Business News

DuPont Fabros Technology, Inc. Reports Third Quarter Results

Thursday 06. November 2008 - DuPont Fabros Technology, Inc. (NYSE:DFT) today reported results for the third quarter and nine months ended September 30, 2008. All per share results are reported on a fully diluted basis.

Hossein Fateh, President and Chief Executive Officer of DuPont Fabros Technology, said “We made progress on several fronts during the quarter and within an economic environment that remains very challenging. We met our FFO expectation for the third quarter and the first nine months of the year and expect to meet our 2008 full year guidance. We opened our new data center in the metro Chicago area, adding 22% of critical load to our portfolio and executed a lease with a new tenant in our Ashburn, Virginia facility. The development of our new data centers in Northern Virginia and Northern New Jersey are on track and below our original budget projections.” Fateh added, “We also continue to solidify our financial position. In October, we executed a loan agreement and we are seeking additional financing arrangements to complete these developments.”

The 2007 results include only the operations for the entity that constituted the Predecessor of DuPont Fabros Technology, Inc. (ACC3) and the results of ACC2, VA3, VA4 and CH1 from August 7, 2007 to September 30, 2007. The historical financial results of the Company’s Predecessor do not include the financial performance of those entities that were consolidated under the ownership of the Company as a result of the October 24, 2007 IPO. In addition, the Predecessor’s results exclude the impact of certain purchase accounting adjustments resulting from the Company’s formation. For these and other reasons, the Predecessor’s historical operating results are not directly comparable to the Company’s operating results after the IPO.

Third Quarter 2008

For the quarter ended September 30, 2008, the Company reported net income of $4.1 million, or $0.12 per share compared to a net loss of $2.1 million for the third quarter of 2007. Funds from operations (“FFO”) for the quarter ended September 30, 2008 were $20.9 million, or $0.31 per share, while Adjusted FFO (“AFFO”) was $12.6 million, or $0.19 per share. Both FFO and AFFO were in line with our expectations. Revenues increased 2.0%, or $0.9 million, to $42.9 million for the third quarter of 2008 over the second quarter of 2008. FFO for the third quarter of 2008 decreased $2.3 million, or $0.04 per share, as compared to the second quarter of 2008 as a result of the opening of Phase I of CH1 discussed below.

Nine Months Ended September 30, 2008

For the nine months ended September 30, 2008, the Company reported net income of $15.6 million, or $0.44 per share, compared to a net loss of $1.0 million at the Predecessor for the nine months ended September 30, 2007. FFO for the nine months ended September 30, 2008 was $66.5 million, or $1.00 per share, while AFFO was $40.0 million, or $0.60 per share.

Current Status

As of September 30, 2008, the Company’s stabilized operating data center portfolio, encompassing 82.4 megawatts (“MW”) of critical load and 539,198 raised square feet, was 94.5% leased compared to 93.9% leased as of June 30, 2008.

Subsequent to the end of the third quarter, the Company executed three new leases. The Company signed two leases in Phase I of CH1 in Elk Grove Village, Illinois, comprising 1.7 megawatts of critical load (9.5% leased) and 12,556 raised square feet, and its first lease in Phase I of ACC5 in Ashburn, Virginia comprising 1.3 megawatts of critical load (7.3% leased) and 6,318 raised square feet.

Liquidity

On October 27, 2008, the Company announced that it closed on a $100 million secured loan with a syndicate of lenders led by KeyBank National Association. The loan has a three-year term with a one-year extension option. The loan includes an accordion feature that allows new lenders to join the existing bank syndicate to increase the amount of the loan up to $250 million over the next 18 months. The Company continues to seek other lenders for the syndicate, negotiate mezzanine financing and explore other financing alternatives. No assurances can be made that the Company will be able to obtain additional proceeds. As of the date of this press release, the Company has approximately $10 million available on its revolving credit facility and approximately $100 million of unrestricted cash.

As of September 30, 2008, the Company’s total debt outstanding was $533.3 million, representing 34% of total market capitalization. The Company has no debt maturities due until December 2010 assuming the Company is able to exercise one-year extension options, which are subject to customary conditions.

Development Update

On August 1, 2008, the Company completed and opened Phase I of CH1, which comprises 18.2 MW of critical load and 121,223 raised square feet at an all-in cost of approximately $190 million. CH1 is in a lease-up phase and the Company anticipates a 24 month lease-up period. In August 2008, the Company commenced construction on a new $270 million data center in Santa Clara, California, known as SC1. In October 2008, the Company announced a temporary suspension of development at SC1 as it continues to explore additional financing alternatives.

Development of ACC5 in Ashburn, Virginia and NJ1 in Piscataway, New Jersey is progressing. The Company lowered the estimated total cost range to complete both projects by approximately $75 million, or 20%, based on the mid-point update provided at June 30, 2008 and expects to complete both developments as planned assuming at least $150 million of additional loan proceeds are obtained.

Dividends

On August 7, 2008, the Company’s Board of Directors declared a regular quarterly cash dividend for the third quarter of 2008 at the rate of $0.1875 per common share for shareholders of record as of September 26, 2008. The dividend was paid on October 10, 2008. For the first three quarters of 2008, the Company has declared and paid dividends of $0.5625 per common share. In order to enhance the Company’s liquidity, and based on the fact the Company has met its 2008 REIT distribution requirement to payout 90% of taxable income, the Company has suspended its fourth quarter dividend. The 2009 dividend policy will be addressed in the Company’s 2008 year-end earnings release.

2008 Guidance

The Company reaffirms its FFO guidance for the full year 2008 at $1.24 to $1.30 on a per share fully diluted basis. The Company anticipates FFO at the midpoint of the guidance range.