Greetings and welcome to the CoreSite Realty Third Quarter 2015 earnings conference call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Mr. Derek McCandless. Thank you. You may begin.

Thank you. Hello, everyone, and welcome to our third quarter 2015 conference call. I'm joined here today by Tom Ray our President and CEO, Steve Smith, our Senior Vice President, Sales and Marketing; and Jeff Finnin, our Chief Financial Officer. As we begin our call, I would like to remind everyone that our remarks on today's call may include forward-looking statements within the meaning of applicable securities laws, including statements regarding projections, plans or future expectations. These forward-looking statements reflect current views and expectations, which are based on currently available information and management's judgment. We assume no obligation to update these forward-looking statements and we can give no assurance that the expectations will be obtained. Actual results may differ materially from those described in the forward-looking statements and may be affected by a variety of risks and uncertainties including those set forth in our SEC filings. Also, on this conference call, we refer to certain non-GAAP financial measures such as funds from operation, reconciliations of these non-GAAP financial measures are available in the supplemental information that is part of the full earnings release, which can be accessed on the Investor Relations pages of our website at, CoreSite.com. And now I will turn the call over to Tom.

Good morning and welcome to our Q3 call. Financial results for the quarter reflect continued steady growth reporting year-over-year increases in revenue, adjusted EBITDA and FFO per share of 23%, 33% and 35% respectively. We continue to see solid margin performance with our adjusted EBITDA margin increasing to 50.3% measured over the trailing four quarters ending with and including Q3 2015. This represents an increase of 370 basis points over the comparable period ending with and including Q3 2014. Regarding sales, our momentum carried into the second half of the year and supported strong production in Q3. Further, we are pleased with our progress across our three primary objectives for 2015, namely, to increase transaction count, further drive network value and bring more leading global public clouds under our platform and on to our CoreSite open cloud exchange. Regarding transaction count, we again increased the number of leases signed and specifically the number of smaller leases targeted to increase interconnections and drive ROI. In Q3, total transaction count of new and expansion leases reached 149, which is a record for us as a public company. 93% or 138 of the new and expansion leases executed this quarter were for deployments measuring less than 1,000 square feet each. Regarding network value, in Q3 we signed leases to add 37 new network deployments to our platform. Network wins in the quarter include companies in the subsea, satellite, cable, and mobility sectors in addition to a broad array of fully integrated network service providers. Additionally, new network agreements signed in the quarter represent service providers from around the world including global providers based in North America as well as providers based in China, Hong Kong, India, Japan, Mexico, New Zealand, Sweden, and United Arab emirates. More broadly over the past four quarters we…

Thanks, Tom. I'd like to start by reviewing our sales activity during the quarter. Q3, new and expansion sales totaled $8.8 million in annualized GAAP rent comprised of 64,000 net rentable square feet at an average GAAP rate of $138 per square foot. As it relates to pricing in the quarter, annualized GAAP rent per square foot on new and expansion leases was slightly below the trailing 12-month rate primarily due to lower power density sold in the quarter. Looking at the performance sensitive segment, the rate per square foot was in line with the trailing 12-month average. As Tom mentioned, we made good progress on our goal to increase leasing volume to smaller customer requirements, executing 138 new and expansion leases of less than 1,000 square feet in Q3, a 25% increase over Q2. We also saw continued strength in leasing among mid-sized opportunities across our platform signing nine new and expansion leases between 1,000 and 5,000 square feet compared to two mid-sized leases signed in the first quarter and five signed in last quarter. The solid leasing activity particularly the increased volume of smaller deployments contributed to the 53 new logos signed in Q3, a record since CoreSite became a public company. This continues to be a key focus as we look to further diversify our customer base. In addition to strengthened new and expansion leasing, our renewal activity in Q3 was similarly strong as renewals totaled approximately 72,000 square feet at an annualized GAAP rate of $145 per square foot reflecting mark-to-market growth of 4.2% on a cash basis and 9.7% on a GAAP basis. On a year-to-date basis, cash rent growth is 4.9%. Churn was 1.4% in the third quarter and is 5.1% year-to-date. Jeff will update you on our outlook for mark-to-market growth and churn…

