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CoreSite Realty Corp (NYSE:COR)
Q4 2020 Earnings Call
Feb 4, 2021, 12:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the CoreSite Realty Fourth Quarter 2020 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to your Investor Relations' host, Kate Ruppe. Please go ahead.

Kate Ruppe -- Investor Relations Officer

Thank you. Good morning, and welcome to CoreSite's fourth quarter 2020 earnings conference call. I'm joined today by Paul Szurek, President and CEO; Steve Smith, Chief Revenue Officer; and Jeff Finnin, Chief Financial Officer.

Before we begin, I would like to remind everyone that our remarks on today's call may include forward-looking statements as defined by federal securities laws, including statements addressing projections, plans, or future expectations. These statements are subject to a number of risks and uncertainties that could cause actual results or facts to differ materially from such statements for a variety of reasons. We assume no obligation to update these forward-looking statements and can give no assurance that the expectations will be obtained. Detailed information about these risks is included in our filings with the SEC. Also on this conference call, we refer to certain non-GAAP financial measures, such as funds from operations. Reconciliations of these non-GAAP financial measures are available in the supplemental information that is part of our full earnings release, which can be found on the Investor Relations pages of our website at coresite.com.

With that, I'll turn the call over to Paul.

Paul Szurek -- President and Chief Executive Officer

Good morning, and thank you for joining us for our four quarter earnings call. Today, I will cover our 2020 highlights, and discuss our 2021 priorities. I'll be followed by Steve and Jeff's more in-depth discussion of sales and financial matters. Our 2020 highlights include new and expansion sales of $37.6 million of annualized GAAP rent, which marks a record year for retail and small-scale leasing.

Operating revenues of $606.8 million representing 6% year-over-year growth. FFO per share of $5.31, representing a year-over-year increase of $0.21 per share or 4.1%. Delivery of 192,000 net rentable square feet or 22 megawatts of total new capacity, including the opening of two new data centers and seven-nines of power and cooling uptime. These achievements enabled us to execute on our 2020 goals of developing more capacity and completing projects on time, translating new and vacant capacity into sales, attracting quality new logos that value our campus ecosystems, thoughtfully expanding our products to assist enterprises with their hybrid and multi-cloud needs, and maintaining high levels of facility performance and customer service.

Overall, I'm pleased with the team's ability to successfully execute these priorities amid the backdrop of the global pandemic. We delivered SV8 Phase 3, NY2 Phase 3, and the first phases of new data centers at CH2 and LA3. As a result, we finished 2020 with 40 megawatts of available capacity to sell compared to 23 megawatts at the end of 2019. Examples of translating new capacity into higher sales included leasing 75% of SV8 Phase 3 and 80% of LA3 Phase 1, and accelerating leasing in Northern Virginia. Our best year in terms of annualized GAAP rent in that market since 2015.

While sales cycles for enterprises were elongated probably due the economic and other uncertainties related to the virus, we continued to attract high-quality new logos, especially in the financial services industry at NY2. We also expanded our connectivity options during the year, including adding Google Partner Interconnect and Oracle Cloud Infrastructure to the CoreSite Open Cloud Exchange, increasing bandwidth for AWS-hosted connections on the CoreSite Open Cloud Exchange at our Chicago campus, adding multi-market peering through our enhanced Any2Exchange, and as recently announced, adding access to Google Cloud using dedicated interconnect in Northern Virginia.

In addition to these 2020 accomplishments, as we announced earlier this week, we appointed a new director to our Board, Mr. Michael Milligan. Mike brings us valuable telecommunications experience as well as noteworthy board experience, which will be a tremendous asset to CoreSite as we continue our pattern of expanding our talent pool through increasing diversity. I also want to thank Jim Attwood and David Thompson for their Board service over the last 10 years. They have both served since the Company's IPO in September 2010 and their contributions were many. Jim and David will continue to serve until our annual meeting in May, but as part of our periodic board rotation, we'll voluntarily not seek reelection this year. We are very grateful for the service they have provided to CoreSite, its shareholders, and its employees and customers and wish them the best in their future endeavors.

As we move forward to 2021, our goals are similar to our 2020 goals as we build on last year's successes. Our ability to meet those goals is enhanced by greater available capacity to sell and the strong enterprise funnel that has been building up due to elongated sales cycles we saw for the enterprise vertical in 2020. One notable difference is that while we will continue being proactive for future developments, we do not need and do not have any new ground-up data centers planned to come online in 2021. In closing, we are excited about the opportunities that lie ahead for us and we believe our priorities, and our other operating objectives will continue to drive long-term value to our customers, employees, and shareholders.

With that, I will turn the call over to Steve.

Steven Smith -- Chief Revenue Officer

Thanks, Paul, and hello, everyone. I'll start by reviewing our fourth quarter sales results and then talk further about some of our key 2020 successes and drivers.

Turning to our quarterly sales results. We delivered new and expansion sales of $9.7 million of annualized GAAP rent during the fourth quarter. Please note that as of this earnings report, and going forward, we have modified our reporting of new and expansion leases signed by deployment size included on Page 14 of our supplemental information. This revision reports our signed leases per period based on leased kilowatts rather than net rentable square feet. The change more closely aligns with how we manage sales activity internally and it is intended to provide greater visibility.

New and expansion sales for the quarter included $4.4 million of annualized GAAP rent from retail leases, $3.7 million of GAAP rent from small-scale leases, and $1.5 million of GAAP rent from large-scale leases. Our new and expansion sales were comprised of 54,000 net rentable square feet reflecting an average annual GAAP rate of $180 per square foot and included an impressive 45 new logos, all with opportunities for future growth. Our highest count since the first quarter of 2018. Looking more closely at new logos, the 45 new logos represents $0.8 million of annualized GAAP rent or approximately 8.5% of our total annualized GAAP rent signed during the quarter and we are strongest in the enterprise vertical. Enhancing the ecosystem while diversifying the customer base through attracting and winning new customers remains a key area of focus and it's great to see 45 new brands become part of that story.

Next, I'll share some highlights from our sales wins. As Paul mentioned, during 2020, we executed $37.6 million of new and expansion sales in annualized GAAP rent, which marks a record year for retail and small-scale leasing. It also represents an 18% increase in retail and small-scale leasing compared to 2019. Driving our new and expansion sales this year were several key factors, including more available contiguous capacity to meet a broader range of customer requirements, ongoing strength in tracking and winning high-quality new logos sales, strategic expansions from existing customers, and a robust sustainable sales pipeline that includes customers looking to accelerate their digital transformation by deploying high-performance hybrid cloud architectures.

Let me expand on these drivers. Our new logo annualized GAAP rent for the full year was $4.3 million, which demonstrates the progress made against our goal to attract high-quality new customers that value our platform, which will help drive future growth. As to strategic expansions with existing customers, our existing customers accounted for approximately 89% of the full year 2020 annualized GAAP rent signed, including expansions into additional markets.

In summary, we are pleased with our sales execution during the year. We exited 2020 with ample contiguous capacity to support future sales opportunities as illustrated by the new capacity graph at the top of Page 18 of our supplemental information. We're optimistic about the fundamental market drivers supporting our strategy. The increasing need for enterprises to leverage technology in a seamless, high-performance hybrid multi-cloud environment bodes well for the unique position of our network-dense cloud-enabled campuses located in top enterprise markets. These market drivers align well with our ongoing Product and Services development which are targeted at easing the transition of enterprises becoming customer by making data integration and application interoperability seamless. Our focus going forward will be to continue improving our ability to help customers solve their IT challenges that they address the changing dynamic needs of their industries and their customers.

