Exhibit 99.1
| | | | |
| [LOGO] | | | | Third Quarter 2009 Earnings Release and Supplemental Information |
[PHOTOGRAPH OF ACC5 DATA CENTER FACILITY, ASHBURN, VIRGINIA]
| | | | | | |
DuPont Fabros Technology, Inc. 1212 New York Avenue, NW Suite 900 Washington, D.C. 20005 | | (202) 728-0044 www.dft.com NYSE: DFT | | | | Investor Relations Contact: Mr. Christopher A. Warnke investorrelations@dft.com (202) 728-0044 ext. 127 |
Third Quarter 2009 Results
Table of Contents
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Earnings Release | | 1-4 |
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Consolidated Statements of Operations | | 5 |
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Reconciliations of Net Income to Funds From Operations and Adjusted Funds From Operations | | 6 |
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Consolidated Balance Sheets | | 7 |
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Consolidated Statements of Cash Flows | | 8 |
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Operating Properties | | 9 |
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Lease Expirations | | 10 |
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Development Projects | | 11 |
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Debt Summary | | 12 |
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Selected Financial Covenants and Capital Structure | | 13 |
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Common Share and Operating Partnership Unit Weighted Average Amounts Outstanding | | 14 |
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2009 Guidance | | 15 |
[LOGO]
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| | DuPont Fabros Technology, Inc. 1212 New York Avenue, NW Suite 900 Washington, D.C. 20005 www.dft.com | | | | |
NEWS
DUPONT FABROS TECHNOLOGY, INC. REPORTS
THIRD QUARTER 2009 RESULTS
Revenues Up 21%
WASHINGTON, DC, — November 3, 2009 - DuPont Fabros Technology, Inc. (NYSE: DFT) today reported results for the three and nine months ended September 30, 2009. All per share results are reported on a fully diluted basis.
Highlights
| | • | | Executed five leases totaling 15.90 megawatts in third quarter, representing approximately $310 million of total contract value over respective lease terms. |
| | • | | CH1 Phase I 48% leased, ACC5 Phase I 73% leased and ACC5 Phase II 38% pre-leased. |
| | • | | Subsequent to the end of the third quarter executed one lease totaling 1.95 megawatts in Reston, Virginia. This lease, which commences in January 2010, fully re-leases the 27,268 raised square feet expiring on December 31, 2009. |
| | • | | Opened Phase I of ACC5, which adds 18% of critical load to our operating portfolio. |
| | • | | Funds From Operations (“FFO”) of $0.29 per share for third quarter of 2009, which was in the upper half of guidance range. |
| | • | | Revenues increased 21.0% in the third quarter and 17.0% year to date. |
| | • | | Raised the lower end of 2009 FFO per share guidance range by $0.04 per share to $1.09 to $1.12 per share. |
| | • | | Raised the 2009 required dividend payout per share guidance by $0.04 per share to $0.24 to $0.30 per share. |
Hossein Fateh, President and Chief Executive Officer of the Company, said, “During the third quarter, we continued to focus on leasing and operations, and are pleased with the progress made. Year to date we have signed 12 leases totaling 32.80 megawatts of critical load, 187,350 raised square feet of space and approximately $700 million of contract value to the Company. In the third quarter we also achieved a solid quarter of earnings and opened our ACC5 Phase I development. Looking ahead, a principal objective will be raising the funds necessary to start the next two developments in early 2010 in order to capitalize on market demand for our product.”
Third Quarter 2009 Results
For the quarter ended September 30, 2009, the Company reported earnings per share of $0.08 compared to $0.12 for the third quarter of 2008. Revenues increased 21.0%, or $9.0 million, to $51.9 million for the third quarter of 2009 over the third quarter of 2008. The $0.04 per share decrease in earnings per share is primarily due to higher interest expense, which is attributable to higher debt balances and lower capitalized interest, partially offset by higher operating income.
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FFO per share for the quarter ended September 30, 2009 was $0.29 compared to $0.31 for the quarter ended September 30, 2008. The $0.02 per share decrease is primarily due to higher interest expense, partially offset by higher operating income, as referenced above.
Nine Months Ended September 30, 2009
For the nine months ended September 30, 2009, the Company reported earnings per share of $0.22 compared to $0.44 for the nine months ended September 30, 2008. Revenues increased 17.0%, or $21.5 million, to $147.6 million for the nine months ended September 30, 2009 over the year ago period. The overall decrease in earnings per share is primarily attributable to higher interest expense, which is due to higher debt balances and lower capitalized interest, and increased depreciation and amortization in the current period.
FFO per share for the nine months ended September 30, 2009 was $0.83 compared to $1.00 for the corresponding period in 2008. The $0.17 per share decrease is primarily due to higher interest expense, as referenced above.
