CyrusOne Inc.
Q3 2016 Earnings Call Transcript

Published: 31 Oct 2016

[Operator:]

Good morning, and welcome to the CyrusOne Third Quarter 2016 Results Conference Call. All participants will be in listen-only mode. [Operator Instruction] After today's presentation, there will be an opportunity to ask questions. [Operator instruction] Please note this event is being recorded. I would now like to turn the conference over to Michael Schafer. Please, go ahead sir.

[Michael Schafer:]

Thank you, Rocco. Good morning, everyone, and welcome to CyrusOne's third quarter 2016 earnings call. Today, I'm joined by Gary Wojtaszek, President and CEO. Before we begin, I would like to remind you that our third quarter earnings release along with the third quarter financial tables are available on the Investor Relations section of our website at cyrusone.com. I would also like to remind you that comments made on today's call and some of the responses to your questions deal with forward-looking statements related to CyrusOne, and are subject to risks and uncertainties. Factors that may cause our actual results to differ from expectations are detailed in the company's filings with the SEC, which you may access on the SECs website or on cyrusone.com. We undertake no obligation to revise these statements following the date of this conference call, except as required by law. In addition, some of the company's remarks this morning contain non-GAAP financial measures. You can find reconciliations of those measures to the most comparable GAAP measures in the earnings release, which is posted on the Investors section of the company's website. I would now like to turn the call over to our President and CEO, Gary Wojtaszek.

[Gary Wojtaszek:]

