DuPont Fabros Technology, Inc. Reports Third Quarter 2013 Results

Revenues increase 13%; AFFO per share increases 63%

2013 Guidance increased; 2014 Guidance provided

24 Oct, 2013, 07:00 ET from DuPont Fabros Technology, Inc.

WASHINGTON, Oct. 24, 2013 /PRNewswire/ -- DuPont Fabros Technology, Inc. (NYSE: DFT) today reported results for the quarter ended September 30, 2013.  All per share results are reported on a fully diluted basis.

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

Highlights

  • As of September 30, 2013, the company's operating portfolio was stabilized at 94% leased.
  • Quarterly Highlights:
    • Normalized Funds from Operations ("Normalized FFO") of $0.51 per share representing a 34% increase over the prior year quarter and a 9% increase sequentially.
    • Adjusted Funds from Operations ("AFFO") per share of $0.52 representing a 63% increase over the prior year quarter.
    • Signed three leases and one pre-lease totaling 11.70 MW of critical load and 84,979 raised square feet.
    • Commenced four leases totaling 11.48 megawatts ("MW") and 85,009 raised square feet.
    • Renewed one lease scheduled to expire in 2013 for five years totaling 1.14 MW and 5,300 raised square feet and two leases scheduled to expire in 2014 for three years totaling 3.41 MW and 16,400 raised square feet.
    • Issued $600 million 5.875% Senior Notes due 2021.
    • Repaid approximately 76% of the $550 million 8.5% Senior Notes due 2017 under a tender offer. Irrevocably called the remaining 24% and will redeem them later today.
    • Obtained a new $195 million unsecured term loan at LIBOR plus 1.75% due 2019.
    • Commenced development of SC1 Phase IIA (9.10 MW) 50% pre-leased with expected completion in the second quarter of 2014.

Hossein Fateh, President and Chief Executive Officer, said, "DFT had an excellent third quarter with 11.7 MW of new leasing with the operating portfolio 94% leased.  In addition we issued $795 million of new debt lowering our average cost by over 200 basis points and extending the average maturity of our outstanding debt from 3.5 years to 7.1 years.  We continue to focus on the lease up of our existing available inventory and our two new developments to fuel our growth."

Third Quarter 2013 Results

For the quarter ended September 30, 2013, the company reported a loss of $0.16 per share compared to earnings of $0.11 per share for the third quarter of 2012.  The $0.16 per share loss includes a one-time $0.38 per share loss on early extinguishment of debt.  Excluding the $0.38 per share loss, earnings were $0.22 per share, an increase of 100% over the prior year quarter.  Revenues increased 13%, or $10.9 million, to $96.3 million for the third quarter of 2013 over the third quarter of 2012.  The increase in revenues is primarily due to new leases commencing.

Funds from Operations ("FFO") for the quarter ended September 30, 2013 was $0.13 per share compared to $0.38 per share for the third quarter of 2012.  The decrease of $0.25 per share from the prior year quarter is primarily due to the $0.38 per share loss on early extinguishment of debt partially offset by higher operating income excluding depreciation.

Normalized FFO is FFO with the loss on early extinguishment of debt added back.  Normalized FFO for the quarter ended September 30, 2013 was $0.51 per share compared to $0.38 per share for the third quarter of 2012.  The increase of $0.13 per share from the prior year quarter is primarily due to higher operating income excluding depreciation. 

First Nine Months 2013 Results

For the nine months ended September 30, 2013, the company reported earnings of $0.15 per share compared to $0.30 per share for the year ago period.  Earnings of $0.15 per share includes losses on the early extinguishment of debt of $0.39 per share from refinancing activity in the first and third quarters of 2013.  Excluding the $0.39 per share of loss on early extinguishment of debt, earnings were $0.54 per share, an increase of 80% over the year ago period.  Revenues increased 12%, or $29.2 million, to $275.7 million for the first nine months of 2013 over the year ago period.  The increase in revenues is primarily due to new leases commencing.

FFO for the nine months ended September 30, 2013 was $1.00 per share, compared to $1.10 per share for the first nine months of 2012.  The decrease of $0.10 per share from the year ago period is primarily due to the $0.39 per share loss on early extinguishment of debt partially offset by higher operating income excluding depreciation.

