Revenues up 25.3% Quarter Over Quarter and 21.1% Year Over Year
ACC5 100% Leased
Provides Outlook for 2011 Performance
WASHINGTON, Feb. 8, 2011 /PRNewswire/ — DuPont Fabros Technology, Inc. (NYSE: DFT) today reported results for the quarter and year ended December 31, 2010. All per share results are reported on a fully diluted basis.
Highlights
- As of today, the company’s stabilized operating portfolio is 100% leased, NJ1 Phase I is 22% leased and CH1 Phase II is 29% pre-leased.
- In the 2011 first quarter to date, the company:
- Signed four leases totaling 9.75 megawatts (“MW”). This includes the 100% lease-up of ACC5 and 29% pre-lease of CH1 Phase II.
- Amended its line of credit to eliminate the 1% LIBOR floor and lowered the interest rate. As of today, there are no borrowings under this facility.
- Fourth quarter 2010 activity as previously reported in the third quarter earnings release:
- Signed two NJ1 leases totaling 2.84 MW, or 16% of the building.
- Issued 7.4 million shares of 7.875% Series A perpetual preferred stock, 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 of the company, said, “Over the course of the year, we continued to strengthen our balance sheet. During the fourth quarter, we opened two new developments, one of which is now 100% leased, issued our first series of perpetual preferred stock and paid off a secured loan that had a 2011 maturity date. Our principal focus for 2011 is to maximize portfolio leasing, complete two additional fully funded developments in the third quarter of 2011, and fund and start our Chicago phase II development for delivery in 2012. We remain optimistic regarding the demand of our wholesale locations.”
Fourth Quarter 2010 Results
For the quarter ended December 31, 2010, the company reported earnings of $0.10 per share compared to a loss of $0.16 per share for the fourth quarter of 2009. The difference is primarily due to the fourth quarter 2009 loss on the discontinuance of a cash flow hedge of $13.7 million, or $0.20 per share.
Revenues increased 25.3%, or $13.3 million, to $66.0 million for the fourth quarter of 2010 over the fourth quarter of 2009. This revenue increase includes a reduction of $1.8 million, or 2.7%, due to energy cost savings from the company’s continued participation in load management and rate setting programs. These energy savings, while a reduction of revenue, also represent a direct reduction of property operating costs due to the triple net lease structure in place with our tenants and, therefore, have no negative impact to earnings or Funds from Operations (“FFO”).
FFO for the quarter ended December 31, 2010 was $0.33 per share compared to $0.05 per share for the quarter ended December 31, 2009. Excluding the one-time loss on discontinuance of the cash flow hedge noted above, FFO was $0.25 per share for the fourth quarter of 2009. The increase is primarily due to higher operating income due to the lease up of certain operating properties.
Year Ended December 31, 2010 Results
For the year ended December 31, 2010, the company reported earnings of $0.51 per share compared to earnings of $0.04 per share for 2009. Revenues increased 21.1%, or $42.3 million, to $242.5 million for the year ended December 31, 2010 over the corresponding period in 2009. This revenue increase was offset by a reduction of $5.1 million, or 2.1%, due to 2010 energy cost savings from the company’s participation in load management and rate setting programs. FFO for the year ended December 31, 2010 was $1.33 per share compared to $0.88 per share for 2009. FFO for 2009 was negatively impacted by the aforementioned $0.20 per share loss on discontinuance of a cash flow hedge.
Portfolio Update
During the fourth quarter of 2010, the company:
- Signed 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 commenced in January 2011 and the other is scheduled to commence in April 2011.
- Commenced six leases totaling 19.12 MW of critical load and 99,500 raised square feet. Four of the leases totaling 13.65 MW and 65,900 raised square feet were at ACC5, one lease totaling 4.33 MW and 28,200 raised square feet was at CH1 and one lease totaling 1.14 MW and 5,400 raised square feet was at NJ1.
For the twelve months ended December 31, 2010, the company:
- Signed fourteen leases representing 23.18 MW of critical load, 128,869 raised square feet and renewed two leases representing 2.11 MW and 23,480 raised square feet. The average lease term at lease signing was 8.8 years representing approximately $480 million of contract value to the company.
