CoreSite Realty Return At 28 Percent This Year

It is not surprising that a 3 percent share price uptick followed the release of CoreSite Realty Corporation’s results (NYSE: COR) for the second quarter of 2015 last Thursday. Which REITs can boast hefty two-digit growth in most of its metrics besides those in the data center sector? One of the best-performing sectors, data center REITs displayed 11 percent growth, on average, in year-to-date returns, and CoreSite has been “leading the pack” with a whopping 28 percent return.

A small, fast-growth capitalization company with low debt to total capitalization, CoreSite has shown a 19 percent FFO-per-share increase in Q2 2015 from Q2 2014 and expects that for the whole year to increase by 26 percent. So far, dividend-per-share has increased 20 percent while dividend payout is a conservative 62 percent. Dividend yield has been below the peer median — 3.4 vs. 4.2 percent.

CoreSite has witnessed accelerated demand for smaller colocation leases, representing over 90 percent of all leases in the company. This can be indicated by several strong operational metrics. For instance, occupancy for stabilized data centers has advanced 450 basis points to 89.9 percent from Q2 2014 compared to the same period last year.

Management sees no significant threat from the recent Telx-Digital Realty combination. Although expecting greater competition, especially in collocation, they still see themselves able to cope with those events.

From a price-to-FFO perspective, the multiple has been at 20.4×. We will await the results from peers over the next two weeks so we can compare businesses more accurately. Stay tuned!

Signup button

Source: CoreSite Realty Corporation, Fast Graphs


Written by Heli Brecailo

Disclaimer: This newsletter is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Please do your own due diligence before making any investment decision. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.

Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.​