Thanks, Schafer. Good morning, everyone, and welcome to CyrusOne's third quarter 2016 earnings call. We had another very strong quarter with continued high growth rates across all key operating and financial metrics including bookings, revenue, EBITDA and FFO. Beginning with slide four, adjusted EBITDA of $73.1 million was up 24% over the third quarter of 2015. Normalized FFO of $0.67 per share was up 18% including 40.04 per share of non recurring income. Revenue of a $143.8million was up 29% over the third quarter. We leased 105,000 co-location square feet and 17 megawatts of power totaling $27 million of annualized GAAP revenue, more than double the bookings volume in the third quarter of 2015 and it's our fourth highest leasing quarter ever. Our backlog stood at $68 million at the end of the quarter representing a 14% increase over our third quarter base revenue annualized run-rate with a total contract value of approximately $550 million. We also signed three new Fortune 1000 companies in the quarter, including a top ten cloud provider, bringing the total to 180. Lastly, we are currently managing the largest sales funnel in our company's history, which is double what it was at the end of Q2. Side five shows our bookings performance over the last eight quarters, this was our fourth largest bookings quarter ever and more than double what we leased in last year. Year-to-date we have closed approximately $129 million of incremental run-rate revenue, which is 32% more than the revenue we generated in all of 2015 and we still have one more selling quarter to go. Additionally, the average leased length of the deals signed this quarter was 63 months and nearly 90% of the leases at annual rent escalators included at an average rate of 2.6% keeping with the trend we've seen by customers wanting to enter into long-term leases with us. For context, the deals we closed this quarter have a combined total contract value of 1.1 billion, yes, that's what the B and not an M. The other trend we are seeing is willingness by customers to sign pre-releases with us for properties that we need to build which has never been the case before. This gives us much more visibility into top-line revenue and allows us to generate higher returns and customers are willing to do this now because we have a proven, we have proven our capabilities and delivering large projects on time and under budget to quote one of our presidential candidates. Moving to slide six, we have more than 950 customers up nearly 60% over the last three years. As I mentioned earlier, we now have 180 Fortune 1000 customers adding three this quarter, including another top 10 cloud company. When trying to commence Fortune 1000 CIOs is to entrust us with their mission-critical gear, it's a powerful statement to say that we've done it a hundred eighty times before and we now count seven of the top 10 largest cloud companies as customers up from practically nothing 24 months ago. As the chart on the right shows we have done, we have a diverse mix of customers across broad range of verticals, one vertical that we have talked quite a bit about recently is cloud and as most of we have seen an acceleration of demand from the hyperscale cloud providers. The other companies that are experiencing tremendous growth as a result of the continued adoption of the cloud. As part of the IT Solution set and the growth in demand for data, the cloud is disrupting the traditional IT stack and the races are to build a full-service cloud step. Slide seven through 12 highlights some of the trends we are seeing in data growth and the impact of the cloud. One of the questions I repeatedly received from investors is whether the current growth we're seeing is just a short-term blip. I can absolutely say that this is not something we believe is a short-term phenomenon but something more fundamental that is changing the entire IT landscape. We are in the beginning stages of digital tsunami that is changing the way companies consume IT resources. In 2015, the market was only about $19 billion with Amazon and Microsoft making up half of this market, and are growing very fast. Amazons cloud business grew 55% year-over-year with a sequential annualized increase of 1.2 billion. Microsoft’s cloud business grew 116% year-over-year and is adding more than 120,000 new customer subscriptions per month. Third-party forecast estimate public cloud demand of nearly 800 megawatts through 2018. To give you an idea as to how large this can be, we believe that one day soon there will be a video of your life that tracks you from birth to the grave. If every person in the U.S. were to record a 24-hour video for their life, for one year, so about 350 million people, you would need about 9.5 million computer racks of storage, which is about 200 million square feet of data center space. You can absolutely see this happening now and we will see this trend accelerating as in and they will in New York to our benefit as ultimately all cloud companies will outsource their data center needs to us. There is no economic, strategic or operational reason why any cloud companies to continue to build and manage their data centers. First of all, these companies are being paid by their investors to disrupt the world, whether it's dis-remediating the IT stack, coming up with communications video platform like Snapchat or recently Facebook or accelerating the adoption of the shared economy like Uber and Airbnb. These investors are not investing in these companies, so that they can tie up their capital building very expensive real estate acids, when they can invest in so many other disruptive technologies that will generate considerably higher returns. Secondly, the reality is that we can build a data center cheaper and faster than anyone in the country including all of the largest cloud companies as evidenced by our six-month 30 megawatts build in Northern Virginia. Over time, we are big believers in the adage that money always flows to where its most wanted and we believe that overtime all the cloud companies will outsource the data center needs to us as this will free up a tremendous amount of their time and capital allowing them to focus on the initiatives that really drive shareholder value in their companies. Turning the slide 13, I ever see various comments over the past few quarters regarding the returns we're generating on our capital and as you can see our development yields have basically been unchanged for the past few years, despite a 70% increase in our capital investment. So when I hear that people are saying that we are giving away the business and underwriting deals that don't get -- economic sense, all I can say is that just send those crazy deals my way as the sign on CyrusOne’s door says we are open for business. The reality is that we can deliver data centers faster and a lower costs than others, which translates into higher returns and our game plan is to invest as much of our capital as possible to generate these returns. As an example on slide 14, you can see that the development yield at our Sterling campus in Northern Virginia. As a reminder, the Sterling II build-to-suit is a massive 30 megawatts project that we delivered in six months. This is the project we delivered for $6.3 million per megawatt, and it is generating a 16% development yield. So while I may have been a deal price below what others are willing to offer you can see that we are still able to generate very healthy returns on this facility because we can deliver a product at a cost point that others can’t. Our capital allocation strategy has always been a simple one. We strive to deliver the highest quality facilities at the lowest cost and the fastest time to market, all of which allows us to achieve very high returns. An additional benefit of this project is that it is generating red covering 100% of the space on day one, which contrasts with our historical builds for which development heels ramp over a period of time. Turning the slide 15, you can see such an example with our Carrollton property. The development deal was initially negative, but has increased to 16% and we are currently in the lease up phase on our fifth data haul. The incremental returns for these large facilities increased dramatically over time as we are able to scale them as part of our massively modular design approach. Their significant operating leverage at these facilities and Carrollton should potentially generate high teens or 20% plus development yield once it is fully built out. What we do --what we do is not easy to replicate. For the past six years we have been constantly focusing on how we engineer costs out of our design, increase the efficiency of our supply gene. This is not something you can achieve quickly and as a result of all the time and attention we spend on this. As we scale our business we are designing plans now that will enable us to deliver facilities that less than $5 million per megawatt, which will further reduce the time it takes to deliver the product. Moving to slide 17, revenue, Adjusted EBITDA and normalized FFO all grew at very strong rates again this quarter. Our revenue growth of 29% was driven by continued strong leasing of co-location space across our markets, the impact of this year's acquisition of the CME data center in Chicago and our interconnection product line. Approximately $0.04 of the increase in normalized FFO per share relates to non recurring income from two hold over customers who terminated their leases earlier this year as well as equipment sales, which are inherently invariable. As you recall, last quarter two customers decided to vacate their space earlier than were contractually obligated to which resulted in accelerator revenue recognition. Those two customers continue to control the space during the third quarter and as a result we recognize additional revenue from them, both now have no further rights to the space or power resulting are somewhat elevated churn of 3.8% in the quarter. The churn included 1.4% of company initiated churn which we initiated so we could solve that space to two other customers resulting in the net churn of 2.4%. This quarter, we completed the rest of the company initiated churn bit and Phoenix that we started earlier this year. The customer no longer has control of that space, which we have released to a total of three customers including the two we mentioned last quarter and one more this quarter. We are now basically sold out in Phoenix. Our churn forecast for the year is unchanged from what we mentioned last quarter, which is a full churn approximately which a four-year churn approximately 8% excluding the company initiated churn. We expect churn next year to be approximately 6%. Turning to slide 18, our NOI was up 29% driven by revenue growth. Adjusted EBITDA was up 24% on the growth of the NOI partially offset by higher SG&A. As we have previously mentioned, we have been staffing up to manage the business for growth. The increase in normalized FFO per share is driven by adjusted EBITDA growth, partially offset by the impact of higher interest expense, and the issuance of equity to fund our development and maintain the strong balance sheet. Slide 19 shows the continued progress we have made in diversifying the portfolio geographically through successful organic expansion into new markets as well as acquisitions. As we continued to deliver a pre-release capacity market such as Chicago, San Antonio and Northern Virginia, the market mix will continue to diversify. We have significantly expanded our footprint over the last year to accommodate the demand we are seeing across our markets, and are stabilized portfolio is 93% utilized. Our pre stabilized data hauls in Dallas, Houston and Austin are all in their early stages of lease up and as we fill those data hauls, they all supplement the growth coming from our pre leased development projects. Moving to slide 20, we have significantly extended the lease term of the portfolio since the IPO. Over the last four quarters the weighted average of leases signed is more than nine years. As a result, the remaining average lease term of the portfolio take into account the revenue backlog is nearly four and a half years, almost twice the remaining average lease term since at the time of the IPL. Nearly one-quarter of the portfolio has a lease term through at least 2025, the majority of which are investment-grade credit creating a more stable these profile. Slide 21 summarizes our development pipeline at quarter end. We currently have projects in Northern Virginia, San Antonio, Phoenix and Chicago that will deliver 350,000 co-locations square feet and it's 69 megawatts of power. These are some of our strongest markets and over 70% of the pipeline's pre-leased. In Northern Virginia, where we have seen the most demand, we have two fully pre-leased bills totaling 20 megawatts that will be completed by early next year. Also early next year, we will be delivering a fully pre-leased 24 megawatt facility in San Antonio. We recently completed construction of a 5-megawatt build out in our Aurora facility in Chicago, which is nearly leased up and we have begun construction on the second phase in the facility which I'm pleased to report was leased up by the end of the quarter, I mean subsequent to the end of the quarter. We also have more than 70,000 square feet of race floor nearly 200,000 square feet of Power Shelled capacity in Phoenix in our active pipeline. In recent months we have announced several land acquisitions to position ourselves for growth, in several markets as a result of the strong demand we are seeing. This includes 23 acres in Chicago, which will enable us to develop what we believe will be the largest financial service Supercenter in a country with the CME as our anchor tenant, as well as 40 acres in Northern Virginia, which has been our strongest market. There we expect to have a 650,000 square foot shell completed next year. We also acquired 29 acres in Phoenix expanding the campus to 85 acres, the largest in the southwest and one of the largest in the United States. Lastly, as we mentioned at our investor day, we have the option to acquire 46 acres of land in the Pacific Northwest, which position us to launch our first-ever cloud supercenter site and offer what we believe will be the lowest cost data center product in the country. One of these facilities, once these facilities are completed, our portfolio will be 50% larger than it was at the beginning of the year. The land and power shell we have available for future development will allow us to more than triple the size of the company and we have capacity to expand in all of our markets. Moving to slide 22, our balance sheet remains very strong. Net debt adjusted EBITDA was 3.7 times, below the lower end of our targeted range of four to five times EBITDA. In August, we completed equity offering which resulted in that proceeds of approximately $165 million and a forward sales of approximately 215 million of equity which can be settled at any time up until august of next year. Adjusting for the impact of the forward, our leverage at quarter end, would have been three times that to EBITDA. We have approximately $600 million of liquidity or more than $810 million taken into the impact of the forward sale. Also as we have announced previously, we have an at-the-market equity program to supplement our readily available sources of capital, and in the third quarter we raised $26 billion through the program. Our weighted average debt terms of approximately five years and we have no debt maturities until 2019. We are currently in the process of upsizing and extending the term of our revolver credit facility as well as bringing pricing and other terms in line with the current market. We continue to remain in active dialogue with the credit rating agencies. Recently SMP upgraded its credit, its corporate credit rating to BB- and its issue level rating to BB maintaining a positive outlook which I believe should increase further as the company continues to keep growing in our customer and geographic diversification increases. In summary, we have never had a stronger balance you giving a significant financial flexibility and positioning us well to capitalize on future growth opportunities. On slide 23 as I mentioned earlier our revenue backlog remain substantial and at the end of the quarter it was $68 million representing nearly $550 million of total contract value. As shown in the bottom of the chart, we expect approximately one-third of the backlog to commence at the end of this year and two-thirds to commence in the beginning part of 2017, this gives us very good visibility into growth next year. Slide 24 includes our updated guidance for the current year. We are increasing the low end of our prior revenue guidance range by three million to 523 million. We are tightening our Adjusted EBITDA range, which will now be 275 to 278 million increase of 1.5 million at the midpoint. We are increasing our normalized FFO per share guidance to a new range of 259 to 262 per share. The normalized FFO per share increase is driven products primarily by stronger operating performance and a more favorable interest expense forecast as a result of several factors including among other things the timing and spending of an interest rate assumptions. Lastly I would like to point out the people we have added to the team. As mentioned in the AK, we separately filed this morning Greg Andrews has decided to leave the company to pursue other interests. Greg has been a great addition to the team and will be missed and during his tenure the enterprise value of the company has increased about $1.5 billion. He's done just about $1 billion of various financings and we're really going to miss him. Fortunately, I'm really excited to announce that Diane Morefield will be joined the company as CFO. Diane has a tremendous background working to high-growth real estate companies most recently with strategic hotels and resorts and prior to that with equity office properties. She's going to be a fantastic addition to the team as we continue to expand our company. Additionally, we also recently hired John Gould as Executive Vice President Global Sales and Brent Behrman as EVP of Strategic Sales. John was recently with Stratasys and Dell, and Brent joins us from Compass and Digital Reality. Both John and Brent are going to help further accelerate our growth as we look to expand or business across the globe. In closing, we are having a record-setting year and have never been in a stronger position with the largest sales funnel we have ever had. As we mentioned, we are increasing our revenue, EBITDA and FFO per share guidance in the current backlog we have is equivalent to 14% more revenue then we generated this quarter ensuring our growth continues into next year. Longer term, the digital tsunami that we are currently witnessing is still in its very early stages. We believe that our long-term growth will increase in lockstep with the overall growth of the cloud industry as all the cloud companies see the economic and strategic benefit of outsourcing their data center needs to a provider who can do it cheaper and faster than they can. In short, we are very bullish on our future. Thank you for your time today. This concludes our prepared remarks and I will turn it over to the operator for questions.

