DuPont Fabros Technology, Inc. Reports Second Quarter 2014 Results Revenues increase 11%; Adjusted FFO per share increases 48%

Midpoint of Normalized FFO guidance range increased $0.05 per share

WASHINGTON, July 24, 2014 /PRNewswire/ -- DuPont Fabros Technology, Inc. (NYSE: DFT) is reporting results for the quarter ended June 30, 2014.  All per share results are reported on a fully diluted basis.

Highlights

  • As of June 30, 2014, our operating portfolio was 96% leased and commenced as measured by computer room square feet ("CRSF") and 95% leased and commenced as measured by critical load (in megawatts, or "MW").
  • Quarterly Highlights:
    • Normalized Funds from Operations ("Normalized FFO") of $0.61 per share representing a 30% increase over the prior year quarter.
    • Adjusted Funds from Operations ("AFFO") per share of $0.62 representing a 48% increase over the prior year quarter.
    • Placed SC1 Phase IIA into service.  This development totals 9.10 MW and 44,000 CRSF.
    • Lowered interest rates on ACC3 Term Loan and Unsecured Credit Facility.  Increased Unsecured Credit Facility from $400 million to $560 million
    • Executed three leases totaling 7.10 MW and 47,166 CRSF.
    • Commenced three leases totaling 9.65 MW and 60,900 CRSF.
  • Subsequent to the Second Quarter 2014:
    • Placed ACC7 Phase I into service 17% pre-leased on a critical load basis.  This development totals 11.89 MW and 70,000 CRSF.
    • Executed one lease totaling 1.28 MW and 5,370 CRSF at NJ1.  This lease is expected to commence in the fourth quarter of 2014.  NJ1 Phase I is now 59% leased on a critical load basis and 70% leased on a CRSF basis.
    • Lowered interest rate on $250 million Unsecured Term Loan.

Hossein Fateh, President and Chief Executive Officer, said, "Increasing levels of customer demand drove strong leasing results in the quarter - both in DFT's existing data centers and in the pre-leasing of our development sites.  We are equipped to capture more demand with the 21 new megawatts of development we've placed in service in the vibrant data center hubs of Northern Virginia and Santa Clara.  Leasing momentum and our financial results allow us to confidently increase the mid-point of our 2014 Normalized FFO guidance by $0.05 per share."

Second Quarter 2014 Results

For the quarter ended June 30, 2014, earnings were $0.32 per share compared to earnings of $0.18 per share for the second quarter of 2013, an increase of 78%.  Revenues increased 11%, or $10.4 million, to $102.0 million for the second quarter of 2014 over the second quarter of 2013.  The increase in revenues was primarily due to new leases commencing. 

Normalized FFO for the quarter ended June 30, 2014 was $0.61 per share compared to $0.47 per share for the second quarter of 2013.  The increase of $0.14 per share, or 30%, from the prior year quarter was primarily due to the following:

  • Higher operating income excluding depreciation of $0.08 per share, and
  • Lower interest expense of $0.06 per share due to lower interest rates and higher capitalized interest.

Normalized FFO of $0.61 per share for the quarter ended June 30, 2014 exceeded the upper end of our guidance range by $0.01 per share due to lower operating and general and administrative expenses.

First Half 2014 Results

For the six months ended June 30, 2014, earnings were $0.63 per share compared to earnings of $0.30 per share for the first half of 2013, an increase of 110%.  Revenues increased 14%, or $24.7 million, to $204.0 million for the first six months of 2014 over the year ago period.  The increase in revenues was primarily due to new leases commencing. 

Normalized FFO for the six months ended June 30, 2014 was $1.20 per share compared to $0.89 per share for the first half of 2013.  The increase of $0.31 per share, or 35%, from the year ago period was primarily due to the following:

  • Higher operating income excluding depreciation of $0.19 per share, and
  • Lower interest expense of $0.12 per share due to lower interest rates and higher capitalized interest.

