Good morning, welcome to the CyrusOne Q1 2021 earnings call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I'd like to turn the call over to Mr. Michael Schafer, VP of Capital Markets and Investor Relations. Please go ahead. Thank you, Nick. Good morning, everyone, welcome to CyrusOne's Q1 2021 earnings call. Today, I am joined by Bruce Duncan, President and CEO, Katherine Motlagh, CFO, and John Hatem, COO. Before we begin, I would like to remind you that our Q1 earnings release, along with the Q1 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 SEC's 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, Bruce Duncan. Thank you, Michael, and welcome to CyrusOne's Q1 earnings call. I want to begin by acknowledging and thanking our team for their tremendous effort during Winter Storm Uri that impacted Texas in late February, keeping our data centers operational and taking care of our customers. While it was a very difficult week for many throughout the state, the expertise, dedication, and hard work of our people helped us manage through these unprecedented circumstances. Turning to the quarter, beginning with slide four, despite the negative impact of higher electricity rates in Texas due to the storm, we had good financial results, which Katherine will discuss in more detail shortly. We also had a good leasing quarter, signing approximately 28 MW, totaling $35.4 million in annualized GAAP revenue, primarily driven by bookings from hyperscale customers in our U.S. markets. We ended the quarter with a record backlog of approximately $113 million, positioning us well for continued growth this year and beyond. Moving to slide five, we completed construction on developments in the New York Metro area and Frankfurt, totaling approximately 78,000 colocation sq ft and 14 MW. Our development pipeline, as of the end of the quarter, consisted of projects across the U.S. and Europe, totaling approximately 380,000 colocation sq ft and 100 MW, with 69% of the square footage under development pre-leased. We are also excited to announce the execution of an agreement to acquire a 12-acre development site in Frankfurt to support growth in one of our leading markets. We continue to maintain a strong balance sheet with low leverage and significant liquidity to fund our growth, including $385 million in available forward equity. Slide six provides detail on our leasing results for the quarter, as well as the revenue contribution across our portfolio by industry verticals as of the end of March. Our hyperscale customers accounted for 79% of the annualized GAAP revenue signed during the quarter, with the lower average pricing of $103 per kilowatt, and with a higher average lease term of 9.7 years, reflecting the mix heavily weighted towards this segment. Over the trailing 12-month period, our bookings have totaled 15% of our base revenue. This indicates that we are still generating strong top-line growth net of the impact of churn, despite having a much larger business than we did a few years ago. As of the end of the quarter, 51% of our total revenue was from hyperscale customers and 49% was from enterprise customers. Turning to slide seven, our interconnection revenue was up 10% in the Q1. In the bottom left-hand corner of the slide, we've highlighted some of our key portfolio metrics, including the NOI contribution of 92% from owned facilities. In addition, we have a relatively young portfolio, a high-quality customer base with nearly 80% of revenue coming from the Fortune 1000, and long-term leases. The right-hand side of the slide shows we continue to make good progress on ESG initiatives, which as we have discussed before, is an area of focus for all of our stakeholders. We recently announced that our Carrollton location in the Dallas area will be our second net positive water data center, following the announcement of our Phoenix location as a net positive water data center last year. Water efficiency projects resulted in a two-thirds decrease in water consumption at our Carrollton facility in 2020, and we continue to take steps toward the further conservation of one of the most important natural resources. Moving to slide eight, I want to highlight our U.S. leasing results, since discussing this is an area of emphasis on our Q3 2020 call, given our loss of market share over the last few years. During the last two quarters, we have averaged approximately 24 MW and just over $33 million in annualized GAAP revenue signed, up over 100% compared to the prior four-quarter average. Nearly 60% of the leasing during this period was with hyperscale customers, including 78% in the Q1. Not surprisingly, these customers are deploying in our key hyperscale markets, notably Northern Virginia and Phoenix. Importantly, we have capacity across our locations to accommodate larger deployments, and our ability to deliver technical solutions to meet specific customer requirements has contributed to the strong recent performance. While the European leasing in the Q1 was softer than it has been in recent quarters, we continue to have productive discussions with our hyperscale customers about potential opportunities in these locations. One of the benefits of having a broad and diverse portfolio with a presence across the key data center markets in both the U.S. and Europe is that we are less dependent on any particular market for leasing to drive growth. Overall, we continue to be encouraged by the demand we are seeing, particularly from hyperscale customers. It is our job as a team to convert this demand into signed leases. Turning to slide nine, as I mentioned earlier, we are excited about the execution of an agreement to acquire a 12-acre development site in Frankfurt. This