Normalized FFO for the nine months ended September 30, 2013 was $1.39 per share, compared to $1.10 per share for the first nine months of 2012.  The increase of $0.29 per share from the year ago period is primarily due to higher operating income excluding depreciation.

Portfolio Update

During the third quarter 2013, the company:

  • Signed three leases with a weighted average lease term of 6.0 years totaling 7.15 MW and 62,979 raised square feet. All three leases commenced in the third quarter.
    • One lease was at VA3 totaling 2.60 MW and 30,053 raised square feet.
    • One lease was at NJ1 totaling 2.28 MW and 22,353 raised square feet.
    • One lease was at SC1 Phase I totaling 2.27 MW and 10,573 raised square feet.
  • Signed one pre-lease at SC1 Phase IIA with a lease term of approximately 5 years totaling 4.55 MW and 22,000 raised square feet. This lease is anticipated to commence in the second quarter of 2014 upon the opening of SC1 Phase IIA.
  • Renewed one lease at ACC4 for five years totaling 1.14 MW and 5,300 raised square feet and two leases for three years at ACC4 and ACC5 totaling 3.41 MW and 16,400 raised square feet.

Year to Date, the company:

  • Signed five leases and a pre-lease with a weighted average lease term of 5.5 years totaling 15.71 MW and 106,130 raised square feet that are expected to generate approximately $15.0 million of annualized GAAP base rent revenue.
  • Commenced 13 leases totaling 32.17 MW and 195,725 raised square feet.
  • Renewed three leases by a weighted average of 3.5 years totaling 4.55 MW and 21,700 raised square feet.

Development Update

In August 2013, the company executed an agreement with its general contractor to complete half of the second phase of SC1, to be known as SC1 Phase IIA.  It will consist of 9.1 MW and approximately 44,000 raised square feet with expected completion in the second quarter of 2014.  SC1 Phase IIA is 50% pre-leased.

Balance Sheet and Liquidity

In September 2013, the company issued $600 million of Senior Notes due 2021 at par bearing an interest rate of 5.875%.  The proceeds from this issuance were partially used to fund a tender offer to purchase the company's 8.5% Senior Notes due 2017.  Bondholders tendered $418.1 million of these notes outstanding and the company settled this tender on September 24, 2013 for $443.4 million which included a premium of $25.3 million.  On September 24, 2013, the company called the remaining bonds totaling $131.9 million and will redeem these Notes today for approximately $139 million which includes a premium of approximately $7 million.

In September 2013, the company 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, the company exercised the accordion feature increasing the term loan $55 million to $250 million.  The new loan includes a delayed draw feature, of which the company immediately drew $120.0 million in September and has drawn $34.0 million in the fourth quarter to date. The Company must draw the remaining balance of $96.0 million by January 10, 2014.

In September 2013, the company's Board of Directors approved a new common stock repurchase program that will commence at the expiration of the existing program and expire on December 31, 2014.  The new program will allow purchases of up to $80 million plus any unused authorized amounts from the current program. Under the current program, the company has repurchased $37.8 million, or 1,632,673 shares, of common stock at an average price of $23.12 per share.  In the third quarter of 2013, the company did not repurchase any shares and has $42.2 million remaining under the current program.

As of September 30, 2013, the company had $198 million of cash available on its balance sheet, $75 million of available capacity on the unsecured term loan and $400 million of available capacity under its revolving credit facility.  Approximately $143 million of this cash will be used today to redeem the remaining 8.5% Senior Notes due 2017.

Fourth Quarter and Full Year 2013 Guidance

The company has established an FFO guidance range of $0.43 to $0.45 per share and a Normalized FFO guidance range of $0.54 to $0.56 for the fourth quarter of 2013.  The $0.11 per share difference between these two ranges is the loss on the early extinguishment of debt from the redemption in October of the remaining Senior Notes due 2017. 