- Commenced fifteen leases totaling 30.39 MW of critical load and 163,686 raised square feet.
In 2011 to date, the company signed four new leases or pre-leases at ACC5 and CH1 Phase II totaling 9.75 MW of critical load and 53,500 raised square feet with an average lease term of 5.8 years. Leases and pre-leases are scheduled to commence in the first quarter of 2011 and in 2012, subject to funding and completion of CH1 Phase II.
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 fully funded, 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 February 2011, the company amended its $100 million line of credit and lowered its interest rate on this facility by eliminating the LIBOR floor of 1% and instituting a tiered pricing grid based upon leverage that ranges from LIBOR plus 3.25% to LIBOR plus 4.25%. As of today, there are no borrowings under this facility.
2011 Guidance
The company has established an FFO guidance range of $0.36 to $0.39 per share for the first quarter of 2011. The primary differences between the company’s fourth quarter 2010 FFO and the midpoint of the first quarter 2011 FFO guidance is the write-off of unamortized deferred financing costs of $0.03 per share in the fourth quarter of 2010 and $0.02 per share of increased operating income.
The company has established an FFO guidance range of $1.50 to $1.70 per share for the full year 2011. The assumptions underlying this guidance are listed on page 15 of this release. The primary differences between the company’s 2010 FFO and the midpoint of the 2011 FFO guidance are:
- Increase of $0.47 per share from higher operating income, net of depreciation and amortization.
- Higher financing costs expensed of $0.15 per share.
- Dilution of $0.08 per share for the additional shares issued in 2010 and other items.
- Write-off of $0.03 per share for the unamortized deferred financing costs in 2010.
Fourth Quarter 2010 Conference Call and Webcast Information
The company will host a conference call to discuss these results tomorrow, Wednesday, February 9, 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 1-888-378-4350 (domestic) or 1-719-457-2603 (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 2414285. The webcast will be archived on the company’s website for one year at www.dft.com on the Presentations & Webcasts page.
First Quarter 2011 Conference Call
DuPont Fabros Technology, Inc. expects to announce first quarter 2011 results on Tuesday, May 3, 2011 and to host a conference call to discuss those results at 10:00 a.m. ET on Wednesday, May 4, 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 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, including, but not limited to, development of CH1 Phase II, 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, 2009 and its Forms 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 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 (in thousands except share and per share data) | |||||
| Quarter ended December 31, | Year ended December 31, | ||||
| 2010 | 2009 | 2010 | 2009 | ||
| Revenues: | |||||
| Base rent | $ 42,899 | $ 32,936 | $ 154,258 | $ 116,829 | |
| Recoveries from tenants | 20,135 | 17,954 | 78,447 | 69,014 | |
| Other revenues | 2,977 | 1,786 | 9,836 | 14,439 | |
| Total revenues | 66,011 | 52,676 | 242,541 | 200,282 | |
| Expenses: | |||||
| Property operating costs | 17,128 | 16,412 | 67,033 | 62,911 | |
| Real estate taxes and insurance | 1,342 | 1,657 | 5,281 | 5,291 | |
| Depreciation and amortization | 17,156 | 15,150 | 62,483 | 56,701 | |
| General and administrative | 3,607 | 3,216 | 14,743 | 13,358 | |
