CyrusOne Inc. (Form: S-11/A, Received: 12/13/2012 06:02:41)

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

As filed with the Securities and Exchange Commission on December 12, 2012

Registration No. 333-183132

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 5

FORM S-11

FOR REGISTRATION

UNDER

THE SECURITIES ACT OF 1933

OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES

CyrusOne Inc.

(Exact Name of Registrant as Specified in Its Governing Instruments)

1649 West Frankford Road

Carrollton, TX 75007

(972) 350-0060

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Gary Wojtaszek

Chief Executive Officer

1649 West Frankford Road

Carrollton, TX 75007

(972) 350-0060

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

William V. Fogg, Esq.
Cravath, Swaine & Moore LLP
825 Eighth Avenue
New York, New York 10019
(212) 474-1000

Julian T.H. Kleindorfer, Esq.

Keith Benson, Esq.

Latham & Watkins LLP

355 South Grand Avenue

Los Angeles, California 90071

(213) 485-1234

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the Securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement of the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Issued December 12, 2012

Shares

LOGO

COMMON STOCK

CyrusOne Inc., a Maryland corporation, is offering shares of its common stock. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price per share of our common stock will be between $ and $ per share.

We intend to elect to be taxed and to operate in a manner that will allow us to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with our tax year ending December 31, 2012. To assist us in complying with certain U.S. federal income tax requirements applicable to REITs, among other purposes, our charter contains certain restrictions relating to the ownership and transfer of our stock, including an ownership limit of 9.8% of our outstanding common stock. See “Description of Securities—Restrictions on Ownership and Transfer” for a detailed description of the ownership and transfer restrictions applicable to our common stock.

We have applied to list our common stock on the NASDAQ Global Select Market under the symbol “CONE.”

We are an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012. Investing in our common stock involves risk. See “ Risk Factors ” beginning on page 22.

PRICE $ A SHARE

Price to
Public

Underwriting
Discounts and
Commissions

Proceeds to
CyrusOne

Per Share

Total

We have granted the underwriters the right to purchase up to an additional shares of common stock to cover over-allotments.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock to purchasers on , 2012.


MORGAN STANLEY		BofA MERRILL LYNCH


DEUTSCHE BANK SECURITIES		BARCLAYS

, 2012

LOGO

TABLE OF CONTENTS


	Page
Prospectus Summary		1
Risk Factors		22
Special Note Regarding Forward-Looking Statements		47
Use of Proceeds		49
Distribution Policy		50
Capitalization		54
Dilution		55
Selected Financial Data		57
Management’s Discussion and Analysis of Financial Condition and Results of Operations		59
Industry Background/Market Opportunity		95
Business and Properties		101
Management		123
Certain Relationships and Related Transactions		149


	Page
Policies With Respect to Certain Activities		155
Structure and Formation of Our Company		159
Description of the Partnership Agreement of CyrusOne LP		163
Principal Stockholders		172
Description of Securities		173
Certain Provisions of Maryland Law and of Our Charter and Bylaws		179
Shares Eligible for Future Sale		186
U.S. Federal Income Tax Considerations		188
ERISA Considerations		208
Underwriting		211
Legal Matters		216
Experts		217
Where You Can Find More Information		218
Index to Financial Statements		F-1

Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock. Our business, financial condition, results of operations, and prospects may have changed since that date.

The information in this preliminary prospectus is not complete and is subject to change. No person should rely on the information contained in this document for any purpose other than participating in our proposed initial public offering, and only the preliminary prospectus dated , 2012, is authorized by us to be used in connection with our proposed initial public offering. The preliminary prospectus will only be distributed by us and the underwriters named herein, and no other person has been authorized by us to use this document to offer or sell any of our securities.

Until , 2012 (25 days after the date of this prospectus), all dealers that buy, sell, or trade shares of our common stock, whether or not participating in our initial public offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

For investors outside the United States: neither we nor the underwriters have done anything that would permit our initial public offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, this offering of the shares of our common stock and the distribution of this prospectus outside of the United States.

MARKET DATA AND INDUSTRY FORECASTS

We use market data and industry forecasts throughout this prospectus, in particular in the sections entitled “Prospectus Summary–Industry Overview” and “Industry Background/Market Opportunity.” We have obtained substantially all of this information from International Data Corporation (“IDC”). We have paid IDC a fee of $27,500 for this information. Such information is included in this prospectus in reliance on IDC’s authority as an expert on such matters. The quantitative information provided by IDC is drawn from its database and other sources, which may be derived from estimates and subjective judgments and is subject to limited audit and validation procedures. See “Experts.” In addition, we have obtained certain market and industry data from the reports entitled Data Center Outsourcing, Hosting or Cloud? Use Gartner’s Market Map and Compass to Decide, Claudio Da Rold, February 8, 2012 and Data Center Services: Regional Differences in the Move Toward the Cloud, 2012, Claudio Da Rold, Rolf Jester, William Maurer, Ted Chamberlin, To Chee Eng, Gregor Petri, February 29, 2012, published by Gartner, Inc. (the “Gartner Reports”). The Gartner Reports represent data, research opinion or viewpoints published as part of a syndicated subscription service by Gartner, Inc., and are not representations of fact. The Gartner Reports speak as of their original publication date (and not as of the date of this prospectus), and the opinions expressed in the Gartner Reports are subject to change without notice.

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed information regarding our company and the historical and pro forma financial statements appearing elsewhere in this prospectus, including under the caption “Risk Factors.” Except as otherwise indicated, references in this prospectus to (i) “CyrusOne,” “we,” “our,” “us” and “our company” refer to CyrusOne Inc., a Maryland corporation, together with our consolidated subsidiaries, including CyrusOne LP, a Maryland limited partnership, which we refer to in this prospectus as our operating partnership, and CyrusOne GP, a Maryland statutory trust of which we are the sole beneficial owner and which is the sole general partner of our operating partnership, (ii) “CBI” refers to Cincinnati Bell Inc., an Ohio corporation, and, unless the context otherwise requires, its consolidated subsidiaries, and (iii) “Predecessor” refers to the carve-out business that is comprised of the historical data center activities of CBI, the financial statements of which are included in this prospectus. Unless otherwise indicated, the information contained in this prospectus is as of September 30, 2012, assumes that the underwriters’ over-allotment option is not exercised, gives effect to a stock and unit split immediately prior to the completion of this offering and assumes that the common stock to be sold in this offering is sold at $ per share, which is the midpoint of the price range set forth on the front cover of this prospectus. Information related to the consideration to acquire our initial properties and with respect to uses of proceeds is estimated as of the anticipated consummation of this offering, the formation transactions and the related financing transactions.

CyrusOne Inc.

Our Company

We are an owner, operator and developer of enterprise-class, carrier-neutral data center properties. Enterprise-class, carrier-neutral data centers are purpose-built facilities with redundant power, cooling and telecommunications systems and that are not network-specific, enabling customer interconnectivity to a range of telecommunications carriers.

We provide mission-critical data center facilities that protect and ensure the continued operation of information technology (“IT”) infrastructure for approximately 500 customers. Our goal is to be the preferred global data center provider to the Fortune 1000. As of September 30, 2012, our customers included nine of the Fortune 20 and 108 of the Fortune 1000 or private or foreign enterprises of equivalent size. These 108 customers provided 79% of our annualized rent as of September 30, 2012. Additionally, as of September 30, 2012, our top 10 customers (including CBI) provided 46% of our annualized rent.

We cultivate long-term strategic relationships with our customers and provide them with solutions for their data center facilities and IT infrastructure challenges. Our offerings provide flexibility, reliability and security and are delivered through a tailored, customer service-focused platform that is designed to foster long-term relationships. We focus on attracting customers that have not historically outsourced their data center needs. We believe our capabilities and reputation for serving the needs of large enterprises will allow us to capitalize on the growing demand for outsourced data center facilities in our markets and in new markets where our customers are located or plan to be located in the future.

Our History

Our business is comprised of the historical data center activities and holdings of CBI. CBI has operated its Cincinnati-based data center business for over 10 years; in addition, it acquired GramTel Inc. (“GramTel”), a data center operator in South Bend, Indiana and Chicago, Illinois, for approximately $20 million in December 2007; and it acquired Cyrus Networks, LLC (“Cyrus Networks”), a data center operator based in Texas, for approximately $526 million, net of cash acquired, in June 2010. As part of the formation transactions, certain subsidiaries of CBI contributed these assets and operations to our operating partnership, CyrusOne LP.

Our Portfolio

As of September 30, 2012, our property portfolio included 23 operating data centers in nine distinct markets (Austin, Chicago, Cincinnati, Dallas, Houston, London, San Antonio, Singapore and South Bend), collectively providing approximately 1,630,000 net rentable square feet (“NRSF”) and powered by approximately 125 megawatts (“MW”) of utility power. We own nine of the buildings in which our data center facilities are located. We lease the remaining 14 buildings, which account for approximately 600,000 NRSF, or approximately 37% of our total operating NRSF. These leased buildings accounted for 36% of our total annualized rent as of September 30, 2012 and 37% of our total NOI for the three months then ended. We also currently have 379,000 NRSF under development at three data centers in three distinct markets (Dallas, Houston and Phoenix) and 762,000 NRSF of additional powered shell space under roof and available for development. In addition, we have approximately 146 acres of land that are available for future data center facility development. Along with our primary product offering, leasing of colocation space, our customers are increasingly interested in our ancillary office and other space, which is listed separately in the table below. We believe our existing operating portfolio and development pipeline will allow us to meet the evolving needs of our existing customers and continue to attract new customers.

The following tables provide an overview of our operating and development properties as of September 30, 2012, after giving effect to the formation transactions.


				Operating Properties NRSF ^(a)											Powered Shell Available for Future Development (NRSF) ^(h)		Available Utility Power (MW) ⁽ⁱ⁾
Facilities	Metropolitan Area	Annualized Rent ^(b)		Colocation Space (CSF) ^(c)		Office & Other ^(d)		Supporting Infrastructure ^(e)		Total ^(f)		Percent Leased ^(g)			Powered Shell Available for Future Development (NRSF) ^(h)		Available Utility Power (MW) ⁽ⁱ⁾
South
Southwest Fwy (Galleria)	Houston	$	42,129,372		63,469		17,247		23,202		103,918		91	%		—		16
Westway Park Blvd (Houston West)	Houston	$	34,616,194		112,133		8,749		35,900		156,782		81	%		3,000		12
S. State Hwy 121 Business (Lewisville)*	Dallas	$	32,181,848		108,687		9,316		59,333		177,336		87	%		2,000		8
E. Ben White Blvd (Austin 1)*	Austin	$	5,131,316		16,223		21,376		7,516		45,115		93	%		—		5
Metropolis Drive (Austin 2)*	Austin	$	1,401,720		40,855		4,128		18,564		63,547		8	%		—		10
Westover Hills Blvd (San Antonio)	San Antonio	$	130,428		35,765		172		25,778		61,715		18	%		35,000		10
Frankford Road (Carrollton)	Dallas	$	50,364		47,366		—		30,365		77,731		13	%		522,000		10
Other South Properties (four properties)		$	9,380,938		28,047		1,449		—		29,496		96	%		—		2

South Total		$	125,022,180		452,545		62,437		200,658		715,640		69	%		562,000		73

Midwest
West Seventh Street (7th St.)**	Cincinnati	$	31,524,906		208,918		5,744		161,024		375,686		96	%		52,000		13
Kingsview Drive (Lebanon)	Cincinnati	$	17,437,330		60,556		32,484		44,505		137,545		81	%		90,000		12
Industrial Road (Florence)*	Cincinnati	$	13,148,577		52,698		46,848		40,374		139,920		91	%		—		10
Knightsbridge Drive (Hamilton)*	Cincinnati	$	10,322,312		46,565		1,077		35,336		82,978		89	%		—		5
Parkway (Mason)	Cincinnati	$	5,746,163		34,072		26,458		17,193		77,723		99	%		—		3
Springer Street (Lombard)*	Chicago	$	2,319,235		13,560		4,115		12,231		29,906		54	%		29,000		3
Goldcoast Drive (Goldcoast)	Cincinnati	$	1,410,429		2,728		5,280		16,481		24,489		100	%		14,000		1
Other Midwest Properties (three properties)		$	3,145,667		15,911		6,950		13,769		36,630		75	%		15,000		3

Midwest Total		$	85,054,619		435,008		128,956		340,913		904,877		90	%		200,000		50


				Operating Properties NRSF ^(a)											Powered Shell Available for Future Development (NRSF) ^(h)		Available Utility Power (MW) ⁽ⁱ⁾
Facilities	Metropolitan Area	Annualized Rent ^(b)		Colocation Space (CSF) ^(c)		Office & Other ^(d)		Supporting Infrastructure ^(e)		Total ^(f)		Percent Leased ^(g)			Powered Shell Available for Future Development (NRSF) ^(h)		Available Utility Power (MW) ⁽ⁱ⁾

International
Kestral Way (London)***	London	$	1,349,727		5,000		—		—		5,000		32	%		—		1
Jurong East (Singapore)***	Singapore	$	303,207		3,200		—		—		3,200		12	%		—		1

International Total		$	1,652,934		8,200		—		—		8,200		24	%		—		2

Total		$	211,729,733		895,753		191,393		541,571		1,628,717		79	%		762,000		125

*	Indicates properties in which we hold a leasehold interest in the building shell and land. All data center infrastructure has been constructed by us and is owned by us.

**	The information provided for the West Seventh Street (7th St.) property includes data for two facilities, one of which we lease and one of which we purchased prior to this offering. See “Business and Properties–Description of Initial Portfolio–West Seventh Street (7th St.), Cincinnati, Ohio.”

***	Indicates properties in which we hold a leasehold interest in the building shell, land and all data center infrastructure.

(a)	Represents the total square feet of a building under lease or available for lease based on engineers’ drawings and estimates but does not include space held for development or space used by CyrusOne.

(b)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2012, multiplied by 12. For the month of September 2012, customer reimbursements were $20.6 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately-metered power vary from month-to-month based on factors such as our customers’ utilization of power and the suppliers’ pricing of power. From January 1, 2011 through September 30, 2012, customer reimbursements under leases with separately-metered power constituted between 7.2% and 9.7% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2012 was $218,612,619. Our annualized effective rent was greater than our annualized rent as of September 30, 2012 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.

(c)	“CSF” represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment.

(d)	Represents the NRSF at an operating facility that is currently leased or readily available for lease as space other than CSF, which is typically office and other space.

(e)	Represents infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.

(f)	Represents the NRSF at an operating facility currently leased or readily available for lease. This excludes existing vacant space held for development.

(g)

Percent leased is determined based on NRSF being billed to customers under signed leases as of September 30, 2012 divided by total NRSF. Leases signed but not commenced as of September 30, 2012 are not included. Supporting infrastructure has been allocated to leased NRSF on a proportionate basis for purposes of this calculation.

(h)	Represents space that is under roof that could be developed in the future for operating NRSF, rounded to the nearest 1,000.

(i)	Represents installed power capacity that can be delivered to the facility by the local utility provider.

During the third quarter of 2012, we added 36,000 CSF at our Westover Hills Blvd (San Antonio) facility, 47,000 CSF at our Frankford Road (Carrollton) facility and 15,000 CSF at our Westway Park Blvd (Houston West) facility. This additional capacity increased our CSF by 12% in the quarter, causing our percent leased NRSF to decrease from 85% at June 30, 2012 to 79% at September 30, 2012. The book value of our properties on which development has commenced, or has recently been completed, or that are held for future development was approximately $130 million as of September 30, 2012.


(Square feet rounded to nearest 1,000; dollars in millions)		NRSF Under Development ^(a)
		Under Development										Under Development Costs ^(b)
Facilities	Metropolitan Area	Colocation Space (CSF)		Office & Other		Supporting Infrastructure		Powered Shell ^(c)		Total		Actual to Date		Estimated Costs to Completion			Total
South Ellis Street (Phoenix)	Phoenix		36,000		—		30,000		126,000		192,000	$	34	$	44		$	78
Frankford Road (Carrollton)	Dallas		—		30,000		—		—		30,000	$	2	$	0	^(d)	$	2
Westway Park Blvd (Houston West)	Houston		42,000		30,000		42,000		43,000		157,000	$	3	$	22		$	25

Total			78,000		60,000		72,000		169,000		379,000	$	39	$	66		$	105

(a)	Represents NRSF at a facility for which substantial activities have commenced to prepare the space for its intended use.

(b)	Represents management’s estimate of the total costs required to complete the current NRSF under development. There may be an increase in costs if customers require greater power density.

(c)	Represents NRSF under construction that, upon completion, will be powered shell available for future development into operating NRSF.

(d)	Less than $500,000 of costs to completion expected.

Industry Overview

Data centers are highly specialized facilities that serve as centralized repositories of server, storage and network equipment and are designed to provide the space, power, cooling and network connectivity necessary to efficiently operate mission-critical IT equipment.

Gartner, Inc. estimates that the global market for data center services was approximately $150 billion in 2011 and will grow to approximately $200 billion in 2012.

The demand for data center infrastructure is being driven by many factors, but most importantly by significant Internet traffic growth and the increased demand for outsourcing.

•

Internet Traffic Growth —The traditional business operations of enterprises are shifting online giving rise to increasingly data- and processing-intensive IT requirements. The move online is largely the result of global end user-generated Internet traffic which, according to IDC, is expected to grow from 17 exabytes per month in 2011 to 117 exabytes per month in 2015, representing a compound annual growth rate (“CAGR”) of 63%. Some of the key drivers of this Internet traffic growth include the expansion of Internet-based business models, growth in smart phones and tablets, the rapid increase of available content such as high-definition video streaming, increases in process-heavy applications such as business analytics and data mining, and growth in social networking. These factors translate into the expanding demand for high-powered, highly resilient data center facilities, given the need to process, store, distribute and manage the volume of data and transactions.

•

Increasing Demand for Outsourcing —There has been a significant trend toward increased data center and IT outsourcing by U.S. and global enterprises. This trend is driven by a number of factors, including growth in enterprise IT units generally, increased regulatory requirements that expand data storage demands on enterprises, and increased power density and cooling requirements that make it more costly to keep IT infrastructure in-house. We believe that enterprises will look to outsource their data center needs as innovation in data center design and implementation continues to drive increased efficiency at lower costs. Companies seeking to reduce capital requirements, coupled with an increasing recognition that managing complex data center infrastructure is not a core competency, are providing strong momentum toward data center and IT outsourcing. In addition, trends towards globalization and IT-enabled commerce are causing enterprises to consider outsourcing as a means to connect to their clients’ IT infrastructure.

In addition to these strong demand dynamics, the data center market has other key favorable characteristics for existing data center operators:

•

High Barriers to Entry —Despite growing demand for third-party data center capacity, a supply and demand imbalance exists in the market for high-quality, high-power, fully redundant facilities due to a number of factors, including extensive upfront capital and planning requirements, specialized expertise and personnel required for data center site selection, design, development and operation, limited availability of suitable locations, and regulatory requirements. Another fundamental barrier to entering the third-party data center market, especially when targeting large enterprises that have yet to outsource their data centers, is the time it takes to develop strong relationships with these enterprises before they are comfortable outsourcing their data center needs. This process can take months or even years. Trust is built through the initial sales cycle and continues through extensive planning phases, when the enterprise re-architects its IT platform to suit a third-party data center model. The amount of planning and business risk the enterprise undertakes in moving to a third-party data center model requires a significant investment on the part of the enterprise that is unlikely to be made without its third-party provider demonstrating a long history of execution, willingness to build a strategic partnership that will grow over time and compatibility with the needs of the enterprise.

•

High Barriers to Switching —Once an enterprise establishes a relationship with a data center provider, it is unlikely to change providers routinely due to the high switching costs and execution risks associated with

relocating IT equipment. These switching costs include disconnecting, packing, shipping, unloading, unpacking, installing and testing each piece of equipment which in large scale data centers can include hundreds of servers and storage devices. In addition, an enterprise will need to establish redundant connections during the transition and pay significant insurance and shipping fees. Switching data center providers also requires significant management resources and potential consulting support to minimize the risk of disruption and downtime which can impact the underlying business. As a result, enterprises are unlikely to switch data center providers routinely once they have an established relationship.

Our Competitive Strengths

We believe the following competitive strengths distinguish us from other data center operators and will enable us to continue to grow our operations.

High Quality Customer Base. The high quality of our assets combined with our reputation for serving the needs of large enterprises has enabled us to focus on the Fortune 1000 to build a quality customer base. We currently have approximately 500 customers from a broad spectrum of industries, with a particular expertise serving the energy industry, which comprises 38% of our annualized rent as of September 30, 2012. We currently have nine of the Fortune 20 and 108 of the Fortune 1000 or private or foreign enterprises of equivalent size as customers, including five of the six “supermajor” oil and gas companies. Our revenue is generated by a stable enterprise customer base, as evidenced by the following as of September 30, 2012:

•

79% of our annualized rent comes from the Fortune 1000 or private or foreign enterprises of equivalent size;

•

57% of our annualized rent comes from investment grade companies or their affiliates, based on the parent company’s corporate credit rating by Standard & Poor’s Ratings Services (“S&P”); and

•

42% of our annualized rent comes from the Fortune 100 or private or foreign enterprises of equivalent size.

As of September 30, 2012, CBI represented 10% of our annualized rent under contracts, which is largely comprised of two customers to whom we provide services through contracts entered into between those customers and Cincinnati Bell Technology Solutions Inc., a subsidiary of CBI (“CBTS”). Customer consent is required in order to assign those contracts to us, and while we expect those contracts to be assigned to us, such consent has not yet been obtained. Excluding these customers, CBI represented 3% of our annualized rent as of September 30, 2012. As of September 30, 2012, no single other customer represented more than 8% of our annualized rent, and our top 10 customers (including CBI) represented 46% of our annualized rent.

Strategically Located Portfolio. Our portfolio is located in several domestic and international markets possessing attractive characteristics for enterprise-focused data center operations. We have domestic properties in five of the top 10 largest U.S. cities by population (Chicago, Dallas, Houston, Phoenix and San Antonio), according to the U.S. Census Bureau, and four of the top 10 cities for Fortune 500 headquarters (Chicago, Cincinnati, Dallas and Houston), according to Forbes . We believe cities with large populations or a large number of corporate headquarters are likely to produce incremental demand for IT infrastructure. In addition, being located close to our current and potential customers provides chief information officers (“CIOs”) with additional confidence when outsourcing their data center infrastructure.

The powered shell can be acquired or constructed for a relatively inexpensive capital cost. Once the building shell is ready, we can build individual data center halls in portions of the building space to meet the needs of customers on a modular basis. This modular data center hall construction can be completed in approximately 16 weeks to meet our customers’ immediate needs. This short construction timeframe ensures a very high utilization of the assets and minimizes the time between our capital investment and the receipt of customer revenue, favorably impacting our return on investment while also translating into lower costs for our customers. Our design principles also allow us to add incremental equipment to increase power densities as our customers’ power needs increase, which provides our customers with a significant amount of flexibility to manage their IT demands. We believe this Massively Modular ^SM approach allows us to respond to rapidly evolving customer needs, to commit capital toward the highest return projects and to develop state-of-the-art data center facilities.

Significant Leasing Capability and Low Recurring Rent Churn . Our focus on the customer, our ability to scale with its needs, and our operational excellence provides us with two key benefits: embedded future growth from our customer base and low recurring rent churn. Our total annualized rent increased by approximately 22%, and our existing customer base provided approximately 72% of such increase, between October 1, 2011 and September 30, 2012. Since October 1, 2011, we have increased NRSF by 19%, while maintaining a high percentage of NRSF leased of 79% at September 30, 2012.

Our management team focuses on minimizing recurring rent churn. We define recurring rent churn as any reduction in recurring rent due to customer terminations, net pricing reductions or service reductions as a percentage of the annualized rent at the beginning of the applicable period, excluding any impact from metered power reimbursements. In 2011, we experienced a recurring rent churn of 3%, approximately half of which was attributable to customers that ceased using our facilities. For the nine months ended September 30, 2012, our recurring rent churn was 4.0% (5.3% annualized), which includes the termination of one lease for legacy data center space that had been utilized for over 20 years. The legacy data center space has been decommissioned and is expected to be developed into data center space that we believe will generate higher amounts of revenue than the prior lease. Excluding this lease, the recurring rent churn for the nine months ended September 30, 2012 would have been 2.9% (3.9% annualized).

Significant, Attractive Expansion Opportunities . Our current development properties and available acreage were selected based on extensive site selection criteria and the collective industry knowledge and experience of our management team. As a result, we believe that our development portfolio contains properties that are located in markets with attractive supply and demand conditions and that possess suitable physical characteristics to support data center infrastructure. In addition to our operating NRSF of approximately 1,630,000 as of September 30, 2012, we are currently developing vacant properties and new facilities to create approximately 379,000 NRSF across three distinct markets. As of September 30, 2012, we also have 762,000 NRSF of powered shell available for future development, and we own approximately 146 acres of land that are available for future data center facility development.

Differentiated Reputation for Service . We believe that the decision CIOs make to outsource their data center infrastructure has material implications for their businesses, and, as such, CIOs look to third-party data center providers that have a reputation for serving similar organizations and that are able to deliver a customized solution. We take a consultative approach to understanding the unique requirements of our customers, and our design principles allow us to deliver robust flexibility in the scale, power and location of our data center infrastructure. We believe that this approach has helped fuel our growth. Our current customers are also often the source of new contracts, with referrals being an important source of new customers.

Experienced Management Team . Our management team is comprised of individuals drawing on diverse knowledge and skill sets acquired through extensive experiences in the real estate, telecommunications and mission-critical infrastructure industries. In aggregate, our management team of nine individuals has an average of approximately 15 years of experience in the data center and communications industries.

Business and Growth Strategies

Our objective is to grow our revenue and earnings and maximize stockholder returns by continuing to expand our data center infrastructure outsourcing business.

Increasing Revenue from Existing Customers and Properties . We have historically generated a significant portion of our revenue growth from our existing customers. Our total annualized rent increased by approximately 22%, and our existing customer base provided approximately 72% of such increase, between October 1, 2011 and September 30, 2012. We plan to continue to target our existing customers, because we believe that many have significant data center infrastructure that has not yet been outsourced, and many will require additional data center space to support their growth and their increasing reliance on technology infrastructure in their operations. To address new demand, as of September 30, 2012, we have approximately 337,000 NRSF available for lease, 379,000 NRSF under development and 762,000 NRSF of additional powered shell available for future development. Our portfolio also contains approximately 146 acres of land that are available for future data center facility development.

Attracting and Retaining New Customers . According to a recent IDC survey, less than 10% of large U.S. enterprises use third-party data center colocation services. Increasingly, enterprises are beginning to recognize the complexities of managing data center infrastructure in the midst of rapid technological development and innovation. We believe that these complexities, brought about by the rapidly increasing levels of Internet traffic and data, obsolete existing corporate data center infrastructure, increased power and cooling requirements and increased regulatory requirements, are driving the need for companies to outsource their data center facility requirements. Consequently, this will significantly increase the percentage of companies that use third-party data center colocation services over the next several years. We believe that our high quality assets and reputation for serving large enterprises have been, and will be, key differentiators for us in attracting customers that are outsourcing their data center infrastructure needs. Since 2010, we have signed more than 100 new customers, many of whom were outsourcing data center infrastructure for the first time. We plan to continue to pursue large enterprise customers by leveraging our relationships and reputation, and by developing our existing pipeline of inventory to meet their needs.

Expanding into New Domestic and International Markets . Our expansion strategy focuses on developing new data centers in markets where our customers are located and in markets where our customers want to be located. We regularly meet with our customers to understand their business strategies and potential data center needs. We also conduct extensive analysis to ensure an identified market displays strong data center fundamentals, independent of the demand presented by any particular customer. We believe that this approach significantly reduces the risk associated with expansion into new markets because it provides strong visibility into our anticipated cash flow and helps to ensure targeted returns on new developments. Our strategy for entering a new market will vary based on in-place real estate and data center infrastructure and could include greenfield construction projects as well as acquisitions.

Growing Interconnection Business . Our customers are increasingly seeking to connect to one another via private peering, cross connects and/or public switching environments. The demand for interconnection creates additional rental and revenue growth opportunities for us, and we believe that customer interconnections increase our likelihood of customer retention by providing an environment not easily replicated by competitors.

Our principal executive offices are located at 1649 West Frankford Rd, Carrollton, TX 75007. Our telephone number is (972) 350-0060.

Summary Risk Factors

Investment in our common stock involves risks. You should carefully consider the following important risks as well as the additional risks described in “Risk Factors”:

•

Our top 20 customers collectively accounted for approximately 61% of our total annualized rent as of September 30, 2012. The loss or significant reduction in business from one or more of our large customers could significantly harm our business, financial condition and results of operations, and impact the amount of cash available for distribution to our stockholders.

•

As of September 30, 2012, leases representing 13%, 24% and 14% of the annualized rent for our portfolio will expire during 2012, 2013 and 2014, respectively, and an additional 11% of the annualized rent for our portfolio was from month-to-month leases. Additionally, most of our leases contain early termination provisions. If leases with our customers are not renewed on the same or more favorable terms or are terminated early by our customers, our business, financial condition and results of operations could be substantially harmed.

•

Our portfolio of properties consists primarily of data centers geographically concentrated in cities in Ohio and Texas, which comprised 38% and 59%, respectively, of our annualized rent as of September 30, 2012. Since we generate a substantial portion of our revenue by servicing a limited geographic area, we are more susceptible to regional economic downturns.

•

Even if we have additional space available for lease at any one of our data centers, our ability to lease this space to existing or new customers could be constrained by our ability to provide sufficient electrical power.

•

We do not own 14 buildings in which our data centers are located that account for approximately 600,000 NRSF, or approximately 37% of our total operating NRSF. These buildings accounted for 36% of our total annualized rent as of September 30, 2012. Instead, we lease or sublease these data center spaces and the ability to retain these leases or subleases could be a significant risk to our ongoing operations. The weighted average remaining term for such leases and subleases is approximately nine years, or approximately 20 years after giving effect to our contractual renewal rights.

•

A decrease in the demand for data center space could adversely affect our business, financial condition and results of operations.

•

We have no operating history as a REIT or an independent public company, and our inexperience may impede our ability to successfully manage our business or implement effective internal controls.

•

Conflicts of interest exist or could arise in the future with our operating partnership or its partners.

•

Upon completion of this offering, CBI will own 9.8% of our outstanding shares of common stock and a majority of the common units of limited partnership interest in our operating partnership (“operating partnership units”) and will have the right initially to nominate three directors. CBI’s interests may differ from or conflict with the interests of our other stockholders.

•

Our charter and bylaws and the partnership agreement of our operating partnership contain provisions that may delay, defer or prevent an acquisition of our common stock or a change in control.

•

If we do not qualify as a REIT, or fail to remain qualified as a REIT, we will be subject to U.S. federal income tax as a regular corporation and could face a substantial tax liability, which would reduce the amount of cash available for distribution to our stockholders.

•

REIT distribution requirements could adversely affect our ability to execute our business plan.

•

Our cash available for distribution to stockholders may not be sufficient to make distributions at expected levels, and we may need to borrow in order to make such distributions; consequently, we may not be able to make such distributions in full.

Structure and Formation of Our Company

On November 20, 2012, we closed the formation transactions, which were designed to consolidate the ownership of a portfolio of properties owned by CBI into our operating partnership, facilitate this offering, enable us to raise necessary capital to repay indebtedness owed to CBI and enable us to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2012. Pursuant to the formation transactions and in conjunction with this offering:

•

CyrusOne Inc. was formed as a Maryland corporation on July 31, 2012.

•

Our operating partnership, CyrusOne LP, was formed as a Maryland limited partnership on July 31, 2012.

•

CyrusOne GP, the general partner of our operating partnership, was formed as a Maryland statutory trust on July 31, 2012.

•

Our operating partnership received a contribution of direct and indirect interests in the portfolio of properties owned by CBI and certain of its subsidiaries set forth under “—CyrusOne Inc.—Our Portfolio” above in exchange for operating partnership units, as adjusted to reflect a unit split immediately prior to the completion of this offering, having a total value of $ based upon the midpoint of the price range set forth on the cover page of this prospectus. Certain of the properties were directly contributed to CyrusOne LP and certain properties were contributed through the contribution of the equity interests of the entity that directly owns those properties.

•

Our operating partnership issued $525 million of senior notes, from which net proceeds received were approximately $511 million, and entered into a $225 million revolving credit facility that is secured by substantially all of our assets.

•

Our operating partnership used the net proceeds of the senior notes issuance to repay approximately $480 million of indebtedness owed to CBI.

•

We will sell shares of our common stock in this offering plus an additional shares if the underwriters exercise their over-allotment option in full, and we will contribute the net proceeds of this offering to our operating partnership in exchange for operating partnership units.

•

We will enter into transition services, registration rights and other commercial agreements with CBI and certain of its subsidiaries. See “Certain Relationships and Related Transactions.”

Upon completion of this offering:

•

Purchasers of our common stock in this offering will own approximately % of our outstanding common stock, and we will be the sole beneficial owner and sole trustee of CyrusOne GP, which is the sole general partner of our operating partnership. We will also own approximately % of the outstanding operating partnership units of our operating partnership.

•

CBI will own 9.8% of our outstanding shares of common stock and % of the outstanding operating partnership units, which, if exchanged for our common stock, would represent an additional approximately % interest in our common stock.

•

Our directors and executive officers will own shares of restricted stock representing approximately % of our outstanding shares of common stock.

•

We expect to have total combined indebtedness, including capital lease obligations, of approximately $563 million and other financing arrangements of $49 million, and the ability to incur an additional $225 million of indebtedness through the availability under our revolving credit facility.

All the properties and other interests transferred to CyrusOne LP were contributed by wholly-owned subsidiaries of CBI. Because both CyrusOne LP and the certain subsidiaries of CBI that contributed the properties comprising our portfolio (the “Contributors”) will be under the common control of CBI until the completion of this offering and were under common control at the time of the formation transactions, the transfer of assets and liabilities of each of these entities will be accounted for at historical cost in a manner similar to a pooling of interests.

Our Structure

The following diagram depicts our ownership structure upon completion of this offering.

LOGO

Restrictions on Transfer

Under the partnership agreement of our operating partnership, except under certain circumstances, unit holders do not have redemption or exchange rights for a period of 12 months and may not otherwise transfer their operating partnership units for a period of 12 months following completion of this offering. In addition, we, our operating partnership, CBI and our executive officers and directors have agreed not to sell or otherwise transfer or encumber any shares of our common stock or securities convertible or exchangeable into our common stock (including operating partnership units) owned by them at the completion of this offering or thereafter acquired by them for a period of 12 months, with respect to CBI, and 180 days, with respect to us and our executive officers and directors, after the completion of this offering without the consent of Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated, subject, in each case, to certain exceptions.

Conflicts of Interest

Following the completion of this offering, there will be conflicts of interest with respect to certain transactions between the unitholders in our operating partnership, including CBI, on the one hand, and us and our stockholders, on the other. See “Risk Factors—Risks Related to our Organizational Structure.”

On November 20, 2012, CBI contributed its ownership interests in certain properties and in other assets and liabilities to our operating partnership in the formation transactions. Under the agreements relating to the contribution of such interests, we have contractual rights to indemnification in the event of breaches of representations or warranties made by CBI. None of these agreements were negotiated on an arm’s length basis. See “Certain Relationships and Related Transactions—Contribution Agreements.”

Our Chairman is the President and Chief Executive Officer and a director of CBI. In addition, some of our directors and executive officers own a substantial amount of CBI common stock, options and other instruments, the value of which is related to the value of common stock of CBI. The direct and indirect interests of our directors and executive officers in common stock of CBI, and us, could create, or appear to create, conflicts of interest with respect to decisions involving both CBI and us that could have different implications for CBI than they do for us.

We have granted CBI a waiver of the ownership restrictions contained in our charter, subject to certain initial and ongoing conditions designed to protect our status as a REIT, including the receipt of an Internal Revenue Service (“IRS”) private letter ruling or an opinion of counsel from a nationally recognized law firm that the exercise of any such exemption should not cause any rent payable by CBI to jeopardize our REIT status.

We lease colocation space in our data centers to Cincinnati Bell Telephone Company LLC, a subsidiary of CBI (“CBT”), and CBTS. Prior to this offering, we entered into separate data center colocation agreements with CBT and CBTS whereby we will continue to lease colocation space to each of them at certain of our data centers. See “Certain Relationships and Related Transactions—Other Benefits to Related Parties and Related Party Transactions.”

Prior to this offering, we purchased the property located at 229 West Seventh Street, which is included under “—CyrusOne Inc.—Our Portfolio” as one of our 23 operating facilities and which we had formerly leased from CBT. In connection with this purchase, we also executed a reciprocal easement and shared services agreement and a right of first opportunity and refusal agreement with CBT. Pursuant to the reciprocal easement and shared services agreement, we granted reciprocal easements to each other; CBT has easements for continued use of portions of our building and CBT provides fuel storage, fire suppression and other building services to us; and we provide chilled water, building automation systems related to HVAC and other building services to CBT.

Pursuant to the right of first opportunity and refusal agreement, we and CBT have agreed to grant to each other rights of first opportunity and first refusal to purchase each other party’s property in the event that either party desires to sell its property to a non-affiliate third party. See “Certain Relationships and Related Transactions—Other Benefits to Related Parties and Related Party Transactions.”

In addition, CBT occupies space in our 229 West Seventh Street facility that is utilized in its network operations. In connection with our purchase of this property, we entered into an agreement to lease this space to CBT for a period of five years, with three renewal options of five years each. Prior to this offering, we also entered into an agreement to lease space at CBT’s 209 West Seventh Street facility for a period of five years, with three renewal options of five years each. See “Certain Relationships and Related Transactions—Other Benefits to Related Parties and Related Party Transactions.”

CBI provides various management services, including executive management, cash management, legal, treasury, human resources, accounting, tax, internal audit and risk management services. Prior to this offering, we entered into a transition services agreement with CBI, pursuant to which CBI will provide certain of these services, on an as needed basis, to our operating partnership. See “Certain Relationships and Related Transactions—Transition Services Agreements.

Effective January 1, 2012, the Predecessor entered into a transition services agreement with CBTS pursuant to which each party agreed to provide certain services to the other party. Services provided by CBTS to the Predecessor included network support, service calls, monitoring and management, storage and backup and IT systems support. Services provided by the Predecessor to CBTS included data center colocation and network interface charges for a fiber network. Prior to this offering, we replaced this transition services agreement with a new transition services arrangement with CBTS pursuant to which each party will provide certain services to the other party. Services provided by CBTS to us include migration and support services for hardware and applications used for local telephony and IT services by our employees, as well as back office billing transition support for customers that have not yet been transitioned off of the CBTS billing platform. Services provided by us to CBTS consist of network interface charges. See “Certain Relationships and Related Transactions—Transition Services Agreements.”

Also effective January 1, 2012, the Predecessor entered into marketing agreements with CBT and CBTS to appoint these affiliates as CyrusOne’s authorized marketing representatives. Pursuant to the terms of these agreements, the Predecessor pays these affiliates a commission for all new leases for space they attain, which is calculated as a percentage of the first month’s recurring revenue with respect to such space. These agreements can be terminated by either party with 90 days’ advance notice. The term of these agreements expires on December 31, 2012 and may be extended by mutual agreement of the parties. See “Certain Relationships and Related Transactions—Marketing Agreement.”

We have also entered into services agreements with CBT and CBTS. Under the CBTS services agreement, CBTS has agreed to provide us with certain managed storage and backup services. These services will be provided on a month-to-month basis, and charges will be based on the variable amount of gigabytes managed by CBTS each month. Under the CBT services agreement, CBT provides us with connectivity services related to several of our data center facilities. These services are related to the use of fiber and circuit assets that are currently a part of the CBI network. See “Certain Relationships and Related Transactions—Other Benefits to Related Parties and Related Party Transactions.”

Prior to this offering, we entered into agreements to lease office space to CBT at our Goldcoast Drive (Goldcoast) data center facility and to CBTS at our Parkway (Mason) data center facility. See “Certain Relationships and Related Transactions—Other Benefits to Related Parties and Related Party Transactions.”

As of September 30, 2012, certain of the Predecessor’s leases had not yet been assigned to CyrusOne. CBTS is the lessor named in these contracts. In 2012, we entered into an agreement with CBTS whereby we perform all obligations of CBTS under the lease agreements, CBTS confers to us the benefits received under such lease agreements and CBTS is granted sufficient usage rights in each of our data centers so that it remains as lessor under each such lease agreement until the lease can be assigned to us. In addition, CBTS will continue to perform billing and collections on these accounts until the assignment has been completed. See “Certain Relationships and Related Transactions—Other Benefits to Related Parties and Related Party Transactions.”

On November 20, 2012, we also entered into a non-competition agreement with CBI, pursuant to which we and CBI have agreed not to enter into each other’s lines of business, subject to certain exceptions, for a period of four years from such date. See “Certain Relationships and Related Transactions—Other Benefits to Related Parties and Related Party Transactions.”

Under the partnership agreement of our operating partnership, the limited partners of our operating partnership will expressly agree that the general partner of our operating partnership is acting for the benefit of the operating partnership, the limited partners of our operating partnership and our stockholders, collectively. The general partner is under no obligation to give priority to the separate interests of the limited partners in deciding whether to cause our operating partnership to take or decline to take any actions. If there is a conflict between the interests of us or our stockholders, on the one hand, and the interests of the limited partners of our operating partnership, on the other, the partnership agreement of our operating partnership provides that any action or failure to act by the general partner that gives priority to the separate interests of us or our stockholders that does not result in a violation of the contractual rights of the limited partners of our operating partnership under the partnership agreement will not violate the duties that the general partner owes to our operating partnership and its partners.

Affiliates of one or more of our underwriters participated as agents or lenders under the revolving credit facility that we entered into with a syndicate of financial institutions. These transactions create potential conflicts of interest because the underwriters have an interest in the successful completion of this offering beyond the underwriting discounts and commissions and financial advisory fees they will receive.

Restrictions on Ownership and Transfer of our Stock

Due to limitations on the concentration of ownership of REIT stock imposed by the Internal Revenue Code of 1986, as amended (the “Code”), among other purposes, our charter provides for restrictions on ownership and transfer of our shares of stock, including, in general, prohibitions on any person actually or constructively owning more than 9.8% in value or number (whichever is more restrictive) of the outstanding shares of our common stock or 9.8% in value of the outstanding shares of all classes or series of our stock. Our charter, however, permits exceptions to be made for stockholders provided that our board of directors determines such exceptions will not jeopardize our tax status as a REIT. Our board of directors has granted CBI exemptions from the ownership limits applicable to other holders of our common stock, subject to certain initial and ongoing conditions designed to protect our status as a REIT, including the receipt of an IRS private letter ruling or an opinion of counsel from a nationally recognized law firm that the exercise of any such exemption should not cause any rent payable by CBI to jeopardize our REIT status.

Related Financings

Senior Notes Issuance

On November 20, 2012, our operating partnership issued $525 million of senior notes, from which the net proceeds were approximately $511 million. Our operating partnership used a portion of the net proceeds from the senior notes issuance to repay approximately $480 million of indebtedness owed to CBI. The indenture governing the senior notes contains covenants that restrict our ability to engage in certain activities such as incurring certain additional indebtedness and making certain investments. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Material Provisions of Consolidated Indebtedness to be Outstanding After this Offering.”

Revolving Credit Facility

On November 20, 2012, we entered into a $225 million revolving credit facility with a syndicate of financial institutions. Affiliates of several of the underwriters are lenders under this facility. The revolving credit facility is guaranteed by CyrusOne and CyrusOne GP, as well as certain of our operating partnership’s existing and future wholly-owned domestic subsidiaries, subject to certain exceptions. All obligations under the revolving credit facility, and the guarantees of those obligations, will be secured by substantially all of our assets, subject to certain exceptions. We intend to use the revolving credit facility, among other things, to finance the acquisition of properties, provide funds for customer improvements and capital expenditures and provide for working capital and for other corporate purposes. The revolving credit facility contains customary covenants for credit facilities of this type. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Material Terms of Our Indebtedness to be Outstanding After this Offering.”

After giving effect to this offering, the formation transactions and the related financing transactions, we expect to have liquidity of approximately $532 million based on our estimated cash balance (based on the mid-point of the price range set forth on the front cover of this prospectus) and availability under the revolving credit facility.

This Offering

Common stock offered by us

Common stock to be outstanding after this offering

shares ⁽¹⁾

Common stock and operating partnership units to be outstanding after this offering

shares/operating partnership units ⁽²⁾

Use of proceeds

We estimate that we will receive gross proceeds from this offering of approximately $300 million, or approximately $ million if the underwriters exercise their over-allotment option in full. After deducting the underwriting discounts, commissions and expenses of this offering, we estimate that we will receive aggregate net proceeds from this offering of approximately $275 million, or approximately $ million if the underwriters exercise their over-allotment option. We intend to contribute the net proceeds from this offering to our operating partnership in exchange for operating partnership units. Our operating partnership intends to use the proceeds received from our contribution to fund future acquisitions of real estate, development of real estate, recurring real estate expenditures and other non-real estate capital expenditures and general working capital. See “Use of Proceeds.”

NASDAQ Symbol

CONE

(1)	Excludes shares issuable upon exercise of the underwriters’ over-allotment option, and shares reserved for issuance under our 2012 Long Term Incentive Plan.

(2)

Includes operating partnership units outstanding pursuant to the consummation of the formation transactions that may, subject to the limits in the partnership agreement of our operating partnership, be exchanged for cash or, at our option, shares of our common stock on a one-for-one basis generally commencing 12 months after the completion of this offering.

Distribution Policy

We intend to make regular quarterly distributions to holders of our common stock. We intend to make a pro rata initial distribution with respect to the period commencing on the completion of this offering and ending December 31, 2012, based on $ per share for a full quarter. On an annualized basis, this would be $ per share, or an annual distribution rate of approximately % based on an initial public offering price at the midpoint of the price range set forth on the front cover of this prospectus. We estimate that this initial annual distribution rate will represent approximately % of estimated cash available for distribution for the 12 months ending September 30, 2013. We established this intended initial annual distribution rate based on our estimate of cash available for distribution for the 12 months ending September 30, 2013, which we have calculated based on adjustments to our pro forma loss before noncontrolling interests for the 12 months ended September 30, 2012. We intend to maintain our initial distribution rate for the 12-month period following completion of this offering unless actual results of operations, economic conditions or other factors differ materially from the assumptions used in our estimate. Distributions made by us will be authorized and determined by our board of directors in its sole discretion out of funds legally available therefor and will be dependent upon a number of factors, including restrictions under applicable law and other factors described under “Distribution Policy.” We believe that our estimate of cash available for distribution constitutes a reasonable basis for setting the initial distribution rate; however, we cannot assure you that the estimate will prove accurate, and actual distributions may therefore be significantly different from the expected distributions. If we have underestimated our cash available for distribution, we may need to increase our borrowings in order to fund our intended distributions. We expect that, at least initially, our distributions may exceed our net income under accounting principles generally accepted in the United States of America (“U.S. GAAP”) because of non-cash expenses included in net income. We do not intend to reduce the expected distributions per share if the underwriters exercise their over-allotment option.

Our Tax Status

We intend to elect and qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2012. Our qualification as a REIT depends upon our ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Code, relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our shares. We believe that we have been organized in conformity with the requirements for qualification and taxation as a REIT under the Code and that our intended manner of operation will enable us to meet the requirements for qualification and taxation as a REIT.

We have received a private letter ruling from the IRS, subject to the terms and conditions contained therein, with respect to certain issues relevant to our qualification as a REIT. Although we may generally rely upon the ruling, no assurance can be given that the IRS will not challenge our qualification as a REIT on the basis of other issues or facts outside the scope of the ruling.

So long as we qualify as a REIT, we generally will not be subject to U.S. federal income tax on our net taxable income that we distribute currently to our stockholders. If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we would be subject to U.S. federal income tax at regular corporate rates and would be precluded from re-electing to be taxed as a REIT for the subsequent four taxable years following the year during which we lost our REIT qualification. Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income or property, and the income of our taxable REIT subsidiaries (each, a “TRS”) will be subject to taxation at regular corporate rates.

Summary Financial Data

The following table sets forth summary financial and other data for the Predecessor (as described below) on both a historical and pro forma basis. We have not presented historical information for the newly-formed registrant, CyrusOne, because it has not had any corporate or business activity since its formation other than the incurrence of costs to support this offering, the formation transactions, the related financing transactions and the issuance of shares of common stock in connection with the initial capitalization of the company and because we believe that a discussion of the results of this newly-formed registrant would not be meaningful. For more information regarding the formation transactions, please see “Structure and Formation of Our Company.”

We use the term “Predecessor” to mean the historical data center activities and holdings of CBI. CBI has operated its Cincinnati-based data center business for over 10 years; in addition, it acquired GramTel, a data center operator in South Bend, Indiana and Chicago, Illinois, for approximately $20 million in December 2007; and it acquired Cyrus Networks, a data center operator based in Texas, for approximately $526 million, net of cash acquired, in June 2010. As part of the formation transactions, certain subsidiaries of CBI contributed these assets and operations to our operating partnership, CyrusOne LP.

