DuPont Fabros Technology, Inc. Reports Third Quarter 2010 Results
Revenues up 16.2%; FFO per share up 27.6%
WASHINGTON, Nov. 3, 2010 /PRNewswire-FirstCall/ -- DuPont Fabros Technology, Inc. (NYSE: DFT) today reported results for the quarter ended September 30, 2010. All per share results are reported on a fully diluted basis.
Highlights
- Executed one new triple-net lease at our New Jersey facility totaling 1.14 megawatts "MW", or 6% of the building, and renewed a lease expiring in 2014 in Reston, Virginia until 2017.
- Increased revenues 16.2%, Funds From Operations ("FFO") 54.0% and FFO per share 27.6% as compared to the third quarter of 2009.
- In the fourth quarter to date, the company:
- Executed two new triple-net leases at our New Jersey facility totaling 2.84 MW, or 16% of the building.
- Issued 7.4 million shares of 7.875% Series A perpetual preferred stock at a price of $25 per share, raising net proceeds of approximately $179 million.
- Paid off in full the $196.5 million ACC4 secured loan that was scheduled to mature in October 2011.
- Placed the ACC5 Phase II and NJ1 Phase I developments into operations on November 1, 2010.
Hossein Fateh, President and Chief Executive Officer said, "With the opening of ACC5 Phase II in Ashburn, Virginia and NJ1 Phase I in Piscataway, New Jersey, we have successfully placed 36.4 megawatts of power in service on time and on budget, increasing our megawatt portfolio by 30%. We strengthened our balance sheet by issuing preferred stock and using the proceeds to pay off a near-term debt maturity. Additionally, we continue to experience solid demand for our wholesale space from both internet and enterprise companies."
Third Quarter 2010 Results
For the quarter ended September 30, 2010, the company reported earnings of $0.18 per share compared to earnings of $0.08 per share for the third quarter of 2009. Revenues increased 16.2%, or $8.4 million, to $60.3 million for the third quarter of 2010 over the third quarter of 2009. This revenue increase was offset by a $1.2 million, or 2.3%, reduction due to energy cost savings from the company's participation in load management and rate setting programs. These energy savings, while a reduction of revenue to the company, represent a direct reduction of property operating costs as well, due to the triple net lease structure in place with our tenants and, therefore, have no impact to earnings or FFO.
FFO for the quarter ended September 30, 2010 was $0.37 per share compared to $0.29 per share for the quarter ended September 30, 2009. The difference is primarily due to higher operating income due to the lease up of certain operating properties.
Nine Months Ended September 30, 2010 Results
For the nine months ended September 30, 2010, the company reported earnings of $0.41 per share compared to earnings of $0.22 per share for the year ago period. Revenues increased 19.6%, or $28.9 million, to $176.5 million for the nine months ended September 30, 2010 over the corresponding period in 2009. This revenue increase was offset by a $3.3 million, or 2.2%, reduction due to energy cost savings from the company's participation in load management and rate setting programs as explained in our third quarter results.
FFO for the nine months ended September 30, 2010 was $1.00 per share compared to $0.83 per share for the year ago period. The difference is primarily due to:
- $0.26 per share of higher operating income due to the lease up of certain operating properties; partially offset by
- $0.09 per share of higher interest expense primarily resulting from higher debt balances and rates.
Portfolio Update
During the third quarter of 2010, the company executed a new lease at NJ1 Phase I totaling 1.14 MW of critical load and 5,400 raised square feet with a lease term of 10.1 years. This lease commenced November 1, 2010. In addition, one lease expiring in 2014 was renewed until 2017 at VA3, representing 0.81 MW of critical load and 9,700 raised square feet.
In the fourth quarter to date, the company executed two new leases at NJ1 Phase I totaling 2.84 MW of critical load and 13,683 raised square feet with an average lease term of 12.1 years. One lease is scheduled to commence in the fourth quarter of 2010 and the other in the second quarter of 2011. One lease represents an existing Northern Virginia tenant who elected to expand their national platform by moving an executed lease yet to be commenced at ACC5 Phase II to NJ1 Phase I.
Year-to-date, the company has executed 14 leases totaling 23.18 MW of critical load totaling 128,869 of raised square feet with an average lease term of 9.1 years. This represents approximately $460 million of contract value to the company.