With that, I will turn the call over to Jeff.

Jeff Finnin -- Chief Financial Officer

Thanks, Steve. Today, I will review our fourth quarter and full-year financial results, discuss our balance sheet, including leverage and liquidity, and conclude with our financial outlook and guidance for 2021. Looking at our financial results. For the full year, operating revenues grew to $606.8 million, a 6% year-over-year increase including interconnection revenue of $84.1 million, an increase of 11% year-over-year.

Adjusted EBITDA was $324.5 million, an increase of 5.3% year-over-year, and adjusted EBITDA margin of 53.5% consistent with the trailing 12-month average. FFO per share was $5.31, which represents 4.1% year-over-year growth and we declared dividends of $4.89 per share, representing an increase of 2.7%. For the quarter, operating revenues were $154.9 million, which represents 6.1% growth year-over-year and consistent sequentially, including growth in interconnection revenue of 12.7% year-over-year, 3.8% sequentially. Customer lease renewals equaling $15.8 million of annualized GAAP rent, which represents a cash rent mark-to-market of 1% and we reported churn of 5.4%, commencement of new and expansion leases of $20.4 million of annualized GAAP rent. Our revenue backlog as of December 31st consisted of $7.8 million of annualized GAAP rent or $21.4 million on a cash basis for leases signed, but not yet commenced.

We expect approximately 60% of the GAAP backlog to commence in the first quarter of 2021 and substantially all of the remaining GAAP backlog to commence in the second quarter of 2021. Adjusted EBITDA was $82.8 million for the quarter, an increase of 4.7% year-over-year and 1.6% sequentially. Net income was $0.46 per diluted share, a decrease of $0.05 year-over-year and $0.04 sequentially. FFO per share was $1.34, an increase of $0.04 or 3.1% year-over-year and $0.01 or 0.8% sequentially.

Moving to our balance sheet. Our debt to annualized adjusted EBITDA was 5.2 times at year-end, slightly lower than anticipated, and inclusive of the current GAAP backlog mentioned earlier, our leverage ratio is 5.1 times. We ended the quarter with approximately $301 million of liquidity, providing us the ability to fully fund our 2021 business plan. In addition, we finished the year with 91% fixed-rate debt. We expect our fixed-rate debt percentage to decrease to approximately 80% by the end of 2021, absent any new debts or derivative instruments.

I will now address our 2021 guidance. We ended the year at 81.9% occupancy in our data center portfolio and 40 megawatts of available capacity to sell. In addition, we have the ability to bring on consistent amounts of capacity through incremental computer rooms and infrastructure development within our existing data centers as needed and as anticipated absorption dictates. We reported elevated churn during 2020, slightly ahead of the high end of our guidance, with Q4 results slightly elevated due to a couple of customer move-outs accelerating their timing from Q1 2021.

The following 2021 guidance is based on our outlook on current economic conditions, internal assumptions about our customer base, and our view of supply and demand dynamics in our markets. It does not include the impact of any future financing, investment or disposition activities beyond what has already been disclosed. I will cover the highlights of our 2021 guidance, but I will refer you to our complete guidance on Page 22 of our fourth quarter supplemental information for further details.

Operating revenue is estimated to be $642 million to $652 million, representing 6.6% year-over-year revenue growth at the midpoint. Our 2021 churn is estimated to be 6.5% to 8.5%, inclusive of the 200 basis points related to that specific Bay Area customer during the second half of the year. Additionally, we expect cash rent growth on data center renewals to be 0% to 2% growth for the year. Interconnection revenue is estimated to be $87 million to $93 million representing 7% growth at the midpoint. Adjusted EBITDA is estimated to be $336 million to $346 million, which implies a 52.7% adjusted EBITDA margin and 5.1% year-over-year growth at the midpoint.

FFO per diluted share and operating unit is estimated to be $5.42 to $5.52 reflecting 3% growth at the midpoint. Based on our expectations and estimates related to leasing, net absorption, and timing of commencements, we anticipate the year-over-year growth rates to accelerate in the second half of 2021 for revenue, adjusted EBITDA, and FFO per share. Lastly, capital expenditures are consistent with our original guidance provided in October and estimated to be $185 million to $225 million. In closing, we are pleased with our execution in 2020 and we look forward to the opportunities ahead to further help our customers solve their IT needs and challenges, as they accelerate their digital transformation.

With that, operator, we would now like to open the call for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Sami Badri with Credit Suisse. Please proceed with your question.

Sami Badri -- Credit Suisse -- Analyst

Hi, thank you very much for the question. First question for Paul, maybe for Steve. I want to talk about the elongated sales cycles and -- we could see -- draw the connection between elongated sales cycles and the effects from the pandemic. But are you starting to see changes or any kind of behavioral movements that are happening that can better explain what you think might happen in 2021 as far as how enterprises stage the outsource data center industry from where we are today?

Paul Szurek -- President and Chief Executive Officer

Sami, thanks. It's a good question. I do think we're starting to see some movement, and it's hard to generalize because it's idiosyncratic to so many customers and even some regions like, for example, I think in New York, in New Jersey, we would have had better performance if it weren't for the uncertainty about the proposed transaction tax and some other industries things were moving along and then suddenly some additional acquisitions were taking place and so the opportunity had to be resized.

But for a lot of the customers, it's just them working through what their economic future looks like, their growth opportunities. For some it is accelerated digital transformation, for others, it's accelerated the process of outlining and planning for digital transformation, but not quite gotten to the point where they're ready to pull the trigger. I do think with 2021 started off a little bit -- it wasn't exactly like the calendar turned and everything turned rosy and there were some bumps nationally and economically in the first month or so, but there appears to be some strong economic optimism going forward and I think that that will have a positive impact on sales cycles. Steve, anything you'd add?

Steven Smith -- Chief Revenue Officer

No, I think you covered it well, Paul, and I think as I mentioned in my prepared remarks, I mean, we feel like we're well-positioned for the overall market trends and that is really any enterprise out there has become more interested in how they leverage technology to run their business. And the hybrid multi-cloud environment is becoming more and more commonplace for a lot of enterprises. It is complex as to how they navigate that and we're working to try to make that as simpler for them as possible, but that's part of what drives that elongated cycle. So it's all the things that Paul mentioned, as well as just the overall complexity of how they manage that migration. So overall, I think customers are getting used to whatever their new normal is and working through those complications, but we feel like we're well-positioned to support that.

Sami Badri -- Credit Suisse -- Analyst

Got it, thank you. Thank you for that color. I want to just shift to Jeff. Jeff, you talked about your backlog and the backlog commencements. I think if I heard you right, 1Q and 2Q, 2021 should the current backlog commence? Now just to kind of triangulate that commencement schedule with the full-year guidance, does the full-year guidance also call for relatively strong productivity in the sales force to bring in deals and do into your quarter execution and deployment or does the full-year guidance bank very little on incremental execution and also productivity as we go through the year.

