EX-99.1 3 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

[DFT LOGO]

   

Fourth Quarter 2010

Earnings Release

and Supplemental Information

[PHOTOGRAPHS OF THE NJ1 DATA CENTER FACILITY AND INFRASTRUCTURE]

NJ1

Piscataway, NJ

 

DuPont Fabros Technology, Inc.

      (202) 728-0044       Investor Relations Contact:

1212 New York Avenue, NW

      www.dft.com       Mr. Christopher A. Warnke

Suite 900

      NYSE: DFT       investorrelations@dft.com

Washington, D.C. 20005

            (202) 478-2330


[DFT LOGO]

Fourth Quarter 2010 Results

 

Table of Contents

  

Earnings Release

     1-4   

Consolidated Statements of Operations

     5   

Reconciliations of Net Income to Funds From Operations and Adjusted Funds From Operations

     6   

Consolidated Balance Sheets

     7   

Consolidated Statements of Cash Flows

     8   

Operating Properties

     9   

Lease Expirations

     10   

Development Projects

     11   

Debt Summary and Debt Maturity

     12   

Selected Unsecured Debt Metrics and Capital Structure

     13   

Common Share and Operating Partnership Unit Weighted Average Amounts Outstanding

     14   

2011 Guidance

     15   

Note: This press release supplement contains certain non-GAAP financial measures that management believes are helpful in understanding the company’s business, as further discussed within this press release supplement. These financial measures, which include Funds From Operations, Adjusted Funds From Operations, Funds From Operations per share and Adjusted Funds From Operations per share, should not be considered as an alternative to net earnings or any other GAAP measurement of performance or as an alternative to cash flows from operating, investing or financing activities. Furthermore, these non-GAAP financial measures are not intended to be a measure of cash flow or liquidity. Information included in this supplemental package is unaudited.


[DFT LOGO]

NEWS

DUPONT FABROS TECHNOLOGY, INC. REPORTS 2010 RESULTS

Revenues up 25.3% Quarter Over Quarter and 21.1% Year Over Year

ACC5 100% Leased

Provides Outlook for 2011 Performance

WASHINGTON, DC, — February 8, 2011 - DuPont Fabros Technology, Inc. (NYSE: DFT) today reported results for the quarter and year ended December 31, 2010. All per share results are reported on a fully diluted basis.

Highlights

 

 

As of today, the company’s stabilized operating portfolio is 100% leased, NJ1 Phase I is 22% leased and CH1 Phase II is 29% pre-leased.

 

 

In the 2011 first quarter to date, the company:

 

   

Signed four leases totaling 9.75 megawatts (“MW”). This includes the 100% lease-up of ACC5 and 29% pre-lease of CH1 Phase II.

 

   

Amended its line of credit to eliminate the 1% LIBOR floor and lowered the interest rate. As of today, there are no borrowings under this facility.

 

 

Fourth quarter 2010 activity as previously reported in the third quarter earnings release:

 

   

Signed two NJ1 leases totaling 2.84 MW, or 16% of the building.

 

   

Issued 7.4 million shares of 7.875% Series A perpetual preferred stock, raising net proceeds of approximately $179 million.

 

   

Paid off in full the $196.5 million ACC4 secured loan that was scheduled to mature in October 2011.

 

   

Placed the ACC5 Phase II and NJ1 Phase I developments into operations on November 1, 2010.

Hossein Fateh, President and Chief Executive Officer of the company, said, “Over the course of the year, we continued to strengthen our balance sheet. During the fourth quarter, we opened two new developments, one of which is now 100% leased, issued our first series of perpetual preferred stock and paid off a secured loan that had a 2011 maturity date. Our principal focus for 2011 is to maximize portfolio leasing, complete two additional fully funded developments in the third quarter of 2011, and fund and start our Chicago phase II development for delivery in 2012. We remain optimistic regarding the demand of our wholesale locations.”

 

- 1 -


Fourth Quarter 2010 Results

For the quarter ended December 31, 2010, the company reported earnings of $0.10 per share compared to a loss of $0.16 per share for the fourth quarter of 2009. The difference is primarily due to the fourth quarter 2009 loss on the discontinuance of a cash flow hedge of $13.7 million, or $0.20 per share.