Portfolio Update/Status
During the third quarter of 2009, the Company executed five new leases totaling 15.90 megawatts of critical load and 90,460 raised square feet with an average lease term of 10.6 years. This represents approximately $310 million of contract value to the Company.
| | • | | One lease was signed at CH1 Phase I in Elk Grove Village, Illinois representing 5.63 megawatts of critical load and 36,700 raised square feet. |
| | • | | Two leases were signed at ACC5 Phase I in Ashburn, Virginia comprising 2.84 megawatts of critical load and 13,700 raised square feet. |
| | • | | One lease was signed at VA3 in Reston, Virginia comprising 0.60 megawatts of critical load and 7,060 raised square feet. This is a new lease of space being vacated at the end of 2009. |
| | • | | One pre-lease was signed at ACC5 Phase II in Ashburn, Virginia comprising 6.83 megawatts of critical load and 33,000 raised square feet with a January 1, 2011 move-in date. |
Subsequent to the end of the third quarter, the Company executed one lease at VA3 in Reston, Virginia totaling 1.95 megawatts of critical load, which, combined with the lease mentioned above, fully re-leases the space being vacated at the end of 2009.
As of the date of this press release, the Company’s stabilized operating portfolio’s critical load is 100% leased. CH1 Phase I and ACC5 Phase I, both currently in lease-up, are 48% and 73% leased, respectively. ACC5 Phase II, a new development yet to be completed, is 38% pre-leased.
Liquidity
The Company has no debt maturities until the third quarter of 2011 assuming the election of the extension options on the Company’s line of credit and the loans secured by ACC5 and SC1. As of the date of this press release, the Company has approximately $24 million of unrestricted cash and $20 million available on its revolving credit facility.
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Development Update
The Company has obtained the certificate of occupancy and commissioning report for ACC5 Phase I. The building was designed and constructed to obtain LEED gold certification.
As of the date of this press release, the Company is actively pursuing additional funds for both the ACC5 Phase II in Ashburn, Virginia and NJ1 Phase I in Piscataway, New Jersey developments. The commencement of one or both is subject to obtaining adequate financing.
Dividend
The Company has increased its 2009 REIT dividend requirement estimate by $0.04, and the payment range is now $0.24 to $0.30 per share. The Company has available funds sufficient to pay the dividend in cash, and the Board of Directors will determine the method and timing of the dividend prior to the end of the fourth quarter.
2009 Guidance
The Company has established a FFO guidance range of $0.26 to $0.29 per share for the fourth quarter of 2009 and is reaffirming and tightening its annual FFO guidance range by $0.04 per share from $1.05 to $1.12 per share to $1.09 to $1.12 per share. The assumptions underlying this guidance are outlined on page 15 of this press release.
Third Quarter 2009 Conference Call and Webcast Information
The Company will host a conference call to discuss these results tomorrow, Wednesday, November 4, 2009 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 1-888-726-2419 (domestic) or 1-913-312-0397 (international). A replay will be available for seven days by dialing 1-888-203-1112 (domestic) or 1-719-457-0820 (international) using conference ID 3352492. The webcast will be archived on the Company’s website for one year atwww.dft.com on the Presentations & Webcasts page.
Fourth Quarter 2009 Conference Call
DuPont Fabros Technology, Inc. expects to announce fourth quarter 2009 results on Wednesday, February 10, 2010 and to host a conference call to discuss those results at 10:00 a.m. ET on Thursday, February 11, 2010.
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 national and international technology companies to house, power and cool the computer servers that support many of their most critical business processes. DuPont Fabros Technology, Inc. is headquartered in Washington, DC. For more information, please visitwww.dft.com.
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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 the Company may be unable to obtain financing on favorable terms or pre-leasing on its development properties sufficient to enable it to resume construction, the risk that the Company is unable to satisfy the conditions required to exercise the extension options for its line of credit and loans, the risks commonly associated with construction and development of new facilities, risks relating to compliance with permitting, zoning, land-use and environmental requirements, the risks related to the leasing of 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 may be unable to acquire additional properties on favorable terms or at all, 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, 2008, contain detailed descriptions of these and many other risks to which the Company is subject. These reports are available on our website atwww.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 forward-looking matters discussed in this press release.
