DuPont Fabros Technology, Inc. Reports Fourth Quarter 2013 Results

Revenues increase 16%; Normalized FFO per share increases 50%

2014 Guidance provided

30 Jan, 2014, 07:00 ET from DuPont Fabros Technology, Inc.

WASHINGTON, Jan. 30, 2014 /PRNewswire/ -- DuPont Fabros Technology, Inc. (NYSE: DFT) is reporting results for the quarter ended December 31, 2013.  All per share results are reported on a fully diluted basis.

(Logo: http://photos.prnewswire.com/prnh/20120104/MM29780LOGO)

Highlights

  • As of December 31, 2013, our operating portfolio was stabilized at 94% leased and commenced.
  • Quarterly Highlights:
    • Normalized Funds from Operations ("Normalized FFO") of $0.57 per share representing a 50% increase over the prior year quarter and a 12% increase sequentially.
    • Adjusted Funds from Operations ("AFFO") per share of $0.56 representing a 51% increase over the prior year quarter and an 8% increase sequentially. 
    • Commenced one lease totaling 1.14 megawatts ("MW") and 5,500 computer room square feet.
    • Renewed two leases scheduled to expire in 2014, each for five years, totaling 1.17 MW and 9,760 computer room square feet.
    • Repaid the remaining 24% of the $550 million 8.5% Senior Notes due 2017.
    • Exercised the accordion on the unsecured term loan, increasing its total capacity from $195 million to $250 million.
  • Subsequent to the Fourth Quarter 2013:
    • Declared first quarter 2014 dividend of $0.35 per share, an increase of 40% over the prior quarter. 

Hossein Fateh, President and Chief Executive Officer, said, "DFT enters 2014 with a strong balance sheet poised for new growth.  We had record lease commencements of 33 megawatts in 2013 which resulted in 32% growth in Normalized FFO per share as compared to 2012.  We continue to focus on the lease up of our existing available inventory and our two new developments to fuel our future growth."

Fourth Quarter 2013 Results

For the quarter ended December 31, 2013, earnings were $0.18 per share compared to earnings of $0.11 per share for the fourth quarter of 2012.  The $0.18 per share of earnings includes an $0.11 per share loss on early extinguishment of debt related to the call of the remaining 8.5% Senior Notes due 2017.  Excluding the $0.11 per share loss on early extinguishment of debt, earnings were $0.28 per share, an increase of 155% over the prior year quarter.  Revenues increased 16%, or $13.5 million, to $99.4 million for the fourth quarter of 2013 over the fourth quarter of 2012.  The increase in revenues is primarily due to new leases commencing. 

Normalized FFO is FFO with the loss on early extinguishment of debt added back.  Normalized FFO for the quarter ended December 31, 2013 was $0.57 per share compared to $0.38 per share for the fourth quarter of 2012.  The increase of $0.19 per share, or 50%, from the prior year quarter is primarily due to the following:

  • Higher operating income excluding depreciation of $0.16 per share and
  • Lower interest expense of $0.03 per share from lower interest rates and higher capitalized interest.

Full Year 2013 Results

For the year ended December 31, 2013, earnings were $0.32 per share compared to $0.41 per share for 2012.  Earnings of $0.32 per share includes losses on the early extinguishment of debt of $0.50 per share from our refinancing of the 8.5% Senior Notes Due 2017 and the ACC5 Term Loan.  Excluding the $0.50 per share loss on early extinguishment of debt, earnings were $0.82 per share, an increase of 100% over 2012.  Revenues increased 13%, or $42.7 million, to $375.1 million for 2013 versus 2012.  The increase in revenues is primarily due to new leases commencing.

Normalized FFO for the year ended December 31, 2013 was $1.96 per share, compared to $1.48 per share for 2012.  The increase of $0.48 per share, or 32%, from 2012 is primarily due to higher operating income excluding depreciation.

Portfolio Update

During the fourth quarter 2013, we:

  • Renewed one lease at VA3 for five years totaling 0.60 MW and 7,060 computer room square feet and one lease for five years at ACC5 totaling 0.57 MW and 2,700 computer room square feet. 

In 2013, we:

  • Signed five leases and a pre-lease with a weighted average lease term of 5.5 years totaling 15.71 MW and 106,130 computer room square feet that are expected to generate approximately $16.0 million of annualized GAAP base rent revenue which includes $1.0 million of management fees. 
  • Commenced 14 leases totaling 33.31 MW and 201,225 computer room square feet. 
  • Renewed five leases by a weighted average of 3.8 years totaling 5.72 MW and 31,460 computer room square feet.