As of the date of this press release, the company's stabilized operating portfolio's critical load is 100% leased. Two new developments, NJ1 Phase I in Piscataway, New Jersey and ACC5 Phase II in Ashburn, Virginia, were placed into service on November 1, 2010. ACC5 Phase II is 75% leased and NJ1 Phase I is 22% leased.
SC1 Phase I in Santa Clara, California and ACC6 Phase I in Ashburn, Virginia are in development and the company currently expects each to be completed during the third quarter of 2011. Each development is on schedule and within our expected total cost.
Capital Markets Update
In October 2010, the company sold 7.4 million shares of 7.875% Series A perpetual preferred stock at a price of $25 per share, raising net proceeds of approximately $179 million in an underwritten public offering. The company used the proceeds from this offering and a portion of its cash on hand to pay off in full the $196.5 million ACC4 Term Loan on October 25, 2010 that was originally due to mature in October 2011. The company's earliest debt maturity is the $150 million ACC5 Term Loan in December 2014.
In August 2010, the company increased its unsecured revolving credit facility from $85 million to $100 million through the use of the facility's accordion feature. This fully utilized the accordion. The facility is at LIBOR plus 450 basis points (with a LIBOR floor of 1%). As of the date of this release, there have been no borrowings under this facility.
Dividend
The company declared a cash dividend of $0.12 per share in the third quarter of 2010 and paid this dividend in October 2010.
Fourth Quarter 2010 Guidance
The company has established an FFO guidance range of $0.30 to $0.34 per share for the fourth quarter of 2010.
Full Year 2010 Guidance
The company has revised and is tightening its full year 2010 FFO per share guidance range from $1.30 to $1.40 per share to $1.30 to $1.34 per share. The primary difference is a $0.03 per share increase in interest expense due to the one-time write-off of unamortized deferred financing costs related to the early payoff of the ACC4 secured loan.
The assumptions underlying this guidance are listed on page 16 of this release.
Third Quarter 2010 Conference Call and Webcast Information
The company will host a conference call to discuss these results tomorrow, Thursday, November 4, 2010 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 1-800-263-8506 (domestic) or 1-719-457-2573 (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 9752421. The webcast will be archived on the company's website for one year at www.dft.com on the Presentations & Webcasts page.
Fourth Quarter 2010 Conference Call
DuPont Fabros Technology, Inc. expects to announce fourth quarter 2010 results on Tuesday, February 8, 2011 and to host a conference call to discuss those results at 10:00 a.m. ET on Wednesday, February 9, 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 facilities used primarily by Internet and enterprise companies to house, power and cool some of 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 2010 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 2010 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, 2009 and its Forms 10-Q for the quarters ended March 31, 2010 and June 30, 2010, 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, |
||||
2010 |
2009 |
2010 |
2009 |
||
Revenues: |
|||||
Base rent |
$ 38,519 |
$ 29,491 |
$ 111,359 |
$ 83,893 |
|
Recoveries from tenants |
20,751 |
17,954 |
58,312 |
51,060 |
|
Other revenues |
1,059 |
4,475 |
6,859 |
12,653 |
|
Total revenues |
60,329 |
51,920 |
176,530 |
147,606 |
|
Expenses: |
|||||
Property operating costs |
16,938 |
16,505 |
