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Dupont Fabros Technology, Inc. Reports Second Quarter 2017 Results

WASHINGTON, July 27, 2017 (GLOBE NEWSWIRE) -- DuPont Fabros Technology, Inc. (NYSE:DFT) announces results for the quarter ended June 30, 2017. All per share results are reported on a fully diluted basis.

Highlights

  • As of July 27, 2017, our operating portfolio was 98% leased and commenced as measured by critical load (in megawatts, or "MW") and computer room square feet ("CRSF"), and 48% of the MW under development have been pre-leased.

  • Second Quarter 2017 Highlights:

    • Double digit growth rates versus prior year quarter:

      • Normalized Funds from Operations ("FFO") per share: +22%

      • Adjusted FFO ("AFFO"): +27%

    • Placed ACC9 Phase I, totaling 14.40 MW and 90,000 CRSF, into service 70% leased.

    • As disclosed in our first quarter 2017 earnings release:

      • Executed three pre-leases totaling 28.80 MW and 161,822 CRSF in our ACC9 and CH3 data centers, with a weighted average lease term of 8.5 years.

      • Commenced development of ACC10 Phase I in Ashburn, Virginia, comprising 15.00 MW and 91,000 CRSF, with expected delivery in the second quarter of 2018.

      • Commenced development of CH3 Phase II, comprising 12.80 MW and 89,000 CRSF, with expected delivery in the second quarter of 2018.

  • Third Quarter 2017 Highlights to date:

    • Extended the terms of two leases totaling 3.47 MW and 18,116 CRSF by 5.0 years each.

Agreement to Merge with Digital Realty

On June 9, 2017, we and Digital Realty Trust, Inc. (“DLR”) announced that DFT and our OP and DLR, Digital Realty Trust, L.P., DLR’s operating partnership ("DLR OP"), and three other DLR subsidiaries entered into an Agreement and Plan of Merger (the “Merger Agreement”). Under the Merger Agreement:

  • DFT will be merged with and into a DLR merger subsidiary and become a wholly-owned subsidiary of DLR; and

  • another DLR merger subsidiary will be merged with and into our OP, and our OP will become a subsidiary of DLR.

The consummation of the mergers are subject to certain customary closing conditions. Pursuant to the terms and conditions in the Merger Agreement, at the effective time of the mergers:

  • each share of DFT's common stock will be converted into the right to receive 0.545 shares of DLR common stock;

  • each common unit of partnership interests in the OP will be converted into the right to receive 0.545 common units in the DLR OP, or, in the alternative, each unit holder may elect to redeem his or her units and receive 0.545 shares of DLR common stock for each unit; and

  • each share of DFT's 6.625% Series C Cumulative Redeemable Perpetual Preferred Stock will be converted into the right to receive one share of a newly designated class of preferred stock of DLR, which will have substantially similar rights, privileges, preferences and interests as DFT's 6.625% Series C Preferred Stock.

Second Quarter 2017 Results

For the quarter ended June 30, 2017, earnings were $0.38 per share compared to $0.49 per share in the second quarter of 2016. The decrease in earnings per share was primarily due to:

  • Costs incurred in the second quarter of 2017 of $0.08 per share associated with the pending merger with DLR,

  • Gain on the sale of the NJ1 data center of $0.23 per share in the second quarter of 2016, partially offset by

  • Write-off of issuance costs in the second quarter of 2016 associated with the redemption of preferred shares of $0.10 per share and

  • Severance costs and equity accelerations for the NJ1 employees in the second quarter of 2016 totaling $0.01 per share.

Excluding these items, earnings increased $0.09 per share, or 24%, year over year, which was primarily due to new leases that commenced and lower preferred stock dividends. For the quarter ended June 30, 2017, revenues were $140.7 million, an increase of 9%, or $12.2 million, over the second quarter of 2016. The increase in revenues was primarily due to new leases commencing, partially offset by lower à la carte project revenue.

For the quarter ended June 30, 2017, NAREIT FFO was $0.70 per share compared to $0.53 per share for the prior year quarter. NAREIT FFO for the second quarter of 2017 included $0.08 per share of merger costs and, for the second quarter of 2016, included $0.10 per share of issuance costs associated with redeemed preferred shares and $0.01 of severance expense and equity acceleration associated with the sale of the NJ1 data center. The increase of $0.17 per share of NAREIT FFO is due to the items discussed above and below.

Normalized FFO for the quarter ended June 30, 2017 was $0.78 per share compared to $0.64 per share for the second quarter of 2016. Normalized FFO increased $0.14 per share, or 22%, from the prior year quarter primarily due to the following:

  • Increased operating income, excluding depreciation of $0.10 per share, primarily due to new leases commencing and

  • Lower preferred stock dividends of $0.04 per share due to fewer preferred shares outstanding and a lower dividend rate.

First Half 2017 Results

For the six months ended June 30, 2017, earnings were $0.83 per share compared to $0.86 per share in the prior year period. The decrease in earnings per share was primarily due to:

  • Costs incurred in the second quarter of 2017 of $0.08 per share associated with the pending merger with DLR,

  • Gain on the sale of the NJ1 data center of $0.23 per share in the second quarter of 2016, partially offset by

  • Write-off of issuance costs in the second quarter of 2016 associated with the redemption of preferred shares of $0.10 per share and

  • Severance costs and equity accelerations for the Chief Revenue Officer in the first quarter of 2017 and for the NJ1 employees in the second quarter of 2016, each totaling $0.01 per share for each period.

Excluding these items, earnings increased $0.18 per share, or 24%, year over year, which was primarily due to new leases that commenced and lower preferred stock dividends. For the six months ended June 30, 2017, revenues were $280.2 million, an increase of 11%, or $27.5 million, over the first half of 2016. The increase in revenues was primarily due to new leases commencing, partially offset by lower à la carte project revenue.