Portfolio Update

During the second quarter 2014, we:

  • Executed and commenced two leases with a weighted average lease term of 5.1 years totaling 5.10 MW and 38,989 CRSF.
    • One lease at VA3 totaling 2.60 MW and 27,952 CRSF.
    • One lease at SC1 Phase IIA totaling 2.50 MW and 11,037 CRSF.
  • Executed one pre-lease at ACC7 Phase I totaling 2.00 MW and 8,177 CRSF with a lease term of 12.0 years.  This lease is expected to commence later this quarter.
  • In addition to the SC1 Phase IIA lease noted above, commenced another lease totaling 4.55 MW and 21,911 CRSF at SC1 Phase IIA. 

Year to date, we:

  • Signed five leases with a weighted average lease term of 6.5 years totaling 8.86 MW and 58,117 CRSF that are expected to generate approximately $8.9 million of annualized GAAP base rent revenue.
  • Extended the maturity of three leases totaling 3.01 MW and 23,072 CRSF by a weighted average of 1.8 years with a weighted average decrease to cash base rent of 0.7% and a weighted average increase to GAAP base rent of 6.3%.
  • Commenced five leases totaling 10.57 MW and 69,281 CRSF. 

Development Update

We placed ACC7 Phase I (11.89 MW) and SC1 Phase IIA (9.10 MW) into service.  SC1 Phase IIA was 77% leased and ACC7 Phase I was 17% leased at their respective placed into service dates.

We have begun development of SC1 Phase IIB (9.10 MW) and CH2 Phase I (7.10 MW).  We anticipate SC1 Phase IIB will be placed into service late first quarter of 2015 and CH2 Phase I will be placed into service in the third quarter of 2015.

Balance Sheet and Liquidity

In May 2014, we exercised the accordion feature on our Unsecured Credit Facility, increasing its total capacity from $400 million to $560 million. We also amended the facility to expand the accordion feature to provide us with the option to increase the total commitment to $800 million. The interest rate was reduced 30 basis points from LIBOR + 1.85% to LIBOR + 1.55%, and the unused fee decreased 10 basis points. The facility's maturity date has been extended from March 2016 to May 2018 and still includes a one-year extension option.

In May 2014, we also executed an amendment that reduced the interest rate on our $115 million ACC3 Term loan 30 basis points from LIBOR + 1.85% to LIBOR + 1.55%.

In July 2014, we executed an amendment to our $250 million Unsecured Term Loan that reduced the interest rate from LIBOR + 1.75% to LIBOR + 1.50% and extended the maturity date from February 2019 to July 2019.

We have a common stock repurchase program that allows for purchases up to $122.2 million that expires on December 31, 2014.  In the first half of 2014, we did not repurchase any shares, and $122.2 million is still available for purchase.

As of June 30, 2014, we had $56 million of cash and $560 million of available capacity under our revolving credit facility.

Dividend

Our second quarter 2014 dividend of $0.35 per share was paid on July 15, 2014.  The anticipated 2014 annualized dividend of $1.40 per share represents an estimated Normalized FFO payout ratio of 58% at the midpoint of our current 2014 guidance.

Third Quarter and Full Year 2014 Guidance

Our Normalized FFO guidance range is $0.60 to $0.62 per share for the third quarter of 2014.

Our 2014 Normalized FFO guidance range was increased to $2.38 to $2.44 per share as compared to prior guidance of $2.32 to $2.40 per share. 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 $0.05 per share increase in the midpoint of guidance is primarily due to:

  • Higher operating income excluding depreciation of $0.04 per share primarily from leases executed since our last earnings call and lower general and administrative expenses.
  • Lower interest expense of $0.01 per share due to lowering the interest rate on our Unsecured Term Loan, as described above, and lower projected borrowings for 2014.