[Operator:]

Thank you sir. [[Operator Instructions] Today's first question comes from Simon Flannery of Morgan Stanley. Please go ahead.

[Simon Flannery:]

Thank you very much, good morning Gary. Just talking about the staffing -- you talked about the global opportunities. Can you just put that into the context of what is next for CyrusOne in terms of potentially looking at M&A internationally? What are the priorities there, and is that something we are going to see come to fruition in 2017? And then on the leasing volumes, it was another good quarter particularly year-over-year, but I think folks are really trying to get their arms around the volatility here from quarter-to-quarter. Is this sort of level more of a new normal here, or are we going to continue to see the highs and lows we've seen over the past year or so? Thanks.

[Gary Wojtaszek:]

Hey, Simon thanks, thanks for the questions. With regard to global activity. So what we have always said is that we believe the data center business is as a global business right data by its nature is global, it goes everywhere, it gets access and shift all around the world as a matter of course, and of all the customers that we go after are the large fortune 1000 multinational. So we believe that to effectively compete, to offer those customers compelling product, you need to have global capabilities. We, we are focused though in the short term period and building out our platform in the U.S. So if you look at our portfolio, we have dark spots in your portfolio in the Southeast, so and you know that that Atlanta area, Florida area and also in the west. So in Northern California, Nevada area. So our focus for the next, for the next year is going to be a building facilities in those locations as part of our ongoing organic plan. We do believe that this is a global business and you have to expand internationally. We have looked at a number of the different opportunities that have been out there on the M&A landscape, and if we had our preference, we would we would prefer that all those sellers hold off selling for a year, so until we're ready to buy, but we realize that we're not going to be able to influence when people are going to sell, so we need to be able to position ourselves to react to those deals as they come up and you'll see and in our results this quarter that there is some deal fees that we that we took through our P&L and those are a result of acquisitions that we're involved with that didn't go our way. So ultimately, we're going to be building out a global platform, but the focus on priority for the next 12 months or so is going to be domestic in those two areas. With regard to your second question, was leasing, so this was our fourth largest leasing quarter ever, and if it wasn't for the record results we have the last three, we would have been we've been jumping up and down saying, and this is like a killer quarter. Is the new normal or not, I don't know. What, what I can tell you thought is that the demand and the conversations that we are seeing is as unprecedented. What, What I mentioned I think in the last quarter or one before customers are talking about needing gigawatts of a capacity. They've never talked about anything that started with G [ph] before previously. And, and what I can say is that all $27 million is a really strong quarter for it's definitely down from what we did last quarter but it’s a phenomenal quarter. What I can say though is the conversations that were in with customers now has never been stronger and my prepared remarks I talked about our funnel. So our funnel is twice as high as it was at the end of the second quarter. So we're seeing like a huge amount of demand. As in all these things, I mean getting them over the finish line and trying to tie when you're going to be able to close the deals, is always the difficult part, but from a broad demand, its unprecedented. And what I can say also is that, look at the end of the day, there's no strategic reason why any company should ever build and manage their own data center. We are proving this with our traditional enterprise companies for the last half decade or so, and all the CIOs in the enterprise companies have basically come to that realization so I don't think there's any, any qualms there about enterprises willingness to outsource. I believe that same trend is going to manifest itself and all the cloud providers as well, because the reality is, if we can do something more expensively and faster, ultimately people are going to outsource that part of their of their requirements to us, because at the end of the day owning these digital factories isn't the key strategic and priority for any of these cloud companies. These cloud companies get paid handsomely by figuring out how to disrupt the world and ultimately as capital ghost words most wanted they're going to come to the realization that they are going to be spending more and more of their capital to things that really drive value and I think the best thing you can point to any industry is the recent change in Google in terms of going to alphabet. I'm not that familiar with all the inner workings that go out of that company, but ultimately I believe that is the result of a focus on capital returns and trying to put a spotlight on the various business there. So investors can get a really good sense of what's driving value there. Ultimately I think once you start doing your critical cost-benefit analysis and you figure out should I tie up $300 million $400 million in expensive data center, or should I tie up $300 million $400 million in a robust programming that can disrupt some other part of the world. I think ultimately long terms are going to choose the latter.