The company's 2013 FFO guidance range is $1.43 to $1.45 per share and the 2013 Normalized FFO guidance range is $1.93 to $1.95 per share.  The $0.50 per share difference between these two ranges is the losses on the early extinguishment of debt.  The new Normalized FFO guidance is an increase of $0.04 per share to the midpoint of the prior FFO range and is due to the addback of the first quarter loss on early extinguishment of debt of $0.02 per share and a reduction in interest expense of $0.02 per share.  The 2013 lower end of the FFO and Normalized FFO guidance ranges still assumes no additional leases will be executed through the end of this calendar year.

Full Year 2014 Guidance

The company has established the low end of its 2014 FFO guidance range at $2.28 per share.  This per share amount has the following key assumptions: 

  • Renewals of all leases scheduled to expire in 2014 and no new leases are executed through the end of 2014.
  • Commencement of one new development, CH2, in Elk Grove Village, Illinois in the second quarter of 2014.
  • $9 million of capitalized interest, with approximately $7 million in the first half of the year and approximately $2 million in the second half of the year.
  • General and administrative expense of $18 to $19 million.
  • No new debt or equity offerings and no common stock repurchases.
  • No acquisitions of income producing properties.

Below is a reconciliation of net income per common share and unit - diluted to FFO per share - diluted:

Expected FFO

per share - low

end of guidance

range

Net income per common share and unit - diluted

$

1.10

Depreciation and amortization, net

1.18

FFO per share - diluted

$

2.28

The company will provide additional details for 2014 guidance on its fourth quarter call to be held in early 2014.

Third Quarter 2013 Conference Call and Webcast Information

The company will host a conference call to discuss these results today, Thursday, October 24, 2013 at 1:00 p.m. ET. To access the live call, please visit the Investor Relations section of the company's 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 10034698.  The webcast will be archived on the company's 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 the company's control.  The company faces many risks that could cause its actual performance to differ materially from the results contemplated by its forward-looking statements, including, without limitation, the risk that its assumptions underlying its full year and fourth quarter 2013, and 2014 guidance are not realized, the risks related to the leasing of available space to third-party tenants, including delays in executing new leases and failure to negotiate leases on terms that will enable it to achieve its expected returns, risks related to the collection of accounts and notes receivable, the risk that the company 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 the company will not declare and pay dividends as anticipated for 2013 and the risk that the company may not be able to maintain its qualification as a REIT for federal tax purposes.  The periodic reports that the company files with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2012 and its quarterly reports on Form 10-Q for the quarters ended June 30, 2013 and March 31, 2013, contain detailed descriptions of these and many other risks to which the company is subject.  These reports are available on our website at www.dft.com.  Because of the risks described above and other unknown risks, the company's actual results, performance or achievements may differ materially from the results, performance or achievements contemplated by its forward-looking statements.  The information set forth in this news release represents management's expectations and intentions only as of the date of this press release.  The company assumes 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 September 30,

Nine months ended September 30,

2013

2012

2013

2012

Revenues:

Base rent

$

63,281

$

56,641

$

185,474

$

165,584

Recoveries from tenants

31,687

27,759

87,073

77,573

Other revenues

1,374

1,046

3,118

3,329

Total revenues

96,342

85,446

275,665

246,486

Expenses:

Property operating costs

27,119

24,524

75,398

70,360

Real estate taxes and insurance

3,630

4,631

10,944

9,215

Depreciation and amortization

23,538

22,531

69,773

66,885

General and administrative

3,664

3,973

12,546

13,714

Other expenses

874

734

2,231

2,146

Total expenses

58,825

56,393

170,892

162,320

Operating income

37,517

29,053

104,773

84,166

Interest income

32

33

85

112

Interest:

Expense incurred

(12,048)

(11,934)

(37,490)

(36,471)

Amortization of deferred financing costs

(849)

(874)

(2,542)

(2,677)

Loss on early extinguishment of debt

(30,610)

(32,310)

Net (loss) income

(5,958)

16,278

32,516

45,130

Net loss (income) attributable to redeemable noncontrolling interests – operating partnership

2,541

(2,181)

(2,397)

(5,757)

Net (loss) income attributable to controlling interests

(3,417)

14,097

30,119

39,373

Preferred stock dividends

(6,811)

(6,811)

(20,433)

(20,241)