Second Quarter 2014 Conference Call and Webcast Information

We will host a conference call to discuss these results today, Thursday, July 24, 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 1-877-300-9306 (domestic) or 1-412-902-6613 (international).  A replay will be available for seven days by dialing 1-877-344-7529 (domestic) or 1-412-317-0088 (international) using passcode 10048361.  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 11 data centers are located in four major U.S. markets, which total 2.75 million gross square feet and 240 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 third 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, 2013 and the quarterly report for the period ended March 31, 2014 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

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



Three months ended June 30,


Six months ended June 30,


2014



2013



2014



2013














Revenues:












Base rent

$

70,455



$

65,438



$

139,659



$

129,570


Recoveries from tenants

29,964



25,319



61,653



48,009


Other revenues

1,531



807



2,725



1,744


Total revenues

101,950



91,564



204,037



179,323


Expenses:












Property operating costs

27,782



24,767



57,877



48,279


Real estate taxes and insurance

3,411



3,673



6,878



7,314


Depreciation and amortization

23,603



23,196



46,872



46,235


General and administrative

3,868



4,332



8,108



8,882


Other expenses

1,599



585



2,472



1,357


Total expenses

60,263



56,553



122,207



112,067


Operating income

41,687



35,011



81,830



67,256


Interest income

39



16



107



53


Interest:












Expense incurred

(7,707)



(12,505)



(15,531)



(25,442)


Amortization of deferred financing costs

(723)



(775)



(1,466)



(1,693)


Loss on early extinguishment of debt

(338)





(338)



(1,700)


Net income

32,958



21,747



64,602



38,474


Net income attributable to redeemable noncontrolling interests
– operating partnership

(5,026)



(2,965)



(9,814)



(4,938)


Net income attributable to controlling interests

27,932



18,782



54,788



33,536


Preferred stock dividends

(6,811)



(6,811)



(13,622)



(13,622)


Net income attributable to common shares

$

21,121



$

11,971



$

41,166



$

19,914


Earnings per share – basic:












Net income attributable to common shares

$

0.32



$

0.19



$

0.63



$

0.31


Weighted average common shares outstanding

65,486,202



64,380,566



65,417,615



64,733,309


Earnings per share – diluted:












Net income attributable to common shares

$

0.32



$

0.18



$

0.63



$

0.30


Weighted average common shares outstanding

65,951,113



65,188,907



65,887,897



65,556,852


Dividends declared per common share

$

0.35



$

0.25



$

0.70



$

0.45


 

 

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

June 30,


Six months ended

June 30,


2014



2013



2014



2013


Net income

$

32,958



$

21,747



$

64,602



$

38,474


Depreciation and amortization

23,603



23,196



46,872



46,235


Less: Non real estate depreciation and amortization

(185)



(229)



(357)



(471)


FFO

56,376



44,714



111,117



84,238


Preferred stock dividends

(6,811)



(6,811)



(13,622)



(13,622)


FFO attributable to common shares and OP units

49,565



37,903



97,495



70,616


Loss on early extinguishment of debt

338





338



1,700


Normalized FFO

$

49,903



$

37,903



$

97,833



$

72,316


Straight-line revenues, net of reserve

1,305



(2,047)



2,016



(6,654)


Amortization of lease contracts above and below market value

(598)



(597)



(1,197)



(1,195)


Compensation paid with Company common shares

1,507



1,612



3,100



3,515


Non real estate depreciation and amortization

185



229



357



471


Amortization of deferred financing costs

723



775



1,466



1,693


Improvements to real estate

(595)



(3,548)



(1,020)



(4,357)


Capitalized leasing commissions

(1,550)



(56)



(1,577)



(168)


AFFO

$

50,880



$

34,271



$

100,978



$

65,621


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

$

0.61



$

0.47



$

1.20



$

0.87


Normalized FFO per share - diluted

$

0.61



$

0.47



$

1.20



$

0.89


AFFO per share - diluted

$

0.62



$

0.42



$

1.24



$

0.80


Weighted average common shares and OP units outstanding
- diluted

81,529,141



81,119,817



81,480,797



81,605,473



(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)



June 30,
 2014


December 31,
 2013


(unaudited)




ASSETS






Income producing property:






Land

$

81,006



$

75,956


Buildings and improvements

2,524,016



2,420,986



2,605,022



2,496,942


Less: accumulated depreciation

(457,696)



(413,394)