Jeff Finnin -- Chief Financial Officer

Sami. Yes, just to confirm your -- you heard correctly in regards to the commencement of the backlog. So, again, 60% Q1, about 40% in Q2. And in terms of sales execution, I think is what you're -- you were gearing your question around. We would clearly believe that, as Paul alluded to that we would have good execution throughout the year. The only thing that I would add is we will see some benefits from an expense perspective if you just see the percentages we're guiding to, I think we will see some decreases in our overall sales as a percentage of revenue during the year. I don't know if that's directly addressing your question, Sami, or was there something else we could add?

Sami Badri -- Credit Suisse -- Analyst

Just if you think about how much incremental leasing you guys imagine, you need to make that guidance?

Jeff Finnin -- Chief Financial Officer

Okay.

Sami Badri -- Credit Suisse -- Analyst

Are you guys expecting meaningful incremental leasing activity to take place to make that guidance number or are you relatively well-rounded out with the existing segment of the existing backbone?

Jeff Finnin -- Chief Financial Officer

No, it's going to require some meaningful sales execution just as every year requires it and I think when you look at where we ended the year, this past year at rough -- just below $40 million, I think realistically we would expect and anticipate somewhere being north of that $40 million as we think about this year, just to give you some idea. Obviously, I don't want to get into too much specifics because we don't generally guide to that, but that gives you some sense for what we're thinking about as we head into 2021.

Sami Badri -- Credit Suisse -- Analyst

Got it. Thank you.

Operator

Thank you. Our next question comes from the line of Jonathan Atkin with RBC Capital Markets. Please proceed with your question.

Jonathan Atkin -- RBC Capital Markets -- Analyst

Thanks. I was interested in the Interconnect business and if you don't mind drilling down a little bit on the drivers or pressures you're seeing in that segment. You've got a lot of different products that you offer, there's bilateral cross-connects as well and then you got the cloud -- the cloud operators and the on-ramps and the carriers and the enterprises and then partners as well on the SDN side and I just wondered is there anything that kind of jumps out in terms of what's going particularly well or what the growth rate might be stalling, a little bit in that area?

Jeff Finnin -- Chief Financial Officer

Yes, let me give you a little bit of color, Jon, and then I'll ask Steve, just to add any incremental color he sees obviously on the front lines but when you look at 2020 from a volume perspective, overall volume increases was about 7.7% for 2020. And as you saw in the revenue, overall revenue increases year-over-year was 11%. So those percentages are fairly consistent with generally what drives that revenue increases, which is about two-thirds coming from volume increases, about another third of it coming from customers migrating from lower-priced to higher-priced products, and some price increases as customers roll or just general price increases.

So that relationship has stayed fairly consistent in 2020. We saw really good growth in the fiber cross-connects last year, as well as our Open Cloud Exchange. And I think some of that may have been spawned on by the pandemic that we walked through and lived through in 2020. Obviously, when you look at our guide for this year, we're guiding to a growth of about 7%, and so I think it's unclear at this point whether we're going to see that continued level of volume increases for 2021. It's something we're going to watch closely, but at this point, we think it will moderate slightly just given where we've guided it street to at this point in time. Steve. Anything else from you?

Steven Smith -- Chief Revenue Officer

No, I guess, I'd just add as far as trending and while we're seeing customer adoption and so forth, we're fortunate in that we were one of the -- in fact, I think the first public data center provider to offer an OCX type of offering in Open Cloud Exchange where it's basically ethernet backbone that allows customers to virtually connect to many different services on that backbone. And we made significant enhancements to that over the last several years that's positioned us well for really where we see the trend going in the future, which is really kind of that end-to-end serviceability over SDN-like network. So I think you'll continue to see more adoption of that and more services come up available on that same platform and that's part of what we're driving toward our product development.

Jonathan Atkin -- RBC Capital Markets -- Analyst

And then secondly on M&A and just noticed that there has been some -- there is a lot of activity kind of at the asset level in this sector, including in markets where you don't really have a presence and I wonder to what extent -- if you can maybe just remind us of the sorts of things that you look at when you think about maybe entering a new kind of core data center internet-gateway-type market that you're not in because there were recently some opportunities and I just wondered are you looking to partner with people as you, enter those markets, is that entirely on balance sheet, is it just not of interest relative to maybe deploying capital where you already are maybe just kind of refresh us on your thinking there?

Paul Szurek -- President and Chief Executive Officer

We look at a lot of things as we've said in the past and our guidance is strategic fit, which really means what type of revenue synergies can we generate in above-standard growth if we do make the investment. And then return on invested capital, does it benefit our shareholders in the intermediate and long-term and hopefully the short-term as well or does it not. We're not averse to partnering if that makes sense and the opportunities there but generally, that can be more complicated than it sounds at first glance. Again, we look at a lot of things and when those criteria are met, we'll do something. When they're not, we won't.

Jonathan Atkin -- RBC Capital Markets -- Analyst

Okay, and then lastly, is there any kind of an update on the standard campus in Santa Clara, SV9 seems like that's ready to break grounds and there has been obviously some increased occupancy at SV8, and maybe just kind of give us some color on the demand pipeline that you think the market has seen and what's happening with kind of overall absorption? There has been I think a lot of activity in that market away from you and I wondered to what extent you might think Santa Clara might drive some of your growth this year?

Paul Szurek -- President and Chief Executive Officer

So I'll let Steve address supply and demand in that market, although I will tell you, I feel good about it. SV9, as we said last quarter, we are targeting, having our permits and everything by the end of the first quarter. So far, the processes are trending that way, but in that market and, Jon, you probably know the dynamics of permitting in power fair as well as anybody, you can't really say it's done until it's done. So we still have a couple of more things we've got to finish up and hopefully, we'll get those finished up and have it shovel-ready by the end of this quarter.

Steven Smith -- Chief Revenue Officer

And I would just add, as far as the overall supply demand dynamics are concerned, we continue to see strong demand in the market and so we're bullish on where we're heading with those investments, where we sit with our overall capacity and pipeline in that space. So overall, we're confident with where we sit today.

Jonathan Atkin -- RBC Capital Markets -- Analyst

Thank you very much.

Operator

Thank you. Our next question comes from the line of Nate Crossett with Berenberg. Please proceed with your question.

Nate Crossett -- Berenberg Capital Markets -- Analyst

Hi, thanks for taking my question. More of a big picture question, how are you guys thinking about the edge. Is it a risk to your business at all and have you guys done any analysis in terms of whether workloads that are currently in your campuses could move closer to the edge over time.

Paul Szurek -- President and Chief Executive Officer

We have, I don't think anyone can say right now that with certainty they know exactly what's going to evolve. But our expectation is that there's minimal exposure for us of workloads that are currently in our data centers going to the edge exclusively, and there is probably a good opportunity for our data centers as core peering places in these central markets to benefit it through the increased products and services that are offered at the further edge, through 5G, IOT things like that, just because of -- the beautiful thing about data is that it works when there's a lot of it pooled together, and you'll see a lot of that necessary for those applications.

So that's our high-level view of it. We continue to monitor it closely and evaluate potential product help in those areas and partners to work with. But at a high level, we think it will be ultimately beneficial.