49,905 |
46,499 |
|
Real estate taxes and insurance |
1,553 |
1,234 |
3,939 |
3,634 |
|
Depreciation and amortization |
15,140 |
14,240 |
45,327 |
41,551 |
|
General and administrative |
3,538 |
3,580 |
11,136 |
10,142 |
|
Other expenses |
609 |
3,548 |
4,961 |
10,175 |
|
Total expenses |
37,778 |
39,107 |
115,268 |
112,001 |
|
Operating income |
22,551 |
12,813 |
61,262 |
35,605 |
|
Interest income |
454 |
66 |
688 |
350 |
|
Interest: |
|||||
Expense incurred |
(6,361) |
(6,088) |
(28,040) |
(17,101) |
|
Amortization of deferred financing costs |
(1,365) |
(1,267) |
(3,205) |
(4,533) |
|
Net income |
15,279 |
5,524 |
30,705 |
14,321 |
|
Net income attributable to redeemable noncontrolling interests – operating partnership |
(4,455) |
(2,137) |
(9,669) |
(5,753) |
|
Net income attributable to controlling interests |
$ 10,824 |
$ 3,387 |
$ 21,036 |
$ 8,568 |
|
Earnings per share – basic: |
|||||
Net income attributable to controlling interests per common share |
$ 0.18 |
$ 0.08 |
$ 0.41 |
$ 0.22 |
|
Weighted average common shares outstanding |
58,739,792 |
41,041,140 |
50,692,936 |
39,407,194 |
|
Earnings per share – diluted: |
|||||
Net income attributable to controlling interests per common share |
$ 0.18 |
$ 0.08 |
$ 0.41 |
$ 0.22 |
|
Weighted average common shares outstanding |
60,070,867 |
41,992,512 |
52,000,823 |
39,918,440 |
|
Dividends declared per common share |
$ 0.12 |
$ — |
$ 0.32 |
$ — |
|
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 September 30, |
Nine months ended September 30, |
||||||||
2010 |
2009 |
2010 |
2009 |
||||||
Net income |
$ 15,279 |
$ 5,524 |
$ 30,705 |
$ 14,321 |
|||||
Depreciation and amortization |
15,140 |
14,240 |
45,327 |
41,551 |
|||||
Less: Non real estate depreciation and amortization |
(164) |
(124) |
(452) |
(355) |
|||||
FFO |
$ 30,255 |
$ 19,640 |
$ 75,580 |
$ 55,517 |
|||||
Straight-line revenues |
(8,047) |
(4,159) |
(25,889) |
(11,504) |
|||||
Amortization of lease contracts above and below market value |
(537) |
(1,744) |
(1,970) |
(5,233) |
|||||
Loss on early extinguishment of debt |
— |
— |
— |
1,047 |
|||||
Compensation paid with Company common shares |
1,003 |
612 |
2,798 |
1,431 |
|||||
AFFO |
$ 22,674 |
$ 14,349 |
$ 50,519 |
$ 41,258 |
|||||
FFO per share - diluted |
$ 0.37 |
$ 0.29 |
$ 1.00 |
$ 0.83 |
|||||
AFFO per share - diluted |
$ 0.28 |
$ 0.21 |
$ 0.67 |
$ 0.61 |
|||||
Weighted average common shares and OP units outstanding - diluted |
82,403,295 |
67,631,035 |
75,300,918 |
67,154,717 |
|||||
(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 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 year over year, 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 will 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 our liquidity, nor is it indicative of funds available to fund 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 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) |
|||
September 30, 2010 |
December 31, 2009 |
||
ASSETS |
(unaudited) |
||
Income producing property: |
|||
Land |
$ 44,001 |
$ 44,001 |
|
Buildings and improvements |
1,441,136 |
1,438,598 |
|
1,485,137 |
1,482,599 |
||
Less: accumulated depreciation |
(156,713) |
(115,225) |
|
Net income producing property |
1,328,424 |
1,367,374 |
|
Construction in progress and land held for development |
529,850 |
330,170 |
|
Net real estate |
1,858,274 |
1,697,544 |
|
Cash and cash equivalents |
305,031 |
38,279 |
|
Marketable securities held to maturity |
60,106 |
138,978 |
|
Restricted cash |
3,651 |
10,222 |
|
Rents and other receivables |
3,924 |
2,550 |
|
Deferred rent |
83,253 |
57,364 |
|
Lease contracts above market value, net |
14,200 |
16,349 |
|
