Good morning, and welcome to the CyrusOne LLC third quarter 2021 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Michael Schafer, SVP of Finance. Please go ahead. Thank you, Anthony. Good morning, everyone, and welcome to CyrusOne's third quarter 2021 earnings call. Today, I am joined by Dave Ferdman, Interim President and CEO, Katherine Motlagh, CFO, and Jonathan Hatem, COO. Before we begin, I would like to remind you that our third quarter earnings release, along with the third quarter financial tables, are available on the investor relations section of our website at cyrusone.com. I would also like to remind you that comments made on today's call and some of the responses to your questions deal with forward-looking statements related to CyrusOne and are subject to risks and uncertainties. Factors that may cause our actual results to differ from expectations are detailed in the company's filings with the SEC, which you may access on the 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, Dave Ferdman. Thank you, Michael, and welcome to CyrusOne's third quarter earnings call. We have a number of positive things to discuss today, and we will move to the quarterly results and provide an update on guidance shortly. I wanna start with two key points. First, we delivered great results this quarter with strong financial and leasing performance, including a significant bookings contribution from Europe and healthy pricing across the deals. I haven't been in this seat for three months and had an opportunity to meet with many of our stakeholders. I can now say I am even more excited about the outlook for this business than I was on our first call. Over the last three months, I visited many of our markets, and I'm really impressed with this team. Their passion and commitment are second to none, and their willingness to jump through hoops to make customers happy is simply part of their DNA. Secondly, I want to directly acknowledge and address the recent speculation regarding the company. I am not going to comment on any market rumor. What I will say is that we are open-minded to all avenues and alternatives to maximizing our shareholder value. Our board and management team are committed to this. Our assessment of the best way to maximize value is to keep our shareholders' interests as our top priority. This is our guiding principle. In any case, we have to continue to execute. The strong results we posted this quarter show that we are focused on and succeeding in doing just that. Beginning with slide four, you can see our key financial metrics for the quarter, which Katherine will discuss. We signed 20 MW totaling approximately $38 million in annual GAAP revenue. As of the end of the quarter, our revenue backlog totaled approximately $106 million, positioning us well for growth next year and beyond. Turning to slide 5. We brought 38 MW online during the quarter, most of which is leased capacity in the U.S. Our development pipeline as of the end of September consisted of 49 MW across London, Frankfurt, and Northern Virginia. We also acquired parcels of land in Frankfurt and San Antonio, each with estimated power capacity of 21 MW. Our balance sheet remains strong, and we had more than $2 billion in available liquidity as of the end of the quarter to fund our growth. Moving to slide 6. Annualized GAAP revenue signed during the quarter was 10% higher than the prior four-quarter average. MRR per kW signed was nearly $160, reflecting strong relative pricing on hyperscale deals in Europe and good enterprise demand in the U.S. The length-weighted average lease term of nine years is in line with the average lease term for deals signed over the prior three quarters, extending the maturity profile of our portfolio. As the pie chart at the bottom of the slide shows, 55% of rent is from hyperscale customers, and we expect that percentage to continue to increase over time, given the significant growth in their footprints in both the U.S. and Europe. Moving to slide 7. Our European markets continue to perform very well, accounting for $27 million in annualized GAAP revenue signed in the third quarter and $53 million through the first three quarters of the year, representing nearly half of our total year-to-date leasing. The site acquisition in Frankfurt gives us additional runway for growth in our strongest European market to accommodate demand from our hyperscale customers as they continue to scale. Taking into account the development projects underway in Frankfurt and London, we have a near-term European footprint of nearly 220 MW, which represents over 20% of the company's near-term footprint. Turning to slide 8. Global supply chain concerns have been dominating the headlines in recent months. We continue to actively manage our supply chain and have not experienced any significant near-term headwinds. As we have discussed before, we have a robust and flexible supply chain that is designed to mitigate a lot of this risk. Our key vendors hold inventory until we need it, and we have forward purchase contracts on long lead time items with fixed rates to help protect against near-term pricing pressure. We have long-term relationships with key suppliers, and we benefit from having a standardized design. That standardization, combined with the significant development that we have across the portfolio, allows us to purchase at scale and achieve better pricing. We also have resiliency built through the supply chain with key components dual sourced. Our internal teams are tightly integrated and work closely together to ensure accurate capacity planning and the ability to deliver our product when and where it is needed to meet demand from our customers. Overall, business has been minimally impacted by the broader inflation and supply chain disruption issues, and we are well-positioned heading into next year. In closing, the outlook for the industry remains strong and the team is working hard to ensure we are positioned to capitalize on opportunities in front of us and focused on maximizing shareholder value. We continue to see robust demand, and we're having productive discussions with our customers, and we have capacity across our markets as well as liquidity to fund our growth. 