The summary historical financial information as of December 31, 2011 and 2010 and for each of the years ended December 31, 2011, 2010 and 2009 has been derived from the Predecessor’s audited combined financial statements included elsewhere in this prospectus. The summary historical financial information as of September 30, 2012 and for the nine months ended September 30, 2012 and 2011 has been derived from the Predecessor’s unaudited condensed combined financial statements included elsewhere in this prospectus. In the opinion of management, the unaudited interim financial information included herein includes all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth herein. The results of operations for the interim period ended September 30, 2012 are not necessarily indicative of the results to be obtained for the full fiscal year.

The unaudited pro forma condensed combined financial data as of and for the nine months ended September 30, 2012 and for the year ended December 31, 2011, is derived from CyrusOne’s and the Predecessor’s combined pro forma financial statements which appear elsewhere in this prospectus. This pro forma data has been presented as if this offering, the formation transactions and the related financing transactions had all occurred: (i) on September 30, 2012 for the pro forma condensed combined balance sheet data and (ii) as of January 1, 2011 for the pro forma condensed combined statement of operations data. The pro forma financial data is not necessarily indicative of what our actual financial position and results of operations would have been as of the date and for the periods indicated, nor does it purport to represent our future financial position or results of operations.

You should read the following summary financial data of the Predecessor in conjunction with our combined historical financial statements and the related notes and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are included elsewhere in this prospectus.


(dollars in millions,
except per share amounts)	Nine Months Ended September 30,									Year ended December 31,
	Pro Forma 2012			2012			2011			Pro Forma 2011			2011			2010 ^(a)			2009
Statement of Operations Data:
Revenue	$	162.8		$	162.8		$	133.7		$	181.7		$	181.7		$	127.5		$	74.1

Costs and expenses:
Property operating expenses		55.6			55.3			43.3			58.5			58.2			43.9			31.0
Sales and marketing		6.9			5.8			7.1			10.6			9.1			6.8			5.1
General and administrative		17.1			15.4			8.5			16.3			12.5			7.0			4.2
Depreciation and amortization		52.9			52.9			40.0			55.5			55.5			36.2			18.0
Transaction costs ^(b)		1.3			1.3			2.6			2.6			2.6			9.0			—
Management fees charged by CBI ^(c)		—			2.1			1.9			—			2.3			3.6			1.5
Loss on sale of receivables to CBF ^(d)		—			3.7			2.3			—			3.5			1.8			1.2
Restructuring costs ^(e)		—			—			—			—			—			1.4			—
Asset impairments ^(f)		13.3			13.3			—			—			—			—			—

Operating income		15.7			13.0			28.0			38.2			38.0			17.8			13.1
Interest expense		31.2			31.2			24.1			39.6			32.9			11.5			3.1
Loss on extinguishment of debt ^(g)		—			—			—			1.4			1.4			—			—
Income tax (benefit) expense		0.5			(4.7	)		2.1			0.6			2.2			2.7			3.9

(Loss) income from continuing operations		(16.0	)		(13.5	)		1.8			(3.4	)		1.5			3.6			6.1
(Gain) loss on sale of real estate improvements ^(h)		(0.1	)		(0.1	)		—			—			—			0.1			—

(Loss) income before noncontrolling interests		(15.9	)		(13.4	)		1.8			(3.4	)		1.5			3.5			6.1
Noncontrolling interests ⁽ⁱ⁾					—			—						—			—			—

Net (loss) income allocable to common shareholders	$			$	(13.4	)	$	1.8		$			$	1.5		$	3.5		$	6.1

Balance Sheet Data (as of period end):
Investment in real estate, net	$	644.6		$	644.6		$	481.3			N/A		$	529.0		$	403.7		$	248.7
Total assets		1,425.0			1,090.8			911.7			N/A			954.7			862.3			279.6
Debt ^(j)		563.0			650.1			470.6			N/A			523.1			452.0			69.7
Other financing arrangements ^(k)		49.2			49.2			61.3			N/A			48.2			32.5			—
Divisional control ^(l)		—			297.5			316.1			N/A			311.5			317.8			163.4
Noncontrolling interests		448.2			—			—			N/A			—			—			—
Stockholders’ equity		719.3			—			—			N/A			—			—			—

Cash Flow Data:
Cash flows provided by (used in):
Operating activities		N/A			42.8			48.2			N/A			66.0			43.5			24.6
Investing activities		N/A			(166.2	)		(64.7	)		N/A			(105.8	)		(40.5	)		(20.2	)
Financing activities		N/A			126.0			12.6			N/A			35.5			1.9			(4.4	)

Other Data (unaudited):
Utilization rate ^(m)		78	%		78	%		86	%		88	%		88	%		88	%		87	%
Funds from operations ⁽ⁿ⁾	$	33.2		$	35.7		$	28.6		$	34.3		$	39.2		$	29.4		$	20.7
Funds from operations, as adjusted ⁽ⁿ⁾		46.8			49.3			39.9			49.3			54.2			38.3			21.9
Net operating income ^(o)		107.2			107.5			90.4			123.2			123.5			83.6			43.1
EBITDA ^(p)		68.7			66.0			68.0			92.3			92.1			53.9			31.1
Adjusted EBITDA ^(p)		83.2			85.5			72.9			96.3			99.6			66.2			32.4
Capital expenditures		146.4			146.4			76.3			117.5			117.5			29.3			20.7

(a)	In June 2010, the Predecessor completed the acquisition of Cyrus Networks. The results of operations of this business are included in the Predecessor’s results from the acquisition date.

(b)	Represents legal, accounting and consulting fees incurred in connection with the formation transactions, our qualification as a REIT and completed and potential business combinations.

(c)

Represents management fees charged by CBI for services it provided to the Predecessor, including executive management, legal, treasury, human resources, accounting, tax, internal audit and IT services. See Note 13 to the Predecessor’s audited combined financial statements included elsewhere in this prospectus for additional detail. Upon completion of this offering, we expect to enter into a transition services agreement with CBI with respect to any required ongoing services.

(d)

For the historical periods, represents the sale by the Predecessor of most of its trade and other accounts receivable to Cincinnati Bell Funding LLC, a bankruptcy-remote subsidiary of CBI (“CBF”), at a 2.5% discount to the receivables’ face value. Effective October 1, 2012, we terminated our participation in this program.

(e)	Represents a restructuring charge recognized in 2010 to terminate a legacy sales commission plan in order to transition to a common plan for all commissioned employees.

(f)	Reflects asset impairments recognized on a customer relationship intangible and property and equipment primarily related to our GramTel acquisition.

(g)	Represents the termination by the Predecessor of the financing obligation for one of its facilities by purchasing the property from the former lessor. A loss of $1.4 million was recognized upon the termination of this obligation.

(h)	Represents the (gain) loss that was recognized on the sale of generators in connection with upgrading of the equipment at various data center facilities.

(i)	Represents the (loss) income allocable to the noncontrolling owner’s interest in CyrusOne LP.

(j)	For the historical periods, reflects related party notes payable and capital lease obligations. For the pro forma periods, reflects third-party notes and capital lease obligations.

(k)

Other financing arrangements represents leases of real estate where the Predecessor was involved in the construction of structural improvements to develop buildings into data centers. When the Predecessor bears substantially all the construction period risk, such as managing or funding construction, the Predecessor is deemed to be the accounting owner of the leased property. These transactions generally do not qualify for sale-leaseback accounting due to our continued involvement in these data center operations. For these transactions, at the lease inception date, we recognize the fair value of the leased building as an asset in investment in real estate and as a liability in other financing arrangements.

(l)	For the historical periods, the Predecessor was not a separate legal entity. Divisional control represents CBI’s net investment in the Predecessor.

(m)

We calculate our utilization rate by dividing CSF under signed leases for available space (whether or not the contract has commenced billing) by total CSF. Utilization rate differs from percent leased presented elsewhere in this prospectus because utilization rate excludes office space and supporting infrastructure NRSF and includes CSF for signed leases that have not commenced billing. Management uses utilization rate as a measure of CSF leased.

(n)

We calculate funds from operations (“FFO”) in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents net (loss) income computed in accordance with U.S. GAAP excluding noncontrolling interests, (gain) loss from sales of real estate improvements, real estate-related depreciation and amortization and real estate impairments.

We calculate funds from operations, as adjusted (“FFO As Adjusted”) as FFO plus amortization and impairments of customer relationship intangibles. Because the value of such customer relationship intangibles is inextricably connected to the real estate acquired, we believe the amortization and impairments of such intangibles is analogous to real estate depreciation and impairments; and therefore, we add the customer relationship intangible amortization and impairments back to FFO As Adjusted for similar treatment with real estate depreciation and impairments. We believe our FFO As Adjusted calculation provides a more comparable measure to others in the industry. Our customer relationship intangibles are primarily associated with the acquisition of Cyrus Networks and represented 22% of the value of the assets acquired.

Management uses FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted as supplemental performance measures because they provide performance measures that, when compared year over year, capture trends in occupancy rates, rental rates and operating costs. We also believe that, as widely recognized measures of the performance of REITs, FFO and pro forma FFO will be used by investors as a basis to compare our operating performance with that of other REITs.

However, because FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted exclude real estate depreciation and amortization and real estate impairments (and, in the case of FFO As Adjusted and pro forma FFO As Adjusted, exclude amortization and impairments of customer relationship intangibles) and capture neither the changes in the value of our properties that result from use or from market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted as measures of our performance is limited. Other REITs may not calculate FFO or pro forma FFO in accordance with the NAREIT definition or may not calculate FFO As Adjusted or pro forma FFO As Adjusted in the same manner. Accordingly, our FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted may not be comparable to others. Therefore, FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted should be considered only as supplements to net income as measures of our performance. FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted should not be used as measures of our liquidity nor as indicative of funds available to fund our cash needs, including our ability to make distributions. FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted also should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with U.S. GAAP.

A reconciliation of net (loss) income to FFO and FFO As Adjusted is presented below:


(dollars in millions)	Nine Months Ended September 30,								Year ended December 31,
	Pro Forma 2012			2012			2011		Pro Forma 2011			2011		2010 ^(a)		2009
Net (loss) income	$			$	(13.4	)		1.8	$			$	1.5	$	3.5	$	6.1
Noncontrolling interests					—			—					—		—		—
(Gain) loss on sale of real estate improvements		(0.1	)		(0.1	)		—		—			—		0.1		—

(Loss) income from continuing operations		(16.0	)		(13.5	)		1.8		(3.4	)		1.5		3.6		6.1
Real estate depreciation and amortization		37.5			37.5			26.8		37.7			37.7		25.8		14.6
Real estate impairments		11.7			11.7			—		—			—		—		—

FFO available to common stockholders and unitholders		33.2			35.7			28.6		34.3			39.2		29.4		20.7

Amortization of customer relationship intangibles		12.1			12.1			11.3		15.0			15.0		8.9		1.2
Customer relationship intangible impairments		1.5			1.5			—		—			—		—		—

FFO As Adjusted available to common stockholders and unit holders	$	46.8		$	49.3		$	39.9	$	49.3		$	54.2	$	38.3	$	21.9

(o)

We calculate net operating income (“NOI”) as net (loss) income, as defined by U.S. GAAP, plus noncontrolling interests, excluding (gain) loss on sale of real estate improvements, plus income tax (benefit) expense, loss on extinguishment of debt, interest expense, sales and marketing costs, general and administrative costs, depreciation and amortization, transaction costs, management fees charged by CBI, loss on sale of receivables to CBF, restructuring costs and asset impairments. NOI can also be calculated as revenues less property operating expenses. Amortization of deferred leasing costs is presented within depreciation and amortization, which is excluded from our NOI calculation. We have not historically incurred any tenant improvement costs. Our sales and marketing costs consist of salaries and benefits for our internal sales staff, travel and entertainment, office supplies, marketing and advertising costs. General and administrative costs include salaries and benefits of senior management and support functions, legal and consulting costs, and other administrative costs. Marketing and advertising costs are not property specific, rather these costs support our entire portfolio. As a result, we have excluded these marketing and advertising costs from our NOI calculation, consistent with the treatment of general and administrative costs, which also support our entire portfolio. Other REITs may not calculate NOI in the same manner. Accordingly, our NOI may not be comparable to other REITs’ NOI. Management uses NOI and pro forma NOI as supplemental performance measures because they provide useful measures of the profitability of our leases. NOI and pro forma NOI should be considered only as supplements to net income as measures of our performance. NOI and pro forma NOI should not be used as measures of liquidity nor are they indicative of funds available to meet our cash needs, including our ability to make distributions.

A reconciliation of net (loss) income to NOI is presented below:


(dollars in millions)	Nine Months Ended September 30,								Year ended December 31,
	Pro Forma 2012			2012			2011		Pro Forma 2011			2011		2010 ^(a)		2009
Net (loss) income	$			$	(13.4	)	$	1.8	$			$	1.5	$	3.5	$	6.1
Noncontrolling interests					—			—					—		—		—
(Gain) loss on sale of real estate improvements		(0.1	)		(0.1	)		—		—			—		0.1		—

(Loss) income from continuing operations		(16.0	)		(13.5	)		1.8		(3.4	)		1.5		3.6		6.1
Income tax (benefit) expense		0.5			(4.7	)		2.1		0.6			2.2		2.7		3.9
Loss on extinguishment of debt		—			—			—		1.4			1.4		—		—
Interest expense		31.2			31.2			24.1		39.6			32.9		11.5		3.1
Sales and marketing		6.9			5.8			7.1		10.6			9.1		6.8		5.1
General and administrative		17.1			15.4			8.5		16.3			12.5		7.0		4.2
Depreciation and amortization		52.9			52.9			40.0		55.5			55.5		36.2		18.0
Transaction costs		1.3			1.3			2.6		2.6			2.6		9.0		—
Management fees charged by CBI		—			2.1			1.9		—			2.3		3.6		1.5
Loss on sale of receivables to CBF		—			3.7			2.3		—			3.5		1.8		1.2
Restructuring costs		—			—			—		—			—		1.4		—
Asset impairments		13.3			13.3			—		—			—		—		—

NOI	$	107.2		$	107.5		$	90.4	$	123.2		$	123.5	$	83.6	$	43.1

(p)

We calculate EBITDA as net (loss) income as defined by U.S. GAAP plus noncontrolling interests, interest expense, income tax (benefit) expense and depreciation and amortization. We calculate Adjusted EBITDA as EBITDA plus transaction costs, loss on sale of receivables to CBF, restructuring costs, loss on extinguishment of debt, asset impairments, stock-based compensation expense resulting from changes in CBI’s stock price, and excluding (gain) loss on sale of real estate improvements. Other companies may not calculate EBITDA or Adjusted EBITDA in the same manner. Accordingly, our EBITDA and Adjusted EBITDA may not be comparable to others. Management uses EBITDA, pro forma EBITDA, Adjusted EBITDA and pro forma Adjusted EBITDA as supplemental performance measures as they provide useful measures of assessing the results of operations. EBITDA, pro forma EBITDA, Adjusted EBITDA and pro forma Adjusted EBITDA should be considered only as supplements to net income as measures of our performance and should not be used as substitutes for net income. A reconciliation of net (loss) income to EBITDA and Adjusted EBITDA is presented below:


(dollars in millions)	Nine Months Ended September 30,								Year ended December 31,
	Pro Forma 2012			2012			2011		Pro Forma 2011			2011		2010		2009
Net (loss) income	$			$	(13.4	)	$	1.8	$			$	1.5	$	3.5	$	6.1
Noncontrolling interests					—			—					—		—		—

(Loss) income before noncontrolling interests		(15.9	)		(13.4	)		1.8		(3.4	)		1.5		3.5		6.1
Interest expense		31.2			31.2			24.1		39.6			32.9		11.5		3.1
Income tax (benefit) expense		0.5			(4.7	)		2.1		0.6			2.2		2.7		3.9
Depreciation and amortization		52.9			52.9			40.0		55.5			55.5		36.2		18.0

EBITDA		68.7			66.0`			68.0		92.3			92.1		53.9		31.1

Transaction costs		1.3			1.3			2.6		2.6			2.6		9.0		—
Loss on sale of receivables to CBF		—			3.7			2.3		—			3.5		1.8		1.2
Restructuring costs		—			—			—		—			—		1.4		—
Loss on extinguishment of debt		—			—			—		1.4			1.4		—		—
Asset impairments		13.3			13.3			—		—			—		—		—
Stock-based compensation mark-to-market		—			1.3			—		—			—		—		0.1
(Gain) loss on sale of real estate improvements		(0.1	)		(0.1	)		—		—			—		0.1		—

Adjusted EBITDA	$	83.2		$	85.5		$	72.9	$	96.3		$	99.6	$	66.2	$	32.4

RISK FACTORS

Investment in our common stock involves risks. In addition to other information contained in this prospectus, you should carefully consider the following factors before acquiring shares of our common stock offered by this prospectus. The occurrence of any of the following risks might cause you to lose all or a part of your investment. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Special Note Regarding Forward-Looking Statements.”

Risks Related to Our Business and Operations

A small number of customers account for a significant portion of our revenue. The loss or significant reduction in business from one or more of our large customers could significantly harm our business, financial condition and results of operations, and impact the amount of cash available for distribution to our stockholders.

We currently depend, and expect to continue to depend, upon a relatively small number of customers for a significant percentage of our revenue. Our top 20 customers collectively accounted for approximately 61% of our total annualized rent as of September 30, 2012. As a result of this customer concentration, our business, financial condition and results of operations, including the amount of cash available for distribution to our stockholders, could be adversely affected if we lose one or more of our larger customers, if such customers significantly reduce their business with us or if we choose not to enforce, or to enforce less vigorously, any rights that we may have now or in the future against these significant customers because of our desire to maintain our relationship with them.

A significant percentage of our customer base is also concentrated in industry sectors that may from time to time experience volatility including, in particular, the oil and gas sector. Enterprises in the energy industry comprised approximately 38% of our annualized rent as of September 30, 2012. A downturn in the oil and gas industry could negatively impact the financial condition of one or more of our oil and gas company customers, including several of our larger customers. In an industry downturn, those customers could default on their obligations to us, delay the purchase of new services from us or decline to renew expiring leases, any of which could have an adverse effect on our business, financial condition and results of operations.

Additionally, if any customer becomes a debtor in a case under the U.S. Bankruptcy Code, applicable bankruptcy laws may limit our ability to terminate our contract with such customer solely because of the bankruptcy or recover any amounts owed to us under our agreements with such customer. In addition, applicable bankruptcy laws could allow the customer to reject and terminate its agreement with us, with limited ability for us to collect the full amount of our damages. Our business, including our revenue and cash available for distribution to our stockholders, could be adversely affected if any of our significant customers were to become bankrupt or insolvent.

A significant percentage of our customer leases expire each year or are on a month-to-month basis, and most of our leases contain early termination provisions. If leases with our customers are not renewed on the same or more favorable terms or are terminated early by our customers, our business, financial condition and results of operations could be substantially harmed.

Our customers may not renew their leases following expiration. This risk is increased by the significant percentage of our customer leases that expire every year. As of September 30, 2012, leases representing 13%, 24% and 14% of the annualized rent for our portfolio will expire during 2012, 2013 and 2014, respectively, and an additional 11% of the annualized rent for our portfolio was from month-to-month leases. While historically we have retained a significant number of our customers, including those leasing from us on a month-to-month basis, upon expiration our customers may elect not to renew their leases or renew their leases at lower rates, for fewer services or for shorter terms. If we are unable to successfully renew or continue our customer leases on the same or more favorable terms or subsequently re-lease available data center space when such leases expire, our business, financial condition and results of operations could be adversely affected.

In addition, most of our leases contain early termination provisions that allow our customers to reduce the term of their leases subject to payment of an early termination charge that is often a specified portion of the remaining rent payable on such leases. Leases representing approximately 22% of our annualized rent as of September 30, 2012 require payment of less than 50% of the remaining rental payment due on the applicable lease. The exercise by customers of early termination options could have an adverse affect on our business, financial condition and results of operations. See “Business and Properties—Lease Expirations.”

We generate a substantial portion of our revenue by servicing a limited geographic area, which makes us more susceptible to regional economic downturns.

Our portfolio of properties consists primarily of data centers geographically concentrated in cities in Ohio and Texas. These markets comprised 38% and 59%, respectively, of our annualized rent as of September 30, 2012. As such, we are susceptible to local economic conditions and the supply of, and demand for, data center space in these markets. If there is a downturn in the economy, a natural disaster or an oversupply of, or decrease in demand for, data centers in these markets, our business could be adversely affected to a greater extent than if we owned a real estate portfolio that was more diversified in terms of both geography and industry focus.

Customers are increasing their use of high-density electrical power equipment in our data centers, which has significantly increased the demand for power. As current and future customers increase their power footprint in our facilities over time, the corresponding reduction in available power could limit our ability to increase occupancy rates or network density within our existing facilities. In addition, our power and cooling systems are difficult and expensive to upgrade. Accordingly, we may not be able to efficiently upgrade or change these systems to meet new demands without incurring significant costs that we may not be able to pass on to our customers.

We do not own all of the buildings in which our data centers are located. Instead, we lease or sublease certain of our data center spaces and the ability to retain these leases or subleases could be a significant risk to our ongoing operations.

We do not own 14 buildings that account for approximately 600,000 NRSF, or approximately 37% of our total operating NRSF. These leased buildings accounted for 36% of our total annualized rent as of September 30, 2012 and 37% of our total NOI for the three months then ended. Our business could be harmed if we are unable to renew the leases for these data centers on favorable terms or at all. Additionally, in several of our smaller facilities we sublease our space, and our rights under these subleases are dependent on our sublandlord retaining its respective rights under the prime lease. The weighted average remaining term for such leases and subleases is approximately nine years, or approximately 20 years after giving effect to our contractual renewal rights. When the primary terms of our existing leases expire, we generally have the right to extend the terms of our leases for one or more renewal periods, subject to, in the case of several of our subleases, our sublandlord renewing its term under the prime lease. For four of these leases and subleases, the renewal rent will be determined based on the fair market value of rental rates for the property, and the then prevailing rental rates may be higher than the current rental rates under the applicable lease. The rent for the remaining leases and subleases will be based on a fixed percentage increase over the base rent during the year immediately prior to expiration. Several of our data centers are leased or subleased from other data center companies, which may increase our risk of non-renewal or renewal on less than favorable terms. If renewal rates are less favorable than those we currently have, we may be required to increase revenues within existing data centers to offset such increase in lease payments. Failure to increase revenues to sufficiently offset these projected higher costs would adversely impact our operating income. Upon the end of our renewal options, we would have to renegotiate our lease terms with the landlord. See “Business and Properties—Facility Leasing Arrangements.”

Additionally, if we are unable to renew the lease at any of our data centers, we could lose customers due to the disruptions in their operations caused by the relocation. We could also lose those customers that choose our data centers based on their locations. In addition, it is not typical for us to relocate data center infrastructure equipment, such as generators, power distribution units and cooling units, from their initial installation. The costs of relocating such equipment to a different data centers could be prohibitive and, as such, we could lose the value of this equipment. For these reasons, any lease that cannot be renewed could adversely affect our business, financial condition and results of operations.

Any losses to our properties that are not covered by insurance, or that exceed our policy coverage limits, could adversely affect our business, financial condition and results of operations.

The properties in our portfolio are subject to casualty risks, including from causes related to riots, war, terrorism or acts of God. For example, our properties located in Texas are generally subject to risks related to tropical storms, hurricanes and other severe weather and floods, and our properties located in the Midwest are generally subject to risks related to earthquakes, tornados and other severe weather. While we will carry commercial liability, fire, extended coverage, earthquake, business interruption and rental loss insurance covering all of the properties in our portfolio under a blanket policy, the amount of insurance coverage may not be sufficient to fully cover the losses we suffer.

If we experience a loss that is uninsured or that exceeds our policy coverage limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. In addition, if the damaged properties were subject to recourse indebtedness, we could continue to be liable for the indebtedness even if these properties were irreparably damaged.

In addition, even if damage to our properties is covered by insurance, a disruption of our business caused by a casualty event may result in the loss of business or customers. The business interruption insurance we carry may not fully compensate us for the loss of business or customers due to an interruption caused by a casualty event.

A disruption in the financial markets may make it more difficult to evaluate the stability, net assets and capitalization of insurance companies and any insurer’s ability to meet its claim payment obligations. A failure of an insurance company to make payments to us upon an event of loss covered by an insurance policy could adversely affect our business, financial condition and results of operations.

Our properties may not be covered by title insurance.

While we intend to seek either endorsements to provide us with the benefits of existing title insurance policies of CBI and its subsidiaries with respect to the contributed owned properties and material leased properties or new title insurance policies for such properties and we are obligated to seek new title insurance policies in connection with our new revolving credit facility, we do not expect to have such policies in effect at completion of this offering. No assurance can be provided that we will obtain such policies after the completion of the offering. In addition, any title insurance coverage we do obtain may not insure for the current aggregate value of our portfolio, and we do not intend to increase our title insurance coverage if the market value of our portfolio increases. See “Certain Relationships and Related Transactions—Contribution Agreements.”

Any failure of our physical infrastructure or services could lead to significant costs and disruptions that could reduce our revenues and harm our brand and reputation.

Our business depends on providing customers with a highly reliable data center environment. We may fail to provide such service as a result of numerous factors, including:

•

human error;

•

unexpected equipment failure;

•

power loss or telecommunications failures;

•

improper building maintenance by our landlords in the buildings that we lease;

•

physical or electronic security breaches;

•

fire, tropical storm, hurricane, tornado, flood, earthquake and other natural disasters;

•

water damage;

•

war, terrorism and any related conflicts or similar events worldwide; and

•

sabotage and vandalism.

Problems at one or more of our data centers, whether or not within our control, could result in service interruptions or equipment damage. Substantially all of our leases include terms requiring us to meet certain service level commitments primarily in terms of electrical output to, and maintenance of environmental conditions in, the data center raised floor space leased by customers. Any failure to meet these commitments or any equipment damage in our data centers, including as a result of mechanical failure, power outage, human error on our part or other reasons, could subject us to liability under our lease terms, including service level credits against customer rent payments, or, in certain cases of repeated failures, the right by the customer to terminate the lease. For example, although our data center facilities are engineered to reliably power and cool our customers’ computing equipment, it is possible that an outage could adversely affect a facility’s power and cooling capabilities. Depending on the frequency and duration of these outages, the affected customers may have the right to terminate their lease, which could have a negative impact on our business. We may also be required to expend significant financial resources to protect against physical or cybersecurity breaches that could result in the misappropriation of our proprietary information or the information of our customers. We may not be able to implement security measures in a timely manner or, if and when implemented, these measures might be circumvented. Service interruptions, equipment failures or security breaches may also expose us to additional legal liability and damage our brand and reputation, and could cause our customers to terminate or not renew their leases. In addition, we may be unable to attract new customers if we have a reputation for significant or frequent service disruptions, equipment failures or physical or cybersecurity breaches in our data centers. Any such failures could adversely affect our business, financial condition and results of operations.

Our growth depends on the development of our properties and our ability to successfully lease those properties, and any delays or unexpected costs associated with such projects or the ability to lease such properties may harm our growth prospects, future business, financial condition and results of operations.

Our growth depends in part upon successfully developing properties into operating data center space. Current and future development projects will involve substantial planning, allocation of significant company resources and certain risks, including risks related to financing, zoning, regulatory approvals, construction costs and delays. These projects will also require us to carefully select and rely on the experience of one or more general contractors and associated subcontractors during the construction process. Should a general contractor or significant subcontractor experience financial or other problems during the construction process, we could experience significant delays, increased costs to complete the project and other negative impacts to our expected returns.

Site selection is also a critical factor in our expansion plans, and there may not be suitable properties available in our markets at a location that is attractive to our customers and has the necessary combination of access to multiple network providers, a significant supply of electrical power, high ceilings and the ability to sustain heavy floor loading. Furthermore, while we may prefer to locate new data centers adjacent to our existing data centers, we may be limited by the inventory and location of suitable properties.

In addition, in developing new properties, we will be required to secure an adequate supply of power from local utilities, which may include unanticipated costs. For example, we could incur increased costs to develop utility substations on our properties in order to accommodate our power needs. Any inability to secure an

appropriate power supply on a timely basis or on acceptable financial terms could adversely affect our ability to develop the property on an economically feasible basis, or at all.

These and other risks could result in delays or increased costs or prevent the completion of our development projects and growth of our business, which could adversely affect our business, financial condition and results of operations.

In addition, we have in the past undertaken development projects prior to obtaining commitments from customers to lease the related data center space. We will likely choose to undertake future development projects under similar terms. Such development involves the risk that we will be unable to attract customers to the relevant properties on a timely basis or at all. If we are unable to attract customers and our properties remain vacant or underutilized for a significant amount of time, our business, financial condition and results of operations could be adversely affected.

We are dependent upon third-party suppliers for power and certain other services, and we are vulnerable to service failures of our third-party suppliers and to price increases by such suppliers.

We rely on third parties to provide power to our data centers. We are therefore subject to an inherent risk that such local utilities may fail to deliver such power in adequate quantities or on a consistent basis, and our recourse against the utility and ability to control such failures may be limited. If power delivered from the local utility is insufficient or interrupted, we would be required to provide power through the operation of our on-site generators, generally at a significantly higher operating cost than we would pay for an equivalent amount of power from the local utility. We may not be able to pass on the higher cost to our customers. In addition, if the generator power were to fail, we would generally be subject to paying service level credits to our customers, who may in certain instances have the right to terminate their leases. Furthermore, any sustained loss of power could reduce the confidence of our customers in our services thereby impairing our ability to attract and retain customers, which would adversely affect both our ability to generate revenues and our results of operations.

In addition, even when power supplies are adequate, we may be subject to pricing risks and unanticipated costs associated with obtaining power from various utility companies. While we actively seek to lock-in utility rates, many factors beyond our control may increase the rate charged by the local utility. For instance, municipal utilities in areas experiencing financial distress may increase rates to compensate for financial shortfalls unrelated to either the cost of production or the demand for electricity. Utilities may be dependent on, and sensitive to price increases for, a particular type of fuel, such as coal, oil or natural gas. In addition, the price of these fuels and the electricity generated from them could increase as a result of proposed legislative measures related to climate change or efforts to regulate carbon emissions. In any of these cases, increases in the cost of power at any of our data centers could put those locations at a competitive disadvantage relative to data centers served by utilities that can provide less expensive power. These pricing risks are particularly acute with respect to our customer leases that are structured on a full-service gross basis, where the customer pays a fixed amount for both colocation rental and power. Our business, financial condition and results of operations could be adversely affected in the event of an increase in utility rates under these leases, which, as of September 30, 2012, accounted for approximately 39% of our leased NRSF, because we may be limited in our ability to pass on such costs to these customers.

We depend on third parties to provide network connectivity to the customers in our data centers, and any delays or disruptions in connectivity may adversely affect our business, financial condition and results of operations.

Our customers require connectivity to the fiber networks of multiple third-party telecommunications carriers. In order for us to attract and retain customers, our data centers need to provide sufficient access for customers to connect to those carriers. While we provide space and facilities in our data centers for carriers to locate their equipment and connect customers to their networks, any carrier may elect not to offer its services within our data centers or may elect to discontinue its service. Furthermore, carriers may periodically experience

business difficulties which could affect their ability to provide telecommunications services, or the service provided by a carrier may be inadequate or of poor quality. If carriers were to terminate connectivity within our data centers or if connectivity were to be degraded or interrupted, it could put that data center at a competitive disadvantage versus a competitor’s data center that does provide adequate connectivity. A material loss of adequate third-party connectivity could have an adverse effect on the businesses of our customers and, in turn, our own results of operations and cash flow.

Furthermore, each new data center that we develop requires significant amounts of capital to be expended by third-party telecommunications carriers for the construction and operation of a sophisticated redundant fiber network. The construction required to connect multiple carrier facilities to our data centers is complex and involves factors outside of our control, including regulatory requirements, the availability of construction resources and the sufficiency of such third-party telecommunications carriers’ financial resources to fund the construction. If the establishment of highly diverse network connectivity to our data centers does not occur, is materially delayed, is discontinued or is subject to failure, our results of operations and cash flow may be adversely affected. Any hardware or fiber failures on this network may result in significant loss of connectivity to our data centers, which could negatively affect our ability to attract new customers or retain existing customers.

The loss of access to key third-party technical service providers and suppliers could adversely affect our current and any future development projects.

Our success depends, to a significant degree, on having timely access to certain key third-party technical personnel who are in limited supply and great demand, such as engineering firms and construction contractors capable of developing our properties, and to key suppliers of electrical and mechanical equipment that complement the design of our data center facilities. For any future development projects, we will continue to rely on these personnel and suppliers to develop data centers. Competition for such technical expertise is intense, and there are a limited number of electrical and mechanical equipment suppliers that design and produce the equipment that we require. We may not always have or retain access to such key service providers and equipment suppliers, which could adversely affect our current and any future development projects.

The long sales cycle for data center services may adversely affect our business, financial condition and results of operations.

A customer’s decision to lease space in one of our data centers and to purchase additional services typically involves a significant commitment of resources, significant contract negotiations regarding the service level commitments, and significant due diligence on the part of the customer regarding the adequacy of our facilities, including the adequacy of carrier connections. As a result, the sale of data center space has a long sales cycle. Furthermore, we may expend significant time and resources in pursuing a particular sale or customer that may not result in revenue. Our inability to adequately manage the risks associated with the data center sales cycle may adversely affect our business, financial condition and results of operations.

Our international activities are subject to special risks different from those faced by us in the United States, and we may not be able to effectively manage our international business.

Our operations are primarily based in the United States with a more limited presence in the United Kingdom and Southeast Asia. Expanding our international operations involves risks not generally associated with investments in the United States, including:

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our limited knowledge of and relationships with sellers, customers, contractors, suppliers or other parties in these markets;

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complexity and costs associated with staffing and managing international development and operations;

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difficulty in hiring qualified management, sales and construction personnel and service providers in a timely fashion;

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problems securing and maintaining the necessary physical and telecommunications infrastructure;

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multiple, conflicting and changing legal, regulatory, entitlement and permitting, and tax and treaty environments with which we have limited familiarity;

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exposure to increased taxation, confiscation or expropriation;

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fluctuations in foreign currency exchange rates, currency transfer restrictions and limitations on our ability to distribute cash earned in foreign jurisdictions to the United States;

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longer payment cycles and problems collecting accounts receivable;

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laws and regulations on content distributed over the Internet that are more restrictive than those in the United States;

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difficulty in enforcing agreements in non-U.S. jurisdictions, including those entered into in connection with our acquisitions or in the event of a default by one or more of our customers, suppliers or contractors; and

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political and economic instability, including sovereign credit risk, in certain geographic regions.

Our inability to overcome these risks could adversely affect our foreign operations and growth prospects and could harm our business, financial condition and results of operations.

We may be unable to identify and complete acquisitions and successfully operate acquired properties.

We continually evaluate the market for available properties and may acquire data centers or properties suited for data center development when opportunities exist. Our ability to acquire properties on favorable terms and successfully develop and operate them involves significant risks, including:

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we may be unable to acquire a desired property because of competition from other data center companies or real estate investors with more capital;

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even if we are able to acquire a desired property, competition from other potential acquirers may significantly increase the purchase price of such property;

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we may be unable to realize the intended benefits from acquisitions or achieve anticipated operating or financial results;

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we may be unable to finance the acquisition on favorable terms or at all;

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we may underestimate the costs to make necessary improvements to acquired properties;

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we may be unable to quickly and efficiently integrate new acquisitions into our existing operations resulting in disruptions to our operations or the diversion of our management’s attention;

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acquired properties may be subject to reassessment, which may result in higher than expected tax payments;

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we may not be able to access sufficient power on favorable terms or at all; and

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market conditions may result in higher than expected vacancy rates and lower than expected rental rates.

If we are unable to successfully acquire, develop and operate data center properties, our ability to grow our business, compete and meet market expectations will be significantly impaired, which would adversely affect the price of our common stock.

Our customers may choose to develop new data centers or expand their own existing data centers, which could result in the loss of one or more key customers or reduce demand for our newly developed data centers.

In the future, our customers may choose to develop new data centers or expand or consolidate into their existing data centers that we do not own. In the event that any of our key customers were to do so, it could result in a loss of business to us or put pressure on our pricing. If we lose a customer, we cannot assure you that we would be able to replace that customer at a competitive rate or at all, which could adversely affect our business, financial condition and results of operations.

A decrease in the demand for data center space could adversely affect our business, financial condition and results of operations.

Our portfolio of properties consists primarily of data center space. A decrease in the demand for data center space would have a greater adverse effect on our business, financial condition and results of operations than if we owned a portfolio with a more diversified customer base or less specialized use. Adverse developments in the outsourced data center space industry could lead to reduced corporate IT spending or reduced demand for outsourced data center space. Changes in industry practice or in technology, such as server virtualization technology, more efficient or miniaturization of computing or networking devices, or devices that require higher power densities than today’s devices, could also reduce demand for the physical data center space we provide or make the customer improvements in our facilities obsolete or in need of significant upgrades to remain viable.

We may have difficulty managing our growth.

We have significantly and rapidly expanded the size of our company. For example, we increased our footprint by 32% from approximately 1,240,000 NRSF at the beginning of 2011 to approximately 1,630,000 NRSF by September 30, 2012. Our growth may significantly strain our management, operational and financial resources and systems. An inability to manage our growth effectively or the increased strain on our management, our resources and systems could materially adversely affect our business, financial condition and results of operations.

To fund our growth strategy and refinance our indebtedness, we depend on external sources of capital, which may not be available to us on commercially reasonable terms or at all.

In order to maintain our qualification as a REIT, we are required under the Code, among other things, to distribute at least 90% of our REIT taxable income annually, determined without regard to the dividends paid deduction and excluding any net capital gains. Even if we maintain our qualification as a REIT, we will be subject to U.S. federal income tax at regular corporate rates to the extent that we distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, as well as U.S. federal income tax at regular corporate rates for income recognized by our TRSs. Because of these distribution requirements, we will likely not be able to fund future capital needs, including any necessary acquisition financing, from operating cash flow. Consequently, we intend to rely on third-party capital markets sources for debt or equity financing to fund our growth strategy. In addition, we may need third-party capital markets sources to refinance our indebtedness at maturity. Continued or increased turbulence in the U.S., European and other international financial markets and economies may adversely affect our ability to replace or renew maturing liabilities on a timely basis, access the capital markets to meet liquidity and capital expenditure requirements and may result in adverse effects on our business, financial condition and results of operations. As such, we may not be able to obtain the financing on favorable terms or at all. Our access to third-party sources of capital also depends, in part, on:

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the market’s perception of our growth potential;

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our then-current debt levels;

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our historical and expected future earnings, cash flow and cash distributions; and

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the market price per share of our common stock.

In addition, our ability to access additional capital may be limited by the terms of the indebtedness we incurred pursuant to the related financing transactions, which may restrict our incurrence of additional debt. If we cannot obtain capital when needed, we may not be able to acquire or develop properties when strategic opportunities arise or refinance our debt at maturity, which could adversely affect our business, financial condition and results of operations.

Our level of indebtedness and debt service obligations could have adverse effects on our business.

As of September 30, 2012, after giving pro forma effect to the formation transactions and the related financing transactions, we would have had a total combined indebtedness, including capital lease obligations, of approximately $563 million and other financing arrangements of $49 million. We also currently have the ability to borrow up to an additional $225 million under our new revolving credit facility, subject to satisfying certain financial tests. Upon completion of this offering, there will be no limits on the amount of indebtedness we may incur other than limits contained in the senior notes indenture covenants, the new revolving credit facility, future agreements that we may enter into or as may be set forth in any policy limiting the amount of indebtedness we may incur adopted by our board of directors. A substantial level of indebtedness could have adverse consequences for our business, financial condition and results of operations because it could, among other things:

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require us to dedicate a substantial portion of our cash flow from operations to make principal and interest payments on our indebtedness, thereby reducing our cash flow available to fund working capital, capital expenditures and other general corporate purposes, including to make distributions on our common stock as currently contemplated or necessary to maintain our qualification as a REIT;

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require us to maintain certain debt and coverage and other financial ratios at specified levels, thereby reducing our financial flexibility;

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make it more difficult for us to satisfy our financial obligations, including borrowings under our new revolving credit facility;

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increase our vulnerability to general adverse economic and industry conditions;

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expose us to increases in interest rates for our variable rate debt;

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limit our ability to borrow additional funds on favorable terms or at all to expand our business or ease liquidity constraints;

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limit our ability to refinance all or a portion of our indebtedness on or before maturity on the same or more favorable terms or at all;

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limit our flexibility in planning for, or reacting to, changes in our business and our industry;

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place us at a competitive disadvantage relative to competitors that have less indebtedness;

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increase our risk of property losses as the result of foreclosure actions initiated by lenders in the event we should incur mortgage or other secured debt obligations; and

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require us to dispose of one or more of our properties at disadvantageous prices or raise equity that may dilute the value of our common stock in order to service our indebtedness or to raise funds to pay such indebtedness at maturity.

The agreements governing our indebtedness place restrictions on us and our subsidiaries, reducing operational flexibility and creating default risks.

The agreements governing our indebtedness contain covenants that place restrictions on us and our subsidiaries. These covenants restrict, among other things, our and our subsidiaries’ ability to:

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merge, consolidate or transfer all or substantially all of our or our subsidiaries’ assets;

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incur additional debt or issue preferred stock;

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make certain investments or acquisitions;

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create liens on our or our subsidiaries’ assets;

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sell assets;

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make capital expenditures;

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make distributions on or repurchase our stock;

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enter into transactions with affiliates;

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issue or sell stock of our subsidiaries; and

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change the nature of our business.

These covenants could impair our ability to grow our business, take advantage of attractive business opportunities or successfully compete. In addition, our new revolving credit facility requires us to maintain specified financial ratios and satisfy financial condition tests. The indenture governing our senior notes issuance also requires our operating partnership and its subsidiaries to maintain total unencumbered assets of at least 150% of their unsecured debt on a consolidated basis, provided that for the purposes of such calculation our new revolving credit facility shall be treated as unsecured indebtedness. Our ability to comply with these ratios or tests may be affected by events beyond our control, including prevailing economic, financial and industry conditions. A breach of any of these covenants or covenants under any other agreements governing our indebtedness could result in an event of default. Cross-default provisions in our debt agreements could cause an event of default under one debt agreement to trigger an event of default under our other debt agreements. Upon the occurrence of an event of default under any of our debt agreements, the lenders could elect to declare all outstanding debt under such agreements to be immediately due and payable. If we were unable to repay or refinance the accelerated debt, the lenders could proceed against any assets pledged to secure that debt, including foreclosing on or requiring the sale of our data centers, and our assets may not be sufficient to repay such debt in full. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Material Provisions of Consolidated Indebtedness to be Outstanding After this Offering” for more detail on the covenants described above.

We may become subject to litigation or threatened litigation which may divert management time and attention, require us to pay damages and expenses or restrict the operation of our business.

We may become subject to disputes with commercial parties with whom we maintain relationships or other parties with whom we do business, including as a result of any breach in our security systems or downtime in our critical electrical and cooling systems. Any such dispute could result in litigation between us and the other parties. Whether or not any dispute actually proceeds to litigation, we may be required to devote significant management time and attention to its resolution (through litigation, settlement or otherwise), which would detract from our management’s ability to focus on our business. Any such resolution could involve the payment of damages or expenses by us, which may be significant. In addition, any such resolution could involve our agreement with terms that restrict the operation of our business.

We could incur significant costs related to environmental matters.

We are subject to laws and regulations relating to the protection of the environment, including those governing the management and disposal of hazardous materials, the cleanup of contaminated sites and health and

safety matters. We could incur significant costs, including fines, penalties and other sanctions, cleanup costs and third-party claims for property damages or personal injuries, as a result of violations of or liabilities under environmental laws and regulations. Some environmental laws impose liability on current owners or operators of property regardless of fault or the lawfulness of past disposal activities. For example, many of our sites contain above ground fuel storage tanks and, in some cases, currently contain or formerly contained underground fuel storage tanks, for back-up generator use. Some of our sites also have a history of previous commercial operations. We also may acquire or develop sites in the future with unknown environmental conditions from historical operations. Although we are not aware of any sites at which we currently have material remedial obligations, the imposition of remedial obligations as a result of spills or the discovery of contaminants in the future could result in significant additional costs. We also could incur significant costs complying with current environmental laws or regulations or those that are promulgated in the future.

We may be adversely affected by regulations related to climate change.

If we, or other companies with which we do business, become subject to existing or future laws and regulations related to climate change, our business could be impacted adversely. For example, in the normal course of business, we enter into agreements with providers of electric power for our data centers, and the costs of electric power comprise a significant component of our operating expenses. Changes in regulations that affect electric power providers, such as regulations related to the control of greenhouse gas emissions or other climate change related matters, could adversely affect the costs of electric power and increase our operating costs and may adversely affect our business, financial condition and results of operations or those of our customers.

We may be subject to unknown or contingent liabilities related to properties or businesses that we acquire for which we may have limited or no recourse against the sellers.

Assets and entities that we have acquired or may acquire in the future, including the properties contributed by CBI, may be subject to unknown or contingent liabilities for which we may have limited or no recourse against the sellers. Unknown or contingent liabilities might include liabilities for clean-up or remediation of environmental conditions, claims of customers, vendors or other persons dealing with the acquired entities, tax liabilities and other liabilities whether incurred in the ordinary course of business or otherwise. In the future we may enter into transactions with limited representations and warranties or with representations and warranties that do not survive the closing of the transactions, in which event we would have no or limited recourse against the sellers of such properties. While we usually require the sellers to indemnify us with respect to breaches of representations and warranties that survive, such indemnification (including the indemnification by CBI) is often limited and subject to various materiality thresholds, a significant deductible or an aggregate cap on losses.

As a result, there is no guarantee that we will recover any amounts with respect to losses due to breaches by the sellers of their representations and warranties. In addition, the total amount of costs and expenses that we may incur with respect to liabilities associated with acquired properties and entities may exceed our expectations, which may adversely affect our business, financial condition and results of operations. Finally, indemnification agreements between us and the sellers typically provide that the sellers will retain certain specified liabilities relating to the assets and entities acquired by us. While the sellers are generally contractually obligated to pay all losses and other expenses relating to such retained liabilities, there can be no guarantee that such arrangements will not require us to incur losses or other expenses as well.

We have no operating history as a REIT or an independent public company, and our inexperience may impede our ability to successfully manage our business or implement effective internal controls.

We have no operating history as a REIT. Similarly, while we currently operate as a subsidiary of a public company, and key members of our management team have served in leadership roles of public companies, we have no operating history as an independent public company. We cannot assure you that our past experience will be sufficient to successfully operate our company as a REIT or an independent public company. Upon

completion of this offering, even though we will be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and therefore may take advantage of various exemptions to public reporting requirements (see “—We are an ‘emerging growth company,’ and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors”), we will still be required to implement substantial control systems and procedures in order to maintain our qualification as a REIT, satisfy our periodic and current reporting requirements under applicable Securities and Exchange Commission (“SEC”) regulations and comply with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) and NASDAQ Global Select Market listing standards. As a result, we will incur significant legal, accounting and other expenses that we have not previously incurred, particularly after we are no longer an “emerging growth company,” and our management and other personnel will need to devote a substantial amount of time to comply with these rules and regulations and establish the corporate infrastructure and controls demanded of a publicly-traded REIT. These costs and time commitments could be substantially more than we currently expect. Therefore, our historical financial statements may not be indicative of our future costs and performance as a stand-alone company. If our finance and accounting organization is unable for any reason to respond adequately to the increased demands that will result from being an independent public company, the quality and timeliness of our financial reporting may suffer, and we could experience significant deficiencies or material weaknesses in our disclosure controls and procedures or our internal control over financial reporting.

We have identified a significant deficiency, as defined in the U.S. Public Company Accounting Oversight Board Standard AU Section 325, related to our internal control over financial reporting. This significant deficiency relates to IT controls over our change management process and logical access to our general ledger system. Following the identification of the significant deficiency, we have taken measures which we believe will remediate the significant deficiency. However, the implementation of these measures may not fully address the significant deficiency, and we cannot yet conclude that it has been fully remedied.

An inability to establish effective disclosure controls and procedures and internal control over financial reporting or remediate existing deficiencies could cause us to fail to meet our reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or result in material weaknesses, material misstatements or omissions in our Exchange Act reports, any of which could cause investors to lose confidence in our company and could adversely affect our business, financial condition and results of operations and the trading price of our common stock.

We have not obtained third-party appraisals to establish the amount of operating partnership units issued in exchange for the properties contributed to our operating partnership in connection with the formation transactions, and the operating partnership units issued by our operating partnership in exchange for these properties may exceed their fair market values.

The initial public offering price of our common stock will be determined in consultation with the underwriters and based on a number of factors, including the Predecessor’s historical results of operations, management experience and expertise, projected net income, projected FFO, projected cash available for distribution, anticipated dividend yield and growth prospects, the current market valuations, financial performance and dividend yields of publicly traded companies considered to be comparable to us and the current state of the data center industry and the economy as a whole, as well as market demand for this offering. As a result, the initial public offering price may not necessarily bear any relationship to our U.S. GAAP book value, the fair market value of our assets or the appraised value of our properties. Consequently, the operating partnership units received by CBI, if valued on an as-exchanged basis for shares of our common stock at the per share price set forth on the cover of this prospectus, may exceed the fair market value or the appraised value of the properties contributed for such operating partnership units, and the aggregate value of our common stock at the initial offering price plus the aggregate amount of our debt may exceed the aggregate appraised values of our properties.