Development Update

We are currently under development at ACC7 Phase I (11.9 MW) and SC1 Phase IIA (9.1 MW).  Both of these developments are on time and on budget, with completion expected in mid-2014.  SC1 Phase IIA is 50% pre-leased.

Balance Sheet and Liquidity

In September 2013, we issued $600 million of Senior Notes due 2021 at par bearing an interest rate of 5.875%.  The proceeds from this issuance were used to retire our 8.5% Senior Notes due 2017.  Bondholders tendered $418.1 million of these notes outstanding and we settled this tender on September 24, 2013 for $443.4 million which included a premium of $25.3 million.  On October 24, 2013, we redeemed the remaining bonds for $139.0 million which included a premium of $7.1 million.

In September 2013, we entered into a $195 million senior unsecured term loan.  This loan bears interest at LIBOR plus 1.75% and matures on February 15, 2019 with no extension option.  In October 2013, we exercised the accordion feature of this loan which increased its total capacity by $55 million to $250 million.  This loan includes a delayed draw feature, and as of December 31, 2013 we had drawn $154.0 million of the total $250 million. The remaining $96.0 million was drawn in January 2014.

In September 2013, the Company's Board of Directors approved a new common stock repurchase program that commenced in November 2013 and expires on December 31, 2014.  The new program allows purchases of up to $142.2 million.  In the fourth quarter of 2013, we did not repurchase any shares.

As of December 31, 2013, we had $39 million of cash, $96 million of available capacity on our unsecured term loan and $400 million of available capacity under our revolving credit facility.

Dividend

Yesterday, we announced that our first quarter 2014 dividend is $0.35 per share which is a 40% increase from the fourth quarter 2013 dividend of $0.25 per share.  The increase is due to a forecasted increase in taxable income in 2014 as the Company's policy is to pay out 100% of taxable income as a dividend.  Jeff Foster, Chief Financial Officer, said, "We are pleased to announce our fourth dividend increase in the last two years. The 2014 annualized dividend of $1.40 per share represents an estimated Normalized FFO payout ratio of 60 percent at the midpoint of our 2014 guidance."  The Normalized FFO payout ratio in 2013 was 48% and the AFFO payout ratio was 51%.

First Quarter and Full Year 2014 Guidance

Our Normalized FFO guidance range is $0.56 to $0.58 per share for the first quarter of 2014.  The midpoint of this range is equal to our fourth quarter 2013 Normalized FFO per share of $0.57.

Our 2014 Normalized FFO guidance range is $2.28 to $2.38 per share and the lower end of this range assumes no additional leases will be executed through the end of this calendar year. The assumptions underlying this guidance can be found on page 15 of this earnings release.  The $0.37 per share, or 19%, increase between our full year 2013 Normalized FFO per share of $1.96 and the mid-point of the 2014 guidance range is primarily due to:

  • Higher operating income excluding depreciation of $0.25 per share primarily from new leases commencing in 2013 and 2014 and
  • Lower interest expense of $0.12 per share of which $0.07 per share is due to higher capitalized interest and the remainder is due to decreasing the average interest rate of our debt by 185 basis points in 2014, partially offset by an increase in our average outstanding debt of $198 million

Fourth Quarter 2013 Conference Call and Webcast Information

We will host a conference call to discuss these results today, Thursday, January 30, 2014 at 1:00 p.m. ET. To access the live call, please visit the Investor Relations section of our website at www.dft.com or dial 1-877-870-4263 (domestic) or 1-412-317-0790 (international).  A replay will be available for seven days by dialing 1-877-344-7529 (domestic) or 1-412-317-0088 (international) using passcode 10039043.  The webcast will be archived on our website for one year at www.dft.com on the Presentations & Webcasts page.

About DuPont Fabros Technology, Inc.

DuPont Fabros Technology, Inc. (NYSE: DFT) is a leading owner, developer, operator and manager of enterprise-class, carrier neutral, multi-tenant wholesale data centers.  The Company's facilities are designed to offer highly specialized, efficient and safe computing environments in a low-cost operating model.  The Company's customers outsource their mission critical applications and include national and international enterprises across numerous industries, such as technology, Internet content providers, media, communications, cloud-based, healthcare and financial services.  The Company's ten data centers are located in four major U.S. markets, which total 2.5 million gross square feet and 218 megawatts of available critical load to power the servers and computing equipment of its customers.  DuPont Fabros Technology, Inc., a real estate investment trust (REIT), is headquartered in Washington, DC.  For more information, please visit www.dft.com.

