DuPont Fabros Technology, Inc. Reports Second Quarter 2011 Results

Revenues up 19%

Funds From Operations per share up 27%

Aug 02, 2011, 17:55 ET from DuPont Fabros Technology, Inc.

WASHINGTON, Aug. 2, 2011 /PRNewswire/ -- DuPont Fabros Technology, Inc. (NYSE: DFT) today reported results for the quarter ended June 30, 2011. All per share results are reported on a fully diluted basis.

Highlights

  • As of today, the company's stabilized operating portfolio is 99% leased, NJ1 Phase I is 25% leased, CH1 Phase II is 50% pre-leased, SC1 Phase I is 13% pre-leased and ACC6 Phase I is 4% pre-leased.
  • Second quarter 2011 activity:
    • Signed three leases totaling 3.25 megawatts ("MW") and 16,023 raised square feet with an average lease term of 7.2 years.
    • Closed on a 23 acre land parcel in Ashburn, Virginia adjacent to our ACC data center campus.
  • Subsequent to the second quarter:
    • Renewed for an additional eight years a 9.6 MW lease that was scheduled to expire in increments from 2012 to 2017.
    • Signed one lease totaling 0.57 MW and 2,750 raised square feet.
    • Restructured the ACC5 term loan, lowering the interest rate.

Hossein Fateh, President and Chief Executive Officer, said, "We had a record quarter with over $70 million of revenues and FFO per share of $0.42. We also doubled cash from operations in the first half of 2011 as compared to the year ago period, generating $55 million of cash. In the third quarter, we will complete construction of our new developments in Santa Clara, California and Ashburn, Virginia on time and on budget. These two developments total 31.2 megawatts and represent a 20% increase in our operating portfolio. We remain focused on the lease-up of our available inventory and continue to see good demand in all of our markets."

Second Quarter 2011 Results

For the quarter ended June 30, 2011, the company reported earnings of $0.20 per share compared to $0.13 per share for the second quarter of 2010. Revenues increased 19%, or $11.5 million, to $70.8 million for the second quarter of 2011 over the second quarter of 2010. This increase is primarily due to leases commencing at CH1 Phase I, ACC5 Phase II and NJ1 Phase I.

Funds from Operations ("FFO") for the quarter ended June 30, 2011 was $0.42 per share compared to $0.33 per share for the quarter ended June 30, 2010. The increase of 27% or $0.09 per share is due to:

  • Higher operating income, excluding depreciation, of $0.08 per share due to leases commencing at CH1 Phase I, ACC5 Phase II and NJ1 Phase I, and
  • Lower fixed charges of $0.01 per share representing lower interest expense of $0.08 per share due to a term loan payoff in October 2010 and higher interest capitalization in the second quarter of 2011, partially offset by preferred dividends of $0.07 per share.

Six Months Ended June 30, 2011 Results

For the six months ended June 30, 2011, the company reported earnings of $0.37 per share compared to $0.22 per share for the year ago period. Revenues increased 20%, or $23.1 million, to $139.3 million for the six months ended June 30, 2011 over the year ago period. This increase is primarily due to leases commencing at CH1 Phase I, ACC5 Phase II and NJ1 Phase I.

FFO for the six months ended June 30, 2011 was $0.80 per share compared to $0.63 per share for the year ago period. The increase of 27% or $0.17 per share is due to:

  • Higher operating income, excluding depreciation, of $0.13 per share due to leases commencing at CH1 Phase I, ACC5 Phase II and NJ1 Phase I, and
  • Lower fixed charges of $0.04 per share representing lower interest expense of $0.16 per share due to a term loan payoff in October 2010 and higher interest capitalization in the first half of 2011, partially offset by preferred dividends of $0.12 per share.