Steven Smith -- Chief Revenue Officer

And I guess the last thing I would just add there is, the edge can be defined by a lot of different people and a lot of different ways and we feel like we're well-positioned in a lot of edge markets, I mean if you look at the key metro areas that we're in, where there's a lot of eyeballs, a lot of enterprises that are in very low latency proximity to our data center campuses. In many definitions, that is edge because we're right next to where those eyeballs and enterprises locate.

Nate Crossett -- Berenberg Capital Markets -- Analyst

Okay, that's helpful. And then I just had one question on pricing. The renewal guidance is 0% to 2%, and if you're looking forward kind of the next four years, it looks like the lease expirations are at a higher rate than what you did in 2020. So I'm just kind of wondering, should we expect kind of pressure on pricing going forward? Can that 0% to 2% range even go negative?

Jeff Finnin -- Chief Financial Officer

Hey, Nate. Let me -- I'll just offer a little bit there. Obviously, the pricing in full you're looking at is on a per-foot basis. And the -- on the renewal pricing, when you look at what we did this year it -- the dollars per square foot were compressed, largely due to the density inside those deployments. So the density really plays into the fact and we're obviously competing and having those conversations with customers. It's -- pricing's going to be on a kilowatt basis. And so I wouldn't read too much into that. On a per square foot basis, there's just a lot of variables, density being the largest in terms of what's going to ultimately result in that pricing. But obviously, as we head into 2021, you saw where we ended 2020, right about the middle of our guidance for a mark-to-market at 0.8%, and we expect to be somewhere in between that 0% and 2% as we work our way through this year. And then obviously, we'll continue to watch it beyond that and give you additional color as needed.

Nate Crossett -- Berenberg Capital Markets -- Analyst

Okay, thanks, guys.

Paul Szurek -- President and Chief Executive Officer

You bet, Nate.

Operator

Thank you. Our next question comes from the line of Jordan Sadler with KeyBanc Capital Markets. Please proceed with your question.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Thanks, and good morning out there. So I wanted to just follow up on sort of the pipeline in Santa Clara. If so, previously like you guys were pretty constructive and optimistic about the ability to backfill the outbound tenant there. What are your sort of most current thoughts there?

Paul Szurek -- President and Chief Executive Officer

Jordan, thanks for the question. Current thoughts haven't changed, we're still -- that still optimistic about backfilling that space in SV7.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

You have front half to do?

Paul Szurek -- President and Chief Executive Officer

I'm sorry? You're breaking up a little bit.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Is that on the to-do list for the front half of '21 or with -- could that take longer?

Paul Szurek -- President and Chief Executive Officer

I mean we typically don't give previews of when like something might be signed. But when it is signed, we'll announce it.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Okay. And then in terms of the churn, Jeff, you did talk about the maybe pull-forward from 1Q. Can you maybe talk about what the source -- the types of tenants that sort of you would drop the reacceleration in churn up to? And did they have anything to do with the decisions around what you're doing with the U.S. colo space in LA1 and LA4?

Jeff Finnin -- Chief Financial Officer

Yes, Jordan. As it relates to the churn in the fourth quarter, we had about 60 to 70 basis points incremental churn in the fourth quarter that really moved essentially from January of '21, and one we anticipated up to December here in the fourth quarter of this last year. So not a real big economic impact, it really is just a shift in the timing. Again, that was about 60 to 70 basis points. And it was really with three customers, one of them happened to be in the -- probably the largest percentage of -- it was just another reseller that was in our portfolio that we had anticipated to move out and did it roughly 30 days prior to when we anticipated. And so, hopefully, that gives you some additional color, and then, what was the second half of the question Jordan?

Paul Szurek -- President and Chief Executive Officer

Whether LA4...

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Anything to...

Jeff Finnin -- Chief Financial Officer

LA4?

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Yes.

Jeff Finnin -- Chief Financial Officer

Yes. No, it's -- as it relates to LA4, appreciate you picking up on that in some of the disclosures there. Obviously, that LA4 is a location that's in close proximity to LA1 and LA2 and LA3, and obviously, our objective is to drive business into our owned assets and from a -- they're just much better in longer-term, better assets to drive business to and we're on the -- in the -- currently in process migrating over all those businesses that we can from LA4 for into LA2. And so, we've already done some of that and our team in LA is working on getting the lion's share of that completed here this year. But that churn that I'd commented earlier had nothing to do with LA4. At this point, that's still in process and we'll work through that in 2021.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Okay. And then as you look through to the 2021 guide on churn, I noticed that came down 50 basis points or so, at the midpoint, 100 at the low end, I assume, due to this pull forward. Is there anything else to potentially be worried about and what are you guys doing to sort of get your arms around this guide?

Jeff Finnin -- Chief Financial Officer

Well, if you think about it, obviously, as we pointed out, we've got about 200 of that coming from the single customer at SV7. That will occur in the second half of this year. And in terms of what are we doing to get our arms around it, I can tell you that between my team and Steve's team, it's something that we address on a weekly basis trying to continue to look as far forward as we can, both through conversations and relationships we're having as well as looking at incremental data around each of those deployments to better understand ultimately what that information is telling us on customer behavior, to help give us a point on which direction those are ultimately going to go.

And from a customer service perspective, it's always been a very high part of our business and I would say we're continuing to even elevate it to a higher level under the guide of our operations team and it's something we're continuing to get out in front of. We want to make sure we retain those customers every time we can and when it makes sense. And hopefully, avoid any of the surprises like we had in the past, but based on where we sit today, and what we know today, we think that 6.5% to 8.5%, for 2021 is a good number, and is in -- right in line with what we anticipated.

Paul Szurek -- President and Chief Executive Officer

Jordan, the only thing I'd add to what Jeff said is that the categories of customers that drove churn over the last couple of years are now a very, very small percentage of our portfolio. And those are business models that have been especially disrupted by cloud.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Yeah, I mean, the reason I ask -- obviously there's a little bit of -- this has been a little bit of a sort of a thorn in your side I think, the churn number, over the past couple of years, and you've got 29% of your annual rent expiring in '21, right? And 1,277 different leases is a lot. And so I kind of -- I guess it doesn't seem outside of the one known move-out, the large known move-out, that you have a ton of wiggle room in the 7.5%, right? Because that's the known move out, you're basically looking at, I don't know, one quarter for same churn on a normalized basis rates or outside of the known move out, that seems like a low number relative to at least the last four quarters, and I don't know why it would be particularly low next year or this year.

Paul Szurek -- President and Chief Executive Officer

I mean, we've had numbers that low or even lower in prior years and again it relates to the cyclicality of some of these business models or the secular acts, I should say the secular changes that affect some of these business models. Again, that's our guidance, we wouldn't put it out there if we didn't feel that it was the right range to put out there.

Steven Smith -- Chief Revenue Officer

The only thing, I guess I would just add is I don't know the roughly 30% of our base renewing in the year is not abnormal, it's very typical for us actually. And if you look at the average length of our leases of roughly three or four years, that's what you can expect I think.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Yes, no. I appreciate that. I don't mean to insinuate that it was sort of outside of the ordinary, I just feel like it's a big number and maybe the churn number of 5.5 outside of the new value was a little bit low relative to history. Is that unfair?

Paul Szurek -- President and Chief Executive Officer

Well, I mean, it depends on which history? As I said, we certainly hit numbers that low in previous years.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Okay, Paul. Thank you, guys, for the color.