We face significant competition and may be unable to lease vacant space, renew existing leases or re-lease space as leases expire, which may adversely affect our business, financial condition and results of operations.

We compete with numerous developers, owners and operators of technology-related real estate and data centers, many of which own properties similar to ours in the same markets, as well as various other public and privately held companies that may provide data center colocation as part of a more expansive managed services offering, and local developers. In addition, we may face competition from new entrants into the data center market. Some of our competitors may have significant advantages over us, including greater name recognition, longer operating histories, lower operating costs, pre-existing relationships with current or potential customers, greater financial, marketing and other resources, and access to less expensive power. These advantages could allow our competitors to respond more quickly to strategic opportunities or changes in our industries or markets. If our competitors offer data center space that our existing or potential customers perceive to be superior to ours based on numerous factors, including power, security considerations, location or network connectivity, or if they offer rental rates below our or current market rates, we may lose existing or potential customers, incur costs to improve our properties or be forced to reduce our rental rates.

The loss of any of our key personnel, including our executive officers or key sales associates, could adversely affect our business, financial condition and results of operations.

Our success will continue to depend to a significant extent on our executive officers and key sales associates. Each of our executive officers has a national or regional industry reputation that attracts business and investment opportunities and assists us in negotiations with lenders, existing and potential customers and industry personnel. The loss of key sales associates could hinder our ability to continue to benefit from existing and potential customers. We cannot provide any assurance that we will be able to retain our current executive officers or key sales associates. The loss of any of these individuals could adversely affect our business, financial condition and results of operations.

Our data center infrastructure may become obsolete, and we may not be able to upgrade our power and cooling systems cost-effectively, or at all.

The markets for the data centers we own and operate, as well as the industries in which our customers operate, are characterized by rapidly changing technology, evolving industry standards, frequent new service introductions, shifting distribution channels and changing customer demands. Our data center infrastructure may become obsolete due to the development of new systems to deliver power to or eliminate heat from the servers that we house. Additionally, our data center infrastructure could become obsolete as a result of the development of new server technology that does not require the levels of critical load and heat removal that our facilities are designed to provide and could be run less expensively on a different platform. In addition, our power and cooling systems are difficult and expensive to upgrade. Accordingly, we may not be able to efficiently upgrade or change these systems to meet new demands without incurring significant costs that we may not be able to pass on to our customers. The obsolescence of our power and cooling systems could have a material negative impact on our business, financial condition and results of operations.

Declining real estate valuations and impairment charges could adversely affect our earnings and financial condition.

We review each of our properties for indicators that its carrying amount may not be recoverable. Examples of such indicators may include a significant decrease in market price, a significant adverse change in the extent or manner the property is being used or in its physical condition, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development, or a history of operating or cash flow losses. When such impairment indicators exist, we review an estimate of the future undiscounted net cash flows (excluding interest charges) expected to result from the real estate investment’s use and eventual disposition and compare to the carrying value of the property. We consider factors such as future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If our future undiscounted net

cash flow evaluation indicates that we are unable to recover the carrying value of a real estate investment, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property. These losses have a direct impact on our net income because recording an impairment loss results in an immediate negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods. A worsening real estate market may cause us to re-evaluate the assumptions used in our impairment analysis. Impairment charges could adversely affect our business, financial condition and results of operations.

We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company” as defined in the JOBS Act. We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenue equals or exceeds $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of this offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. We may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be adversely affected and more volatile.

Risks Related to the Real Estate Industry

Our performance and value are subject to risks associated with real estate assets and with the real estate industry.

Our ability to make expected distributions to our stockholders depends on our ability to generate revenues in excess of expenses, scheduled principal payments on debt and capital expenditure requirements. Events and conditions generally applicable to owners and operators of real property that are beyond our control may decrease cash available for distribution to you and the value of our properties. These events include:

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local oversupply, increased competition or reduction in demand for technology-related space;

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inability to collect rent from customers;

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vacancies or our inability to rent space on favorable terms;

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inability to finance property development and acquisitions on favorable terms;

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increased operating costs to the extent not paid for by our customers;

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costs of complying with changes in governmental regulations;

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the relative illiquidity of real estate investments, especially the specialized real estate properties that we hold and seek to acquire and develop; and

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changing submarket demographics.

Illiquidity of real estate investments, particularly our data centers, could significantly impede our ability to respond to adverse changes in the performance of our properties, which could harm our financial condition.

Because real estate investments are relatively illiquid, our ability to promptly sell one or more properties in our portfolio in response to adverse changes in the real estate market or in the performance of such properties may be limited, thus harming our financial condition. The real estate market is affected by many factors that are beyond our control, including:

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adverse changes in national and local economic and market conditions;

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changes in interest rates and in the availability, cost and terms of debt financing;

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changes in governmental laws and regulations, fiscal policies and zoning ordinances and costs of compliance therewith;

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the ongoing cost of capital improvements that are not passed on to our customers, particularly in older structures;

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changes in operating expenses; and

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civil unrest, acts of war, terrorism and natural disasters, including fires, earthquakes, tropical storms, hurricanes, and floods, which may result in uninsured and underinsured losses.

The risks associated with the illiquidity of real estate investments are even greater for our data center properties. Our data centers are highly specialized real estate assets containing extensive electrical and mechanical systems that are uniquely designed to house and maintain our customers’ equipment, and, as such, have little, if any, traditional office space. As a result, most of our data centers are not suited for use by customers as anything other than as data centers and major renovations and expenditures would be required in order for us to re-lease data center space for more traditional commercial or industrial uses, or for us to sell a property to a buyer for use other than as a data center.

Risks Related to Our Organizational Structure

Our rights and the rights of our stockholders to take action against our directors and officers are limited.

Maryland law provides that a director has no liability in the capacity as a director if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in the company’s best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. As permitted by the Maryland General Corporation Law (“MGCL”), our charter limits the liability of our directors and officers to the company and our stockholders for money damages, except for liability resulting from:

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actual receipt of an improper benefit or profit in money, property or services; or

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a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was material to the cause of action adjudicated.

In addition, our charter authorizes us to obligate the company, and our bylaws require us, to indemnify our directors and officers for actions taken by them in those capacities and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding to the maximum extent permitted by Maryland law, and effective upon completion of this offering, we will enter into indemnification agreements with our directors and executive officers. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist under common law. Accordingly, in the event that actions taken by any of our directors or officers are immune or exculpated from, or indemnified against, liability but which impede our performance, our stockholders’ ability to recover damages from that director or officer will be limited.

Conflicts of interest exist or could arise in the future with our operating partnership or its partners.

Conflicts of interest exist or could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our operating partnership or any partner thereof, on the other. Our directors and officers have duties to our company under applicable Maryland law in connection with their direction of the management of our company. At the same time, we, as trustee, have duties to CyrusOne GP which, in turn, as general partner of our operating partnership, has duties to our operating partnership and to the limited partners under Maryland law in connection with the management of our operating partnership. Under Maryland law, the general partner of a Maryland limited partnership has fiduciary duties of care and loyalty, and an obligation of good faith, to the partnership and its partners. While these duties and obligations cannot be eliminated entirely in the limited partnership agreement, Maryland law permits the parties to a limited partnership agreement to specify certain types or categories of activities that do not violate the general partner’s duty of loyalty and to modify the duty of care and obligation of good faith, so long as such modifications are not unreasonable. These duties as general partner of our operating partnership to the partnership and its partners may come into conflict with the interests of our company. Under the partnership agreement of our operating partnership, the limited partners of our operating partnership will expressly agree that the general partner of our operating partnership is acting for the benefit of the operating partnership, the limited partners of our operating partnership and our stockholders, collectively. The general partner is under no obligation to give priority to the separate interests of the limited partners in deciding whether to cause our operating partnership to take or decline to take any actions. If there is a conflict between the interests of us or our stockholders, on the one hand, and the interests of the limited partners of our operating partnership, on the other, the partnership agreement of our operating partnership provides that any action or failure to act by the general partner that gives priority to the separate interests of us or our stockholders that does not result in a violation of the contractual rights of the limited partners of our operating partnership under the partnership agreement will not violate the duties that the general partner owes to our operating partnership and its partners.

Additionally, the partnership agreement of our operating partnership expressly limits our liability by providing that we and our directors, officers, agents and employees, will not be liable or accountable to our operating partnership or its partners for money damages. In addition, our operating partnership is required to indemnify us, our directors, officers and employees, the general partner and its trustees, officers and employees, employees of our operating partnership and any other persons whom the general partner may designate from and against any and all claims arising from operations of our operating partnership in which any indemnitee may be involved, or is threatened to be involved, as a party or otherwise unless it is established that the act or omission of the indemnitee constituted fraud, intentional harm or gross negligence on the part of the indemnitee, the claim is brought by the indemnitee (other than to enforce the indemnitee’s rights to indemnification or advance of expenses) or the indemnitee is found to be liable to our operating partnership, and then only with respect to each such claim.

No reported decision of a Maryland appellate court has interpreted provisions that are similar to the provisions of the partnership agreement of our operating partnership that modify the fiduciary duties of the general partner of our operating partnership, and we have not obtained an opinion of counsel regarding the enforceability of the provisions of the partnership agreement that purport to waive or modify the fiduciary duties and obligations of the general partner of our operating partnership.

Upon completion of this offering, CBI will own 9.8% of our outstanding shares of common stock and a majority of our operating partnership units and will have the right initially to nominate three directors. CBI’s interests may differ from or conflict with the interests of our other stockholders.

Upon completion of this offering, CBI will own 9.8% of our outstanding shares of common stock and % of our outstanding operating partnership units, which, if exchanged for our common stock, would represent an additional approximately % interest in our common stock. In addition, the operating partnership agreement of our operating partnership will initially grant CBI the right to nominate (i) if there is an even number of directors, 50% of the number of directors minus one; or (ii) if there is an odd number of directors, 50% of the number of directors minus 0.5. If, in connection with a redemption request, a significant

portion of CBI’s operating partnership units are exchanged for shares of our common stock, CBI could have the ability to elect a majority of our directors. See “Description of the Partnership Agreement of CyrusOne LP.”

As a result, CBI will have the ability to exercise significant influence over our company, including with respect to decisions relating to our capital structure, issuing additional shares of our common stock or other equity securities, making distributions, incurring additional debt, making acquisitions, selling properties or other assets, merging with other companies and undertaking other extraordinary transactions. In any of these matters, the interests of CBI may differ from or conflict with the interests of our other stockholders.

Our Chairman is also the President and Chief Executive Officer and a director of CBI. In addition, some of our directors and executive officers own common stock of CBI, options and other instruments, the value of which is related to the value of common stock of CBI, which could create, or appear to create, conflicts of interest that could result in our not acting on opportunities on which we would otherwise act.

Our Chairman is the President and Chief Executive Officer and a director of CBI. In addition, some of our directors and executive officers own a substantial amount of CBI common stock, options and other instruments, the value of which is related to the value of common stock of CBI. The direct and indirect interests of our directors and executive officers in common stock of CBI, and us, could create, or appear to create, conflicts of interest with respect to decisions involving both us and CBI that could have different implications for CBI than they do for us. These decisions could, for example, relate to:

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disagreement over corporate opportunities;

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competition between CBI and us;

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management stock ownership;

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employee retention or recruiting;

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our distribution policy; and

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the services and arrangements from which we benefit as a result of our relationship with CBI.

Potential conflicts of interest could also arise if we enter into any new commercial arrangements with CBI in the future, or if CBI decides to compete with us in any of our product categories. Our directors and executive officers who have interests in both CBI and us may also face conflicts of interest with regard to the allocation of their time between CBI and us. See “Certain Relationships and Related Transactions—Other Benefits to Related Parties and Related Party Transactions.”

As a result of any such conflicts of interest, we may be precluded from certain opportunities on which we would otherwise act, including growth opportunities, which may negatively affect our business, financial condition and results of operations.

Our charter and bylaws and the partnership agreement of our operating partnership contain provisions that may delay, defer or prevent an acquisition of our common stock or a change in control.

Our charter and bylaws contain a number of provisions, the exercise or existence of which could delay, defer or prevent a transaction or a change in control that might involve a premium price for our stockholders or otherwise be in their best interests, including the following:

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Our Charter Contains Restrictions on the Ownership and Transfer of Our Stock . In order for us to qualify as a REIT, no more than 50% of the value of outstanding shares of our stock may be owned, beneficially or constructively, by five or fewer individuals at any time during the last half of each taxable year other than the first year for which we elect to be taxed as a REIT. Subject to certain exceptions, our charter prohibits any stockholder from owning beneficially or constructively more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our

common stock, or 9.8% in value of the aggregate of the outstanding shares of all classes or series of our stock. We refer to these restrictions collectively as the “ownership limits.” The constructive ownership rules under the Code are complex and may cause the outstanding stock owned by a group of related individuals or entities to be deemed to be constructively owned by one individual or entity. As a result, the acquisition of less than 9.8% of our outstanding common stock or the outstanding shares of all classes or series of our stock by an individual or entity could cause that individual or entity or another individual or entity to own constructively in excess of the relevant ownership limits. Our charter also prohibits any person from owning shares of our stock that would result in our being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT. Any attempt to own or transfer shares of our common stock or of any of our other capital stock in violation of these restrictions may result in the shares being automatically transferred to a charitable trust or may be void. These ownership limits may prevent a third-party from acquiring control of us if our board of directors does not grant an exemption from the ownership limits, even if our stockholders believe the change in control is in their best interests. Our board of directors has granted CBI exemptions from the ownership limits applicable to other holders of our common stock, subject to certain initial and ongoing conditions designed to protect our status as a REIT, including the receipt of an IRS private letter ruling or an opinion of counsel from a nationally recognized law firm that the exercise of any such exemption should not cause any rent payable by CBI to jeopardize our REIT status.

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Our Board of Directors Has the Power to Cause Us to Issue Additional Shares of Our Stock without Stockholder Approval. Our charter authorizes us to issue additional authorized but unissued shares of common or preferred stock. In addition, our board of directors may, without stockholder approval, amend our charter to increase the aggregate number of our shares of stock or the number of shares of stock of any class or series that we have authority to issue and classify or reclassify any unissued shares of common or preferred stock and set the preferences, rights and other terms of the classified or reclassified shares. As a result, our board of directors may establish a series of shares of common or preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for our shares of common stock or otherwise be in the best interests of our stockholders. See “Description of Securities—Power to Increase or Decrease Authorized Shares of Stock, Reclassify Unissued Shares of Stock and Issue Additional Shares of Common and Preferred Stock.”

Provisions in the partnership agreement of our operating partnership also may delay, or make more difficult, a transaction or a change in control that might involve a premium price for our stockholders or otherwise be in their best interests. These provisions include, among others:

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redemption rights of CBI;

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rights of certain holders of operating partnership units of our operating partnership, including CBI and its controlled entities, to approve certain change of control transactions involving us, which rights apply at any time that CBI and its controlled entities own at least 20% of the outstanding shares of our common stock (assuming all outstanding operating partnership units, excluding operating partnership units held by us or the general partner, have been exchanged for shares of our common stock);

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transfer restrictions on operating partnership units; and

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the right of CyrusOne GP, as general partner, in some cases, to amend the partnership agreement of our operating partnership and to cause the operating partnership to issue partnership interests with terms that could delay, defer or prevent a merger or other change of control of us or our operating partnership without the consent of the limited partners.

See “Description of the Partnership Agreement of CyrusOne LP.”

Certain provisions of Maryland law may limit the ability of a third-party to acquire control of us.

Certain provisions of the MGCL may have the effect of inhibiting a third-party from acquiring us or of impeding a change of control under circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

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“business combination” provisions that, subject to limitations, prohibit certain business combinations between an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding shares of voting stock or an affiliate or associate of the corporation who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding stock of the corporation) or an affiliate of any interested stockholder and us for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes two super-majority stockholder voting requirements on these combinations; and

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“control share” provisions that provide that holders of “control shares” of our company (defined as voting shares of stock that, if aggregated with all other shares of stock owned or controlled by the acquirer, would entitle the acquirer to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of issued and outstanding “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all of the votes entitled to be cast on the matter, excluding all interested shares.

Pursuant to the Maryland Business Combination Act, our board of directors has by resolution exempted from the provisions of the Maryland Business Combination Act business combinations (i) between CBI or its affiliates and us and (ii) between any other person and us, provided that such business combination is first approved by our board of directors (including a majority of our directors who are not affiliates or associates of such person). Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions by any person of shares of our stock. There can be no assurance that these exemptions or resolutions will not be amended or eliminated at any time in the future.

Additionally, Title 3, Subtitle 8 of the MGCL permits our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain takeover defenses, such as a classified board, some of which we do not have. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws—Business Combinations,” “—Control Share Acquisitions” and “—Subtitle 8.”

We have assumed liabilities in connection with the formation transactions, including unknown liabilities.

As part of the formation transactions, we have assumed existing liabilities of the data center business of CBI, including, but not limited to, liabilities in connection with our properties, some of which may be unknown or unquantifiable at the time this offering is consummated. Unknown liabilities might include liabilities for cleanup or remediation of undisclosed environmental conditions claims of tenants, vendors or other persons dealing with the entities prior to this offering, tax liabilities, and accrued but unpaid liabilities whether incurred in the ordinary course of business or otherwise. In connection with the formation transactions, the Contributors have made certain limited representations and warranties to us regarding potential material adverse impacts on the properties and entities acquired by us in the formation transactions and agreed to indemnify us with respect to claims for breaches of those representations and warranties brought by us within one year of the completion of the formation transactions. However, such indemnification generally is limited to 10 percent of the consideration paid to CBI and its affiliates in the formation transactions and, with respect to issues at any particular property, 10 percent of the consideration paid to CBI and its affiliates with respect to such property, and is subject to a one percent deductible. Accordingly, such indemnification may not be sufficient to cover all liabilities assumed, and we are not entitled to indemnification from any other sources in connection with the formation transactions. In addition, because many liabilities, including tax liabilities, may not be identified within such period, we may have no recourse against the contributors for these liabilities. See “Certain Relationships and Related Transactions—Contribution Agreements.”

Risks Related to Status as a REIT

We intend to operate in a manner that will allow us to qualify as a REIT commencing with our taxable year ending December 31, 2012. We expect to receive an opinion of our special REIT tax counsel, Skadden, Arps, Slate, Meagher & Flom LLP (“Special Tax Counsel”), with respect to our qualification as a REIT in connection with this offering of common stock. Investors should be aware, however, that opinions of counsel are not binding on the IRS or any court. The opinion of Special Tax Counsel will represent only the view of Special Tax Counsel based on its review and analysis of existing law and on certain representations as to factual matters and covenants made by us, including representations relating to the values of our assets and the sources of our income. The opinion will be expressed as of the date issued. Special Tax Counsel will have no obligation to advise us or the holders of our common stock of any subsequent change in the matters stated, represented or assumed or of any subsequent change in applicable law. Furthermore, both the validity of the opinion of Special Tax Counsel and our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis, the results of which will not be monitored by Special Tax Counsel. Our ability to satisfy the asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals.

We have received a private letter ruling from the IRS with respect to certain issues relevant to our qualification as a REIT. In general, the ruling provides, subject to the terms and conditions contained therein, that certain structural components of our properties (e.g., relating to the provision of electricity, heating, ventilation and air conditioning, regulation of humidity, security and fire protection, and telecommunication services) and intangible assets, and certain services that we or CBI may provide, directly or through subsidiaries, to our tenants, will not adversely affect our qualification as a REIT. Although we may generally rely upon the ruling, no assurance can be given that the IRS will not challenge our qualification as a REIT on the basis of other issues or facts outside the scope of the ruling.

If we were to fail to qualify as a REIT in any taxable year, we would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and dividends paid to our stockholders would not be deductible by us in computing our taxable income. Any resulting corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our stockholders, which in turn could have an adverse impact on the value of our common stock. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify as a REIT.

Qualifying as a REIT involves highly technical and complex provisions of the Code.

Qualification as a REIT involves the application of highly technical and complex Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. In addition, our ability to satisfy the requirements to qualify as a REIT may depend in part on the actions of third parties over which we have no control or only limited influence, including in cases where we own an equity interest in an entity that is classified as a partnership for U.S. federal income tax purposes.

Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

The maximum tax rate applicable to income from “qualified dividends” payable to U.S. stockholders that are individuals, trusts and estates is currently 15%. This favorable treatment is currently scheduled to expire,

unless extended or revised by future legislation, at the end of 2012. Dividends payable by REITs, however, generally are not eligible for the reduced rates. Although these rules do not adversely affect the taxation of REITs, the more favorable rates applicable to regular corporate qualified dividends, if extended beyond 2012, could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the stock of REITs, including our common stock.

REIT distribution requirements could adversely affect our ability to execute our business plan.

We generally must distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, in order for us to qualify as a REIT (assuming that certain other requirements are also satisfied) so that U.S. federal corporate income tax does not apply to earnings that we distribute. To the extent that we satisfy this distribution requirement and qualify for taxation as a REIT but distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, we will be subject to U.S. federal corporate income tax on our undistributed net taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. We intend to make distributions to our stockholders to comply with the REIT requirements of the Code.

From time to time, we may generate taxable income greater than our cash flow as a result of differences in timing between the recognition of taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of reserves or required debt or amortization payments. If we do not have other funds available in these situations, we could be required to borrow funds on unfavorable terms, sell assets at disadvantageous prices or distribute amounts that would otherwise be invested in future acquisitions to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity. Thus, compliance with the REIT requirements may hinder our ability to grow, which could adversely affect the value of our common stock.

Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.

Even if we remain qualified for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income and assets, including taxes on any undistributed income and state or local income, property and transfer taxes. See “U.S. Federal Income Tax Considerations—Taxation of CyrusOne Inc.” For example, in order to meet the REIT qualification requirements, we may hold some of our assets or conduct certain of our activities through one or more TRSs or other subsidiary corporations that will be subject to federal, state, and local corporate-level income taxes as regular C corporations. In addition, we may incur a 100% excise tax on transactions with a TRS if they are not conducted on an arm’s length basis. Any of these taxes would decrease cash available for distribution to our stockholders.

Complying with REIT requirements may cause us to liquidate or forgo otherwise attractive opportunities.

To qualify as a REIT, we must ensure that, at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and “real estate assets” (as defined in the Code), including certain mortgage loans and securities. The remainder of our investments (other than government securities, qualified real estate assets and securities issued by a TRS) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our total assets (other than government securities, qualified real estate assets and securities issued by a TRS) can consist of the securities of any one issuer, and no more than 25% of the value of our total assets can be represented by securities of one or more TRSs. See “U.S. Federal Income Tax Considerations—Taxation of CyrusOne Inc.” If we fail to comply with these requirements at the end of any

calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate or forgo otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

In addition to the asset tests set forth above, to qualify as a REIT we must continually satisfy tests concerning, among other things, the sources of our income, the amounts we distribute to our stockholders and the ownership of our stock. We may be unable to pursue investments that would be otherwise advantageous to us in order to satisfy the source-of-income or asset-diversification requirements for qualifying as a REIT. Thus, compliance with the REIT requirements may hinder our ability to make certain attractive investments.

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

The REIT provisions of the Code substantially limit our ability to hedge our assets and liabilities. Any income from a hedging transaction that we enter into to manage risk of interest rate changes with respect to borrowings made or to be made to acquire or carry real estate assets does not constitute “gross income” for purposes of the 75% or 95% gross income tests that apply to REITs, provided that certain identification requirements are met. To the extent that we enter into other types of hedging transactions or fail to properly identify such transaction as a hedge, the income is likely to be treated as non-qualifying income for purposes of both of the gross income tests. See “U.S. Federal Income Tax Considerations—Taxation of CyrusOne Inc.” As a result of these rules, we may be required to limit our use of advantageous hedging techniques or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRS may be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our TRS will generally not provide any tax benefit, except that such losses could theoretically be carried back or forward against past or future taxable income in the TRS.

CBI may in the future acquire a significant percentage of our stock, which may result in a penalty tax if it causes certain rents we receive to be non-qualifying rents for purposes of the REIT requirements .

As described above, upon completion of this offering, CBI will own approximately 9.8% of our common stock and a majority of our operating partnership units. In certain circumstances, CBI may be able to exchange those units for shares of our stock, and any such exchange may result in CBI owning a significant percentage of our stock. See “Description of the Partnership Agreement of CyrusOne LP—Redemption/Exchange Rights.” We have granted CBI a waiver of the ownership restrictions contained in our charter, subject to certain initial and ongoing conditions designed to protect our status as a REIT, including the receipt of an IRS private letter ruling or an opinion of counsel from a nationally recognized law firm that the exercise of any such exemption should not cause any rent payable by CBI to jeopardize our REIT status. Such an opinion of counsel or a private letter ruling will be based on certain facts and assumptions, which, if incorrect, could result in certain rents we receive being treated as non-qualifying income for purposes of the REIT requirements. An opinion of counsel is not binding on the IRS or a court, so there can be no certainty that the IRS will not challenge the conclusions reflected in the opinion or that a court would not sustain such a challenge. See “U.S. Federal Income Tax Considerations—Taxation of CyrusOne Inc.—Income Tests—Rents from Real Property.” Even if we have reasonable cause for a failure to meet the REIT income tests as a result of receiving non-qualifying rental income, we would nonetheless be required to pay a penalty tax in order to retain our REIT status.

Legislative or other actions affecting REITs could have a negative effect on us.

The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury (the “Treasury”). Changes to the tax laws or interpretations thereof, with or without retroactive application, could materially and adversely affect our investors or us. We cannot predict how changes in the tax laws might affect our investors or us. New legislation, Treasury

regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT or the U.S. federal income tax consequences to our investors and us of such qualification.

Risks Related to this Offering

Our expected annual distributions for the 12 months following the consummation of this offering of $ per share are expected to be approximately % of estimated cash available for distribution. See “Distribution Policy.” If cash available for distribution generated by our assets for such 12-month period is less than our estimate or if such cash available for distribution decreases in future periods from expected levels, our inability to make the expected distributions could result in a decrease in the market price of our common stock. Distributions made by us will be authorized and determined by our board of directors in its sole discretion out of funds legally available therefor and will be dependent upon a number of factors, including restrictions under applicable law and the capital requirements of the company. We may not be able to make or sustain distributions in the future. To the extent that we decide to make distributions in excess of our current and accumulated earnings and profits, such distributions would generally be considered a return of capital for U.S. federal income tax purposes to the extent of the holder’s adjusted tax basis in their shares. A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its investment. To the extent that distributions exceed the adjusted tax basis of a holder’s shares, they will be treated as gain from the sale or exchange of such stock. See “U.S. Federal Income Tax Considerations—Taxation of Stockholders—Taxation of Taxable U.S. Stockholders—Distributions.” If we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.

Future offerings of debt, which would be senior to our common stock upon liquidation, and/or preferred equity securities which may be senior to our common stock for purposes of distributions or upon liquidation, may adversely affect the market price of our common stock.

In the future, we may attempt to increase our capital resources by making additional offerings of debt or preferred equity securities, including medium-term notes, trust preferred securities, senior or subordinated notes and preferred stock. Upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive distributions of our available assets prior to the holders of our common stock. Additional equity offerings may dilute the holdings of our existing stockholders or reduce the market price of our common stock, or both. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Our preferred stock, if issued, could have a preference on liquidating distributions or a preference on distribution payments that could limit our ability to make a distribution to the holders of our common stock. Since our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common stock and diluting their stock holdings in us.

If you purchase shares of common stock in this offering, you will experience immediate and significant dilution in the net tangible book value per share of our common stock.

We expect the initial public offering price of our common stock to be substantially higher than the book value per share of our outstanding common stock immediately after this offering. If you purchase our common stock in this offering, you will incur immediate dilution of approximately $ in the book value per share of common stock from the price you pay for our common stock in this offering, based on an initial public offering price of $ per share. See “Dilution” for further discussion of how your ownership interest in us will be immediately diluted.

Increases in market interest rates may cause potential investors to seek higher dividend yields and therefore reduce demand for our common stock and result in a decline in our stock price.

One of the factors that may influence the price of our common stock is the dividend yield on our common stock (the amount of dividends as a percentage of the price of our common stock) relative to market interest rates. An increase in market interest rates, which are currently at low levels relative to historical rates, may lead prospective purchasers of our common stock to expect a higher dividend yield, which we may be unable or choose not to provide. Higher interest rates would likely increase our borrowing costs and potentially decrease the cash available for distribution. Thus, higher market interest rates could cause the market price of our common stock to decline.

The number of shares available for future sale could adversely affect the market price of our common stock.

We cannot predict whether future issuances of shares of our common stock or the availability of shares of our common stock for resale in the open market will decrease the market price per share of our common stock. Sales of a substantial number of shares of our common stock in the public market, either by us or by holders of operating partnership units upon exchange of such operating partnership units for our common stock, or the perception that such sales might occur, could adversely affect the market price of the shares of our common stock. CBI, as a holder of the operating partnership units issued in the formation transactions, will have the right to require us to register with the SEC the resale of the common stock issuable, if we so elect, upon redemption of these operating partnership units. CBI is restricted from exercising its redemption rights prior to the first anniversary of the completion of this offering. In addition, after completion of this offering, we intend to register shares of common stock that we have reserved for issuance under our 2012 Long Term Incentive Plan, and once registered they can generally be freely sold in the public market after issuance, assuming any applicable restrictions and vesting requirements are satisfied. In addition, except as described herein, we, CBI and our directors and executive officers have agreed with the underwriters not to offer, sell, contract to sell, pledge or otherwise dispose of any shares of common stock or securities convertible or exchangeable into our common stock (including operating partnership units) for a period of 180 days, with respect to us and our directors and executive officers, and 12 months, with respect to CBI, after the completion of this offering; however, these lock-up agreements are subject to numerous exceptions and the representatives of the underwriters may waive these lock-up provisions without notice. If any or all of these holders cause a large number of their shares to be sold in the public market, the sales could reduce the trading price of our common stock and could impede our ability to raise future capital. In addition, the exercise of the underwriters’ over-allotment option to purchase up to an additional shares of our common stock or other future issuances of our common stock would be dilutive to existing stockholders.

There is currently no public market for our common stock. An active trading market for our common stock may not develop following this offering, and you may be unable to sell your stock at a price above the initial public offering price or at all.

There has not been any public market for our common stock prior to this offering. We have applied to list our common stock on the NASDAQ Global Select Market. We cannot assure you, however, that an active trading market for our common stock will develop after this offering or, if one develops, that it will be sustained. In the absence of a public market, you may be unable to liquidate an investment in our common stock. The initial public offering price of our common stock has been determined in consultation with the underwriters and based on a number of factors, including our results of operations, management, estimated net income, estimated FFO, estimated cash available for distribution, anticipated dividend yield and growth prospects, the current market valuations, financial performance and dividend yields of publicly traded companies considered to be comparable to us and the current state of the data center industry and the economy as a whole. The price at which shares of our common stock trade after the completion of this offering may be lower than the price at which the underwriters sell them in this offering.

The market price and trading volume of our common stock may be volatile following this offering.

Even if an active trading market develops for our common stock, the market price of our common stock may be volatile. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. If the market price of our common stock declines significantly, you may be unable to resell your shares at or above the public offering price or at all. We cannot assure you that the market price of our common stock will not fluctuate or decline significantly in the future.

Some of the factors that could negatively affect the market price of our common stock or result in fluctuations in the price or trading volume of our common stock include:

•

actual or anticipated variations in our quarterly results of operations or distributions;

•

changes in our funds from operations or earnings estimates;

•

publication of research reports about us or the real estate, technology or data center industries;

•

increases in market interest rates that may cause purchasers of our shares to demand a higher yield;

•

changes in market valuations of similar companies;

•

adverse market reaction to any additional debt we may incur in the future;

•

additions or departures of key personnel;

•

actions by institutional stockholders;

•

speculation in the press or investment community about our company or industry or the economy in general;

•

the occurrence of any of the other risk factors presented in this prospectus; and

•

general market and economic conditions.

Our earnings and cash distributions will affect the market price of shares of our common stock.

We believe that the market value of a REIT’s equity securities is based primarily upon market perception of the REIT’s growth potential and its current and potential future cash distributions, whether from operations, sales, acquisitions, development or refinancing, and is secondarily based upon the value of the underlying assets. For these reasons, shares of our common stock may trade at prices that are higher or lower than the net asset value per share. To the extent we retain operating cash flow for investment purposes, working capital reserves or other purposes rather than distributing the cash flow to stockholders, these retained funds, while increasing the value of our underlying assets, may negatively impact the market price of our common stock. Our failure to meet market expectations with regard to future earnings and cash distributions would likely adversely affect the market price of our common stock.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make statements in this prospectus that are forward-looking statements within the meaning of the federal securities laws. In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, our pro forma financial statements and all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions, demographics and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

•

loss of key customers;

•

defaults on or non-renewal or early termination of leases by customers;

•

economic downturn, natural disaster or oversupply of data centers in the limited geographic area that we serve;

•

inability to supply customers with adequate electrical power;

•

inability to renew leases on the data center buildings in our portfolio not owned by us;

•

risks related to natural disasters and inadequate insurance coverage;

•

risk related to the inability to obtain title insurance;

•

risks related to the failure of our physical infrastructure or services;

•

risks related to the development of our properties and our ability to successfully lease those properties;

•

risks related to third-party suppliers of power, Internet connectivity and other services;

•

loss of access to key third-party service providers and suppliers;

•

long sales cycle for data center services;

•

risks related to our international activities, including expanding our international operations;

•

inability to identify and complete acquisitions and operate acquired properties;

•

customers choosing to develop their own data centers;

•

decrease in demand for data center services;

•

our failure to obtain necessary outside financing on favorable terms, or at all;

•

inability to manage growth;

•

our level of indebtedness or debt service obligations;

•

restrictions in the instruments governing our indebtedness;

•

risks related to litigation and environmental matters;

•

risks related to increased regulations;

•

unknown or contingent liabilities related to our acquired properties;

•

management’s inexperience operating as a REIT;

•

significant competition in our industry;

•

loss of key personnel;

•

obsolescence of our data center infrastructure;

•

risks related to assuming unknown liabilities;

•

failure to maintain our status as a REIT;

•

changes in U.S. tax law and other U.S. laws, whether or not specific to REITs;

•

insufficient cash available to meet distribution requirements;

•

risks related to the real estate industry;

•

risks related to CBI’s ownership of shares of our common stock; and

•

risks related to our organizational structure.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section above entitled “Risk Factors.”

USE OF PROCEEDS

We estimate that we will receive gross proceeds from this offering of $300 million, or approximately $ million if the underwriters exercise their over-allotment option in full, in each case, based on the midpoint of the price range set forth on the front cover of this prospectus. After deducting the underwriting discounts and commissions and estimated expenses of this offering, we expect net proceeds from this offering of approximately $275 million, or approximately $ million if the underwriters exercise their over-allotment option in full.

We will contribute the net proceeds of this offering to our operating partnership in exchange for operating partnership units. Our operating partnership will subsequently use the proceeds received from us to fund future acquisitions of real estate, development of real estate, recurring real estate expenditures and other non-real estate capital expenditures and general working capital. Pending application of cash proceeds, we will invest the net proceeds from this offering in interest bearing accounts and short-term, interest bearing securities, which are consistent with our intention to qualify for taxation as a REIT.

DISTRIBUTION POLICY

Our estimate of cash available for distribution does not include the effect of any changes in our working capital. Our estimate also does not reflect the amount of cash estimated to be used for investing activities for acquisitions, development and other capital expenditures and other activities, other than a provision for recurring capital expenditures and contractual obligations for leasing commissions. It also does not reflect the amount of cash estimated to be used for financing activities, except for scheduled principal payments on capital leases and other long-term obligations. Any such investing and/or financing activities may adversely affect our estimate of cash available for distribution. Because we have made the assumptions set forth above in estimating cash available for distribution, we do not intend this estimate to be a projection or forecast of our actual results of operations or our liquidity and have estimated cash available for distribution for the sole purpose of determining the amount of our initial annual distribution rate. Our estimate of cash available for distribution should not be considered as an alternative to cash flow from operating activities (computed in accordance with U.S. GAAP) or as an indicator of our liquidity or our ability to make distributions. In addition, the methodology upon which we made the adjustments described below is not necessarily intended to be a basis for determining future distributions.

We intend to maintain our initial distribution rate for the 12-month period following completion of this offering unless actual results of operations, economic conditions or other factors differ materially from the assumptions used in our estimate. Distributions made by us will be authorized and determined by our board of directors in its sole discretion out of funds legally available therefor and will be dependent upon a number of factors, including restrictions under applicable law and other factors described below. We believe that our estimate of cash available for distribution constitutes a reasonable basis for setting the initial distribution rate; however, we cannot assure you that the estimate will prove accurate, and actual distributions may therefore be significantly different from the expected distributions. We do not intend to reduce the expected distributions per share if the underwriters exercise their over-allotment option; however, this could require us to utilize additional cash on hand or borrow under our revolving credit facility to make the distributions associated with the over-allotment option.

We anticipate that, at least initially, our distributions may exceed our then-current and accumulated earnings and profits as determined for U.S. federal income tax purposes due to non-cash expenses, primarily depreciation and amortization charges that we expect to incur. Therefore, a portion of these distributions may represent a return of capital for U.S. federal income tax purposes. Distributions in excess of our current and accumulated earnings and profits will not be taxable to a taxable U.S. stockholder under current U.S. federal income tax law to the extent those distributions do not exceed the stockholder’s adjusted tax basis in his or her common stock, but rather will reduce the adjusted basis of such common stock. In that case, the gain (or loss) recognized on the sale of such common stock or upon our liquidation will be increased (or decreased) accordingly. To the extent those distributions exceed a taxable U.S. stockholder’s adjusted tax basis in his or her common stock, such distributions generally will be treated as a capital gain realized from the taxable disposition of those shares. The

percentage of our stockholder distributions that exceeds our current and accumulated earnings and profits may vary substantially from year to year. For a more complete discussion of the tax treatment of distributions to holders of our common stock, see “U.S. Federal Income Tax Considerations.”

We cannot assure you that our estimated distributions will be made or sustained or that our board of directors will not change our distribution policy in the future. Any distributions we make in the future will depend upon our actual results of operations, economic conditions and other factors that could differ materially from our current expectations. Our actual results of operations will be affected by a number of factors, including the revenue we receive from our properties, our operating expenses, interest expense, the ability of our customers to meet their obligations and unanticipated expenditures. For more information regarding risk factors that could materially adversely affect our actual results of operations, please see “Risk Factors.”

U.S. federal income tax law requires that a REIT distribute annually at least 90% of its net taxable income excluding net capital gains and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income including net capital gains. For more information, please see “U.S. Federal Income Tax Considerations.” We anticipate that our estimated cash available for distribution will exceed the annual distribution requirements applicable to REITs. However, under some circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet these distribution requirements, and we may need to borrow funds to make these distributions.

The following table describes our pro forma income (loss) before noncontrolling interests for the year ended December 31, 2011, and the adjustments we have made thereto in order to estimate our initial cash available for distribution for the 12 months ending September 30, 2013 (amounts in millions except share data, per share data, square footage data and percentages):


Pro forma loss before noncontrolling interests for the year ended December 31, 2011	$	(3.4	)
Less: pro forma loss before noncontrolling interests for the nine months ended September 30, 2011		1.8
Add: pro forma loss before noncontrolling interests for the nine months ended September 30, 2012		(15.9	)

Pro forma loss before noncontrolling interests for the 12 months ended September, 30, 2012		(17.5	)
Add: real estate depreciation and amortization ^(a)		48.4
Add: other depreciation and amortization ^(b)		20.0
Add: net increases (decreases) in contractual rent income ^(c)		12.2
Less: net decreases in contractual rent income due to lease expirations, assuming recurring rent churn based on historical data ^(d)		(5.4	)
Less: net effect of straight line rents ^(e)		(8.2	)
Add: non-cash compensation expense ⁽ ^f ⁾		6.0
Add: amortization of financing costs ^(g)		1.4
Add: non-cash impairment charges ⁽ ^h ⁾		13.3

Estimated cash flow from operating activities for the 12 months ending September 30, 2013		70.2

Estimated cash flows used in investing activities:
Less: contractual obligations for leasing commissions ⁽ ⁱ ⁾		(0.2	)
Less: estimated annual provision for recurring capital expenditures ⁽ ^j ⁾		(5.0	)

Total estimated cash flows used in investing activities		(5.2	)

Estimated cash flows used in financing activities—scheduled principal amortization payments of capital and other long-term lease obligations ⁽ ^k ⁾		(8.3	)

Estimated cash flow available for distribution for the 12 months ending September 30, 2013		56.7

Our share of estimated cash available for distribution ⁽ ^l ⁾

Noncontrolling interests’ share of estimated cash available for distribution


Total estimated initial annual distributions to stockholders

Estimated initial annual distribution per share ⁽ ^m ⁾

Payout ratio based on our share of estimated cash available for distribution ⁽ ⁿ ⁾				%


(a) Real estate depreciation and amortization for the 12 months ended December 31, 2011	$	37.8

Less: Real estate depreciation and amortization for the nine months ended September 30, 2011		(26.9	)
Add: Real estate depreciation and amortization for the nine months ended September 30, 2012		37.5

Real estate depreciation and amortization for the 12 months ended September 30, 2012	$	48.4

(b)	Other depreciation and amortization primarily consists of non-cash amortization of customer relationship intangibles, non-real estate depreciation, and amortization of other intangibles:



Other depreciation and amortization for the 12 months ended December 31, 2011	$	17.8
Less: Other depreciation and amortization for the nine months ended September 30, 2011		(13.3	)
Add: Other depreciation and amortization for the nine months ended September 30, 2012		15.5

Other depreciation and amortization for the 12 months ended September 30, 2012	$	20.0

(c)

Represents net increases from new leases, renewals and contractual rent increases, net of abatements, from existing leases and net decreases for terminated leases or rate reductions, in each case that were not in effect for the entire 12 month period ended September 30, 2012, or that will go into effect during the 12 months ending September 30, 2013, based on leases entered into or that expired and were not renewed through September 30, 2012, less estimated variable expenses associated with such leases using our average NOI margin of 66.9% for January 1, 2011 through September 30, 2012.


Total net increases in contractual rent revenue during the 12 months ending September 30, 2013 due to leases that were not in effect for the entire 12 month period ended September 30, 2012	$	18.2
Average NOI margin for January 1, 2011 through September 30, 2012		66.9	%

Total estimated increase in contractual rent income during the 12 months ending September 30, 2013 due to leases that were not in effect for the entire 12 month period ended September 30, 2012	$	12.2

(d)

Represents estimated decreases in contractual rent revenue during the 12 months ending September 30, 2013 due to lease expirations, assuming a recurring rent churn rate of 3.8% (which was our recurring rent annual churn rate for the period from January 1, 2011 through September 30, 2012), less estimated variable expenses associated with such leases using our average NOI margin of 66.9% for January 1, 2011 through September 30, 2012. The adjustment has been calculated as follows:


Annualized rent as of September 30, 2012	$	211.7
Assumed recurring rent annual churn rate		3.8	%

Total estimated decrease in contractual rent revenue during the 12 months ending September 30, 2013 due to lease expirations	$	8.0
Average NOI margin for January 1, 2011 through September 30, 2012		66.9	%

Total estimated decrease in contractual rent income during the 12 months ending September 30, 2013 due to lease expirations	$	5.4

(e)	Represents the conversion of estimated rental revenues on in-place leases from GAAP basis to a cash basis of recognition.

(f)	Pro forma non-cash compensation expense related to awards of restricted stock and performance units that vest over a three-year period.

(g)	Pro forma non-cash amortization of financing costs for the 12 months ended September 30, 2012.

(h)	Represents non-cash impairment charges on real estate for the 12 months ended September 30, 2012.

(i)

Reflects contractual leasing commissions for the 12 months ending September 30, 2013 based on new leases entered into through October 31, 2012. The Company has not historically paid for tenant improvements or leasing commissions for renewed leases. The Company pays leasing commissions based upon new monthly recurring revenue, not square footage sold. Commissions paid to internal personnel and third-party brokers were $3.9 million and $3.6 million for the year ended December 31, 2011 and the nine months ended September 30, 2012, respectively.

(j)

For the 12 months ending September 30, 2013, management’s estimate of the costs of recurring building improvements (excluding costs of customer improvements) at our properties is approximately $5.0 million, which would exceed the weighted average annual capital expenditures costs of $1.61 per rentable square foot in our portfolio incurred during the 36 months ended September 30, 2012 multiplied by 1,628,717 NRSF. The following table sets forth certain information regarding historical recurring capital expenditures at the properties in our portfolio through September 30, 2012.


	Three Months Ended December 31, 2009		Year Ended December 31, 2010		Year Ended December 31, 2011		Nine Months Ended September 30, 2012		Weighted Average October 1, 2009- September 30, 2012
	Three Months Ended December 31, 2009		Year Ended December 31, 2010		Year Ended December 31, 2011		Nine Months Ended September 30, 2012		Weighted Average October 1, 2009- September 30, 2012
Recurring capital expenditures (in millions)	$	0.4	$	1.8	$	1.8	$	2.0	$	2.0
Average NRSF during period		882,310		1,070,850		1,310,067		1,491,312		1,238,839

Recurring capital expenditure per square foot	$	0.43	$	1.68	$	1.37	$	1.34	$	1.61

(k)	Represents scheduled amortization payments of capital lease obligations and other long-term lease obligations due during the 12 months ending September 30, 2013.

(l)	Our share of estimated cash available for distribution and estimated initial annual cash distributions to our stockholders is based on an estimated approximate % aggregate partnership interest in our operating partnership.

(m)	Based on a total of shares of our common stock to be outstanding after this offering.

(n)	Calculated as our estimated initial annual distribution divided by our share of estimated cash available for distribution for the 12 months ending September 30, 2013.

CAPITALIZATION

The following table sets forth the historical combined capitalization of CyrusOne and the Predecessor as of September 30, 2012 and our capitalization as of September 30, 2012, on a pro forma basis giving effect to the formation transactions, the related financing transactions and this offering. You should read this table in conjunction with “Use of Proceeds,” “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and our financial statements and the notes to our financial statements appearing elsewhere in this prospectus.


	As of September 30, 2012
(dollars in millions)	Historical Combined		Pro Forma Combined
Capital lease obligations	$	38.0	$	38.0
Related party notes payable		619.0		—
Other financing arrangements ⁽¹⁾		49.2		49.2
6.375% Senior Notes due 2022		—		525.0
Revolving credit facility ⁽²⁾		—		—
Divisional control		297.5		—
Stockholders’ equity:
Common stock		—		—
Paid in capital		—		271.1
Noncontrolling interest in operating partnership		—		448.2

Total capitalization	$	1,003.7	$	1,331.5

(1)

Other financing arrangements represents leases of real estate where we are involved in the construction of structural improvements to develop buildings into data centers. When we bear substantially all the construction period risk, such as managing or funding construction, the Predecessor is deemed to be the accounting owner of the leased property. These transactions generally do not qualify for sale-leaseback accounting due to our continued involvement in these data center operations. For these transactions, at the lease inception date, we recognize the fair value of the leased building as an asset in investment in real estate and as a liability in other financing arrangements.

(2)	We do not expect to have any outstanding borrowings under our new revolving credit facility upon the completion of this offering.

DILUTION

Purchasers of our common stock offered in this prospectus will experience an immediate and substantial dilution in the net tangible book value of our common stock from the initial public offering price. At September 30, 2012, we had a combined net tangible book value of approximately $(85.3) million, or $ per share of our common stock to be held by CBI after this offering, assuming the exchange of operating partnership units into shares of our common stock on a one-for-one basis. After giving effect to the sale of the shares of our common stock offered hereby, including the use of proceeds as described under “Use of Proceeds” and the formation transactions, the related financing transactions, the deduction of underwriting discounts and commissions and financial advisory fees and estimated offering and formation expenses, the pro forma net tangible book value at September 30, 2012 attributable to common stockholders would have been $ , or $ per share of our common stock. This amount represents an immediate increase in net tangible book value of $ per share to CBI and an immediate dilution in pro forma net tangible book value of $ per share from the assumed public offering price of $ per share of our common stock to new public investors. The following table illustrates this per share dilution:


Assumed initial public offering price per share		$
Net tangible book value per share before the formation transactions, related financing transactions and this offering ⁽¹⁾
Net increase in net tangible book value per share attributable to the formation transactions, the related financing transactions and this offering
Pro forma net tangible book value per share after the formation transactions, the related financing transactions and this offering ⁽²⁾
Dilution in net tangible book value per share to new investors ⁽³⁾		$

(1)

Net tangible book value per share of our common stock before the formation transactions, the related financing transactions and this offering is determined by dividing net tangible book value (consisting of divisional control minus intangible assets, which are comprised of goodwill, customer relationships, trademarks and favorable leasehold interests, net) as of September 30, 2012 of the Predecessor by the number of shares of our common stock to be held by CBI after this offering, assuming the exchange in full of the operating partnership units held by CBI.

(2)

Based on pro forma net tangible book value of approximately $ divided by shares of our common stock and operating partnership units of our operating partnership outstanding after the formation transactions, the related financing transactions and this offering, not including shares of our common stock reserved for issuance pursuant to our 2012 Long Term Incentive Plan in connection with future grants of equity awards to our directors, employees and consultants or shares of restricted stock that will be granted to our directors and employees pursuant to our 2012 Long Term Incentive Plan in connection with this offering.