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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, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
Revenues: | | | | | | | | | | | | | | | | |
Base rent | | $ | 29,491 | | | $ | 26,080 | | | $ | 83,893 | | | $ | 77,821 | |
Recoveries from tenants | | | 17,954 | | | | 15,907 | | | | 51,060 | | | | 41,843 | |
Other revenues | | | 4,475 | | | | 931 | | | | 12,653 | | | | 6,470 | |
| | | | | | | | | | | | | | | | |
Total revenues | | | 51,920 | | | | 42,918 | | | | 147,606 | | | | 126,134 | |
| | | | |
Expenses: | | | | | | | | | | | | | | | | |
Property operating costs | | | 16,505 | | | | 14,141 | | | | 46,499 | | | | 35,898 | |
Real estate taxes and insurance | | | 1,234 | | | | 1,015 | | | | 3,634 | | | | 2,895 | |
Depreciation and amortization | | | 14,240 | | | | 13,038 | | | | 41,551 | | | | 37,116 | |
General and administrative | | | 3,580 | | | | 2,587 | | | | 10,142 | | | | 7,893 | |
Other expenses | | | 3,548 | | | | 795 | | | | 10,175 | | | | 5,334 | |
| | | | | | | | | | | | | | | | |
Total expenses | | | 39,107 | | | | 31,576 | | | | 112,001 | | | | 89,136 | |
| | | | | | | | | | | | | | | | |
| | | | |
Operating income | | | 12,813 | | | | 11,342 | | | | 35,605 | | | | 36,998 | |
Interest income | | | 66 | | | | 66 | | | | 350 | | | | 147 | |
Interest: | | | | | | | | | | | | | | | | |
Expense incurred | | | (6,088 | ) | | | (3,062 | ) | | | (17,101 | ) | | | (6,525 | ) |
Amortization of deferred financing costs | | | (1,267 | ) | | | (465 | ) | | | (4,533 | ) | | | (1,056 | ) |
| | | | | | | | | | | | | | | | |
Net income | | | 5,524 | | | | 7,881 | | | | 14,321 | | | | 29,564 | |
Net income attributable to redeemable noncontrolling interests – operating partnership | | | (2,137 | ) | | | (3,732 | ) | | | (5,753 | ) | | | (13,935 | ) |
| | | | | | | | | | | | | | | | |
Net income attributable to controlling interests | | $ | 3,387 | | | $ | 4,149 | | | $ | 8,568 | | | $ | 15,629 | |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings per share – basic: | | | | | | | | | | | | | | | | |
Net income attributable to controlling interests per common share | | $ | 0.08 | | | $ | 0.12 | | | $ | 0.22 | | | $ | 0.44 | |
| | | | | | | | | | | | | | | | |
| | | | |
Weighted average common shares outstanding | | | 41,041,140 | | | | 35,436,020 | | | | 39,407,194 | | | | 35,423,999 | |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings per share – diluted: | | | | | | | | | | | | | | | | |
Net income attributable to controlling interests per common share | | $ | 0.08 | | | $ | 0.12 | | | $ | 0.22 | | | $ | 0.44 | |
| | | | | | | | | | | | | | | | |
| | | | |
Weighted average common shares outstanding | | | 41,992,512 | | | | 35,455,303 | | | | 39,918,440 | | | | 35,424,032 | |
| | | | | | | | | | | | | | | | |
| | | | |
Dividends declared per common share | | $ | — | | | $ | 0.1875 | | | $ | — | | | $ | 0.5625 | |
| | | | | | | | | | | | | | | | |
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DUPONT FABROS TECHNOLOGY, INC.
RECONCILIATIONS OF NET INCOME TO FFO AND AFFO(1)
(unaudited and in thousands except per share data)
| | | | | | | | | | | | | | | | |
| | | Three months ended
September 30, | | | Nine months ended
September 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
Net income | | $ | 5,524 | | | $ | 7,881 | | | $ | 14,321 | | | $ | 29,564 | |
Depreciation and amortization | | | 14,240 | | | | 13,038 | | | | 41,551 | | | | 37,116 | |
Less: Non real estate depreciation and amortization | | | (124 | ) | | | (40 | ) | | | (355 | ) | | | (174 | ) |
| | | | | | | | | | | | | | | | |
FFO | | $ | 19,640 | | | $ | 20,879 | | | $ | 55,517 | | | $ | 66,506 | |
Straight-line revenue | | | (4,159 | ) | | | (6,710 | ) | | | (11,504 | ) | | | (22,118 | ) |
Amortization of lease contracts above and below market value | | | (1,744 | ) | | | (1,747 | ) | | | (5,233 | ) | | | (5,234 | ) |
Loss on early extinguishment of debt | | | — | | | | — | | | | 1,047 | | | | — | |
Compensation paid with Company common shares | | | 612 | | | | 170 | | | | 1,431 | | | | 874 | |
| | | | | | | | | | | | | | | | |
AFFO | | $ | 14,349 | | | $ | 12,592 | | | $ | 41,258 | | | $ | 40,028 | |
| | | | | | | | | | | | | | | | |
| | | | |
FFO per share - diluted | | $ | 0.29 | | | $ | 0.31 | | | $ | 0.83 | | | $ | 1.00 | |
| | | | | | | | | | | | | | | | |
| | | | |
AFFO per share - diluted | | $ | 0.21 | | | $ | 0.19 | | | $ | 0.61 | | | $ | 0.60 | |
| | | | | | | | | | | | | | | | |
Weighted average common shares and OP units outstanding - diluted | | | 67,631,035 | | | | 66,617,574 | | | | 67,154,717 | | | | 66,586,303 | |
| | | | | | | | | | | | | | | | |
| (1) | Funds from operations, or FFO, is used by industry analysts and investors as a supplemental operating performance measure for REITs. We calculate 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. |
We use 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. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare our 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 our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our 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 our FFO. Therefore, we believe that in order to facilitate a clear understanding of our 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 our cash needs, including our ability to pay dividends or make distributions.
