By David Gross
CoreSite announced this morning that Jeff Finnin, Chief Accounting Officer at industrial real estate firm ProLogis, is taking over as CFO, replacing Deedee Beckman. The stock took a hit today, and its aftermarket performance hasn't been great. It could be perceived as a little strange for the company to be changing CFOs a couple months after the IPO. That said, Finnin has a very similar to background to the woman he's replacing - they're both traditional accountants, not bankers or fund raisers - and Beckman also came to CoreSite from ProLogis.
Beckman will remain on the job another two weeks, with Finnin taking over on the 24th. This seems to be a fairly cordial turnover, and the replacement's prior experience is remarkably similar to his predecessor's. I find little reason here for investors to have had such a sharp reaction.
Showing posts with label COR. Show all posts
Showing posts with label COR. Show all posts
Tuesday, January 4, 2011
Tuesday, December 21, 2010
CoreSite Declares Dividend, Yield Just Under 4%
by David Gross
CoreSite declared a dividend of 13 cents this week, giving the company an annualized yield just under 4% based on today's closing price of $13.60. The stock has risen nearly ten percent since yesterday morning when the dividend was announced. Nonetheless, it remains below the $16 level at which it IPO'd a couple months ago.
Overall, the last few weeks have been rough for data center REITs. In addition to CoreSite struggling to get back to its IPO price, Digital Realty is down over 4% over the last month, and DuPont Fabros is down over 7%. DLR's yield is up to 4.33% as a result of its weak performance during autumn. It began the season over $61, and is down to $48.94 as we head into winter.
CoreSite declared a dividend of 13 cents this week, giving the company an annualized yield just under 4% based on today's closing price of $13.60. The stock has risen nearly ten percent since yesterday morning when the dividend was announced. Nonetheless, it remains below the $16 level at which it IPO'd a couple months ago.
Overall, the last few weeks have been rough for data center REITs. In addition to CoreSite struggling to get back to its IPO price, Digital Realty is down over 4% over the last month, and DuPont Fabros is down over 7%. DLR's yield is up to 4.33% as a result of its weak performance during autumn. It began the season over $61, and is down to $48.94 as we head into winter.
Monday, November 15, 2010
Akamai Leasing Another 16,000 Square Feet from CoreSite
By David Gross
While the Netflix-Akamai/Level 3 story is getting more air time now than "Panama" did in 1984, other events are still happening in the data center industry regarding CDNs, including news that Akamai has leased another 16,061 square feet from CoreSite, according to the data center provider's most recent SEC filing.
In its quarterly newsletter, CoreSite mentioned that Akamai was now peering at 40 Gbps on the provider's Any2 IP exchange, a hint that more space could have been on the way. With the additional capacity, Akamai will be leasing over 29,000 square feet from CoreSite, making the CDN supplier CoreSite's 4th largest customer by annualized rent. Facebook is still #1, and the I.R.S. is #2, with the tax collectors taking over 120,000 square feet of office space at the 55 South Market building in San Jose, where the successor to the MAE West exchange is located.
Either way, Akamai's growing presence is a major win for CoreSite against Equinix, which as I mentioned in the CoreSite earnings preview is struggling in LA against CoreSite's One Wilshire leasehold and 256,000 square foot 900 North Alameda building, which along with its New York City property, are making it a leading choice for media companies, including NBC Universal.
Even though Akamai's annualized rent will now top $3 million at CoreSite, it will still trail the I.R.S in how much revenue it produces for the REIT. And no matter how much rent the tax collectors pay to CoreSite, it's nowhere near as exciting as talking about Netflix and Level 3 as frequently as Z-100 played "Panama" in 1984.
While the Netflix-Akamai/Level 3 story is getting more air time now than "Panama" did in 1984, other events are still happening in the data center industry regarding CDNs, including news that Akamai has leased another 16,061 square feet from CoreSite, according to the data center provider's most recent SEC filing.
In its quarterly newsletter, CoreSite mentioned that Akamai was now peering at 40 Gbps on the provider's Any2 IP exchange, a hint that more space could have been on the way. With the additional capacity, Akamai will be leasing over 29,000 square feet from CoreSite, making the CDN supplier CoreSite's 4th largest customer by annualized rent. Facebook is still #1, and the I.R.S. is #2, with the tax collectors taking over 120,000 square feet of office space at the 55 South Market building in San Jose, where the successor to the MAE West exchange is located.