(3)

Dilution is determined by subtracting pro forma net tangible book value per share of our common stock after giving effect to the formation transactions, the related financing transactions and this offering from the initial public offering price paid by a new investor for a share of our common stock.

A $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease the net tangible book value per share after giving effect to this offering by $ per share and would increase or decrease the dilution in net tangible book value per share to new investors in this offering by $ per share. This calculation assumes that the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same and reflects the deduction of the underwriting discounts and commissions and estimated expenses of this offering payable by us.

Differences Between New Investors and Existing Investors in Number of Shares and Amount Paid

The table below summarizes, as of September 30, 2012, on a pro forma basis after giving effect to the formation transactions, the related financing transactions and this offering, the differences between the number of shares and operating partnership units received by the existing investors in the formation transactions and the new investors purchasing shares in this offering, the total consideration paid and the average price per share paid by the existing investors in the formation transactions and paid in cash by the new investors purchasing shares in

this offering (based on the net tangible book value attributable to the existing investors in the formation transactions). In calculating the shares to be issued in this offering, we used an assumed initial public offering price of $ per share, which is the mid-point of the price range set forth on the front cover page of this prospectus.

Shares/Operating
Partnership Units
Issued

Net Tangible Book
Value of
Contribution ⁽¹⁾ /Cash

Average
Price Per
Share

(dollars in thousands, except per share data)

Number

Percentage

Amount

Percentage

Existing investors ⁽²⁾

New investors

Total

(1)

Represents pro forma net tangible book value as of September 30, 2012, of the assets contributed to our operating partnership in the formation transactions, giving effect to the formation transactions, the related financing transactions and this offering (prior to deducting the estimated costs of this offering).

(2)

Includes 100 shares of common stock representing our initial capitalization, operating partnership units issued in connection with the formation transactions, and an aggregate of shares of common stock (including shares of restricted stock) to be issued to certain of our directors, director nominees, executive officers and employees upon completion of this offering.

SELECTED FINANCIAL DATA

The following table sets forth selected financial and operating data on a combined historical basis for the Predecessor. We have not presented historical information for the newly-formed registrant, CyrusOne, because it has not had any corporate or business activity since its formation other than the incurrence of costs to support this offering, the formation transactions, the related financing transactions and the issuance of shares of common stock in connection with the initial capitalization of the company and because we believe that a discussion of the results of this newly-formed registrant would not be meaningful. For more information regarding the formation transactions, please see “Structure and Formation of Our Company.”

The historical financial information as of December 31, 2011 and 2010 and for each of the years ended December 31, 2011, 2010 and 2009 has been derived from the Predecessor’s audited combined financial statements included elsewhere in this prospectus. This historical financial information as of December 31, 2009, 2008 and 2007 and for the years ended December 31, 2008 and 2007 has been derived from the Predecessor’s unaudited combined financial statements not included in this prospectus. The historical financial information as of September 30, 2012 and for the nine months ended September 30, 2012 and 2011 has been derived from the Predecessor’s unaudited condensed combined financial statements included elsewhere in this prospectus. In the opinion of management, the unaudited interim financial information included herein includes all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth herein. The results of operations for the interim period ended September 30, 2012 are not necessarily indicative of the results to be obtained for the full fiscal year.

You should read the following Predecessor selected financial data in conjunction with our combined historical financial statements and the related notes and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are included elsewhere in this prospectus.


	Nine months ended September 30,					Year ended December 31,
(dollars in millions)	2012			2011		2011		2010 ^(a)		2009		2008		2007
Statement of Operations Data:
Revenue	$	162.8		$	133.7	$	181.7	$	127.5	$	74.1	$	56.1	$	35.3

Costs and expenses:
Property operating expenses		55.3			43.3		58.2		43.9		31.0		24.9		16.5
Sales and marketing		5.8			7.1		9.1		6.8		5.1		3.7		2.1
General and administrative		15.4			8.5		12.5		7.0		4.2		7.3		4.2
Depreciation and amortization		52.9			40.0		55.5		36.2		18.0		11.4		6.1
Transaction costs ^(b)		1.3			2.6		2.6		9.0		—		—		—
Management fees charged by CBI ^(c)		2.1			1.9		2.3		3.6		1.5		1.3		1.3
Loss on sale of receivables to CBF ^(d)		3.7			2.3		3.5		1.8		1.2		0.2		0.3
Restructuring costs ^(e)		—			—		—		1.4		—		—		—
Asset impairments ^(f)		13.3			—		—		—		—		—		—

Operating income		13.0			28.0		38.0		17.8		13.1		7.3		4.8
Interest expense		31.2			24.1		32.9		11.5		3.1		1.5		1.9
Loss on extinguishment of debt ^(g)		—			—		1.4		—		—		—		—
Income tax (benefit) expense		(4.7	)		2.1		2.2		2.7		3.9		2.3		1.1

(Loss) income from continuing operations		(13.5	)		1.8		1.5		3.6		6.1		3.5		1.8
(Gain) loss on sale of real estate improvements ^(h)		(0.1	)		—		—		0.1		—		—		—

Net (loss) income	$	(13.4	)	$	1.8	$	1.5	$	3.5	$	6.1	$	3.5	$	1.8

Balance Sheet Data (at period end):
Investment in real estate, net	$	644.6		$	481.3	$	529.0	$	403.7	$	248.7	$	236.2	$	152.1
Total assets		1,090.8			911.7		954.7		862.3		279.6		270.7		187.6
Debt ⁽ⁱ⁾		650.1			470.6		523.1		452.0		69.7		64.4		26.5
Other financing arrangements ^(j)		49.2			61.3		48.2		32.5		—		—		—
Divisional control ^(k)		297.5			316.1		311.5		317.8		163.4		158.3		135.2

Other Financial Data:
Capital expenditures	$	146.4		$	76.3	$	117.5	$	29.3	$	20.7	$	74.5	$	86.3

(a)	In June 2010, the Predecessor completed the acquisition of Cyrus Networks. The results of operations of this business are included in the Predecessor’s results from the acquisition date.

(b)	Represents legal, accounting and consulting fees incurred in connection with the formation transactions, our qualification as a REIT and completed and potential business combinations.

(c)

Represents management fees charged by CBI for services it provided to the Predecessor including executive management, legal, treasury, human resources, accounting, tax, internal audit and IT services. See Note 13 to our audited combined financial statements included elsewhere in this prospectus for additional detail. Prior to or upon completion of this offering, we expect to enter into a transition services agreement with CBI with respect to any required ongoing services.

(d)	Represents the sale by the Predecessor of most of its trade and other accounts receivable to CBF, a bankruptcy-remote subsidiary of CBI, at a 2.5% discount to the receivables’ face value. Effective October 1, 2012, we terminated our participation in this program.

(e)	Represents a restructuring charge recognized in 2010 to terminate a legacy sales commission plan in order to transition to a common plan for all commissioned employees.

(f)	Reflects asset impairments recognized on a customer relationship intangible and property and equipment primarily related to our GramTel acquisition.

(g)	Represents the termination by the Predecessor of the financing obligation for one of its facilities by purchasing the property from the former lessor. A loss of $1.4 million was recognized upon the termination of this obligation.

(h)	Represents the (gain) loss that was recognized on the sale of generators in connection with upgrading of the equipment at various data center facilities.

(i)	Reflects related party notes payable and capital lease obligations.

(j)

(k)	For the historical periods presented, the Predecessor was not a separate legal entity. Divisional control represents CBI’s net investment in the Predecessor.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with “Selected Financial Data,” “Business and Properties” and our historical and pro forma financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve numerous risks and uncertainties. The forward-looking statements are subject to a number of important factors, including those factors discussed under “Risk Factors” and “Special Note Regarding Forward-Looking Statements,” that could cause our actual results to differ materially from the results described herein or implied by such forward-looking statements.

The combined financial statements included in this prospectus reflect the historical financial position, results of operations and cash flows of the Predecessor for all periods presented. The Predecessor’s historical financial statements have been prepared on a “carve-out” basis from CBI’s consolidated financial statements using the historical results of operations, cash flows, assets and liabilities attributable to the data center business and include allocations of income, expenses, assets and liabilities from CBI. These allocations reflect significant assumptions, and the financial statements do not fully reflect what the Predecessor’s financial position, results of operations and cash flows would have been had the Predecessor been a stand-alone company during the periods presented. As a result, historical financial information is not necessarily indicative of the Predecessor’s future results of operations, financial position and cash flows. The results of Cyrus Networks are included in these results from the date of its acquisition in June 2010, which affects comparability between periods.

Because we believe that a discussion of the historical results of the newly-formed registrant, CyrusOne, would not be meaningful, we have set forth below a discussion of the historical operations of the Predecessor. Any reference to “our,” “we,” and “us” in this discussion and analysis refers to Predecessor and the data center business. Where appropriate, the following discussion includes analysis of the effects of the formation transactions, this offering and related financing transactions. These effects are reflected in the pro forma financial statements included elsewhere in this prospectus.

Overview

Our Company. We are an owner, operator and developer of enterprise-class, carrier-neutral data center properties. Enterprise-class, carrier-neutral data centers are purpose-built facilities with redundant power, cooling and telecommunications systems and that are not network-specific, enabling customer interconnectivity to a range of telecommunications carriers.

We provide mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for approximately 500 customers. Our goal is to be the preferred global data center provider to the Fortune 1000. As of September 30, 2012, our customers included nine of the Fortune 20 and 108 of the Fortune 1000 or private or foreign enterprises of equivalent size. These 108 customers provided 79% of our annualized rent as of September 30, 2012. Additionally, as of September 30, 2012, our top 10 customers (including CBI) represented 46% of our annualized rent.

Formation and Structure . Our business is comprised of the historical data center activities and holdings of CBI. CBI has operated its Cincinnati-based data center business for over 10 years. In addition, it acquired GramTel,

a data center operator in South Bend, Indiana and Chicago, Illinois, for approximately $20 million in December 2007; and it acquired Cyrus Networks, a data center operator based in Texas, for approximately $526 million, net of cash acquired, in June 2010. On November 20, 2012, we closed the formation transactions, which were designed to consolidate the ownership of CBI’s data center properties into our operating partnership, facilitate this offering, enable us to raise necessary capital to repay indebtedness owed to CBI prior to this offering and enable us to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2012. See “Structure and Formation of Our Company—Formation Transactions.”

Our Portfolio. As of September 30, 2012, our property portfolio included 23 operating data centers in nine distinct markets (Austin, Chicago, Cincinnati, Dallas, Houston, London, San Antonio, Singapore and South Bend), collectively providing approximately 1,630,000 NRSF, and powered by approximately 125 MW of utility power. We own nine of the buildings in which our data center facilities are located. We lease the remaining 14 buildings, which account for approximately 600,000 NRSF, or approximately 37% of our total operating NRSF. These leased buildings accounted for 36% of our total annualized rent as of September 30, 2012 and 37% of our total NOI for the three months then ended. We also currently have 379,000 NRSF under development at three data centers in three distinct markets (Dallas, Houston and Phoenix) and 762,000 NRSF of additional powered shell space under roof and available for development. In addition, we have approximately 146 acres of land that are available for future data center facility development. Along with our primary product offering, leasing of colocation space, our customers are increasingly interested in ancillary office and other space. We believe our existing operating portfolio and development pipeline will allow us to meet the evolving needs of our existing customers and continue to attract new customers. See “Structure and Formation of Our Company—Formation Transactions.”

Business Model

Revenue base . As of September 30, 2012, we had approximately 500 customers, many of which have signed leases for multiple sites and multiple services, amenities and/or features. We generate recurring revenues from leasing colocation space and nonrecurring revenues from the initial installation and set-up of customer equipment. We provide customers with data center services pursuant to leases with a customary initial term of three to five years, and, as of September 30, 2012, our leases had a weighted average of 2.4 years remaining based upon annualized rent. Lease expirations through 2014, excluding month-to-month leases, represent 32% of our total square footage or 51% of our aggregate annualized rent as of September 30, 2012. At the end of the lease term, customers may sign a new lease or automatically renew pursuant to the terms of their lease. The automatic renewal period could be for varying lengths, depending on the terms of the contract, such as for the original lease term, one year or month-to-month. As of September 30, 2012, 10% of the NRSF in our portfolio was subject to month-to-month leases.

Costs and expenses. Our property operating expenses generally consist of electricity (including the cost to power data center equipment), salaries and benefits of data center operations personnel, real estate taxes, security, rent, insurance and other site operating and maintenance costs. Our property operating expenses are expected to increase as we expand our existing data center facilities and develop new facilities.

Our sales and marketing expenses consist of salaries and benefits of our sales personnel, marketing and advertising costs. Prior to January 1, 2011, sales and marketing expenses also included sales commissions for

sales personnel for a legacy plan that paid commissions as a percentage of monthly recurring revenue. This plan was terminated effective December 31, 2010 in order to transition to a common plan that pays commissions at lease inception. Our sales and marketing expenses are expected to increase as our business continues to grow.

General and administrative expenses consist of salaries and benefits of senior management and support functions, legal costs and consulting costs. These costs are expected to increase in the near term as we augment our team and back office infrastructure, including IT systems, to support the growth and expansion of our business. In addition, we expect to incur additional compensation, legal, accounting, board fees and other governance costs to operate as an independent public company subject to the reporting and compliance requirements of the SEC and the Sarbanes-Oxley Act. We estimate these incremental costs to approximate $5.0 million annually, exclusive of stock compensation costs. We also expect to issue equity awards to board members and key employees. We estimate the annual incremental, non-cash compensation costs associated with those awards to range from $8.0 million to $16.0 million. We anticipate that we will not be able to pass along these additional costs to our customers.

Depreciation and amortization expense consists of depreciation on both owned and leased property, amortization of intangible assets and amortization of deferred sales commissions. Depreciation and amortization expense is expected to increase in future periods as we acquire and develop new properties and expand our existing data center facilities.

A portion of our operating expenses has been in the form of management fees allocated from CBI for services provided by CBI. Such management services include executive management, cash management, legal, treasury, human resources, accounting, tax, internal audit, risk management and other corporate services. Depending on the nature of the respective cost, our allocated cost for these services was based upon specific identification of costs incurred on our behalf or a reasonable estimate of costs incurred on our behalf, such as relative revenues. See Note 13 to our audited combined financial statements included in this prospectus for additional detail. Prior to this offering, we expect to enter into a transition services agreement with CBI pursuant to which CBI will provide certain of these services, on an as needed basis, to the operating partnership. See “Certain Relationships and Related Transactions—Transition Services Agreements.”

Key Operating Metrics

Annualized Rent . We calculate annualized rent as monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2012, multiplied by 12. For the month of September 2012, customer reimbursements were $20.6 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Other companies may not define annualized rent in the same manner. Accordingly, our annualized rent may not be comparable to others. Management believes annualized rent provides a useful measure of our currently in place lease revenue.

Colocation Square Feet (“CSF”) . We calculate CSF as the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and IT equipment.

Utilization Rate . We calculate utilization rate by dividing CSF under signed leases for available space (whether or not the contract has commenced billing) by total CSF. Utilization rate differs from percent leased presented elsewhere in this prospectus because utilization rate excludes office space and supporting infrastructure NRSF and includes CSF for signed leases that have not commenced billing. Management uses utilization rate as a measure of CSF leased.

Recurring Rent Churn . We calculate recurring rent churn as any reduction in recurring rent due to customer terminations, net pricing reductions or service reductions as a percentage of the annualized rent at the beginning of the applicable period, excluding any impact from metered power reimbursements.

Capital Expenditures . Cash expenditures that expand, improve or extend the life of real estate and non-real estate property are deemed capital expenditures. Management views its capital expenditures as comprised of acquisition of real estate, development of real estate, recurring real estate expenditures and all other non-real estate capital expenditures. Purchases of land or buildings from third parties represent acquisitions of real estate. Discretionary capital spending that expands or improves our data centers is deemed development of real estate. Replacements of data center assets are considered recurring real estate expenditures. Purchases of software, computer equipment and furniture and fixtures are included in all other non-real estate capital expenditures.

Factors That May Influence Future Results of Operations

Rental Income. Our revenue growth will depend on our ability to maintain our existing revenue base and to sell new capacity that becomes available as a result of our development activities. As of September 30, 2012, we have customer leases for approximately 78% of our CSF. Our ability to grow revenue will also be affected by our ability to maintain or increase rental rates at our properties. We believe the current rates charged to our customers generally reflect appropriate market rates based on square footage and power densities provided to the customer. As such, we do not anticipate significant rate increases or decreases in the aggregate as contracts renew. However, negative trends in one or more of these factors could adversely affect our revenue in future periods. Future economic downturns, regional downturns affecting our markets or oversupply of, or decrease in demand for, data center colocation services could impair our ability to attract new customers or renew existing customers’ leases on favorable terms, and this could adversely affect our ability to maintain or increase revenues.

Leasing Arrangements . As of September 30, 2012, 39% of our leased NRSF has been to customers on a full-service gross basis. Under a full-service gross model, the customer pays a fixed monthly rent amount, and we are responsible for all data center facility electricity, maintenance and repair costs, property taxes, insurance and other utilities associated with that customer’s space. For leases under this model, fluctuations in our customers’ monthly utilization of power and the prices our utility providers charge us impact our profitability. As of September 30, 2012, 61% of our leased NRSF has been to customers with separately metered power. Under the metered power model, the customer pays us a fixed monthly rent amount, plus its actual costs of sub-metered electricity used to power its data center equipment, plus an estimate of costs for electricity used to power supporting infrastructure for the data center, expressed as a factor of the customer’s actual electricity usage. We are responsible for all other costs listed in the description of the full-service gross model above. Fluctuations in a customer’s utilization of power and the supplier pricing of power do not impact our profitability under the metered power model. In future periods, we expect more of our contracts to be structured to bill power on a metered power basis.

Growth and Expansion Activities. Our ability to grow our revenue and profitability will depend on our ability to acquire and develop data center space at an appropriate cost and to lease the data center space to customers on favorable terms. During the first nine months of 2012, we completed development of approximately 290,000 NRSF, primarily in Austin, Carrollton, Houston and San Antonio, Texas, bringing our total operating NRSF to approximately 1,630,000 at September 30, 2012. For the nine months ended September 30, 2012, our average cost of development was $828 per square foot. Fluctuations may occur in our average cost of development per CSF from period to period based on power density, customer requirements (such as required resiliency level) and the type of property. Our portfolio, as of September 30, 2012, also included approximately 379,000 NRSF under development as well as 762,000 NRSF of additional powered shell space under roof and available for development. In addition, we have approximately 146 acres of land that are available for future data center facility development. We expect that the eventual construction of this future development space will enable us to accommodate a portion of the future demand of our existing and future customers and increase our future revenue, profitability and cash flows.

Scheduled Lease Expirations. Our ability to maintain low recurring rent churn and renew expiring customer leases on favorable terms will impact our results of operations. As of September 30, 2012, 10% of the NRSF in our portfolio was subject to month-to-month leases. Our data center uncommitted capacity as of that date was

approximately 337,000 NRSF. Excluding month-to-month leases, leases representing 12% and 13% of our total NRSF were scheduled to expire in 2012 and 2013, respectively. These leases represented approximately 13% and 24% of our annualized rent as of September 30, 2012. Month-to-month leases represented 11% of our annualized rent as of September 30, 2012. Our recurring rent annual churn for 2011 was 3%.

Conditions in Significant Markets. Our operating properties are located primarily in the Dallas and Houston metro areas of Texas and the Cincinnati, Ohio metro area. These markets comprised 19%, 37% and 38%, respectively, of our annualized rent as of September 30, 2012. Positive or negative conditions in these markets could impact our overall profitability.

Related Party Transactions

The following related party transactions are based on agreements and arrangements that are either currently in place or that we expect to enter into prior to this offering. See Note 13 to our audited combined financial statements included elsewhere in this offering memorandum for additional information on these arrangements. See “Certain Relationships and Related Transactions.”

We lease colocation space in our data centers to CBT and CBTS. Revenue recognized from the CBT lease was $4.4 million in 2011, $2.0 million in 2010 and $1.0 million in 2009. Prior to this offering, we entered into separate data center colocation agreements with CBT and CBTS whereby we will continue to lease colocation space to each of them at certain of our data centers. The data center colocation agreement with CBT provides for CBT’s lease of data center space, power and cooling in our West Seventh Street (7th St.), Kingsview Drive (Lebanon), Knightsbridge Drive (Hamilton) and Industrial Road (Florence) data center facilities for a period of five years at an aggregate rate of $3.8 million per year. Our data center colocation agreement with CBTS provides for CBTS’s lease of data center space, power and cooling in our West Seventh Street (7th St.), Kingsview Drive (Lebanon) and Industrial Road (Florence) data center facilities for a period of five years at an aggregate rate of $1.6 million per year. Both agreements are renewable for an additional five year term at market rates.

We have also entered into services agreements with CBT and CBTS. Under the CBTS services agreement, CBTS has agreed to provide us with certain managed storage and backup services. These services will be provided on a month-to-month basis, and charges will be based on the variable amount of gigabytes managed by CBTS each month. CBTS will charge us a rate of $0.56 per gigabyte and the annual fee to be paid by us for these services is approximately $0.2 million. We expect that services under this agreement may extend for as long as 36 months.

Under the CBT services agreement, CBT provides us with connectivity services related to several of our data center facilities. These services are related to the use of fiber and circuit assets that are currently a part of the CBI network. The annual fee paid by us for these services in 2012 is expected to be $0.9 million.

Prior to this offering, we purchased the property located at 229 West Seventh Street, included under “Summary—CyrusOne Inc.—Our Portfolio” as one of our 23 operating facilities, which we had formerly leased from CBT. The purchase price was $18 million, which is in the form of a promissory note payable on demand by CBT. Interest on the note accrues at the rate of 10% per annum. This promissory note was repaid in connection with the closing of the formation transactions on November 20, 2012 with a portion of the net proceeds from our senior notes offering. CBT continues to own the adjacent property that was historically operated together with 229 West Seventh Street as one property. We also executed a reciprocal easement and shared services agreement and a right of first opportunity and refusal agreement with CBT with respect to such properties. Pursuant to the reciprocal easement and shared services agreement, we granted reciprocal easements to each other; CBT has easements for continued use of portions of our building and CBT provides fuel storage, fire suppression and other building services to us; and we provide chilled water, building automation systems related to HVAC and other building services to CBT. The shared services agreement is expected to continue for a period of 15 years with five renewal options of five years each. Initially, we are responsible for operating and managing the service

facilities for both buildings. Each party will bear its own utility costs, as well as property taxes and insurance. Shared building operating costs will be charged to each party on the basis of the actual costs incurred, allocated based on the proportionate share of usage. Each party will also pay the other party less than $0.2 million per year to maintain shared building infrastructure systems. This agreement contains a make-whole provision that requires us to make a payment to CBT if CBT’s carrier access revenue declines below $5.0 million per annum as a result of certain actions taken by us which result in circuit disconnections or reductions at CBT. The term of this make-whole provision is approximately four years.

CBT occupies space in our 229 West Seventh Street facility that is utilized in its network operations. In connection with our purchase of this property, we entered into an agreement to lease this space to CBT for a period of five years, with three renewal options of five years each, at an initial annual base rent of approximately $0.1 million, plus a proportionate share of building operating costs. Commencing on January 1, 2014, and on January 1 of each year thereafter, such base rent shall increase by 1% of the previous year’s base rent.

Prior to this offering, we also entered into an agreement to lease space at CBT’s 209 West Seventh Street facility for a period of five years, with three renewal options of five years each. The initial annual base rent will be approximately $0.1 million per year, plus our proportionate share of building operating costs. Commencing on January 1, 2014, and on January 1 of each year thereafter, such base rent shall increase by 1% of the previous year’s base rent.

Prior to this offering, we entered into agreements to lease office space to CBT at our Goldcoast Drive (Goldcoast) data center facility and to CBTS at our Parkway (Mason) data center facility. The aggregate annual base rent for these spaces will be approximately $0.3 million per year. The term of these agreements will be five years each. Both agreements contain three five-year renewal options at market rates.

As of September 30, 2012, certain of the Predecessor’s leases had not yet been assigned to us. CBTS is the lessor named in these contracts. Revenues associated with these leases were $23.7 million in 2011, $20.2 million in 2010 and $12.9 million in 2009. In 2012, we entered into an agreement with CBTS whereby we perform all obligations of CBTS under the lease agreements, CBTS confers the benefits received under such lease agreements to us and CBTS is granted sufficient usage rights in each of our data centers so that it remains as lessor under each such lease agreement until the lease can be assigned to us. In addition, CBTS will continue to perform billing and collections on these accounts until the assignment has been completed.

On November 12, 2012, we also entered into a non-competition agreement with CBI, pursuant to which we and CBI have agreed not to enter into each other’s lines of business, subject to certain exceptions for a period of four years from such date. Pursuant to the terms of this agreement, we have agreed not to directly or indirectly engage in, or have any interest in any entity that engages in, the business of providing telecommunications services in certain areas of Ohio, Kentucky and Indiana in which CBI operates as of such date. We have also agreed not to seek, request or apply for any certification or license to provide telecommunications services in such areas during the term of the agreement. CBI has agreed not to directly or indirectly engage in, or have any interest in any entity that engages in, the business of constructing and selling, operating or providing data center services in the United States or any foreign jurisdiction in which we operate. However, CBI may continue to offer certain data center services, provided that such services are ancillary to its provision of existing IT services, and CBI does not own, lease or is contracted to own, lease or manage the data center infrastructure of the facility in which such existing IT services are being provided.

Services Performed by CBI and Other Affiliates

Transition Services

CBI currently provides various management services, including executive management, cash management, legal, treasury, human resources, accounting, tax, internal audit and risk management services. Our allocated cost for these services was based upon specific identification of costs incurred on our behalf or a reasonable estimate of costs incurred on our behalf, such as relative revenues. Our allocated cost for management services was $2.3 million, $3.6 million and $1.5 million in 2011, 2010 and 2009, respectively. Prior to this offering, we entered into a transition services agreement with CBI pursuant to which CBI will continue to provide certain of these services, on an as needed basis to the operating partnership until the earlier of December 31, 2014 and one year from the completion of this offering, provided, however, that the agreement or the provision of a particular service to be provided thereunder may be terminated for convenience by us upon 30 days’ prior written notice. The fees for these services will be based on actual hours incurred for these services at negotiated hourly rates or a negotiated set monthly fee. See “Certain Relationships and Related Transactions—Transition Services Agreements.”

Prior to this offering, we replaced this transition services agreement with a new transition services arrangement with CBTS pursuant to which each party will provide certain services to the other party. Services provided by CBTS to us include migration and support services for hardware and applications used for local telephony and IT services by our employees, as well as back office billing transition support for customers that have not yet been transitioned off of the CBTS billing platform. The annual fee to be paid by us for these services is approximately $0.3 million. Services provided by us to CBTS consist of network interface charges. The annual fee to be paid by CBTS for these services is approximately $0.5 million, which may decline in future periods as CBTS migrates its network interfaces on to an independently architected and managed CBTS network. These services will be provided on a month-to-month basis, until such time as both parties agree that the services in question have been fully transitioned, which we expect may be as long as 24 month for certain services. See “Certain Relationships and Related Transactions—Transition Services Agreements.”

Other Services

Some of our employees participate in pension, postretirement, health care, and stock-based compensation plans sponsored by CBI or an affiliate. Our allocated costs for employee benefits was determined by specific identification of the costs associated with our participating employees or based upon the percentage our employees represent of total participants. Our allocated employee benefit plan costs were $1.8 million, $1.1 million and $1.0 million in 2011, 2010 and 2009, respectively. See Notes 11 and 12 to the audited combined financial statements included elsewhere in this prospectus for further details. Subsequent to this offering, we will sponsor our own benefit and incentive plans.

We also participate in centralized insurance programs managed by CBI which include coverage for general liability, workers’ compensation, automobiles and various other risks. CBI has third-party insurance policies for certain of these risks and is also self-insured within certain limits. CBI’s self-insured costs have been actuarially determined based on the historical experience of paid claims. Our allocated cost for participation in these programs was determined on the basis of revenues, headcount or insured vehicles. Our allocated insurance costs were $0.4 million, $0.2 million and $0.1 million in 2011, 2010, and 2009, respectively. Subsequent to this offering, CyrusOne LP will maintain its own commercial insurance policies.

Effective January 1, 2012, the Predecessor entered into marketing agreements with CBT and CBTS to appoint these affiliates as CyrusOne’s authorized marketing representatives. Pursuant to the terms of these agreements, the Predecessor pays these affiliates a commission for all new leases for space they attain, which is calculated as a percentage of the first month’s recurring revenue with respect to such space, which ranges from 30% to 140%, depending on the lease term. For the nine months ended September 30, 2012, commissions earned pursuant to these arrangements were $0.1 million. These agreements can be terminated by either party with 90 days’ advance notice. The term of these agreements expires on December 31, 2012 and may be extended by mutual agreement of the parties.

Financing and Cash Management Arrangements

Prior to the closing of the formation transactions on November 20, 2012, the Predecessor participated in CBI’s centralized cash management program. On a periodic basis, all of the Predecessor’s excess cash was transferred to CBI’s corporate cash accounts. Likewise, substantially all funds to finance our operations, including acquisitions and development costs, were funded by CBI. As of September 30, 2012, advances and borrowings under this program were $9.6 million and $212.1 million, respectively. These advances and borrowings were governed by an intercompany cash management agreement. Effective November 19, 2010, all advances and borrowings were subject to interest at the average 30-day Eurodollar rate for the calendar month plus the applicable credit spread for Eurodollar rate borrowings charged for CBI’s revolving line of credit. Prior to such date, the interest rate applied to such advances and borrowings was CBI’s short-term borrowing rate. The average rate earned or charged was 5.0% in 2011, 4.2% in 2010 and 2.4% in 2009. Net interest expense recognized on related party notes was $1.1 million in both 2011 and 2010, and $0.6 million in 2009.

On December 31, 2010, CBI restructured its data center legal entities, including intercompany borrowings. In conjunction with this restructuring, CBI acquisition-related debt of $160.2 million (net of unamortized discount and debt issuance costs) and other related party notes payable to CBI of $24.8 million were subsumed into a new $400 million note payable to CBI, and a non-cash distribution was issued to CBI in the amount of $215.0 million. The $400 million note payable to CBI was subject to interest at 7.25% and was scheduled to mature in 2018. Interest on this note was settled monthly through CBI’s centralized cash management program, effectively increasing the borrowings owed from the Predecessor to CBI. As of September 30, 2012, the Predecessor owed CBI $612.1 million, comprised of the $400 million note and additional borrowings of $212.1 million under the cash management program described above. We used approximately $480 million of our senior notes issuance to partially repay the Predecessor’s notes payable to CBI. The note payable amounts not repaid from proceeds of our senior notes issuance were not contributed to our operating partnership.

As of September 30, 2012, CBI had issued $2.2 billion of unsecured long-term debt which has been guaranteed by several of its subsidiaries, including substantially all of the businesses that form the Predecessor. These guarantees were full and unconditional and joint and several. The guarantees from the businesses that form the Predecessor were released in connection with the closing of the formation transactions on November 20, 2012. As of September 30, 2012, CBF had arranged for a $16.9 million letter of credit to be issued to guarantee certain performance commitments of the Predecessor. This letter of credit will expire without renewal as of December 26, 2012. We will reimburse CBF for the out-of-pocket costs related to this letter of credit.

Prior to October 1, 2012 we participated in an accounts receivable securitization program sponsored by CBI for certain of its subsidiaries. Under this program, we continuously sold certain trade accounts receivable to CBF. In turn, CBF granted, without recourse, a senior undivided interest in the pooled receivables to various purchasers, including commercial paper conduits, in exchange for cash. The loss on sale of our accounts receivable in accordance with this program was $3.5 million in 2011, $1.8 million in 2010 and $1.2 million in 2009. Because most of our receivables were sold, the Predecessor incurred an inconsequential amount of bad debt expense in 2011, 2010 and 2009. If this accounts receivable securitization program had not been in place, incremental bad debt expense would have been $0.2 million in 2011 and less than $0.1 million in both 2010 and 2009. Effective October 1, 2012, we terminated our participation in this receivable securitization program.

Results of Operations

Comparison of Three Months Ended September 30, 2012 and 2011


	Three Months Ended September 30,
(dollars in millions)	2012			2011			$ Change			% Change
Revenue	$	56.7		$	46.5		$	10.2			22	%

Costs and expenses:
Property operating expenses		20.0			15.5			4.5			29	%
Sales and marketing		2.1			2.6			(0.5	)		(19	)%
General and administrative		5.3			3.7			1.6			43	%
Depreciation and amortization		18.8			13.8			5.0			36	%
Transaction costs		0.6			—			0.6			n/m
Management fees charged by CBI		0.9			0.6			0.3			50	%
Loss on sale of receivables to CBF		1.3			1.2			0.1			8	%

Total costs and expenses		49.0			37.4			11.6			31	%

Operating income		7.7			9.1			(1.4	)		(15	)%
Interest expense		11.3			7.9			3.4			43	%

(Loss) income before income taxes		(3.6	)		1.2			(4.8	)		n/m
Income tax (benefit) expense		(0.7	)		0.7			(1.4	)		n/m

(Loss) income from continuing operations		(2.9	)		0.5			(3.4	)		n/m
Gain on sale of real estate improvements		(0.1	)		—			(0.1	)		n/m

Net (loss) income	$	(2.8	)	$	0.5		$	(3.3	)		n/m

Operating margin		13.6	%		19.6	%					(6.0	) pts

Capital expenditures*:
Acquisitions of real estate	$	2.0		$	14.8		$	(12.8	)		(86	%)
Development of real estate		37.5			25.5			12.0			47	%
Recurring real estate		1.4			0.5			0.9			180	%
All other non-real estate		0.7			0.2			0.5			250	%

Total	$	41.6		$	41.0		$	0.6			1	%

Metrics information:
Colocation square feet*		896,000			736,000			160,000			22	%
Utilization rate*		78	%		86	%					(8	) pts

*	See “—Key Operating Metrics” for a definition of capital expenditures, CSF and utilization rate.

Revenue

Revenue was $56.7 million in the third quarter of 2012, an increase of $10.2 million, or 22%, compared to the corresponding quarter in 2011. Revenue increased on leasing of incremental space and sale of power and related colocation services to both new and existing customers. During the third quarter of 2012, 22 new customers were added. The amount of CSF that was contractually committed as of September 30, 2012 increased by 65,000 CSF, or 10%, compared to the end of the third quarter of 2011, generating the increased revenue. Our capacity increased to approximately 896,000 CSF at September 30, 2012, an increase of 22% from a year earlier. During the third quarter of 2012, we added 47,000 CSF at our Frankford Road (Carrollton) facility, 36,000 CSF at our Westover Hills Blvd (San Antonio) facility, and 15,000 CSF at our Westway Park Blvd (Houston West) facility. At September 30, 2012, the utilization rate of our data center facilities was 78%, down eight percentage points from September 30, 2011, as a result of additional CSF being placed in service. Our recurring rent churn for the quarter ended September 30, 2012 was approximately 1.5% (6.0% annualized).

Costs and Expenses

Property operating expenses —Property operating expenses were $20.0 million in the third quarter of 2012, an increase of $4.5 million, or 29%, compared to the corresponding quarter in 2011. Substantially all property operating expenses increased due to expansion of our data center facilities. Utilities increased by $2.4 million on higher electricity usage. Payroll and other employee-related costs increased by $0.9 million from additions to our operations staff. Contract services and rent each increased by $0.5 million compared to the third quarter of 2011.

Sales and marketing expenses —Sales and marketing expenses were $2.1 million in the third quarter of 2012, a decrease of $0.5 million, or 19%, compared to the third quarter of 2011. Compensation to sales and marketing personnel and other support costs decreased by $0.5 million in the third quarter of 2012 compared to the third quarter of 2011, resulting from the integration of the Cincinnati-based sales function into the CyrusOne organization in 2012. Marketing costs increased by $0.1 million compared to the third quarter of 2011. Partially offsetting these increases, consulting costs decreased by $0.1 million compared to the third quarter of 2011.

General and administrative expenses —General and administrative expenses were $5.3 million in the third quarter of 2012, an increase of $1.6 million, or 43%, compared to the third quarter of 2011. This increase was due to higher payroll, employee benefits and other employee-related costs as we continued to build and strengthen the number and quality of our personnel in finance and senior management. In addition, stock-based compensation costs on awards indexed to CBI’s common stock market price increased by $0.8 million compared to the third quarter of 2011.

Depreciation and amortization expense —Depreciation and amortization expense was $18.8 million in the third quarter of 2012, an increase of $5.0 million, or 36%, compared to the corresponding quarter in 2011, driven by new assets placed in service in 2011 and 2012.

Transaction costs —Transaction costs were $0.6 million in the third quarter of 2012, with no such costs in the corresponding period in 2011. Transaction costs consisted of legal and consulting costs incurred in connection with the formation transactions and the qualification of CyrusOne as a REIT.

Management fees charged by CBI —Management fees were $0.9 million in the third quarter of 2012, an increase of $0.3 million, or 50%, compared to the third quarter of 2011. These fees were allocated for services provided by CBI, including executive management, legal, treasury, human resources, accounting, tax, internal audit and IT services. Depending on the nature of the respective cost, our allocated cost for these services was based upon specific identification of costs incurred on our behalf or a reasonable estimate of costs incurred on our behalf. See Note 13 to our audited combined financial statements included elsewhere in this prospectus for additional detail. The increase in management fees resulted from higher allocations of executive compensation associated with stock compensation indexed to CBI’s common stock market price.

Loss on sale of receivables to CBF —Loss on sale of receivables was $1.3 million in the third quarter of 2012, an increase of $0.1 million, or 8%, compared to the corresponding quarter in 2011. Growth in our revenues resulted in more receivables sold in the third quarter of 2012, as compared to the corresponding period in 2011.

Operating Income

Operating income was $7.7 million in the third quarter of 2012, a decrease of $1.4 million, or 15%, compared to the corresponding quarter in 2011. Operating income decreased due to transaction costs of $0.6 million, higher management fees and increased general and administrative expenses incurred to support our growing business. Operating margin was 13.6% in the third quarter of 2012, compared to 19.6% in the corresponding quarter in 2011.

Nonoperating Expenses

Interest expense —Interest expense was $11.3 million in the third quarter of 2012, an increase of $3.4 million, or 43%, compared to the corresponding quarter in 2011. The increase in interest expense was primarily due to an increase in related party notes payable. Capitalized interest expense was $0.2 million in the third quarter of 2012, down $0.5 million as compared to the third quarter of 2011. Lower capitalized interest expense in the third quarter of 2012 was due to the completion of two significant projects in July 2012.

Income tax (benefit) expense —Income tax benefit was $0.7 million in the third quarter of 2012, compared to income tax expense of $0.7 million in the corresponding quarter in 2011, driven by a decrease in our income before income taxes.

Gain on sale of real estate improvements —Gain on sale of real estate improvements was $0.2 million ($0.1 million net of tax) in the third quarter of 2012, with no such gains in the corresponding period of 2011. A gain was realized on the sale of generators as we upgraded the equipment at our Southwest Fwy (Galleria) data center facility.

Capital Expenditures

Capital expenditures were $41.6 million in the third quarter of 2012, an increase of $0.6 million, or 1%, compared to the corresponding quarter in 2011. Acquisitions of real estate were $2.0 million in the third quarter of 2012, down $12.8 million, or 86%, compared to the third quarter in 2011. In the third quarter of 2012, we purchased six acres of land adjacent to our Westway Park Blvd (Houston West) property. In the third quarter of 2011, we purchased 56 acres of land near Phoenix, Arizona. Development of real estate was $37.5 million in the third quarter of 2012, an increase of $12.0 million, or 47%, compared to the corresponding quarter in 2011. In the third quarter of 2012, significant development projects included $11.3 million at Frankford Road (Carrollton), $8.0 million at South Ellis Street (Phoenix), $7.1 million at Westover Hills Blvd (San Antonio), and $5.9 million at Westway Park Blvd (Houston West). In 2011, the largest development projects consisted of expansions at S. State Highway 121 Business (Lewisville), Westway Park Blvd (Houston West) and Metropolis Drive (Austin 2). Recurring real estate expenditures were $1.4 million in the third quarter of 2012, up $0.9 million, or 180%, compared to the corresponding quarter in 2011 due to an increase in CSF in service. Other non-real estate capital expenditures were $0.7 million, up $0.5 million, or 250%, over the comparable period a year ago, as we invested more in back office systems.

Comparison of Nine Months Ended September 30, 2012 and 2011


	Nine Months Ended September 30,
(dollars in millions)	2012			2011			$ Change			% Change
Revenue	$	162.8		$	133.7		$	29.1			22	%

Costs and expenses:
Property operating expenses		55.3			43.3			12.0			28	%
Sales and marketing		5.8			7.1			(1.3	)		(18	)%
General and administrative		15.4			8.5			6.9			81	%
Depreciation and amortization		52.9			40.0			12.9			32	%
Transaction costs		1.3			2.6			(1.3	)		(50	)%
Management fees charged by CBI		2.1			1.9			0.2			11	%
Loss on sale of receivables to CBF		3.7			2.3			1.4			61	%
Asset impairments		13.3			—			13.3			n/m

Total costs and expenses		149.8			105.7			44.1			42	%

Operating income		13.0			28.0			(15.0	)		(54	)%
Interest expense		31.2			24.1			7.1			29	%

(Loss) income before income taxes		(18.2	)		3.9			(22.1	)		n/m
Income tax (benefit) expense		(4.7	)		2.1			(6.8	)		n/m

(Loss) income from continuing operations		(13.5	)		1.8			(15.3	)		n/m
Gain on sale of real estate improvements		(0.1	)		—			(0.1	)		n/m

Net (loss) income	$	(13.4	)	$	1.8		$	(15.2	)		n/m

Operating margin		8.0	%		20.9	%					(12.9	) pts

Capital expenditures*:
Acquisitions of real estate	$	25.4		$	14.8		$	10.6			72	%
Development of real estate		116.1			56.9			59.2			104	%
Recurring real estate		2.0			1.3			0.7			54	%
All other non-real estate		2.9			3.3			(0.4	)		(12	)%

Total	$	146.4		$	76.3		$	70.1			92	%

Metrics information:
Colocation square feet*		896,000			736,000			160,000			22	%
Utilization rate*		78	%		86	%					(8	) pts

*	See “—Key Operating Metrics” for a definition of capital expenditures, CSF and utilization rate.

Revenue

Revenue was $162.8 million in the first nine months of 2012, an increase of $29.1 million, or 22%, compared to the corresponding period in 2011. Revenue increased on leasing of incremental space and sale of power and related colocation services to both new and existing customers. During the first nine months of 2012, 52 new customers were added, including six Fortune 1000 customers or private or foreign enterprises of equivalent size. The amount of CSF that was contractually committed as of September 30, 2012 increased by 65,000 CSF, or 10%, compared to September 30, 2011, generating the increased revenue. Our capacity increased to approximately 896,000 CSF at September 30, 2012, an increase of 22% from the corresponding period end. Compared to the third quarter of 2011, we added 190,000 CSF and decommissioned legacy space totaling approximately 30,000 CSF. At September 30, 2012, the utilization rate of our data center facilities was 78%, down eight percentage points from September 30, 2011, as a result of additional CSF being placed in service.

For the nine months ended September 30, 2012, our recurring rent churn was 4.0% (5.3% annualized), which includes the termination of one lease for legacy data center space that had been utilized for over 20 years.

The legacy data center space has been decommissioned and is expected to be developed into data center space that we believe will generate higher amounts of revenue than the prior lease. Excluding this lease, the recurring rent churn for the nine months ended September 30, 2012 would have been 2.9% (3.9% annualized).

Costs and Expenses

Property operating expenses —Property operating expenses were $55.3 million in the first nine months of 2012, an increase of $12.0 million, or 28%, compared to the corresponding period in 2011. Substantially all property operating expenses increased due to expansion of our data center facilities. Utilities increased by $6.2 million as we expanded our CSF. Payroll and other employee-related costs increased by $1.9 million due to increases in our operations staff. Contract services, including security, increased by $2.2 million in the first nine months of 2012. Rent increased by $1.2 million compared to the corresponding period in 2011 as we expanded our leased CSF.

Sales and marketing expenses —Sales and marketing expenses were $5.8 million in the first nine months of 2012, a decrease of $1.3 million, or 18%, compared to the corresponding period in 2011. Compensation to sales and marketing personnel and other support costs decreased by $2.0 million in the first nine months of 2012 compared to the corresponding period of 2011, resulting from the integration of the Cincinnati-based sales function into the CyrusOne organization in 2012. Marketing costs increased by $0.6 million in the first nine months of 2012 as we continue to build our brand awareness.

General and administrative expenses —General and administrative expenses were $15.4 million in the first nine months of 2012, an increase of $6.9 million, or 81%, compared to the corresponding period in 2011. Payroll, employee benefits and other employee-related costs increased by $4.9 million in the first nine months of 2012 as we continued to build and strengthen the quality of personnel in finance and senior management. Consulting and legal costs increased by $1.2 million compared to the first nine months of 2011. Consulting and legal costs for the first nine months of 2012 included a $0.5 million settlement of an employee dispute related to commissions. Severance costs associated with the termination of a member of senior management were $0.4 million in the first nine months of 2012, with no such costs in the corresponding period in 2011.

Depreciation and amortization expense —Depreciation and amortization expense was $52.9 million in the first nine months of 2012, an increase of $12.9 million, or 32%, compared to the corresponding period in 2011, driven by new assets placed in service in 2011 and 2012.

Transaction costs —Transaction costs were $1.3 million in the first nine months of 2012, down $1.3 million, or 50% compared to the corresponding period in 2011. In 2012, transaction costs consisted of legal and consulting costs incurred in connection with the formation transactions and the qualification of CyrusOne as a REIT. In 2011, transaction costs were incurred to pursue acquisition opportunities.

Management fees charged by CBI —Management fees were $2.1 million in the first nine months of 2012, an increase of $0.2 million, or 11%, compared to the corresponding period in 2011. These fees were allocated for services provided by CBI, including executive management, legal, treasury, human resources, accounting, tax, internal audit and IT services. Depending on the nature of the respective cost, our allocated cost for these services was based upon specific identification of costs incurred on our behalf or a reasonable estimate of costs incurred on our behalf. See Note 13 to our audited combined financial statements included elsewhere in this prospectus for additional details. The increase in management fees in 2012 resulted from higher amounts of executive compensation indexed to CBI’s common stock market price.

Loss on sale of receivables to CBF —Loss on sale of receivables was $3.7 million in the first nine months of 2012, an increase of $1.4 million, or 61%, compared to the corresponding period in 2011. In the first nine months of 2012, substantially all of our receivables were sold to CBF at a discount of 2.5% from their face value. In the first nine months of 2011, a smaller amount of receivables was sold, as not all of our subsidiaries participated in this program at that time.

Asset impairments —During the first nine months of 2012, asset impairments of $13.3 million were recognized on a customer relationship intangible and long-lived assets primarily associated with our GramTel acquisition. No asset impairments were recognized in the corresponding period in 2011.

Operating Income

Operating income was $13.0 million in the first nine months of 2012, a decrease of $15.0 million, or 54%, compared to the corresponding period in 2011. Operating income decreased primarily due to asset impairments of $13.3 million. Operating margin was 8.0% in the first nine months of 2012, compared to 20.9% in the corresponding period in 2011.

Nonoperating Expenses

Interest expense —Interest expense was $31.2 million in the first nine months of 2012, an increase of $7.1 million, or 29%, compared to the corresponding period in 2011. The increase in interest expense is primarily due to growth in related party notes payable. Capitalized interest expense was $1.6 million in the first nine months of both 2012 and 2011.

Income tax (benefit) expense —Income tax benefit was $4.7 million in the first nine months of 2012, compared to income tax expense of $2.1 million in the corresponding period in 2011, driven by a decrease in our income before income taxes.

Gain on sale of real estate improvements —Gain on sale of real estate improvements was $0.2 million ($0.1 million net of tax) in the first nine months of 2012, with no such gains in the corresponding period of 2011. A gain was realized on the sale of generators as we upgraded the equipment at our Southwest Fwy (Galleria) data center facility.

Capital Expenditures

Capital expenditures were $146.4 million in the first nine months of 2012, an increase of $70.1 million, or 92%, compared to the corresponding period in 2011. Acquisitions of real estate were $25.4 million in the first nine months of 2012 for the purchase of the Frankford Road (Carrollton) building and land adjacent to our Westway Park Blvd (Houston West) facility. In the first nine months of 2011, acquisitions of real estate were $14.8 million for the purchase of 56 acres of land near Phoenix, Arizona. Development of real estate was $116.1 million in the first nine months of 2012, an increase of $59.2 million, or 104%, compared to the corresponding period of 2011. In the first nine months of 2012, significant development projects included $29.6 million at Westover Hills Blvd (San Antonio), $27.3 million at Frankford Road (Carrollton), $25.0 million at Westway Park Blvd (Houston West), $13.5 million at South Ellis Street (Phoenix) and $7.5 million at Metropolis Drive (Austin 2). In the first nine months of 2011, the largest development projects consisted of expansions at S. State Highway 121 Business (Lewisville), Westway Park Blvd (Houston West) and Metropolis Drive (Austin 2). Recurring real estate capital spend was $2.0 million in the first nine months of 2012, up $0.7 million, or 54%, compared to the first nine months of 2011 due to an increase in CSF in service. Other non-real estate capital expenditures were $2.9 million, down $0.4 million, or 12%, over the comparable period in 2011.

