share in the same period in 2017.

Net operating income (NOI)2 was $128.0 million for the second
quarter, compared to $107.3 million in the same period in 2017, an
increase of 19%. Adjusted EBITDA3 was $110.6 million for the
second quarter, compared to $90.8 million in the same period in 2017, an
increase of 22%.

Normalized Funds From Operations (Normalized FFO)4 was $80.7
million for the second quarter, compared to $67.9 million in the same
period in 2017, an increase of 19%. Normalized FFO per diluted common
share was $0.81 in the second quarter of 2018, an increase of 5% over
second quarter 2017.

Leasing Activity

CyrusOne leased approximately 52 MW of power and 305,000 CSF in the
second quarter, representing $5.5 million in monthly recurring rent,
inclusive of the monthly impact of installation charges, or
approximately $65.4 million in annualized GAAP revenue5,
excluding estimates for pass-through power. The weighted average lease
term of the new leases, based on square footage, is 143 months (11.9
years), and the weighted average remaining lease term of CyrusOne's
portfolio is 59 months (taking into account the impact of the backlog),
the longest in the Company's history. Recurring rent churn6
for the second quarter was 1.1%, compared to 0.8% for the same period in
2017.

Portfolio Development and CSF Leased

In the second quarter, the Company completed construction on 27,000 CSF
and 18 MW of power capacity across three projects in San Antonio,
Northern Virginia, and Phoenix. CSF leased7 as of the end of
the second quarter was 92% for stabilized properties8 and 88%
overall. In addition, the Company has development projects underway in
Northern Virginia, Dallas, the New York Metro area, Phoenix, Chicago and
San Antonio that are expected to add approximately 401,000 CSF and 86 MW
of power capacity.

Balance Sheet and Liquidity

As of June 30, 2018, the Company had gross assets9 totaling
approximately $5.5 billion, an increase of approximately 23% over gross
assets as of June 30, 2017. CyrusOne had $2.20 billion of long-term debt10,
cash and cash equivalents of $116.2 million, and $1.7 billion available
under its unsecured revolving credit facility as of June 30, 2018. Net
debt10 was $2.10 billion as of June 30, 2018, representing
approximately 27% of the Company's total enterprise value as of June 30,
2018 of $7.9 billion, or 4.7x Adjusted EBITDA for the last quarter
annualized. Available liquidity11 was $2.11 billion as of
June 30, 2018.

Dividend

On May 2, 2018, the Company announced a dividend of $0.46 per share of
common stock for the second quarter of 2018. The dividend was paid on
July 13, 2018, to stockholders of record at the close of business on
June 29, 2018.

Additionally, today the Company is announcing a dividend of $0.46 per
share of common stock for the third quarter of 2018. The dividend will
be paid on October 12, 2018, to stockholders of record at the close of
business on September 28, 2018.

Guidance

CyrusOne is updating guidance for full year 2018, increasing and
tightening the range for Total Revenue, decreasing and tightening the
range for Adjusted EBITDA, increasing and tightening the range for
Normalized FFO per diluted common share, and reaffirming the range for
Capital Expenditures. The annual guidance provided below represents
forward-looking statements, which are based on current economic
conditions, internal assumptions about the Company's existing customer
base, and the supply and demand dynamics of the markets in which
CyrusOne operates.

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

       

Category

Previous 2018
Guidance(1)

Revised 2018
Guidance(1)

Total Revenue $810 - 825 million $820 - 830 million
Lease and Other Revenues from Customers $735 - 745 million $725 - 730 million
Metered Power Reimbursements $75 - 80 million $95 - 100 million
Adjusted EBITDA $460 - 470 million $454 - 459 million
Normalized FFO per diluted common share $3.18 - 3.28 $3.25 - 3.30
Capital Expenditures $850 - 900 million $850 - 900 million
Development $845 - 890 million $845 - 890 million
Recurring $5 - 10 million $5 - 10 million
 

(1) Full year 2018 guidance includes the impact of the
Zenium acquisition, which is assumed to close October 1,

2018. Previous guidance assumed a May 2018 closing. Development
capital expenditures include the acquisition of

land for future development.
 

Upcoming Conferences and Events

  • Cowen Communications Infrastructure Summit on August 6-7 in Boulder, CO
  • Morgan Stanley Telecom & Media Corporate Access Day on August 9 in New
    York City
  • Raymond James Park City Summit on August 14-15 in Park City, UT
  • BMO Capital Markets Real Estate Conference on September 20-21 in
    Chicago, IL
  • Bank of America Merrill Lynch Global Real Estate Conference on
    September 25-26 in New York City

Conference Call Details

CyrusOne will host a conference call on August 2, 2018, at 11:00 AM
Eastern Time (10:00 AM Central Time) to discuss its results for the
second quarter of 2018. A live webcast of the conference call and the
presentation to be made during the call will be available in the
"Investors / Events & Presentations" section of the Company's website at http://investor.cyrusone.com/events.cfm.
The U.S. conference call dial-in number is 1-844-492-3731, and the
international dial-in number is 1-412-542-4121. A replay will be
available one hour after the conclusion of the earnings call on August
2, 2018, through August 16, 2018. The U.S. toll-free replay dial-in
number is 1-877-344-7529 and the international replay dial-in number is
1-412-317-0088. The replay access code is 10121348.

Safe Harbor

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

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

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

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

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

1Net income / (loss) per diluted common share is defined as
net income / (loss) divided by the weighted average diluted common
shares outstanding for the period, which were 99.4 million for the
second quarter of 2018. Basic net income per share was one cent higher
than diluted net income per share.