Revenues increased 25.3%, or $13.3 million, to $66.0 million for the fourth quarter of 2010 over the fourth quarter of 2009. This revenue increase includes a reduction of $1.8 million, or 2.7%, due to energy cost savings from the company’s continued participation in load management and rate setting programs. These energy savings, while a reduction of revenue, also represent a direct reduction of property operating costs due to the triple net lease structure in place with our tenants and, therefore, have no negative impact to earnings or Funds from Operations (“FFO”).

FFO for the quarter ended December 31, 2010 was $0.33 per share compared to $0.05 per share for the quarter ended December 31, 2009. Excluding the one-time loss on discontinuance of the cash flow hedge noted above, FFO was $0.25 per share for the fourth quarter of 2009. The increase is primarily due to higher operating income due to the lease up of certain operating properties.

Year Ended December 31, 2010 Results

For the year ended December 31, 2010, the company reported earnings of $0.51 per share compared to earnings of $0.04 per share for 2009. Revenues increased 21.1%, or $42.3 million, to $242.5 million for the year ended December 31, 2010 over the corresponding period in 2009. This revenue increase was offset by a reduction of $5.1 million, or 2.1%, due to 2010 energy cost savings from the company’s participation in load management and rate setting programs. FFO for the year ended December 31, 2010 was $1.33 per share compared to $0.88 per share for 2009. FFO for 2009 was negatively impacted by the aforementioned $0.20 per share loss on discontinuance of a cash flow hedge.

Portfolio Update

During the fourth quarter of 2010, the company:

 

   

Signed two new leases at NJ1 Phase I totaling 2.84 MW of critical load and 13,683 raised square feet with an average lease term of 12.1 years. One lease commenced in January 2011 and the other is scheduled to commence in April 2011.

 

   

Commenced six leases totaling 19.12 MW of critical load and 99,500 raised square feet. Four of the leases totaling 13.65 MW and 65,900 raised square feet were at ACC5, one lease totaling 4.33 MW and 28,200 raised square feet was at CH1 and one lease totaling 1.14 MW and 5,400 raised square feet was at NJ1.

For the twelve months ended December 31, 2010, the company:

 

   

Signed fourteen leases representing 23.18 MW of critical load, 128,869 raised square feet and renewed two leases representing 2.11 MW and 23,480 raised square feet. The average lease term at lease signing was 8.8 years representing approximately $480 million of contract value to the company.

 

   

Commenced fifteen leases totaling 30.39 MW of critical load and 163,686 raised square feet.

In 2011 to date, the company signed four new leases or pre-leases at ACC5 and CH1 Phase II totaling 9.75 MW of critical load and 53,500 raised square feet with an average lease term of 5.8 years. Leases and pre-leases are scheduled to commence in the first quarter of 2011 and in 2012, subject to funding and completion of CH1 Phase II.

SC1 Phase I in Santa Clara, California and ACC6 Phase I in Ashburn, Virginia are in development and the company currently expects each to be completed during the third quarter of 2011. Each development is fully funded, on schedule and within our expected total cost.

 

- 2 -


Capital Markets Update

In October 2010, the company sold 7.4 million shares of 7.875% Series A perpetual preferred stock at a price of $25 per share, raising net proceeds of approximately $179 million in an underwritten public offering. The company used the proceeds from this offering and a portion of its cash on hand to pay off in full the $196.5 million ACC4 Term Loan on October 25, 2010 that was originally due to mature in October 2011. The company’s earliest debt maturity is the $150 million ACC5 Term Loan in December 2014.

In February 2011, the company amended its $100 million line of credit and lowered its interest rate on this facility by eliminating the LIBOR floor of 1% and instituting a tiered pricing grid based upon leverage that ranges from LIBOR plus 3.25% to LIBOR plus 4.25%. As of today, there are no borrowings under this facility.

2011 Guidance

The company has established an FFO guidance range of $0.36 to $0.39 per share for the first quarter of 2011. The primary differences between the company’s fourth quarter 2010 FFO and the midpoint of the first quarter 2011 FFO guidance is the write-off of unamortized deferred financing costs of $0.03 per share in the fourth quarter of 2010 and $0.02 per share of increased operating income.

The company has established an FFO guidance range of $1.50 to $1.70 per share for the full year 2011. The assumptions underlying this guidance are listed on page 15 of this release. The primary differences between the company’s 2010 FFO and the midpoint of the 2011 FFO guidance are:

 

   

Increase of $0.47 per share from higher operating income, net of depreciation and amortization.