Portfolio Update

During the second quarter of 2011, the company:

  • Signed three leases totaling 3.25 MW and 16,023 raised square feet with an average lease term of 7.2 years.
    • One lease was at CH1 Phase I for 0.43 MW of critical load and 2,500 raised square feet. This lease commenced in the second quarter of 2011.
    • One pre-lease was at SC1 for 2.28 MW of critical load and 11,000 raised square feet. This lease is expected to commence in the third quarter of 2011.
    • One pre-lease was at ACC6 for 0.54 MW of critical load and 2,523 raised square feet. This lease is expected to commence in the third quarter of 2011.
  • Commenced two leases totaling 2.71 MW of critical load and 13,500 raised square feet. One lease was the CH1 Phase I lease noted above and the other was at NJ1 for 2.28 MW of critical load and 11,000 raised square feet.

Subsequent to the second quarter, the company signed one lease at NJ1 totaling 0.57 MW of critical load, with commencement expected in the third quarter of 2011. Also, the company renewed one lease for an additional eight years, representing 9.6 MW of critical load and 90,000 raised square feet. This lease is now scheduled to expire in 1.6 MW increments in 2020 through 2025.

Year to date, the company:

  • Signed nine leases totaling 17.47 MW of critical load and 93,755 raised square feet with an average lease term of 7.6 years and approximate contract value of $290 million.
  • Commenced five leases totaling 7.83 MW of critical load and 38,183 raised square feet.

SC1 Phase I in Santa Clara, California, ACC6 Phase I in Ashburn, Virginia and CH1 Phase II in Elk Grove Village, Illinois were in development in the second quarter of 2011. As of the date of this earnings release, the company has substantially completed SC1 Phase I and ACC6 Phase I and expects to place these developments into service by the end of the third quarter of 2011. CH1 Phase II remains in development, on schedule, on budget and is fully funded. The company expects to complete this project in the first quarter of 2012.

The company purchased an undeveloped parcel of land totaling 23 acres adjacent to the ACC data center campus in Ashburn, Virginia for $9.6 million in the second quarter of 2011. This parcel of land will allow for the construction of the company's prototype data center of 36.4 MW of critical load at some future date.

Capital Markets Update

In July 2011, the company amended its ACC5 term loan and eliminated the LIBOR floor of 1.50% and lowered the LIBOR spread from 4.25% to 3.00%. Also, the company agreed not to prepay the loan during a new lock-out period through July 31, 2012. The loan remains due in December 2014 with no extension option.

As of today, there are no borrowings under the line of credit facility.

2011 Guidance

The company has established an FFO guidance range of $0.42 to $0.44 per share for the third quarter of 2011. The company is tightening its FFO guidance range for the full year 2011 to $1.57 to $1.63 per share from $1.50 to $1.70 per share.

The assumptions underlying this guidance can be found on page 15 of this press release.

Second Quarter 2011 Conference Call and Webcast Information

The company will host a conference call to discuss these results tomorrow, Wednesday, August 3, 2011 at 10:00 a.m. ET. To access the live call, please visit the Investor Relations section of the company's website at www.dft.com or dial 1-888-503-8171 (domestic) or 1-719-325-2161 (international). A replay will be available for seven days by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) using conference ID 1610470. The webcast will be archived on the company's website for one year at www.dft.com on the Presentations & Webcasts page.

Third Quarter 2011 Conference Call

DuPont Fabros Technology, Inc. expects to announce third quarter 2011 results on Tuesday, November 1, 2011 and to host a conference call to discuss those results at 10:00 a.m. ET on Wednesday, November 2, 2011.

About DuPont Fabros Technology, Inc.

DuPont Fabros Technology, Inc. (NYSE: DFT) is a real estate investment trust (REIT) and leading owner, developer, operator and manager of wholesale data centers. The company's data centers are highly specialized, secure, network-neutral facilities used primarily by national and international Internet and enterprise companies to house, power and cool the computer servers that support many of their most critical business processes. DuPont Fabros Technology, Inc. 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 2011 FFO guidance are not realized, the risk that the company may be unable to obtain 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 risks related to the leasing of available space to third-party tenants, including the ability of the company to negotiate leases on terms that will enable it to achieve its expected returns, the risk that the company will not declare and pay dividends as anticipated for 2011 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, 2010 and its quarterly report on Form 10-Q for the quarter ending March 31, 2011, 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 June 30,