Thanks, Steve, and hello, everyone. I'll begin my remarks today by reviewing our Q3 financial results followed by an update on our development CapEx and our balance sheet and liquidity capacity and last, I will discuss our revised outlook and guidance for the remainder of the year. Turning to our financial performance in the third quarter, data center revenues were $84.6 million, a 6.4% increase on a sequential quarter basis and a 23.5% increase over the prior year quarter. Our Q3 data center revenue consisted of $70.9 million in rental and power revenue from data center space, up 6.4% on a sequential quarter basis and 24.3% year-over-year. $11.4 million from interconnection revenue, an increase of 7.6% on a sequential quarter basis and 24.3% year-over-year and $2.4 million from tenant reimbursement and other revenues. Office and light industrial revenue was $1.9 million. Our third quarter FFO was $0.74 per diluted share in unit, an increase of 8.8% on a sequential quarter basis and a 34.5% increase year-over-year. Adjusted EBITDA of $43.7 million increased 7.7% on a sequential quarter basis and 33% over the same quarter last year. Our adjusted EBITDA margin of 50.5% increased 390 basis points year-over-year and 70 basis points sequentially. Related, on a year-to-date basis, our revenue flow through to adjusted EBITDA and FFO is 67% and 56% respectively adjusted for unusual items in 2014. Sales and marketing expenses in the third quarter totaled $3.8 million, 10% less than the prior quarter, but in line with the trailing four quarter average. We expect sales and marketing expenses to be in line with the lower end of our guidance of approximately 5% to 5.5% of total operating revenues for the full year. General and administrative expenses were $8.6 million dollars in Q3 correlating to 10% of total operating revenues.…

Thank you ladies and gentlemen. [Operator Instructions] Our first question comes from the line of Jordan Sadler with KeyBanc Capital Markets. Please go ahead with your question.

Thank you good morning. First question is, I guess also looks at into the future a little bit leaving off where Jeff, you wrapped up your prepared remarks. I guess I’m curious a little bit about capacity and as you’ve been very successful over the last four quarters or so leasing up the portfolio I’m curious about while you’re in the process of assessing your capital needs, the process in assessing the need for additional capacity across the portfolio and how we should think about that either geographically or from a product perspective?

Thanks Jordan. I think at a high level, just pays to think of what we’ve been communicating in terms of our priorities for capital. So, really if you look at the markets we're in right now and where we’ve had the most absorption, then do that math and look at how much is remaining to be available to either be developed or remain to be sold right now that’s already turnkey that points you to where we’re focused. I think we’ve had accelerated leasing in Virginia VA2. The SV7 building is the last building available to be built on our current landholdings in Santa Clara. It’s a big building, but it is the last one. We're running short in Chicago. So, same list of suspects and we’re just evaluating what are the opportunities for investment and what are our returns and we're just working through all that with our board, but I think the easiest way to think of where we’re going to spend our time is in line with those capital deployment priorities that we’ve been articulating. And we just don’t have anything specific to say right now other than, we're 2.9 times levered. We have capacity to keep growing. We have some markets where we’ve had success that we’re getting lean and we're just trying to be economically rational about what to do about that picture.

Okay. And geographically, any thoughts or need to expand beyond the current footprint or like the way you are situated today?

Well, no change to Pat's comments. All things being equal, more markets are better, but I don't think that’s a hugely meaningful driver for us. And in particular, if you look at this Q, which I think is not that different from past Qs we are attracting a global customer base here in the States. I think we’re effective with platform requirements and we just don't feel meaningfully disadvantaged because of the market coverage. We feel like we’re in the best places in the U.S. with a vast majority of them with the most data center demand in the country that we’re addressing through our portfolio. So, we are pleased with our ability to keep growing in the markets we are currently in and on a risk-adjusted basis that’s highly attractive. That’s not to say that something else might be attractive at some point in time, but the table that is set before us is good and plentiful.

Okay. And then on the mark-to-market increase, I’m curious if that’s coming from market rent growth or if it’s a combination of market rent growth and the focus on the smaller transaction, what exactly is driving that?

