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CoreSite Realty Corp COR

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CoreSite Reports Decent Q4, and Better Pricing and Capacity Trends Bode Well, but It May Lag Peers

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

There were encouraging signs in CoreSite’s fourth-quarter report along with decent financial results, although they came in slightly below FactSet consensus estimates. However, even though CoreSite is the first data center firm we cover to report fourth-quarter results, it’s clear from recent performance that despite CoreSite’s very network-dense property portfolio, the firm is not keeping up with competitors that have global footprints, most notably Equinix. We don’t expect a material change to our $108 fair value estimate for CoreSite, and we currently see all the data center firms under our coverage as overvalued to various degrees, but we think others offer better long-term prospects on an industrywide pullback.

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Company Profile

Business Description

CoreSite owns and/or operates 25 data centers in the U.S. and has about 2.5 million net rentable square feet in operations, mostly in the key markets of Northern Virginia, Los Angeles, and San Francisco. It focuses on retail co-location--leasing smaller spaces to dozens of tenants per data center and resulting in a less concentrated customer base than wholesale data center providers. CoreSite's top 10 customers account for about a third of its annualized rental revenue. Of its 1,400 customers, more than 450 are network service providers, which exchange traffic at CoreSite locations. Interconnection revenue, driven primarily by connections between networks and connections between enterprises and their networks or cloud service providers, constitutes just under 15% of total revenue.

1001 17th Street, Suite 500
Denver, CO, 80202
T +1 866 777-2673
Sector Real Estate
Industry REIT - Office
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2019
Stock Type Hard Assets
Employees 481