will give us 63 MW of additional power capacity to continue to grow in one of the strongest data center markets in Europe. More broadly, we have shell and land inventory across key locations in the U.S. and Europe to respond to demand as it materializes. This represents more than 1,000 MW of total potential incremental power capacity and would more than double the size of our footprint. Our development capabilities allow us to bring online significant capacity quickly throughout our portfolio, including the scale builds that are required by hyperscalers. As the slide shows, we have delivered 529,000 colocation sq ft and 95 MW over the past 12 months. Our strong balance sheet with substantial available liquidity gives us significant capacity to fund developments at a relatively low cost of capital. In closing, the demand environment remains strong, and we are well positioned to capitalize on opportunities across our markets. Before I turn the call over to Katherine, I want to remind you that we will be hosting our virtual investor day on June 16th. I and the other members of the senior management team look forward to reviewing industry trends, our business, and our strategy, and we hope you will be able to attend. Please RSVP and get that on your calendar. With that, Katherine will now provide more color on our financial performance for the quarter and an update on our guidance for the year. Katherine? Thank you, Bruce, and good morning, everyone. Continuing with slide 11, please note that our Q1 results were significantly impacted by Winter Storm Uri. The electricity rate impact of the storm on metered power reimbursements at our Dallas and Houston data centers was $27.8 million. This was the main driver behind the 21% increase in revenue year-over-year. As you know, this is a zero-margin pass-through cost that increases our revenue but dilutes our margins. Adjusted to exclude the storm impact on metered power from both revenue and property operating expenses, our NOI and adjusted EBITDA margins would have been 60.1% and 51.8% respectively. Additionally, the electricity rates during the storm negatively impacted adjusted EBITDA by approximately $3.7 million. This was primarily driven by the impact of electricity costs associated with full-service leases at our Texas data centers. For these leases, power is not billed as a pass-through. This adjusted EBITDA impact was largely offset by the receipt of lease termination fees and the reversal of a property tax accrual, which combined total approximately $3 million. As a result, after adjusting for one-time items, including the negative impact of the storm and the positive impact of the lease termination fees and the reversal of the property tax accrual, adjusted EBITDA would have been slightly higher than reported adjusted EBITDA. As we had indicated in our last quarter's call, we expected churn to be more heavily weighted towards the H1 of this year. In the Q1, churn was slightly elevated compared to recent quarters at 1.8%, with the majority driven by customer exits and footprint consolidation. We continue to anticipate that full-year churn will be in the range of 4%-6%, with Q2 churn higher than churn in each of the last two quarters of the year. Moving to slide 12. The revenue contribution from our European markets continues to increase as leases in our backlog commence. As of the end of the quarter, Europe represented approximately 13% of our portfolio, up from 11% as of the end of the Q4. We expect that this trend will continue given the significant proportion of leases across these markets in our backlog and the growth opportunity in Europe relative to the current size of our business there. During the quarter, we exited our Stamford mega facility, which was a very small leased facility consisting of 19,000 sq ft of office space and no colocation space with annualized rent totaling approximately $300,000. We elected not to renew this lease at the expiration, and most of the customers at this facility were migrated to our Norwalk location. Total colocation square foot capacity across our portfolio grew by approximately 12.5%, primarily driven by demand in Europe as well as key U.S. markets such as Phoenix and San Antonio. Slide 13 provides a snapshot of our development pipeline as of the end of the quarter, with projects across nine markets in the United States and Europe. We have approximately 380,000 colocation square feet and 100 MW under development, with a relatively even split domestically and internationally. The colocation square footage under development is 69% pre-leased. It's up from 50% at the end of the Q4, meaningfully de-risking our capital investments. Upon completion of these projects, our portfolio will consist of nearly 1,000 MW of power, with our European markets representing nearly 20% of that total. Since last quarter, we have begun development of 102,000 square feet in Northern Virginia and 62,000 square feet in Phoenix in response to strong demand in those markets. Turning to slide 14. Our credit profile remains strong, with net debt to adjusted EBITDA of 5.6 times, excluding the impact of $385 million in available forward equity. At the end of the Q1, we drew down approximately $95 million in equity, issuing approximately 1.4 million shares. We expect to draw down the remaining available forward equity in the coming quarters to fund our development, meet our settlement obligations, and manage our leverage in our targeted mid to upper five times range. Slide 15 shows the expected commencement timing for leases signed during the quarter, as well as our overall backlog, which consists of a record $113.3 million in annualized GAAP revenue. We expect that nearly $64 million will commence over the next two quarters. Of the remaining amount, nearly $50 million is expected to commence in the Q4 and beyond. As noted at the bottom of the slide, approximately $26 million relates to the lease that we have discussed in prior quarters, where the customer is deploying 4.5 MW blocks annually through mid-2026. Of the remaining $24 million, approximately $5 million is expected to commence at the end of this year, with $19 million anticipated to commence in 2022, weighted towards the H2 of that year. Moving to slide 16. We are increasing the lower and upper ends of the guidance ranges for total revenue and metered power reimbursements by $30 million to account for the impact of the storm in the Q1. We are reaffirming our other guidance ranges. As you think about modeling the Q2, please note that you will have the full run rate impact of the elevated churn that occurred in the Q1, plus slightly elevated Q2 churn compared to each of the last two quarters of the year. Additionally, the lease commencements in the Q2 are expected to be more weighted towards the end of the quarter. Lastly, you will have the full run rate impact of the additional shares that we issued at the end of the Q1. In closing, the team is focused on consistent and disciplined execution across all areas of our business to ensure that we're well-positioned to generate profitable growth. The secular demand trends that have benefited us and the industry are expected to continue in the coming years, providing a strong foundation for us to create significant value for our shareholders. We appreciate you participating in our call. We're now happy to take questions. Given the number of people in the queue, we kindly request that each person asks one question so that we can stay on schedule and conclude the call on time at noon Eastern. Thank you. Nick, please open the line. We'll now begin the question and answer session. This time, we'll pause momentarily to assemble the roster. First question is from Jon Atkin of RBC. Please go ahead. Thanks very much. I was just interested in the Analyst Day and Bruce or Katherine, if there's anything more you might be able to give us in the way of preview, topics that you're going to explore, whether it's strategic, financial or operational in nature. Had a question about Europe. You mentioned productive discussions. I wondered if there's any way that you could characterize kind of the late-stage pipeline for anything hyperscale related, as well as the Frankfurt land parcel. What part of Frankfurt is that, if you are able to share that? Thanks very much. Great. Thanks, Jon. In terms of Investor Day, again, we think it'll be a great opportunity to spend some time and for you to spend time not only with me and Katherine, but with the rest of the senior management team to hear about sort of our thinking in terms of the business, start thinking about how we're thinking about recycling, thinking about in terms of what we think sort of metrics that we're going to be looking at and things changes and how we think about goalposts. That is, what we think is achievable. It's not going to be guidance, but over the next two, three, four years, what the goal is. We think it'll be a good discussion, and we look forward to it. Again, we hope everybody will join us for that. In terms of Europe, again, Europe was very light in the quarter in terms of signed bookings, but we're very encouraged, as I said in my remarks, about business over there. There's good demand. We've got a great team over there, and we're working hard on things. Nothing to report, but we're encouraged by business. I would add, Jon, good morning. First of all, in Europe, most of our demand is hyperscalers. As you know, the hyperscalers don't really work on the quarter-to-quarter business. Our discussions with the customers are very active, and it's just a lumpy business. As to location, when we get to Investor Day, hopefully we will close, we'll tell you where the location is. Right now, since it's not closed, we'd rather not talk about that. Thank you for that. Just on the follow-up then, sounds like multi-year outlook. Would that be for revenues, EBITDA, FFO per share? Anything that you're kind of thinking around the type of outlook that you would provide? Yeah. We'll consider the framework of key metrics, and that would help you understand how we run the business and how we see the growth and especially profitable growth, top and bottom line, John. Again, it's not guidance, but just sort of the goalposts in terms of what we think is achievable. Understood. Thank you. Thank you. Thank you. Thank you. The next question is from Ari Klein of BMO Capital Markets. Please go ahead. Thank you. I was wondering if you can give some color on the markets where hyperscale leasing was done in the U.S. Then you talked about some of the go-to-market changes a few quarters ago. How have you seen that play out in the pipeline? Sure. Ari, I would say, again, if you look at the quarter in terms of the hyperscale demand in terms of signed leases, Phoenix and Northern Virginia were basically neck and neck, and Phoenix just edged them out a little bit. Dallas was a distant third. We're seeing great demand there. In terms of as we look forward, I would say that we have a great team that's focused on this, and we've got great product, and we've got availability, and we're encouraged by what we're seeing in terms of demand. It's up to us to execute and bring home the signed leases. We're encouraged. Yeah. Ari, in Northern Virginia and Phoenix, in particular, those two markets, we have a line of sight to 100 megawatts or so of capacity. Those are the very key markets for us. Great. Then