Net (loss) income attributable to common shares

$

(10,228)

$

7,286

$

9,686

$

19,132

Earnings per share – basic:

Net (loss) income attributable to common shares

$

(0.16)

$

0.11

$

0.15

$

0.30

Weighted average common shares outstanding

64,432,010

62,994,500

64,631,772

62,820,979

Earnings per share – diluted:

Net (loss) income attributable to common shares

$

(0.16)

$

0.11

$

0.15

$

0.30

Weighted average common shares outstanding

64,432,010

63,881,663

65,485,430

63,727,131

Dividends declared per common share

$

0.25

$

0.15

$

0.70

$

0.42

 

 

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

September 30,

Nine months ended

September 30,

2013

2012

2013

2012

Net (loss) income

$

(5,958)

$

16,278

$

32,516

$

45,130

Depreciation and amortization

23,538

22,531

69,773

66,885

Less: Non real estate depreciation and amortization

(218)

(251)

(689)

(785)

FFO

17,362

38,558

101,600

111,230

Preferred stock dividends

(6,811)

(6,811)

(20,433)

(20,241)

FFO attributable to common shares and OP units

$

10,551

$

31,747

$

81,167

$

90,989

Loss on early extinguishment of debt

30,610

32,310

Normalized FFO

41,161

31,747

113,477

90,989

Straight-line revenues, net of reserve

1,331

(5,598)

(5,323)

(16,824)

Amortization of lease contracts above and below market value

(598)

(763)

(1,793)

(2,595)

Compensation paid with Company common shares

1,561

1,660

5,076

5,333

Non real estate depreciation and amortization

218

251

689

785

Amortization of deferred financing costs

849

874

2,542

2,677

Improvements to real estate

(678)

(1,656)

(5,035)

(3,333)

Capitalized leasing commissions

(1,914)

(82)

(2,082)

(781)

AFFO

$

41,930

$

26,433

$

107,551

$

76,251

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

$

0.13

$

0.38

$

1.00

$

1.10

Normalized FFO per share - diluted

$

0.51

$

0.38

$

1.39

$

1.10

AFFO per share - diluted

$

0.52

$

0.32

$

1.32

$

0.92

Weighted average common shares and OP units outstanding - diluted

81,235,730

82,713,851

81,480,540

82,630,663

 

(1)  Funds from operations, or FFO, is used by industry analysts and investors as a supplemental operating performance measure for REITs. The Company calculates 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 (loss) 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. The Company also presents 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.

The Company uses 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. The Company also believes that, as a widely recognized measure of the performance of equity REITs, FFO may be used by investors as a basis to compare the Company's 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 the Company's properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the Company's properties, all of which have real economic effects and could materially impact the Company's results from operations, the utility of FFO as a measure of the Company's 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 the Company's FFO. Therefore, the Company believes that in order to facilitate a clear understanding of its 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 the Company's liquidity, nor is it indicative of funds available to meet the Company's cash needs, including its ability to pay dividends or make distributions.

The Company presents 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.   The Company also presents 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 the Company's 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 the Company's cash needs including the Company's ability to pay dividends. In addition, AFFO may not be comparable to similarly titled measurements employed by other companies. The Company's management uses 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)

 

September 30, 2013

December 31, 2012

(unaudited)

ASSETS

Income producing property:

Land

$

75,956

$

73,197

Buildings and improvements

2,420,123

2,315,499

2,496,079

2,388,696

Less: accumulated depreciation

(391,404)

(325,740)

Net income producing property

2,104,675

2,062,956

Construction in progress and land held for development

197,400

218,934

Net real estate

2,302,075

2,281,890

Cash and cash equivalents

198,196

23,578

Rents and other receivables, net

7,965

3,840

Deferred rent, net

148,440

144,829

Lease contracts above market value, net

9,429

10,255

Deferred costs, net

43,308

35,670

Prepaid expenses and other assets

42,137

30,797

Total assets

$

2,751,550

$

2,530,859

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Line of credit

$

$

18,000

Mortgage notes payable

115,000

139,600

Unsecured term loan

120,000

Unsecured notes payable

731,889

550,000

Accounts payable and accrued liabilities

26,677

22,280

Construction costs payable

22,243

6,334

Accrued interest payable

4,651

2,601

Dividend and distribution payable

25,902

22,177

Lease contracts below market value, net

11,403

14,022

Prepaid rents and other liabilities

51,060

35,524

Total liabilities

1,108,825

810,538

Redeemable noncontrolling interests – operating partnership

409,280

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 September 30, 2013 and December 31, 2012