| Other expenses | 2,163 | 1,310 | 7,124 | 11,485 | |
| Total expenses | 41,396 | 37,745 | 156,664 | 149,746 | |
| Operating income | 24,615 | 14,931 | 85,877 | 50,536 | |
| Interest income | 386 | 31 | 1,074 | 381 | |
| Interest: | |||||
| Expense incurred | (8,706) | (8,361) | (36,746) | (25,462) | |
| Amortization of deferred financing costs | (3,292) | (4,321) | (6,497) | (8,854) | |
| Loss on discontinuance of cash flow hedge | – | (13,715) | – | (13,715) | |
| Net income (loss) | 13,003 | (11,435) | 43,708 | 2,886 | |
| Net (income) loss attributable to redeemable noncontrolling interests – operating partnership | (3,592) | 4,620 | (13,261) | (1,133) | |
| Net income (loss) attributable to controlling interests | 9,411 | (6,815) | 30,447 | 1,753 | |
| Preferred stock dividends | (3,157) | – | (3,157) | – | |
| Net income (loss) attributable to common shares | $ 6,254 | $ (6,815) | $ 27,290 | $ 1,753 | |
| Earnings per share – basic: | |||||
| Net income (loss) attributable to common shares | $ 0.10 | $ (0.16) | $ 0.51 | $ 0.04 | |
| Weighted average common shares outstanding | 59,055,307 | 41,514,002 | 52,800,712 | 39,938,225 | |
| Earnings per share – diluted: | |||||
| Net income (loss) attributable to common shares | $ 0.10 | $ (0.16) | $ 0.51 | $ 0.04 | |
| Weighted average common shares outstanding | 60,310,402 | 41,514,002 | 54,092,703 | 40,636,035 | |
| Dividends declared per common share | $ 0.12 | $ 0.08 | $ 0.44 | $ 0.08 | |
| DUPONT FABROS TECHNOLOGY, INC. RECONCILIATIONS OF NET INCOME TO FFO AND AFFO (1) (in thousands except share and per share data) | |||||||||
| Quarter ended December 31, | Year ended December 31, | ||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||
| Net income (loss) | $ 13,003 | $ (11,435) | $ 43,708 | $ 2,886 | |||||
| Depreciation and amortization | 17,156 | 15,150 | 62,483 | 56,701 | |||||
| Less: Non real estate depreciation and amortization | (190) | (141) | (642) | (496) | |||||
| FFO | 29,969 | 3,574 | 105,549 | 59,091 | |||||
| Preferred stock dividends | (3,157) | – | (3,157) | – | |||||
| FFO attributable to common shares and OP units | $ 26,812 | $ 3,574 | $ 102,392 | $ 59,091 | |||||
| Straight-line revenues | (9,514) | (6,808) | (35,403) | (18,312) | |||||
| Amortization of lease contracts above and below market value | (535) | (1,648) | (2,505) | (6,881) | |||||
| Loss on discontinuance of cash flow hedge | – | 13,715 | – | 13,715 | |||||
| Loss on early extinguishment of debt | 2,547 | 2,825 | 2,547 | 3,872 | |||||
| Compensation paid with Company common shares | 1,005 | 513 | 3,803 | 1,944 | |||||
| AFFO | $ 20,315 | $ 12,171 | $ 70,834 | $ 53,429 | |||||
| FFO attributable to common shares and OP units per share – diluted | $ 0.33 | $ 0.05 | $ 1.33 | $ 0.88 | |||||
| AFFO per share – diluted | $ 0.25 | $ 0.18 | $ 0.92 | $ 0.79 | |||||
| Weighted average common shares and OP units outstanding – diluted | 82,392,751 | 67,937,872 | 77,085,859 | 67,350,581 | |||||
| (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. FFO 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 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 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) | |||
| December 31, 2010 | December 31, 2009 | ||
| ASSETS | |||
| Income producing property: | |||
| Land | $ 50,531 | $ 44,001 | |
| Buildings and improvements | 1,779,955 | 1,438,598 | |
| 1,830,486 | 1,482,599 | ||
| Less: accumulated depreciation | (172,537) | (115,225) | |
| Net income producing property | 1,657,949 | 1,367,374 | |