Six months ended June 30,

2011

2010

2011

2010

Revenues:

Base rent

$  48,286

$  37,922

$  95,261

$  72,840

Recoveries from tenants

21,609

18,071

42,467

37,561

Other revenues

861

3,299

1,527

5,800

Total revenues

70,756

59,292

139,255

116,201

Expenses:

Property operating costs

18,746

15,613

36,846

32,967

Real estate taxes and insurance

1,523

1,140

3,179

2,386

Depreciation and amortization

18,113

15,091

36,204

30,187

General and administrative

3,884

4,008

8,682

7,598

Other expenses

319

2,511

517

4,352

Total expenses

42,585

38,363

85,428

77,490

Operating income

28,171

20,929

53,827

38,711

Interest income

192

209

403

234

Interest:

Expense incurred

(5,519)

(10,050)

(13,178)

(21,679)

Amortization of deferred financing costs

(522)

(893)

(1,146)

(1,840)

Net income

22,322

10,195

39,906

15,426

Net income attributable to redeemable noncontrolling interests - operating partnership

(4,296)

(3,274)

(7,768)

(5,214)

Net income attributable to controlling interests

18,026

6,921

32,138

10,212

Preferred stock dividends

(5,572)

  -

(9,729)

  -

Net income attributable to common shares

$  12,454

$  6,921

$  22,409

$  10,212

Earnings per share - basic:

Net income attributable to common shares

$  0.20

$  0.13

$  0.37

$  0.22

Weighted average common shares outstanding

60,533,755

51,087,845

60,373,069

46,602,821

Earnings per share - diluted:

Net income attributable to common shares

$  0.20

$  0.13

$  0.37

$  0.22

Weighted average common shares outstanding

61,577,461

52,408,654

61,480,769

47,899,114

Dividends declared per common share

$  0.12

$  0.12

$  0.24

$  0.20

DUPONT FABROS TECHNOLOGY, INC.

RECONCILIATIONS OF NET INCOME TO FFO AND AFFO (1)

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

Three months ended June 30,

Six months ended June 30,

2011

2010

2011

2010

Net income

$          22,322

$          10,195

$           39,906

$         15,426

Depreciation and amortization

18,113

15,091

36,204

30,187

Less:  Non real estate depreciation and amortization

(199)

(144)

(402)

(288)

FFO

40,236

25,142

75,708

45,325

Preferred stock dividends

(5,572)

    -

(9,729)

    -

FFO attributable to common shares and OP units

$         34,664

$          25,142

$          65,979

$          45,325

Straight-line revenues

(11,084)

(9,955)

(22,952)

(17,842)

Amortization of lease contracts above and below market value

(535)

(635)

(1,071)

(1,433)

Compensation paid with Company common shares

1,517

1,003

2,923

1,795

AFFO

$         24,562

$          15,555

$           44,879

$          27,845

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

$             0.42

$              0.33

$               0.80

$              0.63

AFFO per share - diluted

$             0.30

$              0.21

$               0.54

$              0.39

Weighted average common shares and OP units outstanding - diluted

82,439,136

75,200,014

82,411,583

71,691,062

(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 income determined in accordance with GAAP, excluding extraordinary items as defined under GAAP 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 also presents FFO with supplemental adjustments to arrive at Adjusted FFO ("AFFO"). AFFO is FFO attributable to common shares and OP units excluding straight-line revenue, non-cash stock based compensation, gain or loss on derivative instruments, acquisition of service agreements, below market lease amortization net of above market lease amortization and early extinguishment of debt costs.  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)

June 30, 2011

December 31, 2010

(unaudited)

ASSETS

Income producing property:

Land

$  50,531

$  50,531

Buildings and improvements

1,776,396

1,779,955

1,826,927

1,830,486

Less: accumulated depreciation

(206,025)

(172,537)