185,000

185,000

Series B cumulative redeemable perpetual preferred stock, 6,650,000 issued and

outstanding at September 30, 2013 and December 31, 2012

166,250

166,250

Common stock, $.001 par value, 250,000,000 shares authorized, 64,722,005 shares issued

and outstanding at September 30, 2013 and 63,340,929 shares issued and outstanding at

December 31, 2012

65

63

Additional paid in capital

892,358

915,119

Retained earnings (accumulated deficit)

(10,228)

Total stockholders' equity

1,233,445

1,266,432

Total liabilities and stockholders' equity

$

2,751,550

$

2,530,859

 

 

 

DUPONT FABROS TECHNOLOGY, INC.   CONSOLIDATED STATEMENTS OF CASH FLOWS   (unaudited and in thousands)

 

Nine months ended September 30,

2013

2012

Cash flow from operating activities

Net income

$

32,516

$

45,130

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

Depreciation and amortization

69,773

66,885

Straight line rent, net of reserve

(5,323)

(16,824)

Amortization of deferred financing costs

2,542

2,677

Loss on early extinguishment of debt

32,310

Amortization of lease contracts above and below market value

(1,793)

(2,595)

Compensation paid with Company common shares

5,076

5,333

Changes in operating assets and liabilities

Rents and other receivables

(2,376)

(1,668)

Deferred costs

(2,132)

(898)

Prepaid expenses and other assets

(10,951)

(6,128)

Accounts payable and accrued liabilities

4,593

739

Accrued interest payable

2,050

11,742

Prepaid rents and other liabilities

14,365

(1,653)

Net cash provided by operating activities

140,650

102,740

Cash flow from investing activities

Investments in real estate – development

(50,164)

(82,754)

Land acquisition costs

(14,186)

Interest capitalized for real estate under development

(1,522)

(2,654)

Improvements to real estate

(5,035)

(3,333)

Additions to non-real estate property

(24)

(55)

Net cash used in investing activities

(70,931)

(88,796)

Cash flow from financing activities

Line of credit:

Proceeds

102,000

15,000

Repayments

(120,000)

(35,000)

Mortgage notes payable:

Proceeds

115,000

Lump sum payoffs

(138,300)

Repayments

(1,300)

(3,900)

Unsecured term loan:

Proceeds

120,000

Unsecured notes payable:

Proceeds

600,000

Repayments

(418,111)

Payments of financing costs

(18,073)

(2,084)

Payments for early extinguishment of debt

(25,462)

Issuance of preferred stock, net of offering costs

62,685

Exercises of stock options

61

868

Common stock repurchases

(37,792)

Dividends and distributions:

Common shares

(41,772)

(24,616)

Preferred shares

(20,434)

(19,195)

Redeemable noncontrolling interests – operating partnership

(10,918)

(7,388)

Net cash provided by (used in) financing activities

104,899

(13,630)

Net increase in cash and cash equivalents

174,618

314

Cash and cash equivalents, beginning

23,578

14,402

Cash and cash equivalents, ending

$

198,196

$

14,716

Supplemental information:

Cash paid for interest

$

36,961

$

27,384

Deferred financing costs capitalized for real estate under development

$

95

$

161

Construction costs payable capitalized for real estate under development

$

22,243

$

10,549

Redemption of operating partnership units

$

70,200

$

5,700

Adjustments to redeemable noncontrolling interests - operating partnership

$

34,326

$

21,643

 

 

 

DUPONT FABROS TECHNOLOGY, INC.  