Net income producing property

2,147,326



2,083,548


Construction in progress and land held for development

310,935



302,068


Net real estate

2,458,261



2,385,616


Cash and cash equivalents

56,141



38,733


Rents and other receivables, net

10,443



12,674


Deferred rent, net

148,022



150,038


Lease contracts above market value, net

8,604



9,154


Deferred costs, net

40,140



39,866


Prepaid expenses and other assets

49,659



44,507


Total assets

$

2,771,270



$

2,680,588


LIABILITIES AND STOCKHOLDERS' EQUITY






Liabilities:






Line of credit

$



$


Mortgage notes payable

115,000



115,000


Unsecured term loan

250,000



154,000


Unsecured notes payable

600,000



600,000


Accounts payable and accrued liabilities

24,089



23,566


Construction costs payable

25,032



45,444


Accrued interest payable

10,588



9,983


Dividend and distribution payable

34,243



25,971


Lease contracts below market value, net

8,783



10,530


Prepaid rents and other liabilities

64,058



56,576


Total liabilities

1,131,793



1,041,070


Redeemable noncontrolling interests – operating partnership

419,801



387,244


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 June 30, 2014 and December 31, 2013

185,000



185,000


Series B cumulative redeemable perpetual preferred stock, 6,650,000 issued and outstanding at June 30, 2014 and December 31, 2013

166,250



166,250


Common stock, $.001 par value, 250,000,000 shares authorized, 65,831,672 shares issued and outstanding at June 30, 2014 and 65,205,274 shares issued and outstanding at December 31, 2013

66



65


Additional paid in capital

868,360



900,959


Retained earnings




Total stockholders' equity

1,219,676



1,252,274


Total liabilities and stockholders' equity

$

2,771,270



$

2,680,588


 

 

DUPONT FABROS TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)



Six months ended June 30,


2014



2013


Cash flow from operating activities






Net income

$

64,602



$

38,474


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






Depreciation and amortization

46,872



46,235


Loss on early extinguishment of debt

338



1,700


Straight line revenues, net of reserve

2,016



(6,654)


Amortization of deferred financing costs

1,466



1,693


Amortization of lease contracts above and below market value

(1,197)



(1,195)


Compensation paid with Company common shares

3,100



3,515


Changes in operating assets and liabilities






Rents and other receivables

2,231



(3,219)


Deferred costs

(442)



(205)


Prepaid expenses and other assets

(6,229)



(10,650)


Accounts payable and accrued liabilities

(994)



2,260


Accrued interest payable

605



(254)


Prepaid rents and other liabilities

6,260



14,087


Net cash provided by operating activities

118,628



85,787


Cash flow from investing activities






Investments in real estate – development

(128,068)



(20,516)


Interest capitalized for real estate under development

(6,163)



(504)


Improvements to real estate

(1,020)



(4,357)


Additions to non-real estate property

(283)



(24)


Net cash used in investing activities

(135,534)



(25,401)


Cash flow from financing activities






Line of credit:






Proceeds



72,000


Repayments



(30,000)


Mortgage notes payable:






Proceeds



115,000


Lump sum payoffs



(138,300)


Repayments



(1,300)


Unsecured term loan:






Proceeds

96,000




Payments of financing costs

(2,816)



(3,036)


Exercises of stock options

3,457




Common stock repurchases



(37,792)


Dividends and distributions:






Common shares

(39,333)



(25,597)


Preferred shares

(13,622)



(13,622)


Redeemable noncontrolling interests – operating partnership

(9,372)



(6,944)


Net cash provided by (used in) financing activities

34,314



(69,591)


Net increase (decrease) in cash and cash equivalents

17,408



(9,205)


Cash and cash equivalents, beginning

38,733



23,578


Cash and cash equivalents, ending

$

56,141



$

14,373


Supplemental information:






Cash paid for interest

$

21,089



$

26,200


Deferred financing costs capitalized for real estate under development

$

354



$

34


Construction costs payable capitalized for real estate under development

$

25,032



$

5,762


Redemption of operating partnership units

$

2,400



$

69,900


Adjustments to redeemable noncontrolling interests - operating partnership

$

36,047



$

2,111








 

 

DUPONT FABROS TECHNOLOGY, INC.