 

   

Higher financing costs expensed of $0.15 per share.

 

   

Dilution of $0.08 per share for the additional shares issued in 2010 and other items.

 

   

Write-off of $0.03 per share for the unamortized deferred financing costs in 2010.

Fourth Quarter 2010 Conference Call and Webcast Information

The company will host a conference call to discuss these results tomorrow, Wednesday, February 9, 2011 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 1-888-378-4350 (domestic) or 1-719-457-2603 (international). A replay will be available for seven days by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) using conference ID 2414285. The webcast will be archived on the company’s website for one year at www.dft.com on the Presentations & Webcasts page.

First Quarter 2011 Conference Call

DuPont Fabros Technology, Inc. expects to announce first quarter 2011 results on Tuesday, May 3, 2011 and to host a conference call to discuss those results at 10:00 a.m. ET on Wednesday, May 4, 2011.

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 Internet and enterprise companies to house, power and cool some of 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 visit www.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 its assumptions underlying its 2011 FFO guidance are not realized, the risk that the company may be unable to obtain financing on favorable terms to facilitate, among other things, future development projects, including, but not limited to, development of CH1 Phase II, the risks commonly associated with construction and development of new facilities (including delays and/or cost increases associated with the completion of new developments), risks relating to obtaining required permits and compliance with permitting, zoning, land-use and environmental requirements, the risks related to the leasing of available 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 will not declare and pay dividends as anticipated for 2011 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, 2009 and its Forms 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010, contain detailed descriptions of these and many other risks to which the company is subject. These reports are available on our website at www.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 contents of this press release.

 

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DUPONT FABROS TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except share and per share data)

 

     Quarter ended December 31,     Year ended December 31,  
     2010     2009     2010     2009  

Revenues:

        

Base rent

   $ 42,899      $ 32,936      $ 154,258      $ 116,829   

Recoveries from tenants

     20,135        17,954        78,447        69,014   

Other revenues

     2,977        1,786        9,836        14,439   
                                

Total revenues

     66,011        52,676        242,541        200,282   

Expenses:

        

Property operating costs

     17,128        16,412        67,033        62,911   

Real estate taxes and insurance

     1,342        1,657        5,281        5,291   

Depreciation and amortization

     17,156        15,150        62,483        56,701   

General and administrative

     3,607        3,216        14,743        13,358   

Other expenses

     2,163        1,310        7,124        11,485   
                                

Total expenses

     41,396        37,745        156,664        149,746   
                                

Operating income

     24,615        14,931        85,877        50,536   

Interest income

     386        31        1,074        381   

Interest:

        

Expense incurred

     (8,706     (8,361     (36,746     (25,462

Amortization of deferred financing costs

     (3,292     (4,321     (6,497     (8,854

Loss on discontinuance of cash flow hedge

     —          (13,715     —          (13,715
                                

Net income (loss)

     13,003        (11,435     43,708        2,886   

Net (income) loss attributable to redeemable noncontrolling interests – operating partnership

     (3,592     4,620        (13,261     (1,133
                                

Net income (loss) attributable to controlling interests

     9,411        (6,815     30,447        1,753   

Preferred stock dividends

     (3,157     —          (3,157     —     
                                

Net income (loss) attributable to common shares

   $ 6,254      $ (6,815   $ 27,290      $ 1,753   
                                

Earnings per share – basic:

        

Net income (loss) attributable to common shares

   $ 0.10      $ (0.16   $ 0.51      $ 0.04   
                                

Weighted average common shares outstanding

     59,055,307        41,514,002        52,800,712        39,938,225   
                                

Earnings per share – diluted:

        

Net income (loss) attributable to common shares

   $ 0.10      $ (0.16   $ 0.51      $ 0.04   
                                

Weighted average common shares outstanding

     60,310,402        41,514,002        54,092,703        40,636,035   
                                

Dividends declared per common share

   $ 0.12      $ 0.08      $ 0.44      $ 0.08   
                                

 

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DUPONT FABROS TECHNOLOGY, INC.