Operating Properties   As of September 30, 2013

 

Property

Property Location

Year Built/ Renovated

Gross Building Area (2)

Raised 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 (6)

Santa Clara, CA

2011

180,000

88,000

18.2

100

%

94

%

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

%

93

%

 

(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 raised square footage (the portion of gross building area where the tenants' computer servers are located), tenant common areas, areas controlled by the Company (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to the tenants (3)      Critical load (also referred to as IT load or load used by tenants' servers or related equipment) is the power available for exclusive use by tenants 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 September 30, 2013 represent $258 million of base rent on a GAAP basis and $261 million of base rent on a cash basis over the next twelve months. Management fees from executed leases are included in recoveries from tenants and are estimated to be $17 million of revenue 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.  (6)      100% commenced as of October 1, 2013.

 

 

DUPONT FABROS TECHNOLOGY, INC.

Lease Expirations   As of September 30, 2013

The following table sets forth a summary schedule of lease expirations of the operating properties for each of the ten calendar years beginning with 2013. The information set forth in the table below assumes that tenants exercise no renewal options and takes into account tenants' early termination options.

 

Year of Lease Expiration

Number of Leases Expiring (1)

Raised Square Feet of Expiring Commenced Leases (in thousands)  (2)

% of Leased Raised Square Feet

Total kW of Expiring Commenced Leases (2)

% of Leased kW

% of Annualized Base Rent (3)

2013 (4)

1

3

0.3

%

430

0.2

%

0.2

%

2014

4

19

1.6

%

2,874

1.4

%

1.7

%

2015

4

70

6.0

%

13,812

6.8

%

6.5

%

2016

4

32

2.7

%

4,686

2.3

%

2.4

%

2017

13

96

8.2

%

17,619

8.6

%

8.8

%

2018

19

215

18.4

%

39,298

19.2

%

18.4

%

2019

10

158

13.5

%

29,735

14.6

%

14.0

%

2020

10

106

9.1

%

16,496

8.1

%

8.6

%

2021

8

153

13.1

%

26,544

13.0

%

13.2

%

2022

6

75

6.4

%

12,812

6.2

%

7.1

%

After 2022

16

244

20.7

%

39,900

19.6

%

19.1

%

Total

95

1,171

100

%

204,206

100

%

100

%

 

(1)      Represents 34 tenants with 95 lease expiration dates. Top four tenants represent 61% of annualized base rent.  (2)      Raised square footage is that portion of gross building area where the tenants 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 204.2 MW as of September 30, 2013.  (4)      This lease will expire on December 31, 2013, representing 2,800 raised square feet, 430 kW of critical load and 0.2% of annualized base rent as notice was provided.  This space has been re-leased with the new lease expected to commence on January 1, 2014 and expire in 2019. 

 

 

 

DUPONT FABROS TECHNOLOGY, INC.

Development Projects   As of September 30, 2013   ($ in thousands) 

 

Property

Property Location

Gross Building Area (1)

Raised 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

$

35,681

50

%

ACC7 Phase I

Ashburn, VA

126,000

70,000

11.9

85,000  -  90,000

23,408

0

%

216,000

114,000

21.0

190,000 - 205,000

59,089

Future Development Projects/Phases

SC1 Phase IIB

Santa Clara, CA

90,000

44,000

9.1

46,000 - 50,000

30,835

ACC7 Phases II to IV

Ashburn, VA

320,000

176,000

29.7

78,000 - 82,000

44,521

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

114,568

Land Held for Development

ACC8

Ashburn, VA

100,000

50,000

10.4

3,784

CH2

Elk Grove Village, IL

338,000

167,000

25.6

14,271

SC2

Santa Clara, CA

200,000

125,000

26.0

5,688

638,000

342,000

62.0

23,743

Total

1,444,000

764,000

140.0

$

197,400

 

(1)     Gross building area is the entire building area, including raised square footage (the portion of gross building area where the tenants' computer servers are located), tenant common areas, areas controlled by the Company (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to the tenants.  The amount listed for CH2 is an estimate.  (2)     Raised square footage is that portion of gross building area where the tenants locate their computer servers.  ACC7 and CH2 will be built without a raised floor and the above represents computer room square footage.  The amount listed for CH2 is an estimate.  (3)     Critical load (also referred to as IT load or load used by tenants' servers or related equipment) is the power available for exclusive use by tenants 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 September 30, 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 September 30, 2013   ($ in thousands)