Operating Properties

As of July 1, 2014


Property


Property Location


Year Built/
Renovated


Gross
Building Area (2)


Computer Room
Square Feet ("CRSF") (2)


CRSF %
Leased (3)


CRSF %
Commenced (4)


Critical
Load MW (5)


Critical
Load %

Leased (3)


Critical
Load % Commenced (4)

Stabilized (1)
























ACC2


Ashburn, VA


2001/2005


87,000



53,000



100

%


100

%


10.4



100

%


100

%

ACC3


Ashburn, VA


2001/2006


147,000



80,000



100

%


100

%


13.9



100

%


100

%

ACC4


Ashburn, VA


2007


347,000



172,000



100

%


100

%


36.4



100

%


100

%

ACC5


Ashburn, VA


2009-2010


360,000



176,000



98

%


98

%


36.4



98

%


98

%

ACC6


Ashburn, VA


2011-2013


262,000



130,000



100

%


100

%


26.0



100

%


100

%

CH1


Elk Grove Village, IL


2008-2012


485,000



231,000



100

%


100

%


36.4



100

%


100

%

NJ1 Phase I (6)


Piscataway, NJ


2010


180,000



88,000



64

%


64

%


18.2



52

%


52

%

SC1 Phase I


Santa Clara, CA


2011


180,000



88,000



100

%


100

%


18.2



100

%


100

%

VA3


Reston, VA


2003


256,000



147,000



94

%


94

%


13.0



95

%


95

%

VA4


Bristow, VA


2005


230,000



90,000



100

%


100

%


9.6



100

%


100

%

Subtotal – stabilized




2,534,000



1,255,000



97

%


97

%


218.5



95

%


95

%

Completed, not Stabilized
























SC1 Phase IIA


Santa Clara, CA


2014


90,000



44,000



75

%


75

%


9.1



77

%


77

%

Subtotal – non-stabilized




90,000



44,000



75

%


75

%


9.1



77

%


77

%

Total Operating Properties




2,624,000



1,299,000



96

%


96

%


227.6



95

%


95

%


(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 CRSF (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)

Percentage leased is expressed as a percentage of CRSF or critical load, as applicable, that is subject to an executed lease. Leases executed as of July 1, 2014 represent $286 million of base rent on a GAAP basis and $300 million of base rent on a cash basis over the next twelve months. Both amounts include $18 million of revenue from management fees over the next twelve months.

(4)

Percentage commenced is expressed as a percentage of CRSF or critical load, as applicable, where the lease has commenced under generally accepted accounting principles.

(5)

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).

(6)

As of July 23, 2014, NJ1 Phase I was 59% leased on a critical load basis and 70% leased on a CRSF basis.

 

 

DUPONT FABROS TECHNOLOGY, INC.


Lease Expirations

As of July 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)


CRSF of
Expiring
Commenced
Leases
(in thousands) (2)


% of
Leased
CRSF


Total kW
of Expiring Commenced Leases (2)


% of
Leased kW


% of
Annualized Base Rent (3)

2014 (4)


1



5



0.4

%


1,137



0.5

%


0.7

%

2015


4



70



5.6

%


13,812



6.4

%


6.4

%

2016


4



32



2.6

%


4,686



2.2

%


2.4

%

2017


14



102



8.2

%


18,106



8.5

%


8.4

%

2018


20



203



16.3

%


38,566



17.9

%


17.8

%

2019


16



247



19.9

%


42,287



19.6

%


18.1

%

2020


10



106



8.5

%


16,496



7.7

%


8.4

%

2021


9



159



12.8

%


27,682



12.8

%


13.2

%

2022


6



75



6.0

%


12,812



5.9

%


6.9

%

2023


4



48



3.9

%


6,475



3.0

%


2.7

%

After 2023


12



196



15.8

%


33,425



15.5

%


15.0

%

Total


100



1,243



100

%


215,484



100

%


100

%



(1)

Represents 34 customers with 100 lease expiration dates. Top four customers represent 62% of annualized base rent.