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

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

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

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

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

We calculate Normalized FFO as FFO plus loss on early extinguishment of
debt, unrealized gain on marketable equity investment, new accounting
standards and regulatory compliance and the related system
implementation costs, amortization of customer relationship intangibles,
transaction, acquisition, integration and other related expenses,
severance and management transition costs, legal claim costs and other
special items as appropriate. Because the value of the customer
relationship intangibles is inextricably connected to the real estate
acquired, the Company believes the amortization of such intangibles and
impairments of such intangibles is analogous to real estate depreciation
and impairments; therefore, the Company adds the customer relationship
intangible amortization and impairments back for similar treatment with
real estate depreciation and impairments. The Company believes its
Normalized FFO calculation provides a comparable measure between
different periods. Other REITs may not calculate Normalized FFO in the
same manner. Accordingly, our Normalized FFO may not be comparable to
others.

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

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

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

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

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

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

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

11Liquidity is calculated as cash, cash equivalents, and
temporary cash investments on hand, plus the undrawn capacity on
CyrusOne's revolving credit facility and the delayed draw term loan.

About CyrusOne

CyrusOne (NASDAQ:CONE) is a high-growth real estate investment trust
(REIT) specializing in highly reliable enterprise-class, carrier-neutral
data center properties. The Company provides mission-critical data
center facilities that protect and ensure the continued operation of IT
infrastructure for approximately 1,000 customers, including 201 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 43 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 201 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 43 data
centers worldwide.

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

Corporate Headquarters

Senior Management

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

Website: www.cyrusone.com

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

Analyst Coverage

           

Firm

Analyst

Phone Number

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

CyrusOne Inc.

Summary of Financial Data

(Dollars in millions, except per share amounts)

 
   

 

 

Three Months

   
June 30, March 31, June 30, Growth %
2018   2018   2017   Yr/Yr
Revenue $ 196.9 $ 196.6 $ 166.9 18 %
Net operating income 128.0 128.8 107.3 19 %
Net income (loss) 105.9 43.5 (0.8 ) n/m
Funds from Operations ("FFO") - NAREIT defined 175.7 110.2 58.1 n/m
Normalized Funds from Operations ("Normalized FFO") 80.7 82.2 67.9 19 %
Weighted average number of common shares outstanding - diluted 99.4 96.6 88.5 12 %
Income (loss) per share - basic $ 1.07 $ 0.45 $ (0.01 ) n/m
Income (loss) per share - diluted $ 1.06 $ 0.45 $ (0.01 ) n/m
Normalized FFO per diluted common share $ 0.81 $ 0.85 $ 0.77 5 %
Adjusted EBITDA 110.6 109.5 90.8 22 %
Adjusted EBITDA as a % of Revenue 56.2 % 55.7 % 54.4 % 1.8 pts
 
 

 

As of

June 30, March 31, June 30, Growth %
2018   2018   2017   Yr/Yr
Balance Sheet Data
Gross investment in real estate $ 4,145.6 $ 3,954.6 $ 3,532.8 17 %
Accumulated depreciation (900.3 ) (836.4 ) (679.6 ) 32 %
Total investment in real estate, net 3,245.3 3,118.2 2,853.2 14 %
Cash and cash equivalents 116.2 228.7 40.8 n/m
Market value of common equity 5,784.3 5,066.4 5,089.5 14 %
Long-term debt 2,200.0 2,200.0 1,857.7 18 %
Net debt 2,098.7 1,987.2 1,829.4 15 %
Total enterprise value

7,883.0

7,053.6

6,918.9

14

%
Net debt to LQA Adjusted EBITDA 4.7x 4.5x 5.0x (0.3)x
 
Dividend Activity
Dividends per share $ 0.46 $ 0.46 $ 0.42 10 %
 
Portfolio Statistics
Data centers 43 45 40 8 %
Stabilized CSF (000) 3,097 3,024 2,380 30 %
Stabilized CSF % leased 92 % 92 % 93 %

(1) pt

 

Total CSF (000) 3,369 3,348 2,575 31 %
Total CSF % leased 88 % 86 % 89 %

(1) pt

 

Total NRSF (000) 5,842 5,824 4,783 22 %
                       

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

 
Three Months Six Months
Ended June 30, Change Ended June 30, Change
2018     2017     $     %     2018     2017     $     %
Revenue:        
Lease and other revenues from customers $ 172.4 $ 151.1 $ 21.3 14 % $ 347.6 $ 285.3 $ 62.3 22 %
Metered power reimbursements 24.5       15.8       8.7       55 %     45.9       30.9       15.0       49 %
Revenue $ 196.9 $ 166.9 $ 30.0 18 % 393.5 316.2 77.3 24 %
Operating expenses:
Property operating expenses 68.9 59.6 9.3 16 % 136.7 111.9 24.8 22 %
Sales and marketing 4.4 4.3 0.1 2 % 9.7 9.2 0.5 5 %
General and administrative 18.6 17.3 1.3 8 % 37.9 33.1 4.8 15 %
Depreciation and amortization 77.6 63.7 13.9 22 % 152.2 119.4 32.8 27 %
Transaction, acquisition, integration and other related expenses 0.4 1.7 (1.3 ) (76 )% 2.3 2.5 (0.2 ) (8 )%
Asset impairments       3.6       (3.6 )     n/m             3.6       (3.6 )     n/m  
Total operating expenses 169.9       150.2       19.7       13 %     338.8       279.7       59.1       21 %
Operating income 27.0 16.7 10.3 62 % 54.7 36.5 18.2 50 %
Interest expense (22.8 ) (16.5 ) (6.3 ) 38 % (43.6 ) (30.1 ) (13.5 ) 45 %
Unrealized gain on marketable equity investment 102.7 102.7 n/m 143.2 143.2 n/m
Loss on early extinguishment of debt       (0.3 )     0.3       n/m       (3.1 )     (36.5 )     33.4       n/m  
Net income (loss) before income taxes 106.9 (0.1 ) 107.0 n/m 151.2 (30.1 ) 181.3 n/m
Income tax expense (1.0 )     (0.7 )     (0.3 )     43 %     (1.8 )     (1.1 )     (0.7 )     64 %
Net income (loss) $ 105.9       $ (0.8 )     $ 106.7       n/m       $ 149.4       $ (31.2 )     $ 180.6       n/m  
Income (loss) per share - basic $ 1.07 $ (0.01 ) $ 1.08 n/m $ 1.53 $ (0.37 ) $ 1.90 n/m
Income (loss) per share - diluted $ 1.06 $ (0.01 ) $ 1.07 n/m $ 1.52 $ (0.37 ) $ 1.89 n/m
           