For the six months ended June 30, 2017, NAREIT FFO was $1.46 per share compared to $1.19 per share for the prior year period. NAREIT FFO for 2017 included $0.08 per share of merger costs and $0.01 per share of severance expense and equity acceleration associated with the departure of our Chief Revenue Officer and for 2016 included $0.10 per share of issuance costs associated with redeemed preferred shares and $0.01 of severance expense and equity acceleration associated with the sale of the NJ1 data center. The increase of $0.27 per share of NAREIT FFO is due to the items discussed above and below.

Normalized FFO for the six months ended June 30, 2017 was $1.55 per share compared to $1.31 per share for the prior year period. Normalized FFO increased $0.24 per share, or 18%, from the prior year period primarily due to the following:

  • Increased operating income, excluding depreciation of $0.21 per share, primarily due to new leases commencing and

  • Lower preferred stock dividends of $0.08 per share due to fewer preferred shares outstanding and a lower dividend rate, partially offset by

  • $0.05 per share from the issuance of common equity in the first quarter of 2016.

Portfolio Update

During the second quarter 2017, we:

  • Executed three pre-leases totaling 28.80 MW and 161,822 CRSF:

    • One pre-lease was for the entire CH3 Phase I, comprising 14.40 MW and 71,506 CRSF. This lease is expected to commence in the first quarter of 2018 when CH3 Phase I is placed into service. CH3 Phase I is now 100% pre-leased with respect to both critical load and CRSF.

    • One pre-lease was for 7.20 MW and 45,158 CRSF in ACC9 Phase I. This pre-lease commenced on June 1, 2017, and ACC9 Phase I is 70% leased on critical load and CRSF.

    • One pre-lease was for 7.20 MW and 45,158 CRSF in ACC9 Phase II. This pre-lease is expected to commence in the third quarter of 2017 when ACC9 Phase II is placed into service. ACC9 Phase II is now 50% pre-leased on both critical load and CRSF.

Subsequent to the second quarter 2017, we:

  • Extended the terms of two leases totaling 3.47 MW and 18,116 CRSF.

    • One lease at ACC6 totaling 2.17 MW and 9,966 CRSF was extended by 5.0 years. Cash base rent will increase by 3.0% when the extension period begins on July 1, 2018 and GAAP base rent will increase by 10.5% immediately.

    • One lease at CH1 totaling 1.30 MW and 8,150 CRSF was extended by 5.0 years. Cash base rent will increase by 3.0% when the extension period begins on July 1, 2018 and GAAP base rent will increase by 10.5% immediately.

Year to date, we:

  • Executed six new leases (including lease amendments and pre-leases), with a weighted average lease term of 8.1 years, totaling 34.42 MW and 200,765 CRSF, which are expected to generate approximately $36.7 million of annualized GAAP base rent revenue, which is equivalent to a GAAP rate of $89 per kW per month. These leases are expected to generate approximately $46.4 million of GAAP annualized revenue, which includes estimated amounts of operating expense recoveries, net of recovery of metered power, which results in a GAAP rate of $112 per kW per month.

  • Extended the terms of two leases totaling 3.47 MW by 5.0 years. On a weighted average basis, cash base rents will increase 3.0% when the extension periods begin and GAAP base rents increased 10.5% immediately. The average GAAP base rent rate related to these extensions was $128 per kW per month and, including operating expense recoveries, was $154 per kW per month.

  • Commenced six leases totaling 20.25 MW and 123,501 CRSF.

Development Update

Below is a summary of our projects currently under development:

Data Center Phase Critical Load
Capacity (MW)
Anticipated
Placed in Service Date
Percentage Pre-Leased
CRSF / Critical Load
SC1 Phase III 16.0 Q3 2017 100% / 100%
ACC9 Phase II 14.4 Q3 2017 50% / 50%
TOR1 Phase IA 6.0 Q4 2017
CH3 Phase I 14.4 Q1 2018 100% / 100%
CH3 Phase II 12.8 Q2 2018
ACC10 Phase I 15.0 Q2 2018
78.6

Balance Sheet and Liquidity

As of July 27, 2017, we had $423.5 million in borrowings under our revolving credit facility, leaving $326.5 million available for additional borrowings.

In order to provide liquidity through the outside merger closing date of November 15, 2017, we have obtained a 364-day bridge loan commitment of $200 million from Goldman Sachs Bank USA. As of July 27, 2017, there are no borrowings under this bridge loan commitment.

Dividend

Our second quarter 2017 dividend of $0.50 per share was paid on July 17, 2017 to shareholders of record as of July 3, 2017. The anticipated 2017 annualized dividend of $2.00 per share represents a yield of approximately 3.3% based on our current stock price.

Guidance

We are no longer giving guidance due to the pending merger with Digital Realty Trust.

About DuPont Fabros Technology, Inc.

DuPont Fabros Technology, Inc. (NYSE:DFT) is a leading owner, developer, operator and manager of enterprise-class, carrier neutral, multi-tenant wholesale data centers. The Company's facilities are designed to offer highly specialized, efficient and safe computing environments in a low-cost operating model. The Company's customers outsource their mission critical applications and include national and international enterprises across numerous industries, such as technology, Internet content providers, media, communications, cloud-based, healthcare and financial services. The Company's 12 data centers are located in three major U.S. markets, which total 3.5 million gross square feet and 301.5 megawatts of available critical load to power the servers and computing equipment of its customers. The Company is in the process of expanding into two new markets. DuPont Fabros Technology, Inc., a real estate investment trust (REIT), is headquartered in Washington, DC. For more information, please visit www.dft.com.