We also present FFO with a supplemental adjustment which we call 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 our 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 our cash needs including our ability to pay dividends. In addition, AFFO may not be comparable to similarly titled measurements employed by other companies. Our management uses AFFO in management reports to provide a measure of REIT operating performance that can be compared to other companies using AFFO.
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DUPONT FABROS TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands except share data)
| | | | | | | | |
| | | September 30,
2009 | | | December 31,
2008 | |
| | | (unaudited) | | | | |
| ASSETS | | | | | | | | |
Income producing property: | | | | | | | | |
Land | | $ | 44,001 | | | $ | 39,617 | |
Buildings and improvements | | | 1,437,415 | | | | 1,277,230 | |
| | | | | | | | |
| | | 1,481,416 | | | | 1,316,847 | |
Less: accumulated depreciation | | | (101,419 | ) | | | (63,669 | ) |
| | | | | | | | |
Net income producing property | | | 1,379,997 | | | | 1,253,178 | |
Construction in progress and land held for development | | | 325,282 | | | | 447,881 | |
| | | | | | | | |
Net real estate | | | 1,705,279 | | | | 1,701,059 | |
Cash and cash equivalents | | | 21,247 | | | | 53,512 | |
Restricted cash | | | 4,478 | | | | 134 | |
Rents and other receivables | | | 1,443 | | | | 1,078 | |
Deferred rent | | | 50,556 | | | | 39,052 | |
Lease contracts above market value, net | | | 17,065 | | | | 19,213 | |
Deferred costs, net | | | 40,805 | | | | 42,917 | |
Prepaid expenses and other assets | | | 6,545 | | | | 7,798 | |
| | | | | | | | |
Total assets | | $ | 1,847,418 | | | $ | 1,864,763 | |
| | | | | | | | |
| | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Liabilities: | | | | | | | | |
Line of credit | | $ | 223,996 | | | $ | 233,424 | |
Mortgage notes payable | | | 479,000 | | | | 433,395 | |
Accounts payable and accrued liabilities | | | 19,198 | | | | 13,257 | |
Construction costs payable | | | 11,376 | | | | 82,241 | |
Lease contracts below market value, net | | | 31,053 | | | | 38,434 | |
Prepaid rents and other liabilities | | | 26,194 | | | | 27,075 | |
| | | | | | | | |
Total liabilities | | | 790,817 | | | | 827,826 | |
Redeemable noncontrolling interests – operating partnership | | | 399,501 | | | | 484,768 | |
Commitments and contingencies | | | — | | | | — | |
Stockholders’ equity: | | | | | | | | |
Preferred stock, par value $.001, 50,000,000 shares authorized, no shares issued or outstanding at September 30, 2009 and December 31, 2008 | | | — | | | | — | |
Common stock, par value $.001, 250,000,000 shares authorized, 41,868,441 shares issued and outstanding at September 30, 2009 and 35,495,257 shares issued and outstanding at December 31, 2008 | | | 42 | | | | 35 | |
Additional paid in capital | | | 737,432 | | | | 641,819 | |
Accumulated deficit | | | (71,656 | ) | | | (80,224 | ) |
Accumulated other comprehensive loss | | | (8,718 | ) | | | (9,461 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 657,100 | | | | 552,169 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 1,847,418 | | | $ | 1,864,763 | |
| | | | | | | | |
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DUPONT FABROS TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
| | | | | | | | |
| | | Nine months ended September 30, | |
| | | 2009 | | | 2008 | |
Cash flow from operating activities | | | | | | | | |
Net income | | $ | 14,321 | | | $ | 29,564 | |
Adjustments to reconcile net income to net cash provided by operating activities | | | | | | | | |
Depreciation and amortization | | | 41,551 | | | | 37,116 | |
Straight line rent | | | (11,504 | ) | | | (22,118 | ) |
Amortization of deferred financing costs | | | 4,533 | | | | 1,056 | |
Amortization of lease contracts above and below market value | | | (5,233 | ) | | | (5,234 | ) |
Compensation paid with Company common shares | | | 1,431 | | | | 874 | |
Changes in operating assets and liabilities | | | | | | | | |
Restricted cash | | | (344 | ) | | | — | |
Rents and other receivables | | | (365 | ) | | | (160 | ) |
Deferred costs | | | (2,663 | ) | | | (238 | ) |
Prepaid expenses and other assets | | | 1,942 | | | | (4,159 | ) |
Accounts payable and accrued liabilities | | | 5,941 | | | | 3,600 | |
Prepaid rents and other liabilities | | | 2,852 | | | | 11,296 | |