Either way, Akamai's growing presence is a major win for CoreSite against Equinix, which as I mentioned in the CoreSite earnings preview is struggling in LA against CoreSite's One Wilshire leasehold and 256,000 square foot 900 North Alameda building, which along with its New York City property, are making it a leading choice for media companies, including NBC Universal.
Even though Akamai's annualized rent will now top $3 million at CoreSite, it will still trail the I.R.S in how much revenue it produces for the REIT. And no matter how much rent the tax collectors pay to CoreSite, it's nowhere near as exciting as talking about Netflix and Level 3 as frequently as Z-100 played "Panama" in 1984.
Friday, November 12, 2010
CoreSite Earnings Preview
By David Gross
CoreSite has its first earnings call as a public company today, a few things to look out for:
CoreSite has its first earnings call as a public company today, a few things to look out for:
- Employee Productivity - While incorporated as a REIT, CoreSite did an un-REIT like $600k per employee in 2009, which is about what Equinix did, and about 75% lower than Digital Realty and DuPont Fabros. Part of this is because of size, and also because the company needs more ops staffing to accommodate its Any2 exchanges, including hiring for an Ops Support Center. At this point, investors cannot realistically apply REIT-like metrics such as NOI and cap rates to CoreSite like they can to DLR and DFT, because CoreSite has been structured like a REIT that's operating as an interconnection company.
- Media Clients and Los Angeles- The company's customers include NBC Universal and Akamai, and in addition to its leasehold at One Wilshire, it has over a quarter million square feet at 900 North Alameda Street, making Los Angeles its largest market, with over 40% of its space. CoreSite is giving Equinix major problems in LA, especially with Equinix building away from the downtown carrier hotels, and trying to get everyone to come out to its centers next to LAX.
- Performance of the non-Data Center Assets - About a third of the company's portfolio is office and light industrial space. Much of this comes from the over 200,000 square feet of office space in the MAE West building it owns at 55 South Market in San Jose, which is a 15 story property whose largest tenant is the I.R.S..
Wednesday, September 29, 2010
Equinix Would Make a Terrible REIT
By David Gross
Citigroup put out a note last week arguing that Equinix (EQIX) should consider becoming a REIT in order to close a gap in its market value relative to Digital Realty (DLR) and DuPont Fabros (DFT). This would be a terrible idea though for the collocation provider. Co-lo and data center REITs remain very separate businesses, with different operating and financial requirements, and in many respects they're growing further apart.
The primary financial difference between providing co-lo space and building space is the number of people a provider has to pay. DLR generates over $2 million dollars in revenue per employee, Equinix just $600,000. DLR, DFT, and COR, like most REITs, need to generate NOI (net operating income) margins of about 65% to justify the high cash flow/high dividend strategy needed for that form of business. While less hands-on than managed services, which often entail a lot of software configuration, co-location is not a real estate business. It requires far more internal experts in areas like database management, network technology, and industry-specific sales support than a typical data center REIT has on staff. The additional staffing needed to do this in the co-lo business eats into operating margins, and makes it financially unsuitable for the REIT structure.
A co-lo provider needs to generate more revenue per dollar invested in fixed assets than a REIT to offset the higher staffing requirements. Equinix has been producing about 40 cents of revenue per dollar invested in PP&E compared to around 20 cents for DLR and DFT. Essentially, co-lo is more labor-intensive, less capital-intensive than the data center REIT business, which makes mixing the two very difficult.
It's easy to look at stock valuations and rush to judgments about quick fixes that could temporarily lift the price. But the trend is for co-location providers to lease space from REITs, as Telx is doing with DLR. Perhaps sometime in the future when it slows down its expansion, Equinix could consider paying some kind of dividend, but bringing its productivity and fixed asset ratios into line for a higher yielding REIT would require destroying existing operations, which would cause a lot more problems for the stock than its current valuation gap.