just on the rate increases, utility rate increases, obviously unexpected. Has there been any pushback from customers on that? We haven't seen that kind of impact from some of your competitors. Obviously, we hope this was a one-off event, but is there anything that you could do differently to prevent these kind of surprises? Let me take this. First of all, we are in very close discussions with the customers as well as with the utility providers that provided our power to our sites. In terms of pushback, I think it's a collaborative effort with our customers. For us, this is a service that we provide for them for the needed power reimbursement customers. For all-in customers, it is included in their rate. As we disclosed, we've incurred $3.7 million in cost charges from that portion of our business. Going forward, we have to see how the power and commodities develop in the market, specifically in the state of Texas and broader, and we will manage this accordingly with our customers. Got it. Thank you. Thank you. Next question is from Richard Choe, J.P. Morgan. Please go ahead. Hi. I was wondering if we can get a little more color on the hyperscale business that you're signing in the U.S. Is it coming from one or two customers, or is this from multiple customers over the past few quarters? What does the pipeline going forward look like? Are you talking to multiple cloud providers? Thank you. I would say, in terms of, there's great demand by a number of customers. Again, we're encouraged by that. In terms of, we really don't discuss pipeline in terms of the funnel on that. Again, as I said in our remarks, we're very encouraged by what we're seeing in the marketplace, and it's up to us to deliver solutions to customers and get leases signed. Again, the demand is out there. Great. Thank you. Thank you. The next question, Erik Rasmussen from Stifel. Please go ahead. Yeah, thank you. Bookings eased off somewhat from Q4. If you just comment on the types of deals the team is tracking and maybe how that plays into potentially better leasing throughout the quarter. With that, do you see Northern Virginia and Phoenix still playing key roles in that? We do feel Northern Virginia and Phoenix continue to play strong roles going forward for us. We also think Europe will continue to be very strong for us. It was an off quarter for us in Europe, despite that, $35 million is a very good number in terms of sales. We're very happy with that. Again, as I said, demand is good, and it's in U.S., it's in Europe, and we're encouraged. Again, it's up to us to deliver. Yeah. Yeah, Erik, just to that, too, I mean, the demand is diverse, right? Just it's enterprise, it's hyperscale, and it's us providing that line of sight for both types of those customers of scale and ability to execute. That's really what drives those signed leases that Bruce is talking about. In terms of the Q1, just to clarify, the 79% of our mix of orders came from the hyperscale customers. Okay, great. Thank you. Thank you. The next question from David Barro of Green Street Advisors. Please go ahead. Hey, thanks, guys. Question for you, Bruce. It feels like the European data center companies, there's a new one that's popping up every week focused on development. I'd love to kind of get your views on how long do you think outsized development profit margin in Europe will persist before we just start to see, I guess, new supply start pressuring asking rents? Ari, it's a good question. I would say again, Europe, we like Europe, we continue to like Europe because it's harder to find product, it's harder to get the land, it's harder to get the power and zoning. You have it's special. That being said, it's competitive over there. It's up to us in terms of finding the right sites that our customers want, and if we can do that, we think we can get decent returns. There's no question in our mind that returns are coming down. Over time, I think they will come down to more in the U.S. in terms of rates. Not rates, but returns. That's helpful. I guess just on the demand environment, maybe for hyperscale data centers outside of the top markets in Europe, could you maybe talk about that and what the company's, I guess, appetite or how comfortable they are shifting capital outside of some of the top markets? Well, we're going to talk about that in Investor Day. I would say this, in terms of going to markets, if we're going to new markets, we want to make sure that we have we want to de-risk it if we can and to have it pre-leased with a customer or a substantial line of sight to leasing. We're really not going to talk about specific markets until we're in them. Again, we think that over time, we will go to different markets, but we'll talk more about that on Investor Day. Great. Thanks for the color, Renee. Thank you. Thank you. Next question comes from Colby Synesael, Cowen. Please go ahead. Great. Thank you. I was wondering if you just gave us an update on the Dublin market. You guys have a presence there, but can you just remind us what's actually been built, and just broadly speaking, what you would describe the demand environment to look like up there? Secondly, I'm just curious if there's been any changes to sales compensation structure, the go-to-market strategy of late, and if so, if you can give us some color on what might have happened and why. Thank you. Hi, Colby. It's Katherine. I'll take your second question first, just because as you know, every year, at the beginning of the year, we look at compensation in terms of targets. It includes our sales compensation as well. There hasn't been any substantial changes to the sales plan. It was more of a tweaks of the nature. With that, we haven't really seen any