[Simon Flannery:]

Great. Great color, thank you Gary.

[Gary Wojtaszek:]

Yep.

[Operator:]

And our next question today comes from Frank Louthan of Raymond James. Please go ahead.

[Frank Louthan:]

Great. Thank you. Maybe just give us a little more color on the trends in the top line here. It seems like they are a little more one-time in Q3. And then what sort of the right starting off point for Q1 after once we exit the existing year?

[Gary Wojtaszek:]

Yes. There are two big trends going in the quarter, Frank and so if you take are implied revenue guys for the fourth quarter it drops, it drops roughly about $9 million versus where we were. so there's a couple different phenomenon is going out one is as we head into the fourth quarter that's traditionally are lower quarter from a power perspective just because it's cheaper to power these places in the winter and that's about a $2 million delta that we expect is going to drop next quarter. We also have this quarter and actually for a year a lot of equipment sales for customers and this is something that we don't really forecast and what it basically is there's a lot of customers have a choice either typically what we do is all the power distribution systems that we deploy for customers those are typically owned by us and so we deliver the power to customers and some of these other deals customers are preferring to put in their own power distribution system. So, we basically buy the equipment, we install it and we're effectively selling it to the customers. That was like around $7 million of revenue this quarter. We don't expect that that's going to continue -- that's going to continue next quarter. And the other thing was in the to lease acceleration customers that we talked about on the last quarter’s call, all -- both of those customers were fully exited those facilities at the end of the third quarter. We thought they were going to bleed into the fourth quarter but that's another $1.5 million, $2 million from what we originally had expected. So, when you when you look at our fourth quarter runway, if you take those numbers in there and you add to it the chart that we have in there that shows when this additional revenue is going to be coming online, you get a pretty good handle in terms of what the base revenue is going to be in Q1 when you look at the least commitments -- commencements that we have in their earnings our presentation. What I would say is that the other thing I point out is if you look at our backlog number that is around 14% number versus are our last month of the quarters annualized that gives you a really good insight in terms of the top line performance that you should expect to see from us heading into next year and that's still with another quarter of bookings this quarter before we have before we even start 2017.

[Frank Louthan:]

Okay, great. Thank you.

[Gary Wojtaszek:]

Is that help?

[Frank Louthan:]

Yep.

[Operator:]

And our next question today comes from Barry McCarver of Stephens Incorporated. Please go ahead.

[Barry McCarver:]

Hey, good morning. Thanks for taking my questions. Gary, talk a little bit about the growth from your cloud customers. I wondered if you could speak more generally just about demand from general enterprise?

[Gary Wojtaszek:]

Yes. We're seeing a demand across the board and it's definitely been swapped this year with demand from a couple of large cloud companies, but we have been selling across the portfolio. This quarter was one of our broadest sales ever where we had sales going in across every single market and the majority of that was not too big cloud customers, so our broad are growing demand for enterprise customers has continued to increase. We close three new big customers this quarter of Fortune 1000 two of which were not cloud companies the other one was a Top 10 cloud company.

[Barry McCarver:]

And you mentioned in your prepared remarks I think on slide 21 about some of your markets where you've got development seeing strong demand, any particular markets that maybe the demand is tapered off a little bit of or any change in pricing dimension?

[Gary Wojtaszek:]

No, no, I mean, I guess not really have tapered off, I mean, so I mean Cincinnati has historically been growing at single digits, really no change there. Dallas, we continue to have the same type of sales that we've had all year, although down for what we were seeing last year. Northern Virginia is on fire. Phoenix is on fire. San Antonio is on fire. Houston actually this quarter has had seen one of the highest number of bookings that we had in the quarter, I think it was a second or third largest market, right. I am talking to Schafer here. So that was actually a fairly strong booking quarter for Houston.

[Barry McCarver:]

Very good. Thanks guys.

[Gary Wojtaszek:]

I mean, probably where you're seeing a little bit more to is some of the remarks you mean before we talk about Chicago we kind of lost over it, but that has been an unbelievably successful acquisition. So we close the CMEs deal, say April 1st, the first phase of that property that we built out was sold on the last quarter's score just about all the it is now and then today, we announced that the second part of that facility that we'll be bringing online at the end of this quarter is also now sold out as well. That's gone really well. The other thing that we close on the quarter was 23 acres of adjacent land there. And so we've started construction on the plan turning dirt. Well, actually haven't started turning dirt there yet, but we've got the plans in place to start construction on the new facility on the original 15 acres that was required as part of the CME deal, that will be up and running by the second quarter of next year. So, we're seeing a lot of demand for that for the Chicago property as well. The only other area I would say that has been cutting the same kind of demand which hasn't really been that strong as in the Northeast, couple bookings here and there, but nothing substantial in terms of big deals going on there.

[Operator:]

And our next question today comes from Richard Choe of JPMorgan. Please go ahead.

[Richard Choe:]

Great. Thank you. I guess you talked about your funnel being twice as large as it was at the end of the second quarter and we're kind of seeing upsizing in your net square footage under development. And then also I guess we're going from 95% committed to 72% this quarter, what gives you the confidence in being able to I guess upsize these developments and that these deals will close given that it seems like the kind of business isn't coming through as fast as necessarily? And then also if you can talk about the Chandler V development, there are 185,000 powered shell that'd be helpful to?