Yeah, Jordan this is Steve. It’s really a combination of both of those things. We're seeing obviously strength in the marketplace that allows us to hold rent and that’s encouraging, but we're also seeing better traction in those smaller deployments which we built in some other renewals that help us in that regard, but overall renewals seem to be solid so we’re pleased with both sides of the equation.

And keep in mind Jordan that the mark-to-market stat is leases that were in the portfolio at the end of the Q and that renewed so that stat does not pick up selling to new customers.

Right, right okay. I get that, I get that. Lastly, just more housekeeping oriented, there was a transaction costs in litigation, it showed up as two different numbers in two different places and I was wondering what might have driven the Delta litigation seems to be added to the second spot in the supplemental and what the nature of those expenditures might have been.

Yeah, Jordan, you're probably referencing roughly $650,000 in the quarter and those costs are largely attributable to some certain legal issues that we’re working through a couple of situations and that’s substantially what those costs relate to.

I think those accruals are for two different items and when you look at the amounts, I don't think they are game changers for the company but we felt it appropriate to take some reserves against two different items. And they are unrelated.

Should they be recurring or is this hard to predict?

I think it’s difficult to predict. In general, we don’t have much litigation at the same time you have some the bigger a company gets you’ve got slip and falls, you’ve got all kinds of stuff out there and it is hard to predict. I think it’s rare that a company of any size never has anything and I think it’s equally rare that we’ve had anything material.

Okay. Thank you.

Thanks, Jordon.

Thank you. Our next question comes from the line of Jonathan Schildkraut with Evercore ISI. Please go ahead with your question.

Thank you for taking the questions. First, I just want to follow up on the development of your cloud communities, obviously you guys have made a lot of progress in getting Microsoft as your on ramp in LA. It was an exciting announcement. Can you give us a little bit of perspective on the development of the other side of putting together these cloud ecosystems that is, where are we as a company or as an industry in terms of seeing enterprises come into plug-in to the multi cloud environment or into the cloud ecosystems that you’re developing and then I’d like to follow up with maybe a couple of detail-related questions, thanks.

Sure, Jonathan. This is Steve. I’ll give you my comments and then I'll let Tom wrap up, but in general I would say that it’s of greater interest for the enterprises to want to have that connectivity flexibility within our data center. So, we work to provide that flexibility across our open cloud exchange and with the reconnect and various other providers, so that’s driving a lot of activity on our end to make sure that we accommodate that from an enterprise perspective. But we’re also seeing greater interest from the other side from the cloud providers wanting to connect back into those enterprises so between the two, we’re at a very nice place in the marketplace where we’re in between those two and being able to provide those connections. So, we look at it to be a continued focus for us as we go forward in part of the value proposition that we built into our data centers. So, I think it will continue to materialize and something will be continued focus for us as we go forward.

But if you had but - go ahead Tom, I’m sorry.

I think it’s very early innings still, we’re just measured by cross connection to what extent our enterprise is connecting into the clouds. We’ve had one of the large public clouds, their providers who’s been with us longer than others and I’d say the first year they didn't, we didn't see a lot of enterprise take up around that offering. I see over the last year, we’ve seen it connections accelerate pretty meaningfully. That said it’s still relatively small compared to the size of our company or all cross connects here, so I would say that we are starting to see it in the more mature deployments, but I still think it’s very early.

Great, thanks Tom. Ironically I was going to ask you what inning we were in, but you seemed to have nailed that one. A couple of detailed questions here, there was a $8.8 million of capitalized commissions in the quarter. I think that was somewhat of an anomaly from what we were expecting. Is there any incremental color around that?

Yeah, Jonathan, just to give you a little bit of color around the $8 million, I would say roughly 60% of that amount relates to external commissions, the rest of it are internal and of that external piece, a major component of that related to a single multi-market new logo that we signed during the quarter and anticipate commencing in Q4.

Okay.

I think it’s important to understand the cash around that as well.

