DuPont Fabros, a real estate investment trust (REIT) specializing in data center properties, Funds from operations (“FFO”) for the fourth quarter of 2009 will be between 0 to 3 cents per fully diluted share, compared to a previous range of 26 to 29 cents. The company had been expecting FFO for the full year 2009 of $1.09 to $1.12 per share, but has now reduced that range to 83 cents to 86 cents.

Shares of DuPont Fabros are down 23 cents to $16.87 in afternoon trading on the Newe York Stock Exchange, a decline of 1.3 percent for the session.

DuPont Fabros also revised its full year 2009 dividend guidance and now anticipates paying a dividend of 8 cents per share for 2009, compared to previous guidance of 24 to 30 cents per share. The company now anticipates paying a 2010 quarterly dividend of 8 cents per share.

The revised guidance takes into account the anticipated closing of a $550 million offering of unsecured senior notes and the completion and use of a $150 million term loan  secured by its new ACC5 data center, which was announced by the company on Dec. 3.

A portion of the proceeds from the ACC5 term loan and the sale of senior notes will be used to repay secured debt. As part of the repayment, DuPont Fabros intends to terminate a related interest swap agreement, “which is expected to result in an estimated $14 million payment by DuPont Fabros to the swap counterparty and an associated charge against net income,” the company said.

The exterior of the DuPont Fabros Technology ACC5 data center in Ashburn, Va. during construction earlier this year. Facebook has pre-leased additional space in the facility.

Data center developer DuPont Fabros Technology (DFT) said today that it has arranged a $150 million loan that will allow it to finish its huge ACC5 data center in Ashburn, Virginia, where it has leased additional space. The company also plans to sell $550 million in notes to build a huge data center project in New Jersey and repay existing debt.

If successful, the debt sale would allow DuPont Fabros to bring new space online in the active New Jersey market without having to sell common stock. Management has expressed a preference to fund construction through debt rather than an equity offering that would dilute the holdings of current stockholders. The company’s confidence in its ability to find buyers for its debt may have been boosted by the successful sale of more than $400 million in debt by Terremark Worldwide earlier this year.

Leasing Remains Strong
DuPont Fabros’ effort to fund its growth has been boosted by the strong leasing activity in its core northern Virginia market. the company has now leased nearly two thirds of the ACC5 data center, where Net2EZ and Facebook have leased space. Today the company announced two new leases at ACC5, with one tenant signing a five-year lease for 1.138 megawatts (MW) of critical load , and another signing a 12-year deal for 2.275 MW.

Here’s an overview of the financial transactions DuPont Fabros announced today:

• The company closed on a $150 million secured loan with a syndicate of lenders led by TD Bank. The loan, which is is secured by the ACC5 data center, has a five-year term at a floating rate of LIBOR plus 4.25% with a LIBOR floor of 1.50%. DuPont Fabros will use $25 million to repay a previous term loan secured by ACC5. DuPont Fabros will use the balance of the funds to complete construction on Phase II of ACC5, and set aside $10 million in reserve.
• The new loan includes an “accordion” feature that allows new lenders to join the existing bank syndicate to increase the amount of the loan up to an additional $100 million if certain leasing and other covenants have been met. DuPont Fabros previously used an accordion feature to restructure loans used to build its Chicago data center.
• DuPont Fabros also today announced that a subsidiary will offer $550 million in senior notes due 2017, a move designed to allow the company to complete construction on a planned 360,000 square foot data center complex in Piscataway, New Jersey, which was postponed last year. Company executives said recently that it would take approximately $75 million to restart construction in new Jersey and complete the project’s first phase. DFT will use the remaining funds from the note sale to repay $50 million that it borrowed to build its ACC4 data center, and pay off a loan for a planned project in Santa Clara, Calif., which is currently mothballed.

“We are pleased to have secured this loan in a challenging credit environment,” said Hossein Fateh, President and CEO of DuPont Fabros Technology. “This loan will allow us to continue to make progress on our development pipeline by completing Phase II of ACC5. We now expect that ACC5 Phase II will be placed in service in October 2010.”

The DuPont Fabros Technology VA3 data center in Reston, Va., where the company has signed two leases to quickly fill space that will be vacated at year-end.

What a difference a year makes. As 2008 drew to a close, DuPont Fabros Technology was struggling. Facing the brutal headwinds of the credit crisis, the data center REIT’s stock had slipped to an all-time low of less than $2 a share after the company halted three development projects amid financing challenges.