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, Dave. Good morning, everyone. Continuing with slide 10, revenue excluding the impact of metered power reimbursements grew approximately 11%, with similar year-over-year increase in NOI and slightly better growth in adjusted EBITDA at 13%. The adjusted EBITDA margin, excluding the impact of metered power reimbursements, was up approximately 120 basis points, driven by the contribution of lease commencement in Europe as well as relatively flat SG&A expense compared to the same period in 2020. Rent churn for the third quarter was at the lowest level we have seen in years, at 0.5%, as we have been able to delay some rate churn and proactively work with our customers. We are decreasing the upper end of our full year guidance range from 6% to 5%. The revised churn range is now 4%-5%, and we are currently trending towards the lower end of that range. The like-for-like renewal population continues to be relatively small per quarter, and the weighted average rate on these renewals was up 1% on a GAAP basis and down 3% on a cash basis. The spreads were positively impacted by the push out of the rate churn that I just mentioned. Turning to slide 11. The revenue contribution from our European markets has increased to approximately 17%. That's up from 11% as of the beginning of the year. We expect this contribution to continue to increase over time given the profile of commencements and strong demand trends across these markets, and we are focused on ensuring that we have the capacity to meet our customers' future needs. During the quarter, we brought online the first phase of our fully leased data center in Paris, further diversifying the portfolio geographically, with revenue now across five European markets. Moving to slide 12. We have 211,000 colocation sq ft and 49 MW under development across U.S. and Europe, including 43 MW in London and Frankfurt, our two strongest European markets. The development pipeline continues to be mostly pre-leased, with 82% of square footage contractually committed to customers, and we remain focused on closely aligning development spends with signed leases. We also have nearly 470,000 sq ft of powered shell under construction in Northern Virginia, San Antonio, and London, giving us the ability to deliver capacity quickly in response to increasing demand across these key markets. Upon completion of the projects in the pipeline, we will have 1,000 MW of power capacity, up 22% from a year ago. Turning to slide 13. As of the end of the quarter, we have more than $2 billion of available liquidity to fund our growth, including $303 million in available forward equity. Our leverage as of the end of the quarter was 5.5 times, at the lower end of our targeted range. Moving to slide 14. Our backlog remains high at $106 million. The decrease from the second quarter is the result of significant lease commencements during the third quarter. Of the nearly $71 million in annualized revenue expected to commence in the third quarter of 2022 and beyond, we anticipate approximately $37 million will begin in the second half of 2022, weighted towards the end of the year. Turning to slide 15. We are raising our 2021 guidance. We're increasing the lower end of our guidance range for base revenue by $10 million, resulting in a $5 million increase in the midpoint. This is primarily driven by a more favorable full-year churn outlook, including the timing of the impact I mentioned earlier, as well as accelerated commencements compared to our prior outlook. Additionally, we are increasing both the lower and upper end of our guidance range for metered power reimbursements by $15 million as a result of higher usage across our markets. We're increasing the lower end of our adjusted EBITDA guidance range by $10 million, resulting in a $5 million increase in the midpoint. This is driven by the increase in base revenue and slightly lower anticipated property operating expenses. Finally, we are increasing both the lower and upper end of our normalized FFO per share guidance range, with the midpoint increasing by $0.055. The increase in the midpoint is primarily driven by the increase in adjusted EBITDA guidance midpoint and slightly lower than anticipated interest expense. We are also narrowing our CapEx guidance range and maintaining the midpoint at $925 million. In closing, as we head into the last couple of months of this year, we're excited about the outlook for the business, and we remain focused on execution of our plans and positioning the company for continued growth in 2022 and beyond. We appreciate you participating in our call. We're now ready to take questions. Thank you, and operator, please open the line. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Jon Atkin with RBC Capital Markets. You may go ahead. Thanks very much. I was wondering if you can maybe update us on how the CEO search is going. You bet. You bet, Jon. You know, it's an ongoing process and, you know, the board is looking at all and exploring all opportunities available to the board. I am, you know, focused on execution, making sure the business performs and, you know, the process is ongoing. Got it. I wondered if you could then talk a little bit about inflation that's driving up, presumably development CapEx per megawatt, which is something I think the industry is seeing, and any implications that you think that'll have on pricing on new hyperscale commitments going forward. Hey, Jon, it's Katherine. Let me take that one. You know, we work very closely with our vendors and suppliers, and our procurement is globally optimized between Europe and U.S. The relationships that we have are usually on a fixed-base contract forward. We ensure that we have the procurement and the capacity with our vendors for our development pipeline as we go forward. So far, we have not seen material inflationary pressures on our supply chain as well as on our construction costs. I think we're working with the customers, and as contracts come up for renewal, we'll manage it through our efficiencies and forward-looking contracts. Finally, Europe was a strong quarter. I think you talked about $27 million. How evenly distributed was that across one or two large signings? Or, can you maybe give us a way to ask the question? What would be the magnitude of the largest lease or two largest leases that you signed in the quarter? We don't speak about individual leases or individual customers, but I would say it's heavily focused on hyperscaler customers as European region is our hyperscale region, is with our existing customers, and it's fairly large deployment. Thank you. I mean, Jon, I'll add to that. You know, in year to date, you know, we have 72% of our bookings are from hyperscale. You know, compare that with two years ago where we had 48%. You know, definitely trending towards long hyperscale contracts. Got it. Thanks so much. Our next question comes from Richard Choe with J.P. Morgan. You may go ahead. Hi. A quick follow-up to the CEO search. Can you give us any update on timing, or expectations around timing? You know, it's an ongoing process, Richard, and unfortunately I just don't have any expectations I can set on timing. To follow up on Europe, another strong