Forward-Looking Statements

Certain statements contained in this press release may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  The matters described in these forward-looking statements include expectations regarding future events, results and trends and are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. We face many risks that could cause our actual performance to differ materially from the results contemplated by our forward-looking statements, including, without limitation, the risk that the assumptions underlying our full year and first quarter 2014 guidance are not realized, the risks related to the leasing of available space to third-party customers, including delays in executing new leases and failure to negotiate leases on terms that will enable us to achieve our expected returns, risks related to the collection of accounts and notes receivable, the risk that we may be unable to obtain new financing on favorable terms to facilitate, among other things, future development projects, the risks commonly associated with construction and development of new facilities (including delays and/or cost increases associated with the completion of new developments), risks relating to obtaining required permits and compliance with permitting, zoning, land-use and environmental requirements, the risk that we will not declare and pay dividends as anticipated for 2014 and the risk that we may not be able to maintain our qualification as a REIT for federal tax purposes.  The periodic reports that we file with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31, 2012 and the quarterly reports on Form 10-Q for the quarters ended September 30, 2013, June 30, 2013 and March 31, 2013, contain detailed descriptions of these and many other risks to which we are subject.  These reports are available on our website at www.dft.com.  Because of the risks described above and other unknown risks, our actual results, performance or achievements may differ materially from the results, performance or achievements contemplated by our forward-looking statements.  The information set forth in this news release represents our expectations and intentions only as of the date of this press release.  We assume no responsibility to issue updates to the contents of this press release.

 

DUPONT FABROS TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except share and per share data)

Three months ended December 31,

Year ended December 31,

2013

2012

2013

2012

Revenues:

Base rent (1)

$

68,904

$

61,000

$

265,695

$

236,810

Recoveries from tenants (1)

28,515

23,702

104,271

91,049

Other revenues

2,025

1,257

5,143

4,586

Total revenues

99,444

85,959

375,109

332,445

Expenses:

Property operating costs

28,124

24,286

103,522

94,646

Real estate taxes and insurance

3,436

3,474

14,380

12,689

Depreciation and amortization

23,285

22,356

93,058

89,241

General and administrative

3,715

3,310

16,261

17,024

Other expenses

1,419

4,773

3,650

6,919

Total expenses

59,979

58,199

230,871

220,519

Operating income

39,465

27,760

144,238

111,926

Interest income

52

56

137

168

Interest:

Expense incurred

(8,953)

(11,294)

(46,443)

(47,765)

Amortization of deferred financing costs

(807)

(819)

(3,349)

(3,496)

Loss on early extinguishment of debt

(8,668)

(40,978)

Net income

21,089

15,703

53,605

60,833

Net income attributable to redeemable noncontrolling interests – operating partnership

(2,817)

(2,046)

(5,214)

(7,803)

Net income attributable to controlling interests

18,272

13,657

48,391

53,030

Preferred stock dividends

(6,812)

(6,812)

(27,245)

(27,053)

Net income attributable to common shares

$

11,460

$

6,845

$

21,146

$

25,977

Earnings per share – basic:

Net income attributable to common shares

$

0.18

$

0.11

$

0.32

$

0.41

Weighted average common shares outstanding

64,685,508

63,000,839

64,645,316

62,866,189

Earnings per share – diluted:

Net income attributable to common shares

$

0.18

$

0.11

$

0.32

$

0.41

Weighted average common shares outstanding

65,439,427

63,833,651

65,474,039

63,754,006

Dividends declared per common share

$

0.25

$

0.20

$

0.95

$

0.62

 

(1)  Effective this quarter, we reclassified the management fee that we collect from customers from "Recoveries from tenants" to "Base rent."  All periods presented were conformed to this change.  We believe that this change more accurately reflects the true nature of our management fee which is equivalent to additional rent for the Company with no offsetting direct expenses.  We continue to recover all of our property management expenses under our triple net lease structure and these recoveries are still reported in "Recoveries from tenants."

 

 

DUPONT FABROS TECHNOLOGY, INC.