RECONCILIATIONS OF NET INCOME TO FFO AND AFFO (1)

(in thousands except share and per share data)

 

     Quarter ended December 31,     Year ended December 31,  
     2010     2009     2010     2009  

Net income (loss)

   $ 13,003      $ (11,435   $ 43,708      $ 2,886   

Depreciation and amortization

     17,156        15,150        62,483        56,701   

Less: Non real estate depreciation and amortization

     (190     (141     (642     (496
                                

FFO

     29,969        3,574        105,549        59,091   

Preferred stock dividends

     (3,157     —          (3,157     —     
                                

FFO attributable to common shares and OP units

   $ 26,812      $ 3,574      $ 102,392      $ 59,091   

Straight-line revenues

     (9,514     (6,808     (35,403     (18,312

Amortization of lease contracts above and below market value

     (535     (1,648     (2,505     (6,881

Loss on discontinuance of cash flow hedge

     —          13,715        —          13,715   

Loss on early extinguishment of debt

     2,547        2,825        2,547        3,872   

Compensation paid with Company common shares

     1,005        513        3,803        1,944   
                                

AFFO

   $ 20,315      $ 12,171      $ 70,834      $ 53,429   
                                

FFO attributable to common shares and OP units
per share - diluted

   $ 0.33      $ 0.05      $ 1.33      $ 0.88   
                                

AFFO per share - diluted

   $ 0.25      $ 0.18      $ 0.92      $ 0.79   
                                

Weighted average common shares and OP units
outstanding - diluted

     82,392,751        67,937,872        77,085,859        67,350,581   
                                
        

 

(1) Funds from operations, or FFO, is used by industry analysts and investors as a supplemental operating performance measure for REITs. The Company calculates 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. FFO per share is calculated on a basis consistent with net income attributable to common shares and OP units and reflects adjustments to net income for preferred stock dividends.

The Company uses 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. The Company also believes that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare the Company’s 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 the Company’s properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the Company’s properties, all of which have real economic effects and could materially impact the Company’s results from operations, the utility of FFO as a measure of the Company’s 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 the Company’s FFO. Therefore, the Company believes that in order to facilitate a clear understanding of its 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 the Company’s cash needs, including its ability to pay dividends or make distributions.

The Company also presents FFO with supplemental adjustments to arrive at Adjusted FFO (“AFFO”). AFFO is FFO attributable to common shares and OP units 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 the Company’s 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 the Company’s cash needs including the Company’s ability to pay dividends. In addition, AFFO may not be comparable to similarly titled measurements employed by other companies. The Company’s 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)

 

     December 31,
2010
    December 31,
2009
 
ASSETS     

Income producing property:

    

Land

   $ 50,531      $ 44,001   

Buildings and improvements

     1,779,955        1,438,598   
                
     1,830,486        1,482,599   

Less: accumulated depreciation

     (172,537     (115,225
                

Net income producing property

     1,657,949        1,367,374   

Construction in progress and land held for development

     336,686        330,170   
                

Net real estate

     1,994,635        1,697,544   

Cash and cash equivalents

     226,950        38,279   

Marketable securities held to maturity

     —          138,978   

Restricted cash

     1,600        10,222   

Rents and other receivables

     3,227        2,550   

Deferred rent

     92,767        57,364   

Lease contracts above market value, net

     13,484        16,349   

Deferred costs, net

     45,543        52,208   

Prepaid expenses and other assets

     19,245        9,551   
                

Total assets

   $ 2,397,451      $ 2,023,045   
                
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Liabilities:

    

Mortgage notes payable

   $ 150,000      $ 348,500   

Unsecured notes payable

     550,000        550,000   

Accounts payable and accrued liabilities

     21,409        16,301   

Construction costs payable

     67,262        6,229   

Accrued interest payable

     2,766        3,510   

Dividend and distribution payable

     12,970        —     

Lease contracts below market value, net

     23,319        28,689   

Prepaid rents and other liabilities

     22,644        15,564   
                

Total liabilities

     850,370        968,793   

Redeemable noncontrolling interests—operating partnership

     466,823        448,811   

Commitments and contingencies

     —          —     

Stockholders’ equity:

    

Preferred stock, par value $.001, 50,000,000 shares authorized, 7,400,000 issued and outstanding at December 31, 2010 and no shares issued or outstanding at December 31, 2009

     185,000        —     

Common stock, par value $.001, 250,000,000 shares authorized, 59,827,005 shares issued and outstanding at December 31, 2010 and 42,373,340 shares issued and outstanding at December 31, 2009