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

 
June 30, December 31, Change
2018     2017     $     %
Assets    
Investment in real estate:
Land $ 107.4 $ 104.6 $ 2.8 3 %
Buildings and improvements 1,461.1 1,371.4 89.7 7 %
Equipment 2,050.3       1,813.9       236.4       13 %
Gross operating real estate 3,618.8 3,289.9 328.9 10 %
Less accumulated depreciation (900.3 )     (782.4 )     (117.9 )     15 %
Net operating real estate 2,718.5 2,507.5 211.0 8 %
Construction in progress, including land under development 452.6 487.1 (34.5 ) (7 )%
Land held for future development 74.2       63.8       10.4       16 %
Total investment in real estate, net 3,245.3 3,058.4 186.9 6 %
Cash and cash equivalents 116.2 151.9 (35.7 ) (24 )%
Rent and other receivables, net 87.7 87.2 0.5 1 %
Equity investment 318.8 175.6 143.2 82 %
Goodwill 455.1 455.1 %
Intangible assets, net 190.5 203.0 (12.5 ) (6 )%
Other assets 215.1       180.9       34.2       19 %
Total assets $ 4,628.7       $ 4,312.1       $ 316.6       7 %
Liabilities and equity
Debt, net $ 2,179.5 $ 2,089.4 $ 90.1 4 %
Capital lease obligations 14.9 10.1 4.8 48 %
Lease financing arrangements 127.8 131.9 (4.1 ) (3 )%
Construction costs payable 113.3 115.5 (2.2 ) (2 )%
Accounts payable and accrued expenses 91.4 97.9 (6.5 ) (7 )%
Dividends payable 46.5 41.8 4.7 11 %
Deferred revenue and prepaid rents 127.1       111.6       15.5       14 %
Total liabilities 2,700.5       2,598.2       102.3       4 %
Stockholders' equity
Preferred stock, $.01 par value, 100,000,000 authorized; no shares
issued or outstanding
%
Common stock, $.01 par value, 500,000,000 shares authorized and
99,114,112 and 96,137,874
shares issued and outstanding at June 30, 2018 and December 31,
2017, respectively
1.0 1.0 %
Additional paid in capital 2,281.5 2,125.6 155.9 7 %
Accumulated deficit (353.0 ) (486.9 ) 133.9 (28 )%
Accumulated other comprehensive income (loss) (1.3 )     74.2       (75.5 )     n/m  
Total stockholders' equity 1,928.2       1,713.9       214.3       13 %
Total liabilities and equity $ 4,628.7       $ 4,312.1       $ 316.6       7 %
                   

CyrusOne Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share amounts)

(Unaudited)

 
For the three months ended: June 30, March 31, December 31, September 30, June 30,
2018     2018     2017     2017     2017
Revenue:
Lease and other revenues from customers $ 172.4 $ 175.2 $ 161.6 $ 155.5 $ 151.1
Metered power reimbursements 24.5       21.4       18.9       19.8       15.8  
Revenue 196.9       196.6       180.5       175.3       166.9  
Operating expenses:
Property operating expenses 68.9 67.8 60.2 63.0 59.6
Sales and marketing 4.4 5.3 3.9 3.9 4.3
General and administrative 18.6 19.3 16.4 17.5 17.3
Depreciation and amortization 77.6 74.6 70.8 68.7 63.7
Transaction, acquisition, integration and other related expenses 0.4 1.9 5.3 4.1 1.7
Asset impairments                   54.4       3.6  
Total operating expenses 169.9       168.9       156.6       211.6       150.2  
Operating income 27.0 27.7 23.9 (36.3 ) 16.7
Interest expense (22.8 ) (20.8 ) (20.1 ) (17.9 ) (16.5 )
Unrealized gain on marketable equity investment 102.7 40.5
Loss on early extinguishment of debt       (3.1 )                 (0.3 )
Net income (loss) before income taxes 106.9 44.3 3.8 (54.2 ) (0.1 )
Income tax expense (1.0 )     (0.8 )     (1.0 )     (0.9 )     (0.7 )
Net income (loss) $ 105.9       $ 43.5       $ 2.8       $ (55.1 )     $ (0.8 )
Income (loss) per share - basic $ 1.07 $ 0.45 $ 0.03 $ (0.61 ) $ (0.01 )
Income (loss) per share - diluted $ 1.06 $ 0.45 $ 0.03 $ (0.61 ) $ (0.01 )
           

CyrusOne Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

(Unaudited)