Operator

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

Dave Rodgers -- Robert W. Baird & Co. -- Analyst

Yeah, good morning out there, guys. I think Jordan hit the renewal side of the equation. Maybe I wanted to go back to the idea sales cycle elongated, but, Jeff, in your comments, you also said you expect leasing to accelerate. So, maybe I'd ask you, Steve, to talk more about what's in the funnel. Last year, you guys were pretty positive about the funnel as well. Can you talk about lease touring activity, any of those kind of early indicators that are going to give us that confidence that we'll see this acceleration in leasing this year that's behind the scenes that you haven't already mentioned well?

Steven Smith -- Chief Revenue Officer

I think it starts with the fundamentals of our platform really as Paul mentioned in his prepared remarks around available capacity, and it's not just the amount of capacity, it is the fact that we have it consistently across really all of our top markets. So historically, we've had some capacity, but it's really been in a couple of markets and had to make sure that we are really accelerating, we're in that specific market. So now we have more opportunity I think across the portfolio to have better sales and then as I look at the pipeline, the pipeline has been consistently strong heading into the pandemic but holding that strengthen and continuing even through the end of the year. So it's hard to foretell exactly what that pipeline will result in. Jeff has mentioned our guidance already, so I think I'll let that speak for itself, but we feel like the -- between the volume of the pipeline, customers getting more I think familiar as I mentioned earlier with how they make these business decisions and navigate the complexities of hybrid multi-cloud, that -- the combination of all those things bodes well for the overall sales forecast for the year.

Dave Rodgers -- Robert W. Baird & Co. -- Analyst

Is there any evidence in there that you're losing more customers are winning more of those deals that you're pursuing, it sounds like the funnel is bigger, which is great, but some of those win versus loss metrics that you might track?

Steven Smith -- Chief Revenue Officer

Sure. We track the win-loss ratios very closely and try to manage beneath the numbers to find out where we can improve on that. There is a balance between -- in some cases winning too many versus obviously losing too many. If you're winning too many, then maybe you're giving away pricing or doing something wrong but we try to make sure we are targeting first of all the right customers that value our platform and then ensure that we are getting the most return for our shareholders, at the same time providing valuable service to our customers.

So it's that balance of all three of those things that we're working toward and overall, I would say that the sales team is gotten better and better over time. As they've not only got better in their skill set, but we've continued to try to, as I call it, deepen the moat on our competitiveness and what makes us unique compared to our peers out there. So I think that all adds up into us being more competitive and being able to win the right good opportunities that truly do value our ecosystem. I don't know if that answers your question, but I guess the short answer is yes.

Dave Rodgers -- Robert W. Baird & Co. -- Analyst

Yeah, that helps, thanks, Steve.

Jeff Finnin -- Chief Financial Officer

Yes.

Dave Rodgers -- Robert W. Baird & Co. -- Analyst

I appreciate that. Jeff, may be coming on to you, I think 12 of your leases makeup as the 26% of the revenues and 15% of square feet, that's kind of what you call as hyperscale. As we look out either this year as part of the larger expirations or into the next year or two, do we see any of those at risk or any of those expiring?

Jeff Finnin -- Chief Financial Officer

Yeah. Obviously, it's a big percentage from a square foot perspective. As you look at the number of leases there being the 12, as you pointed out. And as I sit here today, I don't think there is a significant risk given where they are on each of those. And it's just something we're going to have to watch closely as we work our way through the year. Obviously, one of those is included in our churn guidance for this year. So take that one out of the equation. The remaining 11 are the ones that I would refer to. And obviously, something that we'll continue to watch closely. I think we've always had a history of any time we see something on the horizon that is sizable like one of those, and we will try and give you guys some heads up on that if and when that becomes clear. But at this point in time, we don't see anything that we need to the -- raise at this point in time.

Dave Rodgers -- Robert W. Baird & Co. -- Analyst

Okay, great. Thank you.

Jeff Finnin -- Chief Financial Officer

You bet.

Operator

Thank you. Our next question comes from the line of Colby Synesael with Cowen. Please proceed with your question.

Colby Synesael -- Cowen and Company -- Analyst

Great, thank you. As it relates to SV7, do you feel that you can backfill that with just one or two customers, or is your current expectation to use that space more for retail deployments? And then as part of that what, have you actually assumed in your guidance as it relates to the potential backfill opportunity with SV7, in other words, does guidance assume 0 revenue from that through the course of the year, have you assumed that maybe by the midpoint of the year you backfilled it? Just any color so I can get a sense of what the baseline assumption is in the guidance would be helpful.

And then my second question has to do with margins. Margins are expected to be down about 80 basis points year-over-year 2021 versus 2020. Can you just give us a little bit of color on what's the primary driver of that and whether or not that might start to reverse as we move to the back half of this year and then into next year? Thank you.

Paul Szurek -- President and Chief Executive Officer

Hey Colby. Thanks for the question. Our current plan is to backfill SV7 with one or two customers. And Jeff can confirm, but I believe there is some revenue from that in the guidance, but I know we don't give specifics about individual leases. And Jeff can confirm this as well but margins are simply -- the good news is we got 40 megawatts of capacity that we can lease. But that has a marginal impact because with vacant capacity, you're still paying all the expenses but without offsetting revenues. So there is definitely an opportunity to expand margins, as we lease-up that 40 megawatts.

Jeff Finnin -- Chief Financial Officer

Yes, Colby, just to confirm. Paul has confirmed. We do have some level of revenue associated with SV7 in our guidance and I would point you to it, it's probably in the back half of this year versus the first half. And then in terms of those margins, we do have some drag, especially here in the first half as we go through the lease-up, for instance, CH2 where we're obviously incurring those expenses. And not only operating expenses but the additional property tax, insurance, expenses associated with those, bringing those on. And until we get those to call it roughly 35% lease is probably about the break-even point for us. There is going to be some drag as we work through the bottom level of that J curve, and so we would expect those to improve over time as that asset and others lease-up.

Paul Szurek -- President and Chief Executive Officer

It gives us an opportunity to accelerate our growth rate in the back half of the year if we're successful with our sales.

Colby Synesael -- Cowen and Company -- Analyst

Will the margins also then subsequently go up in the back half of the year?

Paul Szurek -- President and Chief Executive Officer

Yes.

Jeff Finnin -- Chief Financial Officer

Yeah, yeah.

Colby Synesael -- Cowen and Company -- Analyst

Thank you.

Jeff Finnin -- Chief Financial Officer

Yes.

Operator

Thank you. Our next question comes from the line of Michael Rollins with Citigroup. Please proceed with your question.

Michael Rollins -- Citigroup -- Analyst

Thanks. So just to follow on that, are those extra carrying expenses partly in the G&A line because I noticed in the guidance that the growth I believe of the G&A was like 11%, I think at the midpoint. And just separately, different topic. On the balance sheet, I was curious if you could just provide a little bit more color of what the guidance infers for net debt leverage over the course of the year. Are you still trying to get below 5 times leverage, net debt to EBITDA over time? And over what timeframe do you see that happening? Thanks.