     60        42   

Additional paid in capital

     946,379        683,870   

Accumulated deficit

     (51,181     (78,471
                

Total stockholders’ equity

     1,080,258        605,441   
                

Total liabilities and stockholders’ equity

   $ 2,397,451      $ 2,023,045   
                

 

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DUPONT FABROS TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Year ended December 31,  
     2010     2009  

Cash flow from operating activities

    

Net income

   $ 43,708      $ 2,886   

Adjustments to reconcile net income to net cash provided by operating activities

    

Depreciation and amortization

     62,483        56,701   

Straight line rent

     (35,403     (18,312

Loss on discontinuance of cash flow hedge

     —          13,715   

Amortization of deferred financing costs

     3,950        4,982   

Write-off of deferred financing costs

     2,547        3,872   

Amortization of lease contracts above and below market value

     (2,505     (6,881

Compensation paid with Company common shares

     3,803        1,944   

Changes in operating assets and liabilities

    

Restricted cash

     (274     (88

Rents and other receivables

     (852     (1,472

Deferred costs

     (2,563     (2,866

Prepaid expenses and other assets

     (7,811     (1,373

Accounts payable and accrued liabilities

     5,083        4,824   

Accrued interest payable

     (744     1,729   

Prepaid rents and other liabilities

     5,261        6,237   
                

Net cash provided by operating activities

     76,683        65,898   
                

Cash flow from investing activities

    

Investments in real estate – development

     (265,217     (113,918

Marketable securities held to maturity:

    

Purchase

     (60,000     (138,978

Redemption

     198,978        —     

Interest capitalized for real estate under development

     (25,177     (5,691

Improvements to real estate

     (2,985     (3,384

Additions to non-real estate property

     (630     (404
                

Net cash used in investing activities

     (155,031     (262,375
                

Cash flow from financing activities

    

Issuance of common stock, net of offering costs

     305,176        —     

Issuance of preferred stock, net of offering costs

     178,620        —     

Line of credit:

    

Repayments

     —          (233,424

Unsecured notes payable:

    

Proceeds

     —          550,000   

Mortgage notes payable:

    

Proceeds

     —          331,726   

Lump sum payoffs

     (196,500     (365,121

Repayments

     (2,000     (51,500

Return (payment) of escrowed proceeds

     8,896        (10,000

Exercises of stock options

     820        —     

Payments of financing costs

     (2,950     (21,310

Payment for termination of cash flow hedge

     —          (13,715

Dividends and distributions:

    

Common shares

     (17,796     (3,389

Redeemable noncontrolling interests – operating partnership

     (7,247     (2,023
                

Net cash provided by financing activities

     267,019        181,244   
                

Net increase (decrease) in cash and cash equivalents

     188,671        (15,233

Cash and cash equivalents, beginning

     38,279        53,512   
                

Cash and cash equivalents, ending

   $ 226,950      $ 38,279   
                

Supplemental information:

    

Cash paid for interest, net of amounts capitalized

   $ 37,490      $ 23,732   
                

Deferred financing costs capitalized for real estate under development

   $ 1,198      $ 1,330   
                

Construction costs payable capitalized for real estate under development

   $ 67,262      $ 6,229   
                

Redemption of OP units for common shares

   $ 68,000      $ 96,700   
                

Adjustments to redeemable non-controlling interests

   $ 82,632      $ 58,105   
                

 

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DUPONT FABROS TECHNOLOGY, INC.

Operating Properties

As of December 31, 2010

 

Property

   Property Location      Year  Built/
Renovated
     Gross
Building
Area
(2)
     Raised
Square
Feet
(3)
     Critical
Load
MW
(4)
     %
Leased
(5)
    %
Commenced
(5)
 

Stabilized (1)

                   

ACC2

     Ashburn, VA         2001/2005         87,000         53,000         10.4         100     100

ACC3

     Ashburn, VA         2001/2006         147,000         80,000         13.9         100     100

ACC4

     Ashburn, VA         2007         347,000         172,000         36.4         100     100

ACC5 (6)

     Ashburn, VA         2009-2010         360,000         176,000         36.4         88     88

CH1 Phase I

     Elk Grove Village, IL         2008         285,000         122,000         18.2         100     100