 
June 30, March 31, December 31, September 30, June 30,
2018   2018   2017   2017   2017
Assets
Investment in real estate:
Land $ 107.4 $ 104.6 $ 104.6 $ 102.8 $ 94.0
Buildings and improvements 1,461.1 1,400.8 1,371.4 1,344.0 1,291.7
Equipment 2,050.3     1,959.5     1,813.9     1,721.2     1,525.3  
Gross operating real estate 3,618.8 3,464.9 3,289.9 3,168.0 2,911.0
Less accumulated depreciation (900.3 )   (836.4 )   (782.4 )   (722.1 )   (679.6 )
Net operating real estate 2,718.5 2,628.5 2,507.5 2,445.9 2,231.4
Construction in progress, including land under development 452.6 435.3 487.1 429.4 569.1
Land held for future development 74.2     54.4     63.8     58.7     52.7  
Total investment in real estate, net 3,245.3     3,118.2     3,058.4     2,934.0     2,853.2  
Cash and cash equivalents 116.2 228.7 151.9 24.7 40.8
Rent and other receivables, net 87.7 93.1 87.2 89.2 88.7
Equity investment 318.8 216.1 175.6
Goodwill 455.1 455.1 455.1 455.1 455.1
Intangible assets, net 190.5 196.8 203.0 209.7 216.3
Other assets 215.1     190.3     180.9     171.1     162.5  
Total assets $ 4,628.7     $ 4,498.3     $ 4,312.1     $ 3,883.8     $ 3,816.6  
Liabilities and equity
Debt, net $ 2,179.5 $ 2,178.3 $ 2,089.4 $ 2,013.7 $ 1,832.5
Capital lease obligations 14.9 15.9 10.1 10.9 11.7
Lease financing arrangements 127.8 131.3 131.9 133.3 134.0
Construction costs payable 113.3 89.0 115.5 133.6 163.4
Accounts payable and accrued expenses 91.4 66.7 97.9 71.5 73.2
Dividends payable 46.5 46.4 41.8 39.6 39.4
Deferred revenue and prepaid rents 127.1     116.1     111.6     104.8     96.5  
Total liabilities 2,700.5     2,643.7     2,598.2     2,507.4     2,350.7  
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
99,114,112 and 96,137,874 shares issued and outstanding at June 30,
2018
and December 31, 2017, respectively 1.0 1.0 1.0 0.9 0.9
Additional paid in capital 2,281.5 2,268.0 2,125.6 1,826.0 1,821.9
Accumulated deficit (353.0 ) (413.1 ) (486.9 ) (449.2 ) (355.7 )
Accumulated other comprehensive income (loss) (1.3 )   (1.3 )   74.2     (1.3 )   (1.2 )
Total stockholders' equity 1,928.2     1,854.6     1,713.9     1,376.4     1,465.9  
Total liabilities and equity $ 4,628.7     $ 4,498.3     $ 4,312.1     $ 3,883.8     $ 3,816.6  
               

CyrusOne Inc.

Condensed Consolidated Statements of Cash Flow

(Dollars in millions)

(Unaudited)

 

Six Months
Ended June 30,
2018

   

Six Months
Ended June 30,
2017

   

Three Months
Ended June 30,
2018

   

Three Months
Ended June 30,
2017

Cash flows from operating activities:
Net income (loss) $ 149.4 $ (31.2 ) $ 105.9 $ (0.8 )
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 152.2 119.4 77.6 63.7
Interest expense amortization, net 1.8 2.2 1.1 1.3
Stock-based compensation expense 8.4 7.7 4.5 4.0
Provision for bad debt expense 0.4 0.3 (0.1 ) 0.3
Unrealized gain on marketable equity investment (143.2 ) (102.7 )
Loss on early extinguishment of debt 3.1 36.5 0.3
Asset impairments 3.6 3.6
Other 0.2
Change in operating assets and liabilities:
Rent and other receivables, net and other assets (36.8 ) (41.3 ) (18.8 ) (21.3 )
Accounts payable and accrued expenses (3.1 ) 5.2 25.8 12.0
Deferred revenue and prepaid rents 16.3       18.9       11.0       3.2  
Net cash provided by operating activities 148.5       121.5       104.3       66.3  
Cash flows from investing activities:
Asset acquisitions, primarily real estate, net of cash acquired (492.3 )
Investment in real estate (322.7 )     (485.0 )     (177.5 )     (302.5 )
Net cash used in investing activities (322.7 )     (977.3 )     (177.5 )     (302.5 )
Cash flows from financing activities:
Issuance of common stock, net 152.2 408.6 9.3 197.6
Dividends paid (86.6 ) (69.1 ) (45.6 ) (36.7 )
Proceeds from debt, net 985.4 1,766.0 (0.2 ) 565.1
Payments on debt (902.7 ) (1,212.1 ) (467.3 )
Payments on capital lease obligations and lease financing
arrangements
(5.1 ) (4.8 ) (2.5 ) (2.5 )
Tax payment upon exercise of equity awards (4.7 )     (6.6 )     (0.3 )     (0.2 )
Net cash provided by financing activities 138.5       882.0       (39.3 )     256.0  
Net increase (decrease) in cash, cash equivalents and restricted cash (35.7 ) 26.2 (112.5 ) 19.8
Cash, cash equivalents and restricted cash at beginning of period 151.9       14.6       228.7       21.0  
Cash, cash equivalents and restricted cash at end of period $ 116.2       $ 40.8       $ 116.2       $ 40.8  
 
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized of $10.4 million
and $8.1 million in 2018 and 2017, respectively
$ 53.3 $ 27.5 $ 11.1 $ 9.2
Non-cash investing and financing activities:
Construction costs and other payables 113.3 163.4 113.3 163.4
Dividends payable 46.5 39.4 46.5 39.4
Real estate additions from entering into and modifying capital leases 6.6
Transfer of land held for future development to construction in
progress
9.3 6.6 (0.1 ) 2.6
Transfer of construction in progress to gross operating real estate 337.7 415.6 159.0 110.3
                                   

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

 
Six Months Ended Three Months Ended
June 30, Change June 30, March 31, December 31, September 30, June 30,
2018     2017     $     %     2018     2018     2017     2017     2017
Net Operating Income
Revenue $ 393.5 $ 316.2 $ 77.3 24 % $ 196.9 $ 196.6 $ 180.5 $ 175.3 $ 166.9
Property operating expenses 136.7       111.9   24.8 22 % 68.9       67.8       60.2       63.0       59.6  
Net Operating Income (NOI) $ 256.8       $ 204.3   $ 52.5 26 % $ 128.0       $ 128.8       $ 120.3       $ 112.3       $ 107.3  
NOI as a % of Revenue 65.3 % 64.6 % 65.0 % 65.5 % 66.6 % 64.1 % 64.3 %
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
Net income (loss) $ 149.4 $ (31.2 ) $ 180.6 n/m $ 105.9 $ 43.5 $ 2.8 $ (55.1 ) $ (0.8 )
Interest expense 43.6 30.1 13.5 45 % 22.8 20.8 20.1 17.9 16.5
Income tax expense 1.8 1.1 0.7 64 % 1.0 0.8 1.0 0.9 0.7
Depreciation and amortization 152.2 119.4 32.8 27 % 77.6 74.6 70.8 68.7 63.7
Asset impairments and loss on disposals       3.8   (3.8 ) n/m             0.2       55.5       3.6  
EBITDA (NAREIT definition)(a) $ 347.0       $ 123.2   223.8 n/m $ 207.3       $ 139.7       $ 94.9       $ 87.9       $ 83.7  
 