Net income producing property

1,620,902

1,657,949

Construction in progress and land held for development

560,701

336,686

Net real estate

2,181,603

1,994,635

Cash and cash equivalents

111,025

226,950

Restricted cash

273

1,600

Rents and other receivables

1,649

3,227

Deferred rent

115,719

92,767

Lease contracts above market value, net

12,052

13,484

Deferred costs, net

43,184

45,543

Prepaid expenses and other assets

20,185

19,245

Total assets

$  2,485,690

$  2,397,451

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Mortgage notes payable

$  147,400

$  150,000

Unsecured notes payable

550,000

550,000

Accounts payable and accrued liabilities

16,615

21,409

Construction costs payable

48,048

67,262

Accrued interest payable

2,731

2,766

Dividend and distribution payable

14,542

12,970

Lease contracts below market value, net

20,816

23,319

Prepaid rents and other liabilities

28,506

22,644

Total liabilities

828,658

850,370

Redeemable noncontrolling interests-operating partnership

523,845

466,823

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, 2011 and December 31, 2010

185,000

185,000

Series B cumulative redeemable perpetual preferred stock, 4,050,000 issued and outstanding at June 30, 2011 and no shares issued or outstanding at December 31, 2010

101,250

-

Common stock, $.001 par value, 250,000,000 shares authorized, 61,181,294 shares issued and outstanding at June 30, 2011 and 59,827,005 shares issued and outstanding at December 31, 2010

61

60

Additional paid in capital

875,648

946,379

Accumulated deficit

(28,772)

(51,181)

Total stockholders' equity

1,133,187

1,080,258

Total liabilities and stockholders' equity

$  2,485,690

$  2,397,451

DUPONT FABROS TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

Six months ended June 30,

2011

2010

Cash flow from operating activities

Net income

$  39,906

$  15,426

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

Depreciation and amortization

36,204

30,187

Straight line rent

(22,952)

(17,842)

Amortization of deferred financing costs

1,146

1,840

Amortization of lease contracts above and below market value

(1,071)

(1,433)

Compensation paid with Company common shares

2,923

1,795

Changes in operating assets and liabilities

Restricted cash

223

(145)

Rents and other receivables

1,578

13

Deferred costs

(1,566)

(2,302)

Prepaid expenses and other assets

(738)

(2,371)

Accounts payable and accrued liabilities

(4,794)

332

Accrued interest payable

(35)

(328)

Prepaid rents and other liabilities

3,903

2,338

Net cash provided by operating activities

54,727

27,510

Cash flow from investing activities

Investments in real estate - development

(213,464)

(88,312)

Land acquisition costs

(9,507)

-

Marketable securities held to maturity

Purchase

-

(60,014)

Redemption

-

138,978

Interest capitalized for real estate under development

(14,654)

(9,845)

Improvements to real estate

(1,454)

(1,745)

Additions to non-real estate property

(88)

(95)

Net cash used in investing activities

(239,167)

(21,033)

Cash flow from financing activities

Issuance of preferred stock, net of offering costs

97,450

-

Issuance of common stock, net of offering costs

-

304,107

Mortgage notes payable:

Repayments

(2,600)

(1,000)

Return of escrowed proceeds

1,104

4,513

Exercises of stock options

596

309

Payments of financing costs

(218)

(2,614)

Dividends and distributions:

Common shares

(14,491)

(3,534)

Preferred shares

(8,180)

-

Redeemable noncontrolling interests - operating partnership

(5,146)

(1,894)

Net cash provided by financing activities

68,515

299,887

Net (decrease) increase in cash and cash equivalents

(115,925)

306,364

Cash and cash equivalents, beginning

226,950

38,279

Cash and cash equivalents, ending

$  111,025

$  344,643

Supplemental information:

Cash paid for interest

$  27,867

$  31,851

Deferred financing costs capitalized for real estate under development

$  697

$  834

Construction costs payable capitalized for real estate under development

$  48,048

$  16,542

Redemption of OP units for common shares

$  25,100

$  61,300

Adjustments to redeemable noncontrolling interests

$  79,360

$  163,242

DUPONT FABROS TECHNOLOGY, INC.