impact on our sales organization. It's been pretty stable team, very engaged team, and they're going after our sales funnel. As you see, our leasing continues to be strong. In the Q1, it was at $35 million. In terms of Dublin, as you know, it's a self-build market, but we do have presence there and are working to develop that. Today, if you remember, under development, we have 76,000 colocation square feet, which equates to approximately 12 MW. We'll keep working in this market. It's under construction. It should be completed fairly- Next quarter. Yeah. Thank you. Thank you. The next question is from Frank Louthan with Raymond James. Please go ahead. Great. Thank you. I wanted to talk about sort of your future rents. Are you facing any material rent rolldowns you expect to release? What are the rates coming and what are you looking to underwrite to with lease renewals going forward? I guess I'll take that since it's one of my favorite topics as it relates to the renewals and rent rolldowns that we don't normally disclose, but we're working in a broader framework of our metrics and how we think about it. What I do want to point and guide you to is how we think about the churn, and specifically elevated churn this quarter, as I mentioned in my prepared remarks, came from footprint consolidations and some customer exits. The renewal basis during the Q1 was very immaterial, so it's not really substantial to talk about rolldowns in this quarter. As we go further in the year, there will be some more renewals that are coming to play, and we'll talk about it then. Okay. Thank you very much. Thank you. The next question from Eric Luebchow of Wells Fargo. Please go ahead. Great. Thanks for taking the question. Obviously, pricing came down a bit on a per kilowatt basis due to your mix this quarter, but maybe you could just give us some color on what the returns on capital were with that average deal pricing just north of $100 per kW. Then kind of related to that development yield discussion, what are you seeing today in terms of your average cost to build in the U.S. specifically? Have you been able to stay around $7 million per MW in some of your more mature markets? Are there any impacts from kind of cost inflation, higher land prices that maybe could drive those development costs a little higher? Thank you. Let me take the first. Then John can talk about construction. I would say in terms of the yields that we're seeing, they're consistent with what we said before in terms of the 8%-10% stabilized yields over the term. Again, we're pretty encouraged about that. The nice thing about this business is, in terms of the hyperscale, is it's the long-term leases. The 9.7-year term is something we feel very good about in terms of that. The yields are, Eric, within the range we've talked about. Yeah, Eric, it's John here. Nice to talk to you. Firstly, our construction costs are in line, right, with market, right? It drives to what Bruce is saying, keeping those yields in place. We're always looking for efficiency around that build cost like we always have, to build the right product for our customers. That's in line. As far as commodity pricing and inflation on that stuff, we're not seeing anything impacting us today. We are constantly looking at it. We're locked in on our equipment pricing till the end of this year. We've always had a diverse kind of focus when we think about shell construction and we think about steel versus FRP. We look at all those things all the time, and we'll just pick the right product for the cost metric we're trying to achieve. Great. Thank you. Thank you. you. The next question comes from Jordan Sadler of KeyBanc. Please go ahead. Thanks, and good morning. Wanted to touch on Europe for a second. I know this was a lighter quarter there, but trying to gauge total availability in terms of what you really have available for lease right now. I know the development pipeline, broadly speaking, is, I think a high 60% is leased. If we focus in on Europe, how much availability is there? We've got a bunch. If you look at London, we've got London 4 and 5. We've got some little bits in some of the other projects. In terms of total, I would say, when you add it up, Mike, what would it be? Yeah. In excess of 100 MW across our markets. Yeah. Probably across all the markets, it'll be over 100 MW. If you add our development pipeline to it, which is 45 MW, plus we have the land that also we are just in the process of acquiring, plus the land that we acquired in the last year. We have a good runway in Europe, and we're really positive about it. I guess, are you speaking to the not yet commenced development largely? I look at Frankfurt, it's 90% leased, 252,000 sq ft of co-lo space. I see London's 148,000 sq ft of co-lo. You're 83% leased. Amsterdam's fully leased. That's your stabilized portfolio. No, Amsterdam. Among your development portfolio, you've got 45 MW of total under development in Europe listed, 45 MW. Jordan, I think we're going to dive into this more on Investor Day, but Amsterdam's a perfect example. We have four and a half MW built out there. There's three MW leased. The shell that's standing there is a 27-MW shell. Right? This is how do we turn that capacity into leasable capacity quickly, right? Key is where do we have land and shell? That's what Katherine was speaking to. Plus, we have additional land in Amsterdam for another 27-MW shell. There's kind of that combination between land capacity, shell capacity, and built capacity. They kind of fall into all different buckets depending on how soon we could execute on those. You peg it at over 100 megs, basically. Yes. Okay. One other question just on coming back to sort of maybe