| Construction in progress and land held for development | 336,686 | 330,170 | |
| Net real estate | 1,994,635 | 1,697,544 | |
| Cash and cash equivalents | 226,950 | 38,279 | |
| Marketable securities held to maturity | – | 138,978 | |
| Restricted cash | 1,600 | 10,222 | |
| Rents and other receivables | 3,227 | 2,550 | |
| Deferred rent | 92,767 | 57,364 | |
| Lease contracts above market value, net | 13,484 | 16,349 | |
| Deferred costs, net | 45,543 | 52,208 | |
| Prepaid expenses and other assets | 19,245 | 9,551 | |
| Total assets | $ 2,397,451 | $ 2,023,045 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||
| Liabilities: | |||
| Mortgage notes payable | $ 150,000 | $ 348,500 | |
| Unsecured notes payable | 550,000 | 550,000 | |
| Accounts payable and accrued liabilities | 21,409 | 16,301 | |
| Construction costs payable | 67,262 | 6,229 | |
| Accrued interest payable | 2,766 | 3,510 | |
| Dividend and distribution payable | 12,970 | – | |
| Lease contracts below market value, net | 23,319 | 28,689 | |
| Prepaid rents and other liabilities | 22,644 | 15,564 | |
| Total liabilities | 850,370 | 968,793 | |
| Redeemable noncontrolling interests-operating partnership | 466,823 | 448,811 | |
| Commitments and contingencies | – | – | |
| Stockholders’ equity: | |||
| Preferred stock, par value $.001, 50,000,000 shares authorized, 7,400,000 issued and outstanding at December 31, 2010 and no shares issued or outstanding at December 31, 2009 | 185,000 | – | |
| Common stock, par value $.001, 250,000,000 shares authorized, 59,827,005 shares issued and outstanding at December 31, 2010 and 42,373,340 shares issued and outstanding at December 31, 2009 | 60 | 42 | |
| Additional paid in capital | 946,379 | 683,870 | |
| Accumulated deficit | (51,181) | (78,471) | |
| Total stockholders’ equity | 1,080,258 | 605,441 | |
| Total liabilities and stockholders’ equity | $ 2,397,451 | $ 2,023,045 | |
| DUPONT FABROS TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | ||||
| Year ended December 31, | ||||
| 2010 | 2009 | |||
| Cash flow from operating activities | ||||
| Net income | $ 43,708 | $ 2,886 | ||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||
| Depreciation and amortization | 62,483 | 56,701 | ||
| Straight line rent | (35,403) | (18,312) | ||
| Loss on discontinuance of cash flow hedge | – | 13,715 | ||
| Amortization of deferred financing costs | 3,950 | 4,982 | ||
| Write-off of deferred financing costs | 2,547 | 3,872 | ||
| Amortization of lease contracts above and below market value | (2,505) | (6,881) | ||
| Compensation paid with Company common shares | 3,803 | 1,944 | ||
| Changes in operating assets and liabilities | ||||
| Restricted cash | (274) | (88) | ||
| Rents and other receivables | (852) | (1,472) | ||
| Deferred costs | (2,563) | (2,866) | ||
| Prepaid expenses and other assets | (7,811) | (1,373) | ||
| Accounts payable and accrued liabilities | 5,083 | 4,824 | ||
| Accrued interest payable | (744) | 1,729 | ||
| Prepaid rents and other liabilities | 5,261 | 6,237 | ||
| Net cash provided by operating activities | 76,683 | 65,898 | ||
| Cash flow from investing activities | ||||
| Investments in real estate – development | (265,217) | (113,918) | ||
| Marketable securities held to maturity: | ||||
| Purchase | (60,000) | (138,978) | ||
| Redemption | 198,978 | – | ||
| Interest capitalized for real estate under development | (25,177) | (5,691) | ||
| Improvements to real estate | (2,985) | (3,384) | ||
| Additions to non-real estate property | (630) | (404) | ||
| Net cash used in investing activities | (155,031) | (262,375) | ||