quarter. In terms of the volatility in energy, are you seeing customers shift any demand or expectations, whether it's market or region, for Europe? You know, we're seeing strong demand across all of our markets. You know, and if you look at our first quarter bookings, it was 95% in the U.S., and if you look at our third quarter bookings, you know, it was 71% in Europe. You know, we see demand all over the market. We can't, as we all know, control timing. But because of the distributed platform that we have, and as the platform continues to grow, you know, we're certainly taking some of the lumpiness out of the business. You know, Richard, so when you think about the pressure on the energy, and most of our customers are on a path through metered power. In Europe, it's the majority of hyperscale customers. We do see an increase in metered power reimbursements. We do not see that impacting their decisions on where they need capacity. Great. Thank you. The next question comes from Ari Klein with BMO Capital Markets. You may go ahead. Thanks. Just following up on hyperscale. It looks like in the U.S., you know, nothing was leased for hyperscale. I think the rest was enterprise. Last quarter was pretty light too, so obviously lumpy, but maybe you can provide a little more color on what you're seeing in those markets, in the U.S. markets. Yeah, you know, look, it's always been lumpy. We have strong demand for all the hyperscalers in the U.S. You know, we don't see any of that relenting. It's been lumpy, but we're still confident that our footprint in the U.S. is very attractive to the hyperscalers. I would say we have very healthy conversations with our customers in the U.S. They just don't run their business on a quarterly basis or a monthly basis, so we work with them on the long-term relationships. Got it. On the faster commencements you noted, is there anything specific that's driving it? Is that a trend that may continue? I would say it's a compliment to our operations team, so that's what's driving the faster commencement. Thanks, Katherine. No, Ari, on that, I mean, listen, the team is always focused on delivering as early as possible, right? You know, we work with our customers and get them installed as quickly as we can. It's always been the focus of the company, and it continues even in the environment we are today. Got it. Then just maybe one last one on the CEO search. You know, obviously not saying a lot here today, but you know, given your earlier comments about keeping an open mind and shareholders' interest in mind, how do you balance that with the CEO's search? Can those run concurrently? I don't understand the question. If you were for sale, does that make it more difficult to hire a new CEO while running a potential process? We just don't comment on any market rumors or how they correlate to anything in the business. Thank you. Our next question comes from Simon Flannery with Morgan Stanley. You may go ahead. Great. Thanks so much. I wonder, Katherine, if you just elaborate a little bit more on your comment on the backlog timing in the second half of next year. Is there something new going on there about people taking down a longer lease time on some of these deals? How should we think about that? And then there was a report that you're looking to outsource your facilities management in the U.S. to JLL. I wonder if you could comment on that? Yeah. Let me start with the backlog. Normally our backlog is focused on kind of 9-12 months timeline. We don't see any new developments or extended lead times. What you do have in that backlog, remember our Paris multi-year deployment that kind of skews the backlog towards the longer time of it. Without that, it is usually deployments are heavier focused towards the end of the year rather than the beginning of the year. It's just how the timing works. I don't see any extension of the lead times. I think the backlog is healthy. It decreased, as I mentioned in my prepared remarks, because we did accelerate some of the commencement. That's, again, the timing. We feel good about our backlog, and we're well positioned going into the future. In terms of operational, how we run our business, we work with all of our vendors. When the contracts come up for renewal, we negotiate with the vendors. It's a normal process of the business, so there is not really any comments to add to that. Okay. Thank you. Next question comes from David Barden with Bank of America. You may go ahead. Hey, guys. Thanks so much for taking the question. I guess the first question I have would be if Katherine, maybe you could just give us the precise mathematics around energy cost exposure for the business in terms of percentage pass-throughs and of the remainder, how that will work in terms of hedged, unhedged, and what the potential sensitivity is to the business. Second, the question we've been getting a lot, as I'm sure you've heard, you know, with the, say, the Facebooks of the world massively increasing capital expenditure. Question is whether hyperscalers are preparing to make multi-year investments in their own facilities or whether they're preparing to take significant space incrementally from their lessor vendors. I would love to kind of hear you guys' perspective on which of those two things you think it is. Thanks. All right, let me take the power question. Over 90% of our customers are on a pass-through metered power reimbursements. From that, I would say the majority of our all-in customers are in U.S. They've been on a fixed rate, and we haven't seen any material exposure to us from the rising power costs from that. In terms of hedging, our policy is to hedge approximately 50% of our purchases, and we pass through our savings as we obtain it to our metered power customers. Hopefully that answers that. David, I'll take the hyperscale question. You know, we're seeing strong demand from you know, I think we've always seen that these hyperscalers do you know, they do a lot of everything. We're seeing them make very big investments into our assets. In fact, you know, when a hyperscaler deploys with us, you know, they invest in addition to what they spend. They invest about $20 million per megawatt on you know, all that goes in, including all the network capacity they bring in, the network core, the dark fiber, all their gear. So these are very big investments. We, of course, work with them as a partner. We haven't seen that demand slow down. We don't know how they split it up. They all probably do it differently. But we're seeing strong demand in all of our facilities. Great. Thank you, guys. Sure. Our next question comes from Matthew Niknam with Deutsche Bank. You may go ahead. Hey, thanks for taking the question. One on churn and then