Citigroup put out a note last week arguing that Equinix (EQIX) should consider becoming a REIT in order to close a gap in its market value relative to Digital Realty (DLR) and DuPont Fabros (DFT). This would be a terrible idea though for the collocation provider. Co-lo and data center REITs remain very separate businesses, with different operating and financial requirements, and in many respects they're growing further apart.
The primary financial difference between providing co-lo space and building space is the number of people a provider has to pay. DLR generates over $2 million dollars in revenue per employee, Equinix just $600,000. DLR, DFT, and COR, like most REITs, need to generate NOI (net operating income) margins of about 65% to justify the high cash flow/high dividend strategy needed for that form of business. While less hands-on than managed services, which often entail a lot of software configuration, co-location is not a real estate business. It requires far more internal experts in areas like database management, network technology, and industry-specific sales support than a typical data center REIT has on staff. The additional staffing needed to do this in the co-lo business eats into operating margins, and makes it financially unsuitable for the REIT structure.
A co-lo provider needs to generate more revenue per dollar invested in fixed assets than a REIT to offset the higher staffing requirements. Equinix has been producing about 40 cents of revenue per dollar invested in PP&E compared to around 20 cents for DLR and DFT. Essentially, co-lo is more labor-intensive, less capital-intensive than the data center REIT business, which makes mixing the two very difficult.
It's easy to look at stock valuations and rush to judgments about quick fixes that could temporarily lift the price. But the trend is for co-location providers to lease space from REITs, as Telx is doing with DLR. Perhaps sometime in the future when it slows down its expansion, Equinix could consider paying some kind of dividend, but bringing its productivity and fixed asset ratios into line for a higher yielding REIT would require destroying existing operations, which would cause a lot more problems for the stock than its current valuation gap.
Thursday, September 23, 2010
CoreSite Nearly Turns Over Its Float In 1st Trading Session
By David Gross
CoreSite (COR) ended the day up a penny from its initial offering price, but with over 15 million shares traded, it nearly turned over its float of 16.9 million shares. The stock got off to a good start, and was up 3% to 16.48 by 1:30 this afternoon, but fell back the last two hours of trading right back to its IPO price.
CoreSite (COR) ended the day up a penny from its initial offering price, but with over 15 million shares traded, it nearly turned over its float of 16.9 million shares. The stock got off to a good start, and was up 3% to 16.48 by 1:30 this afternoon, but fell back the last two hours of trading right back to its IPO price.
CoreSite Up 2%, 3 Million Shares Traded
COR is off to a solid start in its first 45 minutes as a public company. It's up to 16.30 from an open of 16.00. Volume has settled down after 1.5 million shares traded after the opening around 9:48 this morning.
CoreSite Raises $270.4 Million, Prices at Midpoint, IPO's Today
By David Gross
CoreSite (COR) priced at $16, in the middle of its projected $15-$17 range, and begins trading today on NYSE. The offering raised a total of $270.4 million for the data center REIT, which will be the third publicly traded stock in that category, along with DLR and DFT.
We have added CoreSite to the list of stocks tracked in the ticker in the widget in the right column.
CoreSite (COR) priced at $16, in the middle of its projected $15-$17 range, and begins trading today on NYSE. The offering raised a total of $270.4 million for the data center REIT, which will be the third publicly traded stock in that category, along with DLR and DFT.
We have added CoreSite to the list of stocks tracked in the ticker in the widget in the right column.
Monday, June 28, 2010
Number of Publicly-Traded Companies Dropping, but Telx and CoreSite on the Way
In the data center industry, we've got two major companies in registration, but for the rest of the market, there are a dwindling number of investment opportunities. In a WSJ story today, Bill Hambrecht notes that the number of companies filing proxies with the SEC has dropped from 9,100 ten years ago, to 6,450 today. And the number of companies tracked by the Dow Jones U.S. Total Market Index is down to 4,136, a drop of nearly 20% over the last five years.
He cites limited interest from i-banks in underwriting smaller IPOs now, and I'd add that Sarbanes-Oxley hasn't helped either. But with Telx and CoreSite on the way, the data center industry is likely to stand out even more among public market investors.
He cites limited interest from i-banks in underwriting smaller IPOs now, and I'd add that Sarbanes-Oxley hasn't helped either. But with Telx and CoreSite on the way, the data center industry is likely to stand out even more among public market investors.
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