For 2012, our capital expenditures are expected to approximate $240 million, of which $146.4 million was spent in the first nine months of 2012. See “—Liquidity and Capital Resources—Short-Term Liquidity” for further details on how we expect to fund these expenditures.

Comparison of Years Ended December 31, 2011 and 2010


(dollars in millions)	2011			2010			$ Change 2011 vs. 2010			% Change 2011 vs. 2010
Revenue	$	181.7		$	127.5		$	54.2			43	%
Costs and expenses:
Property operating expenses		58.2			43.9			14.3			33	%
Sales and marketing		9.1			6.8			2.3			34	%
General and administrative		12.5			7.0			5.5			79	%
Depreciation and amortization		55.5			36.2			19.3			53	%
Acquisition costs		2.6			9.0			(6.4	)		(71	)%
Management fees charged by CBI		2.3			3.6			(1.3	)		(36	)%
Loss on sale of receivables to CBF		3.5			1.8			1.7			94	%
Restructuring costs		—			1.4			(1.4	)		n/m

Total costs and expenses		143.7			109.7			34.0			31	%

Operating income		38.0			17.8			20.2			113	%
Interest expense		32.9			11.5			21.4			186	%
Loss on extinguishment of debt		1.4			—			1.4			n/m

Income before income taxes		3.7			6.3			(2.6	)		(41	)%
Income tax expense		2.2			2.7			(0.5	)		(19	)%

Income from continuing operations		1.5			3.6			(2.1	)		(58	)%
Loss on sale of real estate improvements		—			0.1			(0.1	)		n/m

Net income	$	1.5		$	3.5		$	(2.0	)		(57	)%

Operating margin		20.9	%		14.0	%					6.9	pts
Capital expenditures*:
Acquisitions of real estate	$	22.4		$	—		$	22.4			n/m
Development of real estate		91.8			24.7			67.1			272	%
Recurring real estate		1.8			1.8			—			0	%
All other non-real estate		1.5			2.8			(1.3	)		(46	)%

Total	$	117.5		$	29.3		$	88.2			301	%

Metrics information:
Colocation square feet*		763,000			639,000			124,000			19	%
Utilization rate*		88	%		88	%					0	pts

*	See “—Key Operating Metrics” for a definition of capital expenditures, CSF and utilization rate.

Revenue

Revenue was $181.7 million in 2011, an increase of $54.2 million, or 43%, compared to 2010. Results for 2011 include a full year of results from Cyrus Networks, which we acquired in June 2010. Cyrus Networks revenue was $95.4 million for the full year in 2011 compared to a partial year of revenues of $44.9 million in 2010. New business also contributed to the growth in revenue in 2011. In 2011, we completed construction on 124,000 CSF and leased 110,000 CSF. During the year, 82 new customers were added, including 14 Fortune 1000 customers or private or foreign enterprises of equivalent size. During 2011, we also commenced our operations in London and Singapore.

As of December 31, 2011, our total data center capacity was 763,000 CSF, an increase of 19% compared to December 31, 2010. Data center space was added in Houston, Dallas and Austin, Texas, at our Kingsview Drive (Lebanon) facility, as well as in London and Singapore. The utilization rate of 88% at December 31, 2011 was consistent with the utilization rate at the end of the prior year. Recurring rent churn for 2011 was 3%, approximately half of which was attributable to customers that ceased using our facilities.

Costs and Expenses

Property operating expenses —Property operating expenses were $58.2 million in 2011, an increase of $14.3 million, or 33%, compared to 2010. This increase in property operating expenses was primarily due to growth in our data center capacity associated with the acquisition of Cyrus Networks in June 2010 as well as expansion of our other data center facilities and corresponding increases in revenue. Cyrus Networks’ property operating expenses were $26.1 million in 2011 compared to $12.4 million in 2010, due to a full year of operations in 2011 compared to a partial year in 2010 due to the acquisition.

Sales and marketing expenses —Sales and marketing expenses were $9.1 million in 2011, an increase of $2.3 million, or 34%, compared to 2010. A full year of Cyrus Networks’ costs increased sales and marketing by $1.6 million. Consulting and advertising costs increased by $0.3 million and $0.7 million, respectively, in 2011 as we enhanced our Internet marketing and commenced a national branding campaign. Partially offsetting these increases, sales commission expense decreased in 2011 due to the termination of a commissions plan which paid commissions as a percentage of monthly revenue. In 2011, all sales commissions were paid upon lease commencement, deferred and amortized to depreciation and amortization over the term of the customer relationship.

General and administrative expenses —General and administrative expenses were $12.5 million, an increase of $5.5 million, or 79%, compared to 2010. A full year of Cyrus Networks’ costs increased general and administrative costs by $2.1 million. Compensation costs increased in 2011 by $1.6 million as we hired additional management to lead our growth strategy. Legal and consulting costs increased by $1.6 million to support the growing operations, including start up costs associated with new locations. Contract services increased by $0.2 million due to increased use of temporary services to fill open positions.

Depreciation and amortization expense —Depreciation and amortization expense was $55.5 million in 2011, an increase of $19.3 million, or 53%, compared to 2010. A full year of depreciation and amortization on tangible and intangible assets from the June 2010 Cyrus Networks acquisition was the primary reason for the higher costs in 2011. Additional data center space placed in service in 2011 also contributed to higher depreciation.

Acquisition costs —Acquisition costs were $2.6 million in 2011, a decrease of $6.4 million, or 71%, compared to 2010. In 2011, acquisition opportunities were investigated, but none were completed. Acquisition costs of $9.0 million in 2010 were all related to the acquisition of Cyrus Networks.

Management fees charged by CBI —Management fees were $2.3 million in 2011, a decrease of $1.3 million, or 36%, compared to 2010. Management fees represent corporate allocations of services provided by CBI, including executive management, legal, treasury, human resources, accounting, tax, internal audit and IT services. Depending on the nature of the respective cost, our allocated cost for these services was based upon specific identification of costs incurred on our behalf or a reasonable estimate of costs incurred on our behalf, such as relative revenues. Management fees were higher in 2010 due to corporate compensation costs associated with time devoted to the acquisition and integration of Cyrus Networks.

Loss on sale of receivables to CBF —Loss on sale of receivables was $3.5 million in 2011, an increase of $1.7 million, or 94%, compared to 2010. As discussed above, certain of our receivables are sold to CBF at a discount of 2.5% from their face value. Loss on sale of receivables increased in 2011 which reflects a larger volume of receivables sold as Cyrus Networks began selling its receivables to CBF in 2011.

Restructuring costs —No restructuring costs were incurred in 2011. A restructuring charge of $1.4 million was incurred in 2010 for payments to be made in order to terminate a legacy sales commission plan to transition to a common plan for all commissioned employees.

Operating Income

Operating income was $38.0 million in 2011, an increase of $20.2 million, or 113%, compared to 2010. Operating income increased on growth in revenues, resulting from the acquisition of Cyrus Networks as well as new business. Our operating margin was 20.9% in 2011 compared to 14.0% in 2010. The improvement in the operating margin in 2011 is largely due to higher margins realized at our recently acquired data centers as well as lower acquisition costs, management fees and restructuring costs incurred in 2011, partially offset by increased loss on sale of receivables to CBF in 2011.

Nonoperating Expenses

Interest expense —Interest expense was $32.9 million in 2011, an increase of $21.4 million, or 186%, compared to 2010. On December 31, 2010, the Predecessor made a non-cash distribution to CBI by issuing a note payable to CBI for $400 million. This note bears interest at 7.25%. In 2011, interest expense recognized on this note was $29.0 million. In the prior year, the Predecessor’s debt consisted of a $168 million allocation of the parent company debt incurred to acquire Cyrus Networks. The interest rate on that note was 6.5%. In 2010, interest expense recognized on this debt was $6.8 million. The parent acquisition debt was subsumed into the $400 million note issued to CBI on December 31, 2010. Interest expense on capital leases and other borrowings increased by $1.3 million in 2011, which primarily reflects a larger number of leased facilities. Capitalized interest on construction projects was $2.6 million in 2011, an increase of $2.1 million over the prior year, due to increased capital spending on data center expansions.

Loss on extinguishment of debt —A loss on debt extinguishment of $1.4 million occurred in 2011 resulting from the termination of a financing obligation. No such losses occurred in 2010.

Income tax expense —Income tax expense was $2.2 million in 2011, a decrease of $0.5 million, or 19%, compared to 2010, due primarily to lower pre-tax income. The effective tax rate was 59.4% in 2011 compared to 42.7% in 2010. The increase in the effective tax rate results from higher Texas margin taxes, which are assessed based on Texas revenues with limited adjustments and were $0.4 million in 2011 compared to $0.2 million in 2010 net of the related federal tax benefit, and $0.3 million in valuation allowance charges on current foreign losses.

Loss on sale of real estate improvements —In 2010, a $0.2 million pre-tax ($0.1 million after-tax) loss was recognized upon the sale of generators that were replaced with higher capacity equipment at our Springer Street (Lombard) data center. No such losses were recognized in 2011.

Capital Expenditures

Capital expenditures were $117.5 million in 2011, an increase of $88.2 million, or 301%, compared to $29.3 million of capital expenditures in 2010. Acquisitions of real estate were $22.4 million in 2011 consisting of purchases of land in Phoenix, Arizona for $14.8 million and a building in San Antonio, Texas for $7.6 million. Development of real estate was $91.8 million in 2011, an increase of $67.1 million, or 272%, compared to 2010. Significant development projects in 2011 included expansion of our data centers at S. State Highway 121 Business (Lewisville) and Westway Park Blvd (Houston West), Metropolis Drive (Austin 2) and Kingsview Drive (Lebanon). In 2010, a power upgrade project at Southwest Freeway (Galleria) and an expansion at Westway Park Blvd (Houston West) were the largest development projects. Recurring real estate expenditures were $1.8 million in both 2011 and 2010. Other non-real estate capital expenditures were $1.5 million in 2011, a decrease of $1.3 million, or 46%, compared to 2010.

Comparison of Years Ended December 31, 2010 and 2009


(dollars in millions)	2010			2009			$ Change 2010 vs. 2009			% Change 2010 vs. 2009
Revenue	$	127.5		$	74.1		$	53.4			72	%
Costs and expenses:
Property operating expenses		43.9			31.0			12.9			42	%
Sales and marketing		6.8			5.1			1.7			33	%
General and administrative		7.0			4.2			2.8			67	%
Depreciation and amortization		36.2			18.0			18.2			101	%
Acquisition costs		9.0			—			9.0			n/m
Management fees charged by CBI		3.6			1.5			2.1			140	%
Loss on sale of receivables to CBF		1.8			1.2			0.6			50	%
Restructuring costs		1.4			—			1.4			n/m

Total costs and expenses		109.7			61.0			48.7			80	%

Operating income		17.8			13.1			4.7			36	%
Interest expense		11.5			3.1			8.4			271	%

Income before income taxes		6.3			10.0			(3.7	)		(37	)%
Income tax expense		2.7			3.9			(1.2	)		(31	)%

Income from continuing operations		3.6			6.1			(2.5	)		(41	)%
Loss on sale of real estate improvements		0.1			—			0.1			n/m

Net income	$	3.5		$	6.1		$	(2.6	)		(43	)%

Operating margin		14.0	%		17.7	%					(3.7	) pts

Capital expenditures*:
Acquisitions of real estate	$	—		$	—		$	—			n/m
Development of real estate		24.7			16.1			8.6			53	%
Recurring real estate		1.8			1.5			0.3			20	%
All other non-real estate		2.8			3.1			(0.3	)		(10	)%

Total	$	29.3		$	20.7		$	8.6			42	%

Metrics information:
Colocation square feet*		639,000			446,000			193,000			43	%
Utilization rate*		88	%		87	%					1	pt

*	See “—Key Operating Metrics” for a definition of capital expenditures, CSF and utilization rate.

Revenue

Revenue was $127.5 million in 2010, an increase of $53.4 million, or 72%, compared to 2009. The acquisition of Cyrus Networks in June 2010 increased revenue by $44.9 million. Additionally, our legacy data center operations generated higher revenue in 2010 as compared to 2009 due to a full year of revenue from our Kingsview Drive (Lebanon) facility. The Kingsview Drive (Lebanon) facility, which is located in a northern suburb of Cincinnati, opened at the end of the first quarter of 2009, adding approximately 12,000 square feet to our utilized data center space at December 31, 2010 compared to the prior year end. During the year, 84 new customers were added, including 18 Fortune 1000 customers or private or foreign enterprises of equivalent size.

Our data center capacity increased to 639,000 CSF at December 31, 2010, an increase of 43% from December 31, 2009, primarily from the acquisition of Cyrus Networks. At December 31, 2010, the utilization rate was 88%, a slight increase compared to 2009.

Costs and Expenses

Property operating expenses —Property operating expenses were $43.9 million in 2010, an increase of $12.9 million, or 42%, compared to 2009. This increase was primarily related to the acquisition of Cyrus Networks, which had property operating expenses of $12.4 million, and the expansion of our legacy operations.

Sales and marketing expenses —Sales and marketing expenses were $6.8 million in 2010, an increase of $1.7 million, or 33%, compared to 2009. The increase was primarily related to the acquisition of Cyrus Networks, which added $1.1 million to sales and marketing costs in 2010. Marketing, commissions and other sales support costs also increased by $0.6 million in 2010 compared to the prior year.

General and administrative expenses —General and administrative expenses were $7.0 million in 2010, an increase of $2.8 million, or 67%, compared to 2009. This increase was also primarily related to the acquisition of Cyrus Networks, which added $3.1 million of general and administrative costs. Other general and administrative costs decreased by $0.3 million in 2010 compared to the prior year due to lower costs associated with shared employees.

Depreciation and amortization expense —Depreciation and amortization expense was $36.2 million in 2010, an increase of $18.2 million, or 101%, from 2009. This increase was primarily due to the assets acquired from the Cyrus Networks acquisition. Depreciation expense and amortization expense for Cyrus Networks was $8.5 million and $8.0 million, respectively, in 2010. The expansion of our legacy data centers in 2009 also contributed to the higher depreciation expense in 2010.

Acquisition costs —Acquisition costs of $9.0 million were incurred in 2010, which were all associated with the acquisition of Cyrus Networks. Such costs consisted of legal, consulting and other costs incurred to complete this transaction. No acquisition costs were incurred in 2009.

Management fees charged by CBI —Management fees were $3.6 million in 2010, an increase of $2.1 million, or 140%, compared to 2009. Management fees represent corporate allocations of services provided by CBI, including executive management, legal, treasury, human resources, accounting, tax, internal audit and IT services. Depending on the nature of the respective cost, our allocated cost for these services was based upon specific identification of costs incurred on our behalf or a reasonable estimate of costs incurred on our behalf, such as relative revenues. Management fees were higher in 2010 due to corporate compensation costs associated with time devoted to the acquisition and integration of Cyrus Networks.

Loss on sale of receivables to CBF —Loss on sale of receivables was $1.8 million in 2010, an increase of $0.6 million, or 50%, compared to 2009. A larger volume of receivables was sold in 2010 as compared to the prior year due to higher revenues and because we began selling more receivables in March 2009.

Restructuring costs —A restructuring charge of $1.4 million was incurred in 2010 for payments to be made in order to terminate a legacy sales commission plan to transition to a common plan for all commissioned employees.

Operating Income

Operating income was $17.8 million in 2010, an increase of $4.7 million, or 36%, compared to 2009. Growth in operating income resulted from growth in revenues due to the acquisition of Cyrus Networks and new business. Operating margin was 14.0% in 2010 compared to 17.7% in 2009. The decrease in operating margins in 2010 resulted from acquisition costs and restructuring charges incurred in 2010, with no similar costs in 2009, partially offset by higher margins on data centers acquired in 2010.

Nonoperating Expenses

Interest expense —Interest expense was $11.5 million in 2010, an increase of $8.4 million compared to 2009. In June 2010, concurrent with the acquisition of Cyrus Networks, we recognized an allocation of parent company acquisition debt of $168 million. Interest expense recognized on this debt in 2010 was $6.8 million. Interest expense on capital leases and other borrowings increased by $1.8 million in 2010, which primarily reflects an increase in leased data center facilities acquired with Cyrus Networks. Capitalized interest also increased by $0.2 million compared to the prior year.

Income tax expense —Income tax expense was $2.7 million in 2010, a decrease of $1.2 million, or 31%, compared to 2009, due to lower pre-tax income. The effective tax rate was 42.7% in 2010 and 38.5% in 2009. The higher effective tax rate in 2010 was due to the Texas margin tax, which is assessed based on Texas revenues with limited adjustments. The Texas margin tax, net of the federal benefit, was $0.2 million in 2010 with no such tax incurred in 2009 as Cyrus Networks was acquired in 2010.

Capital Expenditures

Capital expenditures were $29.3 million in 2010, an increase of $8.6 million, or 42%, compared to $20.7 million of capital expenditures in 2009. In 2010, development of real estate was $24.7 million, an increase of $8.6 million, or 53%, compared to 2009. In 2010, a power upgrade project at Southwest Freeway (Galleria) and an expansion at Westway Park Blvd (Houston West) were the largest development projects. In 2009, we completed construction of our Kingsview Drive (Lebanon) data center and upgrades at West Seventh Street (7th St.). Recurring real estate expenditures were $1.8 million in 2010, an increase of $0.3 million, or 20%, compared to 2009, which reflects an increase in CSF. Other non-real estate capital expenditures were $2.8 million in 2010, a decrease of $0.3 million, or 10%, compared to 2009.

Quarterly Results of Operations Data

The following tables set forth our unaudited quarterly combined statements of operations for each of the eight quarters ended September 30, 2012. We have prepared this quarterly data on a basis consistent with the audited financial statements included elsewhere in this prospectus. In the opinion of management, the financial information reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data. This information should be read in conjunction with the audited combined financial statements and related notes included elsewhere in this prospectus. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.


	Unaudited
	Three Months Ended
(dollars in millions)	Sept. 30, 2012			June 30, 2012			March 31, 2012			Dec. 31, 2011			Sept. 30, 2011		June 30, 2011		March 31, 2011			Dec. 31, 2010
Revenue	$	56.7		$	54.0		$	52.1		$	48.0		$	46.5	$	44.5	$	42.7		$	41.4
Costs and expenses:
Property operating expenses		20.0			18.1			17.3			14.9			15.5		14.1		13.7			13.9
Sales and marketing		2.1			1.8			1.8			2.0			2.6		2.4		2.1			1.8
General and administrative		5.3			5.5			4.5			4.0			3.7		2.1		2.7			1.9
Depreciation and amortization		18.8			17.8			16.4			15.5			13.8		13.6		12.6			13.3
Transaction costs		0.6			0.7			—			—			—		0.4		2.2			—
Management fees charged by CBI		0.9			0.5			0.7			0.3			0.6		0.7		0.7			1.1
Loss on sale of receivables to CBF		1.3			1.1			1.2			1.3			1.2		0.6		0.4			0.5
Restructuring costs		—			—			—			—			—		—		—			1.4
Asset impairments		—			13.3			—			—			—		—		—			—

Total costs and expenses		49.0			58.8			41.9			38.0			37.4		33.9		34.4			33.9

Operating income (loss)		7.7			(4.8	)		10.2			10.0			9.1		10.6		8.3			7.5
Interest expense		11.3			9.7			10.3			8.8			7.9		8.1		8.1			4.4
Loss on extinguishment of debt		—			—			—			1.4			—		—		—			—

(Loss) income before income taxes		(3.6	)		(14.5	)		(0.1	)		(0.2	)		1.2		2.5		0.2			3.1
Income tax (benefit) expense		(0.7	)		(4.6	)		0.6			0.1			0.7		1.1		0.3			1.3

(Loss) income from continuing operations		(2.9	)		(9.9	)		(0.7	)		(0.3	)		0.5		1.4		(0.1	)		1.8
Gain on sale of real estate improvements		(0.1	)		—			—			—			—		—		—			—

Net (loss) income	$	(2.8	)	$	(9.9	)	$	(0.7	)	$	(0.3	)	$	0.5	$	1.4	$	(0.1	)	$	1.8

Non-GAAP Measures:
NOI ^(a)	$	36.7		$	35.9		$	34.8		$	33.1		$	31.0	$	30.4	$	29.0		$	27.5
EBITDA ^(b)		26.6			13.0			26.6			24.1			22.9		24.2		20.9			20.8
Adjusted EBITDA ^(b)		29.5			28.0			28.1			26.8			24.1		25.2		23.5			22.7

(a)

We calculate NOI as net (loss) income, as defined by U.S. GAAP, excluding gain on sale of real estate improvements, plus income tax (benefit) expense, loss on extinguishment of debt, interest expense, sales and marketing costs, general and administrative costs, depreciation and amortization, transaction costs, management fees charged by CBI, loss on sale of receivables to CBF, restructuring costs and asset impairments. NOI can also be calculated as revenue less property operating expenses. Amortization of deferred leasing costs is presented within depreciation and amortization, which is excluded from our NOI calculation. We have not historically incurred any tenant improvement costs. Our sales and marketing costs consist of salaries and benefits of our internal sales staff, travel and entertainment, office supplies, marketing and advertising costs. General and administrative costs include salaries and benefits of senior management and support functions, legal and consulting costs, and other administrative costs. Marketing and advertising costs are not property specific, rather these costs support our entire portfolio. As a result, we have excluded these marketing and advertising costs from our NOI calculation, consistent with the treatment of general and administrative costs, which also support our entire portfolio.

Other REITs may not calculate NOI in the same manner. Accordingly, our NOI may not be comparable to other REITs’ NOI. Management uses NOI and pro forma NOI as supplemental performance measures because they provide useful measures of the profitability of our leases. NOI and pro forma NOI should be considered only as supplements to net income as measures of our performance. NOI and pro forma NOI should not be used as measures of liquidity nor are they indicative of funds available to meet our cash needs, including our ability to pay dividends or make distributions.

A reconciliation of net (loss) income to NOI is presented below:


(dollars in millions)
	Three Months Ended
	Sept. 30, 2012			June 30, 2012			March 31, 2012			Dec. 31, 2011			Sept. 30, 2011		June 30, 2011		March 31, 2011			Dec. 31, 2010
Net (loss) income	$	(2.8	)	$	(9.9	)	$	(0.7	)	$	(0.3	)	$	0.5	$	1.4	$	(0.1	)	$	1.8
Gain on sale of real estate improvements		(0.1	)		—			—			—			—		—		—			—
Income tax (benefit) expense		(0.7	)		(4.6	)		0.6			0.1			0.7		1.1		0.3			1.3
Loss on extinguishment of debt		—			—			—			1.4			—		—		—			—
Interest expense		11.3			9.7			10.3			8.8			7.9		8.1		8.1			4.4
Sales and marketing		2.1			1.8			1.8			2.0			2.6		2.4		2.1			1.8
General and administrative		5.3			5.5			4.5			4.0			3.7		2.1		2.7			1.9
Depreciation and amortization		18.8			17.8			16.4			15.5			13.8		13.6		12.6			13.3
Transaction costs		0.6			0.7			—			—			—		0.4		2.2			—
Management fees charged by CBI		0.9			0.5			0.7			0.3			0.6		0.7		0.7			1.1
Loss on sale of receivables to CBF		1.3			1.1			1.2			1.3			1.2		0.6		0.4			0.5
Restructuring costs		—			—			—			—			—		—		—			1.4
Asset impairments		—			13.3			—			—			—		—		—			—

NOI	$	36.7		$	35.9		$	34.8		$	33.1		$	31.0	$	30.4	$	29.0		$	27.5

(b)

We calculate EBITDA as net (loss) income as defined by U.S. GAAP plus interest expense, income tax (benefit) expense and depreciation and amortization. We calculate Adjusted EBITDA as EBITDA plus transaction costs, loss on sale of receivables to CBF, restructuring costs, loss on extinguishment of debt, asset impairments, stock-based compensation expense resulting from changes in CBI’s stock price, and excluding gain on sale of real estate improvements. Other companies may not calculate EBITDA or Adjusted EBITDA in the same manner. Accordingly, our EBITDA and Adjusted EBITDA may not be comparable to others. Management uses EBITDA, pro forma EBITDA, Adjusted EBITDA and pro forma Adjusted EBITDA as supplemental performance measures as they provide useful measures of assessing the results of operations. EBITDA, pro forma EBITDA, Adjusted EBITDA and pro forma Adjusted EBITDA should be considered only as supplements to net income as measures of our performance and should not be used as substitutes for net income. A reconciliation of net (loss) income to EBITDA and Adjusted EBITDA is presented below:


(dollars in millions)
	Three Months Ended
	Sept. 30, 2012			June 30, 2012			March 31, 2012			Dec. 31, 2011			Sept. 30, 2011		June 30, 2011		March 31, 2011			Dec. 31, 2010
Net (loss) income	$	(2.8	)	$	(9.9	)	$	(0.7	)	$	(0.3	)	$	0.5	$	1.4	$	(0.1	)	$	1.8
Interest expense		11.3			9.7			10.3			8.8			7.9		8.1		8.1			4.4
Income tax (benefit) expense		(0.7	)		(4.6	)		0.6			0.1			0.7		1.1		0.3			1.3
Depreciation and amortization		18.8			17.8			16.4			15.5			13.8		13.6		12.6			13.3

EBITDA	$	26.6		$	13.0		$	26.6		$	24.1		$	22.9	$	24.2	$	20.9		$	20.8

Transaction costs		0.6			0.7			—			—			—		0.4		2.2			—
Loss on sale of receivable to CBF		1.3			1.1			1.2			1.3			1.2		0.6		0.4			0.5
Restructuring costs		—			—			—			—			—		—		—			1.4
Loss on extinguishment of debt		—			—			—			1.4			—		—		—			—
Stock-based compensation mark-to-market		1.1			(0.1	)		0.3			—			—		—		—			—
Asset impairments		—			13.3			—			—			—		—		—			—
Gain on sale of real estate improvements		(0.1)			—			—			—			—		—		—			—

Adjusted EBITDA	$	29.5		$	28.0		$	28.1		$	26.8		$	24.1	$	25.2	$	23.5		$	22.7

The Predecessor’s results of operations are generally not influenced by seasonality or cyclicality, other than electricity costs, which are generally higher in the summer months as higher volumes of electricity are consumed for cooling our data centers during this period.

Liquidity and Capital Resources

We will be required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, to our stockholders on an annual basis in order to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to common stockholders and operating partnership unit holders from cash flow from operating activities. All such distributions are at the discretion of our board of directors.

On November 20, 2012, CyrusOne LP issued $525 million of senior notes and entered into a $225 million revolving credit facility. The senior notes are scheduled to mature in 2022 and bear interest at a rate of 6.375%. Borrowings under the revolving credit facility bear interest at a variable rate based on, at CyrusOne LP’s option, a rate equal to an applicable margin over either a base rate or a LIBOR rate. The revolving credit facility is scheduled to mature in 2017. We utilized approximately $480 million of net proceeds from our senior notes issuance to partially repay our notes due to related parties, which totaled $612.1 million at September 30, 2012. The notes payable remaining after such repayment were not contributed to the operating partnership.

We expect to offer a % interest in CyrusOne Inc. through this offering. We plan to utilize a portion of these proceeds, based upon the midpoint of the price range set forth on the cover page of this prospectus, to pay approximately $25 million of offering costs and to retain approximately $275 million to fund future growth.

Short-Term Liquidity

Our short-term liquidity requirements primarily consist of operating expenses and capital expenditures composed primarily of acquisition costs for the development of data center properties. For 2012, our capital expenditures are projected to be approximately $240 million, of which $146.4 million was spent in the first nine months of 2012. We expect to fund capital expenditures with a portion of the net proceeds of this offering and availability under the revolving credit facility. Our capital expenditures are largely discretionary and will be applied to expand our existing data center properties, acquire or construct new facilities, or both. For 2012, we expect to complete the construction of approximately 200,000 CSF. In 2012, our most significant capital expenditures will fund construction of a new data center in Phoenix, Arizona and the development of properties recently acquired in Dallas and San Antonio, Texas. Expansion efforts are also ongoing in Houston, Texas. We intend to continue to pursue additional growth opportunities and are prepared to commit additional resources to support this growth.

As of September 30, 2012 and December 31, 2011, we had $3.2 million and $0.6 million, respectively, of cash and cash equivalents. We had minimal amounts of cash on hand as, prior to the closing of the formation transactions on November 20, 2012, we participated in CBI’s centralized cash management program. Prior to such date, all excess cash was transferred to CBI’s corporate cash accounts on a periodic basis. Likewise, substantially all funds to finance our operations, including acquisitions and development costs, were funded by CBI. Upon completion of this offering, the formation transactions and the related financing transactions, we expect to have approximately $308 million of cash and cash equivalents on our balance sheet based on the mid-point of the price range set forth on the front cover of this prospectus and, subject to the satisfaction of certain conditions, the ability to borrow up to an additional $225 million under our new revolving credit facility.

Long-Term Liquidity

Our long-term liquidity requirements primarily consist of distributions to stockholders and the development of additional data center properties. Subsequent to this offering, we expect to meet our long-term liquidity

requirements with cash flows from our operations, issuances of debt and equity securities, secured borrowings and borrowings on our new revolving credit facility.

As of September 30, 2012, our debt and other financing arrangements were $699.3 million, consisting of notes payable to related parties of $612.1 million, capital lease obligations of $38.0 million and other financing arrangements of $49.2 million. The notes payable to related parties of $612.1 million is composed of a fixed term $400.0 million note payable to CBI maturing in 2018 and cash management notes payable to CBI and its subsidiaries of $212.1 million as of September 30, 2012. Balances due to various affiliates are settled with CBI the month after they are incurred. Interest is earned on amounts due from CBI and charged on amounts due to CBI. Prior to this offering, we repaid most of our debt with CBI and its affiliates. The remaining balance of such notes was not contributed to the operating partnership.

As of September 30, 2012, we, along with several CBI subsidiaries, guaranteed a total of $2.2 billion of CBI debt. These guarantees were joint and several, and full and unconditional. If CBI had defaulted on its debt service obligation, we could have been held responsible for repayment of some portion of this debt. We were released from these guarantee obligations in connection with the closing of the formation transactions on November 20, 2012.

Pro Forma Indebtedness

As summarized in the following table, on a pro forma basis after giving effect to the consummation of the formation transactions and related financing transactions we would have had approximately $563 million of indebtedness, including capital lease obligations, and $49 million of other financing arrangements, as of September 30, 2012. We also have $225 million of available capacity under the new revolving credit facility. The availability of funds under our revolving credit facility depends on compliance with applicable restrictions and covenants set forth in the agreements governing our indebtedness and market conditions, and there can be no assurance that additional credit will be available to us on acceptable terms or at all. The following table summarizes our outstanding indebtedness as of September 30, 2012 on a pro forma basis after giving effect to this offering, the formation transactions and the related financing transactions:


(dollars in millions)	Interest Rate			Principal Amount		Annual Debt Service		Maturity Date		Balance at Maturity
Capital lease obligations		various		$	38.0	$	7.4		various	$	—
Revolving credit facility		variable			—		—		2017		—
6.375% Senior Notes due 2022		6.375	%		525.0		33.5		2022		525.0

Other financing arrangements		various			49.2		3.8		various		—

				$	612.2	$	44.7			$	525.0

Material Terms of Our Indebtedness to be Outstanding After this Offering

Revolving Credit Facility

On November 20, 2012, our operating partnership entered into a new $225 million revolving credit facility with a syndicate of financial institutions as lenders and Deutsche Bank Trust Company Americas, as administrative agent and a lender. Upon the completion of this offering, the revolving credit facility is expected to have available capacity of $225 million. The revolving credit facility is scheduled to mature in 2017. All obligations under the revolving credit facility will be unconditionally guaranteed by CyrusOne Inc., CyrusOne GP and each of our operating partnership’s existing and future domestic wholly-owned subsidiaries, subject to certain exceptions. All obligations under the revolving credit facility, and the guarantees of those obligations, will be secured by substantially all of our assets, subject to certain exceptions.

The revolving credit facility bears interest, at our option, at a rate equal to an applicable margin over either a base rate or a LIBOR rate. The initial applicable margin is 2.50% for base rate loans and 3.50% for LIBOR loans. Interest with respect to base rate loans is payable quarterly in arrears on the last business day of each calendar quarter.

The revolving credit facility contains affirmative and negative covenants customarily found in facilities of its type, including a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to: incur additional indebtedness; create liens on assets; enter into sale and leaseback transactions; engage in mergers or consolidations; sell assets; pay dividends and distributions or repurchase capital stock; make loans, acquisitions or other investments; repay subordinated indebtedness; amend organizational documents or material agreements governing certain indebtedness; change the nature of our business; and change our fiscal year. Notwithstanding the foregoing, the covenants contained in the revolving credit facility do not restrict our ability to pay dividends or distributions to our stockholders to the extent (i) no event of default or certain other specified defaults exist or are continuing under the revolving credit facility and (ii) we reasonably believe in good faith that we qualify as a REIT under the Code and the payment of such dividend or distribution is necessary either to maintain our status as a REIT or to enable us to avoid payment of any tax that could be avoided by reason of such dividend or distribution. The revolving credit facility provides that the total indebtedness of our operating partnership and its subsidiaries shall not exceed 55% of the value of the assets of the Company and its subsidiaries as of the last day of any fiscal quarter through December 31, 2014, and 50% thereafter, determined based on the value of the certain properties of the operating partnership and its subsidiaries and cash and cash equivalents held by the Company and its subsidiaries. The revolving credit facility also provides that the Company and its subsidiaries maintain a minimum fixed charge coverage ratio of not less than 2.00 to 1.00 for any period of four consecutive fiscal quarters and a maximum ratio of secured net indebtedness to consolidated EBITDA of 2.50 to 1.00 as of the last day of any fiscal quarter ending on or prior to December 31, 2014, and 2.00 to 1.00 thereafter. As of the date hereof, we are in compliance with all applicable covenants.

6.375% Senior Notes due 2022

On November 20, 2012, our operating partnership issued $525 million in aggregate principal amount of 6.375% Senior Notes due 2022. The senior notes will mature on November 15, 2022. The senior notes are unconditionally guaranteed on a senior basis by CyrusOne Inc., CyrusOne GP and each of our operating partnership’s existing and future domestic wholly-owned subsidiaries, subject to certain exceptions.

The indenture governing the senior notes contains affirmative and negative covenants customarily found in indebtedness of this type, including a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to: incur secured or unsecured indebtedness; pay dividends or distributions on its equity interests, or redeem or repurchase equity interests of CyrusOne Inc. or our operating partnership; make certain investments or other restricted payments; enter into transactions with affiliates; enter into agreements limiting the ability of our operating partnership’s subsidiaries to pay dividends or make certain transfers and other payments to our operating partnership or to our other subsidiaries; sell assets; and merge, consolidate or transfer all or substantially all of our operating partnership’s assets. Notwithstanding the foregoing, the covenants contained in the indenture do not restrict our ability to pay dividends or distributions to our stockholders to the extent (i) no default or event of default exists or is continuing under the indenture and (ii) we believe in good faith that we qualify as a REIT under the Code and the payment of such dividend or distribution is necessary either to maintain our status as a REIT or to enable us to avoid payment of any tax that could be avoided by reason of such dividend or distribution. Our operating partnership and its subsidiaries are also required to maintain total unencumbered assets of at least 150% of their unsecured debt on a consolidated basis, provided that for the purposes of such calculation our new revolving credit facility shall be treated as unsecured indebtedness. If and for so long as the senior notes are rated investment grade by each of Moody’s Investors Service, Inc. (“Moody’s”) and S&P, certain covenants will be suspended and the subsidiary guarantees will be released. As of the date hereof, we are in compliance with all applicable covenants.

Cash Flows

The Predecessor’s primary sources of cash are earnings from its operations, sale of its accounts receivables and borrowing and advances from CBI. The Predecessor’s primary uses of cash are capital expenditures to acquire or construct data center facilities and payment of property operating expenses.

The following table summarizes our historical cash flows for the nine months ended September 30, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009:


(dollars in millions)	Nine Months Ended September 30,						Year ended December 31,
	2012			2011			2011			2010			2009
Cash provided by operations	$	42.8		$	48.2		$	66.0		$	43.5		$	24.6
Cash used in investing activities		(166.2	)		(64.7	)		(105.8	)		(40.5	)		(20.2	)
Cash provided by (used in) financing activities		126.0			12.6			35.5			1.9			(4.4	)

Comparison of Nine Months Ended September 30, 2012 and 2011

As of September 30, 2012, cash and cash equivalents were $3.2 million, up from $0.6 million as of December 31, 2011 due primarily to higher amounts of cash held in bank accounts in London and Singapore.

Net cash generated from operations was $42.8 million in the first nine months of 2012, a decrease of $5.4 million compared to the corresponding period in 2011. Changes in operating assets and liabilities used $8.1 million of cash in the first nine months of 2012 and provided $2.5 million of cash in the corresponding period in 2011.

Cash used in investing activities was $166.2 million in the first nine months of 2012, up $101.5 million compared to the corresponding period in 2011. Capital expenditures for acquisitions of real estate were $25.4 million in the first nine months of 2012 to purchase the Frankford Road (Carrollton) building and land adjacent to our Westway Park Blvd (Houston West) facility. Our significant development activities included $29.6 million at Westover Hills Blvd (San Antonio), $27.3 million at Frankford Road (Carrollton), $25.0 million at Westway Park Blvd (Houston West), $13.5 million at South Ellis Street (Phoenix) and $7.5 million at Metropolis Drive (Austin 2). In the first nine months of 2012, we deposited $11.1 million of cash into an escrow account and released $0.7 million from this account to fund construction at our Westway Park Blvd (Houston West) facility. Advances from (distributions to) CBI were a use of $9.6 million of cash in the first nine months of 2012, compared to a source of cash of $11.6 million in the corresponding period in 2011. Proceeds from the sale of real estate improvements were $0.2 million in the first nine months of 2012, with no such activity in the corresponding period in 2011.

Cash provided by financing activities was $126.0 million in the first nine months of 2012, compared to $12.6 million in the corresponding period in 2011. Borrowings from CBI were a source of funds of $131.9 million in the first nine months of 2012, up $110.2 million compared to the corresponding period of 2011. The increase in borrowings in the first nine months of 2012 was utilized to fund our capital expenditures. Payments on capital lease obligations were $5.2 million in the first nine months of 2012, compared to a $5.5 million in the corresponding period in 2011. Distributions to CBI were a use of cash of $0.7 million and $3.6 million in the first nine months of 2012 and 2011, respectively.

Comparison of Years Ended December 31, 2011 and 2010

As of December 31, 2011 and 2010, cash and cash equivalents were $0.6 million and $4.9 million, respectively. As of December 31, 2010, we had a larger amount of cash on hand as certain subsidiaries did not begin participating in CBI’s cash management program until the first quarter of 2011.

Net cash generated from operations was $66.0 million in 2011, an increase of $22.5 million compared to net cash generated of $43.5 million in 2010. The increase in cash generated from operations is primarily related to the acquisition of Cyrus Networks in June 2010 which expanded our operations. In June 2011, Cyrus Networks began selling its receivables to an affiliated entity, which was an additional source of cash.

Cash used in investing activities was $105.8 million in 2011, up $65.3 million compared to $40.5 million of cash used in investing activities in 2010. Capital expenditures for acquisitions of real estate were $22.4 million in 2011, with no capital expenditures for acquisitions of real estate in 2010. In 2011, we purchased land in Phoenix, Arizona for $14.8 million and a building in San Antonio, Texas for $7.6 million. Development of these properties will occur in 2012. Other capital expenditures were $95.1 million in 2011, an increase of $65.8 million, or 225%, compared to 2010. We incurred $91.2 million of capital expenditures in 2011 to expand our data centers in Houston, Dallas and Austin, Texas and Lebanon, Ohio. Advances from (distributions to) CBI were a source of cash of $11.6 million in 2011 compared to a use of cash of $11.6 million in 2010.

Cash provided by financing activities was $35.5 million in 2011, up $33.6 million compared to $1.9 million of cash provided by financing activities in 2010. Borrowings from CBI were a source of $66.6 million of funds in 2011, up $51.1 million from the prior year. In 2011, we terminated a financing arrangement on our Westway Park Blvd (Houston West) data center facility by purchasing the building, which used $16.2 million of cash. Payments on capital lease obligations were $7.0 million in 2011 compared to $10.2 million in 2010. Distributions to CBI were a use of cash of $7.8 million in 2011 compared to $3.7 million in 2010.

Comparison of Years Ended December 31, 2010 and 2009

As of December 31, 2010 and 2009, cash and cash equivalents were $4.9 million and zero, respectively. The increase in cash results from the acquisition of Cyrus Networks in June 2010, as all other operations participated in the CBI cash management program as of December 31, 2010 and 2009.

Cash generated from operations was $43.5 million in 2010, an increase of $18.9 million compared to $24.6 million of cash generated in 2009. The increase in cash generated from operations is primarily related to the acquisition of Cyrus Networks in June 2010. In addition, in March 2009, CBTS began selling its receivables, which was an additional source of cash. In 2010, more receivables were sold due to higher revenues and participation in this program for a full year.

Cash used in investing activities was $40.5 million in 2010, up $20.3 million compared to $20.2 million of cash used in investing activities in the prior year. Capital expenditures were $29.3 million in 2010, an increase of $8.6 million compared to 2009. In 2010, significant capital expenditures included expansions of our data centers in Houston, Dallas and Austin, Texas. Advances to CBI were $11.6 million in 2010, with no such advances in the prior year.

In 2010, cash provided by financing activities was $1.9 million as compared to $4.4 million of cash used in financing activities in 2009. Borrowings from CBI were $15.5 million in 2010, up $13.4 million compared to 2009. Payments on capital lease obligations were $10.2 million in 2010 compared to $5.5 million in 2009. Distributions to CBI were $3.7 million in 2010 compared to $1.0 million in 2009.

Contractual Obligations

The following contractual obligations table summarizes our contractual obligations as of December 31, 2011:


	Payments due by Period
(dollars in millions)	Total		< 1 Year		1-3 Years		3-5 years		Thereafter
Notes payable to related parties ⁽¹⁾	$	480.2	$	80.2	$	—	$	—	$	400.0
Capital leases		42.9		7.4		15.6		4.9		15.0
Interest payments on notes payable to related parties, capital leases and other financing arrangements ⁽²⁾		273.1		39.5		72.6		71.1		89.9
Non-cancellable operating leases		11.9		5.5		4.3		1.1		1.0
Purchase obligations ⁽³⁾		47.8		46.9		0.9		—		—
Financing arrangements and other liabilities ⁽⁴⁾		25.3		0.2		1.7		2.9		20.5

Total	$	881.2	$	179.7	$	95.1	$	80.0	$	526.4

(1)	Represents the principal portion of notes payable to related parties, which consists of a $400 million fixed rate note due 2018 with the remaining $80.2 million representing a variable-rate note due on demand.

(2)

Includes contractual interest payments on notes payable to related parties, capital leases and other financing arrangements assuming no early payment of debt in future periods. Interest payments on the variable-rate note were estimated utilizing the interest rate as of December 31, 2011 and assuming the note is repaid as of December 31, 2012.

(3)	Purchase obligations primarily consist of amounts under open purchase orders for purchases of energy, contractual obligations for services such as data center construction, and other purchase commitments, including $23 million for the acquisition of a building to be developed into a data center.

(4)	Represents other financing arrangements of $25.2 million for leased data centers where we are deemed the accounting owner, and asset retirement obligations of $0.1 million.

The contractual obligations table is presented as of December 31, 2011. The amount of these obligations can be expected to change over time as new contracts are initiated and existing contracts are completed, terminated or modified.

On November 20, 2012, we issued $525 million of senior notes and entered into a $225 million revolving credit facility. The net proceeds from our senior notes issuance were utilized to partially repay the notes payable to related parties. The remaining balance of such notes payable to related parties were not contributed to the operating partnership.

The following contractual obligations table gives pro forma effect to this offering, the formation transactions and the related financing transactions as of December 31, 2011:


	Payments due by Period
(dollars in millions)	Total		< 1 Year		1-3 Years		3-5 years		Thereafter
6.375% Senior Notes due 2022	$	525.0	$	—	$	—	$	—	$	525.0
Capital leases		42.9		7.4		15.6		4.9		15.0
Interest payments on indebtedness, capital lease obligations and other financing arrangements ⁽¹⁾		401.0		40.1		81.5		80.1		199.3
Non-cancellable operating leases		11.9		5.5		4.3		1.1		1.0
Purchase obligations ⁽²⁾		47.8		46.9		0.9		—		—
Financing arrangements and other liabilities ⁽³⁾		25.3		0.2		1.7		2.9		20.5

Total	$	1,053.9	$	100.1	$	104.0	$	89.0	$	760.8

(1)	Includes contractual interest payments on indebtedness, capital leases and other financing arrangements assuming no early payment of debt in future periods.

(2)	Purchase obligations primarily consist of amounts under open purchase orders for purchases of energy, contractual obligations for services such as data center construction, and other purchase commitments including $23 million for the acquisition of a building to be developed into a data center.

(3)	Represents other financing arrangements of $25.2 million for leased data centers where we are deemed the accounting owner, and asset retirement obligations of $0.1 million.

Contingencies

We are periodically involved in litigation, claims and disputes. Liabilities are established for these claims when losses associated with these matters are judged to be probable and the loss can be reasonably estimated. Based on information currently available, consultation with counsel and established reserves, management believes the outcome of all claims will not individually, and in the aggregate, have a material effect on our financial position, results of operations or cash flows. For the nine months ended September 30, 2012, the Predecessor recognized expense of $0.5 million for the settlement of an employee dispute related to data center commissions. As of September 30, 2012, this settlement had been paid.

Off-Balance Sheet Arrangements

Indemnification

During the normal course of business, we make certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. These include (i) intellectual property indemnities to customers in connection with the use, sale and/or license of products and services, (ii) indemnities to vendors and service providers pertaining to claims based on our negligence or willful misconduct and (iii) indemnities involving the representations and warranties in certain contracts. In addition, we have made contractual commitments to several employees providing for payments upon the occurrence of certain prescribed events. The majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum potential for future payments that we could be obligated to make.

Guarantees

As of September 30, 2012 and December 31, 2011, CBI had $2.2 billion of unsecured long-term debt that has been guaranteed by several of its subsidiaries, including substantially all of the entities that form the Predecessor. These guarantees were full and unconditional and joint and several. We were released from these guarantee obligations in connection with the closing of the formation transactions on November 20, 2012.

In addition, CBF has issued a letter of credit to provide assurance that we will meet certain of our performance commitments. As of December 31, 2011, this outstanding letter of credit was $16.9 million. This letter of credit will expire without renewal as of December 26, 2012. Fees for maintaining this letter of credit are paid by CBI and allocated to the Predecessor through management fees. These fees were $0.4 million in 2011, $0.7 million in 2010, and $0.4 million in 2009. From time to time, CBI also guarantees certain of our other performance obligations.

Non-GAAP Financial Measures

Funds From Operations and Funds From Operations As Adjusted —We calculate FFO in accordance with the standards established by the NAREIT. FFO represents net (loss) income computed in accordance with U.S. GAAP, excluding noncontrolling interests, gain (loss) from sales of real estate improvements, real estate-related depreciation and amortization and real estate impairments.

We calculate FFO As Adjusted as FFO plus amortization and impairments of customer relationship intangibles. Because the value of such customer relationship intangibles is inextricably connected to the real estate acquired, we believe the amortization and impairments of such intangibles is analogous to real estate depreciation and impairments; and therefore, we add the customer relationship intangible amortization and impairments back to FFO As Adjusted for similar treatment with real estate depreciation and impairments. We believe our FFO As Adjusted calculation provides a more comparable measure to others in the industry. Our customer relationship intangibles are primarily associated with the acquisition of Cyrus Networks and represented 22% of the value of the assets acquired.

However, because FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted exclude real estate depreciation and amortization and real estate impairments (and in the case of FFO As Adjusted and pro forma FFO As Adjusted, exclude amortization and impairments of customer relationship intangibles) and capture neither the changes in the value of our properties that result from use or from market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted as measures of our performance is limited. Other REITs may not calculate FFO or pro forma FFO in accordance with the NAREIT definition or may not calculate FFO As Adjusted or pro forma FFO As Adjusted in the same manner. Accordingly, our FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted may not be comparable to others. Therefore, FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted should be considered only as supplements to net income as measures of our performance. FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted should not be used as measures of our liquidity, nor as indicative of funds available to fund our cash needs, including our ability to make distributions. FFO, pro forma FFO, FFO As Adjusted and pro forma FFO As Adjusted also should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with U.S. GAAP. For a reconciliation of U.S. GAAP net (loss) income to FFO and FFO As Adjusted see “Prospectus Summary—Summary Financial Data.”