Deferred costs, net |
50,138 |
52,208 |
|
Prepaid expenses and other assets |
15,740 |
9,551 |
|
Total assets |
$ 2,394,317 |
$ 2,023,045 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Liabilities: |
|||
Mortgage notes payable |
$ 347,000 |
$ 348,500 |
|
Unsecured notes payable |
550,000 |
550,000 |
|
Accounts payable and accrued liabilities |
20,075 |
16,301 |
|
Construction costs payable |
40,348 |
6,229 |
|
Accrued interest payable |
14,548 |
3,510 |
|
Dividend and distribution payable |
9,812 |
— |
|
Lease contracts below market value, net |
24,570 |
28,689 |
|
Prepaid rents and other liabilities |
20,550 |
15,564 |
|
Total liabilities |
1,026,903 |
968,793 |
|
Redeemable noncontrolling interests—operating partnership |
557,097 |
448,811 |
|
Commitments and contingencies |
— |
— |
|
Stockholders' equity: |
|||
Preferred stock, par value $.001, 50,000,000 shares authorized, no shares issued or outstanding at September 30, 2010 and December 31, 2009 |
— |
— |
|
Common stock, par value $.001, 250,000,000 shares authorized, 59,618,316 shares issued and outstanding at September 30, 2010 and 42,373,340 shares issued and outstanding at December 31, 2009 |
60 |
42 |
|
Additional paid in capital |
867,692 |
683,870 |
|
Accumulated deficit |
(57,435) |
(78,471) |
|
Total stockholders' equity |
810,317 |
605,441 |
|
Total liabilities and stockholders' equity |
$ 2,394,317 |
$ 2,023,045 |
|
DUPONT FABROS TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in thousands) |
|||||
Nine months ended September 30, |
|||||
2010 |
2009 |
||||
Cash flow from operating activities |
|||||
Net income |
$ 30,705 |
$ 14,321 |
|||
Adjustments to reconcile net income to net cash provided by operating activities |
|||||
Depreciation and amortization |
45,327 |
41,551 |
|||
Straight line rent |
(25,889) |
(11,504) |
|||
Amortization of deferred financing costs |
3,205 |
4,533 |
|||
Amortization of lease contracts above and below market value |
(1,970) |
(5,233) |
|||
Compensation paid with Company common shares |
2,798 |
1,431 |
|||
Changes in operating assets and liabilities |
|||||
Restricted cash |
(145) |
(344) |
|||
Rents and other receivables |
(1,480) |
(365) |
|||
Deferred costs |
(2,504) |
(2,663) |
|||
Prepaid expenses and other assets |
(6,186) |
1,942 |
|||
Accounts payable and accrued liabilities |
3,774 |
6,311 |
|||
Accrued interest payable |
11,038 |
(370) |
|||
Prepaid rents and other liabilities |
3,437 |
2,852 |
|||
Net cash provided by operating activities |
62,110 |
52,462 |
|||
Cash flow from investing activities |
|||||
Investments in real estate – development |
(144,989) |
(104,747) |
|||
Marketable securities held to maturity: |
|||||
Purchase |
(60,000) |
— |
|||
Redemption |
138,978 |
— |
|||
Interest capitalized for real estate under development |
(19,407) |
(4,940) |
|||
Improvements to real estate |
(2,719) |
(2,373) |
|||
Additions to non-real estate property |
(255) |
(315) |
|||
Net cash used in investing activities |
(88,392) |
(112,375) |
|||
Cash flow from financing activities |
|||||
Issuance of common stock |
305,176 |
— |
|||
Line of credit: |
|||||
Repayments |
— |
(9,428) |
|||
Mortgage notes payable: |
|||||
Proceeds |
— |
181,726 |
|||
Lump sum payoffs |
— |
(135,121) |
|||
Repayments |
(1,500) |
(1,000) |
|||
Return (payment) of escrowed proceeds |
6,716 |
(4,000) |
|||
Exercises of stock options |
820 |
— |
|||
Payments of financing costs |
(2,947) |
(4,529) |
|||
Dividends and distributions: |
|||||
Common shares |
(10,642) |
— |
|||
Redeemable noncontrolling interests – operating partnership |
(4,589) |
— |
|||
Net cash provided by financing activities |
293,034 |
27,648 |
|||