RECONCILIATIONS OF NET INCOME TO FFO, NORMALIZED FFO AND AFFO (1)

(unaudited and in thousands except share and per share data)

Three months ended

December 31,

Year ended

December 31,

2013

2012

2013

2012

Net income

$

21,089

$

15,703

$

53,605

$

60,833

Depreciation and amortization

23,285

22,356

93,058

89,241

Less: Non real estate depreciation and amortization

(186)

(238)

(875)

(1,023)

FFO

44,188

37,821

145,788

149,051

Preferred stock dividends

(6,812)

(6,812)

(27,245)

(27,053)

FFO attributable to common shares and OP units

$

37,376

$

31,009

$

118,543

$

121,998

Loss on early extinguishment of debt

8,668

40,978

Normalized FFO

46,044

31,009

159,521

121,998

Straight-line revenues, net of reserve

(1,597)

(1,143)

(6,920)

(17,967)

Amortization of lease contracts above and below market value

(598)

(599)

(2,391)

(3,194)

Compensation paid with Company common shares

1,012

1,647

6,088

6,980

Non real estate depreciation and amortization

186

238

875

1,023

Amortization of deferred financing costs

807

819

3,349

3,496

Improvements to real estate

(722)

(1,093)

(5,757)

(4,426)

Capitalized leasing commissions

(52)

(362)

(2,134)

(1,143)

AFFO

$

45,080

$

30,516

$

152,631

$

106,767

FFO attributable to common shares and OP units per share - diluted

$

0.46

$

0.38

$

1.46

$

1.48

Normalized FFO per share - diluted

$

0.57

$

0.38

$

1.96

$

1.48

AFFO per share - diluted

$

0.56

$

0.37

$

1.87

$

1.29

Weighted average common shares and OP units outstanding - diluted

81,197,007

82,662,537

81,409,279

82,638,775

 

(1)  Funds from operations, or FFO, is used by industry analysts and investors as a supplemental operating performance measure for REITs. We calculate FFO in accordance with the definition that was adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. FFO, as defined by NAREIT, represents net income determined in accordance with GAAP, excluding extraordinary items as defined under GAAP, impairment charges on depreciable real estate assets and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We also present FFO attributable to common shares and OP units, which is FFO excluding preferred stock dividends. FFO attributable to common shares and OP units per share is calculated on a basis consistent with net income attributable to common shares and OP units and reflects adjustments to net income for preferred stock dividends.

We use FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared period over period, captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO may be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes real estate related depreciation and amortization and captures neither the changes in the value of our properties that result from use or 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 effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited.

While FFO is a relevant and widely used measure of operating performance of equity REITs, other equity REITs may use different methodologies for calculating FFO and, accordingly, FFO as disclosed by such other REITs may not be comparable to our FFO. Therefore, we believe that in order to facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income as presented in the consolidated statements of operations. FFO should not be considered as an alternative to net income or to cash flow from operating activities (each as computed in accordance with GAAP) or as an indicator of our liquidity, nor is it indicative of funds available to meet our cash needs, including our ability to pay dividends or make distributions.

We present FFO with adjustments to arrive at Normalized FFO.  Normalized FFO is FFO attributable to common shares and units excluding gain or loss on early extinguishment of debt and gain or loss on derivative instruments.   We also present FFO with supplemental adjustments to arrive at Adjusted FFO ("AFFO"). AFFO is Normalized FFO excluding straight-line revenue, compensation paid with Company common shares, below market lease amortization net of above market lease amortization, non real estate depreciation and amortization, amortization of deferred financing costs, improvements to real estate and capitalized leasing commissions.  AFFO does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative to net income as an indicator of our operating performance or as an alternative to cash flow provided by operations as a measure of liquidity and is not necessarily indicative of funds available to fund our cash needs including our ability to pay dividends. In addition, AFFO may not be comparable to similarly titled measurements employed by other companies. We use AFFO in management reports to provide a measure of REIT operating performance that can be compared to other companies using AFFO.

 

DUPONT FABROS TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands except share data)

December 31, 2013

December 31, 2012

ASSETS

Income producing property:

Land

$

75,956

$

73,197

Buildings and improvements

2,420,986

2,315,499

2,496,942

2,388,696

Less: accumulated depreciation

(413,394)

(325,740)

Net income producing property

2,083,548

2,062,956

Construction in progress and land held for development

302,068

218,934

Net real estate

2,385,616

2,281,890

Cash and cash equivalents

38,733

23,578

Rents and other receivables, net

12,674

3,840

Deferred rent, net

150,038

144,829

Lease contracts above market value, net

9,154

10,255

Deferred costs, net

39,866

35,670

Prepaid expenses and other assets

44,507

30,797

Total assets

$

2,680,588

$

2,530,859

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Line of credit

$

$

18,000

Mortgage notes payable

115,000

139,600

Unsecured term loan

154,000

Unsecured notes payable

600,000

550,000

Accounts payable and accrued liabilities

23,566

22,280

Construction costs payable

45,444

6,334

Accrued interest payable

9,983

2,601

Dividend and distribution payable

25,971

22,177

Lease contracts below market value, net

10,530

14,022

Prepaid rents and other liabilities

56,576

35,524

Total liabilities

1,041,070

810,538

Redeemable noncontrolling interests – operating partnership

387,244

453,889

Commitments and contingencies

Stockholders' equity:

Preferred stock, $.001 par value, 50,000,000 shares          authorized:

Series A cumulative redeemable perpetual preferred                   stock, 7,400,000 issued and outstanding at December                   31, 2013 and 2012

185,000

185,000

Series B cumulative redeemable perpetual preferred                   stock, 6,650,000 issued and outstanding at December                   31, 2013 and 2012

166,250

166,250

Common stock, $.001 par value, 250,000,000 shares           authorized, 65,205,274 shares issued and outstanding at           December 31, 2013 and 63,340,929 shares issued and           outstanding at December 31, 2012

65

63

Additional paid in capital

900,959

915,119

Retained earnings

Total stockholders' equity

1,252,274

1,266,432

Total liabilities and stockholders' equity

$

2,680,588

$

2,530,859

 

DUPONT FABROS TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year ended December 31,

2013

2012

Cash flow from operating activities

Net income

$

53,605

$

60,833

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

93,058

89,241

Loss on early extinguishment of debt

40,978

Straight line rent, net of reserve

(6,920)

(17,967)

Amortization of deferred financing costs

3,349

3,496

Amortization of lease contracts above and below market value

(2,391)

(3,194)

Compensation paid with Company common shares

6,088

6,980

Changes in operating assets and liabilities

Rents and other receivables

(5,900)

(2,452)

Deferred costs

(2,082)

(1,278)

Prepaid expenses and other assets

(14,760)

(5,854)

Accounts payable and accrued liabilities

1,520

(1,112)

Accrued interest payable

7,382

73

Prepaid rents and other liabilities

19,834

3,997

Net cash provided by operating activities

193,761

132,763

Cash flow from investing activities

Investments in real estate – development

(129,332)

(94,753)

Land acquisition costs

(14,186)

(3,830)

Interest capitalized for real estate under development

(3,774)

(4,434)

Improvements to real estate

(5,757)

(4,426)

Additions to non-real estate property

(71)

(57)

Net cash used in investing activities

(153,120)

(107,500)

Cash flow from financing activities

Line of credit:

Proceeds

102,000

48,000

Repayments

(120,000)

(50,000)

Mortgage notes payable:

Proceeds

115,000

Lump sum payoffs

(138,300)

Repayments

(1,300)

(5,200)

Unsecured term loan:

Proceeds

154,000

Unsecured notes payable:

Proceeds

600,000

Repayments

(550,000)

Payments of financing costs

(18,200)

(2,109)

Payments for early extinguishment of debt

(32,544)

Issuance of preferred stock, net of offering costs

62,685

Exercises of stock options

1,711

868

Common stock repurchases

(37,792)

Dividends and distributions:

Common shares

(57,927)

(34,112)

Preferred shares

(27,245)

(26,006)

Redeemable noncontrolling interests – operating partnership

(14,889)

(10,213)

Net cash used in financing activities

(25,486)

(16,087)

Net increase in cash and cash equivalents

15,155

9,176

Cash and cash equivalents, beginning

23,578

14,402

Cash and cash equivalents, ending

$

38,733

$

23,578

Supplemental information:

Cash paid for interest

$

42,835

$

52,127

Deferred financing costs capitalized for real estate under development

$

226

$

277

Construction costs payable capitalized for real estate under development

$

45,444

$

6,334

Redemption of operating partnership units

$

75,600

$

6,800

Adjustments to redeemable noncontrolling interests - operating partnership

$

18,791

$

2,830

 

DUPONT FABROS TECHNOLOGY, INC.

Operating Properties

As of January 1, 2014

Property

Property Location

Year Built/ Renovated

Gross Building Area (2)

Computer Room Square Feet (2)

Critical Load MW (3)

% Leased (4)

% Commenced (5)

Stabilized (1)