| Cash flow from financing activities | ||||
| Issuance of common stock, net of offering costs | 305,176 | – | ||
| Issuance of preferred stock, net of offering costs | 178,620 | – | ||
| Line of credit: | ||||
| Repayments | – | (233,424) | ||
| Unsecured notes payable: | ||||
| Proceeds | – | 550,000 | ||
| Mortgage notes payable: | ||||
| Proceeds | – | 331,726 | ||
| Lump sum payoffs | (196,500) | (365,121) | ||
| Repayments | (2,000) | (51,500) | ||
| Return (payment) of escrowed proceeds | 8,896 | (10,000) | ||
| Exercises of stock options | 820 | – | ||
| Payments of financing costs | (2,950) | (21,310) | ||
| Payment for termination of cash flow hedge | – | (13,715) | ||
| Dividends and distributions: | ||||
| Common shares | (17,796) | (3,389) | ||
| Redeemable noncontrolling interests – operating partnership | (7,247) | (2,023) | ||
| Net cash provided by financing activities | 267,019 | 181,244 | ||
| Net increase (decrease) in cash and cash equivalents | 188,671 | (15,233) | ||
| Cash and cash equivalents, beginning | 38,279 | 53,512 | ||
| Cash and cash equivalents, ending | $ 226,950 | $ 38,279 | ||
| Supplemental information: | ||||
| Cash paid for interest, net of amounts capitalized | $ 37,490 | $ 23,732 | ||
| Deferred financing costs capitalized for real estate under development | $ 1,198 | $ 1,330 | ||
| Construction costs payable capitalized for real estate under development | $ 67,262 | $ 6,229 | ||
| Redemption of OP units for common shares | $ 68,000 | $ 96,700 | ||
| Adjustments to redeemable non-controlling interests | $ 82,632 | $ 58,105 | ||
| DUPONT FABROS TECHNOLOGY, INC. Operating Properties As of December 31, 2010 | |||||||||
| 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 (6) | Ashburn, VA | 2009-2010 | 360,000 | 176,000 | 36.4 | 88 % | 88% | ||
| CH1 Phase I | Elk Grove Village, IL | 2008 | 285,000 | 122,000 | 18.2 | 100 % | 100% | ||
| 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 % | 6% | ||
| 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 December 31, 2010 (including the 16% of NJ1 Phase I leased but not commenced) represent $185 million of base rent on a straight-line basis and $154 million on a cash basis over the next twelve months. This excludes contractual management fees and approximately $2 million of revenues from the amortization of above and below market leases. | |
| (6) | As of February 8, 2011, ACC5 is 100% leased and 100% commenced, and NJ1 Phase I is 22% leased and 9% commenced. | |
| DUPONT FABROS TECHNOLOGY, INC. Lease Expirations As of December 31, 2010 | |||||||
| Year of Lease Expiration | Number of Leases Expiring (1) | Raised Square Feet Expiring (in thousands)(2) | % of Leased Raised Square Feet | Total kW of Expiring Leases (3) | % of Leased kW | % of Annualized Base Rent | |
| 2011 | 1 | 5 | 0.6 % | 1,138 | 0.8 % | 0.9 % | |
| 2012 | 2 | 82 | 9.8 % | 7,340 | 5.3 % | 4.8 % | |
| 2013 | 3 | 45 | 5.4 % | 4,630 | 3.4 % | 2.4 % | |
| 2014 | 7 | 50 | 5.9 % | 7,887 | 5.7 % | 6.0 % | |
| 2015 | 7 | 99 | 11.8 % | 17,850 | 13.0 % | 12.0 % | |
| 2016 | 4 | 72 | 8.6 % | 10,423 | 7.6 % | 7.6 % | |
| 2017 | 6 | 80 | 9.6 % | 13,388 | 9.8 % | 9.9 % | |
| 2018 | 4 | 75 | 9.0 % | 15,309 | 11.2 % | 11.4 % | |
| 2019 | 9 | 119 | 14.3 % | 21,500 | 15.7 % | 14.5 % | |
| 2020 | 6 | 65 | 7.7 % | 11,862 | 8.6 % | 9.5 % | |
| After 2020 | 9 | 145 | 17.3 % | 26,003 | 18.9 % | 21.0 % | |
| Total | 58 | 837 | 100 % | 137,330 | 100 % | 100 % | |
| (1) | The operating properties have a total of 27 tenants with 58 different lease expiration dates. The top three tenants represented 60% of annualized base rent as of December 31, 2010. | |