Net increase (decrease) in cash and cash equivalents |
266,752 |
(32,265) |
|||
Cash and cash equivalents, beginning |
38,279 |
53,512 |
|||
Cash and cash equivalents, ending |
$ 305,031 |
$ 21,247 |
|||
Supplemental information: |
|||||
Cash paid for interest, net of amounts capitalized |
$ 17,002 |
$ 17,470 |
|||
Deferred financing costs capitalized for real estate under development |
$ 947 |
$ 1,270 |
|||
Construction costs payable capitalized for real estate under development |
$ 40,348 |
$ 11,376 |
|||
Redemption of OP units for common shares |
$ 62,900 |
$ 88,800 |
|||
Adjustments to redeemable non-controlling interests |
$ 168,764 |
$ (3,752) |
|||
DUPONT FABROS TECHNOLOGY, INC. Operating Properties As of September 30, 2010 |
|||||||||
Property |
Property Location |
Year Built/ |
Gross |
Raised |
Critical |
% |
% |
||
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 Phase I |
Ashburn, VA |
2009 |
180,000 |
88,000 |
18.2 |
100% |
100% |
||
CH1 Phase I |
Elk Grove Village, IL |
2008 |
285,000 |
122,000 |
18.2 |
100% |
76% |
||
VA3 |
Reston, VA |
2003 |
256,000 |
147,000 |
13.0 |
100% |
100% |
||
VA4 |
Bristow, VA |
2005 |
230,000 |
90,000 |
9.6 |
100% |
100% |
||
Total Operating Properties |
1,532,000 |
752,000 |
119.7 |
||||||
(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). ACC3’s critical load was increased from 13.0 MW to 13.9 MW during the third quarter of 2010 via a retrofitting project. |
|
(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 and commencing as of September 30, 2010 (including the remaining 24% of CH1 Phase I) represent $159 million of base rent on a straight-line basis and $138 million on a cash basis over the next twelve months. This excludes contractual management fees and approximately $2 million net amortization increase in revenue of above and below market leases. |
|
DUPONT FABROS TECHNOLOGY, INC. Lease Expirations As of September 30, 2010 |
|||||||
The following table sets forth a summary schedule of lease expirations of the operating properties for each of the ten calendar years beginning with 2010. The information set forth in the table assumes that tenants exercise no renewal options and considers early tenant termination options. |
|||||||
Year of Lease Expiration |
Number |
Raised |
% of Leased |
Total kW |
% of |
% of |
|
2010 |
— |
— |
— |
— |
— |
— |
|
2011 |
1 |
5 |
0.7% |
1,138 |
1.0% |
1.0% |
|
2012 |
2 |
82 |
10.9% |
7,340 |
6.1% |
5.6% |
|
2013 |
3 |
45 |
6.0% |
4,630 |
3.9% |
2.8% |
|
2014 |
7 |
50 |
6.6% |
7,887 |
6.6% |
7.0% |
|
2015 |
5 |
88 |
11.7% |
15,575 |
13.0% |
11.9% |
|
2016 |
4 |
72 |
9.6% |
10,423 |
8.7% |
8.9% |
|
2017 |
6 |
80 |
10.6% |
13,388 |
11.2% |
11.6% |
|
2018 |
4 |
75 |
10.0% |
15,309 |
12.8% |
13.4% |
|
2019 |
9 |
119 |
15.9% |
21,500 |
17.9% |
16.9% |
|
After 2019 |
9 |
136 |
18.0% |
22,510 |
18.8% |
20.9% |
|
Total |
50 |
752 |
100% |
119,700 |
100% |
100% |
|
(1) |
The operating properties have a total of 26 tenants with 50 different lease expiration dates. The top three tenants represented 59% of annualized base rent as of September 30, 2010. |
|
(2) |
Raised square footage is that portion of gross building area where the tenants locate their computer servers. The Company considers raised square footage to be the net rentable square footage in each of its facilities. |
|
(3) |
One megawatt is equal to 1,000 kW. |
|
DUPONT FABROS TECHNOLOGY, INC. Development Projects As of September 30, 2010 ($ in thousands) |
||||||||
Property |
Property |
Gross |
Raised |
Critical |
Estimated |
Construction |
Percentage |
|
Current Development Projects |
||||||||
ACC5 Phase II |
Ashburn, VA (6)(7) |
180,000 |
88,000 |
18.2 |
$ 144,000 - $ 146,000 |