ACC2

Ashburn, VA

2001/2005

87,000

53,000

10.4

100

%

100

%

ACC3

Ashburn, VA

2001/2006

147,000

80,000

13.9

100

%

100

%

ACC4

Ashburn, VA

2007

347,000

172,000

36.4

100

%

100

%

ACC5

Ashburn, VA

2009-2010

360,000

176,000

36.4

98

%

98

%

ACC6

Ashburn, VA

2011-2013

262,000

130,000

26.0

100

%

100

%

CH1

Elk Grove Village, IL

2008-2012

485,000

231,000

36.4

100

%

100

%

NJ1 Phase I

Piscataway, NJ

2010

180,000

88,000

18.2

52

%

52

%

SC1 Phase I

Santa Clara, CA

2011

180,000

88,000

18.2

100

%

100

%

VA3

Reston, VA

2003

256,000

147,000

13.0

71

%

71

%

VA4

Bristow, VA

2005

230,000

90,000

9.6

100

%

100

%

Total Operating Properties

2,534,000

1,255,000

218.5

94

%

94

%

(1)      Stabilized operating properties are either 85% or more leased and commenced or have been in service for 24 months or greater.

(2)      Gross building area is the entire building area, including computer room square footage (the portion of gross building area where our customers' computer servers are located), common areas, areas controlled by us (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to our customers.

(3)      Critical load (also referred to as IT load or load used by customers' servers or related equipment) is the power available for exclusive use by customers expressed in terms of megawatt, or MW, or kilowatt, or kW (1 MW is equal to 1,000 kW).

(4)      Percentage leased is expressed as a percentage of critical load that is subject to an executed lease totaling 205.3 MW. Leases executed as of January 1, 2014 represent $275 million of base rent on a GAAP basis and $283 million of base rent on a cash basis over the next twelve months. Both amounts include $17 million of revenue from management fees over the next twelve months.

(5)      Percentage commenced is expressed as a percentage of critical load where the lease has commenced under generally accepted accounting principles.

 

DUPONT FABROS TECHNOLOGY, INC.

Lease Expirations As of January 1, 2014

The following table sets forth a summary schedule of lease expirations at our operating properties for each of the ten calendar years beginning with 2014. The information set forth in the table below assumes that customers exercise no renewal options and takes into account customers' early termination options in determining the life of their leases under GAAP.

 

Year of Lease Expiration

Number of Leases Expiring (1)

Computer Room Square Feet of Expiring Commenced Leases (in thousands)  (2)

% of Leased Computer Room Square Feet

Total kW of Expiring Commenced Leases (2)

% of Leased kW

% of Annualized Base Rent (3)

2014

2

8

0.7

%

1,705

0.8

%

1.1

%

2015

4

70

6.0

%

13,812

6.7

%

6.7

%

2016

4

32

2.7

%

4,686

2.3

%

2.4

%

2017

13

96

8.2

%

17,619

8.6

%

8.7

%

2018

19

215

18.3

%

39,298

19.1

%

18.4

%

2019

13

171

14.5

%

31,337

15.3

%

14.8

%

2020

10

106

9.0

%

16,496

8.0

%

8.7

%

2021

9

159

13.5

%

27,682

13.5

%

13.8

%

2022

6

75

6.4

%

12,812

6.1

%

7.2

%

2023

4

48

4.1

%

6,475

3.2

%

2.7

%

After 2023

12

196

16.6

%

33,425

16.4

%

15.5

%

Total

96

1,176

100

%

205,347

100

%

100

%

 

(1)      Represents 33 customers with 96 lease expiration dates. Top four customers represent 62% of annualized base rent.

(2)      Computer room square footage is that portion of gross building area where customers locate their computer servers. One MW is equal to 1,000 kW.

(3)      Annualized base rent represents the monthly contractual base rent (defined as cash base rent before abatements) multiplied by 12 for commenced leases totaling 205.3 MW as of January 1, 2014.

 

 

DUPONT FABROS TECHNOLOGY, INC.

Development Projects

As of December 31, 2013

($ in thousands)

Property

Property Location

Gross Building Area (1)

Computer Room Square Feet (2)

Critical Load MW (3)

Estimated Total Cost (4)

Construction in Progress & Land Held for Development  (5)

% Pre- leased

Current Development Projects

SC1 Phase IIA

Santa Clara, CA

90,000

44,000

9.1

$105,000 - $115,000

$

64,972

50

%

ACC7 Phase I

Ashburn, VA

126,000

70,000

11.9

85,000  -  90,000

68,402

0

%

216,000

114,000

21.0

190,000 - 205,000

133,374

Future Development Projects/Phases

SC1 Phase IIB

Santa Clara, CA

90,000

44,000

9.1

46,000 - 50,000

44,610

ACC7 Phases II to IV

Ashburn, VA

320,000

176,000

29.7

78,000 - 82,000

59,705

NJ1 Phase II

Piscataway, NJ

180,000

88,000

18.2

39,212

39,212

590,000

308,000

57.0

$163,212 - $171,212

143,527

Land Held for Development

ACC8

Ashburn, VA

100,000

50,000

10.4

3,855

CH2

Elk Grove Village, IL

338,000

167,000

25.6

15,702

SC2

Santa Clara, CA

200,000

125,000

26.0

5,610

638,000

342,000

62.0

25,167

Total

1,444,000

764,000

140.0

$

302,068

 

(1)     Gross building area is the entire building area, including computer room square footage (the portion of gross building area where our customers' computer servers are located), common areas, areas controlled by us (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to our customers.  The amount listed for CH2 is an estimate.

