CyrusOne today announced its Q1 2021 earnings and provided updates on its data center leasing activity and development pipeline. In Q1 2021, CyrusOne reported revenue of $299m, an 11% increase quarter-over-quarter, and adjusted EBITDA of $140m, a 3% increase quarter-over-quarter.

Leasing Activity – Q1 2021

In Q1 2021, CyrusOne’s new data center lease signings were $35.4m (annual revenue), down 28% from the $49.3m of signings during Q4 2020. However, new lease signings were above CyrusOne’s typical quarterly average of $30m. In total, the new lease signings represented 28.5 megawatts of power capacity and 156k sqft. Decomposing the lease signings further:

  • Hyperscale: over 500-kilowatt signings were $24.8m, equivalent to 70% of total signings
  • Colocation: under 500-kilowatt signings were $10.6m, equivalent to 30% of total signings

Geographic Breakdown – New Leases

In Q1 2021, CyrusOne’s geographic mix of new lease signings was as follows:

  • United States: new lease signings were $33.7m, for 28.0 megawatts of power capacity
  • Europe: new lease signings were $1.7m, for 0.5 megawatts of power capacity

CyrusOne highlights that its hyperscale customers are driving the company’s strength in the United States, particularly in Northern Virginia and Phoenix. At the same time, the company admits that “European leasing in the first quarter was softer” than prior quarters.

Overall, the weighted-average lease term of the new lease signings was 9.7 years. Indeed, this compares to the weighted average remaining lease term of CyrusOne’s portfolio of 4.3 years.

Backlog

At the end of Q1 2021, CyrusOne’s backlog (i.e., signed but not commenced leases) reached $113m of annualized revenue. Notably, this represents a 12% increase form the company’s backlog of $101m at the end of Q4 2020.

Development Pipeline – CyrusOne

CyrusOne has development projects underway in 9 markets including Frankfurt, Dublin, Paris, London, Northern Virginia, Phoenix, New York, Cincinnati, and San Antonio. Overall, this development pipeline comprises ~$600m of investment, adding 100 megawatts of power capacity and 380k sqft to CyrusOne’s portfolio. Importantly, 69% of the square footage under development is already pre-leased.

Notable markets where CyrusOne is allocating the majority of its development budget towards include Frankfurt (~$145m), Northern Virginia (~$115m), Dublin (~$115m), Phoenix (~$88m) and Paris (~$60m). Indeed, during Q1 2021, CyrusOne began development of 102k sqft in Northern Virginia and 62k square feet in Phoenix, in response to strong demand in those markets.

Finally, CyrusOne noted during its Q1 2021 earnings call that it targets 8% to 10% stabilized yields for its development portfolio.

Developments Completed – Q1 2021

In Q1 2021, CyrusOne completed construction on 14 megawatts of power capacity and 78.0k sqft in New York and Frankfurt.

Development Pipeline – Beyond Q1 2021

Subsequently, following Q1 2021, CyrusOne agreed to acquire a 12-acre site in Frankfurt, providing 63 megawatts of potential power capacity.

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