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CoreSite Realty Corp COR

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Morningstar’s Analysis

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CoreSite Reports Strong Third-Quarter Revenue and Raises 2020 Guidance

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

CoreSite reported strong third-quarter results as the firm continued to benefit from secular tailwinds for data centers. The firm’s success with three scale (smaller than hyperscale, but bigger than retail colocation) deals contributed to solid revenue growth, beating our expectations. The firm also had its best quarter for new lease signings thus far this year. Management said that customers have adapted to architecting their IT in a virtual environment, which has reinforced and expanded the firm’s sales pipeline. The firm slightly raised its 2020 guidance for adjusted EBITDA and funds from operations. Our long-term outlook for the firm is unchanged, and we don’t plan to materially change our $108 fair value estimate.

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Company Profile

Business Description

CoreSite owns and/or operates 22 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 1,200 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.

Contact
1001 17th Street, Suite 500
Denver, CO, 80202
T +1 866 777-2673
Sector Real Estate
Industry REIT - Office
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2019
Stock Type Hard Assets
Employees 464