metrics. Bruce, you've had sort of nearing a year looking at this business and spending time on this business. What are your thoughts on sort of offering up leasing spreads? Offering up leasing spreads on renewals. Yeah on new. Yeah. I think we're going to talk about, in terms of Investor Day, sort of how we look at churn and how we look at that. I think we're going to talk about that. Make sure you show up. I'll be there. What about your escalators on that 9.7 years leases you guys just signed? Well, we don't talk specific leases. If you look at, in general, with our leases, we have about a 2% escalation on all of our leases. Okay. You're still getting that? Yes. That's a combination of hyperscale and enterprise in terms of it averages to about 2%. Okay. Thank you. Thank you. The next question is from Tim Long of Barclays. Please go ahead. Thank you. Was hoping to ask about kind of what you're seeing on the enterprise side of the business. I guess leasing looks like it was down a little bit quarter on quarter. Just give us a little color kind of what you're seeing on the pricing front, and any verticals that are coming out better or worse, and maybe a little bit on pipeline as we get to reentry to the office. Do you expect to see more new logos in that business? Thank you. Mike, you want to take that? As Bruce mentioned in his remarks, we had a really strong Q4 among enterprises with $20 million signed. A little bit lighter in the Q1 relative to what we've seen historically in part a function of that. We remain encouraged by what we're seeing in that segment. It's across verticals. It's across markets. We feel good about it. The pricing, Tim, varies by deal, right? The bigger the enterprise deal is, the pricing's going to reflect that. There's a wide variety of deal sizes out there, which impacts the pricing. In terms of new logos, I think we've been relatively consistent in terms of what we've brought in over the past few quarters. It's been a little bit lighter than what we had brought in in prior years. I think once we get on the other side of this pandemic, we'll probably see an increase in the number of new customers we're able to add. Okay, thanks. Just to follow up, it sounds like decent growth in interconnect, but still small, and a lot of the new leases contain that. Could you talk a little bit about what you think as far as you getting the new customer growth, but volume growth for that business to become more meaningful? Thanks. Yeah. We've always viewed interconnection as an enabler of our colocation business. Really what we're seeing now is what we've seen historically. It's a growth in cross connects as we're building these ecosystems within data centers, and then enterprise customers particularly taking advantage of the SDN offerings with Megaport in particular. That's what we expect to see going forward. The revenue this quarter was impacted. We had a prior period credit for a customer that impacted revenue. We had a little bit of churn. Again, we're viewing interconnection as we always have, as an enabler of our colocation business. Thank you. Sure. Thank you. The next question is from Nick Del Deo of MoffettNathanson. Please go ahead. Hey, thanks for taking my question. Are you guys observing any change in the propensity for the major hyperscalers to insource versus outsource, or does your market intelligence and customer conversations suggest any changes on that front? Is this kind of the usual ebb and flow? Yeah. I think it's the usual ebb and flow. It all depends. In terms of if they have time and they'd love to do it themselves, in terms of if we have the right site and there's a demand, we're providing a solution for them. We think that continues. We help provide solutions to them. As long as we can keep doing that, we think it's a great business for us and for them. We're pretty encouraged. You have anything, John? Yeah, Nick, I think for especially the large hyperscalers and even some of these enterprises of scale we think about, people who would do their own versus lease with us, they view us as an extension of their team, right? They have a demand that they need to hit for their cloud business or whatever their business is, right? Leasing is a lever that they use, right? They want to lease with people who are going to deliver. Execute on the project, hit the sustainability goals, hit the safety goals. It's not an easy business, right? It takes an army to do that, and they expect you to perform just like they do, right? Better. Better, right? Better. Sure better. Yeah. Sure better. All right. Well, thank you. Thank you. Thank you. The next question is from Jeff Kvaal, Wolfe Research. Please go ahead. Yes, thanks very much for taking the question. A couple quarters ago, you adjusted the yield targets that you were hoping for in the long term, and I guess I'm wondering to what extent that is reverberating in the marketplace and how long that effect will be with you. Will you start to lap that at some point, or will it reverberate for a couple years perhaps? I guess a second side point that you introduced a moment ago, I think is, sounds like you are a little worried about the European pricing more so than the U.S., which is holding up, but it also suggested as though you, and I may have misinterpreted this, but it sounds as though you thought that the U.S. pricing actually may harmonize with the Europe pricing over time. All right. Well, let me be clear. Number one, as it relates to the U.S., when we went down to the 8%-10% threshold in terms of our view of what yields were acceptable for us, we weren't doing that to lead the market. We were doing that to meet the market. That is, the market was already there. We did that. I