| | | | | | | | |
Net cash provided by operating activities | | | 52,462 | | | | 51,597 | |
| | | | | | | | |
Cash flow from investing activities | | | | | | | | |
Investments in real estate – development | | | (104,747 | ) | | | (216,063 | ) |
Interest capitalized for real estate under development | | | (4,940 | ) | | | (9,871 | ) |
Improvements to real estate | | | (2,373 | ) | | | (2,663 | ) |
Additions to non-real estate property | | | (315 | ) | | | (466 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (112,375 | ) | | | (229,063 | ) |
| | | | | | | | |
Cash flow from financing activities | | | | | | | | |
Line of credit: | | | | | | | | |
Proceeds | | | — | | | | 204,000 | |
Repayments | | | (9,428 | ) | | | — | |
Mortgage notes payable: | | | | | | | | |
Proceeds | | | 181,726 | | | | 32,537 | |
Lump sum payoffs | | | (135,121 | ) | | | — | |
Repayments | | | (1,000 | ) | | | — | |
Escrowed proceeds | | | (4,000 | ) | | | — | |
Offering costs | | | — | | | | (87 | ) |
Payments of financing costs | | | (4,529 | ) | | | (421 | ) |
Dividends and distributions: | | | | | | | | |
Common shares | | | — | | | | (18,618 | ) |
Noncontrolling interests – operating partnership | | | — | | | | (16,539 | ) |
| | | | | | | | |
Net cash provided by financing activities | | | 27,648 | | | | 200,872 | |
| | | | | | | | |
Net (decrease) increase in cash and cash equivalents | | | (32,265 | ) | | | 23,406 | |
Cash and cash equivalents, beginning | | | 53,512 | | | | 11,510 | |
| | | | | | | | |
Cash and cash equivalents, ending | | $ | 21,247 | | | $ | 34,916 | |
| | | | | | | | |
Supplemental information: | | | | | | | | |
Cash paid for interest, net of amounts capitalized | | $ | 17,470 | | | $ | 6,097 | |
| | | | | | | | |
Deferred financing costs capitalized for real estate under development | | $ | 1,270 | | | $ | 1,763 | |
| | | | | | | | |
Construction costs payable capitalized to real estate | | $ | 11,376 | | | $ | 39,827 | |
| | | | | | | | |
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DUPONT FABROS TECHNOLOGY, INC.
Operating Properties
As of September 30, 2009
| | | | | | | | | | | | | |
Property | | Property Location | | Year Built/
Renovated | | Gross
Building
Area
(2) | | Raised Square
Feet
(3) | | Critical Load
MW
(4) | | %
Leased
(5) | |
| | | | | | |
Stabilized (1) | | | | | | | | | | | | | |
VA3 | | Reston, VA | | 2003 | | 256,000 | | 144,901 | | 13.0 | | 100 | % |
VA4 | | Bristow, VA | | 2005 | | 230,000 | | 90,000 | | 9.6 | | 100 | % |
ACC2 | | Ashburn, VA | | 2001/2005 | | 87,000 | | 53,397 | | 10.4 | | 100 | % |
ACC3 | | Ashburn, VA | | 2001/2006 | | 147,000 | | 79,600 | | 13.0 | | 100 | % |
ACC4 | | Ashburn, VA | | 2007 | | 307,000 | | 172,025 | | 36.4 | | 100 | % |
| | | | | | | | | | | | | |
Subtotal - stabilized | | | | 1,027,000 | | 539,923 | | 82.4 | | 100 | % |
| | | | | | |
Completed not Stabilized | | | | | | | | | | | | | |
| | | | | | |
CH1 Phase I | | Elk Grove Village, IL | | 2008 | | 285,000 | | 121,223 | | 18.2 | | 48 | % |
ACC5 Phase I | | Ashburn, VA | | 2009 | | 150,000 | | 85,600 | | 18.2 | | 73 | % |
| | | | | | | | | | | | | |
| | | | | |
Total Operating Properties | | | | 1,462,000 | | 746,746 | | 118.8 | | | |
| | | | | | | | | | | | | |
| (1) | Stabilized operating properties are either 85% or more leased or are 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 our tenants’ computer servers are located), tenant common areas, areas controlled by us (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to our tenants. |
| (3) | Raised square footage is that portion of gross building area where our tenants locate their computer servers. We consider raised square footage to be the net rentable square footage in each of our 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 our 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. Represents $133.2 million of annualized base rent on a straight-line basis for leases executed and/or amended as of September 30, 2009 over the non-cancellable terms of the respective leases and excludes approximately $7.0 million net amortization increase in revenue of above and below market leases. Base rent for the next 12 months on a cash basis as of September 30, 2009 is $106.1 million assuming no additional leasing or changes to existing leases. |
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DUPONT FABROS TECHNOLOGY, INC.