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 our control. We face many risks that could cause our actual performance to differ materially from the results contemplated by our forward-looking statements, including, without limitation, the risk that the proposed merger with DLR will not be consummated, the risks related to the leasing of available space to third-party customers, including delays in executing new leases, failure to negotiate leases on terms that will enable us to achieve our expected returns and declines in rental rates at new and existing facilities, risks related to the collection of accounts and notes receivable, the risk that we may be unable to obtain new financing on favorable terms to facilitate, among other things, future development projects, the risks commonly associated with the acquisition of development sites, 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 risk that we will not declare and pay dividends as anticipated for future periods and the risk that we may not be able to maintain our qualification as a REIT for federal tax purposes. The periodic reports that we file with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31, 2016 and the quarterly report on Form 10-Q for the quarter ended March 31, 2017 contain detailed descriptions of these and many other risks to which we are subject. These reports are available on our website at www.dft.com. Because of the risks described above and other unknown risks, our actual results, performance or achievements may differ materially from the results, performance or achievements contemplated by our forward-looking statements. The information set forth in this news release represents our expectations and intentions only as of the date of this press release. We assume no responsibility to issue updates to the contents of this press release.

DUPONT FABROS TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands except share and per share data)
Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Revenues:
Base rent $92,931 $83,362 $184,199 $165,895
Recoveries from tenants 46,073 41,695 91,368 80,389
Other revenues 1,706 3,481 4,627 6,403
Total revenues 140,710 128,538 280,194 252,687
Expenses:
Property operating costs 41,472 37,933 81,663 73,888
Real estate taxes and insurance 5,029 5,840 10,039 11,156
Depreciation and amortization 28,948 26,323 57,155 52,166
General and administrative 6,276 5,274 13,088 10,849
Transaction expenses 7,128 7,128
Other expenses 1,307 3,193 4,012 5,542
Total expenses 90,160 78,563 173,085 153,601
Operating income 50,550 49,975 107,109 99,086
Interest:
Expense incurred (11,793) (11,563) (23,252) (23,132)
Amortization of deferred financing costs (794) (919) (1,619) (1,764)
Gain on sale of real estate 23,064 23,064
Net income 37,963 60,557 82,238 97,254
Net income attributable to redeemable noncontrolling interests – operating partnership (4,506) (7,467) (10,218) (12,945)
Net income attributable to controlling interests 33,457 53,090 72,020 84,309
Preferred stock dividends (3,333) (6,964) (6,666) (13,775)
Issuance costs associated with redeemed preferred stock (8,827) (8,827)
Net income attributable to common shares $30,124 $37,299 $65,354 $61,707
Earnings per share – basic:
Net income attributable to common shares $0.39 $0.50 $0.84 $0.87
Weighted average common shares outstanding 77,486,297 74,370,577 77,080,615 70,661,406
Earnings per share – diluted:
Net income attributable to common shares $0.38 $0.49 $0.83 $0.86
Weighted average common shares outstanding 78,487,973 75,231,634 78,071,944 71,518,495
Dividends declared per common share $0.50 $0.47 $1.00 $0.94


DUPONT FABROS TECHNOLOGY, INC.
RECONCILIATIONS OF NET INCOME TO NAREIT FFO, NORMALIZED FFO AND AFFO (1)
(unaudited and in thousands except share and per share data)

Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Net income $37,963 $60,557 $82,238 $97,254
Depreciation and amortization 28,948 26,323 57,155 52,166
Less: Non-real estate depreciation and amortization (231) (200) (435) (394)
Gain on sale of real estate (23,064) (23,064)
NAREIT FFO 66,680 63,616 138,958 125,962
Preferred stock dividends (3,333) (6,964) (6,666) (13,775)
Issuance costs associated with redeemed preferred shares (8,827) (8,827)
NAREIT FFO attributable to common shares and common units 63,347 47,825 132,292 103,360
Transaction expenses 7,128 7,128
Severance expense and equity acceleration 891 532 891
Issuance costs associated with redeemed preferred shares 8,827 8,827
Normalized FFO attributable to common shares and common units 70,475 57,543 139,952 113,078
Straight-line revenues, net of reserve 741 696 2,459 (1,041)
Amortization and write-off of lease contracts above and below market value (94) (106) (365) (222)
Compensation paid with Company common shares 2,198 1,521 4,570 3,290
Non-real estate depreciation and amortization 231 200 435 394
Amortization of deferred financing costs 794 919 1,619 1,764
Improvements to real estate (232) (999) (418) (3,098)
Capitalized leasing commissions (614) (1,839) (890) (3,450)
AFFO attributable to common shares and common units $73,499 $57,935 $147,362 $110,715
NAREIT FFO attributable to common shares and common units per share – diluted $0.70 $0.53 $1.46 $1.19
Normalized FFO attributable to common shares and common units per share – diluted $0.78 $0.64 $1.55 $1.31
Weighted average common shares and common units outstanding – diluted 90,303,991 89,985,913 90,307,954 86,520,893


(1) Funds from operations, or FFO, is used by industry analysts and investors as a supplemental operating performance measure for REITs. We calculate 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, impairment charges on depreciable real estate assets 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. We also present FFO attributable to common shares and OP units, which is FFO excluding preferred stock dividends. FFO attributable to common shares and OP units 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.

We use 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 period over period, captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of equity REITs, FFO may be used by investors as a basis to compare our 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 our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our 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 our FFO. Therefore, we believe that in order to facilitate a clear understanding of our 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 meet our cash needs, including our ability to pay dividends or make distributions.

We present FFO with adjustments to arrive at Normalized FFO. Normalized FFO is FFO attributable to common shares and units excluding transaction expenses, severance expense and equity accelerations, gain or loss on early extinguishment of debt, gain or loss on derivative instruments and write-offs of original issuance costs for redeemed preferred shares. We also present FFO with supplemental adjustments to arrive at Adjusted FFO (“AFFO”). AFFO is Normalized FFO excluding straight-line revenue, compensation paid with Company common shares, below market lease amortization and write-offs net of above market lease amortization and write-offs, non-real estate depreciation and amortization, amortization of deferred financing costs, improvements to real estate and capitalized leasing commissions. 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 our 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 our cash needs including our ability to pay dividends. In addition, AFFO may not be comparable to similarly titled measurements employed by other companies. We use AFFO in management reports to provide a measure of REIT operating performance that can be compared to other companies using AFFO.