Yeah, I guess just to give you a little bit more color, that particular, for the one particular transaction is a transaction whereby the lease or the commission amounts will be paid out over the life of the particular term of that deployment as we collect cash from our particular customer. And so while it will be paid over a period of the customers’ term, the supplemental reflects the entire amount that we anticipate paying out over that period of term just so you have an understanding of how that works. We provided some additional disclosure inside the supplemental in our definition just to make sure that gets cleared up for people.

Jonathan, just the simple I guess the clearest thing we can say is the meaningful transaction to which Jeff referred is with an agent rather than a real estate broker, it’s more of the telecom based agent on a longer-term multi-market deal and our work with our auditors and internally with our team pointed toward capitalizing all of those payments even though we paid that agent as we received the money over a longer term, capitalizing that and then accruing it as a liability since we haven't paid the cash. So, if you are trying to, as I think most people are trying to look at AFFO on a cash basis, a big chunk of the AFFO is frankly a noncash item in this quarter.

Yeah, all right, thanks for that extra color. I’ll just ask one more here and then I’ll circle back in the line, but look it was a very solid quarter again for you guys and you’re able to bring up the guidance. It’s interesting to me that where we are in the year and the fact that there's usually a fairly decent lag time between the time deals are signed and they start to generate revenue to see you be able to take up numbers and so I’m wondering as we look at your guidance increase this late in the year if this had to do with faster leasing or faster commencements or delayed churn like what are the factors that roll together to allow you to move the numbers here? Thanks.

It’s leasing. Our churn has been in line, our mark-to-market has been in line, so it’s really leasing. There you have it.

All right. Thanks guys, really appreciate you taking the questions.

Yeah.

Thanks, Jonathan.

Thank you. Our next question comes from the line of Jonathan Atkin with RBC Capital Markets, please go ahead with your question.

Thanks. So I was interested in any noticeable change in the demand or activity in your business as a result of the large M&A deal that recently closed and then, related to the commissions question, overall if you could talk about how much of your leasing is a result of direct sales to customers versus indirect channels? Thanks.

What’s the M&A deal you’re just talking about? I have no idea. I’m sorry, I’m kidding there. Steve do you want to talk about what you’ve seen?

Yeah, I would say from the M&A deal that you’re discussing, I haven't seen a whole lot of difference in the marketplace relative to how we’re competing and how they're showing up as of yet. That may change over time but as it sits today, nothing material.

I just think it’s too early.

And then Jonathan on the second one, I think in terms of I guess what the number of deals that would be coming through I think you said the channel and/or broker, I think on average it’s going to vary based on and it’s good to be driven by the size of those leases, but on average it’s anywhere between 10% to 20% is what we would typically see. That’s typically what we’ve seen over the last several years in terms of number of leases.

Number of leases, okay, got it. And then I'm interested in the growth, not the absolute volumes of interconnect revenues but just the growth you’re seen in interconnect and how much of that would you characterize as coming from customer to carrier versus a customer to customer within your data centers? Any sort of change in the mixed shift and what should be the predominant driver?

I think you are seeing some increase in the share that is non- carrier related or put differently enterprise to enterprise, enterprise to cloud, but the majority still remains involving a carrier.

And then related to that, there is open cloud exchange and then there is design wins that can ExpressRoute and Direct Connect and if we isolate cloud related activities into those two buckets, which would be the more meaningful incremental driver that you’re seeing right now?

Between what John?

Open cloud exchange versus the cloud specific on-ramps that you’ve got like an ExpressRoute and Direct Connect and then perhaps a few others.

We are kind of the same. ExpressRoute with us is number one, [indiscernible] the number two and it’s currently only on the exchange and that’s the request of the service provider. So I'm not sure how to answer it. There is a fair amount of – sorry.

Go-ahead. I thought that those might be separate particularly in the case of say Direct Connect where some of that might come directly from the customer onto that cloud rather than through your CS platform.

And with Direct Connect, that’s accurate. The majority of connections into Direct Connect are via Cross Connect. And with [indiscernible] to different animal right now because of how they have come to market in our portfolio.

Got it. Thanks very much.

Thank you. Our next question comes from the line of Dave Rodgers with Baird. Please go ahead with your question.