Transaction, acquisition, integration and other related expenses 2.3 2.3 n/m 0.4 1.9 5.1 3.0 1.7
Legal claim costs 0.3 0.8 (0.5 ) (63 )% 0.1 0.2 0.3 0.6
Stock-based compensation expense 8.4 7.7 0.7 9 % 4.5 3.9 3.1 3.9 4.0
Severance and management transition costs 0.7 0.5 0.2 40 % 0.7
Loss on early extinguishment of debt 3.1 36.5 (33.4 ) n/m 3.1 0.3
New accounting standards and regulatory compliance and the related
system implementation costs
1.5 0.5 1.0 n/m 1.0 0.5 1.1 0.8 0.5
Unrealized gain on marketable equity investment (143.2 )       (143.2 ) n/m (102.7 )     (40.5 )                  
Adjusted EBITDA $ 220.1       $ 171.5   48.6 28 % $ 110.6       $ 109.5       $ 104.2       $ 95.9       $ 90.8  
Adjusted EBITDA as a % of Revenue 55.9 % 54.2 % 56.2 % 55.7 % 57.7 % 54.7 % 54.4 %
(a)   We calculate Earnings Before Interest, Taxes, Depreciation and
Amortization for Real Estate (EBITDAre) as GAAP net income (loss)
plus interest expense, income tax expense, depreciation and
amortization plus or minus losses and gains on the disposition of
depreciable property, plus asset impairments. While it is consistent
with the definition of EBITDAre promulgated by the National
Association of Real Estate Investment Trusts ("NAREIT"), our
computation of EBITDAre may differ from the methodology for
calculating EBITDAre used by other REITs. Accordingly, our EBITDAre
may not be comparable to others.
                               

CyrusOne Inc.

Reconciliation of Net Income (Loss) to Net Operating Income

(Dollars in millions)

(Unaudited)

 
Three Months Ended Six Months Ended
June 30, Change June 30, Change
2018     2017     $     %     2018     2017     $     %
Net Income (Loss) $ 105.9 $ (0.8 ) $ 106.7 n/m $ 149.4 $ (31.2 ) $ 180.6 n/m
Sales and marketing expenses 4.4 4.3 0.1 2 % 9.7 9.2 0.5 5 %
General and administrative expenses 18.6 17.3 1.3 8 % 37.9 33.1 4.8 15 %
Depreciation and amortization expenses 77.6 63.7 13.9 22 % 152.2 119.4 32.8 27 %
Transaction, acquisition, integration and other related expenses 0.4 1.7 (1.3 ) (76 )% 2.3 2.5 (0.2 ) (8 )%
Asset impairments 3.6 (3.6 ) (100 )% 3.6 (3.6 ) (100 )%
Interest expense 22.8 16.5 6.3 38 % 43.6 30.1 13.5 45 %
Unrealized gain on marketable equity investment (102.7 ) (102.7 ) n/m (143.2 ) (143.2 ) n/m
Loss on early extinguishment of debt 0.3 (0.3 ) (100 )% 3.1 36.5 (33.4 ) (92 )%
Income tax expense 1.0       0.7       0.3       43 %     1.8       1.1       0.7       64 %
Net Operating Income $ 128.0       $ 107.3       $ 20.7       19 %     $ 256.8       $ 204.3       $ 52.5       26 %
                                   

CyrusOne Inc.

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

(Dollars in millions)

(Unaudited)

 
Six Months Ended Three Months Ended
June 30, Change June 30, March 31, December 31, September 30, June 30,
2018     2017     $     %     2018     2018     2017     2017     2017
Reconciliation of Net Income (Loss) to FFO and Normalized FFO:
Net income (loss) $ 149.4 $ (31.2 ) $ 180.6 n/m $ 105.9 $ 43.5 $ 2.8 $ (55.1 ) $ (0.8 )
Real estate depreciation and amortization 136.5 104.0 32.5 31 % 69.8 66.7 62.6 60.3 55.3
Asset impairments       3.6   (3.6 ) n/m                   54.4       3.6  
Funds from Operations ("FFO") - NAREIT defined $ 285.9 $ 76.4 $ 209.5 n/m $ 175.7 $ 110.2 $ 65.4 $ 59.6 $ 58.1
 
Loss on early extinguishment of debt 3.1 36.5 (33.4 ) n/m 3.1 0.3
Unrealized gain on marketable equity investment (143.2 ) (143.2 )

n/m

(102.7 ) (40.5 )
New accounting standards and regulatory compliance and the related
system implementation costs
1.5 0.5 1.0 n/m 1.0 0.5 1.1 0.8 0.5
Amortization of customer relationship intangibles 12.3 11.9 0.4 3 % 6.2 6.1 6.6 6.6 6.7
Transaction, acquisition, integration and other related expenses 2.3 2.5 (0.2 ) (8 )% 0.4 1.9 5.3 4.1 1.7
Severance and management transition costs 0.7 0.5 0.2 40 % 0.7
Legal claim costs 0.3       0.8   (0.5 ) (63 )% 0.1       0.2             0.3       0.6  
Normalized Funds from Operations (Normalized FFO) $ 162.9       $ 129.1   $ 33.8 26 % $ 80.7       $ 82.2       $ 78.4       $ 71.4       $ 67.9  
Normalized FFO per diluted common share $ 1.66 $ 1.49 $ 0.17 11 % $ 0.81 $ 0.85 $ 0.84 $ 0.79 $ 0.77
Weighted average diluted common shares outstanding 98.1 86.5 11.6 13 % 99.4 96.6 93.5 90.9 88.5
 