one on margins. First on churn, if you could talk a little bit about what's driving the lower churn, is this deferral into 2022? And if it is, in fact, deferral into next year, how does that sort of shape the expectation for 2022? And then secondly, margins ex pass-throughs, I think improved by about 120 bps year-over-year. Just wondering if you can maybe give a little more color on what drove the improvements and whether we can sort of extrapolate a similar magnitude of improvements going forward. Thanks. Yeah. Matt, let me take that. On churn, first of all, as you know, our negotiations with the customer and renewal conversations are ongoing, and they're very proactive. We have been able to delay some of those negotiations and renewal and rate reduction that we've anticipated earlier this year. There is not an exact date that we have agreed with the customers in the future. When that churn takes place, we'll report on that. It's a little too early to talk about 2022. If you hold that question till we get to our guidance and expectations for the next year, then we'll address that. I'll take a note of that. I want to add a little color on the churn and renewal picture. You know, we actually had some good surprises this year. We had projected some churn for a couple enterprise deals that actually renewed for a really healthy and long-term renewal at a 0% reduction in price. We had one in Houston in one of our legacy facilities. We had a bunch of renewals. You know, I think it's important to understand that our like-for-like renewals are 89% of our renewal population. The cash roll down, which we talked about earlier, was 3%. The gap was actually a 1.6% bump. You know, what we're seeing is customers are still trying to manage their architecture, and some are going to the cloud, and some are re-architecting to the private cloud. We're still playing a very large role. You know, our strategy of the enterprise at scale is having a very positive impact, and the renewal rates are certainly better. In fact, you know, we're averaging, you know, in the enterprise, 30% or better above the spot market rate on our renewals. You know, I know we had flagged some stuff earlier and some will be timing, but a lot of it is actually just we were very conservative on our projections. Yes. Now let me take your margin question. We are very pleased with our margin performance in the third quarter, and the expansion of 120 basis points is primarily contributed to two factors. One is the commencements in Europe, which is basically us growing the business and increasing our scale in Europe. That, as we talked about at our Analyst Day, is one of the avenues that we are looking to help expand on our margin 300 basis points by 2025. It's not necessarily a linear progression, but as we grow our businesses in Europe and run it more efficiently, we expect opportunities for margin expansion there. The second one is it's a slightly better operating expenses as well as flat SG&A and some savings on SG&A that we experienced in this quarter. Thank you very much. Sure. Our next question comes from Frank Louthan with Raymond James. You may go ahead. Great. Thank you. Can you give us an idea on, you know, what exactly you have permitted and power available in Europe? I mean, it seems like that's gonna be more of a scarcity there. Do you think you'll be able to pick up some incremental business as, you know, power availability gets harder to source over there from some of the customers? Okay, let me start, and maybe Jon can complement me. Our existing footprint, we have permitting on, and we have available capacity in our existing in Frankfurt and London, and we got our Paris online, but it's 100% leased. The new land that we secured will still need to be permitted, and we're working through that process both in the land that we have available in Frankfurt as well as London. Yeah. Frank, it's Jon On that, you know, in Europe, it's a 5-6-year outlook, right? When we look at the land bank, we look at the power, and we look at, you know, the permitting because it takes time in these markets. I mean, I really don't want to get into site by site, but I mean, that's really the outlook we have for those markets. You know, we think about that bank, the land bank and power bank and short, medium, and long-term outlook that takes us, you know, well beyond 6 years. All right. Great. A follow-up question. L ooking back to the rent roll downs you're looking at in the Analyst Day, to what extent do you think inflation will help mitigate some of that? Do you think that can help, you know, help improve some of that pricing as you look forward to the rent roll downs that you've got coming? You had a pretty decent rate this quarter, but how do you think about that going forward? Yeah, Frank, I mean, on the inflation side, I mean, you know, modest inflation, I mean, it's healthy for our business. I mean, we are a scale player, and I believe it's gonna help us. Yeah. you know, in the near term. Remember then when we talked about renewal spreads, we compared our rates in the future to current spot rates. To the extent inflation drives current spot rates, stability or increases that will help renewals. We'll see how that works out. All right. Thank you. Our next question comes from Sami Badri with Credit Suisse. You may go ahead. Hi. Thank you. One of your peers earlier this week talked about how there would be capacity potentially to negotiate higher leasing rates with some of your existing customers as renewals come up. At the same time, your same peer, and I think you guys have alluded to relatively fixed costs that go into the builds and the development of new capacity. Now, when we look at what happened over the last couple of years, specifically, costs of development have come down with scale and sizes of developments and rents have actually come down alongside it. Could you give us just color on if you are potentially seeing similar types of dynamics that could be a tailwind to rental rates? Could you just give us an idea on when your suppliers and vendors may potentially be unable to be pricing equipment at the current rates that they are, just given that they are absorbing a lot of fixed costs coming in due to rising component input prices and other inflationary factors? Yeah. I mean, the development is based on fixed costs. When you release second generation space, you do have some savings from the cost structure. However, I think we have not had substantial renewals on that level to talk about really yet. Yes, Sami, on the development side, the headwinds, let's say, on inflation or supply chain, you know, when we think about it holistically, it's offset by the things we talked about on our Gen Three design when we