CyrusOne (CONE) Financial Report Summaries

Risks

• Risks Related to the Proposed Merger
• Risks Related to Our Business and Operations
• Risks Related to the Real Estate Industry
• Risks Related to Our Debt and Capital Structure
• Risks Related to Our Organizational Structure
• Risks Related to Status as a REIT
• Risks Related to Our Common Stock
• Risks Related to the Proposed Merger
• The Merger Transactions may not be completed on the terms or timeline currently contemplated or at all, which could adversely affect our stock price, business, financial condition and results of operations.
• The announcement of the Merger Agreement and pendency of the Merger Transactions could negatively impact our business, financial condition and results of operations.
• Our directors and executive officers have interests in the Merger Transactions that may be different from, or in addition to, the interests of our other stockholders.
• Risks Related to Our Business and Operations
• A significant percentage of our customer leases expire each year or are on a month-to-month basis, and many of our leases contain early termination provisions. If leases with our customers are not renewed on the same or more favorable terms or are terminated early by our customers, our business, financial condition, results of operations, cash flows and ability to pay dividends as well as the market price of our common stock could be substantially harmed.
• Our contracts with our customers may adversely affect our business, financial condition, results of operations, cash flows and ability to pay dividends as well as the market price of our common stock.
• Our customers may choose to develop or relocate into new data centers or expand their own existing data centers, which could result in the loss of one or more key customers or reduce demand for our data centers.
• A decrease in the demand for data center space, or an increase in supply driving down market prices, could adversely affect our business, financial condition, results of operations, cash flows and ability to pay dividends as well as the market price of our common stock.
• We face significant competition and may be unable to lease vacant space, renew existing leases or re-lease space as leases expire, which may adversely affect our business, financial condition, results of operations, cash flows and ability to pay dividends as well as the market price of our common stock.
• We do not own all of the land or buildings in which our data centers are located. Instead, we lease or sublease certain of our data center spaces and the ability to retain these leases or subleases could be a significant risk to our ongoing operations.
• Any failure of our physical infrastructure or services could lead to significant costs and disruptions that could reduce our revenues and harm our brand and reputation.
• Our data center infrastructure may become obsolete, and we may not be able to operate or upgrade our power and cooling systems cost-effectively, or at all.
• We and our partners, contractors and vendors have been and may continue to be vulnerable to security breaches, cyber-attacks or terrorism which have disrupted and could disrupt our operations, harm our brand and reputation and have a material adverse effect on our business, financial condition and results of operations.
• We may be subject to unknown or contingent liabilities related to properties or businesses that we acquire for which we may have limited or no recourse against the sellers.
• Recent turnover, including the search for a permanent President and CEO, or the further loss, of any of our key personnel, including our executive officers or key sales associates, could adversely affect our business, financial condition, results of operations, cash flows and ability to pay dividends as well as the market price of our common stock.
• Any failure of our connectivity solutions could lead to significant costs and disruptions that could reduce our revenue and harm our business reputation and financial results.
• Even if we have additional space available for lease at any one of our data centers, our ability to meet existing customer requirements or lease this space to existing or new customers could be constrained by our ability to provide sufficient electrical power and cooling capacity.
• Any losses to our properties that are not covered by insurance, or that exceed our coverage limits, could adversely affect our business, financial condition, results of operations, cash flows and ability to pay dividends as well as the market price of our common stock.
• We generate a substantial portion of our revenue from a small number of metropolitan markets, which makes us more susceptible to regional economic downturns.
• We are dependent upon third-party suppliers for power and certain other services, and we are vulnerable to service failures of our third-party suppliers and to price increases by such suppliers.
• We depend on third parties to provide network connectivity to the customers in our data centers, and any delays or disruptions in connectivity may adversely affect our business, financial condition, results of operations, cash flows and ability to pay dividends as well as the market price of our common stock.
• The loss of access to key third-party technical service providers and suppliers could adversely affect our current and any future development projects.
• The long sales cycle for data center services may adversely affect our business, financial condition, results of operations, cash flows and ability to pay dividends as well as the market price of our common stock.
• We may be unable to identify and complete acquisitions and successfully operate acquired properties.
• We face risks with our international acquisitions associated with investing in unfamiliar metropolitan areas.
• We have been and may become subject to or involved in litigation, threatened litigation, or investigations which may divert management time and attention, require us to pay damages, penalties and expenses or may restrict the operation of our business or interfere with existing agreements or permits.
• Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers.