Twelve months later, even as the economy continues to struggle, the outlook for DuPont Fabros has been transformed. In 2009 the company has signed 12 leases representing more than $700 million in contract value, gaining commitments for more than 187,000 square feet of data center space. In the third quarter DuPont Fabros opened the doors for first phase of ACC5, one of the projects that had been mothballed last November.

Four New Leases in Virginia
DuPont Fabros (DFT) reported its third quarter earnings late Tuesday, including four previously undisclosed leases in Northern Virginia. Significantly, the company was able to quickly fill space that was being vacated in its VA3 data center in Reston, Va. The deals continue the torrid pace of leasing in Northern Virginia, which is currently the most active market in the nation.

Space at the Reston facility representing 2.5 megawatts of critical load was to become available upon lease expirations on Dec. 31. DuPont Fabros said today that it had successfully filled the space with two leases, one for 1.95 megawatts and another for 0.6 megawatts.

More leasing at ACC5
The company said it also signed two leases at ACC5 Phase I in Ashburn, representing 2.84 megawatts of crticial load and 13,700 square feet of raised-floor space.

DuPont Fabros previously disclosed two large leases from early in the third quarter, a 36,700 square foot lease at its CH1 data center and a 33,000 square foot lease in ACC5 Phase II. DuPont Fabros didn’t identify the tenants, but Rackspace leased the Chicago space and Facebook has made the commitment for the space at ACC5 Phase II.

“During the third quarter, we continued to focus on leasing and operations, and are pleased with the progress made,” said Hossein Fateh, President and CEOf of DuPont Fabros. “Looking ahead, a principal objective will be raising the funds necessary to start the next two developments in early 2010 in order to capitalize on market demand for our product.”

Higher Interest Expenses
For the quarter ended Sept. 30, DuPont Fabros reported earnings per share of $0.08 compared to $0.12 for the third quarter of 2008, attributing the decline to higher interest expenses. Revenues increased 21 percent to $51.9 million for the third quarter of 2009 over the third quarter of 2008. Funds from operation (FFO) per share for the quarter ended Sept. 30, 2009 was $0.29 compared to $0.31 for the year-earlier period.

The company said it is actively pursuing additional funds for both the ACC5 Phase II in Ashburn, Virginia and NJ1 Phase I in Piscataway, New Jersey developments.

DuPont Fabros also hinted at news on the restoration of a dividend. “The company has increased its 2009 REIT dividend requirement estimate by $0.04, and the payment range is now $0.24 to $0.30 per share,” it said. “The company has available funds sufficient to pay the dividend in cash, and the Board of Directors will determine the method and timing of the dividend prior to the end of the fourth quarter.”

Hmmmm … it’s too bad for Cramer (and his viewers) that he didn’t discover the stock when it was trading below $2 a share last November. It closed today’s session at $13.33 a share.

Check out our DuPont Fabros Channel for more news about the company. For additional video, check out our DCK video archive and the Data Center Videos channel on YouTube.

The exterior of the DuPont Fabros Technology ACC5 data center in Ashburn, Va. during construction earlier this year. Facebook has pre-leased additional space in the facility.

Facebook has made a major commitment to its future infrastructure, locking down a large chunk of data center space in northern Virginia that will provide room for thousands of additional servers to power its fast-growing social networking hub. The lease in Ashburn, Va., which doesn’t start until 2011, represents a substantial financial commitment – as much as $125 million over the life of the lease, by some analysts’ math.   

Facebook has pre-leased 33,000 square feet of additional space in a huge data center being built by DuPont Fabros Technology in Ashburn, Virginia known as ACC5. Facebook already operates a data center in an adjacent building known as ACC4, and is about to move into about 30,000 square feet of space it has leased in the first phase of ACC5, which has just opened to tenants.

Planning Ahead for Major Growth
The new lease is in Phase II of ACC5, which has not yet been completed, and provides Facebook with 6.8 megawatts of power to support its IT gear. The lease doesn’t begin until January of 2011, meaning Facebook is planning ahead and expecting to fill the space in its first two Virginia data centers within the next 15 months. Facebook, which won’t begin making payments until the lease commences, wouldn’t comment on the length or total outlay involved in the agreement.

“We do not disclose specifics with regard to our lease financials, but we can confirm that we have signed an agreement,” Facebook said in a statement. “This agreement continues with our effort to add data center capacity to support our growing business.”

The new Facebook lease is the biggest example yet a trend in which users with large requirements are locking down space in northern Virginia, presumably to stay ahead of capacity constraints.   

“It’s incredible that there’s someone grabbing 6 megawatts for 2011,” said one industry source who closely tracks the northern Virginia market. “You’re either thinking you may not get that price later on, or that much space may not be available at all.”