think that brought us in the market. I'd say also in terms of we had capacity, we developed the capacity for our clients that we had in the markets like Northern Virginia, Dallas, and in Phoenix. I think that's helped. We're very encouraged by what we're seeing there. In terms of yields, rents are higher in Europe. The costs are higher in Europe. You got to factor that in. In terms of the overall yields in Europe, they've traditionally been higher than the U.S., but I do think over time that those will come down some. The pricing is higher in Europe than it is in the U.S. because the costs are much higher. Okay. Thank you. Just to follow up on that yields to 8%-10%, how long will that be visible in the financials? Is this something that works its way through the system in two or three quarters, a year? As renewals come up, is this kind of the new benchmark that we'll look to? I'm not sure what you're saying, but I would say again, in the yields that we're getting people in there in 16 weeks, you're going to see that they're in there. Some of these are developments that will take longer, and if it takes longer, it'll show up in a year or so. Go ahead, Katherine. Yeah. Jeff, if you go back a year ago, when we had our yield expectations in the mid-teens or so, and we passed on some of the deals, so new business was impacted by that. As Bruce Duncan pointed out, we were going at the market. We were not leading the market when we lowered our yields 8%-10%. This is the market expectations for business, and that drives the pricing in the marketplace. We are able to be competitive at that level because we're still- Yeah with our structure, are able to generate same double-digit returns on equity because of the leverage and the cost of debt that we have. Yeah, just to follow up on Katherine's point. If you look at it, and you say you're doing a 9% deal, all right? You use our leverage of 5.8 times and you assume interest rates of 3%, what that means is your return on equity, on the equity you're putting in, will yield a 15%-16% return. It's a very attractive return for our investors, we think. Again, that's at a 9%-10% range, whatever. We think it's a pretty attractive return still. Thank you both. Yeah. Thank you. Next question from Michael Funk of Bank of America. Please go ahead. Yeah. Hi, good morning. Thank you for the questions. First one's on the commencement timing slide. I think it's slide number 15 in the deck. I know it's hard to compare quarter-over-quarter, it does appear the commencements got pushed back more to the H2 of 2021. I hope you could comment on that. If that assessment's correct, maybe comment on what's pushing out the commencement timing. Is it customer behavior? Is it your ability to provide the space? What's providing that change? Michael, relative to the commencement timing that we had provided last quarter, there wasn't a significant shift. I think maybe a couple million dollars here and there, but that's normal because we're estimating, and we update our estimates every quarter. There was not a significant shift this quarter in our expectations relative to last quarter. Also, I would point out the fact that the leases that we signed this quarter, the $35.4 million, are all expected to commence within the four quarters. Great. One more if I could. Bruce, I think you mentioned when addressing the end of stay business and then recycling. I'm assuming that you don't mean ESG, that you mean asset sales. If that's correct, can you give us a highlight of what types of assets, looking to recycle, timing for that, CBRE put into the data plus-? I would love to give you all that information, and you just tune in June 16th. We look forward to it. Great. Appreciate it. Thank you. Next question comes from Simon Flannery of Morgan Stanley. Please go ahead. Great. Thank you. Good morning. Nice to see the 69% pre-leased space. How are you thinking about your focus on making sure you have enough space in some of the hotter markets like Northern Virginia and Phoenix? Is there any plans? How high will you let that run before you start planning the next phases? Simon, it's a very good question. Again, we look at it to see the demand, because we want to make sure we have capacity. We're looking at that because there is great demand in both of those, both Northern Virginia and Phoenix. We're looking at that to making sure we're going to have capacity available. What about new markets either in the U.S. or in Europe? There's been a lot of talk about the focus of customers on these sort of Tier 2, Tier 3 markets as the edge becomes more important. Do you see opportunities there? I would say on the edge, it's not going to be our primary focus. I would say that we've got a big development site in Santa Clara. John and I will talk about that, we're very excited about. Yes, Simon, nice to talk to you. Yeah. Hi, John. Santa Clara, we're looking for our entitlements to be done by the end of the year there. That's a high barrier to entry kind of market. We're really excited about that. I think just a big project. It's a huge project. It's a huge project. 