• Our properties are not suitable for use other than as data centers, which could make it difficult to sell or reposition them if we are not able to lease available space.
• Declining real estate valuations and impairment charges could adversely affect our earnings and financial condition.
• Risks Related to the Real Estate Industry
• Our performance and value are subject to risks associated with real estate assets and with the real estate industry.
• Illiquidity of real estate investments, particularly our data centers, could significantly impede our ability to respond to adverse changes in the performance of our properties, which could harm our financial condition.
• We could incur significant costs related to environmental matters.
• Risks Related to Our Debt and Capital Structure
• To fund our growth strategy and refinance our indebtedness, we depend on external sources of capital, which may not be available to us on commercially reasonable terms or at all.
• We have significant outstanding indebtedness that involves significant debt service obligations, limits our operational and financial flexibility, exposes us to interest rate fluctuations and exposes us to the risk of default under our debt obligations.
• Failure to hedge effectively against interest rate changes and our increased exposure to foreign currency fluctuations as a result of our foreign currency hedging activities may adversely affect our results of operations.
• Discontinuation, reform or replacement of the London Interbank Offered Rate (“LIBOR”) and other benchmark rates, or uncertainty related to the potential for any of the foregoing, may adversely affect our business.
• The agreements governing our indebtedness place significant operational and financial restrictions on us, reducing our operational flexibility and creating default risks.
• Risks Related to Our General Business
• The novel coronavirus (COVID-19) pandemic and measures to prevent its spread could materially adversely impact our business, financial condition, results of operations, cash flows and ability to pay dividends as well as the market price of our common stock.
• Our international activities are subject to special risks different from those faced by us in the United States, and we may not be able to effectively manage our international business.
• Any failure to comply with anti-corruption laws and regulations could have adverse effects on our business, financial condition, results of operations, cash flows and ability to pay dividends as well as the market price of our common stock.
• The ongoing trade conflict between the United States and the PRC may negatively impact certain of our customers, which in turn could materially and adversely affect our financial condition and results of operations.
• We may incur significant costs complying with the Americans with Disabilities Act, or ADA, and similar laws, which could materially adversely affect our financial condition and operating results.
• We may be adversely affected by regulations or standards related to climate change and other regulations.
• The failure to successfully implement changes to our information technology system could adversely affect our business.
• Violations of our prohibition on harassment, sexual or otherwise, could result in liabilities and/or litigation.
• The expansion of social media platforms presents new risks and challenges.
• Risks Related to Our Organizational Structure
• Our rights and the rights of our stockholders to take action against our directors and officers are limited.
• Our charter and bylaws and the partnership agreement of our operating partnership contain provisions that may delay, defer or prevent an acquisition of our common stock or a change in control.
• Conflicts of interest exist or could arise in the future with our operating partnership or its partners.
• Certain provisions of Maryland law may limit the ability of a third-party to acquire control of us.
• Our bylaws designate the Circuit Court for Baltimore City, Maryland, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to bring a claim in a judicial forum that the stockholders believe is a more favorable judicial forum for disputes with us or our directors, officers or other employees.
• Risks Related to Status as a REIT
• If we fail to remain qualified as a REIT, we will be subject to U.S. federal income tax as a regular corporation and could face a substantial tax liability, which would reduce the amount of cash available for distribution to our stockholders.
• Qualifying as a REIT involves highly technical and complex provisions of the Code.
• REIT distribution requirements could adversely affect our ability to execute our business plan.
• Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends, but certain stockholders may be entitled to deduct up to 20% of dividends payable by REITs.
• Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.
• Certain property transfers may generate prohibited transaction income, resulting in a penalty tax on gain attributable to the transaction.
• Complying with REIT requirements may cause us to forgo otherwise attractive opportunities.
• Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
• Changes to U.S. federal income tax laws could materially and adversely affect us and our stockholders.
• Risks Related to Our Common Stock
• Our cash available for distribution to stockholders may not be sufficient to make distributions at expected levels, and we may need to borrow in order to make such distributions; consequently, we may not be able to make such distributions in full.
• Future offerings of debt, which would be senior to our common stock upon liquidation, and/or preferred equity securities, which may be senior to our common stock for purposes of distributions or upon liquidation, may adversely affect the market price of our common stock.
• Increases in market interest rates may cause potential investors to seek higher dividend yields and therefore reduce demand for our common stock and result in a decline in our stock price.
• The number of shares available for future sale could adversely affect the market price of our common stock.
• The market price and trading volume of our common stock may be volatile.
• Our earnings and cash distributions will affect the market price of shares of our common stock.