Growth Keeps Accelerating
As its growth has accelerated past 250 million users, Facebook has managed its infrastructure costs through its relationships with the two largest “wholesale” data center landlords, DuPont Fabros and Digital Realty Trust. We previously estimated that Facebook was spending about $20 million to $25 million a year on its data center leases. That figure doesn’t include the two new leases in ACC5.

Here’s what we know about Facebook’s additional data center footprint.

• Facebook is paying $10.9 million a year for 114,168 square feet of space in two Silicon Valley data centers it is leasing from Digital Realty (DLR), according to data from the landlord’s quarterly report to investors.
• Facebook also hosts equipment in a Santa Clara, Calif.  data center operated by Terremark Worldwide (TMRK), a Palo Alto, Calif. facility operated by Switch & Data (SDXC) and at least one European data center operated by Telecity. These are believed to be substantially smaller footprints than the company’s leases with Digital Realty and DuPont Fabros.

Funding Wrinkles for DuPont Fabros
The move offers some advantages to landlord DuPont Fabros, which used Facebook’s previous lease to help raise $30 million in funding to complete construction. Lenders are more willing to finance data center construction with a lease in place. Facebook’s commitment may make it easier for DuPont Fabros to raise the $80 million needed to complete construction of Phase II.

If it isn’t able to raise additional funds, DuPont Fabros says it will offer Facebook an equivalent amount of space in the remaidner of Phase I of ACC5. But CEO Hossein Fateh expressed confidence that the company will raise the funds.  

“Between now and sometime in the first quarter, we are going to look at all the options we have and decide how we’re going to raise the money to build it,” Fateh said in the company’s recent earnings call, adding that DFT would prefer to use debt financing but  could also consider selling more stock. 

Details of the Deal
Here’s what we know about Facebook’s agreement, based on press releases from DuPont Fabros and SEC disclosures from other tenants. In its second quarter earnings, DuPont Fabros announced two leases representing $275 million in contract value.

One of the leases was an announced deal with Rackspace Hosting (RAX) in Chicago. Analysts from Stifel Nicholas have estimated the value of the Rackspace lease as $140 million to $150 million. The second tenant’s identity was not revealed by DuPont Fabros, but is now known to be Facebook.  Given DFT’s statement that the two leases total $275 million in revenue, that suggests a value of $125 million to $135 million for the Facebook lease.

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The DuPont Fabros Technology ACC4 data center facility in Ashburn, Virginia.

DuPont Fabros Technology (DFT) hopes to complete leasing of its new data centers in Chicago and Virginia by the middle of 2010, but has no immediate plans to restart construction on its projects in New Jersey and Silicon Valley, the company said today.

In the meantime, solid revenue from the company’s five fully-leased data centers in northern Virginia helped DuPont Fabros post first quarter earnings that were in line with expectations. The real estate investment trust reported funds from operations (FFO) of $0.25 per share for first quarter of 2009, which was at the top end of guidance.

“During the quarter, we continued to execute on our overall business plan,” said Hossein Fateh, President and CEO of DuPont Fabros.

Most of the significant news in the earnings release had previously been disclosed by the company, including:

• The signing of three leases at ACC4 in Ashburn, Virginia, representing 4.55 megawatts of critical
  load and 21,700 raised square feet. One of the new tenants is Rackspace (RAX). ACC4 is now 100 percent leased.
• One lease was signed at CH1 in Elk Grove Village, Illinois, representing 1.3 megawatts of critical
  load and 9,790 raised square feet. CH1 is currently 17 percent leased.
• Two pre-leases were signed at the new ACC5 data center in Ashburn, comprising 9.1 megawatts of critical load and 44,000 square feet of raised-floor space. The two pre-leases (one to Net2EZ, and an unannounced lease with Facebook) represent 50 percent of the facility’s critical load, 57 percent of its available space.
  In February the company closed on two loans totaling $30.0 million to finance the resumption of construction on ACC5. 
• Raised $150 million through an “accordion” feature in a loan secured by ACC4, and used the money to pay off the construction loan for CH1.

DuPont Fabros has about $27 million of unrestricted cash, $11 million available on its revolving credit facility, and $20 million of restricted cash available for the completion of construction on phase 1 of ACC5, the company said.

“We’re very pleased with our leasing progress,” said Fateh. “We continue to believe that we will benefit from the low supply of high-quality wholesale data center space.”:

For more information, see our DuPont Fabros Channel. For additional video, visit our DCK video archive and the Data Center Videos channel on YouTube.