(2)     Computer room square footage is that portion of gross building area where customers locate their computer servers. The amount listed for CH2 is an estimate.

(3)     Critical load (also referred to as IT load or load used by customers' servers or related equipment) is the power available for exclusive use by customers expressed in terms of MW or kW (1 MW is equal to 1,000 kW).  The amount listed for CH2 is an estimate.

(4)     Current development projects include land, capitalization for construction and development and capitalized operating carrying costs, as applicable, upon completion.  Capitalized interest is excluded. Future development projects/phases other than SC1 Phase IIB include land, shell and underground work through Phase I opening only.  SC1 Phase IIB also includes a portion of the electrical and mechanical infrastructure. 

(5)     Amount capitalized as of December 31, 2013. Future development projects/phases other than SC1 Phase IIB include land, shell and underground work through Phase I opening only.  SC1 Phase IIB also includes a portion of the electrical and mechanical infrastructure. 

 

 DUPONT FABROS TECHNOLOGY, INC.

Debt Summary as of December 31, 2013

($ in thousands)

December 31, 2013

Amounts

% of Total

Rates

Maturities

(years)

Secured

$

115,000

13

%

2.0

%

4.2

Unsecured

754,000

87

%

5.1

%

7.2

Total

$

869,000

100

%

4.7

%

6.8

Fixed Rate Debt:

Unsecured Notes due 2021

$

600,000

69

%

5.9

%

7.7

Fixed Rate Debt

600,000

69

%

5.9

%

7.7

Floating Rate Debt:

Unsecured Credit Facility

2.2

Unsecured Term Loan

154,000

18

%

1.9

%

5.1

ACC3 Term Loan

115,000

13

%

2.0

%

4.2

Floating Rate Debt

269,000

31

%

2.0

%

4.7

Total

$

869,000

100

%

4.7

%

6.8

 

Note:      We capitalized interest and deferred financing cost amortization of $2.4 million and $4.0 million during the three months and year ended December 31, 2013, respectively.

 

 

Debt Maturity as of December 31, 2013

($ in thousands)

Year

Fixed Rate

Floating Rate

Total

% of Total

Rates

2014

2015

2016

3,750

(2)

3,750

0.4

%

2.0

%

2017

8,750

(2)

8,750

1.0

%

2.0

%

2018

102,500

(2)

102,500

11.8

%

2.0

%

2019

154,000

(3)

154,000

17.7

%

1.9

%

2020

2021

600,000

(1)

600,000

69.1

%

5.9

%

Total

$

600,000

$

269,000

$

869,000

100

%

4.7

%

 

(1)     The 5.875% Unsecured Notes are due September 15, 2021.

(2)     The ACC3 Term Loan matures on March 27, 2018 with no extension option. Quarterly principal payments of $1.25 million begin on April 1, 2016, increase to $2.5 million on April 1, 2017 and continue through maturity.

(3)     The $250 million Unsecured Term Loan matures on February 15, 2019 with no extension option.  In January 2014, we drew the remaining $96.0 million

 

 

DUPONT FABROS TECHNOLOGY, INC.

Selected Unsecured Debt Metrics(1)

12/31/13

12/31/12

Interest Coverage Ratio (not less than 2.0)

5.8

4.0

Total Debt to Gross Asset Value (not to exceed 60%)

28.2%

24.9%

Secured Debt to Total Assets (not to exceed 40%)

3.7%

4.9%

Total Unsecured Assets to Unsecured Debt (not less than 150%)

364.8%

334.3%

 

(1)   These selected metrics relate to DuPont Fabros Technology, LP's outstanding unsecured notes.  DuPont Fabros Technology, Inc. is the general partner of DuPont Fabros Technology, LP.