Additional Information:
Amortization of deferred financing costs and bond premium 1.8 2.2 (0.4 ) (18 )% 1.1 0.7 0.9 1.2 1.2
Stock-based compensation expense 8.4 7.7 0.7 9 % 4.5 3.9 3.1 3.9 4.0
Non-real estate depreciation and amortization 3.4 3.5 (0.1 ) (3 )% 1.6 1.8 1.6 1.8 1.7
Straight line rent adjustments(a) (13.0 ) (18.5 ) 5.5 (30 )% (5.8 ) (7.2 ) (7.4 ) (6.4 ) (8.8 )
Deferred revenue, primarily installation revenue(b) 5.6 6.4 (0.8 ) (13 )% 2.4 3.2 3.8 12.9 6.1
Leasing commissions (6.9 ) (7.7 ) 0.8 (10 )% (3.7 ) (3.2 ) (3.5 ) (6.1 ) (3.8 )
Recurring capital expenditures (4.7 ) (2.2 ) (2.5 ) n/m (2.3 ) (2.4 ) (1.6 ) (0.6 ) (0.7 )
     
(a)

Straight line rent adjustments:

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

Deferred revenue, primarily installation revenue:

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

CyrusOne Inc.

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

(Unaudited)

 

Market Capitalization

           
(dollars in millions)

Shares or
Equivalents
Outstanding

   

Market Price
as of
June 30, 2018

   

Market Value
Equivalents
(in millions)

Common shares 99,114,112 $ 58.36 $ 5,784.3
Net Debt 2,098.7
Total Enterprise Value (TEV) $ 7,883.0
 

Reconciliation of Net Debt

       
June 30, March 31,
(dollars in millions) 2018     2018
Long-term debt(a) $ 2,200.0 $ 2,200.0
Capital lease obligations 14.9 15.9
Less:
Cash and cash equivalents (116.2 )     (228.7 )
Net Debt $ 2,098.7       $ 1,987.2  
 

(a)  Excludes adjustment for deferred financing costs.

           

Debt Schedule (as of
June 30, 2018)

 
(dollars in millions)
Long-term debt: Amount     Interest Rate     Maturity Date
Revolving credit facility $ L + 145bps

March 2023(a)

Term loan 700.0 L + 140bps(b) March 2023
Term loan 300.0 L + 170bps(c) March 2025
5.000% senior notes due 2024, excluding bond premium 700.0 5.000 % March 2024
5.375% senior notes due 2027, excluding bond premium 500.0       5.375 %     March 2027
Total long-term debt(d) $ 2,200.0   4.44 %
 
Weighted average term of debt: 6.2 years
 

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

(b)  Interest rate as of June 30, 2018: 3.50%.

(c)  Interest rate as of June 30, 2018: 3.80%.

(d)  Excludes adjustment for deferred financing costs.

       

Interest Summary

Three Months Ended
June 30,     March 31,     June 30, Growth %
(dollars in millions) 2018     2018     2017     Yr/Yr
Interest expense and fees $ 27.0 $ 25.2 $ 19.8 36 %
Amortization of deferred financing costs and bond premium 1.1 0.7 1.2 (8 )%
Capitalized interest (5.3 )     (5.1 )     (4.5 ) 18 %
Total interest expense $ 22.8       $ 20.8       $ 16.5   38 %
           

CyrusOne Inc.

Colocation Square Footage (CSF) and CSF Leased

(Unaudited)

 
As of June 30, 2018     As of March 31, 2018     As of June 30, 2017

Market

Colocation
Space (CSF)(a)
(000)

    CSF
Leased(b)
   

Colocation
Space (CSF)(a)
(000)

    CSF
Leased(b)
   

Colocation
Space (CSF)(a)
(000)

    CSF
Leased(b)
Northern Virginia 673     98 % 673     94 % 438     90 %
Dallas 550 81 % 555 81 % 431 93 %
Phoenix 509 92 % 509 91 % 216 100 %
Cincinnati 402 93 % 404 92 % 404 92 %
Houston 308 76 % 308 74 % 308 75 %
San Antonio 300 100 % 273 100 % 240 100 %
New York Metro 218 82 % 218 83 % 218 83 %
Chicago 213 67 % 213 67 % 136 88 %
Austin 106 72 % 106 73 % 106 64 %
Raleigh-Durham 76 88 % 76 88 % 65 80 %
International 13       76 %     13       76 %     13       77 %
Total 3,369       88 %     3,348       86 %     2,575       89 %
Stabilized Properties(c) 3,097       92 %     3,024       92 %     2,380       93 %
 
(a) CSF represents the NRSF at an operating facility that is currently
leased or readily available for lease as colocation space, where
customers locate their servers and other IT equipment.
(b) CSF Leased is calculated by dividing CSF under signed leases for
colocation space (whether or not the lease has commenced billing) by
total CSF.
(c) Stabilized properties include data halls that have been in service
for at least 24 months or are at least 85% leased.
 

CyrusOne Inc.

2018 Guidance

 

Category

       

Previous 2018

Guidance(1)

   

Revised 2018

Guidance(1)

Total Revenue $810 - 825 million $820 - 830 million
Lease and Other Revenues from Customers $735 - 745 million $725 - 730 million
Metered Power Reimbursements $75 - 80 million $95 - 100 million
Adjusted EBITDA $460 - 470 million $454 - 459 million
Normalized FFO per diluted common share $3.18 - 3.28 $3.25 - 3.30
Capital Expenditures $850 - 900 million $850 - 900 million
Development $845 - 890 million $845 - 890 million
Recurring $5 - 10 million $5 - 10 million
 
(1)  

Full year 2018 guidance includes the impact of the Zenium
acquisition, which is assumed to close October 1, 2018. Previous
guidance assumed a May 2018 closing. Development capital
expenditures include the acquisition of land for future
development.