VA3

     Reston, VA         2003         256,000         147,000         13.0         100     100

VA4

     Bristow, VA         2005         230,000         90,000         9.6         100     100
                                     

Subtotal— stabilized

  

        1,712,000         840,000         137.9        

Completed not Stabilized

  

                

NJ1 Phase I (6)

     Piscataway, NJ         2010         180,000         88,000         18.2         22     6
                                     

Total Operating Properties

  

        1,892,000         928,000         156.1        
                                     

 

(1) Stabilized operating properties are either 85% or more leased or have been 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 the tenants’ computer servers are located), tenant common areas, areas controlled by the Company (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to the tenants.
(3) Raised square footage is that portion of gross building area where the tenants locate their computer servers. The Company considers raised square footage to be the net rentable square footage in each of its 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 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. Percentage commenced is expressed as a percentage of critical load where the lease has commenced under generally accepted accounting principles. Leases executed as of December 31, 2010 (including the 16% of NJ1 Phase I leased but not commenced) represent $185 million of base rent on a straight-line basis and $154 million on a cash basis over the next twelve months. This excludes contractual management fees and approximately $2 million of revenues from the amortization of above and below market leases.
(6) As of February 8, 2011, ACC5 is 100% leased and 100% commenced, and NJ1 Phase I is 22% leased and 9% commenced.

 

- 9 -


DUPONT FABROS TECHNOLOGY, INC.

Lease Expirations

As of December 31, 2010

The following table sets forth a summary schedule of lease expirations of the operating properties for each of the ten calendar years beginning with 2011. The information set forth in the table assumes that tenants exercise no renewal options and takes into account early tenant termination options.

 

Year of Lease Expiration

   Number
of Leases
Expiring (1)
     Raised
Square Feet
Expiring
(in thousands) (2)
     % of  Leased
Raised
Square Feet
    Total kW
of  Expiring
Leases (3)
     % of
Leased kW
    % of
Annualized
Base Rent
 

2011

     1         5         0.6     1,138         0.8     0.9

2012

     2         82         9.8     7,340         5.3     4.8

2013

     3         45         5.4     4,630         3.4     2.4

2014

     7         50         5.9     7,887         5.7     6.0

2015

     7         99         11.8     17,850         13.0     12.0

2016

     4         72         8.6     10,423         7.6     7.6

2017

     6         80         9.6     13,388         9.8     9.9

2018

     4         75         9.0     15,309         11.2     11.4

2019

     9         119         14.3     21,500         15.7     14.5

2020

     6         65         7.7     11,862         8.6     9.5

After 2020

     9         145         17.3     26,003         18.9     21.0
                                                   

Total

     58         837         100     137,330         100     100
                                                   

 

(1) The operating properties have a total of 27 tenants with 58 different lease expiration dates. The top three tenants represented 60% of annualized base rent as of December 31, 2010.
(2) Raised square footage is that portion of gross building area where the tenants locate their computer servers. The Company considers raised square footage to be the net rentable square footage in each of its facilities.
(3) One MW is equal to 1,000 kW.

 

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DUPONT FABROS TECHNOLOGY, INC.

Development Projects

As of December 31, 2010

($ 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
 

Current Development Projects

  

                

SC1 Phase I

     Santa Clara, CA (6)        180,000         88,000         18.2       $ 230,000 - 260,000       $ 146,787         0

ACC6 Phase I

     Ashburn, VA (6)        131,000         66,000         13.0         110,000 - 130,000         60,167         0
                                                 
       311,000         154,000         31.2       $ 340,000 - 390,000         206,954      
                                                 

Future Development Projects/Phases

  

                

CH1 Phase II

     Elk Grove Village, IL (7)        200,000         109,000         18.2       $ 17,715         17,715      

NJ1 Phase II

     Piscataway, NJ        180,000         88,000         18.2         44,000 - 46,000         39,275      

SC1 Phase II

     Santa Clara, CA        180,000         88,000         18.2         50,000 - 60,000         46,225      

ACC6 Phase II

     Ashburn, VA        131,000         66,000         13.0         25,000 - 30,000         20,053      
                                                 
       691,000         351,000         67.6       $ 136,715 - 153,715         123,268      
                                                 

Land Held for Development

  

                

ACC7

     Ashburn, VA        100,000         50,000         10.4         —           4,242      

SC2 Phase I/II

     Santa Clara, CA        300,000         171,000         36.4         —           2,222      
                                           