DUPONT FABROS TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands except share data)
June 30,
2017
December 31,
2016
(unaudited)
ASSETS
Income producing property:
Land $107,539 $105,890
Buildings and improvements 3,141,102 3,018,361
3,248,641 3,124,251
Less: accumulated depreciation (716,719) (662,183)
Net income producing property 2,531,922 2,462,068
Construction in progress and property held for development 551,258 330,983
Net real estate 3,083,180 2,793,051
Cash and cash equivalents 31,125 38,624
Rents and other receivables, net 9,422 11,533
Deferred rent, net 120,599 123,058
Deferred costs, net 23,673 25,776
Prepaid expenses and other assets 48,467 46,422
Total assets $3,316,466 $3,038,464
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Line of credit $335,997 $50,926
Mortgage notes payable, net of deferred financing costs 107,175 110,733
Unsecured term loan, net of deferred financing costs 249,143 249,036
Unsecured notes payable, net of discount and deferred financing costs 838,461 837,323
Accounts payable and accrued liabilities 39,426 36,909
Construction costs payable 74,795 56,428
Accrued interest payable 11,515 11,592
Dividend and distribution payable 46,431 46,352
Prepaid rents and other liabilities 67,629 81,062
Total liabilities 1,770,572 1,480,361
Redeemable noncontrolling interests – operating partnership 714,494 591,101
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value, 50,000,000 shares authorized:
Series C cumulative redeemable perpetual preferred stock, 8,050,000 shares issued and outstanding at June 30, 2017 and December 31, 2016 201,250 201,250
Common stock, $.001 par value, 250,000,000 shares authorized, 77,845,588
shares issued and outstanding at June 30, 2017 and 75,914,763 shares issued and outstanding at December 31, 2016
78 76
Additional paid in capital 631,022 766,732
Retained earnings
Accumulated other comprehensive loss (950) (1,056)
Total stockholders’ equity 831,400 967,002
Total liabilities and stockholders’ equity $3,316,466 $3,038,464


DUPONT FABROS TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
Six months ended June 30,
2017 2016
Cash flow from operating activities
Net income $82,238 $97,254
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 57,155 52,166
Gain on sale of real estate (23,064)
Straight-line revenues, net of reserve 2,459 (1,041)
Amortization of deferred financing costs 1,619 1,764
Amortization and write-off of lease contracts above and below market value (365) (222)
Compensation paid with Company common shares 4,734 3,290
Changes in operating assets and liabilities
Rents and other receivables 2,111 192
Deferred costs (891) (3,465)
Prepaid expenses and other assets (1,328) 1,750
Accounts payable and accrued liabilities 2,130 27
Accrued interest payable (82) 189
Prepaid rents and other liabilities (12,437) (4,399)
Net cash provided by operating activities 137,343 124,441
Cash flow from investing activities
Net proceeds from sale of real estate 123,545
Investments in real estate – development (301,504) (101,867)
Acquisition of real estate (12,250)
Acquisition of real estate – related party (20,168)
Interest capitalized for real estate under development (8,895) (6,118)
Improvements to real estate (418) (3,098)
Additions to non-real estate property (196) (426)
Net cash used in investing activities (323,263) (8,132)
Cash flow from financing activities
Line of credit:
Proceeds 282,432 60,000
Repayments (60,000)
Mortgage notes payable:
Repayments (3,750) (1,250)
Payments of financing costs (110) (96)
Issuance of common stock, net of offering costs 275,720
Issuance of preferred stock, net of offering costs 194,502
Redemption of preferred stock (251,250)
Equity compensation (payments) proceeds (4,041) 8,285
Dividends and distributions:
Common shares (76,857) (66,048)
Preferred shares (6,666) (16,288)
Redeemable noncontrolling interests – operating partnership (12,587) (14,078)
Net cash provided by financing activities 178,421 129,497
Net (decrease) increase in cash and cash equivalents (7,499) 245,806
Cash and cash equivalents, beginning of period 38,624 31,230
Cash and cash equivalents, ending of period $31,125 $277,036
Supplemental information:
Cash paid for interest, net of amounts capitalized $23,331 $23,101
Deferred financing costs capitalized for real estate under development $635 $364
Construction costs payable capitalized for real estate under development $74,795 $26,914
Redemption of operating partnership units $77,894 $49,468
Adjustments to redeemable noncontrolling interests – operating partnership $202,734 $227,425


DUPONT FABROS TECHNOLOGY, INC.

Operating Properties
As of July 1, 2017
Property Property Location Year Built/
Renovated
Gross
Building
Area (2)
Computer Room
Square Feet
("CRSF") (2)
CRSF %
Leased
(3)
CRSF %
Commenced
(4)
Critical
Load
MW (5)
Critical
Load %
Leased
(3)
Critical
Load %
Commenced
(4)
Stabilized (1)
ACC2 Ashburn, VA 2001/2005 87,000 53,000 100% 100% 10.4 100% 100%
ACC3 Ashburn, VA 2001/2006 147,000 80,000 100% 100% 13.9 100% 100%
ACC4 Ashburn, VA 2007 347,000 172,000 100% 100% 36.4 97% 97%
ACC5 Ashburn, VA 2009-2010 360,000 176,000 99% 99% 36.4 100% 100%
ACC6 Ashburn, VA 2011-2013 262,000 130,000 100% 100% 26.0 100% 100%
ACC7 Ashburn, VA 2014-2016 446,000 238,000 100% 100% 41.6 100% 100%
CH1 Elk Grove Village, IL 2008-2012 485,000 231,000 100% 100% 36.4 100% 100%
CH2 Elk Grove Village, IL 2015-2016 328,000 158,000 100% 100% 26.8 100% 100%
SC1 Phases I-II Santa Clara, CA 2011-2015 360,000 173,000 100% 100% 36.6 100% 100%
VA3 Reston, VA 2003 256,000 147,000 94% 94% 13.0 95% 95%
VA4 Bristow, VA 2005 230,000 90,000 100% 100% 9.6 100% 100%
Subtotal – stabilized 3,308,000 1,648,000 99% 99% 287.1 99% 99%
Completed, not Stabilized
ACC9 Phase I Ashburn, VA 2017 163,000 90,000 70% 70% 14.4 70% 70%
Subtotal – not stabilized 163,000 90,000 70% 70% 14.4 70% 70%
Total Operating Properties 3,471,000 1,738,000 98% 98% 301.5 98% 98%