 

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

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

 

CyrusOne Inc.

Data Center Portfolio

As of June 30, 2018

(Unaudited)

 
                Operating Net Rentable Square Feet (NRSF)(a)    

Powered
Shell
Available
for
Future

Development
(NRSF)(k)

(000)

   

Available

Critical

Load

Capacity
(MW)(l)

Stabilized Properties(b)

Metro
Area
   

Annualized

Rent(c)

($000)

   

Colocation

Space

(CSF)(d)

(000)

   

CSF

Occupied(e)

    CSF
Leased(f)
   

Office &

Other(g)

(000)

   

Office &

Other

Occupied(h)

   

Supporting
Infrastructure(i)
(000)

   

Total(j)
(000)

       
Dallas - Carrollton Dallas $ 74,229 305     89%     89%     82     51%     111     498 38
Houston - Houston West I Houston 42,902 112 97% 97% 11 99% 37 161 3 28
Dallas - Lewisville* Dallas 35,409 114 88% 89% 11 95% 54 180 21
Cincinnati - 7th Street*** Cincinnati 35,231 197 94% 94% 6 100% 175 378 46 16
Northern Virginia - Sterling II Northern Virginia 35,162 159 100% 100% 9 100% 55 223 30
San Antonio III San Antonio 31,477 132 100% 100% 9 100% 43 184 24
Somerset I New York Metro 28,616 97 85% 85% 27 89% 89 213 203 11
Chicago - Aurora I Chicago 27,628 113 97% 97% 34 100% 223 371 27 71
Totowa - Madison** New York Metro 26,800 51 89% 90% 22 100% 59 133 6
Cincinnati - North Cincinnati Cincinnati 24,450 65 98% 99% 45 79% 53 163 65 14
Houston - Houston West II Houston 24,317 80 87% 87% 4 88% 55 139 11 12
Wappingers Falls I** New York Metro 23,073 37 90% 90% 20 99% 15 72 3
Northern Virginia - Sterling V Northern Virginia 22,914 276 73% 95% 11 100% 121 408 64 39
San Antonio I San Antonio 22,871 44 100% 100% 6 83% 46 96 11 12
Phoenix - Chandler II Phoenix 22,608 74 100% 100% 6 38% 26 105 12
Phoenix - Chandler I Phoenix 19,999 74 100% 100% 35 12% 39 147 31 16
Northern Virginia - Sterling I Northern Virginia 19,053 78 100% 100% 6 77% 49 132 12
Phoenix - Chandler III Phoenix 18,806 68 100% 100% 2 —% 30 101 14
Raleigh-Durham I Raleigh-Durham 17,651 76 88% 88% 13 100% 82 171 246 12
Houston - Galleria Houston 16,665 63 59% 60% 23 51% 25 112 14
Northern Virginia - Sterling III Northern Virginia 16,147 79 100% 100% 7 100% 34 120 15
Austin II Austin 15,715 44 95% 95% 2 100% 22 68 5
San Antonio II San Antonio 14,754 64 100% 100% 11 100% 41 117 12
Phoenix - Chandler VI Phoenix 14,452 148 96% 98% 6 100% 32 186 10 24
Florence Cincinnati 13,509 53 99% 99% 47 87% 40 140 9
Austin III Austin 12,331 62 54% 56% 15 83% 21 98 67 6
Phoenix - Chandler IV Phoenix 11,387 73 100% 100% 3 100% 27 103 12
Cincinnati - Hamilton* Cincinnati 10,652 47 76% 76% 1 100% 35 83 10
Northern Virginia - Sterling IV Northern Virginia 8,711 81 100% 100%

7

100% 34 122 15
London - Great Bridgewater** International 6,300 10 94% 94% —% 1 11 1
Dallas - Midway** Dallas 5,357 8 100% 100% —% 8 1
San Antonio IV San Antonio 5,285 60 45% 100% 4 —% 27 91 12
Cincinnati - Mason Cincinnati 5,269 34 100% 100% 26 98% 17 78 4
Stamford - Riverbend** New York Metro 5,250 20 23% 23% —% 8 28 2
Houston - Houston West III Houston 4,641 53 25% 34% 10 100% 32 95 209 6
Norwalk I** New York Metro 3,942 13 96% 96% 4 68% 41 58 87 2
Chicago - Lombard Chicago 2,383 14 73% 74% 4 100% 12 30 29 3
Stamford - Omega** New York Metro 1,238 —% —% 19 84% 4 22
Cincinnati - Blue Ash* Cincinnati 660 6 36% 36% 7 100% 2 15 1
Totowa - Commerce** New York Metro 567 —% —% 20 38% 6 26
South Bend - Crescent* Chicago 542 3 41% 41% —% 5 9 11 1
Singapore - Inter Business Park** International 383 3 22% 22% —% 3 1
South Bend - Monroe Chicago 123     6     23%     23%         —%     6     13     4     1
Stabilized Properties - Total $ 729,461     3,097     88%     92%     576     77%     1,835     5,508     1,124     543
 
 
CyrusOne Inc.
Data Center Portfolio
As of June 30, 2018
(Unaudited)
 
                Operating Net Rentable Square Feet (NRSF)(a)    

Powered
Shell
Available
for
Future

Development
(NRSF)(k)
(000)

   

Available

Critical

Load

Capacity
(MW)(l)

Metro
Area
   

Annualized

Rent(c)

($000)

   

Colocation

Space

(CSF)(d)

(000)

   

CSF

Occupied(e)

   

CSF
Leased(f)

   

Office &

Other(g)

(000)

   

Office &

Other

Occupied(h)

   

Supporting
Infrastructure(i)

(000)

   

Total(j) (000)

       
Stabilized Properties - Total $ 729,461 3,097     88%     92%     576     77%     1,835     5,508 1,124 543
 

Pre-Stabilized Properties(b)