Operating Properties As of June 30, 2011

Property

Property Location

Year Built/ Renovated

Gross Building Area (2)

Raised Square Feet (3)

Critical Load MW (4)

% Leased (5)

% 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

100%

100%

CH1 Phase I

Elk Grove Village, IL

2008

285,000

122,000

18.2

98%

98%

VA3

Reston, VA

2003

256,000

147,000

13.0

100%

100%

VA4

Bristow, VA

2005

230,000

90,000

9.6

100%

100%

                      Subtotal- stabilized

1,712,000

840,000

137.9

Completed not Stabilized

NJ1 Phase I (6)

Piscataway, NJ

2010

180,000

88,000

18.2

22%

22%

                      Total Operating Properties

1,892,000

928,000

156.1

(1)

Stabilized operating properties are either 85% or more leased 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)

Raised square footage is that portion of gross building area where the tenants locate their computer servers. The Company considers raised square footage to be the net rentable square footage in each of its facilities.

(4)

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).

(5)

Percentage leased is expressed as a percentage of critical load that is subject to an executed lease. Percentage commenced is expressed as a percentage of critical load where the lease has commenced under generally accepted accounting principles. Leases executed as of June 30, 2011 represent $191 million of base rent on a straight-line basis and $177 million on a cash basis over the next twelve months. This excludes contractual management fees and approximately $2 million net amortization increase in revenue of above and below market leases.

(6)

As of August 2, 2011, NJ1 Phase I is 25% leased.

DUPONT FABROS TECHNOLOGY, INC.

Lease Expirations As of June 30, 2011

The following table sets forth a summary schedule of lease expirations of the operating properties for each of the ten calendar years beginning with 2011. The information set forth in the table below assumes that tenants exercise no renewal options, except as noted below, and takes into account tenants' early termination options.

Year of Lease Expiration

Number of Leases Expiring (1)

Raised Square Feet Expiring (in thousands) (2)

% of Leased Raised Square Feet

Total kW of Expiring Leases (3)

% of Leased kW

% of Annualized Base Rent

2011

-

-

-

-

-

-

2012 (4)(5)(6)

2

72

8.4%

6,878

4.9%

4.2%

2013 (5)

2

30

3.6%

3,030

2.2%

1.0%

2014 (5)

6

35

4.0%

6,287

4.4%

4.5%

2015 (5)

6

84

9.8%

16,250

11.5%

10.5%

2016 (5)

4

68

7.9%

11,098

7.8%

7.7%

2017 (5)

6

76

8.9%

14,063

10.0%

10.2%

2018

4

75

8.8%

15,309

10.8%

11.3%

2019

9

116

13.6%

21,067

14.9%

14.1%

2020 (5)

8

82

9.6%

13,895

9.8%

10.6%

After 2020 (5)

14

217

25.4%

33,570

23.7%

25.9%

Total

61

855

100%

141,447

100%

100%

(1)

Represents 27 tenants with 61 lease expiration dates. Top three tenants represent 58% of annualized base rent as of June 30, 2011.

(2)

Raised square footage is that portion of gross building area where the tenants locate their computer servers. The Company considers raised square footage to be the net rentable square footage in each of its facilities.

(3)

One MW is equal to 1,000 kW.

(4)

Includes one lease - representing 1,138 kW of available critical load and 5,000 raised square feet, or 0.6% of the total amount of leased raised square feet as of June 30, 2011 - that gives the tenant a limited right to terminate the lease upon six months notice, but only if the tenant's customer were to terminate the services agreement between the tenant and its customer.

(5)

Reflects the fact that, in August 2011, the Company entered into a lease amendment with one tenant, which lease provided for scheduled lease expirations of 9,600 kW of critical load in increments of 1,600 kW in each of 2012, 2013, 2014, 2015, 2016 and 2017, to extend the term of each of these 1,600 kW increments for eight years.  This lease represents 90,000 raised square feet and 10.5% of leased raised square feet as of June 30, 2011.

(6)

On June 20, 2011, one tenant notified the Company it will not renew a lease that is scheduled to expire on April 30, 2012.  This lease represents 67,000 raised square feet, 7.8% of leased raised square feet and 5,740 kW of critical load as of June 30, 2011.  

DUPONT FABROS TECHNOLOGY, INC.