Net Operating Income —We calculate NOI as net (loss) income, as defined by U.S. GAAP, plus noncontrolling interests, excluding gain (loss) on sale of real estate improvements, plus income tax (benefit) expense, loss on extinguishment of debt, interest expense, sales and marketing costs, general and administrative costs, depreciation and amortization, transaction costs, management fees charged by CBI, loss on sale of receivables to CBF, restructuring costs and asset impairments. NOI can also be calculated as revenues less property operating expenses. Amortization of deferred leasing costs is presented within depreciation and amortization, which is excluded from our NOI calculation. We have not historically incurred any tenant improvement costs. Our sales and marketing costs consist of salaries and benefits of our internal sales staff, travel and entertainment, office supplies, marketing and advertising costs. General and administrative costs include salaries and benefits of senior management and support functions, legal and consulting costs, and other administrative costs. Marketing and advertising costs are not property specific, rather these costs support our entire portfolio. As a result, we have excluded these marketing and advertising costs from our NOI calculation, consistent with the treatment of general and administrative costs, which also support our entire portfolio. Other REITs may not calculate NOI in the same manner. Accordingly, our NOI may not be comparable to other REITs’ NOI. Management uses NOI and pro forma NOI as supplemental performance measures because they provide useful measures of the profitability of our leases. NOI and pro forma NOI should be considered only as supplements to net income as measures of our performance. NOI and pro forma NOI should not be used as measures of liquidity, nor are they indicative of funds available to meet our cash needs, including our ability to make distributions. For a reconciliation of U.S. GAAP net (loss) income to NOI see “Prospectus Summary—Summary Financial Data.”

EBITDA —We calculate EBITDA as net (loss) income, as defined by U.S. GAAP, plus noncontrolling interests, interest expense, income tax (benefit) expense and depreciation and amortization. Other companies may not calculate EBITDA in the same manner. Accordingly, our EBITDA may not be comparable to others. Management uses EBITDA and pro forma EBITDA as supplemental performance measures because they provide useful measures of assessing the results of operations. EBITDA and pro forma EBITDA should be considered only as supplements to net income as measures of our performance and should not be used as substitutes for net income. For a reconciliation of U.S. GAAP net (loss) income to EBITDA see “Prospectus Summary—Summary Financial Data.”

Adjusted EBITDA —We calculate Adjusted EBITDA as EBITDA plus transaction costs, loss on sale of receivables to CBF, restructuring costs, loss on extinguishment of debt, asset impairments, stock-based compensation expense resulting from changes in CBI’s stock price, and excluding gain (loss) on sale of real estate improvements. Other companies may not calculate Adjusted EBITDA in the same manner. Accordingly, our Adjusted EBITDA may not be comparable to others. Management uses Adjusted EBITDA and pro forma Adjusted EBITDA as supplemental performance measures because they provide useful measures of assessing the results of operations. Adjusted EBITDA and pro forma Adjusted EBITDA should be considered only as supplements to net income as measures of our performance and should not be used as substitutes for net income. For a reconciliation of U.S. GAAP net (loss) income to Adjusted EBITDA see “Prospectus Summary—Summary Financial Data.”

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses in the reporting period. Our management evaluates these estimates on an ongoing basis, based upon information currently available and on various assumptions management believes are reasonable as of the date on the front cover of this prospectus. Our actual results may differ from these estimates. We have provided a summary of the Predecessor’s significant accounting policies in Note 2 to our audited financial statements included elsewhere in this prospectus. We describe below those accounting policies that require material subjective or complex judgments and that have the most significant impact on our financial condition and results of operations:

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revenue recognition;

•

goodwill impairment;

•

accounting for real estate and other definite-lived assets;

•

accounting for business combinations; and

•

accounting for income taxes.

Revenue Recognition —Colocation rentals are generally billed monthly in advance and certain contracts have escalating payments over the non-cancellable term of the contract. If rents escalate without the lessee gaining access to or control over additional leased space or power and the lessee takes possession of or controls the physical use of the property (including all contractually committed power) at the beginning of the lease term, the rental payments by the lessee are recognized as revenue on a straight-line basis over the term of the lease. If rents escalate because the lessee gains access to and control over additional leased space or power, revenue is recognized in proportion to the additional space or power in the years that the lessee has control over the use of the additional space or power. The excess of revenue recognized over amounts contractually due is recognized in other assets in the accompanying combined balance sheet. Approximately 20% of our annual revenue is associated with leases that contain free rent periods or escalating terms.

Some of our leases are structured on a full-service gross basis where the customer pays a fixed amount for both colocation rental and power. Other leases provide that the customer will be billed for power based upon their actual usage, which is separately metered, as well as an estimate of electricity used to power supporting infrastructure for the data center. In both cases, this revenue is presented on a gross basis in the accompanying combined statement of operations. Power is generally billed one month in arrears and an estimate of this revenue is accrued in the month that the associated costs are incurred. We generally are not entitled to reimbursements for real estate taxes, insurance or other operating expenses.

amortized to revenue ratably over the expected term of the customer relationship, unless the pattern of service suggests otherwise. As of December 31, 2011 and 2010, deferred revenue was $49.0 million and $46.6 million, respectively.

Certain customer contracts require specified levels of service or performance. If we fail to meet these service levels, our customers may be eligible to receive credits on their contractual billings. These credits are recognized against revenue when an event occurs that gives rise to such credits.

A provision for credit losses is recognized when collection of contractual rent, straight-line rent or customer reimbursements are deemed to be doubtful. The provision for doubtful accounts was immaterial in 2011, 2010 and 2009 due to our participation in CBI’s receivable securitization program, which resulted in the immediate sale of our receivables to CBF.

Goodwill Impairment —In September 2011, the FASB amended its guidance in ASC 350-20 on testing goodwill for impairment. As a result of the revised guidance, we will have the option of performing a qualitative assessment for impairment prior to performing the quantitative tests. Impairment testing of goodwill is performed on an annual basis or when events or changes in circumstances indicate that an asset may be impaired. We perform our annual impairment tests in the fourth quarter.

Management estimates the fair value of each reporting unit utilizing a combination of valuation methods, including both income-based and market-based methods. The income-based approach utilizes a discounted cash flow model using projected cash flows derived from our five-year plan, adjusted to reflect market participants’ assumptions. Expected future cash flows are discounted at the weighted average cost of capital applying a market participant approach. The market-based approach utilizes earnings multiples from comparable publicly-traded companies.

The fair value of each reporting unit exceeded the respective reporting unit’s carrying value at December 31, 2011, 2010 and 2009. As such, there were no goodwill impairments in 2011, 2010 or 2009. As of December 31, 2011, the fair value of each of the Predecessor’s reporting units exceeded its carrying value by at least 20%.

Changes in certain assumptions could have a significant impact on the impairment test for goodwill. The most critical assumptions are projected future growth rates, operating margins, capital expenditures, terminal values and discount rates. These assumptions are subject to change as our long-term plans and strategies are updated each year.

Accounting for Real Estate and Other Definite-Lived Assets— Investments in real estate consists of land, buildings, improvements and integral equipment utilized in our data center operations. Real estate acquired from third parties has been recorded at its acquisition cost. Real estate acquired from CBI and its affiliates has been recorded at its historical cost basis. Additions and improvements which extend an asset’s useful life or increase its functionality are capitalized and depreciated over the asset’s remaining life. Maintenance and repairs are expensed as incurred.

When we are involved in the construction of structural improvements to leased property, we are deemed the accounting owner of the leased real estate. In these instances, we bear substantially all the construction period risk, such as managing or funding construction. These transactions generally do not qualify for sale-leaseback accounting due to our continued involvement in these data center operations. At the lease inception date, the fair value of the leased real estate, which generally consists of a building shell, is recorded as construction in progress, and a financing obligation is recorded for the same amount. As construction progresses, the value of the asset and obligation increases by the fair value of the structural improvements. When construction is complete, the asset is placed in service and depreciation commences. These properties are depreciated to the lesser of (i) its estimated fair value at the end of the term or (ii) the expected amount of the unamortized obligation at the end of the term. As of December 31, 2011 and 2010, assets where we are deemed the accounting owner were $48.2 million and $32.5 million, respectively. The associated obligation is presented as other financing arrangements in the accompanying balance sheets.

When we are not deemed the accounting owner, we further evaluate leased real estate to determine if the lease should be classified as either a capital or operating lease. One of the following four characteristics must be present to classify a lease as a capital lease: (i) the lease transfers ownership of the property to the lessee by the end of the lease term, (ii) the lease contains a bargain purchase option, (iii) the lease term is equal to 75% or more of the estimated economic life of the leased property, or (iv) the net present value of the lease payments are at least 90% of the fair value of the leased property. As of December 31, 2011 and 2010, capital lease assets included in investment in real estate were $59.2 million and $50.2 million, respectively.

We capitalize direct and indirect costs related to the construction and development of data center facilities. These costs include compensation and benefits of personnel who manage third-party contractors as well as property taxes, insurance and financing costs associated with properties under active construction. We cease capitalization once the space is ready for its intended use and held available for occupancy.

The useful lives of real estate and other definite-life long-lived assets are estimated in order to determine the amount of depreciation and amortization expense to be recorded during any reporting period. Depreciation of our real estate, and other tangible assets, except for leasehold improvements, is based on the straight-line method over the estimated economic useful life. Depreciation of leasehold improvements is based on a straight-line method over the lesser of the economic useful life or term of the lease, including optional renewal periods if renewal of the lease is reasonably assured. Amortization of acquired customer relationships is estimated using an accelerated amortization method to match the projected benefit derived from this asset. All other intangible assets are amortized applying a straight-line amortization method.

We review the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Events and circumstances that we consider when assessing long-lived assets associated with each of our data center facilities include NOI, vacancy rates, declines in rental or occupancy rates, and other factors. An impairment loss is recognized when the estimated future undiscounted cash flows expected to result from the use of an asset (or group of assets) and its eventual disposition is less than its carrying amount. No asset impairments were recorded in 2011, 2010 or 2009.

The estimate of expected future cash flows is inherently uncertain and relies to a considerable extent on estimates and assumptions, including current and future market conditions, projected growth in our CSF, projected recurring rent churn, lease renewal rates and our ability to generate new leases on favorable terms. It may be more difficult to sign new customers to fill some of our smaller data centers because the available space at these locations is relatively small. If there are changes to any of these estimates and assumptions in future periods, an impairment loss could occur.

During the second quarter of 2012, management identified impairment indicators for a customer relationship intangible and other long-lived assets primarily associated with the GramTel acquisition. We performed step one of the impairment tests for these assets utilizing cash flow estimates from our most recent long-term business plan and other updated assumptions. The results of these tests indicated a potential impairment loss for each of these asset groups.

Management engaged a third-party valuation specialist to assist with the Company’s estimation of the fair value of these assets. Management estimated the fair value of the customer relationship using the income approach, which discounted the expected earnings attributable to current customer contracts, and includes estimates of future expenses, capital expenditures and an appropriate discount rate. Management also estimated the fair value of other long-lived assets, primarily leasehold improvements, using an income approach based on projected discounted future cash flows using estimates of future revenues and expenses, projected capital expenditures and an appropriate discount rate. The fair value of the customer relationship intangible was estimated by management to be $2.8 million resulting in an asset impairment of $1.5 million. Management estimated the fair value of other long-lived assets, primarily leasehold improvements, at $2.4 million resulting in an impairment loss of $11.8 million. Both fair value estimates are deemed Level 3 measurements within the fair value hierarchy due to the significance of unobservable inputs utilized in these measurements.

Accounting for Business Combinations —In accounting for business combinations, we follow ASC 805, “Business Combinations,” which requires the recording of net assets of acquired businesses at fair value. In developing estimates of fair value of acquired assets and assumed liabilities, management analyzes a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets, and market rate assumptions for contractual obligations. Such a valuation requires significant estimates and assumptions, especially with respect to the intangible assets. Transaction costs associated with acquisitions are expensed as incurred.

In determining the fair value of the net assets acquired with the purchase of Cyrus Networks, management utilized several valuation methods:

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Excess earnings method: This method was used to determine the fair value of the Cyrus Networks customer relationships. This method estimates the present value of future cash flows attributable to the customer base and requires estimates of the expected future earnings and remaining useful lives of the customer relationships.

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Replacement cost method: This method was used to determine the fair value of real estate and non-real estate property. This method indicates value based on the amount that currently would be required to replace the service capacity of the asset and considers the cost of a buyer to acquire or construct a substitute asset of comparable utility, adjusted for deterioration and obsolescence.

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Relief-from-royalty: This method, used to determine the fair value of the CyrusOne trademark, estimates the present value of royalty expense that could be avoided as a result of owning the respective asset or technology.

An independent valuation firm was utilized to assist with management’s determination of the fair values of the acquired real estate, identified intangibles and other financing arrangements. See Note 4 to the audited financial statements included elsewhere in this prospectus for the allocation of the purchase price to the assets acquired and liabilities assumed. In 2011, we finalized the Cyrus Networks purchase price allocation. No significant changes were made in 2011 to the estimates or assumptions applied in the preliminary purchase price allocation.

Accounting for Income Taxes —The Predecessor is included in CBI’s consolidated tax returns in various jurisdictions. In the accompanying financial statements, we have accounted for income taxes as if the Predecessor was a separate stand-alone company. The income tax provision consists of an amount for taxes currently payable and an amount for tax consequences deferred to future periods. CBI’s previous tax filings are subject to normal reviews by regulatory agencies until the related statute of limitations expires. With a few exceptions, CBI is no longer subject to U.S. federal, state or local examinations for years prior to 2008. In 2011, the IRS completed an examination of CBI’s U.S. federal income tax returns for 2008 and 2009.

The Predecessor has generated net operating loss carryforwards at the federal, foreign, state and local levels. Tax loss carryforwards are available to offset taxable income of the Predecessor (but not CyrusOne Inc.) in current and future periods. The carryforward period for these net operating losses vary by jurisdiction with a 20-year carryforward period for federal tax loss carryforwards. Based on current income levels and anticipated future reversal of existing temporary differences, management expects to fully utilize its federal and state net operating loss carryforwards within their expiration periods. However, realization of certain local and foreign net operating losses is uncertain. As of December 31, 2011 and 2010, the valuation allowance for these potentially unrealizable net operating losses was $0.3 million and $0.1 million, respectively. Prior to this offering, CBI expects to retain the deferred tax assets associated with the Predecessor’s business. As such, CyrusOne Inc., as a newly formed legal entity, will not have any net operating loss carryforwards as of the date of this offering to use against its future taxable income.

Recently Issued Accounting Standards

Refer to Note 3 to our audited financial statements for further information on recently issued accounting standards. We do not expect the adoption of these new accounting standards to have a material impact on our financial condition, results of operations or cash flows on a prospective basis.

Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. However, we are choosing to “opt out” of such extended transition period and, as a result, we will comply with any such new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Inflation

Our customer leases generally do not provide for annual increases in rent based on inflation. As a result, we bear the risk of increases in the costs of operating and maintaining our data center facilities. Some of our leases are structured to pass-through the cost of sub-metered utilities. In the future, we plan to structure more of our leases to pass-through utility costs.

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

As of December 31, 2011, the Predecessor’s long-term debt was all fixed-rate debt. The Predecessor participates in CBI’s cash management system. Advances to and borrowings from CBI are charged interest at a variable rate equal to the 30-day Eurodollar rate plus CBI’s credit spread. As of December 31, 2011 and 2010, the Predecessor had $80.2 million and $13.6 million of borrowings outstanding under this arrangement. As of December 31, 2011 and 2010, the Predecessor had no derivative instruments outstanding.

The following table sets forth the carrying value and fair value face amounts, maturity dates, and average interest rates at December 31, 2011 for our fixed-rate debt, excluding capital leases and other financing arrangements:


(dollars in millions)	2012		2013		2014		2015		2016		Thereafter			Total Carrying Value			Fair Value
Fixed-rate debt		—		—		—		—		—	$	400.0		$	400.0		$	415.1
Average interest rate on fixed-rate debt		—		—		—		—		—		7.25	%		7.25	%		—

Prior to this offering, the fixed-rate debt shown above was repaid. See “—Pro Forma Indebtedness” for a description of our indebtedness subsequent to this offering.

The following table sets forth on a pro forma basis the carrying value and fair value face amounts, maturity dates and average interest rates at December 31, 2011 for our fixed-rate debt, excluding capital leases and other financing arrangements:


(dollars in millions)	2012		2013		2014		2015		2016		Thereafter			Total Carrying Value
Fixed-rate debt		—		—		—		—		—	$	525.0		$	525.0
Average interest rate on fixed-rate debt		—		—		—		—		—		6.375	%		6.375	%

Foreign Currency Risk

Substantially all of our revenue and expenses are denominated in U.S. dollars. We do not currently employ forward contracts or other financial instruments to mitigate foreign currency risk. As our international operations grow, we may engage in hedging activities to hedge our exposure to foreign currency risk.

Commodity Price Risk

Certain of our operating costs are subject to price fluctuations caused by the volatility of the underlying commodity prices, including electricity used in our data center operations, and building materials, such as steel and copper, used in the construction of our data centers. In addition, the lead time to purchase certain equipment for our data centers is substantial which could result in increased costs for these construction projects.

We entered into a contract to purchase 14 MW of electricity for use at our Houston data centers at fixed prices for the period January 1, 2012 to March 31, 2013. This contract represents 75% of the anticipated Houston electricity usage through March 31, 2013. The remaining 25% of anticipated Houston utility usage is priced at market rates. We intend to obtain additional fixed price contracts as our load grows.

We do not currently employ forward contracts or other financial instruments to mitigate the risk of commodity price risk other than the contract discussed above.

INDUSTRY BACKGROUND/MARKET OPPORTUNITY

All of the information presented in this section, including the analysis of the various sectors of the data center industry, has been provided by IDC. IDC has advised that the quantitative information contained herein is drawn from its database and other sources. In connection therewith, IDC has advised that (i) certain IDC research information is derived from estimates or subjective judgments, (ii) the research information from other market intelligence providers for the data center industry may differ from the information in IDC’s data base and (iii) while IDC has taken reasonable care in the compilation of the quantitative information contained herein and believes it to be accurate and correct, data compilation is subject to limited audit and validation procedures.

Data centers are highly specialized facilities that serve as centralized repositories of server, storage and networking equipment and are designed to provide the space, power, cooling and network connectivity necessary to efficiently operate mission-critical IT equipment. As business processes have become increasingly technology-intensive, data centers are key hubs for the processing, storage, distribution and analysis of business data, applications and content. Technology has become an increasingly important contributor to business growth, playing a key role in bringing new products to market, developing new distribution channels, creating new business models, supporting globalization and enabling improved interactions with customers, partners and suppliers. At the same time, technology trends such as virtualization, IT infrastructure centralization and multi-core computing are placing stress on existing data center environments and the core competencies of IT staff.

History and Evolution of Data Centers

The data center services industry has evolved and matured considerably since the early 2000s. The addressable market for third-party data center facilities now includes established “traditional” businesses that are Web-enabling their applications and business processes as well as new types of cloud-centric companies with sophisticated technology requirements. The complexity and scale of Internet-based applications and services such as cloud computing and software-as-a-service (i.e., anytime/anywhere Internet-based delivery of business and consumer applications, content, and data), social networking and the emergence of internal business applications require high-performance computing and processing. IT hardware technology has also evolved, and the processing, storage and computing power of today’s servers are significantly increased from that of the early 2000s, requiring significantly increased power and cooling capabilities per square foot of data center space. The complexity of these IT applications and the advancement of the IT equipment means that in-house data center environments are often not capable of providing an appropriate environment for the processing, storage and computing needs of today’s enterprise.

As the business operations of enterprises increasingly depend on real-time data collection, processing and analysis, data centers that are able to support next-generation IT computing, storage and networking requirements have become essential business requirements. Third-party data center specialists grew during the recent economic downturn as a result of demand for data center space, power and cooling constraints, limited capital budgets for new data center construction or retrofitting, the processing- and data-intensive requirements of highly interconnected business processes, and increased enterprise receptivity to outsourcing as a way to refocus time, effort and resources on core competencies.

Although the global economic environment remains volatile, data center providers continue to build and expand as more enterprises and Internet technology companies find their ability to grow, innovate and transform limited by unforeseen data center capacity constraints or other infrastructure roadblocks. As the paradigm of “cloud” becomes the predominant mode of computing, the high-performance repositories where the infrastructure and networks that process, manage, store, and interconnect the applications and data are hosted take on a vital role as the crossroads of next-generation digital business operations.

Types of Data Centers

The data center industry encompasses a wide range of facility types that correspond to different customer technology, cost, regulatory and industry/business requirements. There are two broad categories of data centers: in-house and third-party provider. However, both types of facilities feature the same technical infrastructure elements that transform a building into a data center, including primary and backup power sources, advanced cooling and ventilation systems, fire suppression systems, physical and digital security, and network connectivity.

In-House Data Centers

Many companies own and operate some or all of their own data centers. These facilities run the gamut from small scale server rooms or closets to large-scale enterprise data centers featuring centralized raised floor environments that house the majority of the IT systems that support the business. Companies may operate in-house data centers due to regulatory considerations, because IT is perceived to be a core competency and an important element of the business value proposition, or because the IT operations are perceived to be of sufficient scale to be cost efficient.

Third-Party Data Center Providers

There are several models of third-party data centers, including wholesale data centers, retail colocation data centers and IT outsourcers and managed services provider data centers.

Wholesale Data Centers . Providers in this segment are specialized real estate developers that build or retrofit facilities outfitted with robust, large-scale electrical power systems and heating, ventilation and air conditioning (“HVAC”) systems to accommodate the housing and operation of customers’ IT and networking infrastructure. Wholesale data center customers include large enterprises, government agencies, companies with Internet-based business models and service providers such as managed hosters and cloud service providers. Customers generally enter into long-term leases of five to 10 years. Wholesale data center facilities’ footprints and power densities are designed to serve the current and long-term IT facilities requirements of established businesses that rely on IT infrastructure for competitive advantage, differentiation and business operations.

Retail Colocation . Retail colocation data center facilities operate on a fee-for-service basis and sell space to customers in the form of individual cabinets, cages or racks under short-term contracts (typically one to three years). Retail colocation data centers generally offer smaller lease footprints and have lower power densities than wholesale data centers. Providers in this segment generally offer broader facilities support and maintenance than wholesale data center companies, as well as additional customer-facing services such as on-site technical support, network monitoring and backup/recovery. Retail colocation providers fall into two categories:

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Carrier-captive . These data centers, operated by telecommunications providers, require customers to purchase bandwidth on that specific network as part of their colocation contracts. However, in some cases, the providers may offer interconnectivity with a limited range of other networks.

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Carrier-neutral . These carrier-neutral data centers are not network-specific and allow customer interconnectivity to a range of carriers, thus facilitating customer choice based on cost efficiency, network performance and application requirements. For carriers and colocation customers whose business models rely heavily on network-centric traffic and data exchange, carrier neutral colocation offers direct connectivity to communities of interest (i.e., trading partners, customers and suppliers) within individual data centers or to application end users on multiple networks. In addition to telecommunication carriers and content delivery networks, carrier-neutral colocation customers include large enterprises, Internet-based application and content providers, media and entertainment companies, and cloud computing and software-as-a-service providers.

IT Outsourcers and Managed Services Provider Data Centers . Providers in this segment generally do not sell colocation space as a discrete offering, but leverage the space as part of a comprehensive outsourcing service

that includes management (and sometimes ownership) of the servers and other IT infrastructure as well as networking and application management. IT outsourcers and managed services providers may in fact be customers of wholesale data center providers, leasing the technical space to run their businesses.

Demand Drivers

Internet Traffic Growth

According to IDC’s February 2012 Worldwide Internet Broadband Bandwidth Demand 2012-2015 Forecast , worldwide end user-generated Internet traffic (business and consumer, and fixed and mobile users, measured in total exabytes per month) is expected to grow from 17 exabytes per month in 2011 to 117 exabytes per month in 2015, representing a CAGR of 63%. This expansion is the result of the Internet’s evolution over time from a static, one-way medium of small text and Web objects into a robust, global platform for commerce, business operations, application processing, social networking, media and entertainment and communication.

Key drivers of Internet traffic growth include the expansion of Internet-based business models, proliferation of Internet-connected devices (particularly smart phones and tablets), the spread of high-speed Long Term Evolution mobile networks, the growth in consumers’ appetite for online/mobile video and social networking, and increasing business use of real-time data access and processing-heavy applications such as business analytics and data mining. These factors translate into the expanding demand for high-powered, highly resilient data center facilities, given the need to process, store, distribute and manage the volume of data and transactions.

Real-world examples that highlight the underlying drivers of Internet traffic and data growth include the following:

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IDC predicts that the volume of global Internet traffic will reach nearly 74 exabytes per month in 2014 ( Worldwide Internet Broadband Bandwidth Demand 2012—2015 Forecast , IDC, March 2012) . According to estimates in Cisco Systems Inc.’s Visual Networking Index, 2010, this translates into 32 million people streaming the film Avatar in 3D continuously for an entire month.

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According to Cisco Systems Inc. estimates, the amount of data delivered over the Internet from its founding through 2009 was 150 exabytes, or less than half the data expected to be generated over one quarter in 2015.

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According to IDC’s Worldwide Telecom Services Database, 2H11, mobile data connections will nearly double from 2.3 billion in 2011 to 4.1 billion in 2015, and mobile Internet traffic will grow 30-fold, from 4% of total Internet traffic in 2011 to 17% in 2015.

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Facebook, Inc., a company founded in 2004, has grown to more than 1 billion members during 2012, equivalent to the combined populations of the United States, the European Union and Russia.

Increasing Demand for Outsourcing

Increased business willingness to procure IT capabilities from third-party sources is a key driver of outsourced data center demand. According to IDC, U.S. companies across all industries allocated 49% of their IT budgets to the purchase and management of traditional in-house IT in 2010. IDC’s Cloud Computing Survey (December 2010 ) found that by 2013, traditional in-house IT budget allocations will decline to 37% of the total, indicating increased demand for third-party IT capabilities—both data center facilities and IT infrastructure.

Factors contributing to the trend toward outsourcing include the following:

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Renewed Focus on the Core Business. Enterprises are struggling to address the challenges of rapid technology change while also seeking to drive increased profitability via new sources, improve productivity and reduce expenses. For the majority of companies, building and managing data centers is not a core competency or a competitive advantage. Third-party data centers offer solutions to

businesses while allowing capital and personnel to be deployed toward core competencies rather than on back-office data center facilities. IDC’s 2011 U.S. WAN Managers Survey found that approximately 10% of large U.S. enterprises use third-party data center colocation services, highlighting substantial untapped addressable market opportunity.

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Business Resiliency and Disaster Recovery. Organizations are increasingly dependent on technology as the engine powering critical business applications and processes. As IT becomes an increasingly integral part of the business, disaster recovery becomes a higher priority. In addition to robust production sites, organizations require resilient disaster recovery capabilities to ensure business continuity in the event of system/network failures, natural disasters or other disruptions.

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Increased Regulatory Requirements. Recent compliance requirements for large enterprises have led to an increase in data center outsourcing both from a colocation and a disaster recovery perspective. Specific legislation such as Sarbanes-Oxley, Dodd-Frank, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and the Gramm-Leach-Bliley Act of 1999 are requiring enterprises to conduct their business and/or store data online, contributing to the increased need for online IT requirements.

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Globalization. As organizations globalize their bases of operations, their customers, partners, suppliers and employees are becoming more geographically distributed. Given the ever tighter linkage between business and IT operations, application availability and performance may now require multiple data centers. For enterprises interested in entering new geographic markets, capital allocated to business growth requirements represents a more efficient use of scarce funds than investments in data center construction and operation. Outsourcing of the data center facilities function frees up capital for key growth initiatives such as globalization.

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Increased Power Density and Cooling Requirements . Dense, next-generation IT environments are creating power and cooling challenges inside the data center. Enterprises have limited capital to invest, and many simply cannot continue allocating additional budget to the escalating power and cooling requirements being driven by the higher-speed, smaller footprint infrastructure that powers increasingly technology-driven business processes. These challenges are causing many in-house data center environments to become obsolete. Furthermore, as enterprises seek to consolidate their IT requirements in fewer but larger data centers, power and cooling costs rise as density increases. Specialized data center facilities with purpose-built, next-generation power redundancy and density, HVAC infrastructure and operational process efficiencies, are better for organizations with significant power density and cooling requirements.

Increasing Demand Trends Within Specific Sectors

Oil and Gas Exploration Trends . Exploration and production activities in the oil and gas industry are heavily dependent on data storage and high-performance computing capacity. IDC’s worldwide spending forecast for high-performance computing servers for geoscience applications shows a 7.8% CAGR between 2010 and 2015. During exploration, seismic imaging is used to accurately locate and evaluate potential resources. The growth in seismic data volumes and processing capacity is expected to increase with newer exploration techniques, including shale and deepwater offshore exploration. Geologists and geophysicists are beginning to consider employing petabyte-scale seismic data sets in their analyses. Once drilling has been completed and wells are put into production, wells are automated in order to maximize production and manage environmental, health and safety risks. This means deploying large numbers of sensors and the use of advanced analytics, which will require high-performance computing capacity and data storage.

Interconnectivity Trends. Organizations in ecosystem or supply chain-driven industries such as financial trading/brokerage, healthcare, transportation/distribution and retail, as well as Internet-centric content, gaming, social networking and cloud/SaaS network companies process extensive traffic among the various value chain participants. As companies continue to Web-enable mission-critical business processes such as sales, product

design, and inventory management and as online business-to-business, and business-to-business-to-consumer models emerge, network interconnection in carrier-neutral data centers represents a highly efficient way to exchange information with reduced network costs (last-mile avoidance), improved performance (i.e., proximity as a way to reduce network latency) and direct access to supply chain partners on downstream access networks.

Supply Constraints and Barriers to Entry

Despite growing demand for third-party data center capacity, a supply and demand imbalance exists in the market for high-quality, high-power, fully redundant facilities. Given the upfront capital expenditure required for new data center builds, financing can be time consuming and/or difficult to obtain. Furthermore, there is a limited supply of available land for new builds or suitable building shells for retrofits in key U.S. markets. Data center development and construction can take from 12 to 24 months and involves extensive planning with local governments, regulatory bodies and electric utilities. While a number of factors are converging to expand demand for data center space and services, the highly specialized nature of the market creates significant barriers for new entrants.

Availability of Suitable Locations

Commercial data centers are typically located near key population/business centers in close proximity to adequate and relatively inexpensive power sources and fiber optic connectivity. Such locations are becoming scarce, given the larger footprint of data centers, higher power consumption and local zoning issues and other potential political obstacles. As a result, the amount of available land suitable for data center development is shrinking and the cost of acquisition is increasing. Furthermore, the cost and complexity of retrofitting existing properties for next-generation data center use may be prohibitive. These factors make it difficult for new entrants to enter this market.

Data Center Development Cost and Lifecycle

The commercial data center business involves significant upfront capital expenditures for construction, and financing can be difficult to obtain in the current economic environment. Furthermore, construction of individual data centers requires extensive planning and permission processes, which can vary greatly by geography. The lifecycle of data center construction projects from site selection to commercial operation and revenue recognition can take up to 24 months. As a result, well-managed portfolios of properties and well-timed project initiation are required for sustainable, financially viable operations.

High Barriers to Switching

Once an enterprise establishes a relationship with a data center provider, it is unlikely to change providers routinely due to the high switching costs and execution risks associated with relocating IT equipment. These switching costs include disconnecting, packing, shipping, unloading, unpacking, installing and testing each piece of equipment which in large scale data centers can include hundreds of servers and storage devices. In addition, an enterprise will need to establish redundant connections during the transition and pay significant insurance and shipping fees. Switching data center providers also requires significant management resources and potential consulting support to minimize the risk of disruption and downtime which can impact the underlying business. As a result, enterprises are unlikely to switch data center providers routinely once they have an established relationship.

Expertise and Personnel

The data center market is a highly specialized segment of the real estate development market, requiring expertise not only in commercial real estate, but also data center design and construction, server, storage and networking technology, electrical and mechanical engineering, high-capacity power and cooling systems and physical security. New entrants may have difficulty assembling the expertise required to compete in the market and obtaining the economic scale and purchasing power to sustain successful operations.

Establishment of Brand, Reputation and Track Record

Existing data center providers have established brand names and reputations that allow them to attract new customers based on their operational track records of successfully operating multiple large-scale facilities and ability to accommodate customers’ evolving facilities requirements. The amount of planning and business risk the enterprise undertakes in moving to a third-party data center model requires a significant investment on the part of the enterprise that is unlikely to be made without its third-party provider demonstrating a long history of execution, willingness to build a strategic partnership that will grow over time and compatibility with the needs of the enterprise. New entrants may find it difficult to build a base of high-value customers without an established reputation and substantial operating history.

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BUSINESS AND PROPERTIES

Our Company

We cultivate long-term key strategic relationships with our customers and provide them with solutions for their data center facilities and IT infrastructure challenges. Our offerings provide flexibility, reliability and security and are delivered through a tailored, customer service-focused platform that is designed to foster long-term relationships. We focus on attracting customers that have not historically outsourced their data center needs. We believe our capabilities and reputation for serving the needs of large enterprises will allow us to capitalize on the growing demand for outsourced data center facilities in our markets and in new markets where our customers are located or plan to be located in the future.

Our History

Our business is comprised of the historical data center activities and holdings of CBI. CBI has operated its Cincinnati-based data center business for over 10 years. In addition, it acquired GramTel, a data center operator in South Bend, Indiana and Chicago, Illinois, for approximately $20 million in December 2007, and it acquired Cyrus Networks, a data center operator based in Texas, for approximately $526 million, net of cash acquired, in June 2010. As part of the formation transactions, certain subsidiaries of CBI contributed these assets and operations to our operating partnership, CyrusOne LP.

We were formed as a Maryland corporation on July 31, 2012. We have been a consolidated subsidiary of CBI for U.S. federal income tax purposes since the date of our incorporation. In connection with this offering, we will cease to be a consolidated subsidiary of CBI for U.S. federal income tax purposes, and we intend to qualify as a REIT for such purposes commencing with our short taxable year ending on December 31, 2012. Our corporate offices are located at 1649 West Frankford Rd, Carrollton, TX 75007. Our telephone number is (972) 350-0060. Our website is www.cyrusone.com. The information contained on, or accessible through, our website is not incorporated by reference into this prospectus and should not be considered a part of this prospectus.

Our Competitive Strengths

We believe the following competitive strengths distinguish us from other data center operators and will enable us to continue to grow our operations.

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customers, including five of the six “supermajor” oil and gas companies. Our revenue is generated by a stable enterprise customer base, as evidenced by the following as of September 30, 2012:

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79% of our annualized rent comes from the Fortune 1000 or private or foreign enterprises of equivalent size;

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57% of our annualized rent comes from investment grade companies or their affiliates, based on the parent company’s corporate credit rating by S&P; and

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42% of our annualized rent comes from the Fortune 100 or private or foreign enterprises of equivalent size.

As of September 30, 2012, CBI represented 10% of our annualized rent under contracts, which is largely comprised of two customers to whom we provide services through contracts entered into between those customers and CBTS. Customer consent is required in order to assign those contracts to us, and while we expect those contracts to be assigned to us, such consent has not yet been obtained. Excluding these customers, CBI represented 3% of our annualized rent as of September 30, 2012. As of September 30, 2012, no single other customer represented more than 8% of our annualized rent, and our top 10 customers (including CBI) represented 46% of our annualized rent.

Strategically Located Portfolio. Our portfolio is located in several domestic and international markets possessing attractive characteristics for enterprise-focused data center operations. We have domestic properties in five of the top 10 largest U.S. cities by population (Chicago, Dallas, Houston, Phoenix and San Antonio), according to the U.S. Census Bureau, and four of the top 10 cities for Fortune 500 headquarters (Chicago, Cincinnati, Dallas and Houston), according to Forbes . We believe cities with large populations or with a large number of corporate headquarters are likely to produce incremental demand for IT infrastructure. In addition, being located close to our current and potential customers provides CIOs with additional confidence when outsourcing their data center infrastructure. In the markets where we currently operate data centers and in the markets where we own property that we intend to develop, we have historically experienced data center infrastructure demand in excess of currently available data center construction.

Modern, High Quality Facilities. Our portfolio includes highly efficient, reliable facilities with advanced cooling capabilities and the security systems necessary to provide an environment suitable for some of our clients’ most vital technology infrastructure. To optimize the delivery of power, our properties include modern engineering technologies designed to minimize unnecessary power usage and, in our newest facilities, we are able to provide power utilization efficiency ratios we believe to be among the best in the multi-customer data center industry. In our newest facilities, we take a Massively Modular ^SM approach to site selection, design and construction such that we are able to deliver a range of power densities to our customers within a single facility. Our Massively Modular ^SM design principles allow us to efficiently stage construction on a large scale and deliver CSF in a timeframe that we believe is one of the best in the industry. We acquire or build a large powered shell capable of scaling with our customers’ power and colocation space needs. The powered shell can be acquired or constructed for a relatively inexpensive capital cost. Once the building shell is ready, we can build individual data center halls in portions of the building space to meet the needs of customers on a modular basis. This modular data center hall construction can be completed in approximately 16 weeks to meet our customers’ immediate needs. This short construction timeframe ensures a very high utilization of the assets and minimizes the time between our capital investment and the receipt of customer revenue, favorably impacting our return on investment while also translating into lower costs for our customers. Our design principles also allow us to add incremental equipment to increase power densities as our customers’ power needs increase, which provides our customers with a significant amount of flexibility to manage their IT demands. We believe this Massively Modular ^SM approach allows us to respond to rapidly evolving customer needs, to commit capital toward the highest return projects and to develop state-of-the-art data center facilities. As of September 30, 2012, facilities in our operating portfolio consisted of approximately 1,630,000 NRSF and approximately 125 MW of utility power capacity.

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Significant, Attractive Expansion Opportunities. Our current development properties and available acreage were selected based on extensive site selection criteria and the collective industry knowledge and experience of our management team. As a result, we believe that our development portfolio contains properties that are located in markets with attractive supply and demand conditions and that possess suitable physical characteristics to support data center infrastructure. In addition to our operating NRSF of approximately 1,630,000 as of September 30, 2012, we are currently developing vacant properties and new facilities to create approximately 379,000 NRSF across three distinct markets. As of September 30, 2012, we also have 762,000 NRSF of powered shell available for future development, and we own approximately 146 acres of land that are available for future data center facility development.

During development, our construction techniques allow us to strategically address demand, and since the acquisition of Cyrus Networks in June 2010, we have constructed approximately 287,000 CSF while maintaining a utilization rate of at least 78% across our portfolio. Due to developments under construction expected to be completed during the second quarter of 2013, it is anticipated that our occupancy level will decrease for a period of time as this new space is leased. We believe that we are able to optimize our capital spending for development through efficiency-focused construction practices, including just-in-time procurement procedures. In addition, the development of our interconnection business creates an incremental source of revenue for our future developments.

Differentiated Reputation for Service. We believe that the decision CIOs make to outsource their data center infrastructure has material implications for their businesses, and, as such, CIOs look to third-party data center providers that have a reputation for serving similar organizations and that are able to deliver a customized solution. We take a consultative approach to understanding the unique requirements of our customers, and our design principles allow us to deliver robust flexibility in the scale, power and location of our data center infrastructure. We believe that this approach has helped fuel our growth. Our current customers are also often the source of new contracts, with referrals being an important source of new customers.

Experienced Management Team. Our management team is comprised of individuals drawing on diverse knowledge and skill sets acquired through extensive experiences in the real estate, telecommunications and mission-critical infrastructure industries. In aggregate, our management team of nine individuals has an average of approximately 15 years of experience in the data center and communications industries.

Prior to becoming our President and Chief Executive Officer in August 2011, Gary Wojtaszek served as Chief Financial Officer of CBI beginning July 2008 and prior to that served as Senior Vice President, Treasurer and Chief Accounting Officer for the Laureate Education Corporation in Baltimore, Maryland from 2006 to

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2008. Our Chief Financial Officer and Treasurer, Kimberly Sheehy, previously served as our Chief Administrative Officer since November 2011, and prior to that in various roles at CBI since 1996, including Treasurer, Vice President of Financial Planning and Analysis, and Vice President of Investor Relations. Kevin Timmons, our Chief Technology Officer, was responsible for the design, site selection, construction and operation of approximately 30 data centers during 14 years at Yahoo! and Geocities (acquired by Yahoo! in 1999), and most recently was responsible for managing Microsoft’s global data center footprint. Michael Duckett, Chief Operating Officer, previously served as Chief Operating Officer of CoreLink Data Centers LLC from 2010 to 2011 and as Senior Vice President of Operations of Terremark Worldwide from 2005 to 2010. Scott Brueggeman, our Chief Marketing Officer, previously served as Vice President of Marketing and Corporate Communications at CoreLink Data Centers LLC from 2010 to 2012. Tesh Durvasula, Chief Commercial Officer, previously served as Chief Marketing and Business Officer at Quality Technology Services from 2010 to 2012. Dorothy Spruce, Executive Vice President of Sales, has approximately 30 years of secure infrastructure sales experience, including 17 years with Unisys Corporation, and has been with us for 8 years. Joshua Snowhorn, Vice President and General Manager of Interconnection, previously served as Vice President of Business Development at Terremark Worldwide from 2000 to 2012. John Hatem, Vice President of Engineering and Construction, previously served as Director of Design and Construction at ConceptCSI Global Data Center Solutions from 2009 to 2011, and has been with us for one year.

Business and Growth Strategies

Our objective is to grow our revenue and earnings and maximize stockholder returns by continuing to expand our data center infrastructure outsourcing business.

To address incremental demand from existing and new customers, as of September 30, 2012, we have approximately 337,000 NRSF available for lease, and we believe that we can lease this space with minimal additional capital investment and in a significantly shorter period of time versus properties requiring development. In addition, we have 379,000 NRSF under development and 762,000 NRSF of additional powered shell available for future development. Our portfolio also contains approximately 146 acres of land that are available for future data center facility development. We plan to prioritize the development of our existing properties based on market-specific observed customer demand, capital requirements and prevailing capital markets conditions, among other considerations.

Since 2010, we have signed more than 100 new customers, many of whom were outsourcing data center infrastructure for the first time. We have historically managed our sales process through a direct-to-the-customer model

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but have recently begun utilizing third-party leasing agents to expand our universe of potential new customers. Regardless of how a potential customer lead is generated, every opportunity undergoes a rigorous review process designed to maximize cash flow generation and customer retention. Additionally, throughout the life cycle of a customer’s interaction with us, we maintain a disciplined approach to monitoring their experience, with the goal of providing the highest level of customer service. We plan to continue to pursue large enterprise customers by leveraging our relationships and reputation, and by developing our existing pipeline of inventory to meet their needs.

Expanding into New Domestic and International Markets . Our expansion strategy focuses on developing new data centers in markets where our customers are located and in markets where our customers want to be located. We regularly meet with our customers to understand their business strategies and potential data center needs. We also conduct extensive analysis to ensure an identified market displays strong data center fundamentals, independent of the demand presented by any particular existing customer. We believe that this approach significantly reduces the risk associated with expansion into new markets because it provides strong visibility into our anticipated cash flow and helps to ensure targeted returns on new developments. Our strategy for entering a new market will vary based on in-place real estate and data center infrastructure and could include greenfield construction projects as well as acquisitions.

Growing Interconnection Business . Our customers are increasingly seeking to connect to one another via private peering, cross connects and/or public switching environments. Interconnection allows our customers to share information and conduct commerce in a highly efficient manner not requiring a third-party intermediary and at a fraction of the cost normally required to establish such a connection between two enterprises. The demand for interconnection creates additional rental and revenue growth opportunities for us, and we believe that customer interconnections increase our likelihood of customer retention by providing an environment not easily replicated by competitors. Interconnections are made possible by our customers’ common location in our facilities and our provisioning of the infrastructure necessary to interconnect within our facilities, and, as a result, we believe that it would require significant coordination and capital for our customers to move their interconnection to a different location. Since many of our facilities currently have the infrastructure necessary to provide interconnection, we plan to market this capability to our existing customers, and we will incorporate interconnection into our current and future developments. We anticipate implementing interconnection infrastructure in our existing facilities that do not currently have it. Compared to the capital required to build a data center, the capital required for interconnection is minimal, which we believe creates the potential to create attractive capital returns. We act as the trusted neutral party that enterprises, carriers and content companies utilize to connect to each other. We believe that the reputation and industry relationships of our executive management team place us in an ongoing trusted provider role.

Selectively Pursuing Property Acquisition Opportunities . We intend to seek opportunities to acquire existing or potential data center properties in key strategic markets. In addition, we currently lease certain of our data center properties and, to the extent economically attractive, we may opportunistically seek to purchase those properties. We take a disciplined approach in evaluating potential business, property and site acquisitions, including expected demand from existing and new customers, the current competitive environment, a site’s geographic attributes, availability of telecommunications providers, expected costs for development and potential barriers to entry for other third-party data center providers. The decision to consummate an acquisition meeting our standards will be governed by the expected return on investment cost of the capital available to us, should new financing be required, as well as the opportunity cost for other potential capital spending.

Financing Strategy

We intend to finance our operations and anticipated development with cash on hand, cash generated from operations, proceeds from this offering, issuances of unsecured debt and equity securities, secured borrowings and borrowings under our new revolving credit facility. Our decision to issue debt or equity securities will be based, in part, on our debt to capital ratio, leverage ratio, anticipated cash flows, prevalent market conditions and

the relative costs of financings. As of September 30, 2012, after giving effect to this offering, the formation

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transactions and the related financing transactions, we would have had liquidity of approximately $532 million based on our estimated cash balance (based on the midpoint of the price range set forth on the cover of this prospectus) and availability under our new revolving credit facility, which we believe provides sufficient flexibility in the short- to medium-term.

Leasing Arrangements

As of September 30, 2012, 39% of our leased NRSF has been to customers on a full-service gross basis. Under a full-service gross model, the customer pays a fixed monthly rent amount, and we are responsible for all data center facility electricity, maintenance and repair costs, property taxes, insurance and other utilities associated with that customer’s space. For leases under this model, fluctuations in our customers’ monthly utilization of power and the prices our utility providers charge us impact our profitability. As of September 30, 2012, 61% of our leased NRSF has been to customers with separately metered power. Under the metered power model, the customer pays us a fixed monthly rent amount, plus its actual costs of sub-metered electricity used to power its data center equipment, plus an estimate of costs for electricity used to power supporting infrastructure for the data center, expressed as a factor of the customer’s actual electricity usage. We are responsible for all other costs listed in the description of the full-service gross model above. Fluctuations in a customer’s utilization of power and the supplier pricing of power do not impact our profitability under the metered power model. In future periods, we expect more of our contracts to be structured to bill power on a metered power basis.

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Our Initial Portfolio

The following table presents an overview of the initial portfolio of properties that we own or lease as a result of the consummation of the formation transactions, referred to herein as our portfolio, based on information as of September 30, 2012. We own nine of the buildings in which our data centers are located. We lease the remaining 14 buildings, which account for approximately 600,000 NRSF, or approximately 37% of our total operating NRSF.


				Operating Net Rentable Square Feet (NRSF) ^(a)											Powered Shell Available for Future Development (NRSF) ^(h)		Available Utility Power (MW) ⁽ⁱ⁾
Facilities	Metropolitan Area	Annualized Rent ^(b)		Colocation Space (CSF) ^(c)		Office & Other ^(d)		Supporting Infrastructure ^(e)		Total ^(f)		Percent Leased ^(g)			Powered Shell Available for Future Development (NRSF) ^(h)		Available Utility Power (MW) ⁽ⁱ⁾
South
Southwest Fwy (Galleria)	Houston	$	42,129,372		63,469		17,247		23,202		103,918		91	%		—		16
Westway Park Blvd (Houston West)	Houston	$	34,616,194		112,133		8,749		35,900		156,782		81	%		3,000		12
S. State Hwy 121 Business (Lewisville)*	Dallas	$	32,181,848		108,687		9,316		59,333		177,336		87	%		2,000		8
Midway**	Dallas	$	6,387,262		9,782		—		—		9,782		100	%		—		1
E. Ben White Blvd (Austin 1)*	Austin	$	5,131,316		16,223		21,376		7,516		45,115		93	%		—		5
Metropolis Drive (Austin 2)*	Austin	$	1,401,720		40,855		4,128		18,564		63,547		8	%		—		10
North Fwy (Greenspoint)**	Houston	$	1,077,086		13,000		1,449		—		14,449		100	%		—		1
Bryan St.**	Dallas	$	990,646		3,020		—		—		3,020		56	%		—		1
Marsh Ln**	Dallas	$	925,944		2,245		—		—		2,245		100	%		—		1
Westover Hills Blvd. (San Antonio)	San Antonio	$	130,428		35,765		172		25,778		61,715		18	%		35,000		10
Frankford Road (Carrollton)	Dallas	$	50,364		47,366		—		30,365		77,731		13	%		522,000		10

South Total		$	125,022,180		452,545		62,437		200,658		715,640		69	%		562,000		73

Midwest
West Seventh Street (7th St.)***	Cincinnati	$	31,524,906		208,918		5,744		161,024		375,686		96	%		52,000		13
Kingsview Drive (Lebanon)	Cincinnati	$	17,437,330		60,556		32,484		44,505		137,545		81	%		90,000		12
Industrial Road (Florence)*	Cincinnati	$	13,148,577		52,698		46,848		40,374		139,920		91	%		—		10
Knightsbridge Drive (Hamilton)*	Cincinnati	$	10,322,312		46,565		1,077		35,336		82,978		89	%		—		5
Parkway (Mason)	Cincinnati	$	5,746,163		34,072		26,458		17,193		77,723		99	%		—		3
Springer Street (Lombard)*	Chicago	$	2,319,235		13,560		4,115		12,231		29,906		54	%		29,000		3
E. Monroe Street (Monroe St)	South Bend	$	1,600,268		6,350		—		6,478		12,828		81	%		4,000		1
Goldcoast Drive (Goldcoast)	Cincinnati	$	1,410,429		2,728		5,280		16,481		24,489		100	%		14,000		1
Crescent Circle (Blackthorn)*	South Bend	$	994,466		3,368		—		5,125		8,493		82	%		11,000		1
McAuley Place (Blue Ash)*	Cincinnati	$	550,933		6,193		6,950		2,166		15,309		71	%		—		1

Midwest Total		$	85,054,619		435,008		128,956		340,913		904,877		90	%		200,000		50

International
Kestral Way (London)**	London	$	1,349,727		5,000		—		—		5,000		32	%		—		1
Jurong East (Singapore)**	Singapore	$	303,207		3,200		—		—		3,200		12	%		—		1

International Total		$	1,652,934		8,200		—		—		8,200		24	%				2

Total		$	211,729,733		895,753		191,393		541,571		1,628,717		79	%		762,000		125

*	Indicates properties in which we hold a leasehold interest in the building shell and land. All data center infrastructure has been constructed by us and owned by us.