[Gary Wojtaszek:]

Yes. Hey, Rick, thanks for the question. The business is coming in incredibly fast, right. We are running at a break next be bringing a capacity online to meet customer demand. What we talked about last quarter was we had $96 million of a backlog subsequent to the deal that was booked this at the end of the quarter, so really big backlog that has dropped down to 60 something million, $65 million or so, and that just is the reason that drop is because we delivered that additional capacity. We're working very quickly to bring out the additional capacity so that $66 million will be fully in our run rate basically by the end of end of the first quarter, I think about $2 million of that bleed through for the following quarter. So, we're running a really fast pace, the reason that you see our increase in development that's coming online that is the best leading indicator that you can have, every time you see that I've mentioned this in the past as we look at our capital allocation as a derivative of the customer demand that we are seeing so if you see us investing in markets that means what we're looking at it as a really strong sales funnel there which gives us good reason to invest in that capital. So, if you look historically you're never going to see us with big numbers investing in the Midwest and the Cincinnati market just minor amounts of capital there because the demand that were tracking doesn't want that type of capital investment. When you see us investing in other markets that is the best indication of where our sales funnel is telling us customers want demand and what I can say is that it was only about a year and a half ago, two years ago that no customer would never commit to sign a contract with us if we didn't have space available that has been completely changed now. We've closed probably a $1 billion of total contract value in the last couple quarters for customers and we still needed to deliver the product to them. So that had an amazing change in the business because it gives us great top-line visibility completely de-risk our capital investment. And when we have a longer-term bid on our capital investment that gives us a greater ability to kind of continue to shave cross-sell in that design, so having better visibility into [Indiscernible] plan just have so many other tremendous downstream impacts associated with your supply chain, your costs, your ability to deliver on the business, so we expect that that's going to continue to go on. In terms of the comfort that we're seeing, what I mentioned is like we're looking at a funnel that's almost two times as large as where we sat at the end of the second quarter. So, all those deals are going to close when they close, but if you have that big of a funnel you're sitting in a really good position.

[Richard Choe:]

Great. Thank you.

[Operator:]

And our next question today comes from Vincent Chao of Deutsche Bank. Please go ahead.

[Vincent Chao:]

Hey, good morning everyone. I just want to circle back to the CFO transition here for a second. I think we were certainly not expecting that announcement today. Just curious, if there's any other color you can provide in terms of what drove the decision to make the transition and it doesn't seem like given the fact that Diane is already lined up that maybe this has been, something that's been planned internally for a while and just maybe talk about when these discussions started and if we should expect any shift in the sort of the balance sheet strategy going forward?

[Gary Wojtaszek:]

Yes. Hey, Vince, thanks oh thanks for the question. Look, Greg has done a masterful job here right. Over his, during his tenure the value of the company has increased $1.5 billion. He's done a $1 billion of acquisitions and I think he's really enjoyed is his time here. He is looking at moving on and doing other things in his career we're really excited to have Diane join the party for those who you who may not who she is. She's just done a number of great things in her career, and I think her high growth experience is really going to serve us well as we as we transition to her. The thing I'd point out in terms of timing, look these things are never good, right. These are always generally concerning issues what I can say is we filed our 10-Q today, there are no issues there. Greg is staying out through the end of the month to help with that transition, so no one should be bothered by anything going on there. And with regard to the balance sheet, absolutely not, I mean our goal is, we are planning as we mentioned in the Investor Day. We are planning to increase the size of this company dramatically. We are looking at being becoming over a $1 billion top-line organization over the next couple years. And what we have always said repeatedly is that in capital intensive businesses those who have the cheapest cost to capital ultimately win. So, our focus is making sure that we have a really conservative balance sheet because we expect that as once rating agencies to become more familiar with this asset class they are going to be much more willing to give us the investment grade rating which we think that this business should command. If you look at the returns we get her assets, diversity education that we have, the growth opportunities here, these are all things that bodes really, really well from a credit agency perspective. And at a leverage ratio of 3.7 times, 3.8 times to 3.0 with the forward equity including in there, that is relatively speaking one of the lower elaborate real estate companies in the entire RMZ. I think the average leverage in the RMZ is closer to six times debt and we have significantly less, and we've done that because we want to make sure that that we always have access to a capital at really cheap terms and be able to continue to fund our business, because we do not see that growing down and Diane is fully on board with that. I don't think I've ever been any CFO's whose ever more aggressive about wanting a more aggressive balance sheet so her and I are really aligned on that. She recognizes the value basically getting to investment grade and I think she's going to help us tremendously with convincing the rating agencies to increase our ratings beyond where they currently set.

[Vincent Chao:]

Okay. Is there any color you can provide and sort of timing of when you started looking for replacement, and then also maybe who else was considered or how widespread the search was?

[Gary Wojtaszek:]

No. We don't want to get into the details of that, but Morgan [ph] says Greg does a great job more excited to have Diane.

[Vincent Chao:]

Okay.

[Gregory Andrews:]

Question that we had though I mean the one we're struggling with was I didn't want to -- I wanted to have this all out today and I didn't want to delay that and so that was a thing that we were considering whether this should be delayed until later, but it felt more appropriate to get all this out today, so that you guys can fully make any -- before you issue any reports and you're fully aware of this.

[Vincent Chao:]

Right. Okay. And just maybe another question just a separate topic just in terms of the churn I know pretty much the quarterly churn was about in line with which expected, but you can just give us a sense of what the company initiated churn level will be for fourth quarter? It sounds like there's a little bit that will bleed it out?

[Gary Wojtaszek:]

Yes. That was some of it. So we have expected some of that was going to bleed through into the fourth quarter of those customers are out now and they're behind us. So as I mentioned we expect that our churn next year is going to be around that 6% mark, so that's actually where what we're looking at now that's in our forecast.

[Vincent Chao:]

Okay. And this is on a 6% I think the guidance is historically been sort of four to six and just curious is there anything particular about 2017 where there's some certain tenants that are moving out?

[Gary Wojtaszek:]

No. I think historically been sending 6% to 8%, so we actually expected to be lower than what we have insight.

[Vincent Chao:]

Okay. Thank guys.

[Operator:]

And our next question comes from Manny Korchman from Citi. Please go ahead.

[Manny Korchman:]

Hey, guys. Gary, you've got a big funnel you're looking at, maybe can you help us sort of digest that a little bit what stage our discussions at and what's the difference between landing deals and not landing deals when you when we look at that funnel?

[Gary Wojtaszek:]

Well, so we classify our deals into four different stages. When we're generally talking about the funnel, any stage as a customer comes through different hurdles that they have to meet with us in order for us to move them up into the higher stages, as they move up into the higher stages we have a much higher degree of visibility into it and a higher ability to forecast that they are going to close. So typically when I talk about the funnels it is those customers that are in late-stage, late phase 3 and 4 type areas with us and so what we're saying is that like that funnel right now, so those customers that are in there have gone through the various traps and hurdles to get classified in those funnels. The timing of those things are still it's still having I mean you always want these things to close faster than then they do but what I can say is that the broad amount the demand we're seeing is the strongest ever, even if you looked at it from exclusive of the late-stage funnel and just looked at in terms of absolute funnel we're also looking at the largest sales funnel in our history as well.