(2)

CRSF 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 as of July 1, 2014.

(4)

In July 2014, this lease was renewed for two years and now expires in 2016.

 

 

 

DUPONT FABROS TECHNOLOGY, INC.

Development Projects

As of June 30, 2014

($ in thousands)


Property


Property
Location


Gross
Building Area (1)


CRSF (2)


Critical
Load MW (3)


Estimated
Total Cost (4)


Construction
in Progress & Land Held for Development (5)


CRSF %
Pre- leased


Critical
Load % Pre- leased
























Current Development Projects





















ACC7 Phase I (6)


Ashburn, VA


126,000



70,000



11.9



 $90,000 -  $95,000


$

90,589



12

%


17

%

SC1 Phase IIB


Santa Clara, CA


90,000



44,000



9.1



 107,000 -  113,000


63,636



%


%

CH2 Phase I


Elk Grove Village, IL


93,000



46,000



7.1



   70,000 -    80,000


6,853



%


%





309,000



160,000



28.1



 267,000 -  288,000


161,078































Future Development Projects/Phases





















ACC7 Phases II to IV


Ashburn, VA


320,000



176,000



29.7



  87,000 -   93,000


86,544








CH2 Phases II to III


Elk Grove Village, IL


243,000



120,000



18.5



120,000 - 130,000


14,542








NJ1 Phase II


Piscataway, NJ


180,000



88,000



18.2



39,212


39,212












743,000



384,000



66.4



$246,212 - $262,212


140,298








Land Held for Development





















ACC8


Ashburn, VA


100,000



50,000



10.4





4,069








SC2


Santa Clara, CA


200,000



125,000



26.0





5,490












300,000



175,000



36.4





9,559








Total




1,352,000



719,000



130.9





$

310,935










(1)

Gross building area is the entire building area, including CRSF (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 respective amounts listed for each of the "Land Held for Development" sites are estimates.

(2)

CRSF is that portion of gross building area where customers locate their computer servers. The respective amounts listed for each of the "Land Held for Development" sites are estimates.

(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 respective amounts listed for each of the "Land Held for Development" sites are estimates.

(4)

Current development projects include land, capitalization for construction and development and capitalized interest and operating carrying costs, as applicable, upon completion. Future development projects/phases include land, shell and underground work through Phase I opening only.

(5)

Amount capitalized as of June 30, 2014. Future development projects/phases include land, shell and underground work through Phase I opening only.

(6)

ACC7 Phase I was placed into service in July 2014.

   

 

DUPONT FABROS TECHNOLOGY, INC.

Debt Summary as of June 30, 2014

($ in thousands)



June 30, 2014


Amounts


% of Total


Rates


Maturities

(years)

Secured

$

115,000



12

%


1.7

%


3.7


Unsecured

850,000



88

%


4.7

%


6.5


Total

$

965,000



100

%


4.3

%


6.1














Fixed Rate Debt:












Unsecured Notes due 2021

$

600,000



62

%


5.9

%


7.2


Fixed Rate Debt

600,000



62

%


5.9

%


7.2


Floating Rate Debt:












Unsecured Credit Facility







3.9


Unsecured Term Loan

250,000



26

%


1.9

%


4.6


ACC3 Term Loan

115,000



12

%


1.7

%


3.7


Floating Rate Debt

365,000



38

%


1.8

%


4.4


Total

$

965,000



100

%


4.3

%


6.1




Note:

We capitalized interest and deferred financing cost amortization of $3.4 million and $6.5 million during the three and six months ended June 30, 2014, respectively.

 

 

Debt Maturity as of June 30, 2014

($ in thousands)


Year


Fixed Rate



Floating Rate



Total


% of Total


Rates

2014













2015













2016





3,750


(2)


3,750



0.4

%


1.7

%

2017





8,750


(2)


8,750



0.9

%


1.7

%

2018





102,500


(2)


102,500



10.6

%


1.7

%

2019





250,000


(3)


250,000



25.9

%


1.9

%

2020













2021


600,000


(1)





600,000



62.2

%


5.9

%

Total


$

600,000




$

365,000




$

965,000



100

%


4.3

%
























(1)

The 5.875% Unsecured Notes mature on 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 Unsecured Term Loan matures on July 21, 2019 with no extension option.