Jeff Finnin -- Chief Financial Officer

You bet. Mike, in terms of the carry costs that are impacting those margins, most of those carry costs are going to be up in our operating expenses, lying on them. And that's where our data center teams get aggregated in terms of the expense recognition. In terms of the G&A growth of 11%, basically, most of that is being driven by some non-cash compensation increases. And then some of that's being driven by expected increases in our travel and entertainment as we expect to get back to, I guess some normal sense of the level of whatever that looks like in 2021. And just to give you some sense, we anticipate the first quarter to continue to be at some very low levels of travel. But as we work our way through the year, anticipating some of that to start coming back and being introduced into the business. And we'll just see how things perform as in whether or not things open up to that extent. But that give you some idea of what's driving that G&A.

In terms of leverage, we finished the year at 5.2. And if you think about 2021, based on our anticipated capital needs and the timing of that capital deployment, I would imagine we would oscillate somewhere between 5.2 and 5.4 times during 2021, as we work our way through the year. And so, obviously, topic we always talked with our Board about and obviously, here it's the management team as well as our Board, we're comfortable continuing to let that reside in those levels here in the near term. So that's kind of what we expect for 2021.

Michael Rollins -- Citigroup -- Analyst

If you wrap these kind of two questions together on the margin front with the balance sheet front, and you're looking at the FFO per share growth rate that's been below revenue for the last couple of years. When does that reverse in total when you take into account what you're trying to do with the balance sheet, with the operating business, when can FFO per share and show the underlying operating in financial leverage that's typically built into the data center business model?

Paul Szurek -- President and Chief Executive Officer

I may be wrong about this, and Jeff can correct me, but I think because of the capital intensity of the data center business, and you either have to issue shares or stock that once you get to a certain level of maturity and occupancy, you're always going to see lower FFO per share growth. And you see an FFO growth and you see revenue growth because you've got to cover the cost of financing the capital expansion. We've certainly seen that as we've looked across the industry generally. So -- but I do think, I mean getting back to your point, Mike, it's the good one, and I've circle back to the 40 megawatts versus 23 megawatts, we've just got more occupancy that we have the opportunity to build. As we do, that will have a positive impact on our margins and our growth rate, and our flow through to FFO.

Michael Rollins -- Citigroup -- Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of Nick Del Deo with MoffettNathanson. Please proceed with your question.

Nick Del Deo -- MoffettNathanson -- Analyst

Yeah, thanks for taking my questions. First, just a follow-up on that leverage question. It sounds like you expect the leverage ratio to kind of remain in the same zone as it is today over the course of 2021. Yet, as we look at a little further and kind of baking the potential cost of SV9, is there any potential for equity issuances or do you feel comfortable that that would not be required?

Jeff Finnin -- Chief Financial Officer

Yeah, Nick. Obviously, in 2021. It's not currently in our business plan just based upon capital needs and where our leverage is. Obviously, beyond that, it remains to be seen. But we're -- as Paul alluded to, we're -- we sit at 81.9% occupancy here at year-end. And if, as we work to drive that north, call it to somewhere in the mid to upper 80%, that EBITDA growth can drive not only a lot of value inside this organization but obviously, will help us with that leverage and then as we continue to look out in terms of when we're going to need capital, whether it's for SV9 or some incremental computer rooms.

But near term, most of our capital's going to be directed toward those second and third phases of some of the new builds we've just completed. And the EBITDA growth relative to capital deployed in those scenarios are much, much higher EBITDA growth resulting just because of low levels of capital needed to bring that capacities in market since we've spent roughly 50% of it already. So I think that's where we are in the cycle and we'll continue to disclose what we can as we get closer to the need for bringing on more capacity. But that's kind of how we're viewing things near term.

Nick Del Deo -- MoffettNathanson -- Analyst

Okay. Okay, that's helpful. And then maybe one more on Northern Virginia. I think you guys mentioned that leasing in that market was the best since I believe you said 2015. Can you comment on how you feel about the sustainability of that performance and how the return attributes of the deals you've been signing there have been trending, since that's something you've noted as presented with some challenges in the past?

Steven Smith -- Chief Revenue Officer

Thanks, Nick. We're pleased with how 2020 ended up in Virginia. We had some strong leasing there and if you look at the leasing, none of it is hyperscale, it's all retail and scale leasing, which is really the core of our business and where we've been focused over time. So really to execute well against that core piece of the business is great to see, given that that market is very much measured and oftentimes by hyperscale leasing. So we still have the ability to take down some of those larger leases if stayed fit the profile that we've discussed earlier, as far as those that add to the ecosystem and value the ecosystem. But overall, it seems like that market is stabilizing and we feel like we're in a good position to continue to execute on that retail scale but also well-positioned for the right types of larger leases that may come along.

Nick Del Deo -- MoffettNathanson -- Analyst

Okay. Thanks, Steve.

Steven Smith -- Chief Revenue Officer

Yeah.

Operator

Thank you. Our next question comes from the line of Tim Long with Barclays. Please proceed with your question.

Tim Long -- Barclays -- Analyst

Thank you. And two if I could. First one's a quick one. Just talk a little bit about the maintenance capex. It looks like it's spiking next year. Is that just some catch-up or is there something else going on there? And then second, I just want to touch again on the connectivity focus. You mentioned a lot of initiatives that you guys have gone through. Could you just let us know kind of what other types of areas are there opportunities for CoreSite to expand those offerings? And in the areas where you have invested in better connectivity, what has that meant for you as far as churns or churn or win rates or pricing or anything -- any color you can give us on the benefits of that would be great. Thank you.

Jeff Finnin -- Chief Financial Officer

Hey, Tim. Let me just address the question on the maintenance capex first of all. Yes, we are anticipating elevated maintenance capex for 2021 and what's really driving that inside the data center business is we're replacing a chiller facility in Boston that has hit the end of life. And so, we're replacing and then enhancing that to handle the entire facility there, which should drive us some very good savings as we bring that on and that will all occur here in the first half of 2021.

Secondly, I just want to point out, there is some additional recurring capex that we've anticipated in our Office business. Not something we talked about often here at CoreSite, but we have signed an office lease in -- at SV1 and Downtown, San Jose, which we are going to spend some dollars to bring that space up to what's needed before that tenant commences its lease here in the first half of 2021 as well. Steve?

Steven Smith -- Chief Revenue Officer

Yeah, thanks, Jeff. As far as the connectivity solutions are concerned, Paul mentioned a little bit about this in his opening remarks as to some of the I think milestones that we've made during 2020 and attracting additional cloud providers, some of the enhancements to our peering exchange, higher speeds that we're able to accommodate customers for example on AWS Direct Connect in Chicago. Those are just some examples of what we've done already. But I think, -- I mean as you mentioned question around the win rates or churn and those kind of things, and last year, we announced that we implemented our inter-site connectivity, which really connects all of our markets together. And we've seen some strong uptick from that in some cases where we won opportunities because we had that service.

So we continue to look at those types of services and how we can continue to enhance the OCX, for example, to provide more end-to-end provisioning of customers and the trade-offs of demand versus the cost to enhance some of those features. Those types of things I think are continuing to be top of mind for us and our customers. We announced earlier this year that we rolled out our DCI visibility to give customers visibility on as to what's going on in their environment over the portal and that's been very well received. So it's all of those kinds of things that's really kind of easing the path for customers to become customers and making that interoperability a lot more seamless for them.

Tim Long -- Barclays -- Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of Ari Klein with BMO Capital Markets. Please proceed with your question.