**	Indicates properties in which we hold a leasehold interest in the building shell, land and all data center infrastructure.

***	The information provided for the West Seventh Street (7th St.) property includes data for two facilities, one of which we lease and one of which we purchased prior to this offering. See “—Description of Initial Portfolio—West Seventh Street (7th St.), Cincinnati, Ohio.”

(a)	Represents the total square feet of a building under lease or available for lease based on engineers’ drawings and estimates but does not include space hold for development or space used by CyrusOne.

(b)	Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2012, multiplied by 12. For the month of September 2012, customer reimbursements were

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$20.6 million annualized and consisted of reimbursements by customers across all facilities with separately metered power. Customer reimbursements under leases with separately-metered power vary from month-to-month based on factors such as our customers’ utilization of power and the suppliers’ pricing of power. From January 1, 2011 through September 30, 2012, customer reimbursements under leases with separately-metered power constituted between 7.2% and 9.7% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2012 was $218,612,619. Our annualized effective rent was greater than our annualized rent as of September 30, 2012 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.

(c)	CSF represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment.

(d)	Represents the NRSF at an operating facility that is currently leased or readily available for lease as space other than CSF, which is typically office and other space.

(e)	Represents infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.

(f)	Represents the NRSF at an operating facility currently leased or readily available for lease. This excludes existing vacant space held for development.

(g)

(h)	Represents space that is under roof that could be developed in the future for operating NRSF, rounded to the nearest 1,000.

(i)	Represents installed power capacity that can be delivered to the facility by the local utility provider. Does not sum to total due to rounding.


(Square feet rounded to nearest 1,000; dollars in millions)		NRSF Under Development ^(a)
		Under Development										Under Development Costs ^(b)
Facilities	Metropolitan Area	Colocation Space (CSF)		Office & Other		Supporting Infrastructure		Powered Shell ^(c)		Total		Actual to Date		Estimated Costs to Completion			Total
South Ellis Street (Phoenix)	Phoenix		36,000		—		30,000		126,000		192,000	$	34	$	44		$	78
Frankford Road (Carrollton)	Dallas		—		30,000		—		—		30,000	$	2	$	0	^(d)	$	2
Westway Park Blvd (Houston West)	Houston		42,000		30,000		42,000		43,000		157,000	$	3	$	22		$	25

Total			78,000		60,000		72,000		169,000		379,000	$	39	$	66		$	105

(a)	Represents NRSF at a facility for which substantial activities have commenced to prepare the space for its intended use.

(b)	Represents management’s estimate of the total costs required to complete the current NRSF under development. There may be an increase in costs if customers require greater power density.

(c)	Represents NRSF under construction that, upon completion, will be powered shell available for future development into operating NRSF.

(d)	Less than $500,000 of costs to completion expected.

We anticipate that the development of the 36,000 CSF under development at our South Ellis Street (Phoenix) facility will be completed in the fourth quarter of 2012. We anticipate that the development of the powered shell at this facility will be completed in the first quarter of 2013. We anticipate that the 157,000 NRSF under development at our Westway Park Blvd (Houston West) facility will be completed in the first half of 2013.

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Customer Diversification

Our portfolio is currently leased to approximately 500 companies, many of which are leading global companies. The following table sets forth information regarding the 20 largest customers, including affiliates, in our portfolio based on annualized rent as of September 30, 2012:


Principal Customer Industry	Number of Locations		Annualized Rent ^(a)		Percentage of Portfolio Annualized Rent ^(b)			Weighted Average Remaining Lease Term in Months ^(c)
Telecommunications (CBI) ^(d)		9	$	20,546,810		9.7	%		18.4
Energy		2	$	15,424,188		7.3	%		10.3
Industrials		4	$	15,348,682		7.2	%		7.3
Research and Consulting Services ^(e)		3	$	12,741,859		6.0	%		9.5
Telecommunications		1	$	6,398,712		3.0	%		55.6
Financials		1	$	6,313,596		3.0	%		92.0
Information Technology		2	$	5,673,140		2.7	%		55.6
Telecommunications		1	$	4,876,015		2.3	%		79.0
Consumer Staples		1	$	4,754,486		2.2	%		114.9
Energy		2	$	4,731,000		2.2	%		46.0
Energy		1	$	3,888,432		1.8	%		26.5
Energy		3	$	3,694,778		1.7	%		8.4
Energy		1	$	3,571,203		1.7	%		44.0
Consumer Discretionary		1	$	3,304,656		1.6	%		14.7
Energy		1	$	3,139,284		1.5	%		45.5
Information Technology		1	$	3,092,964		1.5	%		77.0
Energy		1	$	3,037,495		1.4	%		16.0
Energy		1	$	3,018,000		1.4	%		6.0
Information Technology		1	$	2,720,292		1.3	%		33.0
Financials		1	$	2,643,890		1.2	%		16.0

Total			$	128,919,482		60.7	%		31.7

(a)

(b)	Represents the customer’s total annualized rent divided by the total annualized rent in the portfolio as of September 30, 2012, which was approximately $211.7 million.

(c)

Weighted average based on customer’s percentage of total annualized rent expiring and is as of September 30, 2012, assuming that customers exercise no renewal options and exercise all early termination rights that require payment of less than 50% of the remaining rents. Early termination rights that require payment of 50% or more of the remaining lease payments are not assumed to be exercised because such payments approximate the profitability margin of leasing that space to the customer, such that we do not consider early termination to be economically detrimental to us.

(d)

Includes information for both CBTS and CBT and two customers that have contracts with CBTS. We expect the contracts for these two customers to be assigned to us, but the consents for such assignments have not yet been obtained. Excluding these customers, CBI represented 3% of our annualized rent as of September 30, 2012.

(e)	Customer’s contract is currently with CBTS, but we have the right to assign the contract without the customer’s consent.

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Lease Distribution

The following table sets forth information relating to the distribution of customer leases in the properties in our portfolio, based on NRSF under lease as of September 30, 2012:


NRSF Under Lease ^(a)	Number of Customers ^(b)		Percentage of All Customers			Total Leased NRSF ^(c)		Percentage of Portfolio Leased NRSF			Portfolio Annualized Rent ^(d)		Percentage of Portfolio Annualized Rent
0-999		429		83	%		113,184		9	%	$	35,195,324		17	%
1000-2499		26		5	%		41,311		3	%	$	11,735,602		5	%
2500-4999		19		4	%		67,500		5	%	$	17,521,884		8	%
5000-9999		14		3	%		104,920		8	%	$	28,909,806		14	%
10000+		26		5	%		965,300		75	%	$	118,367,117		56	%

Total		514		100	%		1,292,215		100	%	$	211,729,733		100	%

(a)	Represents all leases in our portfolio, including colocation, office and other leases.

(b)	Represents the number of customers in our portfolio utilizing data center, office and other space.

(c)

Represents the total square feet at a facility under lease and that has commenced billing, excluding space held for development or space used by CyrusOne. A customer’s leased NRSF is estimated based on such customer’s direct CSF or office and light-industrial space plus management’s estimate of infrastructure support space, including mechanical, telecommunications and utility rooms, as well as building common areas.

(d)

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Lease Expirations

The following table sets forth a summary schedule of the customer lease expirations for leases in place as of September 30, 2012 plus available space, for each of the 10 full calendar years and the partial year beginning October 1, 2012, at the properties in our portfolio. Customers whose leases have been auto-renewed prior to September 30, 2012 are shown in the calendar year in which their current auto-renewed term expires. Unless otherwise stated in the footnotes, the information set forth in the table assumes that customers exercise no renewal options and exercise all early termination rights that require payment of less than 50% of the remaining rents. Early termination rights that require payment of 50% or more of the remaining lease payments are not assumed to be exercised because such payments approximate the profitability margin of leasing that space to the customer, such that we do not consider early termination to be economically detrimental to us.


Consolidated	Number of Leases Expiring ^(a)		Total Operating NRSF Expiring		% of Total NRSF			Annualized Rent ^(b)		% of Portfolio Annualized Rent			Annualized Rent at Expiration ^(c)		% of Portfolio Annualized Rent at Expiration
Available				336,502		21	%
Month-to-Month ^(d)		212		157,207		10	%	$	22,043,573		11	%	$	22,043,573		10	%
Remainder of 2012		194		195,796		12	%	$	27,900,764		13	%	$	27,988,932		12	%
2013		467		217,505		13	%	$	51,865,700		24	%	$	51,920,775		23	%
2014		360		114,323		7	%	$	28,992,299		14	%	$	29,082,233		13	%
2015		347		87,090		5	%	$	22,576,830		11	%	$	25,960,002		12	%
2016		26		22,297		1	%	$	10,519,791		5	%	$	11,422,370		5	%
2017		43		190,870		12	%	$	19,791,667		9	%	$	19,953,870		9	%
2018		29		33,194		2	%	$	6,274,171		3	%	$	6,331,844		3	%
2019		3		120,143		8	%	$	7,968,979		4	%	$	11,337,031		5	%
2020		2		81,997		5	%	$	6,313,596		3	%	$	6,913,596		3	%
2021		1		2,720		0	%	$	1,037,160		0	%	$	1,037,160		0	%
2022-Thereafter		7		69,073		4	%	$	6,445,203		3	%	$	10,566,189		5	%

Total		1,691		1,628,717		100	%	$	211,729,733		100	%	$	224,557,575		100	%

(a)	Number of leases represents each agreement with a customer. A lease agreement could include multiple spaces and a customer could have multiple leases.

(b)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2012, multiplied by 12. For the month of September 2012, customer reimbursements were $20.6 million annualized and consisted of reimbursements by customers across all facilities with separately metered power, Customer reimbursements under leases with separately-metered power vary from month-to-month based on factors such as our customers’ utilization of power and the suppliers’ pricing of power. From January 1, 2011 through September 30, 2012, customer reimbursements under leases with separately-metered power constituted between 7.2% and 9.7% of annualized rent. After giving effect to abatements, free rent and other straight-line adjustments, our annualized effective rent as of September 30, 2012 was $218,612,619. Our annualized effective rent was greater than our annualized rent as of September 30, 2012 because our positive straight-line and other adjustments and amortization of deferred revenue exceeded our negative straight-line adjustments due to factors such as the timing of contractual rent escalations and customer prepayments for services.

(c)	Represents the final monthly contractual rent under existing customer leases that had commenced as of September 30, 2012, multiplied by 12.

(d)	Customers whose contracts expired prior to September 30, 2012 have continued on a month-to-month basis for a weighted average of 13 months.

The table above shows that leases representing approximately 48% of our annualized rent have contractual expiration dates prior to the end of 2013. Based on our historical experience, we believe the vast majority of these leases will renew on their current or comparable terms. Historically, our standard lease structure had an initial fixed term (typically three to five years), and an automatic renewal feature such that most leases renew either on a month-to-month basis, for one-year extension periods or for the original length of the lease. In addition, customers may enter into multiple leases for the same space, due to increases in the services they require at a particular data center over time. When customers request new services, such as incremental power or connectivity, such services are provided pursuant to new leases, rather than as additions to an existing lease, and

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typically result in an extension of the term of the leases for the underlying space. Frequently, customers will allow their leases to roll through automatic renewal. As of September 30, 2012, 26% of our total number of lease agreements were in auto-renewal. Our leases provide for no change in rental rate or tenant concessions upon automatic renewal. Based on the significant number of customers currently leasing pursuant to the automatic renewal feature and our low recurring rent churn rate, we believe that our lease rates generally reflect current market rental rates for comparable space and services.

Market Rates and Renewals

We believe that our customers’ leases generally reflect current market rental rates. Market rental rates are difficult to compare on the basis of annualized rent per leased NRSF because of variability in location, power consumption and density, level of redundancy, total square footage under lease, lease length, connectivity and type of lease. In addition, new leases (including renewed leases) with an existing customer may include additional services, such as additional power or connectivity, which increase the rate but do not increase the customer’s NRSF, and customers may enter into multiple leases for the same space as they increase their services at a particular data center over time. These factors can produce significant swings in average rents by location for new leases, sometimes by as much as 100% or more period over period.

Because of the structure of our leases and their automatic renewal provisions, we focus on recurring rent churn in managing our business, rather than on rent per leased NRSF on renewal. Recurring rent churn measures reductions in recurring rent due to customer terminations, net pricing reductions or service reductions as a percentage of the annualized rent at the beginning of the applicable period, excluding any impact from metered power reimbursements. Our recurring rent churn for the nine months ended September 30, 2012 was approximately 4.0% (of which 1.4% resulted from non-renewals and 2.6% resulted from net reductions in rental rate), and 3.0% for the year ended December 31, 2011 (of which 1.5% resulted from non-renewals and 1.5% resulted from net reductions in rental rate). Recurring rent churn does not include increases in revenue from increased services provided or increases in rental rate.

Historical Capital Expenditures, Tenant Concessions and Improvement Costs, and Leasing Commissions

The following table sets forth certain information regarding historical recurring capital expenditures (excluding customer improvements) at the properties in our portfolio for the 36 months ended September 30, 2012:


	Three Months Ended December 31, 2009		Year Ended December 31, 2010		Year Ended December 31, 2011		Nine Months Ended September 30, 2012		Weighted Average October 1, 2009 - September 30, 2012
Recurring capital expenditures (in millions)	$	0.4	$	1.8	$	1.8	$	2.0	$	2.0
Average NRSF during period		882,310		1,070,850		1,310,067		1,491,212		1,238,839

Recurring capital expenditures per square foot (NRSF)	$	0.43	$	1.68	$	1.37	$	1.34	$	1.61

For the 2012 fiscal year, we expect the cost of recurring building improvements at the properties in our initial portfolio (excluding the cost of customer improvements) will be approximately $5.0 million ($3.35 per square foot).

Nonrecurring capital expenditures are discretionary and vary substantially from period to period based on management’s view as to whether such expenditures are merited by future income generation. As of September 30, 2012, we expect nonrecurring capital expenditures at our properties will be approximately $235 million for the full year 2012. We may spend additional amounts related to the build-out of unimproved space for colocation use depending on customer demand.

We have not historically paid for tenant concessions or improvement costs. In addition, since customers are purchasing the data center “environment” that we have created in the data center, we do not pay for tenant improvements to such space.

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Leasing commissions for the nine months ended September 30, 2012 and 12 months ended December 31, 2011 were $3.6 million and $3.9 million, respectively. Commissions are paid on the basis of new monthly recurring revenue. We primarily use our internal sales force; however, we are building our network of third-party brokers.

Description of Initial Portfolio

As of September 30, 2012, our property portfolio included 23 operating data centers in nine distinct markets (Austin, Chicago, Cincinnati, Dallas, Houston, London, San Antonio, Singapore and South Bend), collectively providing approximately 1,630,000 NRSF, and powered by approximately 125 MW of utility power. We own nine of the buildings in which our data center facilities are located. We lease the remaining 14 buildings, which account for approximately 600,000 NRSF, or approximately 37% of our total operating NRSF. These leased buildings accounted for 36% of our total annualized rent as of September 30, 2012 and 37% of our total NOI for the three months then ended. As of September 30, 2012, our operating data center properties were 79% leased. We also currently have 379,000 NRSF under development at three data centers in three distinct markets (Dallas, Houston and Phoenix) and 762,000 NRSF of additional powered shell space under roof and available for development. Additionally, we own a total of approximately 146 acres of land that are available for future data center facility development, 42 acres of which are at our South Ellis Street (Phoenix) location, 98 acres at our Kingsview Drive (Lebanon) facility and six acres at our Westway Park Blvd (Houston West) facility. In the opinion of management, all of our properties are adequately covered by insurance. We are presenting additional data below for each property that comprises 10% or more of our total consolidated assets as of December 31, 2011 or that had gross revenues that amounted to 10% or more of our consolidated gross revenues for the year ended December 31, 2011.

There are many factors that can cause variability in annualized rent per leased NRSF. These factors include, but are not limited to, location, power consumption and density, level of redundancy, total square footage under lease, lease length, type of space under lease (CSF versus office space), type of lease (metered power versus full- service) and contractual escalators. Data center requirements can also vary significantly between customers. Our customer-centric focus allows us to tailor our products to the specific needs of our customers, which can cause the rent per leased NRSF to vary across our portfolio.

Southwest Fwy (Galleria), Houston, Texas

Our Southwest Fwy (Galleria) property is located five minutes from both downtown Houston and the Galleria area, where many major corporations are headquartered. The two acre facility is capable of providing approximately 16 MW of power and has 104,000 NRSF, of which 91% was leased as of September 30, 2012.

The building at 4211 Southwest Fwy was constructed in 1972 and underwent improvements in 2007-2008. The building at 4201 Southwest Freeway was originally constructed in 1969 and underwent improvements in 2000 and 2006. Both of these buildings were acquired with the acquisition of Cyrus Networks in June 2010. The Southwest Fwy (Galleria) facility was designed for high density computing requirements and is equipped with a fully redundant and flexible power architecture to provide these services on demand. The facility’s distributed redundant design provides the flexibility and scalability for clients to select the level of redundancy and density required for their business needs. The facility’s power architecture is completely backed up on-site by fuel and battery reserves and is coupled to a cooling infrastructure, security and surveillance system that enables the facility to be concurrently maintainable, devoid of any single points of failure and highly secure.

The building is currently used for data center and corporate operations and is currently serviced by over 10 telecommunications carriers, providing carrier diversity and neutrality for us and our customers. We have no plans to further expand this data center as it is at its capacity.

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The following table presents summary data regarding our space in this property:

NRSF

Available
Utility
Power (MW)

Number of
Customers

Property

Total
Operating

Colocation
Space

Office & Other
Space

Southwest Fwy (Galleria)

103,918

63,469

17,247

173

We have a large and diverse customer base of 173 customers at this location, and no single customer represents more than 10% of our total operating NRSF at this location.

The following table sets forth the available space and lease expirations at this location:


Southwest Fwy (Galleria)	Number of Leases Expiring		Total Operating NRSF Expiring		% of Total NRSF			Annualized Rent ^(a)		% of Annualized Rent			Annualized Rent at Expiration		% of Facility Annualized Rent at Expiration
Available				9,113		9	%
Month-to-Month		75		6,547		6	%	$	2,410,399		6	%	$	2,410,399		6	%
2012		109		9,226		9	%	$	6,165,355		15	%	$	6,165,355		14	%
2013		263		41,201		39	%	$	13,596,644		32	%	$	13,598,353		32	%
2014		150		15,448		15	%	$	9,269,824		22	%	$	9,269,824		22	%
2015		115		8,966		9	%	$	3,708,770		9	%	$	3,717,453		9	%
2016		6		11,985		12	%	$	6,451,482		15	%	$	6,938,176		16	%
2017		4		1,432		1	%	$	526,898		1	%	$	526,898		1	%

Total		722		103,918		100	%	$	42,129,372		100	%	$	42,626,458		100	%

(a)

The following table sets forth the percent leased and annualized rent per leased NRSF of this property since the date of its acquisition by us:


Date	Facility Total Operating NRSF		Percent Leased			Annualized Rent per Leased NRSF ^(b)
September 30, 2012		103,918		91	%	$	444.38
December 31, 2011		103,918		92	%	$	479.62
December 31, 2010 ^(a)		103,918		89	%	$	458.38

(a)	This property was purchased in 2010 through the acquisition of Cyrus Networks, and we are unable to present information in a similar manner for years prior to 2010.

(b)	Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of the applicable date, multiplied by 12, and divided by the NRSF leased at the end of the period.

Fluctuations in annualized rent per leased NRSF at our Southwest Fwy (Galleria) property for the time periods shown above primarily relate to metered power billings that vary based on consumption.

Upon completion of this offering, we will be the owner of Southwest Fwy (Galleria) partially in fee simple and partially pursuant to a long-term ground lease.

For 2011 the annual real estate taxes were $0.3 million. We are conducting a comprehensive tax basis study in connection with this offering. Upon completion, we estimate our total federal tax basis in this property will be approximately $280 million. Approximately $255 million of such tax basis will consist of real property that will be depreciated over 39 years on a straight-line basis. Approximately $25 million of such tax basis will be depreciated using the federal Modified Accelerated Cost Recovery System with 15-year or shorter recovery periods.

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S. State Highway 121 Business (Lewisville), Lewisville, Texas

S. State Highway 121 Business (Lewisville) is located in the Convergence Technology Center, in very close proximity to the Dallas/Fort Worth International Airport. The facility is capable of providing eight MW of power and has approximately 177,000 NRSF, of which 87% was leased as of September 30, 2012.

We acquired our leasehold interest in this property with the acquisition of Cyrus Networks in June 2010. Originally constructed in 1979, we developed an additional 103,000 NRSF at this facility in 2011. Our remaining lease obligation associated with this facility was $18.1 million as of September 30, 2012, and is classified as other financing arrangements in our financial statements. Our base rental is $175,363 per month and steps up to $180,376 per month effective September 1, 2018. The lease expires in August 2023, and has two renewal options, each for a five-year period. Upon renewal, the rent will be reset at market rates.

The S. State Highway 121 Business (Lewisville) facility was designed for high density computing requirements and is equipped with a fully redundant and flexible power architecture to provide these services on demand. The facility’s distributed redundant design provides the flexibility and scalability for clients to select the level of redundancy and density required for their business needs. The facility’s power architecture is completely backed up on-site by fuel and battery reserves and is coupled to a cooling infrastructure, security and surveillance system that enables the facility to be concurrently maintainable, devoid of any single points of failure and highly secure.

The building is currently used for data center operations and is currently serviced by eight telecommunications carriers, providing carrier diversity and neutrality for us and our customers. We have no plans to further expand this data center as it is at its capacity.

The following table presents summary data regarding our space in this property:

NRSF

Available
Utility
Power (MW)

Number of
Customers

Property

Total
Operating

Colocation
Space

Office & Other
Space

S. State Highway 121 Business (Lewisville)

177,336

108,687

9,316

The building currently services 73 customers, with one customer accounting for 16% of NRSF and another customer accounting for 12% of NRSF. No other customer accounts for more than 10% of NRSF.

The following table presents summary data regarding our principal customers at this location:


Principal Nature of Business of Customer	Lease Expiration		Renewal Options		Total Leased NRSF		Percentage of Facility Total Operating NRSF			Annualized Rent		Percentage of Facility Annualized Rent
Professional Services		Feb 2019		2 x 1 yr		28,687		16	%	$	3,092,964		10	%
Information Technology		Varies ^(a)		*		20,766		12	%	$	176,086		1	%

*	This lease will automatically renew on a month-to-month basis upon expiration of its initial term.

^(a)	Ranging from September 2012 – December 2013.

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The following table sets forth the available space and lease expirations at this location:


S. State Hwy 121 Business (Lewisville)	Number of Leases Expiring		Total Operating NRSF Expiring		% of Total NRSF			Annualized Rent ^(a)		% of Annualized Rent			Annualized Rent at Expiration		% of Facility Annualized Rent at Expiration
Available				23,197		13	%
Month-to-Month		8		13,317		8	%	$	76,980		0	%	$	76,980		0	%
2012		22		12,002		7	%	$	3,694,200		12	%	$	3,770,628		10	%
2013		68		33,189		19	%	$	10,980,888		34	%	$	10,980,937		30	%
2014		86		17,844		10	%	$	4,499,720		14	%	$	4,503,462		13	%
2015		90		16,481		9	%	$	4,909,113		15	%	$	4,934,372		14	%
2016		7		5,914		3	%	$	2,296,479		7	%	$	2,619,436		7	%
2017		5		17,839		10	%	$	1,620,240		5	%	$	1,733,971		5	%
2018		1		452		0	%	$	72,252		0	%	$	72,252		0	%
2019		2		28,687		16	%	$	3,092,964		10	%	$	5,228,964		14	%
2020		—		—		0	%		—		0	%		—		0	%
2021		—		—		0	%		—		0	%		—		0	%
2022-Thereafter		2		8,414		5	%	$	939,012		3	%	$	2,407,596		7	%

Total		291		177,336		100	%	$	32,181,848		100	%	$	36,328,598		100	%

^(a)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2012, multiplied by 12. For the month of September 2012, customer reimbursements for our S. State Hwy 121 Business (Lewisville) facility were $1.3 million annualized and consisted of reimbursements by customers with separately metered power. Customer reimbursements under leases with separately-metered power vary from month-to-month based on factors such as our customers’ utilization of power and suppliers’ pricing of power.

The following table sets forth the percent leased and annualized rent per leased NRSF of this property since the date of its acquisition by us:


Date	Facility Total Operating NRSF		Percent Leased			Annualized Rent per Leased NRSF ^(b)
September 30, 2012		177,336		87	%	$	208.78
December 31, 2011		174,225		77	%	$	211.08
December 31, 2010 ^(a)		70,764		71	%	$	425.05

^(a)	This property was purchased in 2010 through the acquisition of Cyrus Networks, and we are unable to present information in a similar manner for years prior to 2010.

^(b)	Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of the applicable date, multiplied by 12, and divided by the NRSF leased at the end of the period.

The decrease in annualized rent per leased NRSF over the time period shown above is directly attributable to the average size of the space the customers are leasing in the S. State Highway 121 Business (Lewisville) facility. The NRSF added to this facility in 2011 was leased to a small number of customers taking large footprints of space, in contrast with many customers leasing small amounts of space, racks and cabinets in the original building. Customers taking small amounts of space are generally under full-service leases and are not offered the price discounts given to customers taking large amounts of space.

As a tenant at the S. State Hwy 121 Business (Lewisville) facility, we do not directly pay real estate taxes as these taxes are included in operating expense recoveries collected by the landlord. We do, however, pay taxes to the Denton County Tax Office on personal property we own at the facility. For the 2011 fiscal tax year, these taxes totaled $0.1 million. We are conducting a comprehensive tax basis study in connection with this offering. Upon completion, we estimate our total federal tax basis in this property will be $155 million. The real property component of our tax basis in this leased facility will be approximately $120 million, approximately $105 million of which will be depreciated over 39 years on a straight-line basis and $15 million of which will constitute qualified leasehold improvements that will be depreciated over 15 years under the federal Modified Accelerated Cost Recovery System. Approximately $35 million of our tax basis will be depreciated using the federal Modified Accelerated Cost Recovery System with 15-year or shorter recovery periods.

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West Seventh Street (7th St.), Cincinnati, Ohio

229 West Seventh Street

The West Seventh Street (7th St.) facility consists of the facilities at 229 and 209 West Seventh Street. 229 West Seventh Street is a 14-story building located in downtown Cincinnati on approximately one acre of land and serves data center floors throughout the building with varying levels of reliability based upon specific customer needs. Built in 1975, the building construction consists of a reinforced concrete frame with exterior masonry finish. The building contains a high-grade electrical system and either concrete or raised floors. The property has a common utility infrastructure shared with 209 West Seventh Street. The 229 West Seventh Street property hosts the chillers and electrical systems for both buildings, while the 209 West Seventh Street property hosts the water supply, boilers and fuel storage. Access control, security and surveillance systems for the building and property are of the highest quality.

229 West Seventh Street is capable of providing 11 MW of power. Improvements were made in 2008 and 2009 to improve the power, electrical systems, chillers and other infrastructure.

The total NRSF in this building is 347,536. Currently, we occupy 300,732 NRSF in this building. Our space in this building is primarily data center space which is leased to customers. Prior to this offering, we purchased this property for approximately $18 million. This property has been presented as owned in the Predecessor combined financial statements at its historical cost.

CBT currently occupies 46,804 NRSF in this facility. Prior to this offering, we entered into a lease agreement with CBT for this space for a period of five years, with three renewal options of five years. See “Certain Relationships and Related Transactions—Other Benefits to Related Parties and Related Party Transactions.”

209 West Seventh Street

209 West Seventh Street consists of a 12-story building on 0.65 acres of land located in downtown Cincinnati. Built in 1929, the building construction consists of a reinforced concrete frame with either concrete or raised floors. The portion of the facility that we lease is capable of providing approximately two MW of power to our data center space. 209 West Seventh Street, along with 229 West Seventh Street, serves as the primary telecommunications switching system for the greater Cincinnati region. As described above, this property has a common utility infrastructure shared with 229 West Seventh Street.

We currently lease 28,150 NRSF in this building from CBT. Prior to this offering, we expect to enter into a new lease for this space for a period of five years, with three renewal options of five years each. See “Certain Relationships and Related Transactions—Other Benefits to Related Parties and Related Party Transactions.” Our space in this building is a mix of both CSF and office space which is leased to customers.

Concurrent with the acquisition of 229 West Seventh Street, described above, we executed a reciprocal easement and shared services agreement with CBT, pursuant to which CBT will provide certain utilities and other services to CyrusOne and CyrusOne will provide certain utilities and other services to CBT, in connection with the ongoing operation and maintenance of both buildings. See “Certain Relationships and Related Party Transactions—Other Benefits to Related Parties and Related Party Transactions.”

The following table presents summary data regarding our space in these properties:

NRSF

Available Utility
Power (MW)

Number of
Customers

Property

Total
Operating

Colocation
Space

Office & Other
Space

West Seventh Street (7th Street)

375,686

208,918

5,744

These properties currently service 98 customers, with three customers accounting for a total of 71% of NRSF and no other customer accounting for more than 10% of NRSF.

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The following table presents summary data regarding our principal customers at these locations combined:


Principal Nature of Business of Customer	Lease Expiration		Renewal Options		Total Leased NRSF		Percentage of Facility Total Operating NRSF			Annualized Rent		Percentage of Facility Annualized Rent
Professional Services		Dec. 2012		*		129,428		34	%	$	2,264,359		7	%
Telecommunications		Apr. 2019		2x5yrs		91,456		24	%	$	4,876,015		15	%
Telecommunications (CBT)		Sept. 2017		3x5yrs		46,804		12	%	$	4,195,271		13	%

*	This lease will automatically renew on a month-to-month basis upon expiration of its initial term.

The following table sets forth the available space and lease expirations at these locations:


West Seventh Street (7 ^th St.)	Number of Leases Expiring		Total Operating NRSF Expiring		% of Total NRSF			Annualized Rent ^(a)		% of Annualized Rent			Annualized Rent at Expiration		% of Facility Annualized Rent at Expiration
Available				15,165		4	%
Month-to-Month		55		45,861		12	%	$	8,248,794		26	%	$	8,248,794		25	%
2012		8		138,448		37	%	$	4,553,360		15	%	$	4,553,360		14	%
2013		22		27,690		7	%	$	7,072,551		22	%	$	7,072,551		21	%
2014		14		1,758		1	%	$	604,536		2	%	$	604,536		2	%
2015		18		1,074		0	%	$	426,099		1	%	$	426,099		1	%
2016		—		—		0	%		—		0	%		—		0	%
2017		4		54,234		15	%	$	5,743,551		18	%	$	5,792,023		18	%
2018		—		—		0	%		—		0	%		—		0	%
2019		1		91,456		24	%	$	4,876,015		16	%	$	6,108,067		19	%
2022-Thereafter		—		—		0	%		—		0	%		—		0	%

Total		122		375,686		100	%		31,524,906		100	%	$	32,805,430		100	%

^(a)

Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of September 30, 2012, multiplied by 12. For the month of September 2012, customer reimbursements for our West Seventh Street (7th St.) facility were $2.7 million annualized and consisted of reimbursements by customers with separately metered power. Customer reimbursements under leases with separately-metered power vary from month-to-month based on factors such as our customer’ utilization of power and suppliers’ pricing of power.

The following table sets forth the percent leased and annualized rent per leased NRSF of these properties for each of the last five years:


Date	Facility Total Operating NRSF		Percent Leased			Annualized Rent per Leased NRSF ^(a)
September 30, 2012		375,686		96	%	$	87.44
December 31, 2011		406,127		97	%	$	73.04
December 31, 2010		406,127		96	%	$	71.42
December 31, 2009		406,127		98	%	$	78.76
December 31, 2008		407,328		89	%	$	69.11

^(a)	Represents monthly contractual rent (defined as cash rent including customer reimbursements for metered power) under existing customer leases as of the applicable date, multiplied by 12, and divided by the NRSF leased at the end of the period.

Annualized rent per leased NRSF at the West Seventh Street (7th Street) property is lower than that of our other properties in our portfolio primarily due to the lower power density at this facility.

As a tenant or former tenant in these locations, we did not directly pay real estate taxes, although such taxes are included in operating expenses recovered by the landlord. For 2011, the annual real estate taxes on West Seventh Street (7th Street) were $0.5 million for 229 West Seventh Street and $0.3 million for 209 West Seventh Street.

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We are conducting a comprehensive tax basis study in connection with this offering. Upon completion, we estimate our total federal tax basis in this property will be $85 million. Approximately $75 million of such tax basis will consist of real property that will be depreciated over 39 years on a straight-line basis. Approximately $10 million of our tax basis will be depreciated using the federal Modified Accelerated Cost Recovery System with 15-year or shorter recovery periods.

Selected Other Operating Properties

The following provides a summary of three of our other key properties although they did not comprise 10% or more of our total consolidated assets as of December 31, 2011 or have gross revenues that amounted to 10% or more of our consolidated gross revenues for the year ended December 31, 2011.

Westway Park Blvd. (Houston West), Houston, Texas

Westway Park Blvd (Houston West) is located 20 minutes west of downtown Houston. This two story building was originally constructed in 2010 and is solely used for data center operations. The 157,000 NRSF facility is 81% leased and is capable of providing 12 MW of power. In July 2012, we purchased six acres of land adjacent to the facility, and we have begun to construct an expansion on this property to add up to six MW of distributed redundant power and 157,000 NRSF to the facility. This development is expected to be completed in the first quarter of 2013. A distributed redundant power architecture in this facility ensures high availability of power to mission-critical information systems and equipment and access to the most robust and reliable telecommunication networks. This facility has been built to sustain potential Houston weather risks, employing a high wind rated roof and concrete walls, and contains extensive security measures, such as perimeter fencing, dual authentication, biometric access systems, video surveillance and 24-hour security guards.

Kingsview Dr. (Lebanon), Cincinnati, Ohio

Kingsview Dr. (Lebanon) is located approximately 40 minutes northeast of downtown Cincinnati. This facility was constructed in 2009 and is used solely for data center operations. The total capacity at this facility is 138,000 NRSF, of which 81% was leased as of September 30, 2012, and the facility is capable of providing 12 MW of power. Additionally, the facility has 90,000 NRSF of powered shell and approximately 98 acres of land at this site for future development. This facility employs the use of outside air economizers when temperatures drop below 46 degrees Fahrenheit to achieve operational efficiencies. Redundant power architectures support continuous availability of power to our customers’ critical information systems and equipment. This facility also provides 24-hour monitoring for the critical infrastructure as six different levels of security access are controlled with a comprehensive video surveillance system for internal and external monitoring.

Westover Hills Blvd. (San Antonio), San Antonio, Texas

In December 2011, we purchased a 10-acre parcel of land and building in San Antonio, Texas. The purchase price of this property was $7.6 million, of which $4.6 million was allocated to land, with the remaining $3.0 million allocated to the building. This facility is expected to provide between 150–200 watts per square foot from dedicated primary circuits with redundant utility feeds of up to 20 MW and access to reliable telecommunications networks. We commissioned 36,000 CSF at this site in July 2012.

Properties Under Development

Frankford Rd. (Carrollton), Carrollton, Texas

In January 2012, we purchased a 30-acre parcel of land in Carrollton, Texas. The purchase price of this property was $23.4 million dollars. This property holds approximately 600,000 NRSF of space and is expected to be one of the largest data center buildings in the state of Texas. The facility will offer nearly 400,000 CSF and 60,000 NRSF of Class A office space. This property is expected to provide up to 250 watts per square foot from dedicated primary circuits with redundant utility feeds of up to 60 MW and access to the most robust and reliable telecommunications networks. The mechanical infrastructure being deployed will allow the facility to be one of the industry’s most efficient to operate. We commissioned 47,000 CSF at this site in July 2012.

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South Ellis Street (Phoenix), Phoenix, Arizona

In September 2011, we purchased 56-acres of land to build a one million square foot data center in Chandler, Arizona. The purchase price of this property was $14.8 million. CyrusOne is the first company to be located in Continuum, a 152-acre master-planned science and technology business park located in the Price Corridor in Chandler. Upon completion, the data center is expected to become one of the largest in the country, with 100 MW of power capacity delivered from an onsite substation. Construction of Phase I began in the second quarter 2012 on the building shell and 66,000 NRSF. We expect to commission the initial build of this space in the fourth quarter of 2012.

Facility Leasing Arrangements

The following table summarizes the remaining primary term, renewal rights, purchase rights and monthly base rent as of September 30, 2012 associated with properties that we lease from third parties:


Property*	Current Lease Term Expiration	Renewal Rights / Purchase Rights	Current Monthly Base Rent	Base Rent Increases at Renewal	Lease Type
S. State Hwy 121 Business (Lewisville) ^(b)	August-2023	2 x 5 years	$175,363	FMR ^(a)	Triple net ^(j)

Industrial Road (Florence) ^(c)	November-2020	3 x 5 years ^(g)	$89,329	104% of prior base rent	Triple net

Knightsbridge Drive (Hamilton) ^(c)	January-2018	1 x 5 years ^(h)	$116,324	Lesser of FMR or 115% of prior base rent	Triple net

Metropolis Drive (Austin 2) ^(b)	December-2026	3 x 5 years ⁽ⁱ⁾	$20,000	Lesser of current rent base and 95% of FMR	Triple net

Springer Street (Lombard) ^(c)	March-2020	2 x 5 years ⁽ⁱ⁾	$40,330	104% of prior base rent	Triple net

E. Ben White Blvd. (Austin 1) ^(b)	February-2020	2 x 5 years ⁽ⁱ⁾	$29,500	FMR	Triple net

West Seventh Street (7th St.) ^(d)	November 2017	3 x 5 years	$5,459	101% prior base rent	Triple net

Crescent Circle (Blackthorn) ^(c)	May-2019	2 x 5 years ⁽ⁱ⁾	$11,718	Base rate plus 50% of gross CPI over prior lease term	Triple net

Midway ^(e)	July-2013	4 x 1 year	$328,514	103% of prior base rent	Gross ^(k)

Kestral Way (London) ^(b)	August-2021 ^(f)	Statutory renewal rights	GBP 65,059	103% of prior base rent	Modified gross ^(l)

Jurong East (Singapore) ^(c)	November-2021	2 x 5 years	SGD 14,640	103% of prior base rent	Triple net

Other (four properties)	July-2013 – August-2023		$19,590 – $47,500	Varies	Gross

*	Excludes our Southwest Fwy (Galleria) facility, for which we will be the owner partially in fee simple and partially pursuant to a long-term ground lease.

(a)	FMR represents “fair market rent” as determined by mutual agreement between landlord and tenant or, in the case of a disagreement, mutual agreement by third-party appraisers.

(b)

Other financing arrangement. Other financing arrangements represent leases of real estate where the Predecessor was involved in the construction of structural improvements to develop these buildings into data centers. When the Predecessor bears substantially all the construction period risk, such as managing or funding construction, the Predecessor is deemed to be the accounting owner of the leased property. These transactions generally do not qualify for sale-leaseback accounting due to our continued involvement in these data center operations.

(c)	Capital lease.

(d)	Prior to completion of this offering, we will enter into a new lease agreement for the space we occupy at 209 West Seventh Street. The data in the accompanying table reflect the terms of the new lease.

(e)	Operating lease.

(f)	Expiration date will be extended to be coterminous with the 10-year term of the lease for Data Hall 2, which has not yet commenced.

(g)	We hold an option to purchase this property at the expiration of the initial term for $9 million, as well as a right of first refusal to purchase this property before such expiration if the landlord receives a bona fide third-party purchase offer.

(h)

As of October 31, 2012, we leased approximately 83,000 NRSF at this data center. A customer recently gave notice of its intent to exercise its option to purchase this property. This customer has approximately 47,000 NRSF at this data center. Upon the closing of such purchase, our current lease will be terminated and a new lease will commence. The new lease will have a term of 15 years and will be

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subject to eight five-year renewal options, with rent increasing by 1.5% per year after the initial 15-year term. After the closing of such purchase, revenue from this customer will only be recognized for data center services and power, not space. The projected annual decline in revenues is approximately $1.2 million.

(i)	We hold a right of first refusal to purchase this property if the landlord receives a bona fide third-party purchase offer.

(j)	Under a triple net lease, we are generally responsible for an agreed upon proportionate share of the landlord’s operating expenses, including expenses for insurance, property taxes, maintenance and repairs.

(k)	Under a gross lease, the landlord’s operating expenses are included within our base rent and not separately payable by us.

(l)	Certain statutory taxes and landlord’s environmental costs can be passed through to the tenant, in addition to base rent charges.

Regulation

General

Office properties in our submarkets are subject to various laws, ordinances and regulations, including regulations relating to common areas. We believe that each of the initial properties has the necessary permits and approvals to operate its business.

Environmental Matters

We are subject to laws and regulations relating to the protection of the environment, in particular with respect to the storage of diesel fuel for auxiliary or emergency power. These laws and regulations govern, among other things, the management and disposal of hazardous materials, emissions to air and discharges to water, the cleanup of contaminated sites and health and safety matters. While we believe that our operations are in substantial compliance with environmental, health, and human safety laws and regulations, as an owner or operator of property and in connection with the current and historical use of hazardous materials and other operations at its sites, we could incur significant costs, including fines, penalties and other sanctions, cleanup costs and third-party claims for property damages or personal injuries, as a result of violations of or liabilities under environmental laws and regulations.

Many of our sites include the bulk storage of diesel fuel in aboveground, and in a few cases underground, storage tanks for back-up generator use. These operations also include the use of batteries, which we recycle or dispose of at the end of their useful life via third-party service providers. Some of our sites also have a history of previous commercial operations, including past underground storage tanks. We also may acquire or develop sites in the future with unknown environmental conditions from historical operations. Although we are not aware of any sites at which we currently have material remedial obligations, the imposition of remedial obligations as a result of spill or the discovery of contaminants in the future could result in significant additional costs to us.

Our operations also require us to obtain permits and other governmental approvals and to develop response plans in connection with the use of our generators or other operations. These requirements could restrict our operations or delay the development of data centers in the future. In addition, we could incur significant costs complying with environmental laws or regulations that are promulgated in the future.

Insurance

Upon completion of this offering, we will carry commercial liability, fire, extended coverage, earthquake, business interruption and rental loss insurance covering all of the properties in our portfolio under a blanket policy. We will select policy specifications and insured limits which we believe to be appropriate given the relative risk of loss, the cost of the coverage and industry practice and, in the opinion of our company’s management, the properties in our portfolio are currently, and upon completion of this offering will be, adequately insured. We will not carry insurance for generally uninsured losses such as loss from war. In addition, we will carry earthquake insurance on our properties in an amount and with deductibles which we believe are commercially reasonable. Certain of the properties in our portfolio will be located in areas known to be seismically active. See “Risk Factors—Risks Related to Our Business and Operations—Any losses to our properties that are not covered by insurance, or that exceed our policy coverage limits, could adversely affect our business, financial condition and results of operations.”

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Competition

We compete with numerous developers, owners and operators of office and commercial real estate, many of which own properties similar to ours in the same submarkets in which our properties are located, but which have lower occupancy rates than our properties. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our customers, we may lose potential customers and we may be pressured to reduce our rental rates below those we currently charge in order to retain customers when our customers’ leases expire.

Employees

We initially intend to employ approximately 250 persons. We currently expect that none of these employees will be represented by a labor union.

Offices

Our headquarters is located in Carrollton, Texas. We may add regional offices in the future depending upon our operational needs.

Legal Proceedings

In the ordinary course of our business, from time to time we are subject to claims and administrative proceedings, none which are currently outstanding which we believe would have, individually or in the aggregate, a material adverse effect on our business, financial condition and results of operations, liquidity and cash flows.

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MANAGEMENT

Directors and Executive Officers

Upon completion of this offering, our board of directors will consist of eight members, including a majority of directors who are independent within the meaning of the NASDAQ Global Select Market listing standards. Pursuant to our charter and bylaws, each of our directors will be elected by our stockholders to serve until the next annual meeting and until his or her successor is duly elected and qualifies. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws—Our Board of Directors.” The first annual meeting of our stockholders after this offering will be held in 2013. Subject to any employment agreements, officers serve at the pleasure of our board of directors.

The following table sets forth certain information concerning the individuals who are our directors, persons who have agreed to become directors upon completion of this offering and executive officers.


Name	Age		Position
Gary J. Wojtaszek		46	President, Chief Executive Officer and Director
Kimberly H. Sheehy		48	Chief Financial Officer and Treasurer
Kevin L. Timmons		48	Chief Technology Officer
Michael L. Duckett		47	Chief Operating Officer
Tesh Durvasula		46	Chief Commercial Officer
John F. Cassidy		58	Chairman
William E. Sullivan		58	Director Nominee*
Roger T. Staubach		70	Director Nominee*
T. Tod Nielsen		47	Director Nominee*
Alex Shumate		62	Director Nominee*
Melissa E. Hathaway		44	Director Nominee*
David H. Ferdman		45	Director Nominee

*	We expect our board of directors to determine that this director is independent for purposes of the NASDAQ Global Select Market corporate governance listing standards.

The following is a biographical summary of the experience of our directors, persons who have agreed to become directors upon completion of this offering and executive officers.

Gary J. Wojtaszek is our President, Chief Executive Officer and a member of our board of directors. Mr. Wojtaszek was appointed to CBI’s board of directors on July 29, 2011, and was named President of CyrusOne effective August 5, 2011. Upon consummation of this offering, Mr. Wojtaszek is expected to resign as a member of CBI’s board of directors. Prior to becoming the President of CyrusOne in August 2011, Mr. Wojtaszek served as Chief Financial Officer of CBI beginning July 2008 and as Senior Vice President, Treasurer and Chief Accounting Officer for the Laureate Education Corporation in Baltimore, Maryland from 2006 to 2008. Prior to that, Mr. Wojtaszek worked from 2001 to 2008 at Agere Systems, the semiconductor and optical electronics communications division of Lucent Technologies, which was subsequently spun-off through an initial public offering. While at Agere Systems, Mr. Wojtaszek worked in a number of finance positions, ultimately serving as the Vice President of Corporate Finance, overseeing all Controllership, Tax and Treasury functions. Mr. Wojtaszek started his career in General Motors Company’s New York treasury group and joined Delphi Automotive Systems as the regional European treasurer in connection with the initial public offering and spin-off of Delphi Automotive Systems from General Motors. Mr. Wojtaszek has an MBA from Columbia University and a BA from Rutgers University. Having previously served as CBI’s Chief Financial Officer and President of CyrusOne, Mr. Wojtaszek brings to our board of directors critical knowledge and understanding of the data center colocation business coupled with an in-depth understanding of the company’s capital structure.

Kimberly H. Sheehy is our Chief Financial Officer and Treasurer. Ms. Sheehy joined CyrusOne in 2011 as the Chief Administrative Officer. Prior to that, she held various roles between 1996 and 2011 at CBI, including

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Treasurer and Vice President of Investor Relations from March 2011 through November 2011, Vice President of Finance and Treasurer from 2007 to 2011, and Vice President of Financial Planning and Analysis in 2007. Prior to joining CBI, Ms. Sheehy held accounting and tax positions at Ernst & Young.

Kevin L. Timmons is our Chief Technology Officer. Mr. Timmons joined CyrusOne in October 2011 as Chief Technology Officer. Prior to joining CBI, he led Microsoft’s global data center team as General Manager, Data Center Services beginning in 2009. Prior to that, Mr. Timmons held several positions between 1999 and 2009 within the operations team at Yahoo!. Mr. Timmons originally joined Yahoo! via the GeoCities acquisition in September 1999 as Director of Operations. He was then promoted to Senior Director in August 2000, and assumed the role of Vice President, Operations in February 2006.

Michael L. Duckett is our Chief Operating Officer. Mr. Duckett joined CyrusOne in November 2011 as Chief Operating Officer. Prior to joining CyrusOne, Mr. Duckett served as the President and Chief Operating Officer of CoreLink Data Centers LLC from 2010 to 2011. Prior to that, Mr. Duckett held a Senior Vice President of Operations position at Terremark Worldwide from 2005 to 2010, where he was responsible for the colocation, hosting, and network business lines during a period when Terremark increased its revenue from approximately $50 million to over $300 million.