Lease Expirations
As of September 30, 2009
The following table sets forth a summary schedule of lease expirations of our operating properties for each of the ten calendar years beginning with 2009. 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
of Leases
Expiring
(1) | | Raised Square
Feet Expiring
(2) | | % of Net
Raised
Square Feet | | | Total kW
of Expiring
Leases
(3) | | % of
Leased kW | | | % of
Annualized
Base Rent | |
| | | | | | |
2009 (4) | | 1 | | 27,268 | | 4.1 | % | | 2,600 | | 2.5 | % | | 0.9 | % |
2010 | | 1 | | 66,661 | | 10.0 | % | | 5,688 | | 5.5 | % | | 3.1 | % |
2011 | | 2 | | 19,620 | | 3.0 | % | | 2,438 | | 2.3 | % | | 2.1 | % |
2012 | | 1 | | 15,000 | | 2.3 | % | | 1,600 | | 1.5 | % | | 1.9 | % |
2013 | | 3 | | 44,743 | | 6.7 | % | | 4,630 | | 4.4 | % | | 3.3 | % |
2014 | | 6 | | 46,509 | | 7.0 | % | | 6,963 | | 6.7 | % | | 7.1 | % |
2015 | | 2 | | 68,397 | | 10.3 | % | | 12,000 | | 11.5 | % | | 10.4 | % |
2016 | | 2 | | 54,800 | | 8.3 | % | | 8,100 | | 7.8 | % | | 9.1 | % |
2017 | | 5 | | 70,800 | | 10.7 | % | | 12,324 | | 11.8 | % | | 13.2 | % |
2018 | | 4 | | 75,300 | | 11.4 | % | | 15,113 | | 14.5 | % | | 16.0 | % |
After 2018 | | 11 | | 173,909 | | 26.2 | % | | 32,875 | | 31.5 | % | | 32.9 | % |
| | | | | | | | | | | | | | | |
Total | | 38 | | 663,007 | | 100 | % | | 104,331 | | 100 | % | | 100 | % |
| | | | | | | | | | | | | | | |
| (1) | The operating properties have 21 tenants with 38 different lease expiration dates. Top two tenants represent 51% of annualized base rent. Top three tenants represent 66% of annualized base rent. |
| (2) | Raised square footage is that portion of gross building area where our tenants locate their computer servers. We consider raised square footage to be the net rentable square footage in each of our facilities. |
| (3) | One megawatt is equal to 1,000 kW. |
| (4) | The Company has executed two new leases to fully re-lease the space covered by this expiring lease. |
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DUPONT FABROS TECHNOLOGY, INC.
Development Projects
As of September 30, 2009
($ 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 | |
| | | | | | |
Development Projects on hold | | | | | | | | | | | | | | |
| | | | | | | |
ACC5 Phase II | | Ashburn, VA | | 150,000 | | 85,600 | | 18.2 | | $140,000 - $150,000 | | $ | 59,085 | | 38 | % |
NJ1 Phase I (6) | | Piscataway, NJ | | 150,000 | | 85,600 | | 18.2 | | $200,000 - $215,000 | | | 131,578 | | | |
SC1 Phase I (6) | | Santa Clara, CA | | 150,000 | | 85,600 | | 18.2 | | $240,000 - $280,000 | | | 53,394 | | | |
| | | | | | | | | | | | | | | | |
| | | | 450,000 | | 256,800 | | 54.6 | | $580,000 - $645,000 | | | 244,057 | | | |
| | | | | | | | | | | | | | | | |
Future Development Projects | | | | | | | | | | | | | | |
| | | | | | | |
CH1 Phase II | | Elk Grove Village, IL | | 200,000 | | 89,917 | | 18.2 | | * | | | | | | |
NJ1 Phase II | | Piscataway, NJ | | 150,000 | | 85,600 | | 18.2 | | * | | | | | | |
SC1 Phase II | | Santa Clara, CA | | 150,000 | | 85,600 | | 18.2 | | * | | | | | | |
SC2 Phase I/II | | Santa Clara, CA | | 300,000 | | 171,200 | | 36.4 | | * | | | | | | |
ACC6 Phase I/II | | Ashburn, VA | | 240,000 | | 155,000 | | 31.2 | | * | | | | | | |
ACC7 | | Ashburn, VA | | 100,000 | | 50,000 | | 10.4 | | * | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | 1,140,000 | | 637,317 | | 132.6 | | | | | 81,225 | | | |
| | | | | | | | | | | | | | | | |
Total | | | | 1,590,000 | | 894,117 | | 187.2 | | | | $ | 325,282 | | | |
| | | | | | | | | | | | | | | | |
| * | Development costs have not yet been estimated. |
| (1) | Gross building area is the entire building area, including raised square footage (the portion of gross building area where our tenants’ computer servers are located), tenant common areas, areas controlled by us (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to our tenants. |
| (2) | Raised square footage is that portion of gross building area where our tenants locate their computer servers. We consider raised square footage to be the net rentable square footage in each of our 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 our tenants expressed in terms of MW or kW (1 MW is equal to 1,000 kW). |
| (4) | Includes estimated capitalization for construction and development, including closing costs, capitalized interest and capitalized operating carrying costs, as applicable, upon completion. |
| (5) | Amount capitalized as of September 30, 2009. |
| (6) | Construction temporarily suspended on NJ1 and SC1 and amount incurred includes all estimated commitments. |
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DUPONT FABROS TECHNOLOGY, INC.