Development Projects As of June 30, 2011 ($ 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)

Percentage Pre-Leased

Current Development Projects

SC1 Phase I (6)

Santa Clara, CA

180,000

88,000

18.2

$  230,000 - 235,000

$  214,763

13%

ACC6 Phase I (6)

Ashburn, VA

131,000

66,000

13.0

115,000 - 120,000

108,969

4%

CH1 Phase II (7)

Elk Grove Village, IL

200,000

109,000

18.2

190,000 - 200,000

97,509

50%

511,000

263,000

49.4

535,000 - 555,000

421,241

Future Development Projects/Phases

NJ1 Phase II

Piscataway, NJ

180,000

88,000

18.2

40,175

40,175

SC1 Phase II

Santa Clara, CA

180,000

88,000

18.2

59,000 - 60,000

58,594

ACC6 Phase II

Ashburn, VA

131,000

66,000

13.0

25,000 - 26,000

24,772

491,000

242,000

49.4

$  124,175 - 126,175

123,541

Land Held for Development

ACC7 Phase I /II (8)

Ashburn, VA

360,000

176,000

36.4

10,039

ACC8 (8)

Ashburn, VA

100,000

50,000

10.4

3,726

SC2 Phase I/II

Santa Clara, CA

300,000

171,000

36.4

2,154

760,000

397,000

83.2

15,919

Total

1,762,000

902,000

182.0

$  560,701

(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.

(2)

Raised square footage is that portion of gross building area where the tenants locate their computer servers. The Company considers raised square footage to be the net rentable square footage in each of its facilities.

(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).

(4)

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

(5)

Amount capitalized as of June 30, 2011.

(6)

Completion expected during the third quarter of 2011.

(7)

Completion expected during the first quarter of 2012.

(8)

In June 2011, the Company acquired undeveloped land in Ashburn, Virginia that is of sufficient size to accommodate a data center facility capable of providing 36.4 MW of available critical load.  This parcel of land is newly titled ACC7 while the parcel of land previously titled ACC7 is now known as ACC8.

DUPONT FABROS TECHNOLOGY, INC.

Debt Summary as of June 30, 2011 ($ in thousands)

Amounts

% of Total

Rates (1)

Maturities (years)

Secured

$  147,400

21.1%

5.8%

3.4

Unsecured

550,000

78.9%

8.5%

5.8

Total

$  697,400

100.0%

7.9%

5.3

Fixed Rate Debt:

Unsecured Notes

$  550,000

78.9%

8.5%

5.8

Fixed Rate Debt

550,000

78.9%

8.5%

5.8

Floating Rate Debt:

Unsecured Credit Facility

-

-

-

1.9

ACC5 Term Loan

147,400

21.1%

5.8%

3.4

Floating Rate Debt

147,400

21.1%

5.8%

3.4

Total

$  697,400

100.0%

7.9%

5.3

Note:

The Company capitalized interest and deferred financing cost amortization of $8.8 million and $15.4 million during the three and six months ended June 30, 2011, respectively.

(1)

Rates as of June 30, 2011. On July 29, 2011, the Company amended the ACC5 Term Loan, reducing the rate from 5.8% to LIBOR (currently 0.2%) plus a 3% spread.

Debt Maturity as of June 30, 2011 ($ in thousands)

Year

Fixed Rate

Floating Rate

Total

% of Total

Rates (3)

2011

$           -

$  2,600(2)

$  2,600

0.4%

5.8%

2012

-

5,200(2)

5,200

0.7%

5.8%

2013

-

5,200(2)

5,200

0.7%

5.8%

2014

-

134,400(2)

134,400

19.3%

5.8%

2015

125,000(1)

-

125,000

17.9%

8.5%

2016

125,000(1)

-

125,000

17.9%

8.5%

2017

300,000(1)

  -

300,000

43.1%

8.5%

Total

$  550,000

$  147,400

$  697,400

100%

7.9%

(1)

The Unsecured Notes have mandatory amortizations of $125.0 million due in 2015, $125.0 million due in 2016 and $300.0 million due in 2017.