Hey, good morning, Tom. I had a question for you I guess around the network wins. You talked about 37 I think network wins in the quarter, 130 in the trailing 12 months if I got the numbers right. I'm just kind of curious that the market is experiencing the same type of growth if you think within your markets you’re just winning a tremendous amount of share in that business. I guess I just love a little bit of more color around the network side of the business if you could.

Yeah, sure. This is Steve. I'm going to start off here. I think we are attracting a fair share or maybe more than our fair share of the activity in that marketplace driven by increased strength in the enterprise space and just increasing the value in our hubs in LA and DC and so forth. But I think just the overall industry is seeing significant growth as you've seen in recent reports on the news that the value of Cross Connects and the interconnection strengthen the marketplace. So that’s just driving more and more connectivity to the data centers in general but I think we’re seeing a pretty good share of that come to our data centers which is great.

Great, thanks. Second question maybe around the Cross Connect side of the business, can you give a lot of details about fiber and total connect volume but I guess I was curious more on the market pricing that you are seeing out there with regard to Cross Connects? I know you’re continuing to inch up and mark-to-market in that business, but I’d like to know a little bit more about market pricing if you could comment on that? And then a second to that was, you talked about a large cloud customer impacting the Cross Connect volumes, was that a meaningful change, will that continue to be or is that something that we should see ebb in the next quarter maybe I didn't get that clearly.

First on pricing, Dave, I think we haven't seen material changes in the market and as such we have been as you've said inching and marking our portfolio closer and closer to market but I haven't seen the market change a lot. So that's - that one. And regarding the cloud, Cross Connect to the cloud, I think that was in the context of may be responding to Jonathan around, to what extent is the enterprise really adopting the cloud? So we’ve had - one of our early cloud partners, we have seen significant growth in Cross Connects for that partner from enterprise over the last year. That total volume is still not tremendously, it is still not material I think related to our total Cross Connect base. So if you think about the Cross Connect business I wouldn’t describe anything material to that, it’s a higher growth rate but often the smaller base.

Okay, that’s helpful. Last question maybe for Jeff. Jeff, you talked about churn, it looks like the churn for the fourth quarter is 3.5% to 4% plus or minus. You mentioned the extra customer in Chicago. If that customer I guess were to leave in the fourth quarter would that take churn above that number or is that embedded in the number and it could come in lower if it slips to the first quarter?

Yes, Dave. The guidance we’ve given for Q4 includes the possible churn of that particular customer. So again while we are not certain of the timing or of the amount, we wanted to make sure people were at least aware of it at this point in time, especially if we have visibility into it. So we’ve included that in our Q4 churn.

Okay, great. Thanks guys.

You bet.

Thank you. Our next question comes from the line of Colby Synesael with Cowen and Company. Please go ahead with your question.

Great, thanks. Two if I may. Just wanted to follow-up on the initial question regarding pipeline, so when you are looking for space, are you still seeing there's a lot of space available in the markets where you are going to need it that you’ll be comfortable taking on and be able to turn into a type of facility that you’ll be happy with I guess starting as far as just going to the land itself. And if you look at over the next 12 months, do you see any markets where you guys could be capacity constrained relative to demand that you're seeing today to the point where that could actually start to impact your top line growth at least for a brief period of time until you get that space brought on? And then my second line of questioning is, recently there has been some talk whether it came from Cisco or Intel around some weakness in data center demand and I very much appreciate the term data center is a very broad term and very much appreciate that there has been a debate for many years now about does cloud ultimately eat Colo. But I would love to get your take on what you see happening and is there any risk you see longer-term from some of your for example digital media customers shifting from a Colo-type model to perhaps more of a cloud model and how that might impact you? Thank you.