push density and we push topology and, you know, in cooperation with our customers, you know, to keep costs, you know, in line, right? That's really what we're seeing. It doesn't flow through dollar for dollar, right? Because there's all these other dynamics that are happening on the build. You know, the scale, like you mentioned, right? I mean, the scale is a huge help on development costs. While we are, you know, managing the supply chain like we always have, we keep focused on all the levers to maintain our development costs. If inflation drives spot prices up, I mean, that's good for us, right? As Katherine mentioned. One follow-up to the prior question I asked is, when would your suppliers or vendors look to increase the price lists of their products just given they are, and I think in your slide, set fixed for 2-3 years, maybe that doesn't apply to everything, but maybe applies to some things. When would your vendors that are currently absorbing relatively higher input costs come to you and say, "We need to talk about this again, regarding what you're paying for what component? Sami, it's the same thing on the vendor base a little bit when we think about scale, right? If we're seeing impacts on unit cost metrics for a generator, let's say, you know, we're looking to those vendors to say, you know, "What's the next size generator we could get? What's the next size UPS we can get?" To offset some of that increase with scale at a unit level. Got it. Okay, thank you. Our next question comes from Erik Rasmussen with Stifel. You may go ahead. Yeah, thanks for taking the questions. Maybe just coming back to the churn, you know, obviously it's continued to trend lower. I appreciate, Katherine, you're not gonna offer guidance for next year, but just trying to get a sense of sort of the magnitude of how the changes throughout the year, the improvements that you saw, you know, where could we sort of, you know, expect maybe the churn, you know, to settle? I mean, obviously a 4%-5% range doesn't seem a sustainable part, but I know, you know, Dave, you said you were seeing, you know, some improvements and some good surprises. I'm just trying to balance all that with, you know, where could potentially, you know, churn, you know, what's that normalized range when you take sort of factor in all the things we talked about on the call? Yeah. Eric, there's a couple of things that play into the customer renewal conversations and in the broader sense, expectations longer term for churn in our business. You remember we said at the Analyst Day that multi-year, we still kinda look at that 4%-6% on the lower end of that range. As our base of business and the revenue base grows, obviously the churn as a percent kinda tends to decrease in that. We also see the terms of the leases are extending. The leases that we sign today versus the leases that we signed 3-4 years ago are a lot longer term, which obviously decreases their renewal population as it happens. If you were to see the churn at 5%-7% a couple of years ago, now we're seeing it 4%-6% on the lower end. I do think at some point those contracts still come up for renewals. It's the success rate of those renewals that we've seen an improvement this year, and how we've been able to renew these contracts because of data gravity, because of customer relationships, because of our track record, really. Okay. Great. Thanks. It's helpful. Maybe I know hyperscale you talked about could be lumpy, but maybe if you could just comment on what you're seeing specifically in Northern Virginia and your opportunities in that market. Maybe just you know it's obviously a competitive market, but you know how do you sort of see that market for you you know in the coming you know quarters? Because it's been sort of pretty quiet the last few quarters now. Yeah. Look, opportunity, this is Dave. Opportunity is strong. Pricing has firmed up. We're really confident about Northern Virginia. Yeah. We have capacity there, so we're working with the customers, right? It's just if and when, right? It's not if, it's when. We feel good about that region still. Yeah, Eric. I think it's in the release with their shell capacity we're standing up right now. Land bank is big. We've secured power across that market at our sites with both NOVEC and Dominion, so excited, and stay tuned. Great. Thank you. Our next question comes from Colby Synesael with Cowen. You may now go ahead. Great. Thank you. Yeah, Dave, I'm surprised, but appreciate the comments you made to start off the call that the board is open to all considerations. I guess it'd be helpful if you can share any colors as it relates to, you know, what I see as two potentially conflicting views. One is that you may have some shareholders, perhaps activists that are more motivated to maybe see something happen sooner rather than later. On the other side, just hearing you speak today about the demand that you're seeing and then going back to what you guys mentioned at your June Analyst Day about looking to sell off some legacy assets, which would obviously take some time. You know, to the extent you're successful with that demand, selling off some of those assets, one can make the argument that the company could be potentially worth significantly more, you know, within perhaps a year's time. How does the board think about those two potentially conflicting views? Second, you sound pretty bullish on the demand environment across all markets, both in the U.S. as well as Europe. Perhaps to some degree, you might be a victim of your own success in terms of just having so much leasing done already. Is there a risk that you guys could find yourself flat-footed in terms of having available capacity, in the markets where that demand is to actually sell into? Just lastly, I think you guys missed Simon's question earlier as it relates to the JLL deal and giving us a little bit color in terms of why that may have been done. Thank you. You bet, Colby. You know, first of all, we talk to all of our shareholders, right? You know, the only way for us to, you know, focus on maximizing value is to execute. You know, we land bank, we get power, we build data centers, we install customers, we take care of them, and that's what we do. We block and we tackle, and we'll continue to block and tackle. You know, when we talk about capital recycling, we talk about portfolio optimization, which is a strategic objective. You know, it's just our strategy going forward is, you know, focusing on digital gateway markets, focusing on, you know, enterprise at scale and hyperscale. You know, all capital recycling would be, you know, considered strategic, based on our go-forward plan. With respect to capacity, you know, fundamentally, we're seeing