[Manny Korchman:]

Great. And then, you mentioned I think that you're looking at getting your build cost down to below $5 million. How does that impact your yields? Is that mean that your yields move upwards or does it bring rent down?

[Gary Wojtaszek:]

It’s a good question. Typically we're looking to keep the same, right. So, in this earnings release what you saw on the presentation was what we just delivered and in Northern Virginia. So there was a lot of any window comments whatever about us giving away the business and underwriting deals that were just on economic. What we what we tried to show in that is that we're generating a 16% yield on that particular building which is consistent with the yield that we generate across the portfolio. But also at the same time what you saw is that we delivered that facility for $6.3 million for megawatt. So that is that is a really great return. We're happy with and so, but it's not it's not for everyone like we achieve things by working with customers that not every customer wants to do. And so as we work with customers to do that, their costs go down, our yields stay the same. We're happy to do that. The $5 million plan, that were working on is also the result of that. So this is when we're working with customers and we have a longer term planning horizon we are able to engineer solutions to them that don't require all the various bells and whistles that we put out for our base business not knowing what customers are going to come into the door. So we can be weighing more constructive in the conversations to designing a product with them. Also to the extent that you have a lot more visibility longer-term you can really fine-tune your supply chain so that you're not wasting time, right, so sometimes very expensive to us. So if you have more time to plan we do it appropriately reducing your cycle time which reduces your costs which is just improves your return. So, generally speaking we like to maintain the same type of returns for those customers and but give them a price point that is that's more attractive than what they're currently getting.

[Manny Korchman:]

The leasing – I believable you call the second phase of Aurora how big was that leasing? So how much are we looking at right now for fourth quarter today?

[Gary Wojtaszek:]

Like another 25,000 square feet.

[Manny Korchman:]

And then last one for me. On the CFO search just maybe little bit different. How would you search this time different than your search last time? Were you looking for a candidate that change between the two searches now a year ago?

[Gary Wojtaszek:]

I mean ultimately right, you need someone that really is supportive of business. So you need someone that understands what a high-growth companies like that understands what the challenges are when you're growing through that type of organization. And from CFO perspective you need people fundamentally understand what the value drivers are for the business, but importantly making sure that the balance sheet is able to be responsive and reflects that future growth profile. And Diane kind of fit the bill. She was just you probably know better than I but given your 10 year in real, but what she was able to do with strategic hotels and equity office properties has been phenomenal. Those companies went through hundreds of millions of dollars of increases in value. I think like maybe 10x type value creation in the last two of two companies. And equity office properties before they were sold was one of the largest REITs ever. So, as they're growing through that period she was instrumental in helping them, make sure that the balance sheet was responsive and grew in lockstep with that without taking on too much risk of that she was able to manage that growth appropriately, and I think she's going to be able to do the same at Cyrus here, a little different in terms of fundamentally what we're delivering to the customer but her skill set is going to translate really well with what we need from the CFO. so I'm pretty pumped up to have her on board.

[Manny Korchman:]

Thanks, Gary.

[Operator:]

And our next question comes from Jordan Sadler of KeyBanc. Let's go ahead.

[Jordan Sadler:]

Thank you. Good morning. Just a clarification on the CFO change, so it is it safe to say we won't see any -- we shouldn't expect any charges in the fourth quarter as it relates to the transition?

[Gary Wojtaszek:]

No, no. There will be a charge on that for the transition.

[Jordan Sadler:]

Okay. There will be. Can you quantify yet or not yet?

[Gary Wojtaszek:]

Not yet.

[Jordan Sadler:]

Okay. And then, as it relates to the recent additions on the sales front, John Gould and Brent Behrman. Can you maybe just expand on that a little bit you did mention global but then we said kind of focusing next 12 months on domestic? So and you guys haven't exactly been for one on the execution site as it relates to provide to sell some. Can you can you connect the dots for me on sort of need to hire those two guys?

[Gary Wojtaszek:]

Yes. So we're pretty excited to have both of them so. So there's two different roles here that we've got them filing. So, John join from – it’s been -- actually probably the vast majority of his career working at Dell, building up really big part of our organization high-growth businesses tremendous relationships before all the Fortune 500 CIOs around the country, and what he is going to be focused on developing is a much more robust sales organization and getting much more focused around terms of the metrics, the penetrations, all things around that when you're building up a really, a really robust sales organization. He's gone for a lot of high growth as well and in his background, but we were really focused with him on was his ability coming from large organizations that know how to scale and being able to take those same type of principles and things that he's learned and done in his past and recreate that magic at that Cyrus here. Brent is another person I don't know if everyone's we're so he's come from Compass Datacenters which is a local datacenter operator in Dallas here. They've grown nicely over the last couple years. But previously he was at digital really running sales for them. So, what he's bringing to the to the conversation here is a much more of a relationship with traditional real estate of folks in all of the corporate companies because there's a number of different transactions that are going on which we expect is going to accelerate which are associated with corporations looking at divesting some of their datacenters. So, what's great about Brent is that he speaks both languages sale side as well as with the finance side and he's going to be helping us kind of penetrate some of those corporates as they look for datacenter solutions to monetize our existing assets and also give on the runway for growth, so he's been in an industry forever has number of great relationships there. So those two are going to be working together and as I was mentioned to Simon earlier, I mean our preference is really together build out and focus on our U.S. platform here as we build that out, but we recognize that there's going to be deals coming to market that are going to put that timing like [Indiscernible] spin-off a total city assets earlier this year and some of the other once and I'm sure everyone is aware of are currently, but also have international assets attached. So we've got to be responsive to be able to look at that is ultimately we believe that you need to have a globally scaled business. And that's where Diane kind of just love telling into all that I mean her background in those other two are real estate firms that she's worked at have done an extensive amount of growth through M&A and her experience and leading that making sure that balance sheets that we're able to achieve those results is going to be critically important for our next our next chapter.

[Jordan Sadler:]

Clarify a recent comment in your expansion of additional land you've added in Phoenix you in that press release you mentioned the planned expansion into Santa Clara maybe having a campus similar to Phoenix. Any clarification you could have there or in terms of where you are in the process?

[Gary Wojtaszek:]

Yes. We're definitely, we've spoken to a number of different folks about property there that's an area that we're going to get into, because what we what were realizing is that our ability to sell we're done a really great job penetrating the whole California market. A number of those cloud companies as I mentioned were customers of ours 24 months ago, now we've got seven of the Top 10, but there's still a lot of those future companies that start-up in that area that that we are not able to move out of California to come to one of our other facilities. And so we think having a presence there in that market is going to give us the opportunity to start the conversations with those customers, so that when they do grow they'll be able to grow in our portfolio elsewhere. And so, we've spoken to a number of different property owners there and we expect we'll have something there in the next couple months.