Sure. I guess related to the capacity and room to run inside the portfolio, first we focus on earnings and for the extent capacity is a component of that, it is certainly is a component but we are really focused on earnings growth and I would say over the last couple of years we have had spots where we have been very tight in some markets and more capacity in others. I don’t expect that to change. I think there may be some markets where we get reasonably thin but we really do look at our planning and we try to look pretty hard out five years, what is the growth of earnings of the company and in the near term, we believe there remains a good opportunity for the organization, a good market opportunity and a good physical platform and a good balance sheet inside the company to maintain healthy growth rates. That is our belief. We are certainly not trying to – we are very aware of not running out of space everywhere and not being able to grow. We are measured and we plan pretty carefully and there are soft spots from time to time in some markets and over the years we have been able to navigate that pretty well.

And weakness in demand overall, rumors out there.

Let our sales speak for themselves. I did see the note from Intel and the weakness in data center demand I guess they’ve been putting their gear into data centers as opposed to demand for their data centers. I know they have some type of third-party products, but I guess we can only see what we see. Steve, any comments on that?

Yeah, I would just say that we haven’t seen that shelf in our pipeline as of yet, so we keep a close eye on it and we monitor and try to adjust to it but all those factors are important. But at this point we haven't seen them show up in our pipeline.

Thanks.

Thanks, Colby.

Thank you. Our next question comes from the line of Matthew Heinz with Stifel. Please go ahead with your question.

Thank you. Good afternoon. If I could go back to the cloud exchange concept and just think about our cloud providers over provisioned today given what they anticipate in terms of future enterprise demand or would you think it is more of an add-on affect when the enterprise starts to meaningfully adopt the product or the solution, and how meaningful could that add-on affect be from the service providers standpoint?

Sure. I’ll start off with give you my perspective. This is Steve. I think it varies pretty broadly across the various cloud providers out there. We’ve seen over the past several years cloud providers come and go, some that have over provisioned and not seen the demand and had their gear be antiquated and not competitive and we’ve seen others be much more measured and seen better adoption. So the big players out there are much better at it and they will come in and build out and then plan on scaling from there and that is part of our value proposition is being able to accommodate that scale. It has been a mix but I think many of the cloud providers have gotten much smarter over the past couple of years as to what they deploy and how they measure that growth and as adoption comes along with it. so it seem to be maturing and with that maturity we’ve seen more consistency.

Okay, that’s helpful. Thank you. And then I'm not sure I’ve heard you guys talk much about escalators built into your contracts and I’m just kind of trying to get a sense of, as I look at that same-store MRR per cab growth of 4% to 5% and that’s been pretty consistent, how much of that is a base rent or cash rent escalator versus just overall growth in the cross connects?

Matt, is going to really be a combination of the two I think. When you look at the overall growth in the MRR per cab-e, historically we’ve talked a little bit about and we haven’t seen a meaningful change that typically about 75% of that growth from the MMR per cab-e comes from increases in power and cross connects. The other 25% is coming from the rent component. And so while there are escalations, cash escalations inside most of our contracts or I should say majority of our contracts that helps drive that to some extent but the lion’s share of that growth continues to come from both increases in power and cross connects.

Okay, thanks. And can you quantify what the average escalator is written in?

I think overall I’d say ballpark-ish is 3% of a relatively on an annual basis a relatively good data point.

Okay, thanks guys.

Thanks, Matt.

Thank you. Our next question comes from the line of Jon Petersen with Jefferies. Please go ahead with your question.

Great. Thank you. I am curious about the [indiscernible] connection, a lot of people have asked question kind of about what it means in terms of demand and all that stuff. What I'm more curious about is how do you guys get these deals to start with? What is the negotiation process? Is it something that you have to pay for? I'm sure it is something that you and all your competitors want as well so how does it end up in a CoreSite facility and what are the contracts like? How long are you locked up in terms of having the only connection in the market or could that change tomorrow?

I guess first, bringing them in actually - Steve, do you want to talk about how the process?

Go ahead.

In bringing them in, I don’t recall that we’ve ever paid a cloud provider to launch inside our platform and it really just comes from how do we get them but we have long-standing relationships with these companies. We have people who work together with their people for years. And I just think those discussions start fairly early in the product planning cycle and it is a – that’s the process, that is it. We have not signed anything, CoreSite has not signed anything that locks any cloud provider out of announcing or working with other parties in the marketplace so that dynamic does not apply to CoreSite.