 

September 30, 2013

Amounts

% of Total

Rates

Maturities

(years)

Secured

$

115,000

12

%

2.0

%

4.5

Unsecured

851,889

88

%

5.7

%

6.4

Total

$

966,889

100

%

5.3

%

6.2

Fixed Rate Debt:

Unsecured Notes due 2021

$

600,000

62

%

5.9

%

8.0

Unsecured Notes due 2017

131,889

14

%

8.5

%

0.1

Fixed Rate Debt

731,889

76

%

6.3

%

6.5

Floating Rate Debt:

Unsecured Credit Facility

2.5

Unsecured Term Loan

120,000

12

%

1.9

%

5.4

ACC3 Term Loan

115,000

12

%

2.0

%

4.5

Floating Rate Debt

235,000

24

%

2.0

%

4.9

Total

$

966,889

100

%

5.3

%

6.2

Note:      The Company capitalized interest and deferred financing cost amortization of $1.1 million and $1.6 million during the three and nine months ended September 30, 2013, respectively.

 

Pro Forma Debt Summary as of September 30, 2013   ($ in thousands)

The pro forma debt summary below assumes the repayment of the remaining $131.9 million Unsecured Notes due 2017, which were irrevocably called on September 24, 2013 and will be repaid on October 24, 2013 with cash on hand.

 

September 30, 2013

Amounts

% of Total

Rates

Maturities

(years)

Secured

$

115,000

14

%

2.0

%

4.5

Unsecured

720,000

86

%

5.2

%

7.5

Total

$

835,000

100

%

4.8

%

7.1

Fixed Rate Debt:

Unsecured Notes due 2021

$

600,000

72

%

5.9

%

8.0

Fixed Rate Debt

600,000

72

%

5.9

%

8.0

Floating Rate Debt:

Unsecured Credit Facility

2.5

Unsecured Term Loan

120,000

14

%

1.9

%

5.4

ACC3 Term Loan

115,000

14

%

2.0

%

4.5

Floating Rate Debt

235,000

28

%

2.0

%

4.9

Total

$

835,000

100

%

4.8

%

7.1

 

 

 

DUPONT FABROS TECHNOLOGY, INC.

Debt Maturity as of September 30, 2013   ($ in thousands)

 

Year

Fixed Rate

Floating Rate

Total

% of Total

Rates

2013

$

131,889

(1)

$

$

131,889

13.6

%

8.5

%

2014

2015

2016

3,750

(3)

3,750

0.4

%

2.0

%

2017

8,750

(3)

8,750

0.9

%

2.0

%

2018

102,500

(3)

102,500

10.6

%

2.0

%

2019

120,000

(4)

120,000

12.4

%

1.9

%

2020

2021

600,000

(2)

600,000

62.1

%

5.9

%

Total

$

731,889

$

235,000

$

966,889

100

%

5.3

%

 

(1)     The remaining Unsecured Notes due 2017 were irrevocably called on September 24, 2013 and will be redeemed on October 24, 2013.  (2)     The 5.875% Unsecured Notes due 2021 were issued in September 2013.  (3)     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.  (4)     The Unsecured Term Loan matures on February 15, 2019 with no extension option.  In October 2013, the company exercised the accordion feature, increasing this loan to $250 million and drawing an additional $34.0 million.  The remaining balance of $96.0 million must be drawn by January 10, 2014. 

 

 

 

DUPONT FABROS TECHNOLOGY, INC.

Selected Unsecured Debt Metrics

 

9/30/13 (1)

9/30/13 (2)

12/31/12

Interest Coverage Ratio (not less than 2.0)

4.4

5.6

4.0

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

30.9%

27.8%

24.9%

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

3.7%

3.8%

4.9%

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

317.5%

375.6%

334.3%

(1)        These selected metrics relate to DuPont Fabros Technology, LP's outstanding unsecured notes. This includes $131.9 million Notes due 2017 (paid off October 24, 2013) and $600 million Notes due 2021.  DuPont Fabros Technology, Inc. is the general partner of DuPont Fabros Technology, LP.  (2)        These selected metrics relate to DuPont Fabros Technology, LP's outstanding unsecured notes and are pro forma assuming the $131.9 million Notes due 2017 were paid off as of September 30, 2013.