(1) Stabilized operating properties are either 85% or more leased and commenced or have been in service for 24 months or greater.
(2) Gross building area is the entire building area, including CRSF (the portion of gross building area where our customers' computer servers are located), common areas, areas controlled by us (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to our customers.
(3) Percentage leased is expressed as a percentage of CRSF or critical load, as applicable, that is subject to an executed lease. Leases executed as of July 1, 2017 represent $399 million of base rent on a GAAP basis and $403 million of base rent on a cash basis over the next twelve months. Both amounts include $19 million of revenue from management fees over the next twelve months.
(4) Percentage commenced is expressed as a percentage of CRSF or critical load, as applicable, where the lease has commenced under GAAP.
(5) Critical load (also referred to as IT load or load used by customers' servers or related equipment) is the power available for exclusive use by customers expressed in terms of megawatt, or MW, or kilowatt, or kW (One MW is equal to 1,000 kW).


DUPONT FABROS TECHNOLOGY, INC.

Lease Expirations
As of July 1, 2017
The following table sets forth a summary schedule of lease expirations at our operating properties for each of the ten calendar years beginning with 2017. The information set forth in the table below assumes that customers exercise no renewal options and takes into account customers’ early termination options in determining the life of their leases under GAAP.
Year of Lease Expiration Number
of Leases
Expiring (1)
CRSF of
Expiring Commenced Leases
(in thousands) (2)
% of
Leased
CRSF
Total kW
of Expiring
Commenced Leases (2)
% of
Leased kW
% of
Annualized
Base Rent (3)
2017 (4) 3 19 1.1% 3,846 1.3% 1.5%
2018 18 159 9.4% 29,981 10.1% 10.9%
2019 26 330 19.4% 57,404 19.4% 20.9%
2020 15 182 10.7% 31,754 10.7% 11.3%
2021 17 293 17.2% 51,514 17.4% 17.2%
2022 11 158 9.3% 27,389 9.3% 9.4%
2023 10 110 6.5% 16,772 5.7% 5.4%
2024 9 138 8.1% 23,479 7.9% 7.3%
2025 4 47 2.8% 7,750 2.6% 2.9%
2026 8 100 5.9% 17,334 5.9% 5.8%
After 2026 8 164 9.6% 28,244 9.7% 7.4%
Total 129 1,700 100% 295,467 100% 100%


(1) Represents 33 customers with 129 lease expiration dates.
(2) CRSF is that portion of gross building area where customers locate their computer servers. One MW is equal to 1,000 kW.
(3) Annualized base rent represents the monthly contractual base rent (defined as cash base rent before abatements) multiplied by 12 for commenced leases as of July 1, 2017.
(4) A customer at ACC4 whose lease expires on July 31, 2017 has informed us that it does not intend to renew this lease. This lease is for 1.14 MW and 5,400 CRSF. Additionally, a customer at ACC6, whose lease expires on August 31, 2017, has informed us that it does not intend to renew this lease. This lease is for 0.54 MW and 2,523 CRSF. These leases total 0.9% of Annualized Base Rent. We are marketing these computer rooms for re-lease.


DUPONT FABROS TECHNOLOGY, INC.

Leasing Statistics - New Leases
Period Number of Leases Total CRSF Leased (1) Total MW Leased (1)
Q2 2017 3 161,822 28.80
Q1 2017 3 38,943 5.62
Q4 2016 1 18,000 2.88
Q3 2016 2 16,319 2.42
Trailing Twelve Months 9 235,084 39.72
Q2 2016 4 72,657 12.52


Leasing Statistics - Renewals/Extensions
Period Number of
Renewals
Total CRSF
Renewed (1)
Total MW
Renewed (1)
GAAP Rent
change (2)
Cash Rent
Change (2)
Q2 2017 % %
Q1 2017 % %
Q4 2016 1 13,696 1.30 5.8% 4.0%
Q3 2016 2 16,400 3.41 1.2% 3.0%
Trailing Twelve Months 3 30,096 4.71
Q2 2016 4 21,526 2.72 3.5% 2.9%


(1) CRSF is that portion of gross building area where customers locate their computer servers. One MW is equal to 1,000 kW.
(2) GAAP rent change compares the change in annualized base rent before and after the renewal. Cash rent change compares cash base rent at renewal execution to cash base rent at the start of the renewal period.


Booked Not Billed
($ in thousands)
The following table outlines the incremental and annualized revenue excluding direct electric from leases that have been executed but have not been billed as of June 30, 2017.
2017 2018 Total
Incremental Revenue $15,155 $19,447
Annualized Revenue $38,316 $20,206 $58,522


DUPONT FABROS TECHNOLOGY, INC.