$ 137,085 |
88% |
|
NJ1 Phase I |
Piscataway, NJ (6)(7) |
180,000 |
88,000 |
18.2 |
200,000 - 202,000 |
190,149 |
6% |
|
SC1 Phase I |
Santa Clara, CA (8) |
180,000 |
88,000 |
18.2 |
230,000 - 260,000 |
80,601 |
0% |
|
ACC6 Phase I |
Ashburn, VA (8) |
131,000 |
66,000 |
13.0 |
110,000 - 130,000 |
16,834 |
0% |
|
671,000 |
330,000 |
67.6 |
$ 684,000 - $ 738,000 |
424,669 |
||||
Future Development Projects/Phases |
||||||||
CH1 Phase II |
Elk Grove Village, IL |
200,000 |
90,000 |
18.2 |
$ 17,564 |
17,564 |
||
NJ1 Phase II |
Piscataway, NJ |
180,000 |
88,000 |
18.2 |
44,000 - 46,000 |
38,086 |
||
SC1 Phase II |
Santa Clara, CA |
180,000 |
88,000 |
18.2 |
50,000 - 60,000 |
33,262 |
||
ACC6 Phase II |
Ashburn, VA |
131,000 |
66,000 |
13.0 |
25,000 - 30,000 |
10,104 |
||
691,000 |
332,000 |
67.6 |
$ 136,564 - $ 153,564 |
99,016 |
||||
Land Held for Development |
||||||||
ACC7 |
Ashburn, VA |
100,000 |
50,000 |
10.4 |
— |
3,914 |
||
SC2 Phase I/II |
Santa Clara, CA |
300,000 |
171,000 |
36.4 |
— |
2,251 |
||
400,000 |
221,000 |
46.8 |
6,165 |
|||||
Total |
1,762,000 |
883,000 |
182.0 |
$ 529,850 |
||||
(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, shell, capitalization for construction and development, capitalized interest and capitalized operating carrying costs, as applicable, upon completion. Future Phase II development projects include land, underground work and capitalized interest through Phase I opening only; CH1 Phase II project costs includes land, shell and capitalized interest only. Development costs beyond the current projects have not yet been estimated for these properties. |
|
(5) |
Amount capitalized as of September 30, 2010. |
|
(6) |
Placed into service on November 1, 2010. |
|
(7) |
As of November 3, 2010, ACC5 Phase II is 75% leased and NJ1 Phase I is 22% leased. |
|
(8) |
Completion expected during the third quarter of 2011. |
|
DUPONT FABROS TECHNOLOGY, INC. Debt Summary as of September 30, 2010 ($ in thousands) |
|||||
Amounts |
% of Total |
Rates (1) |
Maturities |
||
Secured |
$ 347,000 |
38.7 % |
4.6 % |
2.4 |
|
Unsecured |
550,000 |
61.3 % |
8.5 % |
6.5 |
|
Total |
$ 897,000 |
100.0 % |
7.0 % |
4.9 |
|
Fixed Rate Debt: |
|||||
Unsecured Notes |
$ 550,000 |
61.3 % |
8.5 % |
6.5 |
|
Fixed Rate Debt |
550,000 |
61.3 % |
8.5 % |
6.5 |
|
Floating Rate Debt: |
|||||
Unsecured Credit Facility |
— |
— |
— |
2.6 |
|
ACC4 Term Loan (2) |
197,000 |
22.0 % |
3.8 % |
1.1 |
|
ACC5 Term Loan |
150,000 |
16.7 % |
5.8 % |
4.2 |
|
Floating Rate Debt |
347,000 |
38.7 % |
4.6 % |
2.4 |
|
Total |
$ 897,000 |
100.0 % |
7.0 % |
4.9 |
|
Note: |
The Company capitalized interest and deferred financing cost amortization of $9.7 million and $20.4 million during the three and nine months ended September 30, 2010, respectively. |
|
(1) |
Rate as of September 30, 2010. |
|
(2) |
The ACC4 Term Loan was paid off in full on October 25, 2010. |
|
Debt Maturity as of September 30, 2010 ($ in thousands) |
||||||
Year |
Fixed Rate |
Floating Rate |
Total |
% of Total |
Rates (4) |
|
2010 |
$ — |
$ 500 (2) |
$ 500 |
0.1 % |
3.8 % |
|
2011 |
— |
201,700 (2)(3) |
201,700 |
22.5 % |
3.8 % |
|
2012 |
— |
5,200 (3) |
5,200 |
0.6 % |
5.8 % |
|
2013 |
— |
5,200 (3) |
5,200 |
0.6 % |
5.8 % |
|
2014 |
— |
134,400 (3) |
134,400 |
15.0 % |
5.8 % |
|
2015 |
125,000 (1) |
— |
125,000 |
13.9 % |
8.5 % |
|
2016 |
125,000 (1) |
— |
125,000 |
13.9 % |
8.5 % |
|
2017 |
300,000 (1) |
— |
300,000 |
33.4 % |
8.5 % |
|
Total |
$ 550,000 |
$ 347,000 |
$ 897,000 |
100 % |
7.0 % |
|
(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 ACC4 Term Loan was paid off in full on October 25, 2010. |
|
(3) |