strong demand in markets where we see significant data gravity, which is exactly what we planned for when we announced this kind of a digital gateway market strategic objective on Analyst Day. That's where we're investing. We're investing where there's more and more demand in the markets where we've had great success. You know, with the demand and with the growth in both the hyperscaler market and the enterprise at scale, you know, we feel like we're really well-positioned, and we're making good investments, and you know, we're certainly not gonna deploy a bunch of capital before we have good line of sight to leases. You know, we're gonna play it safe, we're gonna play it smart, but we think right now, protecting our turf and getting land and equipment lined up is probably the best thing to do at this moment. And then I'm gonna let Jon handle the question around the suppliers. Hey, Colby. Listen, we have hundreds of outsourced vendors that we utilize all the time. I think the key here, there's no change in our operating model across our sites. This is to vendors, and we have lots of them. We have all kinds of relationships, but nothing is changing operationally. No change to how we run the business day to day. Aidan, did the JLL deal replace someone else that you had previously or is this, I guess, the outsourcing of some of your facilities, a new way in which you're operating those facilities? Colby, we don't talk on specific customers. We don't talk on specific vendors. There's no change to our operations, as Jon pointed out. Okay. Our next question comes from David Guarino with Green Street. You may go ahead. Thanks. Hey, Dave, you talked about maximizing shareholder value through development, and I wanted to ask you about the San Antonio market where you just bought some more land. How do you think about underwriting long-term risks of building data centers for a single tenant when that same tenant's already self-building at a large scale in that market? I ask just because I think you're approaching close to 100 MW of capacity in that market, and just kind of curious how you think through another tenant who could backfill that space if that was ever needed. Maybe, David, it's Katherine. Maybe I'll take that since underwriting is kind of falls under my umbrella. When we underwrite deals, we look at stabilized development yields. We do not differentiate single tenant versus multi-tenant. Our intent on a campus-based scale, and we offer capacity to tenants when they're interested at the right prices. I don't think there is a difference between underwriting one versus the other. We have had great experience and a lot of success in San Antonio market, so we continue expanding there because there is demand in that market for us, and we've done really well there. We have hyperscale and enterprise demand in San Antonio. It's a fantastic market and you know, we're excited to continue to expand there. Maybe sticking on the hyperscalers. A number of them have announced their intentions to reduce the environmental impact they have from data centers. Can you maybe talk about conversations you've had with those tenants about what they might wanna replace to achieve their green goals? Ultimately, who bears those costs? Is that CyrusOne who's gonna foot the costs, or does that pass down to the tenants? David, I mean, we're in constant conversations with these customers, as you could imagine, around all components of the data center and the environmental impact of the data center or footprint. I mean, that's green energy purchases. That's, you know, looking at solutions to replace diesel generators. All of those things will, you know, they will come to fruition because the market's gonna demand it does. You know, the cost of that will get reflected in our rates and you know, we're working to maintain our yields with our hyperscale customers. If they're gonna pay more for power, which, you know, some cases green power costs more, they're willing to pay for it, that's their corporate initiative, and we're here to help them get there. Great. Thank you. Our next question comes from Jordan Sadler with KeyBanc Capital Markets. You may go ahead. Thank you, and good morning. Just wanted one more clarification on the CEO search. Did you hire an executive search firm? The Board decision. Jordan, it's the Board decision. That's not the Management decision. Right. Has the board hired an executive search firm? You know, we have many relationships with advisors and, you know, we do not comment on the particulars. I can tell you it's an ongoing process, and I'm very confident the board will make the best decision. And I think that's, you know, it's all we can say about the CEO search. Well, can you speak to the process a little bit? You said it's an ongoing process. Can you maybe describe what's going on? Number of parties involved. I think it's a traditional search. There's a committee of the board or a group on the board that's working on it. You know, my focus is on execution. You know, we've got some significant objectives, and my focus is on day-to-day execution and there's a committee of the board working on that. You know, we simply, you know, I can tell you it's an ongoing process, and I think it's a pretty traditional process. Okay. On the asset recycling, I wanna circle back there. You did touch on gateway markets a number of times as a strategic priority. Of course, you know, this quarter you bought the 6 acres in San Antonio. I'm just kinda curious, maybe if you can characterize a little bit, for us what you guys view to be, you know, gateway markets versus, asset recycling markets or opportunities. Yes, Jordan, let me take that. First of all, our recycling initiative that we announced earlier in the summer is aimed at optimizing our portfolio. You're absolutely correct. We're looking at and focusing on our key gateway markets, which, what we look for is diversified demand. We look at high growth areas where we see opportunities for us to expand on our current footprint as well as extend on it profitably. In terms of San Antonio, that's more of an extension of our existing footprint, not necessarily entering or expanding a different market. We're just meeting the demand in that market right now. Yeah, Jordan, to add to that, the diversified, I mean, that's what we're looking for, right? Diversified demands in a digital gateway market. It's demand hyperscale and enterprise at scale, right? It's not just limited to one customer, and I think that's the point about how we classify these digital gateway markets. Okay, that makes sense. One clarification for you, David. You mentioned, I think I heard 89% of your like for like renewals or of your renewal pool were like to like, and I