Top 15 Customers
As of July 1, 2017
The following table presents our top 15 customers based on annualized monthly contractual base rent at our operating properties as of July 1, 2017:
Customer Number
of
Buildings
Number
of
Markets
Average
Remaining
Term
% of
Annualized
Base Rent (1)
1Microsoft 10 3 6.0 25.4%
2Facebook 4 1 3.6 20.9%
3Fortune 25 Investment Grade-Rated Company 4 3 4.5 12.6%
4Rackspace 3 2 8.1 8.7%
5Fortune 500 leading Software as a Service (SaaS) Provider, Not Rated 4 2 6.7 7.9%
6Yahoo! (2) 1 1 1.2 4.0%
7Server Central 1 1 4.1 2.4%
8Fortune 50 Investment Grade-Rated Company 2 1 3.4 2.0%
9Dropbox 1 1 1.5 1.5%
10IAC 1 1 1.8 1.5%
11Symantec 2 1 2.0 1.3%
12GoDaddy 1 1 9.3 1.1%
13UBS 1 1 8.0 0.9%
14Anexio 3 1 6.5 0.9%
15Sanofi Aventis 2 1 4.0 0.8%
Total 5.2 91.9%


(1) Annualized base rent represents monthly contractual base rent for commenced leases (defined as cash base rent before abatements) multiplied by 12 for commenced leases as of July 1, 2017.
(2) Comprised of a lease at ACC4 that has been fully subleased to another DFT customer.


DUPONT FABROS TECHNOLOGY, INC.

Same Store Analysis
($ in thousands)
Same Store PropertiesThree Months Ended Six Months Ended
30-Jun-17 30-Jun-16 % Change 31-Mar-17 % Change 30-Jun-17 30-Jun-16 % Change
Revenue:
Base rent$91,799 $81,450 12.7% $91,268 0.6% $183,067 $161,019 13.7%
Recoveries from tenants45,960 40,443 13.6% 45,295 1.5% 91,255 77,114 18.3%
Other revenues631 470 34.3% 632 (0.2)% 1,263 907 39.3%
Total revenues138,390 122,363 13.1% 137,195 0.9% 275,585 239,040 15.3%
Expenses:
Property operating costs40,985 36,369 12.7% 40,191 2.0% 81,176 69,994 16.0%
Real estate taxes and insurance4,917 4,963 (0.9)% 4,985 (1.4)% 9,902 9,188 7.8%
Other expenses64 (41) N/M 58 10.3% 122 73 67.1%
Total expenses45,966 41,291 11.3% 45,234 1.6% 91,200 79,255 15.1%
Net operating income (1)92,424 81,072 14.0% 91,961 0.5% 184,385 159,785 15.4%
Straight-line revenues, net of reserve1,383 592 N/M 1,718 (19.5)% 3,101 (1,372) N/M
Amortization and write-off of lease contracts above and below market value(95) (106) (10.4)% (271) (64.9)% (366) (222) 64.9%
Cash net operating income (1)$93,712 $81,558 14.9% $93,408 0.3% $187,120 $158,191 18.3%
Note: Same Store Properties represent those properties placed into service on or before January 1, 2016 and excludes ACC9. NJ1 is excluded as it was sold in June 2016.
Same Store, Same Capital PropertiesThree Months Ended Six Months Ended
30-Jun-17 30-Jun-16 % Change 31-Mar-17 % Change 30-Jun-17 30-Jun-16 % Change
Revenue:
Base rent$70,446 $69,913 0.8% $70,875 (0.6)% $141,321 $140,570 0.5%
Recoveries from tenants38,508 36,991 4.1% 38,557 (0.1)% 77,065 71,602 7.6%
Other revenues459 399 15.0% 471 (2.5)% 930 791 17.6%
Total revenues109,413 107,303 2.0% 109,903 (0.4)% 219,316 212,963 3.0%
Expenses:
Property operating costs34,402 32,673 5.3% 34,099 0.9% 68,501 63,948 7.1%
Real estate taxes and insurance4,021 4,418 (9.0)% 4,127 (2.6)% 8,148 8,307 (1.9)%
Other expenses24 (52) N/M 20 20.0% 44 55 (20.0)%
Total expenses38,447 37,039 3.8% 38,246 0.5% 76,693 72,310 6.1%
Net operating income (1)70,966 70,264 1.0% 71,657 (1.0)% 142,623 140,653 1.4%
Straight-line revenues, net of reserve4,146 3,076 34.8% 4,015 3.3% 8,161 3,946 N/M
Amortization and write-off of lease contracts above and below market value(95) (106) (10.4)% (271) (64.9)% (366) (222) 64.9%
Cash net operating income (1)$75,017 $73,234 2.4% $75,401 (0.5)% $150,418 $144,377 4.2%
Note: Same Store, Same Capital properties represent those properties placed into service on or before January 1, 2016 and have less than 10% of additional critical load developed after January 1, 2016. Excludes ACC9, ACC7 and CH2. NJ1 is also excluded as it was sold in June 2016.
(1) See next page for a reconciliation of Net Operating Income and Cash Net Operating Income to GAAP measures.


DUPONT FABROS TECHNOLOGY, INC.