The ACC5 Term Loan matures on December 2, 2014 with no extension option. Scheduled principal amortization payments of $1.3 million per quarter start in the third quarter of 2011 or upon economic stabilization, whichever is earlier. The Company currently anticipates that principal payments will be required to be made beginning in the first quarter of 2011. |
|
(4) |
Rate as of September 30, 2010. |
|
DUPONT FABROS TECHNOLOGY, INC. Selected Unsecured Debt Metrics |
|||
9/30/10 |
6/30/10 |
||
Interest Coverage ratio (not less than 2.0) |
2.2 |
2.2 |
|
Total Debt to Gross Asset Value (not to exceed 60%) |
35.4% |
36.2% |
|
Secured Debt to Total Assets (not to exceed 40%) |
13.7% |
14.0% |
|
Total Unsecured Assets to Unsecured Debt (not less than 150%) |
198.2% |
193.3% |
|
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 September 30, 2010 (in thousands except per share data) |
|||||
Mortgage notes payable |
$ 347,000 |
||||
Unsecured Notes |
550,000 |
||||
Total Debt |
897,000 |
30.4 % |
|||
Common Shares |
73 % |
59,618 |
|||
Operating Partnership ("OP") Units |
27 % |
22,151 |
|||
Total Shares and Units |
100 % |
81,769 |
|||
Common Share Price at September 30, 2010 |
$ 25.15 |
||||
Total Equity |
2,056,490 |
69.6 % |
|||
Total Market Capitalization |
$ 2,953,490 |
100.0 % |
|||
DUPONT FABROS TECHNOLOGY, INC. Common Share and OP Unit Weighted Average Amounts Outstanding |
|||||
Q3 2010 |
Q3 2009 |
YTD Q3 2010 |
YTD Q3 2009 |
||
Weighted Average Amounts Outstanding for EPS Purposes: |
|||||
Common Shares – basic |
58,739,792 |
41,041,140 |
50,692,936 |
39,407,194 |
|
Shares issued from assumed conversion of: |
|||||
- Restricted Shares |
417,019 |
365,076 |
406,438 |
203,154 |
|
- Stock options |
914,056 |
586,296 |
901,449 |
308,092 |
|
Total Common Shares - diluted |
60,070,867 |
41,992,512 |
52,000,823 |
39,918,440 |
|
Weighted Average Amounts Outstanding for FFO and AFFO Purposes: |
|||||
Common Shares – basic |
58,739,792 |
41,041,140 |
50,692,936 |
39,407,194 |
|
OP Units – basic |
22,332,428 |
25,638,523 |
23,300,095 |
27,236,277 |
|
Total Common Shares and OP Units |
81,072,220 |
66,679,663 |
73,993,031 |
66,643,471 |
|
Shares and OP Units issued from |
|||||
- Restricted Shares |
417,019 |
365,076 |
406,438 |
203,154 |
|
- Stock options |
914,056 |
586,296 |
901,449 |
308,092 |
|
Total Common Shares and Units - diluted |
82,403,295 |
67,631,035 |
75,300,918 |
67,154,717 |
|
Period Ending Amounts Outstanding: |
|||||
Common Shares |
59,618,316 |
||||
OP Units |
22,150,976 |
||||
Total Common Shares and Units |
81,769,292 |
||||
DUPONT FABROS TECHNOLOGY, INC. The following tables are presented pro forma for the $185.0 million perpetual preferred stock offering and related pay off in full of the ACC4 secured term loan in October 2010. Interest rates are as of September 30, 2010. Pro Forma Debt Summary as of September 30, 2010 ($ in thousands) |
|||||
Amounts |
% of Total |
Rates |
Maturities |
||
Secured |
$ 150,000 |
21.4% |
5.8% |
4.2 |
|
Unsecured |
550,000 |
78.6% |
8.5% |
6.5 |
|
Total |
$ 700,000 |
100.0% |
7.9% |
6.0 |
|
Fixed Rate Debt: |
|||||
Unsecured Notes |
$ 550,000 |
78.6% |
8.5% |
6.5 |
|
Fixed Rate Debt |
550,000 |
78.6% |
8.5% |
6.5 |
|
Floating Rate Debt: |
|||||
Unsecured Credit Facility |
— |
— |
— |
2.6 |
|
ACC5 Term Loan |
150,000 |
21.4% |
5.8% |
4.2 |
|
Floating Rate Debt |
150,000 |
21.4% |
5.8% |
4.2 |
|
Total |
$ 700,000 |
100.0% |
7.9% |
6.0 |
|
Pro Forma Debt Maturity as of September 30, 2010 ($ in thousands) |
|||||||||
Year |
Fixed Rate |
Floating Rate |
Total |
% of Total |
Rates |
||||
2010 |
$ — |
$ — |
$ — |
— |
— |
||||
2011 |
— |
5,200 |
5,200 |
0.7 % |
5.8 % |
||||
2012 |
— |
5,200 |
5,200 |
0.7 % |
5.8 % |
||||