The DuPont Fabros Technology ACC4 data center facility in Virginia.

Data center landlord DuPont Fabros Technology (DFT) continues to report strong leasing activity at the company’s data center facilities. The company announced three new leases this morning, including two leases with Fortune 500 enterprise companies for all the remaining space in its flagship ACC4 data center in Ashburn, Virginia. The leases totaled 2.275 megawatts of critical power load.

The leases continue a flurry of leasing activity in northern Virginia, as users with large footprint requirements look to lock up space. ACC4 was completed in the fourth quarter of 2007, and has a total power capacity of 36.4 megawatts of critical load.

DuPont Fabros also announced that it has a new tenant at its CH1 facility in metropolitan Chicago, which has leased space equivalent to 1.3 megawatts of critical load. The new tenant is an enterprise company with an S&P credit rating of A/A-1. Phase I of the facility is now 17 percent leased.

The leasing activity continues a strong start to 2009 for DuPont Fabros, which halted construction on its data center projects late last year due to the credit crunch, but has been boosted by new leases in both Chicago and Virginia. 

“We are pleased that our prototype ACC4 asset is 100 percent leased and that CH1 continues to gain traction,” said Hossein Fateh, President and Chief Executive Officer of DuPont Fabros Technology. “With the execution of these three leases, totaling 3.575 MW of critical load, we not only are diversifying our tenant base but building valuable relationships with high caliber businesses, which should position us well for future growth.”

Net2EZ currently leases 2.275 MW of critical load at DuPont Fabros’ ACC4 data center in Ashburn. It is one of three tenants that have signed leases for more than 50,000 square feet of space in ACC5, representing 57 percent of the facility’s capacity. DuPont Fabros now expects to complete ACC5 during the third quarter of this year.

“Through this agreement with Net2EZ at ACC5 we are strengthening our relationship with a high quality and valued tenant at our Ashburn campus,” said Hossein Fateh, President and CEO of DuPont Fabros. “Moreover, this will allow smaller companies to capitalize on the level of reliability we’ve made available through our best in class data centers. Looking ahead, it is our hope that Net2EZ will serve as an effective conduit through which smaller scale companies will develop, thrive and ultimately become direct tenants of DFT.”

“As a current tenant, we believe that DuPont Fabros Technology offers the best quality data center space available in the northern Virginia market today,” said Pervez Delawalla, Chief Executive Officer of Net2EZ. “Our decision to take additional space at the Company’s new ACC5 data center demonstrates our confidence in these facilities and further strengthens a productive partnership.”

DuPont Fabros halted construction on ACC5 in November when it had difficulty completing financing. Last month the company announced that it had raised $30 million in new debt to resume and complete construction on ACC5.

Here’s the scenario; DuPont Fabros had hoped to borrow at least $300 million through a loan secured by its huge ACC4 data center in Ashburn, Virginia and use the proceeds to fund construction of three new data centers in Silicon Valley, New Jersey and Ashburn. But then several potential lenders, including Lehman Brothers, were wiped out or hobbled by the Wall Street financial crisis in September.

With lending severely curtailed, DuPont Fabros was eventually able to borrow just $100 million, despite an appraisal that valued ACC4 at $680 million – a 15 percent loan to value ratio on a facility that was 87 percent occupied with long-term leases. As a result, it was forced to halt construction on the three data center projects.

At the same time, leasing was going slowly at the new Chicago CH1 data center, raising concerns about whether the company would need to repay a $135 million construction loan scheduled to come due on Dec. 31. DuPont Fabros could obtain an extension only if CH1 was 80 percent occupied, a prospect which seemed more uncertain with the slower sales cycle for enterprise users.

A solution was found in an “accordion” feature of the $100 million loan secured by ACC4, which gave DuPont Fabros the option of borrowing an additional $150 million – but only if it put up another property as collateral.

DuPont Fabros worked out an agreement to effectively fold the Chicago construction loan into the accordion feature of the existing loan on ACC4. The CH1 facility was added as collateral, allowing DuPont Fabros to secure the extra $150 million, which it used to pay off the $135 million construction loan on CH1. As a result, DuPont Fabros has breathing room, with no major loans coming due until August 2011.

“It was a win-win situation for everybody,” said DuPont Fabros president and CEO Hossein Fateh.

It has certainly turned out well for DuPont Fabros investors. Shares of DFT gained $1.48 to $5.50 a share Thursday, an increase of 36 percent.

The company was also able to borrow $30 million to complete construction on its ACC5 project in Ashburn after signing two large leases. Projects in Santa Clara, Calif. and Piscataway, NJ remain idle for the time being.