Same Store Analysis - Reconciliations of Operating Income
to Net Operating Income and Cash Net Operating Income (1)
($ in thousands)
Reconciliation of Operating Income to Same Store Net Operating Income and Cash Net Operating Income
Three Months Ended Six Months Ended
30-Jun-17 30-Jun-16 % Change 31-Mar-17 % Change 30-Jun-17 30-Jun-16 % Change
Operating income$50,550 $49,975 1.2% $56,559 (10.6)% $107,109 $99,086 8.1%
Add-back: non-same store operating loss13,684 5,318 N/M 7,239 N/M 20,923 9,999 N/M
Same Store:
Operating income64,234 55,293 16.2% 63,798 0.7% 128,032 109,085 17.4%
Depreciation and amortization28,190 25,779 9.4% 28,163 0.1% 56,353 50,700 11.1%
Net operating income92,424 81,072 14.0% 91,961 0.5% 184,385 159,785 15.4%
Straight-line revenues, net of reserve1,383 592 N/M 1,718 (19.5)% 3,101 (1,372) N/M
Amortization and write-off of lease contracts above and below market value(95) (106) (10.4)% (271) (64.9)% (366) (222) 64.9%
Cash net operating income$93,712 $81,558 14.9% $93,408 0.3% $187,120 $158,191 18.3%
Reconciliation of Operating Income to Same Store, Same Capital Net Operating Income and Cash Net Operating Income
Three Months Ended Six Months Ended
30-Jun-17 30-Jun-16 % Change 31-Mar-17 % Change 30-Jun-17 30-Jun-16 % Change
Operating income$50,550 $49,975 1.2% $56,559 (10.6)% $107,109 $99,086 8.1%
Less: non-same store, same capital operating income(2,307) (2,455) (6.0)% (7,629) (69.8)% (9,936) (3,855) N/M
Same Store, Same Capital:
Operating income48,243 47,520 1.5% 48,930 (1.4)% 97,173 95,231 2.0%
Depreciation and amortization22,723 22,744 (0.1)% 22,727 % 45,450 45,422 0.1%
Net operating income70,966 70,264 1.0% 71,657 (1.0)% 142,623 140,653 1.4%
Straight-line revenues, net of reserve4,146 3,076 34.8% 4,015 3.3% 8,161 3,946 N/M
Amortization and write-off of lease contracts above and below market value(95) (106) (10.4)% (271) (64.9)% (366) (222) 64.9%
Cash net operating income$75,017 $73,234 2.4% $75,401 (0.5)% $150,418 $144,377 4.2%


(1) Net Operating Income ("NOI") represents total revenues less property operating costs, real estate taxes and insurance, and other expenses (each as reflected in the consolidated statements of operations) for the properties included in the analysis. Cash Net Operating Income ("Cash NOI") is NOI less straight-line revenues, net of reserve and amortization of lease contracts above and below market value for the properties included in the analysis.

We use NOI and Cash NOI as supplemental performance measures because, in excluding depreciation and amortization, impairment charges on depreciable real estate assets and gains and losses from property dispositions, each provides a performance measure that, when compared period over period, captures trends in occupancy rates, rental rates and operating expenses. However, because NOI and Cash NOI exclude depreciation and amortization, impairment charges on depreciable real estate assets and gains and losses from property dispositions, and capture neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of NOI and Cash NOI as a measure of our performance is limited.

Other REITs may not calculate NOI and Cash NOI in the same manner we do and, accordingly, our NOI and Cash NOI may not be comparable to the NOI and Cash NOI of other REITs. NOI and Cash NOI should not be considered as an alternative to operating income (as computed in accordance with GAAP).


DUPONT FABROS TECHNOLOGY, INC.

Development Projects
As of June 30, 2017
($ in thousands)
Property Property
Location
Gross
Building
Area (1)
CRSF (2) Critical
Load
MW (3)
Estimated
Total Cost (4)
Construction
in Progress &
Land Held for
Development
(5)
CRSF %
Pre-
leased
Critical
Load %
Pre-
leased
Current Development Projects
ACC9 Phase II Ashburn, VA 163,000 90,000 14.4 $126,000 - $130,000 $114,699 50% 50%
ACC10 Phase I Ashburn, VA 161,000 91,000 15.0 126,000 - 132,000 20,650 % %
CH3 Phase I Elk Grove Village, IL 153,000 71,000 14.4 138,000 - 142,000 61,203 100% 100%
CH3 Phase II Elk Grove Village, IL 152,000 89,000 12.8 132,000 - 138,000 59,970 % %
SC1 Phase III Santa Clara, CA 111,000 60,000 16.0 166,000 - 168,000 148,983 100% 100%
TOR1 Phase IA Vaughan, ON 104,000 35,000 6.0 63,000 - 69,000 45,627 % %
844,000 436,000 78.6 751,000 - 779,000 451,132
Future Development Projects/Phases
ACC10 Phase II Ashburn, VA 128,000 72,000 12.0 49,000 - 53,000 10,302
TOR1 Phase IB/C Vaughan, ON 210,000 78,000 14.5
93,000 - 99,000 27,319
TOR1 Phase II Vaughan, ON 397,000 113,000 19.5 34,000 - 42,000 25,393
735,000 263,000 46.0 176,000 - 194,000 63,014
Land Held for Development (6)
ACC8 Ashburn, VA 100,000 50,000 10.4 4,252
ACC11 Ashburn, VA 150,000 80,000 16.0 4,892
OR1 Hillsboro, OR 777,000 347,000 48.0 8,323
OR2 Hillsboro, OR 798,000 347,000 48.0 7,385
PHX1 Mesa, AZ 968,000 408,000 60.0 6,130
PHX2 Mesa, AZ 968,000 408,000 60.0 6,130
3,761,000 1,640,000 242.4 37,112
Total 5,340,000 2,339,000 367.0 $551,258


(1) Gross building area is the entire building area, including CRSF (the portion of gross building area where our customers’ computer servers are located), common areas, areas controlled by us (such as the mechanical, telecommunications and utility rooms) and, in some facilities, individual office and storage space leased on an as available basis to our customers. The respective amounts listed for each of the “Land Held for Development” sites are estimates.
(2) CRSF is that portion of gross building area where customers locate their computer servers. The respective amounts listed for each of the “Land Held for Development” sites are estimates.
(3) Critical load (also referred to as IT load or load used by customers’ servers or related equipment) is the power available for exclusive use by customers expressed in terms of MW or kW (1 MW is equal to 1,000 kW). The respective amounts listed for each of the “Land Held for Development” sites are estimates.
(4) Current development projects include land, capitalization for construction and development and capitalized interest and operating carrying costs, as applicable, upon completion. Future development projects/phases include land, shell and underground work through the opening of the phase(s) that are either under current development or in service.
(5) Amount capitalized as of June 30, 2017. Future development projects/phases include land, shell and underground work through the opening of the phase(s) that are either under current development or in service.
(6) Amounts listed for gross building area, CRSF and critical load are current estimates.