Ari Klein -- BMO Capital Markets -- Analyst

Thank you, and maybe just going back to the churn entirely it seems like if we adjust for some of the moving parts this year. It will be somewhere in the range of 5% to 7%, is that kind of the right way to think about it moving forward beyond this year as far as churn?

Jeff Finnin -- Chief Financial Officer

You know what, Ari, I think as you look at several of the years since we basically came public in 2010, I mean you saw churn ranging from I think one year we are down at 5.5% and then obviously this year would have been the high at 11.6%. But when you look at and take away some of those -- the highs and lows, on average, we were somewhere right around 7.5% to 8% on a regular basis. And so that's the way I'd probably think of it, somewhere around 1% to 2% per quarter is really what we would classify as fairly typical for us.

As you think about 2021, to give you some sense for where we see that, I would anticipate our churn being somewhere between 1% and 1.5% in each of the first and second quarters, and then it would be a little bit elevated in the back half, probably 2% to -- I'm sorry, 2% to 2.5% in the back half of the year as we have the one customer moving out and some in September and some in October. Just to give you some sense for how we think the year will shape up for 2021.

Ari Klein -- BMO Capital Markets -- Analyst

Got it. That's helpful. And then maybe just on the capacity front, you seem to be in a much better position today than you were maybe the last year or two. But how are you thinking about the need or how much capacity kind of do you want to have on hand in moving forward? A lot of it will obviously be dictated by the leasing, that's done, but is there a right amount of capacity that you consistently want to have on hand and available?

Paul Szurek -- President and Chief Executive Officer

It's a good question, Ari. I think it's more looked at by market but I would say we're a little bit over what we would ideally want right now and primarily that's because we haven't been a successful out the gate with CH2 as we would have liked to. We've gone into the reasons for that in the past, but we're still very happy with that asset and we think it's going to perform well and it has a good enterprise pipeline. But so far, it's been a little bit slower than we expected. Ideally, we'd lease-up at a faster pace this year and I think somewhere around -- somewhere in the 25 to 30 megawatts of capacity, plus the ability to expand in existing data centers with new computer rooms and ready to develop lands that we have the optionality to expand capacity. That's probably the right way to think about the business model for our current size.

Ari Klein -- BMO Capital Markets -- Analyst

Thanks.

Operator

Thank you. Our next question comes from the line of Richard Choe with J.P. Morgan. Please proceed with your question.

Richard Choe -- J.P. Morgan -- Analyst

Hi. A lot of the business last year came from existing customers. For guidance this year, are you still expecting most of the business to come from existing or is that mix going to change a little bit and how should we think about it going through the year?

Steven Smith -- Chief Revenue Officer

Hey, Richard, this is Steve. As we mentioned on the call, I think we had 89% come from existing customers in the last Q and that's not unnatural for us. I mean then it -- which is really part of the reason why there is such a focus for me and my team on driving new logos because as we win those new logos when they come in, the likelihood of them landing and expanding becomes much greater. So not relying on just the base to continue to expand over and over and over again. So, the ratios are probably fairly consistent, although we look to try to overweight more in that new logos category. But as you look over time, I think anywhere from 70% to 90% and expansion is not uncommon.

Richard Choe -- J.P. Morgan -- Analyst

And then in terms of the small scale and retail, is there any difference on how quickly those signings turn to revenue. Are they both about the same timeframe?

Steven Smith -- Chief Revenue Officer

I would say they're both pretty similar as you get to the higher end of the scale. Those can be a bit more complex and private cages that take a little bit more time to deploy. But they're all relatively in the same time period.

Richard Choe -- J.P. Morgan -- Analyst

Great, thank you.

Operator

Thank you. Our next question comes from the line of Frank Louthan with Raymond James. Please proceed with your question.

Frank Louthan -- Raymond James -- Analyst

Great. I wanted to circle back again on the sales cycle a little bit. Can you give us a little -- a couple of -- little more insight here, is it a function of customers in how they're reacting broadly or do you think it's something more specific to how you're trying to sell them? Are you trying to engage with larger initial deals or workloads or applications that are generally taking longer than the traditional mix that you've had with enterprise customers? Is it -- or is it just something about the market, in general, are you seeing the sales cycles lengthen?

Steven Smith -- Chief Revenue Officer

I'll just start I guess with the simple answer of yes. Because it's of all of that. I will tell you that we are trying to get into sales cycles earlier, which is part of the reason they become protracted it because we're in earlier, so therefore we're in them longer. But they're also more complex, as I mentioned earlier. So as we look to really try to communicate our overall value and messaging to the marketplace around not just the nuts and bolts of the data center, but the value that they can extract from the data center and the ecosystem that is embedded within it, that will hopefully allow us to position ourselves better with those enterprises earlier. That may not -- that may actually elongated sales cycles as we've seen, but hopefully better position us for more opportunities and give us a better position at the table as we make those decisions. Right, Jeff

Frank Louthan -- Raymond James -- Analyst

I mean had you identified where maybe you are missing out on this in the past and is this -- at what point is this sort of normalize and result in maybe higher growth going forward?

Steven Smith -- Chief Revenue Officer

Yeah, well, I think it continues to normalize. I mean, it's hard to know what normal is in today's environment, but I think the process, as I mentioned earlier is become more normalized. It's still a long process and frankly, we still have more work to do with our sales team to get better and better at this and get better at our messaging. And as I mentioned earlier, try to deepen our mode on our value. So I don't think it's a static thing that we ever say mission accomplished. It's always trying to get better at, trying to get in more deals and work them more efficiently. So it's hard to say that it's -- you can expect a status quo going forward because I don't think there ever will be in the high tech sector.

Frank Louthan -- Raymond James -- Analyst

All right.

Paul Szurek -- President and Chief Executive Officer

Frank, I would only...

Frank Louthan -- Raymond James -- Analyst

Yeah.

Paul Szurek -- President and Chief Executive Officer

I would only add that some of our most valuable customers that Steve and his team have brought in and added which have these some of the longer sales cycles, are the ones who are going to come in and they're going to use multiple clouds, multiple networks, probably some of the cloud-adjacent storage and other cloud-adjacent utilities. And they're moving typically out of a traditional kind of on-premises environment. So there's just a lot more moving parts for them and a lot more work with solution partners and our solution architects, to make sure we get their initial deployment and setup right, so that they can have the ability to expand and add new features as they grow into their hybrid multi-cloud architecture.

Frank Louthan -- Raymond James -- Analyst

Okay. And have you seen any incremental activity or interest from any of the Chinese hyperscalers since November?

Steven Smith -- Chief Revenue Officer

Nothing, that's abnormal. I would say, pretty consistent.

Frank Louthan -- Raymond James -- Analyst

All right, great. All right, thank you very much.

Operator

Thank you. Our next question comes from the line of David Guarino with Green Street. Please proceed with your question.

David Guarino -- Green Street -- Analyst

Hey, guys. I noticed CoreSite stopped at providing property-level disclosure and they now show market-level disclosure in the supplemental. Could you just talk about why the company thinks providing investors with less disclosures are in the portfolio? Is that best way to communicate the story?

Jeff Finnin -- Chief Financial Officer

Hey, Dave, it's Jeff. Every year we go through a process of looking at the information we disclose and how it's being received and how it's being utilized. And we're always looking for ways to enhance the message by giving good and many times more transparency. In certain situations like this one, we felt summarizing the information just felt and gave and tried to simplify the message. We did the same thing in our debt disclosure table but the debt -- you can go to our 10-K get all the nitty-gritty details that you need.

