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CoreSite Realty Corp COR

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

CoreSite Delivers a Good, Though Unspectacular, Second Quarter

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

Several encouraging trends showed up in CoreSite’s second quarter, with both revenue and EBITDA coming in ahead of FactSet consensus. The firm also had a solid quarter of bookings, and most promising, saw its best pricing power in several quarters, something we expect to persist given our view that CoreSite’s data centers are unique properties that benefit from a network effect moat source. We are raising our fair value estimate to $111 from $110, and although we believe the stock is overvalued, we see that as reflective of a market that has recently been willing to pay higher multiples for data center REITs than it has historically rather than an indictment on the company.

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Company Profile

Business Description

CoreSite owns and/or operates 25 data centers in the U.S. and has about 2.5 million net rentable square feet in operations, mostly in the key markets of Northern Virginia, Los Angeles, and San Francisco. It focuses on retail co-location--leasing smaller spaces to dozens of tenants per data center and resulting in a less concentrated customer base than wholesale data center providers. CoreSite's top 10 customers account for about a third of its annualized rental revenue. Of its 1,400 customers, more than 450 are network service providers, which exchange traffic at CoreSite locations. Interconnection revenue, driven primarily by connections between networks and connections between enterprises and their networks or cloud service providers, constitutes just under 15% of total revenue.

Contact
1001 17th Street, Suite 500
Denver, CO, 80202
T +1 866 777-2673
Sector Real Estate
Industry REIT - Office
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Hard Assets
Employees 481

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