The other thing I would add is, we do have very good relationships with many of the largest cloud providers and we do work with them on a continual basis. As far as how we start and ultimately formalize those relationships, it is a mutual interest so they want to have access to our customers, we want to have access to their cloud and as I mentioned earlier that makes pretty easy conversation, how we get there varies from cloud provider to provider but we are all interested in the same thing.

Gotcha, okay. And then lot of people have talked about capacity and the runway in new markets and all of that stuff, I'm just kind of curious I know you have nothing new to announce in terms of plans for new markets but just internally how much time do you guys spend amongst yourselves or meetings with the board talking about potential markets you would want to be in whether it is domestic or international, how much of your strategic planning time do you spend thinking about that?

How we deploy capital and how we think about our investment returns is certainly a key topic for the Board and for the Executive Team as we think about the strategy. There are times when that strategy is pretty well set for the next year, year and a half and as such we don't talk about it quite as much. There are times when there is more to talk about but we maintain a good discipline around thinking about how to invest, we are a capital intensive business and our Board is very rigorous and disciplined about staying up to speed on our strategies and helping us think through those things. So I can’t quantify - it ebbs and flows with the needs of the company but it never goes away because we never stop thinking about it.

Gotcha, okay. That makes sense. And then just one other question for Jeff, it sounds like to fund development spending with the pipeline you have right now I think you had about 160 million-ish left and it sounds like there is going to be some new debt issued. Can you give us any indication of the timing around that, what kind of routes you would use on that and then I'm also just curious with your leverage levels as low as they are, you guys have a fairly diversified portfolio, you’re now a larger company than you were at the IPO, what kind of conversations you had with the ratings agencies about moving towards investment grade rating?

Yes, let me see if I can give you some color as best as I can Jon. I guess somewhat as I said in my prepared remarks as we look out over the next call at nine months through June 30 of next year is kind of where we're looking from a timing perspective between now and then and ultimately it’s going to depend on the things that really matter to us which is maintaining flexibility so that we can continue to trend towards that investment grade rating. And maintaining an unsecured instrument is obviously key from our perspective. As you’ve seen we like to maintain a balance between fixed versus variable price debt and then obviously maintain an appropriate debt maturity stack in whatever it is we do. In terms of conversations with rating agencies, we meet with the rating agencies at least once a year with each of them, the main ones to make sure that we stay in front of them. We learn from how they are looking at things, how they look at the industry and importantly so they also understand what CoreSite is doing, has done and ultimately probably more importantly where we are headed. And so we have those conversations in terms of actually timing around a rating. That will really depend on when it is needed or sometime before it is needed but nothing at this point in time is concrete.

Okay. Thanks for the color.

You bet. I just want to respond to the prior question or about the growth rates and escalators built into our contracts et cetera. I want to make sure we are clear. You could hear what we shared as – if you have 3% escalators on rent and you are getting four on your mark-to-market and how can you be getting any more than a point on power and interconnection, and I think that would be - if we’ve led towards that I think we’ve misled you guys. It has been an incorrect analysis. What is key inside the MMR per cab-e is we’ve been adding a lot of wholesale into the mix over the last couple of years, so the escalators are in the smaller agreements and the wholesale is typically at a lower MMR per cab-e than the rest of our business. So I think in general when you see wholesale, a flag of wholesale coming in because of a round of new development but you are still seeing reasonable strength in the MMR per cab-e. Generally speaking I think what you have is very solid strength in MMR per cab-e inside the transaction engine in the performance sensitive side of our business being diluted by wholesale. And so I just want to make sure we're super clear about the component of MMR per cab-e. It is a moving base with more wholesale having come in over the last couple of years and that has muted what you might have otherwise seen from the rest of the portfolio, escalators, cross connects, break or power et cetera. I just wanted to touch on that to make sure we are clear.

So with that, I think we’ll wrap it up and just want to say thank you to everybody for taking time with us on the call today and for following the company and working hard to understand what we're doing and where we're trying to go. We will keep working hard. We are very grateful for our people here at CoreSite to drive our success and for the customers to keep putting their faith in us. Thanks again, we will talk to you soon.