And as Steve pointed out, adding some additional disclosures around how we're managing the business from a sales perspective, we think helps with transparency and aligns it much better. So we're always looking for ways to improve upon it. Specific to your question, trying to simplify it, David. And if there's something in there that's meaningful and is causing some real issues, let me know what it is and we'll see if we can help you out.

David Guarino -- Green Street -- Analyst

Okay, that's great. And maybe we can talk offline about that. And just second question on the Chicago market. We didn't touch a lot on that but still limited activity there again this quarter. But it looks like there were two pretty large leases signed by some private data center operators during Q4. So could you maybe give us an idea I guess of how you view the supply and demand dynamics in that market? And then just kind of your expectations surrounding when that space might be leased in CH2?

Paul Szurek -- President and Chief Executive Officer

So we're positive on the market. It was in 2020 much more almost entirely a hyperscaler market. In fact, I'm not sure -- if I'm not mistaken, both of those two leases, you mentioned were with one hyperscale customer. But it's traditionally been a very strong enterprise market. We actually had good leasing in that market. Our leasing in Chicago was our best since 2016, it was 19% ahead of 2019 levels, we brought our occupancy in CH1, up from 81% to 87%. And we have a good funnel of enterprises with larger-scale requirements that hopefully will start bearing fruit this year in 2021. Steve, anything you'd add?

Steven Smith -- Chief Revenue Officer

No, just minor corrections. 30% over 2019, but in the ballpark, it's accurate. But, yeah, it was a good year. We'd like to do more. I mean, I would like to see more, we've got a beautiful building there that now we can extend all the value that we've had, our 427 LaSalle location. And we're optimistic about the opportunity there. But as Paul mentioned, we did have good leasing and we expect that to accelerate as we go into 2021.

David Guarino -- Green Street -- Analyst

Great, thanks for the color.

Operator

Thank you. Our next question comes from the line of Omotayo Okusanya with Mizuho Securities. Please proceed with your question.

Omotayo Okusanya -- Mizuho Securities -- Analyst

Yes, good afternoon. In your earlier comments, you discussed the proposed New Jersey tax on financial service transactions kind of causing some delay or some uncertainty in the New Jersey, New York market. Could you talk a little bit about, one, what the latest is with that proposed tax, and then, two, if you're seeing any other kind of major market, but thinking of doing something like that as all of these municipalities are all trying to shore up their revenues post the pandemic.

Paul Szurek -- President and Chief Executive Officer

So we don't have any real updated information. It almost seems like there's a little bit of a pause. The proposal has been reduced but hasn't gone away completely and who knows, it may be tied to bigger fiscal things going on relative to Washington and the COVID relief/stimulus bill. But I honestly -- I don't have very good tea leaves into the political situation, Tayo, so I can't really address that.

We haven't seen anything similar in other markets. I recall vaguely three, four years ago, Chicago floated something like that. And then when they saw what the impact would be on business in their state, in their community, they shut it down. So I mean, I think all these municipalities are focused on the fact that business in that activity is portable to other jurisdictions, and so they have to make a judgment as to whether they're cutting off their nose to spite their face if they implemented tax like that.

Omotayo Okusanya -- Mizuho Securities -- Analyst

All right, thank you.

Operator

Thank you. Ladies and gentlemen, our final question this morning comes from the line of Michael Funk with Bank of America. Please proceed with your question.

Michael Funk -- Bank of America -- Analyst

Yeah, thank you very much for the questions today. Quickly, circling back interconnection to your comments earlier, hoping you can pull apart what's in your guidance for 2021. You mentioned that the number of moving pieces there, volume growth helped in 2020, migration to higher capacity price increases. So does your '21 guidance, does that assume lower volume growth, lower level of migration, pruning by customers, or less ability to increase pricing?

Jeff Finnin -- Chief Financial Officer

Yeah, Michael, how are you? In terms of...

Michael Funk -- Bank of America -- Analyst

I've been well, thank you.

Jeff Finnin -- Chief Financial Officer

In terms of 2021 guidance, as I mentioned earlier, our overall volume increases in 2020 were 7.7%. We actually expect volume increases for 2021 to be around 7%, which is right in line with where are our revenue growth is guided to at this point in time. So what we're not certain of and haven't baked into the guidance is how much incremental revenue growth we would receive from customers as they're rolling over on the new lease terms, or any migration to those higher-priced products. We saw a lot of that activity in 2020, and at this point have expected that to be fairly muted for 2021. And we'll just see how things -- how that rolls out as we go through the year.

Michael Funk -- Bank of America -- Analyst

And then one more if I could on capital allocation, you slowed the dividend growth, recently. I mean, you gave a target for leverage for 2021. What does it take to get back to the historical level of dividend growth?

Jeff Finnin -- Chief Financial Officer

Well, I would simply say, we continue to target that AFFO payout ratio of somewhere around 90%, 92%, and you can see, we're just a little bit higher than that currently over the last trailing to 12 months. But I don't anticipate that payout ratio increasing, that's the level we're comfortable with at this point in time. And so dividend increases are going to be very highly correlated to revenue, I'm sorry, cash flow growth. So I would say look closely at the AFFO growth and that's really going to give you a better indication on what that dividend growth is going to look like longer-term.

Michael Funk -- Bank of America -- Analyst

Okay, thank you guys for the time today. Have a good day.

Jeff Finnin -- Chief Financial Officer

Thanks, Michael. Appreciate it.

Operator

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I will turn the floor back to Paul Szurek for any closing comments.

Paul Szurek -- President and Chief Executive Officer

Thank you. Thank you all for your interest and your time in learning more about CoreSite today. I'll tell you I learned of many good things about our team during the challenges of 2021. My colleagues, I have an increased depreciation for how conscientious, agile, and innovative they are, not only to make the adjustments necessary to succeed in 2020, but to continue to build a better platform for going -- for how we go forward. They make me very optimistic that we can perform well with our strong business model and the abundant capacity that we have coming into this year. So I look forward to 2021 and hope you all have a great rest of your day. Thank you.

Operator

[Operator Closing Remarks]

Duration: 79 minutes

Call participants:

Kate Ruppe -- Investor Relations Officer

Paul Szurek -- President and Chief Executive Officer

Steven Smith -- Chief Revenue Officer

Jeff Finnin -- Chief Financial Officer

Sami Badri -- Credit Suisse -- Analyst

Jonathan Atkin -- RBC Capital Markets -- Analyst

Nate Crossett -- Berenberg Capital Markets -- Analyst

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Dave Rodgers -- Robert W. Baird & Co. -- Analyst

Colby Synesael -- Cowen and Company -- Analyst

Michael Rollins -- Citigroup -- Analyst

Nick Del Deo -- MoffettNathanson -- Analyst

Tim Long -- Barclays -- Analyst

Ari Klein -- BMO Capital Markets -- Analyst

Richard Choe -- J.P. Morgan -- Analyst

Frank Louthan -- Raymond James -- Analyst

David Guarino -- Green Street -- Analyst

Omotayo Okusanya -- Mizuho Securities -- Analyst

Michael Funk -- Bank of America -- Analyst

More COR analysis

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