Cencora, Inc.

Greetings and welcome to CoreSight Realty's second quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this call is being recorded. I would now like to turn the conference over to your host, Kate Ruppe, Manager of Investor Relations. Please go ahead. Thank you.

Good morning and welcome to CoreSite's second quarter 2021 earnings conference call. I'm joined today by Paul Zurich, President and CEO, Steve Smith, Chief Revenue Officer, and Jeff Finnan, Chief Financial Officer. Before we begin, I would like to remind everyone that our remarks on today's call may include forward-looking statements as defined by federal securities laws, including statements addressing projections, plans, or future expectations. These statements are subject to a number of risks and uncertainties that could cause actual results or facts to differ materially from such statements for a variety of reasons. We assume no obligation to update these forward-looking statements and can give no assurance that the expectations will be obtained. Detailed information about these risks is included in our filings with the SEC. Also, on this conference call, we refer to certain non-GAAP financial measures, such as funds from operations. Reconciliations of these non-GAAP financial measures are available in the supplemental information that is part of our full earnings release, which can be found on the investor relations pages of our website at CoreSite.com. With that, I'll turn the call over to Paul.

Good morning, and thank you for joining our second quarter earnings call. Today, I will cover the quarter's highlights, and Steve and Jeff will discuss sales and financial results in more detail. We delivered another strong quarter of financial results, including operating revenues of $162 million, resulting in 7.7% year-over-year growth, and FFO per share as adjusted of $1.42, which is year-over-year growth of 5.2%, excluding the impact of a one-time benefit of $0.06 per share that Jeff will discuss later. Second quarter sales results included new and expansion leases of $7.8 million of annualized gap rent, which consisted of $7 million of retail co-location and small-scale leasing above the trailing 12-month average, and $0.8 million of large-scale leasing. We are pleased with our retail and small-scale leasing so far this year, and as Steve will discuss, we expect more volume in large-scale leases in future months as the funnel of these longer cycle opportunities should bear fruit. Our sales trends confirm the findings in the 2021 State of the Data Center survey that International Data Group recently published, which shows co-location emerging as a key element for modern IT enterprises, bridging multiple cloud and service providers to provide a robust foundation for driving innovation. The full survey is available on our website. Turning to our property development, the LA-3 Phase II construction project remains on track for a Q4 2021 delivery, and we completed a pre-lease for a scale deployment this quarter to an existing customer. We also achieved the least percentage of 89% at LA-3 Phase I, reflecting the strength of our position in the Los Angeles market and solid sales activity. In addition, we placed a new four megawatt computer room at NY2 under development with an estimated Q1 2022 delivery date. We continue to see strong demand in the New York market, particularly in the financial services industry. The new Boston chiller plant project has been completed. We expect the chiller to provide a positive return on investment through improved power efficiency and utilization. As you know from our 2020 sustainability report, energy efficiency is a key focus for CoreSite. And finally, we received zoning approval from the Santa Clara City Council for our SV9 development, an important entitlement, and we continue to work through the remaining pre-construction activities to bring SV9 to a shovel-ready state. We achieved a valuable milestone at our SB8 data center, which reached stabilization during the quarter at 98% occupancy, less than two years from the delivery of phase one, with financial returns expected to achieve our underwriting with some additional time and maturation. On the connectivity front, we recently announced on-net availability to Google Cloud natively on our Chicago and Silicon Valley campuses. further supporting Google's partner interconnect and validating the importance attributed to our portfolio by key cloud partners. In summary, we have solid accomplishments for the first half of the year, and Jeff will discuss their positive impact on guidance. We are executing well on our 2021 goals to translate our new and vacant capacity into sales opportunities, to attract high-quality logos that value our campus ecosystems, to expand our connectivity options and relationships to assist enterprises with their hybrid and multi-cloud needs, and to return to mid to high single-digit growth in revenues, earnings, and FFO per share. We remain optimistic about the fundamental market drivers supporting our go-to-market strategy. Technology requiring low latency, high performance, hybrid cloud IT architectures continues to play an increasingly important role in the success of businesses. And CoreSight is well positioned to capture an attractive share of the edge needs in our major metropolitan markets. With that, I will turn the call over to Steve.