(2)

The ACC5 Term Loan matures on December 2, 2014 with no extension option. Scheduled quarterly principal amortization payments of $1.3 million started in the first quarter of 2011.

(3)

Rates as of June 30, 2011.

DUPONT FABROS TECHNOLOGY, INC.

Selected Unsecured Debt Metrics

6/30/11

3/31/11

Interest Coverage Ratio (not less than 2.0)

3.1

3.0

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

26.0%

26.2%

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

5.5%

5.6%

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

324.3%

312.0%

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

Capital Structure as of June 30, 2011 (in thousands except per share data)

Mortgage Notes Payable

$   147,400

Unsecured Notes

550,000

Total Debt

697,400

22.9%

Common Shares

75%

61,181

Operating Partnership ("OP") Units

25%

20,788

Total Shares and Units

100%

81,969

Common Share Price at June 30, 2011

$   25.20

Common Share and OP Unit Capitalization

$  2,065,619

Preferred Stock ($25 per share liquidation preference)

286,250

Total Equity

2,351,869

77.1%

Total Market Capitalization

$  3,049,269

100.0%

DUPONT FABROS TECHNOLOGY, INC.

Common Share and OP Unit Weighted Average Amounts Outstanding

Q2 2011

Q2 2010

YTD

Q2 2011

YTD

Q2 2010

Weighted Average Amounts

Outstanding for EPS Purposes:

Common Shares - basic Shares issued from assumed conversion of:

60,533,755

51,087,845

60,373,069

46,602,821

- Restricted Shares

226,378

394,601

280,878

401,148

- Stock Options

817,328

926,208

826,822

895,145

Total Common Shares - diluted

61,577,461

52,408,654

61,480,769

47,899,114

Weighted Average Amounts Outstanding for FFO and AFFO Purposes:

Common Shares - basic

60,533,755

51,087,845

60,373,069

46,602,821

OP Units - basic

20,861,675

22,791,360

20,930,814

23,791,948

Total Common Shares and OP Units

81,395,430

73,879,205

81,303,883

70,394,769

Shares and OP Units issued from

   assumed conversion of:

- Restricted Shares

226,378

394,601

280,878

401,148

- Stock Options

817,328

926,208

826,822

895,145

Total Common Shares and Units - diluted

82,439,136

75,200,014

82,411,583

71,691,062

Period Ending Amounts Outstanding:

Common Shares

61,181,294

OP Units

20,787,499

Total Common Shares and Units

81,968,793

DUPONT FABROS TECHNOLOGY, INC.

2011 Guidance

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

Expected Q3 2011

per share

Expected 2011    

per share    

Net income per common share and unit - diluted

   $0.20 to $0.21

  $0.66 to $0.70

Depreciation and amortization, net

     0.22 to   0.23

    0.91 to   0.93

FFO per share - diluted (1)

   $0.42 to $0.44

  $1.57 to $1.63

Note:  2011 guidance assumes an additional financing of $75 million in late 2011.

2011 Debt Assumptions

Weighted average debt outstanding

$696.8 million

Weighted average interest rate

7.9%

Total interest costs

$55.0 million

Amortization of deferred financing costs

$3.9 million

     Interest expense capitalized

$(27.1) to $(29.0) million

     Deferred financing costs amortization capitalized

$(1.3) to $(1.4) million

Total interest expense after capitalization

$28.5 to $30.5 million

2011 Other Guidance Assumptions

Total revenues

$285 to $295 million

Other revenues (included in total revenues)

$2 million

Straight-line revenues (included in total revenues)

$35 to $37 million

Below market lease amortization, net of above market lease amortization

$2 million

General and administrative expense

$16 to $17 million

Investments in real estate - development

$370 to $380 million

Improvements to real estate excluding development

$4 to $5 million

Estimated dividend distribution payout

$0.48 per share

Weighted average common shares and OP units - diluted

83 million

(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 income determined in accordance with GAAP, excluding extraordinary items as defined under GAAP 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.

SOURCE DuPont Fabros Technology, Inc.



RELATED LINKS

http://www.dft.com