In an effort to reap proceeds for acquiring stake in its
operating partnership from a subsidiary of
Cincinnati Bell Inc.
), the real estate investment trust -
) - has come up with a public offering of 12.5 million shares of
its common stock. The underwriters have been further provided with
an opportunity to buy up to an additional 1,875,000 shares of
common stock from CyrusOne.
With the proceeds, CyrusOne would acquire 12.5 million common units
of limited partnership interests in CyrusOne LP (or 14.375 million
common units if underwriters exercise their option in full).
Notably, in 2010, Cincinnati Bell acquired data center operator
CyrusOne from ABRY Partners in a cash deal valued at around $525
million. In Jan 2013, Cincinnati Bell accomplished the initial
public offering of CyrusOne Inc. Following this, Cincinnati Bell
effectively owned about 68% of CyrusOne through the ownership of
its common stock and partnership units of CyrusOne LP.
Following the current stake acquisition by CyrusOne, Cincinnati
Bell's ownership stake would decrease to around 49.0% (or about
46.1% if the option to acquire additional shares of CyrusOne is
exercised by the underwriters). The move is a strategic fit as it
would enable CyrusOne to gain ownership in its operating
partnership unit, despite the share dilution impact.
As a matter of fact, CyrusOne, which focuses on highly reliable
enterprise-class, carrier-neutral data center properties and offers
mission-critical data center facilities, reported solid results in
the first quarter with adjusted funds from operations (FFO) per
share of 42 cents, exceeding the Zacks Consensus Estimate by 10.53%
and the year-ago quarter figure by 56%, backed by a strong increase
of 29% in revenues.
It has expanded its customer base to 630, mirroring an uptick of 76
from the prior-year quarter level. Going forward, we believe that
with a customer base comprising nine of the Fortune 20 and 135 of
the Fortune 1000 or private or foreign enterprises of equivalent
size and long-term growth of 19.94%, this can be a good choice for
your portfolio addition.
Investors interested in the REIT industry may also consider stocks
Chatham Lodging Trust
Terreno Realty Corp.
). Both these stocks carry a Zacks Rank #1 (Strong Buy).
FFO, a widely used metric to gauge the performance of REITs, is
obtained after adding depreciation and amortization and other
non-cash expenses to net income.
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CINCINNATI BELL (CBB): Free Stock Analysis
TERRENO REALTY (TRNO): Free Stock Analysis
CHATHAM LODGING (CLDT): Free Stock Analysis
CYRUSONE INC (CONE): Free Stock Analysis Report
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