thought that was interesting. I don't have that. Yeah, Jordan, I don't have that in front of me. What I can tell you is that. Well, I'll tell you what I do have. That, you know, 89% are like to like this past quarter. I'm talking this quarter. We'll continue to report on this as it happens, and we can get you some data. But I can tell you we're traditionally these are almost all enterprise, so enterprise at scale. They're across, you know, most of our large markets. There's even a couple legacy markets that we got some really good renewals. They're only 3% cash roll down and a 1, you know, over 1% gap uptick. We can get you that quantified data, but I don't have that at my fingertips. Okay. We can follow up. Thanks, guys. Our next question comes from Eric Luebchow with Wells Fargo. You may go ahead. Thanks for taking the question. Sorry to keep hammering the renewal question. Just curious, at your analyst day, you talked about how your renewals through 2024 may be weighted a little more heavily towards enterprise. I would presume those have slightly more favorable mark to markets versus hyperscale. Maybe you could talk about, you know, hyperscale expirations the next few years and any kind of ballpark and where you think those mark to markets are today. Related to that, you mentioned that that 18%-22% cash decline was relative to spot rates in the market, but I would presume that when you're doing a renewal, you have more leverage to get a premium to market prices given the difficulty in moving. Maybe it was a presumption that you were being ultra-conservative, as I think you mentioned earlier, on that 18-22, and you should come in meaningfully ahead, especially with some of the, you know, cost inflation and potential for price increases across the market. Thanks. Oh, you bet. I'm gonna let Katherine handle the hyperscale question. I will tell you that the renewals are definitely coming in. You know, when we do a renewal, there's significantly less risk, there's significantly less cost and disruption to a customer. They're paying us on average over 30% above the market spot rate on that renewal, okay? You know, what that's translating to, at least in this quarter, was a 3% cash churn down instead of the 18%-22%. Yes, we were pretty conservative. As that continues, you know, over each quarter, we'll report on that. This is the data for the quarter. Yes, you know, we do think, you know, there's a shot that our conservatism prevails. Katherine, I'd love for you to answer the question about the hyperscale renewals and when they're coming due. Yeah. Eric, I mean, today our revenue is 50/50 between hyperscale and enterprise, but the majority of the renewals that we are seeing in this year are being all enterprise, as you rightly pointed out. Eventually, half of this revenue that will come up for renewal with hyperscalers, and as we work with them, we'll basically apply the same approach to renewals as we do with our enterprise customers. All customers are facing the same cost of moving the same data gravity and the goalposts that we talked about at the Analyst Day of cash on cash spreads. It's when we look at our profile of rates, where are they gonna be in the next three years and compare them to today's spot rates. It does not necessarily indicate that the plan is to renew at those rates. It's just establishing the playing field. What we've experienced is we tend to renew at higher rates than the market rates of the day. Okay. Thank you. Our next question comes from Brendan Lynch with Barclays. You may now go ahead. Great. Thanks for taking my questions. I wanted to follow up on the capital recycling, and we've seen some transactions recently at pretty low cap rates. To the extent that you're active on that plan at this point, maybe you could give some commentary on the bidders that you're seeing in the process and if the pool of potential bidders has expanded beyond what has been seen in past years. Brendan, we just announced the recycling program in June, and we said that we're planning to recycle $1 billion-$2 billion in the next 3-4 years. There is not really any progress or any results that we can report at this time. As we continue on this program and execute on it, then we'll talk about what we're seeing in the market. Okay, that makes sense. David, you mentioned you'd taken a tour around your markets and presumably had conversations with customers and employees. After kind of re-engaging in the business, can you give us an update on your willingness to stay on in the CEO role on a permanent basis? You know, first of all, I had a great tour in Europe and got to meet, you know, a lot of our team. I had a fantastic time in Chicago with our enterprise team and several of our customers. I've of course met with lots of customers in Dallas and in several other markets. You know, I'm here to let the board make the best decision they can. You know, they're looking at all opportunities and, you know, I'm really just focused on executing right now. I haven't made any, you know, decisions regarding anything except for, you know, I'm the Interim CEO, and we're working on execution and, you know, everything that I see in this company is just incredibly powerful and positive. Okay, fair enough. Thank you. Our next question comes from Michael Rollins with Citi. You may now go ahead. Thanks. Just a couple of questions. First, on some of the additional items that you provide that are used in your historic presentation of AFFO. I'm curious if you could discuss the deferred revenue line. It was, I think, about $29 million in a quarter, $55 million year to date. What's driving that significant year-over-year increase in that deferred revenue, and how is that affecting the GAAP reported revenues for equipment or non-rental revenues? Then secondly, just curious for a balance sheet question on if I think back historically, the company management team has talked about the importance of investment-grade debt ratings and maintaining an IG credit balance sheet. I'm just curious, how important is that going forward as you look at capital opportunities, and are there any updates in terms of your expectations to use equity or ATM to continue to fund development? Thanks. Hi, Michael. It's Katherine. On deferred revenue. It is related to the equipment sales, and it is lumpy. In the past, historically, we used to sell equipment to the customers, so they would take the title of that equipment, and it would be a one-time equipment sale. What we have been really doing recently this year is where we retain the title on the equipment, and so the equipment sales, while they pay for it upfront, they're part of the leasing stream. You would see that in the GAAP reporting in a straight-line basis. In