| (2) | Raised square footage is that portion of gross building area where the tenants locate their computer servers. The Company considers raised square footage to be the net rentable square footage in each of its facilities. | |
| (3) | One MW is equal to 1,000 kW. | |
| DUPONT FABROS TECHNOLOGY, INC. Development Projects As of December 31, 2010 ($ 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 | Santa Clara, CA (6) | 180,000 | 88,000 | 18.2 | $ 230,000 – 260,000 | $ 146,787 | 0% | ||
| ACC6 Phase I | Ashburn, VA (6) | 131,000 | 66,000 | 13.0 | 110,000 – 130,000 | 60,167 | 0% | ||
| 311,000 | 154,000 | 31.2 | $ 340,000 – 390,000 | 206,954 | |||||
| Future Development Projects/Phases | |||||||||
| CH1 Phase II | Elk Grove Village, IL (7) | 200,000 | 109,000 | 18.2 | $ 17,715 | 17,715 | |||
| NJ1 Phase II | Piscataway, NJ | 180,000 | 88,000 | 18.2 | 44,000 – 46,000 | 39,275 | |||
| SC1 Phase II | Santa Clara, CA | 180,000 | 88,000 | 18.2 | 50,000 – 60,000 | 46,225 | |||
| ACC6 Phase II | Ashburn, VA | 131,000 | 66,000 | 13.0 | 25,000 – 30,000 | 20,053 | |||
| 691,000 | 351,000 | 67.6 | $ 136,715 – 153,715 | 123,268 | |||||
| Land Held for Development | |||||||||
| ACC7 | Ashburn, VA | 100,000 | 50,000 | 10.4 | – | 4,242 | |||
| SC2 Phase I/II | Santa Clara, CA | 300,000 | 171,000 | 36.4 | – | 2,222 | |||
| 400,000 | 221,000 | 46.8 | 6,464 | ||||||
| Total | 1,402,000 | 726,000 | 145.6 | $ 336,686 | |||||
| (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; CH1 Phase II project costs includes land, shell and capitalized interest only. | |
| (5) | Amount capitalized as of December 31, 2010. | |
| (6) | Completion expected during the third quarter of 2011. | |
| (7) | As of February 8, 2011, CH1 Phase II is 29% pre-leased. | |
| DUPONT FABROS TECHNOLOGY, INC. Debt Summary as of December 31, 2010 ($ in thousands) | ||||||
| Amounts | % of Total | Rates (1) | Maturities (years) | |||
| Secured | $ 150,000 | 21.4 % | 5.8 % | 3.9 | ||
| Unsecured | 550,000 | 78.6 % | 8.5 % | 6.3 | ||
| Total | $ 700,000 | 100.0 % | 7.9 % | 5.8 | ||
| Fixed Rate Debt: | ||||||
| Unsecured Notes | $ 550,000 | 78.6 % | 8.5 % | 6.3 | ||
| Fixed Rate Debt | 550,000 | 78.6 % | 8.5 % | 6.3 | ||
| Floating Rate Debt: | ||||||
| Unsecured Credit Facility | – | – | – | 2.3 | ||
| ACC5 Term Loan | 150,000 | 21.4 % | 5.8 % | 3.9 | ||
| Floating Rate Debt | 150,000 | 21.4 % | 5.8 % | 3.9 | ||
| Total | $ 700,000 | 100.0 % | 7.9 % | 5.8 | ||
| Note: | The Company capitalized interest and deferred financing cost amortization of $6.0 million and $26.4 million during the three and twelve months ended December 31, 2010, respectively. | |
| (1) | Rate as of December 31, 2010. | |
| Debt Maturity as of December 31, 2010 ($ in thousands) | |||||||||
| Year | Fixed Rate | Floating Rate | Total | % of Total | Rates (3) | ||||
| 2011 | $ – | $ 5,200 | (2) | $ 5,200 | 0.7 % | 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 | 19.2 % | 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 | 42.9 % | 8.5 % | |||
| Total | $ 550,000 | $ 150,000 | $ 700,000 | 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) | Rate as of December 31, 2010. | |
| DUPONT FABROS TECHNOLOGY, INC. Selected Unsecured Debt Metrics | |||
| 12/31/10 | 9/30/10 | ||
| Interest Coverage ratio (not less than 2.0) | 2.8 | 2.2 | |
| Total Debt to Gross Asset Value (not to exceed 60%) | 27.4% | 35.4% | |
| Secured Debt to Total Assets (not to exceed 40%) | 5.9% | 13.7% | |