 

 

Capital Structure as of December 31, 2013

(in thousands except per share data)

Line of Credit

$

Mortgage Notes Payable

115,000

Unsecured Term Loan

154,000

Unsecured Notes

600,000

Total Debt

869,000

27.0

%

Common Shares

81

%

65,205

Operating Partnership ("OP") Units

19

%

15,672

Total Shares and Units

100

%

80,877

Common Share Price at December 31, 2013

$

24.71

Common Share and OP Unit Capitalization

$

1,998,471

Preferred Stock ($25 per share liquidation preference)

351,250

Total Equity

2,349,721

73.0

%

Total Market Capitalization

$

3,218,721

100.0

%

 

DUPONT FABROS TECHNOLOGY, INC.

Common Share and OP Unit Weighted Average Amounts Outstanding

Q4 2013

Q4 2012

2013

2012

Weighted Average Amounts Outstanding for EPS Purposes:

Common Shares - basic

64,685,508

63,000,839

64,645,316

62,866,189

Shares issued from assumed conversion of:

- Restricted Shares

87,317

115,880

77,999

126,534

- Stock Options

666,602

716,932

723,917

761,283

- Performance Units

26,807

Total Common Shares - diluted

65,439,427

63,833,651

65,474,039

63,754,006

Weighted Average Amounts Outstanding for FFO,

Normalized FFO and AFFO Purposes:

Common Shares - basic

64,685,508

63,000,839

64,645,316

62,866,189

OP Units - basic

15,757,580

18,828,886

15,935,240

18,884,769

Total Common Shares and OP Units

80,443,088

81,829,725

80,580,556

81,750,958

Shares and OP Units issued from assumed conversion of:

- Restricted Shares

87,317

115,880

77,999

126,534

- Stock Options

666,602

716,932

723,917

761,283

- Performance Units

26,807

Total Common Shares and Units - diluted

81,197,007

82,662,537

81,409,279

82,638,775

Period Ending Amounts Outstanding:

Common Shares

65,205,274

OP Units

15,671,537

Total Common Shares and Units

80,876,811

 

DUPONT FABROS TECHNOLOGY, INC.

2014 Guidance

The earnings guidance/projections provided below are based on current expectations and are forward-looking.

 

Expected Q1 2014

per share

Expected 2014

per share

Net income per common share and unit - diluted

$0.27 to $0.29

$1.09 to $1.19

Depreciation and amortization, net

0.29

1.19

FFO per share - diluted (1)

$0.56 to $0.58

$2.28 to $2.38

Loss on early extinguishment of debt

Normalized FFO per share - diluted (1)

$0.56 to $0.58

$2.28 to $2.38

 

2014 Debt Assumptions

Weighted average debt outstanding

$977.0 million

Weighted average interest rate (one month LIBOR average 0.36%)

4.59%

Total interest costs

$44.8 million

Amortization of deferred financing costs

3.7 million

Interest expense capitalized

(8.8) million

Deferred financing costs amortization capitalized

(0.6) million

Total interest expense after capitalization

$39.1 million

2014 Other Guidance Assumptions

Total revenues

$400 to $415 million

Base rent (included in total revenues)

$280 to $290 million

Straight-line revenues (included in base rent) (2)

$(4) to $(9) million

General and administrative expense

$17 to $19 million

Investments in real estate - development (3)

$225 to $275 million

Improvements to real estate excluding development

$4 million

Preferred stock dividends

$27 million

Annualized common stock dividend

$1.40 per share

Weighted average common shares and OP units - diluted

81 million

Common share repurchase

No amounts budgeted

Acquisitions of income producing properties

No amounts budgeted

 

(1)     For information regarding FFO and Normalized FFO, see "Reconciliations of Net Income to FFO, Normalized FFO and AFFO" on page 6 of this earnings release.

(2)     Straight-line revenues are projected to reduce total revenues in 2014 as cash rents are projected to be higher than GAAP rents.

(3)     Represents cash spend expected in 2014 for the ACC7, SC1 Phase IIA and CH2 developments.  The CH2 development is forecasted to begin in the second quarter of 2014 with an in service date in the first half of 2015.

Note: This press release supplement contains certain non-GAAP financial measures that we believe are helpful in understanding our business, as further discussed within this press release supplement. These financial measures, which include Funds From Operations, Normalized Funds From Operations, Adjusted Funds From Operations, Funds From Operations per share, Normalized Funds From Operations per share and Adjusted Funds From Operations per share, should not be considered as an alternative to net income, earnings per share or any other GAAP measurement of performance or as an alternative to cash flows from operating, investing or financing activities. Furthermore, these non-GAAP financial measures are not intended to be a measure of cash flow or liquidity. Information included in this supplemental package is unaudited.

 

SOURCE DuPont Fabros Technology, Inc.



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