[Jordan Sadler:]

Is that something is imminent or just you're optimistic something will happen?

[Gary Wojtaszek:]

We're optimistic, but just to give you a sense, I mean it takes awhile for planning their I mean so you're not looking at from modeling purposes you shouldn't assume that we're going to have any product available there until 2018 even if you require that now right you've got to assume it’s probably really in 18 months of build out there just given their complexities for us for permitting the over there.

[Jordan Sadler:]

Thank you.

[Gary Wojtaszek:]

But we'll be there.

[Jordan Sadler:]

Thanks for the time. Colby Synesael Yep.

[Operator:]

And our next question comes from Colby Synesael of Cowen & Company. Please go ahead.

[Colby Synesael:]

Great. Thank you. I have three questions that are model related. So the first one is on the fourth quarter guidance, is there anything assumed in the revenue that's one time in nature perhaps equipment sales or anything else we kind of back into the fourth quarter implied guidance from the full year, just we have that appropriate launching pad if you are going into the first quarter?

[Gary Wojtaszek:]

Yes. On there maybe a $1 million or so probably and that not anything at all really.

[Colby Synesael:]

Okay. And then my other two questions one is then on the forward equity sale, the 4.40 million shares, when would you assume that -- when we assume we put that into our shares outstanding and ultimately when you will get those proceeds? And then the second question is on CapEx for 2017, I appreciate you're not giving your 2017 guidance right now based on the project which you've already announced that you're working on that are going to be built out in 2017. Any color on what CapEx should be looking like we start to think more about next year? Thanks.

[Gary Wojtaszek:]

Yes. It's a good question. Those are both kind of related right. So we – you think about sitting on that type of demand funnel, right, it suggests that our CapEx is going to be another – if all those things flows, we're looking at another big CapEx here, right. So that gives you some sense if you’re like if you're modeling our CapEx now maybe down maybe 5%, 10% or so probably put you in a ballpark currently where we're thinking about CapEx shaking out, but a lot of that is going to be contingent upon when these deals closed. That's also have a secondary impact that is the financing piece which is associated with the equity forward. We did that and we launched that deal recognizing all man that we're seeing in our business at the at the time, I think for modeling purposes I think if you probably assume that by the end of the first quarter we have it pulled down you're probably that's probably good estimate of for modeling purposes.

[Colby Synesael:]

Great. Thank you.

[Operator:]

And our next question comes from Matthew Heinz of Stifel. Please go ahead.

[Matthew Heinz:]

Thanks. Good morning. Gary, I realize it's been anything but a quote normal year for you guys, but if you sort of strip away the survivalists impact and some of the non recurring revenue items over the last couple of quarters where do you see the organic run rate of growth in your business right now and as you think about your capital budget for next year do you think a similar level of leasing is achievable versus 2016?

[Gary Wojtaszek:]

Yes. So if you look at like -- so that 14% up that I was talking about. Matt that is -- that's actually a good indication of where organic we were at, actually it is higher than that because that's also somewhat skewed by some of these one-time things in there. So our base business is doing phenomenally well. I mean the reason that we took up our guidance those quarter was our operating results are stronger than we expected right, we're getting at the midpoint of our of our revenue increased by 1.5 million consistent with the increase in our EBITDA and that's because our business is doing better than we had expected. The other points down below that in terms of the FFO different and associated with timing of CapEx and some of our interest rate assumption and taxes and some of the other stuff, but the fundamentals of our business are really strong and we expect that that's going to continue. We're confident about that just given that the backlog that we're tracking is really large. And so we're sitting at a really large backlog and then we've got two new ponies in the stable here with a with Gould and Behrman joining the team which I think are going to further accelerate our top-line growth. So I feel I feel pretty bullish about what's going on and I don't see any slowdown and in broad demand drivers in terms of what's going on the cloud space and I think we're just go into to see continued growth in that as they become more and more comfortable outsourcing their critical datacenter needs to us, so I've never felt more bullish about the company's prospects that I that I have right now.

[Matthew Heinz:]

Thanks for that Gary. And I guess one more just looking at your NOI margins in the quarter I realized there's a seasonal dip from utility costs, but looking at the 10-Q it looks like you just disclosed about 6 million of cost associated with hardware sales, I'm just wondering if that's associated with that the kind of one-time revenue items you're talking about this one.

[Gregory Andrews:]

Yes. So that hardware stuff we don't get any margin on that stuff, so I mean that probably pulls within about a $1 million of EBITDA impact so there's two phenomenons what's going on why margins you've got that right that one time stuff is going to go away, that's kind of a what Colby was just kind of asking about always, we're assuming it goes away if there's not a lot of it's hard to forecast that, but there's really no margin impact with that. So that brought down – that brought down margins as well as power is typically seasonably higher in the in the in the third quarter, so from a marketing perspective that also crosses it. So we would expect that those margins will pick up by and if you flow through the bottom line EBITDA performance that should be up a couple hundred points consistent with what you saw in the first half of the year as well.

[Matthew Heinz:]

Okay. Just one last one. I didn't see the rate of growth and interconnections. Did you disclose or…?

[Gregory Andrews:]

No. I think it was about 15% or so,

[Matthew Heinz:]

Okay.

[Gregory Andrews:]

Yes.

[Matthew Heinz:]

Thanks a lot.

[Gregory Andrews:]

Yes. Thanks.

[Operator:]

And our next question comes from Amir Rozwadowski of Barclays Capital. Please go ahead.

[Amir Rozwadowski:]

Thank you very much for taking the questions. If we can chat a bit more on the M&A front you'd mentioned that there was some fees in your P&L related to some potential activities out there. I guess without tipping had any color you can provide us in terms of available assets in the market whether evaluations have crept up here is it clearly a key part of your outlook between growth for between now and 2020 just wanted to see if there's any update there?