Debt Summary as of September 30, 2009
($ in thousands)
| | | | | | | | | | | |
| | | Amounts | | % of Total | | | Rates (1) | | | Maturities
(years) |
Secured | | $ | 702,996 | | 100.0 | % | | 4.2 | % | | 1.5 |
Unsecured | | | — | | — | | | — | | | — |
| | | | | | | | | | | |
Total | | $ | 702,996 | | 100.0 | % | | 4.2 | % | | 1.5 |
| | | | | | | | | | | |
| | | | |
Fixed Rate Debt: | | | | | | | | | | | |
Safari Term Loan (2)(3) | | $ | 200,000 | | 28.4 | % | | 6.5 | % | | 1.9 |
ACC5 Loan | | | 25,000 | | 3.6 | % | | 12.0 | % | | 0.4 |
SC1 Loan | | | 5,000 | | 0.7 | % | | 12.0 | % | | 0.4 |
| | | | | | | | | | | |
Fixed Rate Debt | | | 230,000 | | 32.7 | % | | 7.2 | % | | 1.7 |
| | | | | | | | | | | |
| | | | |
Floating Rate Debt: | | | | | | | | | | | |
Line of Credit (2) | | | 223,996 | | 31.9 | % | | 1.5 | % | | 0.9 |
ACC4 Term Loan | | | 249,000 | | 35.4 | % | | 3.8 | % | | 2.1 |
| | | | | | | | | | | |
Floating Rate Debt | | | 472,996 | | 67.3 | % | | 2.7 | % | | 1.5 |
| | | | | | | | | | | |
| | | | |
Total | | $ | 702,996 | | 100.0 | % | | 4.2 | % | | 1.5 |
| | | | | | | | | | | |
Note: The Company capitalized interest of $1.8 million and $6.2 million during the three and nine months ended September 30, 2009, respectively.
| (1) | Rate as of September 30, 2009. |
| (2) | Collateral includes VA3, VA4, ACC2 and ACC3. |
| (3) | Rate is fixed by an interest rate swap. |
Debt Maturity Schedule as of September 30, 2009
($ in thousands)
| | | | | | | | | | | | | | | | | |
Year | | Fixed Rate | | | Floating
Rate | | | Total | | % of Total | | | Rates (5) | |
2009 | | $ | — | | | $ | — | | | $ | — | | — | | | — | |
2010 | | | 30,000 | (1) | | | 223,996 | (3) | | | 253,996 | | 36.1 | % | | 2.7 | % |
2011 | | | 200,000 | (2) | | | 249,000 | (4) | | | 449,000 | | 63.9 | % | | 5.0 | % |
| | | | | | | | | | | | | | | | | |
Total | | $ | 230,000 | | | $ | 472,996 | | | $ | 702,996 | | 100.0 | % | | 4.2 | % |
| | | | | | | | | | | | | | | | | |
| (1) | Extendable up to four years upon satisfaction of certain customary conditions. |
| (2) | Matures on August 7, 2011 with no extension option. |
| (3) | Amount outstanding on the Company’s $275 million Line of Credit that matures on August 7, 2010, subject to a one-year extension option exercisable by the Company upon satisfaction of certain customary conditions. A borrowing base initial appraised value covenant currently limits the amount available to $244 million. |
| (4) | Matures on October 24, 2011 and includes a one-year extension option exercisable by the Company upon satisfaction of certain customary conditions. Includes scheduled principal amortization payments of $0.5 million in the fourth quarter of 2009 and $2.0 million in 2010. |
| (5) | Rate as of September 30, 2009. |
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DUPONT FABROS TECHNOLOGY, INC.
Selected Financial Covenants
| | | | | | |
| | | 9/30/09 | | | 6/30/09 | |
Total Debt to Gross Asset Value (not to exceed 65%) | | 34 | % | | 35 | % |
| | |
Fixed Charge Coverage ratio (not less than 1.45) | | 3.60 | | | 3.56 | |
| | |
Borrowing Base Debt Service Coverage Ratio (not less than 1.35) | | 1.95 | | | 1.93 | |
| | |
Secured Recourse Debt to Gross Asset Value (not to exceed 15%) | | 5 | % | | 5 | % |
These selected covenants relate to DuPont Fabros Technology, LP and/or its related subsidiaries. DuPont Fabros Technology, Inc. is the general partner of DuPont Fabros Technology, LP.