       400,000         221,000         46.8            6,464      
                                           

Total

       1,402,000         726,000         145.6          $ 336,686      
                                           

 

(1) Gross building area is the entire building area, including raised square footage (the portion of gross building area where the tenants’ computer servers are located), tenant common areas, areas controlled by the Company (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to the tenants.
(2) Raised square footage is that portion of gross building area where the tenants locate their computer servers. The Company considers raised square footage to be the net rentable square footage in each of its 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 tenants expressed in terms of MW or kW (1 MW is equal to 1,000 kW).
(4) Current development projects include land, capitalization for construction and development, capitalized interest and capitalized operating carrying costs, as applicable, upon completion. Future Phase II development projects include land, shell, underground work and capitalized interest through Phase I opening only; CH1 Phase II project costs includes land, shell and capitalized interest only.
(5) Amount capitalized as of December 31, 2010.
(6) Completion expected during the third quarter of 2011.
(7) As of February 8, 2011, CH1 Phase II is 29% pre-leased.

 

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DUPONT FABROS TECHNOLOGY, INC.

Debt Summary as of December 31, 2010

($ in thousands)

 

     Amounts      % of Total     Rates (1)     Maturities
(years)
 

Secured

   $ 150,000         21.4     5.8     3.9   

Unsecured

     550,000         78.6     8.5     6.3   
                                 

Total

   $ 700,000         100.0     7.9     5.8   
                                 

Fixed Rate Debt:

         

Unsecured Notes

   $ 550,000         78.6     8.5     6.3   
                                 

Fixed Rate Debt

     550,000         78.6     8.5     6.3   
                                 

Floating Rate Debt:

         

Unsecured Credit Facility

     —           —          —          2.3   

ACC5 Term Loan

     150,000         21.4     5.8     3.9   
                                 

Floating Rate Debt

     150,000         21.4     5.8     3.9   
                                 

Total

   $ 700,000         100.0     7.9     5.8   
                                 

 

Note: The Company capitalized interest and deferred financing cost amortization of $6.0 million and $26.4 million during the three and twelve months ended December 31, 2010, respectively.
(1) Rate as of December 31, 2010.

Debt Maturity as of December 31, 2010

($ in thousands)

 

Year

   Fixed Rate     Floating Rate     Total      % of Total     Rates (3)  

2011

   $ —        $ 5,200 (2)    $ 5,200         0.7     5.8

2012

     —          5,200 (2)      5,200         0.7     5.8

2013

     —          5,200 (2)      5,200         0.7     5.8

2014

     —          134,400 (2)      134,400         19.2     5.8

2015

     125,000 (1)      —          125,000         17.9     8.5

2016

     125,000 (1)      —          125,000         17.9     8.5

2017

     300,000 (1)      —          300,000         42.9     8.5
                                         

Total

   $ 550,000      $ 150,000      $ 700,000         100     7.9
                                         

 

(1) The Unsecured Notes have mandatory amortizations of $125.0 million due in 2015, $125.0 million due in 2016 and $300.0 million due in 2017.
(2) The ACC5 Term Loan matures on December 2, 2014 with no extension option. Scheduled quarterly principal amortization payments of $1.3 million started in the first quarter of 2011.
(3) Rate as of December 31, 2010.

 

- 12 -


DUPONT FABROS TECHNOLOGY, INC.

Selected Unsecured Debt Metrics

 

     12/31/10     9/30/10  

Interest Coverage ratio (not less than 2.0)

     2.8        2.2   

Total Debt to Gross Asset Value (not to exceed 60%)

     27.4     35.4

Secured Debt to Total Assets (not to exceed 40%)

     5.9     13.7

Total Unsecured Assets to Unsecured Debt (not less than 150%)

     308.8     198.2

These selected metrics relate to DuPont Fabros Technology, LP’s outstanding unsecured debt. DuPont Fabros Technology, Inc. is the general partner of DuPont Fabros Technology, LP.