| Total Unsecured Assets to Unsecured Debt (not less than 150%) | 308.8% | 198.2% | |
| 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 December 31, 2010 (in thousands except per share data) | |||||||||
| Mortgage Notes Payable | $ 150,000 | ||||||||
| Unsecured Notes | 550,000 | ||||||||
| Total Debt | 700,000 | 26.7 % | |||||||
| Common Shares | 73 % | 59,827 | |||||||
| Operating Partnership (“OP”) Units | 27 % | 21,948 | |||||||
| Total Shares and Units | 100 % | 81,775 | |||||||
| Common Share Price at December 31, 2010 | $ 21.27 | ||||||||
| Common Share and OP Unit Capitalization | $ 1,739,354 | ||||||||
| Preferred Stock ($25 per share liquidation preference) | 185,000 | ||||||||
| Total Equity | 1,924,354 | 73.3 % | |||||||
| Total Market Capitalization | $ 2,624,354 | 100.0 % | |||||||
| DUPONT FABROS TECHNOLOGY, INC. Common Share and OP Unit Weighted Average Amounts Outstanding | |||||
| Q4 2010 | Q4 2009 | YTD Q4 2010 | YTD Q4 2009 | ||
| Weighted Average Amounts Outstanding for EPS Purposes: | |||||
| Common Shares – basic | 59,055,307 | 41,514,002 | 52,800,712 | 39,938,225 | |
| Shares issued from assumed conversion of: | |||||
| – Restricted Shares | 418,938 | – | 409,563 | 268,316 | |
| – Stock Options | 836,157 | – | 882,428 | 429,494 | |
| Total Common Shares – diluted | 60,310,402 | 41,514,002 | 54,092,703 | 40,636,035 | |
| Weighted Average Amounts Outstanding for FFO and AFFO Purposes: | |||||
| Common Shares – basic | 59,055,307 | 41,514,002 | 52,800,712 | 39,938,225 | |
| OP Units – basic | 22,082,349 | 25,166,370 | 22,993,156 | 26,714,546 | |
| Total Common Shares and OP Units | 81,137,656 | 66,680,372 | 75,793,868 | 66,652,771 | |
| Shares and OP Units issued from | |||||
| assumed conversion of: | |||||
| – Restricted Shares | 418,938 | 463,802 | 409,563 | 268,316 | |
| – Stock Options | 836,157 | 793,698 | 882,428 | 429,494 | |
| Total Common Shares and Units – diluted | 82,392,751 | 67,937,872 | 77,085,859 | 67,350,581 | |
| Period Ending Amounts Outstanding: | |||||
| Common Shares | 59,827,005 | ||||
| OP Units | 21,947,501 | ||||
| Total Common Shares and Units | 81,774,506 | ||||
| DUPONT FABROS TECHNOLOGY, INC. 2011 Guidance | |||
| Expected Q1 2011 per share | Expected 2011 per share | ||
| Net income per common share and unit – diluted | $0.14 to $0.17 | $0.58 to $0.74 | |
| Depreciation and amortization, net | $0.22 | 0.92 to 0.96 | |
| FFO per share – diluted (1) | $0.36 to $0.39 | $1.50 to $1.70 | |
| Note: 2011 guidance assumes additional financings of $100 million in early 2011 and $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 | $3.6 million | |
| Interest expense capitalized | $(22.9) to $(25.7) million | |
| Deferred financing costs amortization capitalized | $(1.2) to $(1.4) million | |
| Total interest expense after capitalization | $31.5 to $34.5 million | |
| 2011 Other Guidance Assumptions | ||
| Total revenues | $285 to $315 million | |
| Other revenues (included in total revenues) | $8 to $10 million | |
| Straight-line revenues (included in total revenues) | $35 to $45 million | |
| Below market lease amortization, net of above market lease amortization | $2 million | |
| General and administrative expense | $16 to $18 million | |
| Investments in real estate – development | $380 to $400 million | |
| Improvements to real estate excluding development | $4 to $6 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. FFO 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 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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