[Gregory Andrews:]

Yes. Hey, thanks for the question. That there is a lot of M&A out right I think you have protective cover all the Telco space, so all the different acids that are that are out there and-and-and market. So there's a number of deals out there and we are we are very focused on doing the right deal, so we have spent a lot of time and a number of these different opportunities and we're very discriminating in terms of what it is that we want to get out of that M&A. And it's a tough call for us because it what you see in our organic business we generate really high returns, So if you look at it on the reverse of that on the implied EBITDA multiple type basis we're looking at very low input on multiples we're willing to pay up for an asset if it makes strategic sense, so if you look at something like what we did with the CME that came in at a higher multiple or say like 15 times or so, but there we saw a lot of opportunity getting a great customer being able to attract a bunch of other companies of that facility, so we're going to be able to drive down that acquiring EBITDA to something more realistic. And I think now if you're probably looking at that asset now with some of the backlog in there we're probably looking at and apply an acquisition multiple for that around nine times even dollar relative to where we trade that so willing to pay off for it we knew we were going to be able to come down. In other assets that we're looking at we have to apply that same approach. We're not willing to just kind of trade dollars for dollars. We need to see the upside so that we can get the returns that were we're trying to achieve from our customers so their strategic benefits that you get some of these things with new customers new geographies that were willing to pay for but there's a price that were not going to pay for it and you'll see by the deal that we wrote off this quarter in terms of the diligence were. Those were deals ever trading at multiples that were beyond what we were willing to affect.

[Amir Rozwadowski:]

That's very helpful Gary. And then a given your enthusiasm on the pipeline and businessman and recognizing that on a quarter-on-quarter basis there's different moving pieces but it seems like you've got healthy enthusiasm in terms of the pipeline of business as it stands today how do you view your ability to sort of reached out 2020 growth outlook for you guys provided earlier this year?

[Gary Wojtaszek -:]

What we we've done really well, right. I mean we have closed so many big deals this year that if you look at -- last year we had $400 billion of revenue through the third quarter we closed about a $130 million of incremental run rate revenue, right, on the base of large million coming out of 2015, right. So that's a tremendous better growth. We're actually probably tracking north of what we thought we were going to be. So we feel pretty good I mean, but look if you look back, I were to able to show you, know you our five-year plans from a couple years ago, we're basically ahead on all measures. I mean, this is some of the stuff I will share with Diane, where she was going to make sure that we kind of had a good bead on where we wanted to go. And when what we showed her where we're at relative to what we had expected and this was the original IPO plan, we’re basically ahead across the board. We continue to want to continue exceed our expectations that we've done pretty well and at the end of the day it's all about the team, and as long as we can continue to attract really great high quality folks to the party, I think we can continue to accelerate the business and over achieve what we set out for ourselves. So with John and Brent coming on board, I think that's just a good a good indication of the type of talent that were able to attract, and I expect that we're going to continue to outperform what we originally set out to achieve.

[Amir Rozwadowski:]

That's very helpful. Thanks for the incremental color.

[Gary Wojtaszek:]

Sure, yep.

[Operator:]

And our next question today comes from Jonathan Atkin of RBC Capital Markets. Please go ahead.

[Jonathan Atkin:]

Thanks. So I was interested in the second phase of CME and you said it was pretty committed to, is that financial demand, or is that with still cloud software, could you give us just a little bit of flavor for that, I may have missed that, in case you mentioned it. And then with regard to the sales editions, can you talk a little bit about maybe how to channel strategy, might differ going forward direct versus indirect, or is there no change foreseen on that front? Thanks.

[Gary Wojtaszek:]

Yes, thanks Jonathan. Yes, I would, when we opened up the CME, we went into that with a view that we are going to basically pull our customers that we acquired in the Ceballos acquisition, which were predominantly all the largest financial service companies in the Northeast with a heavy concentration of hedge funds. And we're going to be able to leverage that that group and build upon what the, what the CME has, and built-in Chicago. And in addition to that, what we were saying then was that, we believe that as more and more of this disparity data gets consolidated and as is delivered in one location that there's going to be more opportunities for various people to trade on that. So all these different types of metadata sources, which are not traditionally provided buy or to or from financial service companies going to be there. So the cloud companies and some of these other companies. So what we've seen in the, in the deal that we've closed which is resulting in both phases now being sold out is exactly that. We've got a large cloud company there as well as a couple of financial service companies there that are all trying to bring in different opportunities to monetize the relationship that they have with the CME there and ultimately that is going to end up translating into higher trading volume for the CME. So that ecosystem that we're developing there is going to be tremendous. I mean, when the CME decided to move their matching in the engine to or from downtown Chicago, that was the beginnings of a huge migration that is going to occur because everyone wants to be close to that matching engine, so that they can be able to monetize that speed and everything else associated with what's CME can bring to that transaction. So we're pretty bullish on what we're doing there. That’s why we acquired the adjacent 23 acres next door to it, because we want to build a much larger facility on that campus.

[Jonathan Atkin:]

Thanks. And then on sales and distribution.

[Gary Wojtaszek:]

Yes, so okay what you see in that chart again actually no we didn't break out between direct and indirect, but this quarter it was as finally another 9010 split. 90 being direct, 10 being indirect, we don't we don't think that's really going to change much go forward, and just given the given the really deep relationships that John and Brent have, we expect that we're going to be doing probably more deals direct just given that they have so many more relationships with all of the Fortune 1000 CIOs that we’re targeting. Look at the end of the day, while we’ve done a great job in attacking that Fortune 1000 base, we still only have 20% share, I said are still 800 other Fortune 1000 companies that we still got to go and get, and I think that Brent and John are really going to help cash go attack more of those accounts.

[Jonathan Atkin:]

Thank you very much.

[Gary Wojtaszek:]

Thanks.

[Operator:]

This includes the question and answer session. I’d like to turn it back over to the management for the final remarks.

[Gary Wojtaszek:]

Yes, well I appreciate everyone getting on the call today. I know just given some of the training and volatility last week, there were a lot of concerns going on in the industry. And what I can say is that my personal view is that any of those concerns were overblown, a number of my peers last week put out really strong bookings quarter, some of their record or closer record-breaking quarters, what you saw that and our results was more of the same our fourth strongest bookings quarter ever. And the only other one of my competitors who didn't put up a booking a strong booking number was basically because they were completely sold out so the takeaway from all that is that the underlying secular demand trends in this industry are fully intact. I believe that the growth in the real in the data center portion of the real estate business is going to continue to do really, really well. And if there's any concerns about rising interest rate I think that the growth opportunities that at this asset class has collectively should outweigh any concerns about any interest rate increases going up because the best way to protect about rising interest rates is through growth, and I think that's what you have in this asset class. So I'm really bullish about the future and I'm really looking forward to the next year. Thanks everyone if you have any questions, don't hesitate to reach out to Schafer or myself and we would be more than happy to talk to you. Take care, bye.

[Operator:]

And thank you, sir. Today's conference has now concluded. And we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.