Dallas - Carrollton (DH #6) Dallas 4,906 75 76% 76% —% 21 96 6
Phoenix - Chandler V Phoenix 3,816 72 50% 50% 1 50% 16 89 94 12
Chicago - Aurora II (DH #1) Chicago 1,077 77 23% 28% 10 —% 14 101 272 16
Dallas - Carrollton (DH #7) Dallas 550     48     18%     21%         —%         48         6
All Properties - Total $ 739,809     3,369     85%     88%     587     75%     1,886     5,842     1,490     583
 
*   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 June 30, 2018, multiplied by 12. For the month of June
2018, customer reimbursements were $100.8 million annualized and
consisted of reimbursements by customers across all facilities with
separately metered power. Customer reimbursements under leases with
separately metered power vary from month-to-month based on factors
such as our customers' utilization of power and the suppliers'
pricing of power. From July 1, 2016 through June 30, 2018, customer
reimbursements under leases with separately metered power
constituted between 10.2% and 13.6% of annualized rent. After giving
effect to abatements, free rent and other straight-line adjustments,
our annualized effective rent as of June 30, 2018 was $746.4
million. Our annualized effective rent was greater than our
annualized rent as of June 30, 2018 because our positive
straight-line and other adjustments and amortization of deferred
revenue exceeded our negative straight-line adjustments due to
factors such as the timing of contractual rent escalations and
customer prepayments for services.
(d) CSF represents the NRSF at an operating facility that is currently
leased or readily available for lease as colocation space, where
customers locate their servers and other IT equipment.
(e) Percent occupied is determined based on CSF billed to customers
under signed leases as of June 30, 2018 divided by total CSF. Leases
signed but that have not commenced billing as of June 30, 2018 are
not included.
(f) Percent leased is calculated by dividing CSF under signed leases for
colocation space (whether or not the lease has commenced billing) by
total CSF.
(g) Represents the NRSF at an operating facility that is currently
leased or readily available for lease as space other than CSF, which
is typically office and other space.
(h) Percent occupied is determined based on Office & Other space being
billed to customers under signed leases as of June 30, 2018 divided
by total Office & Other space. Leases signed but not commenced as of
June 30, 2018 are not included.
(i) Represents infrastructure support space, including mechanical,
telecommunications and utility rooms, as well as building common
areas.
(j) Represents the NRSF at an operating facility that is currently
leased or readily available for lease. This excludes existing vacant
space held for development.
(k) Represents space that is under roof that could be developed in the
future for operating NRSF, rounded to the nearest 1,000.
(l) Critical load capacity represents the aggregate power available for
lease and exclusive use by customers expressed in terms of
megawatts. The capacity reported is for non-redundant megawatts, as
we can develop flexible solutions to our customers at multiple
resiliency levels. Does not sum to total due to rounding.
 
 

CyrusOne Inc.

NRSF Under Development

As of June 30, 2018

(Dollars in millions)

(Unaudited)

 
        NRSF Under Development(a)           Under Development Costs
Facilities Metropolitan

Area

   

Estimated

Completion

Date

   

Colocation

Space

(CSF)

(000)

   

Office &

Other

(000)

   

Supporting

Infrastructure

(000)

   

Powered

Shell(b)

(000)

    Total (000)    

Critical

Load MW

Capacity(c)

   

Actual

to

Date(d)

   

Estimated

Costs to

Completion(e)

    Total
Northern Virginia - Sterling V Northern Virginia 3Q'18     107         24         131     24.0     $ 18     $84-96     $102-114
Dallas - Carrollton Dallas 3Q'18 6.0 3 14-16 17-19
Dallas - Allen Dallas 3Q'18 79 27 60 175 341 6.0 45 17-23 62-68
Aurora II Chicago 3Q'18 35 35 8-9 8-9
Somerset II New York Metro 4Q'18 9 9 2.0 12-14 12-14
San Antonio IV San Antonio 4Q'18 8 8 1-2 1-2
Northern Virginia - Sterling VI Northern Virginia 1Q'19 206 30 52 71 359 48.0 9 238-264 247-273
Phoenix - Chandler VII Phoenix 1Q'19 269 269 59-65 59-65
Northern Virginia - Sterling VII Northern Virginia 3Q'19             93     93             33-37     33-37
Total 401     100     136     609     1,246     86.0     $ 75     $466-526     $541-601
(a)   Represents NRSF at a facility for which activities have commenced or
are expected to commence in the next 2 quarters to prepare the space
for its intended use. Estimates and timing are subject to change.
(b) Represents NRSF under construction that, upon completion, will be
powered shell available for future development into operating NRSF.
(c) Critical load capacity represents the aggregate power available for
lease and exclusive use by customers expressed in terms of
megawatts. The capacity reported is for non-redundant megawatts, as
we can develop flexible solutions to our customers at multiple
resiliency levels.
(d) Actual to date is the cash investment as of June 30, 2018. There may
be accruals above this amount for work completed, for which cash has
not yet been paid.
(e) Represents management's estimate of the total costs required to
complete the current NRSF under development. There may be an
increase in costs if customers require greater power density.
 
 

CyrusOne Inc.

Land Available for Future Development (Acres)

As of June 30, 2018

(Unaudited)

 
As of
Market June 30, 2018
Atlanta 44
Austin 22
Chicago 23
Cincinnati 98
Dallas 33
Houston 20
International
New York Metro
Northern Virginia
Phoenix(a) 95
Quincy, Washington 48
Raleigh-Durham
San Antonio
Total Available(a) 383
Book Value of Total Available(a) $70 million

(a) Adjusted to reflect impact of Phoenix - Chandler VII shell
construction, which commenced in July 2018.

 
 

CyrusOne Inc.

Leasing Statistics - Lease Signings

As of June 30, 2018

(Unaudited)

 
Period    

Number

of Leases(a)

   

Total CSF

Signed(b)

   

Total kW

Signed(c)

   

Total MRR

Signed (000)(d)

   

Weighted

Average

Lease Term(e)

2Q'18     506     305,000     51,919     $5,453     143
Prior 4Q Avg. 424 149,750 17,367