Capital Structure as of September 30, 2009
(in thousands except per share data)
| | | | | | | | | | | | |
Mortgage notes payable | | | | | | | | $ | 479,000 | | | |
Line of Credit | | | | | | | | | 223,996 | | | |
| | | | | | | | | | | | |
Total Debt | | | | | | | | | 702,996 | | 43.9 | % |
| | | | |
Common Shares | | 62 | % | | | 41,869 | | | | | | |
Operating Partnership (“OP”) Units | | 38 | % | | | 25,453 | | | | | | |
| | | | | | | | | | | | |
Total Shares and OP Units | | 100 | % | | | 67,322 | | | | | | |
Common Share Price at September 30, 2009 | | | | | $ | 13.33 | | | | | | |
| | | | | | | | | | | | |
Total Equity | | | | | | | | | 897,402 | | 56.1 | % |
| | | | | | | | | | | | |
Total Market Capitalization | | | | | | | | $ | 1,600,398 | | 100.0 | % |
| | | | | | | | | | | | |
- 13 -
DUPONT FABROS TECHNOLOGY, INC.
Common Share and OP Unit
Weighted Average Amounts Outstanding
| | | | | | | | |
| | | Q3 2009 | | Q3 2008 | | YTD
Q3 2009 | | YTD
Q3 2008 |
| | | | |
Weighted Average Amounts Outstanding for EPS Purposes: | | | | | | | | |
| | | | |
Common Shares – basic | | 41,041,140 | | 35,436,020 | | 39,407,194 | | 35,423,999 |
Shares issued from assumed conversion of | | | | | | | | |
- Restricted Shares | | 365,076 | | 19,283 | | 203,154 | | 33 |
- Stock options | | 586,296 | | — | | 308,092 | | — |
| | | | | | | | |
Total Common Shares - diluted | | 41,992,512 | | 35,455,303 | | 39,918,440 | | 35,424,032 |
| | | | | | | | |
| | | | |
Weighted Average Amounts Outstanding for FFO and AFFO Purposes: | | | | | | | | |
| | | | |
Common Shares – basic | | 41,041,140 | | 35,436,020 | | 39,407,194 | | 35,423,999 |
OP Units – basic | | 25,638,523 | | 31,162,271 | | 27,236,277 | | 31,162,271 |
| | | | | | | | |
Total Common Shares and OP Units | | 66,679,663 | | 66,598,291 | | 66,643,471 | | 66,586,270 |
Share issued from assumed conversion of | | | | | | | | |
- Restricted Shares | | 365,076 | | 19,283 | | 203,154 | | 33 |
- Stock options | | 586,296 | | — | | 308,092 | | — |
| | | | | | | | |
Total Common Shares and OP Units - diluted | | 67,631,035 | | 66,617,574 | | 67,154,717 | | 66,586,303 |
| | | | | | | | |
| | | | |
Period Ending Amounts Outstanding: | | | | | | | | |
| | | | |
Common Shares | | 41,868,441 | | | | | | |
OP Units | | 25,453,394 | | | | | | |
| | | | | | | | |
Total Common Shares and OP Units | | 67,321,835 | | | | | | |
| | | | | | | | |
- 14 -
DUPONT FABROS TECHNOLOGY, INC.
2009 Guidance
The earnings guidance/projections provided below are based on current expectations and are forward-looking.
| | | | |
| | | Expected Q4 2009
per share | | Expected 2009
per share |
Earnings per share and unit – diluted | | $0.04 to $0.07 | | $0.25 to $0.27 |
Depreciation and amortization, net | | 0.22 | | 0.84 to 0.85 |
| | | | |
FFO per share and unit – diluted (1) | | $0.26 to $0.29 | | $1.09 to $1.12 |
| | | | |
2009 Debt Assumptions
| | |
Weighted average debt outstanding | | $703 to $706 million |
Weighted average interest rate | | 4.2% |
| |
Total interest costs | | $29.5 to $30.0 million |
Total amortization of deferred financing costs | | $7.4 million |
Interest expense capitalized | | $(4.9) million |
Deferred financing costs amortization capitalized | | $(1.3) million |
| | |
Total interest expense after capitalization | | $30.7 to $31.2 million |
| | |
Note: Debt guidance assumes no new debt issued from the date of this release.
2009 Other Guidance Assumptions
| | |
Other revenues | | $12 to $14 million |
Straight-line revenue | | $17 to $19 million |
Below market lease amortization, net of above market lease amortization | | $7 million |
General and administrative expense | | $13 to $14 million |
Estimated required REIT dividend distribution payout | | $0.24 to $0.30 per share |
Weighted average common shares and OP units - diluted | | 67.6 million |
| (1) | Funds from operations, or FFO, is used by industry analysts and investors as a supplemental operating performance measure for REITs. We calculate 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. |
We use 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. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare our 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 our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our 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 our FFO. Therefore, we believe that in order to facilitate a clear understanding of our 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 our cash needs, including our ability to pay dividends or make distributions.
- 15 -