DUPONT FABROS TECHNOLOGY, INC.

Debt Summary as of June 30, 2017
($ in thousands)
June 30, 2017
Amounts (1) % of Total Rates Maturities
(years)
Secured $107,500 7% 2.8% 0.7
Unsecured 1,435,997 93% 4.5% 4.3
Total $1,543,497 100% 4.4% 4.1
Fixed Rate Debt:
Unsecured Notes due 2021 $600,000 39% 5.9% 4.2
Unsecured Notes due 2023 (2) 250,000 16% 5.6% 6.0
Fixed Rate Debt 850,000 55% 5.8% 4.7
Floating Rate Debt:
Unsecured Credit Facility 335,997 22% 2.7% 3.1
Unsecured Term Loan 250,000 16% 2.7% 4.6
ACC3 Term Loan 107,500 7% 2.8% 0.7
Floating Rate Debt 693,497 45% 2.7% 3.2
Total $1,543,497 100% 4.4% 4.1


Note: We capitalized interest and deferred financing cost amortization of $5.2 million and $9.5 million during the three and six months ended June 30, 2017, respectively.
(1) Principal amounts exclude deferred financing costs.
(2) Principal amount excludes original issue discount of $1.6 million as of June 30, 2017.



Debt Principal Repayments as of June 30, 2017
($ in thousands)
Year Fixed Rate (1) Floating Rate (1) Total (1) % of Total Rates
2017 5,000 (4) 5,000 0.3% 2.8%
2018 102,500 (4) 102,500 6.6% 2.8%
2019 % %
2020 335,997 (5) 335,997 21.8% 2.7%
2021 600,000 (2) 600,000 38.9% 5.9%
2022 250,000 (6) 250,000 16.2% 2.7%
2023 250,000 (3) 250,000 16.2% 5.6%
Total $850,000 $693,497 $1,543,497 100.0% 4.4%


(1) Principal amounts exclude deferred financing costs.
(2) The 5.875% Unsecured Notes due 2021 mature on September 15, 2021.
(3) The 5.625% Unsecured Notes due 2023 mature on June 15, 2023. Principal amount excludes original issue discount of $1.6 million as of June 30, 2017.
(4) The ACC3 Term Loan matures on March 27, 2018 with no extension option. Quarterly principal payments of $1.25 million began on April 1, 2016, increased to $2.5 million on April 1, 2017 and continue through maturity.
(5) The Unsecured Credit Facility matures on July 25, 2020 with a one-year extension option.
(6) The Unsecured Term Loan matures on January 21, 2022 with no extension option.


DUPONT FABROS TECHNOLOGY, INC.

Selected Unsecured Debt Metrics(1)
6/30/17 12/31/16
Interest Coverage Ratio (not less than 2.0) 4.9 5.4
Total Debt to Gross Asset Value (not to exceed 60%) 38.2% 34.0%
Secured Debt to Total Assets (not to exceed 40%) 2.7% 3.0%
Total Unsecured Assets to Unsecured Debt (not less than 150%) 188% 231%


(1) These selected metrics relate to DuPont Fabros Technology, LP's outstanding unsecured notes. DuPont Fabros Technology, Inc. is the general partner of DuPont Fabros Technology, LP.


Capital Structure as of June 30, 2017
(in thousands except per share data)
Line of Credit $335,997
Mortgage Notes Payable 107,500
Unsecured Term Loan 250,000
Unsecured Notes 850,000
Total Debt 1,543,497 21.4%
Common Shares 87% 77,846
Operating Partnership (“OP”) Units 13% 11,682
Total Shares and Units 100% 89,528
Common Share Price at June 30, 2017 $61.16
Common Share and OP Unit Capitalization $5,475,532
Preferred Stock ($25 per share liquidation preference) 201,250
Total Equity 5,676,782 78.6%
Total Market Capitalization $7,220,279 100.0%


DUPONT FABROS TECHNOLOGY, INC.

Common Share and OP Unit
Weighted Average Amounts Outstanding
Q2 2017 Q2 2016 YTD 2Q
2017
YTD 2Q
2016
Weighted Average Amounts Outstanding for EPS Purposes:
Common Shares - basic 77,486,297 74,370,577 77,080,615 70,661,406
Effect of dilutive securities 1,001,676 861,057 991,329 857,089
Common Shares - diluted 78,487,973 75,231,634 78,071,944 71,518,495
Weighted Average Amounts Outstanding for FFO,
Normalized FFO and AFFO Purposes:
Common Shares - basic 77,486,297 74,370,577 77,080,615 70,661,406
OP Units - basic 11,682,368 14,607,330 12,051,751 14,822,570
Total Common Shares and OP Units 89,168,665 88,977,907 89,132,366 85,483,976
Effect of dilutive securities 1,135,326 1,008,006 1,175,588 1,036,917
Common Shares and Units - diluted 90,303,991 89,985,913 90,307,954 86,520,893
Period Ending Amounts Outstanding:
Common Shares 77,845,588
OP Units 11,682,368
Total Common Shares and Units 89,527,956

Note: This press release supplement contains certain non-GAAP financial measures that we believe are helpful in understanding our business, as further discussed within this press release supplement. These financial measures, which include NAREIT Funds From Operations, Normalized Funds From Operations, Adjusted Funds From Operations, Net Operating Income, Cash Net Operating Income, NAREIT Funds From Operations per share and Normalized Funds From Operations per share, should not be considered as an alternative to net income, operating income, earnings per share 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.

Investor Relations Contacts: Jeffrey H. Foster Chief Financial Officer jfoster@dft.com (202) 478-2333 Steven Rubis Vice President, Investor Relations srubis@dft.com (202) 478-2330

Source:DuPont Fabros Technology, Inc.