Capital Structure as of December 31, 2010

(in thousands except per share data)

 

Mortgage Notes Payable

           $ 150,000      

Unsecured Notes

             550,000      
                   

Total Debt

             700,000         26.7

Common Shares

     73     59,827            

Operating Partnership (“OP”) Units

     27     21,948            
                         

Total Shares and Units

     100     81,775            

Common Share Price at December 31, 2010

     $ 21.27            
                   

Common Share and OP Unit Capitalization

        $ 1,739,354         

Preferred Stock ($25 per share liquidation preference)

          185,000         
                   

Total Equity

             1,924,354         73.3
                         

Total Market Capitalization

           $ 2,624,354         100.0
                         

 

- 13 -


DUPONT FABROS TECHNOLOGY, INC.

Common Share and OP Unit

Weighted Average Amounts Outstanding

 

     Q4 2010      Q4 2009      YTD
Q4 2010
     YTD
Q4 2009
 

Weighted Average Amounts Outstanding for EPS Purposes:

           

Common Shares – basic

     59,055,307         41,514,002         52,800,712         39,938,225   

Shares issued from assumed conversion of:

           

- Restricted Shares

     418,938         —           409,563         268,316   

- Stock Options

     836,157         —           882,428         429,494   
                                   

Total Common Shares - diluted

     60,310,402         41,514,002         54,092,703         40,636,035   
                                   

Weighted Average Amounts Outstanding for FFO and AFFO Purposes:

           

Common Shares – basic

     59,055,307         41,514,002         52,800,712         39,938,225   

OP Units – basic

     22,082,349         25,166,370         22,993,156         26,714,546   
                                   

Total Common Shares and OP Units

     81,137,656         66,680,372         75,793,868         66,652,771   

Shares and OP Units issued from assumed conversion of:

           

- Restricted Shares

     418,938         463,802         409,563         268,316   

- Stock Options

     836,157         793,698         882,428         429,494   
                                   

Total Common Shares and Units - diluted

     82,392,751         67,937,872         77,085,859         67,350,581   
                                   

Period Ending Amounts Outstanding:

           

Common Shares

     59,827,005            

OP Units

     21,947,501            
                 

Total Common Shares and Units

     81,774,506            
                 

 

- 14 -


DUPONT FABROS TECHNOLOGY, INC.

2011 Guidance

The earnings guidance/projections provided below are based on current expectations and are forward-looking.

 

     Expected Q1 2011
per share
     Expected 2011
per share
 

Net income per common share and unit – diluted

   $ 0.14 to $0.17       $ 0.58 to $0.74   

Depreciation and amortization, net

     $0.22         0.92 to 0.96   
                 

FFO per share – diluted (1)

   $ 0.36 to $0.39       $ 1.50 to $1.70   
                 

Note: 2011 guidance assumes additional financings of $100 million in early 2011 and $75 million in late 2011.

2011 Debt Assumptions

 

Weighted average debt outstanding

   $696.8 million

Weighted average interest rate

   7.9%

Total interest costs

   $55.0 million

Amortization of deferred financing costs

   $3.6 million

Interest expense capitalized

   $(22.9) to $(25.7) million

Deferred financing costs amortization capitalized

   $(1.2) to $(1.4) million
    

Total interest expense after capitalization

   $31.5 to $34.5 million
    

2011 Other Guidance Assumptions

 

Total revenues

   $285 to $315 million

Other revenues (included in total revenues)

   $8 to $10 million

Straight-line revenues (included in total revenues)

   $35 to $45 million

Below market lease amortization, net of above market lease amortization

   $2 million

General and administrative expense

   $16 to $18 million

Investments in real estate - development

   $380 to $400 million

Improvements to real estate excluding development

   $4 to $6 million

Estimated dividend distribution payout

   $0.48 per share

Weighted average common shares and OP units - diluted

   83 million

 

(1) Funds from operations, or FFO, is used by industry analysts and investors as a supplemental operating performance measure for REITs. The Company calculates 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. FFO per share is calculated on a basis consistent with net income attributable to common shares and OP units and reflects adjustments to net income for preferred stock dividends.

The Company uses 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. The Company also believes that, as a widely recognized measure of the performance of equity REITs, FFO will be used by investors as a basis to compare the Company’s 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 the Company’s properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the Company’s properties, all of which have real economic effects and could materially impact the Company’s results from operations, the utility of FFO as a measure of the Company’s 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 the Company’s FFO. Therefore, the Company believes that in order to facilitate a clear understanding of its 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 the Company’s cash needs, including its ability to pay dividends or make distributions.

 

- 15 -