   

 

DUPONT FABROS TECHNOLOGY, INC.

Selected Unsecured Debt Metrics(1)



6/30/14


12/31/13

Interest Coverage Ratio (not less than 2.0)

5.9


5.8





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

30.0%


28.2%





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

3.6%


3.7%





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

331.5%


364.8%



(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 June 30, 2014

(in thousands except per share data)


Line of Credit










$





Mortgage Notes Payable










115,000





Unsecured Term Loan










250,000





Unsecured Notes










600,000





Total Debt










965,000



27.5

%

Common Shares

81

%


65,832











Operating Partnership ("OP") Units

19

%


15,571











Total Shares and Units

100

%


81,403











Common Share Price at June 30, 2014




$

26.96











Common Share and OP Unit Capitalization







$

2,194,625








Preferred Stock ($25 per share liquidation preference)







351,250








Total Equity










2,545,875



72.5

%

Total Market Capitalization










$

3,510,875



100.0

%



















 

DUPONT FABROS TECHNOLOGY, INC.

Common Share and OP Unit

Weighted Average Amounts Outstanding



Q2 2014


Q2 2013


YTD

Q2 2014


YTD

Q2  2013

Weighted Average Amounts Outstanding for EPS Purposes:
























Common Shares - basic

65,486,202



64,380,566



65,417,615



64,733,309


Shares issued from assumed conversion of:












- Restricted Shares

107,236



51,954



103,570



75,837


- Stock Options

357,675



756,387



366,712



747,706


- Performance Units





 




Total Common Shares - diluted

65,951,113



65,188,907



65,887,897



65,556,852














Weighted Average Amounts Outstanding for FFO,

Normalized FFO and AFFO Purposes:
























Common Shares - basic

65,486,202



64,380,566



65,417,615



64,733,309


OP Units - basic

15,578,028



15,930,910



15,592,900



16,048,621


Total Common Shares and OP Units

81,064,230



80,311,476



81,010,515



80,781,930


Shares and OP Units issued from assumed conversion of:












- Restricted Shares

107,236



51,954



103,570



75,837


- Stock Options

357,675



756,387



366,712



747,706


- Performance Units





 




Total Common Shares and Units - diluted

81,529,141



81,119,817



81,480,797



81,605,473














Period Ending Amounts Outstanding:












Common Shares

65,831,672











OP Units

15,571,237











Total Common Shares and Units

81,402,909











 

 

DUPONT FABROS TECHNOLOGY, INC.


2014 Guidance


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



Expected Q3 2014

per share


Expected 2014

per share

Net income per common share and unit - diluted

   $0.30 to $0.32


  $1.19 to $1.25

Depreciation and amortization, net

0.30


1.19





FFO per share - diluted (1)

   $0.60 to $0.62


  $2.38 to $2.44

Loss on early extinguishment of debt


Normalized FFO per share - diluted (1)

   $0.60 to $0.62


  $2.38 to $2.44

 

 

2014 Debt Assumptions



Weighted average debt outstanding

        $976.0 million

Weighted average interest rate (one month LIBOR average 0.16%)

4.45%



Total interest costs

         $43.4 million

Amortization of deferred financing costs

            3.7 million

      Interest expense capitalized

            (9.7) million

      Deferred financing costs amortization capitalized

            (0.6) million

Total interest expense after capitalization

         $36.8 million





2014 Other Guidance Assumptions



Total revenues

         $410 to $415 million

Base rent (included in total revenues)

          $284 to $288 million

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

         $(6) to $(8) million

General and administrative expense

         $16 to $17 million

Investments in real estate - development (3)

         $270 to $290 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 Phase I, SC1 Phase IIA, SC1 Phase IIB and CH2 Phase I developments.

Logo - http://photos.prnewswire.com/prnh/20120104/MM29780LOGO

 

 

SOURCE DuPont Fabros Technology, Inc.



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