2013 |
— |
5,200 |
5,200 |
0.7 % |
5.8 % |
||||
2014 |
— |
134,400 |
134,400 |
19.2 % |
5.8 % |
||||
2015 |
125,000 |
— |
125,000 |
17.9 % |
8.5 % |
||||
2016 |
125,000 |
— |
125,000 |
17.9 % |
8.5 % |
||||
2017 |
300,000 |
— |
300,000 |
42.9 % |
8.5 % |
||||
Total |
$ 550,000 |
$ 150,000 |
$ 700,000 |
100 % |
7.9 % |
||||
Pro Forma Capital Structure as of September 30, 2010 ($ in thousands) |
|||||
Mortgage notes payable |
$ 150,000 |
||||
Unsecured Notes |
550,000 |
||||
Total Debt |
700,000 |
23.8 % |
|||
Common Stock and OP Units |
$ 2,056,490 |
||||
Series A Preferred Stock |
185,000 |
||||
Total Equity |
2,241,490 |
76.2 % |
|||
Total Market Capitalization |
$ 2,941,490 |
100.00 % |
|||
DUPONT FABROS TECHNOLOGY, INC. 2010 Guidance The earnings guidance/projections provided below are based on current expectations and are forward-looking. |
|||
Expected Q4 2010 |
Expected 2010 |
||
Earnings per share and unit – diluted |
$0.09 to $0.12 |
$0.49 to $0.52 |
|
Depreciation and amortization, net |
0.21 to 0.22 |
0.81 to 0.82 |
|
FFO per share – diluted (2) |
$0.30 to $0.34 |
$1.30 to $1.34 |
|
Note: The Q4 and 2010 earnings guidance projection includes a one-time $0.03 per share loss on early extinguishment of debt related to the pay off in full of the ACC4 Term Loan on October 25, 2010. |
|
2010 Capital Assumptions |
||
Weighted average debt outstanding |
$861.0 million |
|
Weighted average interest rate |
7.2% |
|
Total interest costs |
$62.0 million |
|
Amortization of deferred financing costs |
$5.2 million |
|
Loss on early extinguishment of debt (one-time) |
$2.5 million |
|
Interest expense capitalized |
$(24.8) to $(25.8) million |
|
Deferred financing costs amortization capitalized |
$(1.1) to $(1.3) million |
|
Total interest expense after capitalization |
$42.6 to $43.8 million |
|
Note: The Q4 and 2010 fiscal year guidance includes issuance of $185.0 million of perpetual preferred stock in October 2010 and the related pay off in full of the ACC4 Term Loan on October 25, 2010. Guidance assumes no new debt or equity issued after the date of this release. |
||
2010 Other Guidance Assumptions |
||
Total revenues |
$245 to $250 million (1) |
|
Other revenues (included in total revenues) |
$8 to $10 million |
|
Straight-line revenues (included in total revenues) |
$34 to $36 million |
|
Below market lease amortization, net of above market lease amortization |
$3 million |
|
General and administrative expense |
$14 to $15 million |
|
Investments in real estate - development |
$270 to $290 million |
|
Improvements to real estate excluding development |
$3 to $5 million |
|
Estimated required REIT dividend distribution payout |
$0.44 per share |
|
Weighted average common shares and OP units - diluted |
77.3 million |
|
(1) |
The midpoint of revenue guidance decreased from the Q2 earnings release due to actual and estimated energy cost savings from the company's participation in load management and rate setting programs. These energy savings, while a reduction of revenue to the company, represent a direct reduction of property operating costs as well, due to the triple net lease structure that we have in place with our tenants. |
|
(2) |
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 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 year over year, 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 will 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 our liquidity, nor is it indicative of funds available to fund the Company's cash needs, including its ability to pay dividends or make distributions. |
||
SOURCE DuPont Fabros Technology, Inc.
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