 

 

Capital Structure as of September 30, 2013   (in thousands except per share data)

 

 

Line of Credit

$

Mortgage Notes Payable

115,000

Unsecured Term Loan

120,000

Unsecured Notes

731,889

Total Debt

966,889

28.5

%

Common Shares

80

%

64,722

Operating Partnership ("OP") Units

20

%

15,882

Total Shares and Units

100

%

80,604

Common Share Price at September 30, 2013

$

25.77

Common Share and OP Unit Capitalization

$

2,077,165

Preferred Stock ($25 per share liquidation preference)

351,250

Total Equity

2,428,415

71.5

%

Total Market Capitalization

$

3,395,304

100.0

%

 

 

 

DUPONT FABROS TECHNOLOGY, INC.

Common Share and OP Unit  Weighted Average Amounts Outstanding

 

Q3 2013

Q3 2012

YTD Q3 2013

YTD Q3 2012

Weighted Average Amounts Outstanding for EPS Purposes:

Common Shares - basic

64,432,010

62,994,500

64,631,772

62,820,979

Shares issued from assumed conversion of:

- Restricted Shares

113,617

74,893

130,085

- Stock Options

773,546

743,022

776,067

- Performance Units

35,743

Total Common Shares - diluted

64,432,010

63,881,663

65,485,430

63,727,131

Weighted Average Amounts Outstanding for FFO and AFFO Purposes:

Common Shares - basic

64,432,010

62,994,500

64,631,772

62,820,979

OP Units - basic

15,889,830

18,832,188

15,995,110

18,903,532

Total Common Shares and OP Units

80,321,840

81,826,688

80,626,882

81,724,511

Shares and OP Units issued from

assumed conversion of:

- Restricted Shares

73,006

113,617

74,893

130,085

- Stock Options

733,654

773,546

743,022

776,067

- Performance Units

107,230

35,743

Total Common Shares and Units - diluted

81,235,730

82,713,851

81,480,540

82,630,663

Period Ending Amounts Outstanding:

Common Shares

64,722,005

OP Units

15,882,037

Total Common Shares and Units

80,604,042

 

 

 

DUPONT FABROS TECHNOLOGY, INC.

2013 Guidance

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

 

Expected Q4 2013

per share

Expected 2013

per share

Net income per common share and unit - diluted

$0.14 to $0.16

$0.29 to $0.30

Depreciation and amortization, net

0.29

1.14 to 1.15

FFO per share - diluted (1)

$0.43 to $0.45

$1.43 to $1.45

Loss on early extinguishment of debt

0.11

0.50

Normalized FFO per share - diluted (1)

$0.54 to $0.56

$1.93 to $1.95

 

 

 

2013 Debt Assumptions

Weighted average debt outstanding

$779.0 million

Weighted average interest rate

6.45%

Total interest costs

$50.2 million

Amortization of deferred financing costs (2)

3.6 million

Interest expense capitalized

(3.5) million

Deferred financing costs amortization capitalized

(0.2) million

Total interest expense after capitalization

$50.1 million

2013 Other Guidance Assumptions

Total revenues

$368 to $376 million

Base rent (included in total revenues)

$249 to $251 million

Straight-line revenues (included in base rent)

$6 to $8 million

General and administrative expense

$17 million

Investments in real estate - development (3)

$137 to $142 million

Improvements to real estate excluding development

$6 million

Preferred stock dividends

$27 million

Loss on early extinguishment of debt

$41 million

Annualized common stock dividend

$1.00 per share

Weighted average common shares and OP units - diluted

81 million

Common share repurchase

$38 million

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 7 of this earnings release.   (2)     Excludes write-offs of deferred financing costs related to the payoff of unsecured notes and a secured loan.  (3)     Represents cash spend expected in 2013 for the ACC7 and SC1 Phase II developments.

 

Note: This press release supplement contains certain non-GAAP financial measures that management believes are helpful in understanding the company's 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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