70, 75 MW. 70-MW project there. One of the hyperscale markets we're not in, that we're looking forward to getting into. As far as the second and third Tier markets, I think Bruce mentioned it like, that kind of stuff's going to happen with an anchor at scale. If we have an anchor to go into that market, that's when we'll look at that stuff. Great. Thank you. Thank you. The next question from Sami Badri, Credit Suisse. Please go ahead. Hi. Thank you. I just have a couple. Katherine, maybe the first one for you regarding the customer that you saw consolidating the footprint. What industries were those customers from or verticals? Hi, Sami. You're referring to the churn that we had customers exiting and consolidating footprint. It's across a couple. It's not one specific customer, it's across the verticals as well. It happened actually in the Dallas market, we already have new demand for that space that we're looking at into. Okay, got it. The other question I had was, you guys signed MRR per kW at 103 per kW in the quarter. When you compare that to just the last quarter or even just year-on-year, that's down quite a bit. Now, the reason why I kind of just want to understand this 103 number a little bit better here is that you've laid out an 8%-10% return target. Is 8%-10% achievable at 103? What if this 103 dips down to, say, 95? Is 8%-10% still achievable? It is achievable. Remember, the reason it's 102 is because the mix. The mix was all hyperscale. Last quarter was like 133 because you had the enterprise with it and whatever. It's also in the U.S. versus in Europe, and rates are lower in the U.S. than Europe. I would say at the 102, we have very good returns. As I said earlier, that 103, we're in the range of the 8%-10%, and it's a very good return on a leverage basis. We underwrite our deals to that yield of 8%-10%. The fact that we close these bookings, that means it meets our underwriting criteria. Okay, got it. Then maybe Katherine, one last question here is for modeling. How much cash do you guys need on hand on the balance sheet to just keep running the business? I only ask this because you are straddling different regions now. You have a lot of long-dated development projects taking place. Just how much cash should we be modeling on a quarter to run rate basis? Actually, the way to think about it is there's not a minimum cash that we want to keep on the balance sheet. We have access to revolving credit facilities. We also have a forward equity, $385 million, which we use that as sources to fund the business and the run rate. If you look at between the leverage and our access to capital and the liquidity of $1.6 billion overall, we're pretty much well-positioned to fund the years of development. Looking forward, we are always considering forward ATM programs as a vehicle to fund our future development. Yeah. Sami, I'd also add to that, just be mindful that we're operating with three different currencies now. USD, and then in Europe, obviously sterling and euro. You have to have minimum levels across those currencies to be able to fund short-term requirements. Got it. Maybe asking this question a little bit differently. Do you guys need $30 million of cash on your balance sheet, or do you guys need more like $150 million of cash at any given quarter on your balance sheet? It depends. It depends on any quarter. You've seen our range of cash on hand from $30 million- $200 million. That's pretty good wide range, but we manage it according to our leverage and funding capacity that we need. Yeah. Just bear in mind that we did draw down $95 million in equity at the very end of the Q1. Then we had a dividend payment that we funded, as we always do, at the beginning of the next quarter. Got it. Thank you. Thank you. Again, if you have a question, please press star then one. Our next question comes from Tayo Okusanya at Mizuho. Please go ahead. Yes, good morning. I wanted to focus in on guidance a little bit. You did talk about the $0.03 negative impact from the power situation, and even when you kind of back out all the one-time items, you probably would have done a little bit better than your reported number. You're kind of talking about a pretty decent kind of leasing outlook despite some other concerns around Europe, and your churn is expected to kind of slow going forward. I guess, when I look at all that, I'm just kind of curious, number one, why guidance wasn't raised and maybe what some of the offsetting factors could be over the course of the rest of the year to kind of maintain guidance, just because it felt like there was some type of momentum from Q1 2021 results and some of your commentary today on the earnings call. Thank you. Let me take that, Tayo. We are staying within our stated guidance because a lot of the activity during the Q1 were, as I mentioned in my prepared remarks, were of one-time nature, whether it's a negative impact of Winter Storm Uri or a couple of positive events, for example, lease termination fees and others. From that perspective, we do look at our margin, if adjusted for those one-time items for the remainder of the year, stay in the 50% or so, which is within the range of our guidance. In terms of the bottom line and FFO normalized, the flow per share is the guidance we also say within the range because we are raising the equity as we took down $85 million at the end of the quarter. We continue to have to take $385 million for the remainder of the year, so be mindful of that within our stated guidance. That's helpful. Thank you. Thank you. We have no further questions, and I'll turn the call back over to Mr. Bruce Duncan for closing remarks. Thank you, operator. Let me conclude with two things. First, if you have any questions, please feel free to reach out to Michael, Katherine, or me, and don't forget to RSVP for our Investor Day on June 16th. Finally, and most importantly, I want to thank my CyrusOne teammates for all their good work this quarter. As a result of your hard work, we're making good progress, and your efforts are much appreciated. You're an extraordinary team, and we thank you for all you're doing to make us better. Thank you all, and thank you for the call. Any questions, call us. Thank you. Bye. Call is now concluded. Thank you for attending today's presentation. You may now disconnect.