terms of your second question in our balance sheet, we are very proud and I'm very pleased with our balance sheet. It's a very strong balance sheet with over $2 billion in liquidity. Investment grade rating does help with that. We do have $303 million of available forward equity as we close third quarter, and we look for that equity to fund our development pipeline. Typically, the way we think about our equity raises is to match them against our development and opportunities to build our leasing and commencements. As long as we stay within the leverage parameters, which is mid- to high 5s, we supplement that with our equity. Now, we also, as we've mentioned in the investor day, we launched the recycling program with a purpose of twofold. One is optimize the portfolio, but the second part of this program is supplement our equity raises. We balance the two, if and when we need the capital. Just to follow up on your comments regarding the deferred revenue, what's the margin that you would typically get on those equipment sales? Then what's the amortization period for that straight line? Is that causing some of that inflation in the margin? Because, presumably the cost of that equipment is in depreciation and not as a cash operating expense. In terms of margin, it's not that material margin. It's not the same margin we do in our core operations, so I wouldn't be focused on the margin. The reason we do this for our customers is there's also value add, and it is for the duration of the lease terms. It's straight lined over the lease term of that specific deployment. Thanks. Our next question comes from Nick Del Deo with MoffettNathanson. You may now go ahead. Hi. Thanks for taking my questions. First, you obviously feel pretty good about your supply chain. If you were to disaggregate the different components, are there any links that you'd say you're keeping a closer eye on than others? Or do you feel like it's pretty consistent across the board in terms of what the risks are and how you're protected? Second, I think earlier this year, you landed a number of on-ramps from Google. I was wondering if you've had any positive enterprise leasing impact or positive conversations with your customers as a result of those, or if it's too soon to say. Yeah. Nick, on the supply chain side, you know, we talked about it in the deck a little bit, but, you know, we've expanded our kind of supply chain base to literally, you know, in some cases, 3 or 4 providers of that equipment to diversify kind of some of that risk. We've been focused on this for, you know, the past 4 quarters really because we kinda saw some of this coming in our conversations with them. I mean, you know, I think we think about all pieces and parts kind of in that OFCI equipment list that, you know, we can't deliver the data center without any single piece. We're kind of focused on all of it. Nothing like sticks out that says, oh, like this seems to not be a worry, or we're really concerned about this. It's been a kind of across the board focus to make sure that we have enough to meet the demand, and really the demand and the timelines of the customers. On the on-ramp, you know, look, whenever you have a native cloud on-ramp, it's good. It attracts the enterprise especially. You know, where we've deployed them, we've seen, you know, more data gravity. Every time you can secure a native cloud on-ramp, that's a good thing for the asset. Our next question comes from Irvin Liu with Evercore ISI. You may go ahead. Hi. Hi. Thanks for taking my question. Hopefully this wasn't already addressed, but from a supply chain perspective, it looks like you were able to mitigate the impacts on your end. Could you comment on whether there's potential for supply constraints to impact deployments for your customers in the event that they're unable to procure supply that they need? Irvin, yeah, I mean, we talk to our customers all the time. I mean, in our conversations with, you know, with our big, you know, enterprise and scale customers and our hyperscale customers, they're really doing the same thing we're doing on kind of pre-purchasing chips and the things that they need to run their business. So we haven't had anybody say like, "Oh, listen, we're not taking the capacity because we don't have chips." You know, the industry is super focused on it across the board, you know, on all layers of the data center. The demands that we see is obviously the same demand that they're seeing on their businesses. So, it's top of mind, but nothing has, you know, changed any kind of our delivery timelines. Our early commencements that, you know, that we reported this quarter kind of speak to that, you know, everybody's focused on it, and everybody's still focused on executing on the business. Got it. Then it looks like your Europe continues to be a good source of growth for you. But I'm trying to better understand if your strength here is more reflective or more of a function of the underlying data gravity trends in Europe, or is it more of a function of traditionally, you know, hyperscalers having or being under indexed in Europe from a data center perspective? You know, look, we have focused on just key markets in Europe, right? We've been able to get really nice scale in the markets and the campuses we have. For us, you know, when a customer can continuously grow on the same campus, you've just got a better position than if you're in another part of town or not on the same campus. We're seeing the growth because I think, you know, coming into Europe, which we did just a couple of years ago, you know, we were able to focus on scale and data gravity. I can't really tell you what's driving the hyperscalers or exactly what's driving their demand, but I do know that there is significant demand in the markets that we happen to be in. The conversations we're having with these hyperscalers, like Jon said earlier, they're not conversations about the next 12-24 months. We're having conversations about the next, you know, many, many years. The conversations we're having are around our key markets. You know, we expect that to continue. Understood. Thanks. That's all I had. Thank you. This concludes our question and answer session. I would like to turn the conference back over to David Ferdman for any closing remarks. Thank you, Anthony, and everyone for participating on the call. Before we go, I'd like to reiterate how excited we are about the industry and about the consistent execution of the company. We remain well-positioned to meet the needs of our customers, and our team is focused on delivering solutions in both the U.S. and Europe. We look forward to talking with you on the next earnings call. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.