Tesh Durvasula is our Chief Commercial Officer, overseeing strategy, marketing and sales. Mr. Durvasula joined CyrusOne in October 2012. Prior to joining CyrusOne, Mr. Durvasula served as the Chief Marketing and Business Officer of Quality Technology Services (“QTS”) from March 2010 through April 2012. Prior to QTS, he was a co-founder and Chief Operating Officer of NYC-Connect, a privately-held interconnection business that was sold to Digital Realty Trust, Inc. and Telx in 2007. Following that sale, Mr. Durvasula served as the Chief Marketing Officer at Telx until 2009. Prior to NYC-Connect, Mr. Durvasula served as Vice President of Sales at AboveNet, Inc.

John F. Cassidy is the Chairman of our board of directors. Mr. Cassidy has been the President and Chief Executive Officer of CBI since July 2003 and a director of CBI since September 2002. Mr. Cassidy has held various other positions within CBI, including President and Chief Operating Officer of Cincinnati Bell Telephone Company and President of Cincinnati Bell Wireless Company. Having served as CBI’s Chief Executive Officer since 2003 and during the expansion of CBI’s data center business, including the acquisition of Cyrus Networks, Mr. Cassidy brings to our board of directors critical knowledge and understanding of the products and services offered by CyrusOne, as well as a thorough understanding of the telecommunications industry in which it operates.

William E. Sullivan will serve on our board of directors upon completion of this offering as our lead independent director and the chair of our audit committee. From March 2007 to May 2012, Mr. Sullivan served as the Chief Financial Officer of ProLogis Inc., a REIT operating as an owner, manager and developer of distribution facilities. Prior to that, Mr. Sullivan served as the Chairman and Chief Executive Officer of SiteStuff, Inc., beginning in June 2001. SiteStuff, Inc. is a procurement solutions company specializing in real estate property and facility management. Mr. Sullivan worked for Jones Lang LaSalle, and its predecessor LaSalle Partners, in a variety of positions from 1984 to 2001, including as Chief Financial Officer from 1997 to 2001 and as a member of the board of directors from 1997 to 1999. As a result of this background, Mr. Sullivan brings to our board of directors a comprehensive understanding of the commercial real estate industry coupled with extensive REIT management experience.

Roger T. Staubach will serve on our board of directors upon the completion of this offering. Mr. Staubach has been the Executive Chairman, Americas, and a Director, of Jones Lang LaSalle since July 2008. Mr. Staubach founded The Staubach Company in 1977 and served as its Chairman and Chief Executive Officer until June 2007, when he became its Executive Chairman. The Staubach Company merged with Jones Lang LaSalle in July 2008. A 1965 graduate of the United States Naval Academy with a B.S. degree in Engineering, Mr. Staubach served for four years as a Navy officer. He then joined the Dallas Cowboys professional football team as its quarterback,

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from which he retired in March 1980. Mr. Staubach is a member of the board of directors of Cinemark Holdings, Inc. and AMR Corporation, the parent company of American Airlines. Mr. Staubach was also the Chairman of the Host Committee for Super Bowl XLV, which was held in North Texas at the beginning of 2011. He has received numerous honors for his leadership in business, civic, philanthropic and athletic activities, including the 2006 Congressional Medal of Honor “Patriot Award” and the 2007 Horatio Alger Award. He has also been inducted into the Texas Business Hall of Fame and named a “Distinguished Graduate” by the United States Naval Academy. As a result of his long tenure as a chief executive officer, coupled with his experience as a Navy officer and then the quarterback for a highly successful professional football team, Mr. Staubach brings to our board of directors leadership qualities and perspectives on the importance of corporate ethics and integrity that will be valuable to its oversight of the Company. His years of building a significant real estate business add entrepreneurial and marketing expertise that are important to the oversight of our growth and our ability to innovate and serve clients within the real estate industry.

T. Tod Nielsen will serve on our board of directors upon the completion of this offering. Mr. Nielsen is the Co-President, Applications Platform of VMware, Inc. Mr. Nielsen served as VMware’s Chief Operating Officer from January 2009 to January 2011. Prior to that, he served as President and Chief Executive Officer of Borland Software Corporation from November 2005 to December 2008. From June 2005 to November 2005, Mr. Nielsen served as Senior Vice President, Marketing and Global Sales Support for Oracle Corporation, an enterprise software company. From August 2001 to August 2004, he served in various positions at BEA Systems, Inc., a provider of application infrastructure software, including Chief Marketing Officer and Executive Vice President, Engineering. Mr. Nielsen also spent 12 years with Microsoft in various roles, including General Manager of Database and Developer Tools, Vice President of Developer Tools, and at the time of his departure, Vice President of Microsoft’s platform group. Mr. Nielsen is a current director of Club Holdings LLC and MyEdu. As a result of his background, Mr. Nielsen brings to our board of directors a strong technical background in software development, coupled with extensive management experience and knowledge of the information technology market.

Alex Shumate will serve on our board of directors upon the completion of this offering. Mr. Shumate is currently the Managing Partner, North America, of Squire, Sanders & Dempsey (US) LLP (an international law firm) since 2009. Prior to that, he served as the Managing Partner of the Columbus, Ohio office of Squire Sanders since 1991. He is a current director of CBI, as well as The J.M. Smucker Company. He also served as a director of the Wm. Wrigley Jr. Company from 1998 until its acquisition in 2008, as well as Nationwide Financial Services from 2002 until its acquisition in 2009. He has served as a director of CBI since 2005. Upon consummation of this offering, Mr. Shumate is expected to resign as a member of CBI’s board of directors. With his legal background, his years of experience serving as the managing partner of a major law firm, and his service on the boards of other publicly-traded companies, including CBI, Mr. Shumate brings to our board of directors demonstrated managerial ability and a thorough understanding of the principles of good corporate governance.

Melissa E. Hathaway will serve on our board of directors upon the completion of this offering. Ms. Hathaway is President of Hathaway Global Strategies, LLC and a Senior Advisor at Harvard Kennedy School’s Belfer Center, roles she has held since August 2009. Ms. Hathaway also served on the board of directors of Terremark Worldwide from February 2010 until its acquisition by Verizon Communications Inc. in March 2011. Previously, from February 2009 to August 2009, she led the development of the Cyberspace Policy Review in her role as the Acting Senior Director for Cyberspace in the National Security Council of President Barack Obama’s administration. Prior to that, from March 2007 to February 2009, Ms. Hathaway served as Cyber Coordination Executive and Director of the Joint Interagency Cyber Task Force in the Office of the Director of National Intelligence under President George W. Bush. Before working in the Obama and Bush administrations, from June 1993 to February 2007, Ms. Hathaway was a Principal with Booz Allen & Hamilton, Inc., where she led the information operations and long-range strategy and policy support business units. Her efforts at Booz Allen supported key offices within the Department of Defense and Intelligence Community, including the U.S. Southern Command, the U.S. Pacific Command, the Office of the Secretary of Defense for Net Assessment, the Central Intelligence Agency, the Defense Intelligence Agency and the Office of the Director

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of National Intelligence. As a result of her background, Ms. Hathaway brings to our board of directors more than 20 years of high-level public and private-sector experience and is considered one of the leading experts on cyber security matters.

David H. Ferdman will serve on our board of directors upon completion of this offering. Mr. Ferdman is the founder of Cyrus Networks, where he served as President and Chief Executive Officer from 2000 until its acquisition by the Predecessor in June 2010. Following such acquisition, Mr. Ferdman served as the President of CyrusOne until August 5, 2011. Prior to founding Cyrus Networks, Mr. Ferdman was the Chief Operating Officer and co-founder of UWI Association Programs (d/b/a Eclipse Telecommunications), a facilities-based telecommunications service provider. As Chief Operating Officer of UWI, Mr. Ferdman was instrumental in the company’s rapid growth, which culminated in its acquisition by IXC Communications (now part of Level 3 Communications Inc.) in 1998. As a result of his background, Mr. Ferdman brings to our board of directors a comprehensive understanding of our business coupled with extensive experience in the data center industry.

Board Committees

At its first meeting, which shall take place within 90 days following the completion of this offering, our board of directors will appoint the remaining members of our audit committee, as well as appoint a compensation committee and a nominating and corporate governance committee. Under our corporate governance guidelines, the composition of each committee must comply with the listing requirements and other rules and regulations of the NASDAQ Global Select Market, as amended or modified from time to time, and we currently anticipate that each of these committees will be comprised of three independent directors when appointed by our board of directors. Our corporate governance guidelines define “independent director” by reference to the rules, regulations and listing qualifications of the NASDAQ Global Select Market which generally deem a director to be independent if the director has no relationship to us that may interfere with the exercise of the director’s independence from management and our company. Our board of directors may from time to time establish other committees to facilitate the management of our company. The partnership agreement of our operating partnership currently requires that, so long as CBI has the right to nominate at least one director, CBI will have the right to designate at least one of its nominees to serve on each committee (if the nominee is qualified as independent under the applicable rules, regulations and listing qualifications of the NASDAQ Global Select Market) other than any committee whose purpose is to evaluate or negotiate any transaction with CBI.

Audit Committee. The audit committee will help ensure the integrity of our financial statements, the qualifications and independence of our independent auditor and the performance of our internal audit function and independent auditors. The audit committee will select, assist and meet with the independent auditor, oversee each annual audit and quarterly review, evaluate the performance of our internal audit controls and prepare the report that federal securities laws require be included in our annual proxy statement. William Sullivan has been designated as chair of the audit committee.

Compensation Committee. The compensation committee will review and approve the compensation and benefits of our executive officers, administer and make recommendations to our board of directors regarding our compensation and stock incentive plans, produce an annual report on executive compensation for inclusion in our proxy statement and publish an annual committee report for our stockholders.

Nominating and Corporate Governance Committee. The nominating and corporate governance committee will develop and recommend to our board of directors a set of corporate governance guidelines, a code of business conduct and ethics and related company policies, monitor our compliance with corporate governance requirements of state and federal law and the rules and regulations of the NASDAQ Global Select Market, establish criteria for prospective members of our board of directors, conduct candidate searches and interviews, oversee and evaluate our board of directors and its committees, evaluate from time to time the appropriate size and composition of our board of directors and recommend, as appropriate, increases, decreases and changes in the composition of our board of directors and propose the slate of directors to be submitted for election at each annual meeting of our stockholders.

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Our board of directors may from time to time establish certain other committees to facilitate the management of our company.

Compensation of Directors

Upon completion of this offering, each of our directors who is not an employee of our company or our subsidiaries will receive the following as compensation for services as a director: an initial equity grant of restricted stock with a grant-date fair value of $105,000, an annual cash retainer of $50,000 (except as specified below in the case of our lead independent director and our non-executive chair), and an annual equity grant with a grant-date fair value of $100,000 for the director’s initial 12 months of service. The equity awards granted to our directors will be made pursuant to our 2012 Long Term Incentive Plan. The restricted stock awards that will be granted to our directors upon completion of this offering are expected to vest in three equal installments, with the first installment vesting on May 15, 2014 and the second and third installments vesting on the second and third anniversaries of the date of grant, respectively, subject to the director’s continued service on our board of directors. Our lead independent director will receive an annual cash retainer of $75,000, and our non-executive chair will receive an annual cash retainer of $100,000. The director who serves as chair of the audit committee will receive an additional annual retainer of $15,000, and the directors who serve as chairs of the compensation committee and the nominating and corporate governance committee each will receive an additional annual retainer of $10,000. Directors who are employees of our company or our subsidiaries will not receive compensation for their services as directors. We will not provide any per-meeting compensation to any of our directors.

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Summary Compensation Table

The following table summarizes the compensation of each of our named executive officers for the executive’s service to the Predecessor for the fiscal year ended December 31, 2011. As required by the SEC rules, compensation information is included for the two individuals who served in the position of Chief Executive Officer of the Predecessor for the fiscal year ended December 31, 2011, the two other most highly compensated executive officers of the Predecessor for the fiscal year ended December 31, 2011, each of whom was serving in such role as of December 31, 2011, as well as one additional executive officer who was among the two most highly compensated executive officers for the fiscal year ended December 31, 2011, but who was no longer employed with the Predecessor as of December 31, 2011. The executive officers included in the following table may not necessarily represent our named executive officers following the consummation of this offering.


Name and Principal Position	Year		Salary ($)			Bonus ($)		Stock Awards ($) ⁽⁶⁾		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($) ⁽⁷⁾		Total ($)
Gary J. Wojtaszek President and Chief Executive Officer ⁽¹⁾⁽²⁾		2011		391,592	⁽⁵⁾		490,425		212,331		—		—		—		6,879		1,101,227
Dorothy R. Spruce Senior Vice President, Sales ⁽¹⁾		2011		334,828			—		—		—		—		—		8,866		343,694
Paul Marvin Vice President, Finance ⁽³⁾		2011		189,240			112,761		—		—		—		—		7,339		309,340
David H. Ferdman Former President and Chief Executive Officer ⁽¹⁾		2011		358,021			426,663		—		—		—		—		11,386		796,070
Joshua McLane Former Chief Business Development Officer ⁽⁴⁾		2011		277,981			137,142		—		—		—		—		7,922		423,045

⁽¹⁾

In August 2011, Gary J. Wojtaszek was appointed President of the Predecessor, at which time David H. Ferdman assumed the role of Founder and Chief Strategy Officer of the Predecessor. Prior to August 2011, Mr. Ferdman served as the President and Chief Executive Officer of Cyrus Networks. Mr. Wojtaszek is expected to continue as our President and Chief Executive Officer following the consummation of this offering, while Mr. Ferdman will serve on our board of directors. Ms. Spruce is expected to continue as our Executive Vice President of Sales following the consummation of this offering, however, she is no longer an executive officer of the Company.

⁽²⁾

The amounts included in the table for Mr. Wojtaszek reflect amounts allocated to the Predecessor in its financial statements included in this prospectus. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 1 to “Notes to Combined Financial Statements” for additional discussion of allocations made to the Predecessor in its financial statements.

⁽³⁾	Mr. Marvin’s employment with the Predecessor terminated as of July 1, 2012.

⁽⁴⁾	Mr. McLane’s employment with the Predecessor terminated as of April 4, 2011.

⁽⁵⁾	Mr. Wojtaszek received an increase in base salary in 2011 to offset the termination of CBI’s flexible Perquisite Reimbursement Program effective January 27, 2011.

⁽⁶⁾

This amount reflects the grant-date fair value of the CBI performance units issued in 2011 to Mr. Wojtaszek for the 2011-2013 performance cycle pursuant to the Cincinnati Bell Inc. 2007 Long Term Incentive Plan. Such amount assumes payout at target, the most probable outcome at the time of the grant, based on a weighted average exercise price of $2.85 per share of CBI common stock, assuming the number of awards that can be earned if target performance conditions are achieved. If the maximum payout is earned, the value of the performance units that would be allocated to the Predecessor in its financial statements included in this prospectus based on the stock price at the date of grant is $318,497.

⁽⁷⁾	The table below shows the components of the “All Other Compensation” column.


Name and Principal Position	Year		401(k) Match ($) ⁽¹⁾			Life Insurance ($)			Total “All Other Compensation” ($)
Gary J. Wojtaszek		2011		6,879	⁽²⁾		—			6,879
Dorothy R. Spruce		2011		8,866			—			8,866
Paul Marvin		2011		7,339			—			7,339
David H. Ferdman		2011		8,250			3,136	⁽³⁾		11,386
Joshua McLane		2011		7,922			—			7,922

⁽¹⁾

Under the terms of the Cincinnati Bell Inc. Retirement Savings Plan, CBI’s matching contribution is equal to 100% on the first 3% and 50% on the next 2% of contributions made to the plan by the participant. Eligible compensation includes base salary plus any cash incentive compensation paid to eligible participants. The maximum CBI matching contribution is $9,800. Mr. Wojtaszek is a participant in the Cincinnati Bell Inc. Retirement Savings Plan. Under the terms of the CyrusOne 401(k) Savings Plan, discretionary matching contributions to the CyrusOne 401(k) Savings Plan may be made, subject to applicable statutory maximum contribution amounts. For 2011, Cyrus Networks’ matching contribution was equal to 50%

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on the first 8% of contributions made to the plan by the participant. Messrs. Marvin, Ferdman and McLane and Ms. Spruce are participants in the CyrusOne 401(k) Savings Plan.

⁽²⁾	This amount reflects the portion of CBI’s matching contribution to the Cincinnati Bell Inc. Retirement Savings Plan allocated to the Predecessor in its financial statements included in this prospectus.

⁽³⁾	This amount reflects a life insurance premium paid by the Predecessor in 2011 for fiscal year 2011 of $1,586 as well as a life insurance premium paid by the Predecessor in 2011 for fiscal year 2012 of $1,550.

Narrative Disclosure to Summary Compensation Table

The following describes material features of the compensation disclosed in the Summary Compensation Table:

CBI Employment Agreements

During 2011, each of Messrs. Wojtaszek and Ferdman were employed pursuant to an employment agreement, which sets forth, among other things, the executive’s base salary, bonus opportunity, and entitlement to participate in benefit and pension plans and to receive CBI equity awards and post-termination benefits and obligations.

Mr. Wojtaszek’s employment agreement with CBI, amended and restated effective as of January 1, 2009, and further amended, effective as of January 27, 2011, provides for a one-year term of employment subject to automatic one-year extensions and for both a minimum base salary and a minimum bonus target of $550,000 per year.

Mr. Ferdman’s employment agreement with CBI, Cy-One Holdings LLC and Cyrus Networks, dated May 12, 2010, similarly provides for a one-year term of employment subject to automatic one-year extensions, unless 60 days’ notice of non-renewal is provided by either party prior to the conclusion of the then-current term and for both a minimum base salary and a minimum bonus target of $350,000 per year.

Each of Messrs. Wojtaszek’s and Ferdman’s employment agreements provide for certain payments and benefits in the event of a termination of employment. See “—Potential Payment Upon Termination or Change in Control.” We anticipate entering into an arrangement with Mr. Wojtaszek in connection with this offering that will, among other things, address the terms of his termination of employment with CBI upon consummation of this offering. See “—CyrusOne Employment Agreements and Arrangements” for additional details with respect to the arrangements with Mr. Wojtaszek.

CBI Performance Units

The CBI performance units granted to Mr. Wojtaszek in 2011 pursuant to the Cincinnati Bell Inc. 2007 Long Term Incentive Plan, which may be paid in CBI common shares, cash, or a combination thereof, are based on the achievement of specific CBI quantitative goals over the 2011-2013 performance cycle. Such awards were granted during the first quarter of 2011 following finalization and approval by the full CBI board of directors of the one-year, two-year cumulative and three-year cumulative financial goals for each of the three performance periods within the 2011-2013 cycle.

The number of performance units granted was based on the long-term incentive dollar value approved by CBI’s compensation committee for Mr. Wojtaszek and the value of one share of CBI stock on the date of grant. For each of the one-year, two-year cumulative and three-year cumulative performance periods, actual adjusted free cash flow achieved must be at least 90% of the target goal in order to generate a threshold level payout equal to 75% of the target award for each executive and at least 100% of the target goal in order to generate a target level payout equal to 100% of the target award for each executive, which, for the one-year and two-year cumulative performance periods, represents the maximum payout for the performance units. For the three-year cumulative performance period, actual adjusted free cash flow of 110% of the target goal or higher will result in the achievement of a maximum level payout equal to 150% of the target award for each executive. Payout levels between 75% and 100%, and 100% and 150%, as applicable, are determined based on linear interpolation rounded to the nearest one-tenth of 1%. The adjusted free cash flow targets are (i) $7 million for the 2011

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performance period, (ii) $32 million for the 2011-2012 performance period and (iii) $66 million for the 2011-2013 performance period. Actual adjusted free cash flow for the 2011 performance period exceeded the superior performance level established by CBI’s compensation committee. In determining the number of performance units to be paid out for each such performance period, the total number of performance units paid out in the previous performance period or periods is subtracted from the performance units earned for such performance period.

In the event that Mr. Wojtaszek’s employment with CBI or any of its subsidiaries terminates for any reason other than disability, death, by CBI without cause or by Mr. Wojtaszek due to a constructive termination, prior to the date on which CBI distributes the value of the number of performance units required to be distributed for the 2011-2013 performance cycle (the “Final Distribution Date”), Mr. Wojtaszek will forfeit his rights to receive the value of any additional performance units. Pursuant to the terms of the performance unit award agreement, Mr. Wojtaszek’s employment will be deemed to have terminated when his status as an active employee on the payroll of CBI or any of its subsidiaries for payment and withholding purposes ends; however, Mr. Wojtaszek’s employment agreement with CBI entitles him to be treated as an active employee during the one-year period following a termination of employment by CBI without cause or a constructive termination. In the event that Mr. Wojtaszek’s employment terminates due to his disability, he will be entitled to receive the value of the performance units required to be distributed for the 2011-2013 performance cycle as if he had been employed through the Final Distribution Date. See “—Potential Payments Upon Termination or Change in Control – Payments Upon Termination Not in Connection with a Change in Control” for additional detail.

In the event that, following the conclusion of the 2011-2013 performance cycle but prior to the Final Distribution Date, (i) CBI undergoes a change in control or (ii) Mr. Wojtaszek’s employment terminates due to death, Mr. Wojtaszek or his beneficiary, as applicable, will be entitled to receive the value of the performance units earned for the 2011-2013 performance cycle. In the event that, prior to the conclusion of the 2011-2013 performance cycle, (i) CBI undergoes a change in control or (ii) Mr. Wojtaszek’s employment terminates due to death, Mr. Wojtaszek or his beneficiary, as applicable, will be entitled to receive the value of (x) the target number of performance units for the 2011-2013 performance cycle less (y) the number of units whose value was distributed for any performance period prior to such change in control or Mr. Wojtaszek’s death.

We anticipate entering into an arrangement with Mr. Wojtaszek addressing the treatment of his outstanding performance units in connection with the consummation of this offering, although the terms of such arrangement have not yet been determined.

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2011 Outstanding Equity Awards at Fiscal Year-End

The following table describes the outstanding equity awards held by our named executive officers as of December 31, 2011. All amounts in the below table relate to shares of CBI common stock and do not reflect any equity awards granted in connection with this offering.

We anticipate entering into arrangements with Mr. Wojtaszek and our other executive officers holding CBI equity awards (including CBI performance units) addressing the treatment of the outstanding equity awards following the consummation of this transaction, although the terms of such arrangements have not yet been determined.


Option Awards											Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date ⁽²⁾		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) ⁽³⁾		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) ⁽⁴⁾
Gary J. Wojtaszek		200,000						3.75		8/1/2018		—		—		—		—
		324,324						1.67		12/5/2018		—		—		—		—
		201,131		6,221				1.39		1/30/2019		—		—		—		—
		128,884		82,400				2.91		1/29/2020		—		—		—		—
		74,567		191,744				2.54		12/7/2020		—		—		—		—
		—		—		—		—		—		—		—		461,708		1,523,636
Dorothy R. Spruce		—		—		—		—		—		—		—		—		—
Paul Marvin ⁽¹⁾		29,900		35,100		—		3.28		6/11/2020		—		—		—		—
David H. Ferdman		41,400		48,600		—		3.28		6/11/2020		—		—		—		—
Joshua McLane		—		—		—		—		—		—		—		—		—

⁽¹⁾	Although Mr. Marvin’s employment with the Predecessor terminated as of July 1, 2012, his outstanding options continue to vest until June 30, 2013. Any options that are not vested by June 30, 2013 will be automatically forfeited.

⁽²⁾	All options and stock appreciation rights granted are for a maximum period of 10 years from the date of grant and vest over a three-year period. These awards vest 28% on the first anniversary of the original date of grant and, thereafter, at the rate of 3% per month for the next 24 months.

⁽³⁾

Amounts in this column include performance units granted for the 2009-2011 performance cycle assuming vesting at the maximum level less performance units earned and vested for (i) the 2009 period on February 28, 2010 and (ii) the 2009-2010 cumulative period on February 28, 2011. Amounts also include performance units granted for the 2010-2012 performance cycle assuming vesting at the maximum level less performance units earned and vested for the 2010 period on February 28, 2011. The amount also includes the performance unit grant made to Mr. Wojtaszek for the 2011-2013 performance cycle on January 28, 2011 assuming vesting at the maximum level.

⁽⁴⁾	Assuming the maximum number of shares is earned, amounts represent the equity incentive plan awards not yet vested. The value is based on the closing price of CBI’s common shares on December 31, 2011 ($3.03).

Retirement Benefits

Mr. Wojtaszek participates in the Cincinnati Bell Management Pension Plan (the “Management Pension Plan”), which contains both a qualified defined benefit plan and a nonqualified excess benefit plan. Mr. Wojtaszek is vested in his benefits under the Management Pension Plan, and upon retirement may elect a

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lump-sum or equivalent annuity form of payment of such benefits without any reduction. Normal retirement eligibility under the Management Pension Plan is, for employees who became participants in the Management Pension Plan after January 1, 1988 (such as Mr. Wojtaszek), the later of (i) age 65 or (ii) five years from the date participation in the Management Pension Plan began.

Pursuant to a 2009 amendment to the Management Pension Plan, pension benefits for certain management employees below 50 years of age were frozen. As a result of the 2009 amendment, Mr. Wojtaszek, who was below 50 years of age at the time, is no longer eligible to accrue benefits under the Management Pension Plan.

Each participant’s account under the Management Pension Plan is generally credited with assumed interest for each calendar year at a certain interest rate. Such interest rate for 2011 was 4.0% per annum with respect to a participant while still employed by CBI and 3.5% (or 4.0% if a participant elects out of a pre-retirement death benefit) for a participant while not employed by CBI prior to March 1, 2012. Pursuant to a 2012 amendment to the Management Pension Plan, beginning March 1, 2012, interest credited to a participant is 4.0% per annum, regardless of whether the participant is employed by CBI.

Each of the named executive officers participates in either the Cincinnati Bell Retirement Savings Plan (the “CBI Savings Plan”) or the CyrusOne 401(k) Savings Plan (the “CyrusOne Savings Plan”), each of which is a tax-qualified defined contribution plan designed to assist employees in providing for their retirement. Pursuant to the CBI Savings Plan, CBI is required to make matching contributions equal to 100% on the first 3% of compensation contributed by a participant and 50% on the next 2% of compensation contributed by a participant subject to a maximum matching contribution of $9,800. CBI may, upon notice to a participant, change the method by which it determines plan contributions under the CBI Savings Plan. Matching contributions in accordance with the formula described above were made to the CBI Savings Plan during the fiscal year ended December 31, 2011. See “—Summary Compensation Table” for additional detail. Pursuant to the CyrusOne Savings Plan, discretionary matching contributions may be made to such plan, subject to applicable statutory maximum matching contribution amounts. Discretionary matching contributions were made to the CyrusOne Savings Plan during the fiscal year ended December 31, 2011. See “—Summary Compensation Table” for additional detail.

Potential Payments Upon Termination or Change in Control

CBI’s plans and arrangements provide for certain payments and benefits upon termination of employment at any time and in connection with a change in control of CBI. This section describes such potential payments that would have been made to Messrs. Wojtaszek and Ferdman pursuant to each such executive’s employment agreement and long-term incentive award agreements. For purposes of this section, the triggering events are assumed to have taken place on December 31, 2011.

In connection with the consummation of this offering, we expect to enter into arrangements with each of Mr. Wojtaszek and Ms. Spruce, which will include certain payments and benefits upon a termination of employment following consummation of this offering, and, with respect to Mr. Wojtaszek, will address the terms of the termination of his employment with CBI upon the consummation of this offering. See “—CyrusOne Employment Agreements and Arrangements” for additional details. The summary below sets forth the terms of the employment agreements with Messrs. Wojtaszek and Ferdman as in effect on December 31, 2011 and does not include the terms of any arrangements we intend to enter into in connection with this offering.

Payments Upon Termination Not in Connection with a Change in Control

In the event Mr. Wojtaszek or Mr. Ferdman’s employment is terminated for any reason by CBI or Cyrus Networks, as applicable, or by such executive, he is entitled, subject to his execution of a general release of claims in favor of CBI or Cyrus Networks (other than with respect to any accrued but unpaid salary and bonus), as applicable, to those benefits which he has a non-forfeitable right to receive, which includes any shares of stock he may own outright, vested options which may be exercisable for a period of 90 days following termination and

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vested amounts under CBI’s pension and savings plans, as well as the payments and benefits described below. In addition, each of Messrs. Wojtaszek and Ferdman will continue to be bound by the non-disclosure, non-compete and non-solicitation provisions of his employment agreement.

In the event Mr. Wojtaszek or Mr. Ferdman’s employment is terminated by CBI or Cyrus Networks, as applicable, for cause, or such executive terminates his employment voluntarily, he is not entitled to any payments from CBI or Cyrus Networks other than those payments and benefits set forth in the immediately preceding paragraph.

Pursuant to the terms of their respective employment agreements, in the event Mr. Wojtaszek or Mr. Ferdman’s employment is terminated by CBI or Cyrus Networks, as applicable, without cause or such executive terminates his employment due to a constructive termination, such executive will be entitled to (i) a payment equal to two times his base salary, (ii) continued medical, dental, vision and life insurance benefits during the one-year period following his termination of employment on the same basis as any active salaried employee provided any required monthly contributions are made, (iii) continued treatment as an active employee during the one-year period following termination with respect to any outstanding stock option, restricted stock or long-term incentive award (other than any award granted pursuant to the CBI 2010 Cyrus Plan, as defined below), (iv) the ability to exercise any vested options for an additional 90 days after the end of the one-year period following his termination, and (v) the sum of any forfeitable benefits accrued under any qualified or non-qualified pension, profit-sharing 401(k) or deferred compensation plan of CBI, Cyrus Networks, or their respective affiliates which would have vested if such executive had remained employed during the one-year period following termination.

In the event Mr. Wojtaszek or Mr. Ferdman’s employment is terminated due to death, such executive’s beneficiary will be entitled to (i) a payment equal to the base salary and bonus accrued and payable to such executive upon the date of his death, (ii) accelerated vesting of all outstanding options and the ability to exercise such options for the one-year period following the date of his death and (iii) full vesting and payout at target amounts of any awards granted under CBI’s long-term incentive plans (other than any award granted pursuant to the Technology Solutions/Data Center Program (as defined below), which will be forfeited upon a termination due to death (see “—Technology Solutions/Data Center Program” for additional details) and any award granted pursuant to the CBI 2010 Cyrus Plan, which will remain outstanding and will be settled only upon the consummation of a transaction (see “—Cincinnati Bell Inc. 2010 Cyrus Performance Plan” for additional details)).

In the event Mr. Wojtaszek or Mr. Ferdman’s employment is terminated due to disability, he is entitled to (i) a payment equal to the base salary and bonus accrued and payable to him upon the date of termination, (ii) accelerated vesting of all outstanding options and the ability to exercise such options for the one-year period following the date of termination, (iii) continued vesting of all outstanding long-term incentive awards in accordance with the terms of such awards and participation in any outstanding long-term incentive plans and (iv) continued consideration as an employee for all other benefits provided the disabling conditions continue.

Payments Upon Termination in Connection with a Change in Control

If Mr. Wojtaszek or Mr. Ferdman’s employment is terminated without cause by CBI or Cyrus Networks, as applicable, or the executive terminates his employment due to a constructive termination within the one-year period following a change in control of CBI, he will be entitled to (i) a payment equal to two times the sum of his base salary and target bonus, (ii) continued medical, dental, vision and life insurance coverage during the one-year period following his termination of employment on the same basis as other active employees provided any required monthly contributions are made, (iii) accelerated vesting of any outstanding options, restricted shares, and/or other equity awards (other than any award granted pursuant to the Technology Solutions/Data Center Program or the CBI 2010 Cyrus Plan) and the ability to exercise such options until, with respect to Mr. Wojtaszek, the earlier of (x) the latest date such options would be exercisable if such options had vested immediately prior to the termination of Mr. Wojtaszek’s employment and (y) the one-year period following

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termination, or, with respect to Mr. Ferdman, the latest date such options would be exercisable if such options had vested immediately prior to Mr. Ferdman’s termination, (iv) accelerated vesting and payout at target levels of any awards granted under long-term incentive plans (other than any award granted pursuant to the Technology Solutions/Data Center Program or the CBI 2010 Cyrus Plan) and (v) the sum of any forfeitable benefits accrued under any qualified or non-qualified pension, profit-sharing 401(k) or deferred compensation plan of CBI, Cyrus Networks, or their respective affiliates which would have vested if such executive had remained employed during the one-year period following termination.

Defined Terms

“Cause”, for purposes of Mr. Wojtaszek’s employment agreement, means a determination that there has been fraud, misappropriation, embezzlement or misconduct constituting serious criminal activity on the part of Mr. Wojtaszek.

“Cause”, for purposes of Mr. Ferdman’s employment agreement, means a determination that there has been fraud, misappropriation, embezzlement or conviction of, or plea of guilty or no contest or similar plea with respect to, a felony on the part of Mr. Ferdman.

“Change in Control”, for purposes of each of Messrs. Wojtaszek and Ferdman’s employment agreements as well as Mr. Wojtaszek’s performance unit award agreement, means the occurrence of any of the following events:

(i)

a change in the ownership of CBI (within the meaning of Section 1.409A-3(i)(5)(v) of the Treasury regulations);

(ii)

a change in the effective control of CBI (within the meaning of Section 1.409A-3(i)(5)(vi) of the Treasury regulations); and

(iii)

a change in the ownership of a substantial portion of the assets of CBI (within the meaning of Section 1.409A-3(i)(5)(vii) of the Treasury regulations).

“Constructive Termination”, for purposes of each of Messrs. Wojtaszek’s and Ferdman’s employment agreements, means the occurrence of, without such executive’s consent, (i) a material reduction in such executive’s authority, reporting relationship or responsibilities, (ii) a reduction in such executive’s base salary or bonus target, (iii) with respect to Mr. Wojtaszek, a relocation from the greater Cincinnati, Ohio Area by 50 or more miles and, with respect to Mr. Ferdman, a relocation from Houston, Texas, by 30 or more miles and (iv) with respect to Mr. Ferdman, any material breach of his employment agreement by Cyrus Networks, provided that Cyrus Networks fails to remedy such breach within 10 days of Mr. Ferdman’s delivery of notice of such breach and provided further that Mr. Ferdman’s termination of employment must be effected within 10 days following the expiration of such 10-day period.

Technology Solutions/Data Center Program

On December 7, 2010, the CBI compensation committee approved a new long-term incentive program under CBI’s 2007 Long Term Incentive Plan (the “Technology Solutions/Data Center Program”). The program was primarily intended to (i) encourage rapid and profitable growth of revenue and EBITDA in the Technology Solutions/Data Center segment of CBI’s business (the segment of CBI’s business conducted by the Predecessor), (ii) create significant enterprise value through the growth of the Technology Solutions/Data Center segment, (iii) bring about a significant change in the strategic direction of CBI’s business in a short time frame and (iv) provide management and the board of directors of CBI with strategic flexibility.

The program was implemented through the grant of performance unit awards by the CBI compensation committee (denominated in $1.00 per unit) with respect to a given performance period, which provides for a specified cash payment to the participating executive in the event that (i) the executive is continuously employed for

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a three-year period after the date of grant, (ii) specified EBITDA targets are met over such three-year period, (iii) a “qualifying transaction” is consummated within ten years of the date of grant and (iv) at least $1 billion of equity value is created in the Technology Solutions/Data Center segment in connection with the qualifying transaction. The awards give the CBI compensation committee discretion to make fractional payments no less than a pro-rata portion of the “base payout” amount and no more than the “base payout” amount in the event there is either: (a) a qualifying transaction before the fifth anniversary of the initial award grant date or (b) there is a qualifying transaction after the fifth anniversary of the initial award grant date and the equity value created is at least $500 million. If a qualifying transaction does not occur within 10 years of the grant date, the performance unit awards terminate with no payment to the participating executives. Moreover, if a participating executive’s employment is terminated for any reason (other than a termination for the executive’s retirement or disability), prior to the consummation of a qualifying transaction, then the executive will not receive any payment under the award (other than with respect to previously vested performance units, if any, and as otherwise provided in the executive’s employment agreement, if any). If a participating executive’s employment is terminated due to disability or retirement prior to the consummation of a qualifying transaction, then the executive will be deemed to be an active participant through the end of the then-current performance period. “Qualifying transaction” includes certain sales of the Technology Solutions/Data Center business (including an initial public offering), certain transactions that would result in CBI ceasing to own its other businesses, and a change in control of CBI. “Base payout” equals the product of $1.00, the number of vested performance units at the time of a qualifying transaction and the percentage payment described in the following paragraph based on EBITDA achieved. Participants vest in a certain number of units at the conclusion of each performance period, provided they are employed on such date. If a qualifying transaction occurs prior to the end of the applicable performance period, participants will be deemed to be active participants through the end of the applicable three-year performance period.

For each performance period, EBITDA achieved must be at least 90% of the targeted goal in order to generate a threshold level of payment equal to 75% of the target award for each executive and 100% or higher in order to generate a maximum payment of 100% of the target award, provided that if a qualifying transaction occurs prior to the end of such performance period, EBITDA will be deemed to be 100% or higher.

Pursuant to the terms of the Technology Solutions/Data Center Program, no executive may receive performance units in any calendar year with a value in excess of $5,000,000.

For each of the 2011-2013 and 2012-2014 performance periods, the CBI compensation committee approved a grant of units to Mr. Wojtaszek with a maximum value of $4,000,000 per grant. Upon the consummation of this offering, based on the midpoint of the price range on the cover of this prospectus, it is expected that Mr. Wojtaszek will be entitled to a cash payment from CBI with respect to such performance units as described above equal to $ .

Cincinnati Bell Inc. 2010 Cyrus Performance Plan

On June 11, 2010, the Cincinnati Bell Inc. 2010 Cyrus Performance Plan (the “Cyrus Plan”) became effective. The plan was primarily intended to promote the interests of CBI and its shareholders by encouraging the employees of CBI and its subsidiaries to create a global data center business.

The Cyrus Plan was implemented through the grant of awards by the CBI compensation committee to each participating executive providing for the grant of a specified number of points to such executive, which are vested as of the date of grant. Payment with respect to the vested number of such points will be made to the participating executive in cash, equity, or other property in the event that (i) a “transaction” is consummated prior to June 11, 2020 and (ii) the executive is employed on the date such transaction is consummated; provided that if such executive’s employment terminates prior to the consummation of a transaction due to death, disability or retirement, the executive will be entitled to payment with respect to his or her vested awards if (x) the executive is continuously employed for three years following the date such awards were granted or (y) the transaction occurs prior to June 11, 2013. The amount of the payment to each participating executive will be determined by multiplying 6% of the equity value created by the transaction as specified in the Cyrus Plan and as reviewed and

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certified by a specified valuation firm by a ratio, the numerator of which is the vested number of points held by the participating executive, and the denominator of which is the total number of outstanding and vested points. If a transaction does not occur prior to June 11, 2020 or if a transaction occurs after June 11, 2015 and the equity value created is less than $500 million, awards granted pursuant to the Cyrus Plan will terminate with no payment to the participating executives. Moreover, if a participating executive’s employment is terminated for any reason (other than a termination for the executive’s retirement, death or disability), prior to the consummation of a transaction, then the executive will not receive any payment under the award. “Transaction” includes certain sales of the business conducted by Cyrus Networks and its subsidiaries as of June 11, 2010 (including an initial public offering), certain transactions that would result in CBI ceasing to own its other businesses, and a change in control of CBI.

In April 2012, the CBI compensation committee approved grants of a total of 947 points pursuant to the Cyrus Plan, including an award of 50 points to Mr. Ferdman, 85 points to Ms. Spruce and 20 points to Mr. Marvin. Mr. Marvin’s points were forfeited upon the termination of his employment with the Predecessor as of July 1, 2012. Upon the consummation of this offering, based on the midpoint of the price range on the cover of this prospectus, Mr. Ferdman and Ms. Spruce are expected to be entitled to payment with respect to such awards as described above equal to $ and $ , respectively. We have not yet determined if such payments will be made in the form of cash or equity.

CyrusOne Employment Agreements, Arrangements and Incentive Plans

In connection with this offering, we anticipate entering into employment agreements or arrangements with certain of our executive officers. We have not yet determined the specific provisions of such employment agreements and arrangements. The following table sets forth the expected base salary and annual target bonus of each of our executive officers following consummation of this offering.


Name	Base Salary		Annual Target Bonus

Gary J. Wojtaszek	$	600,000	$	750,000

Kimberly H. Sheehy	$	350,000	$	262,500

Michael L. Duckett	$	350,000	$	262,500

Kevin L. Timmons	$	325,000	$	325,000

Tesh Durvasula	$	300,000	$	225,000

In addition, the CBI board of directors has approved the CyrusOne 2012 Long Term Incentive Plan and the CyrusOne 2013 Short Term Incentive Plan, both of which are described in more detail below, for the benefit of certain of our directors, employees and consultants.

2012 Long Term Incentive Plan

The full text of the CyrusOne 2012 Long Term Incentive Plan (the “Plan”) is set forth in Exhibit 10.7 of this prospectus and the following discussion is qualified in its entirety by reference to such text.

The purposes of the Plan are (i) to further the long-term growth of the company by offering competitive incentive compensation related to long-term performance goals to our directors and employees who will be responsible for planning and directing such growth, (ii) to reinforce a commonality of interest between our stockholders and our directors, employees and consultants who participate in the Plan and (iii) to aid us in attracting and retaining directors, employees and consultants of outstanding abilities and specialized skills.

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The principal provisions of the Plan are summarized below:

1. Administration . The Plan is administered by a committee (for purposes of this discussion as to the Plan, the “Committee”). Unless otherwise provided by our board of directors, the Committee will be the compensation committee of our board of directors. Subject to the limits and terms of the Plan, the Committee (i) selects the directors, employees and consultants who will be granted awards, (ii) makes awards, in such forms and amounts and on such conditions as it determines, (iii) interprets the terms of the Plan and (iv) performs all other administrative functions.

The Committee may delegate to one or more of the company’s executive officers its right to make awards under the Plan to directors, employees or consultants who (i) are not otherwise subject to the stock reporting requirements of Section 16 of the Exchange Act and (ii) are not expected to become employees for whom our ability to take deductions related to their compensation is potentially limited under Section 162(m) of the Code.

Thus, any one of the company’s executive officers generally can grant awards under the Plan to employees who are not executive officers of the company if delegated this right by the Committee. If any one of the company’s executive officers is delegated such right, then any reference to the Committee in the following parts of this discussion of the Plan should be deemed to be a reference to such executive officer to the extent the discussion may apply to any awards that he or she grants under the Plan.

2. Eligible Participants . Any director, employee or consultant (including any prospective director, employee or consultant) of the company is eligible to be granted an award under the Plan.

3. Source of Shares . Any common shares issued under the Plan will consist, in whole or in part, of authorized and unissued common shares.

4. Types of Awards . The Committee may grant awards under the Plan at any time. The grants may consist of one or a combination of the following forms of awards: (i) stock options, including options intended to qualify as incentive stock options under Section 422 of the Code (“ISOs”) and options that are not ISOs (“NSOs”), (ii) stock appreciation rights (“SARs”), (iii) restricted stock, (iv) restricted stock units, (v) performance shares, (vi) share-based performance units, (vii) nonshare-based performance units, (viii) non-restricted stock and (ix) other nonshare-based awards. No award may be granted under the Plan after November 15, 2022.

(a) Stock Options . A stock option represents an option to purchase, over a certain time period not to exceed 10 years, a number of common shares at a fixed purchase price. The terms and conditions of any stock option will be determined by the Committee, subject to the terms of the Plan, and set forth in the applicable award agreement. The fixed purchase price of any stock option granted under the Plan will not be less than 100% of the fair market value of a common share on the grant date of the option.

Stock options can either be ISOs or NSOs. All options granted under the Plan will be NSOs unless the applicable award agreement expressly states that the option is intended to be an ISO. ISOs are a special type of stock options that can provide special tax advantages for participants that are not available with respect to NSOs (but they provide less ability for the company to deduct their value when exercised by the applicable participants). Also, by reason of applicable law, the aggregate fair market value of common shares, determined at grant date, for which ISOs can be exercisable for the first time during any calendar year as to any participant is limited by tax law (the current limitation is $100,000). In addition, the Committee cannot grant an ISO to any participant who owns (directly or constructively) more than 10% of the voting power of our common shares. Unless otherwise set forth in the applicable award agreement, each stock option will expire upon the tenth anniversary of the date the option is granted.

(b) Stock Appreciation Rights . A SAR represents the right, upon exercise of the SAR, to receive payment of a sum in cash, common shares, other property or any combination thereof (as determined by the Committee on the date of grant of the SAR) not to exceed the amount, if any, by which the fair market value (as determined on

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the date of the exercise of the SAR) of a number of common shares on which the SAR is based exceeds a fixed grant price of the SAR. The terms and conditions of any SAR will be determined by the Committee, subject to the terms of the Plan, and set forth in the applicable award agreement. The Plan provides that the grant price of the common shares that are subject to a SAR may not be less than the fair market value of such common shares as determined on the SAR’s grant date. A SAR may be granted by itself, in conjunction with new stock options granted at the same time under the Plan, or in relation to non-ISO stock options that were previously granted. Unless otherwise set forth in the applicable award agreement, each SAR will expire upon the tenth anniversary of the date the SAR is granted.

(c) Restricted Stock . Restricted stock constitutes common shares that may not be disposed of by the participant to whom they are awarded until certain restrictions lapse (and that will ultimately be forfeited to the extent such restrictions are not satisfied). In general, such restrictions may include but are not limited to restrictions related to service requirements and to the satisfaction of performance goals. The restrictions that apply to any restricted stock award may lapse as to a portion of the common shares subject to the award if the participant meets some but not all of the imposed restrictions. Unless the Committee determines otherwise, the recipient of restricted stock will have all rights of a stockholder of the company with respect to the restricted common shares, including the right to vote and to receive cash dividends. The terms and conditions of any restricted stock award will be determined by the Committee, subject to the terms of the Plan, and set forth in the applicable award agreement.

(d) Restricted Stock Units . Restricted stock units constitute an unfunded and unsecured promise to deliver common shares, cash, other securities, other awards or other property upon the lapse of certain restrictions. In general, such restrictions may include but are not limited to restrictions related to service requirements and to the satisfaction of performance goals. The terms and conditions of any restricted stock units will be determined by the Committee, subject to the terms of the Plan, and set forth in the applicable award agreement.

(e) Performance Share Award . A performance share award refers to an award that provides that the participant to whom the award is granted will receive a number of common shares, up to a fixed maximum, if certain performance-based conditions are met, in addition to any other conditions specified by the Committee, including service requirements. A portion of the maximum number of common shares subject to the award can be paid if some but not all of the conditions imposed under the award are met. The terms and conditions of any performance share awards will be determined by the Committee, subject to the terms of the Plan, and set forth in the applicable award agreement.

(f) Share-based Performance Unit . A share-based performance unit refers to an award that provides that the participant to whom the award is granted will receive an amount that is equal to a percent of the fair market value of one common share on the date the amount becomes payable under the award (or is equal to a percent of the increase in the fair market value of a common share from the grant date of the award to the date the amount becomes payable) if certain performance-based conditions are met, in addition to any other conditions specified by the Committee, including service requirements. A portion of the maximum amount payable under the award can be paid if some but not all of the conditions imposed under the award are met. Any amount that becomes payable under a share-based performance unit can be paid in cash, in common shares or other property, or by a combination thereof, as the Committee may determine. The terms and conditions of any share-based performance unit will be determined by the Committee, subject to the terms of the Plan, and set forth in the applicable award agreement.

(g) Nonshare-based Performance Unit . A nonshare-based performance unit refers to an award that provides that the participant to whom the award is granted will receive an amount that is equal to a dollar value, not more than a maximum dollar value, if certain performance-based conditions are met, in addition to any other conditions specified by the Committee, including service requirements. A portion of the maximum amount payable under the award can be paid if some but not all of the conditions imposed under the award are met. Any amount that becomes payable under a nonshare-based performance unit can be paid in cash, in common shares or

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other property, or by a combination thereof, as the Committee may determine. The terms and conditions of any nonshare-based performance unit will be determined by the Committee, subject to the terms of the Plan, and set forth in the applicable award agreement.

(h) Non-Restricted Stock Awards . Non-restricted stock granted constitutes an award to a participant of a fixed number of common shares that can be sold or disposed of immediately and without any restrictions. The terms and conditions of any non-restricted stock awards will be determined by the Committee, subject to the terms of the Plan, and set forth in the applicable award agreement.

(i) Other Awards . The Committee may grant other equity-based or equity-related awards, or other awards that provide for compensation based on a dollar amount, in each case, payable in cash, equity or otherwise. The terms and conditions of any such awards will be determined by the Committee, subject to the terms of the Plan.

5. Share and Compensation Limits under the Plan .

Common Shares Reserved for Awards. Subject to adjustment in the case of certain changes in the capital structure of the company, the following limits apply to the number of common shares that may be issued or paid under or with respect to awards granted under the Plan:

(a) The maximum number of common shares that may be issued or paid under or with respect to all of the awards (considered in the aggregate) granted under the Plan during the Plan’s entire existence will be equal to common shares.

(b) The maximum number of common shares that may be issued or paid under or with respect to all stock options and SARs (considered in the aggregate but separately from all other forms of awards) granted under the Plan during the Plan’s entire existence will be equal to common shares.

(c) The maximum number of common shares that may be issued or paid under or with respect to all ISOs (considered in the aggregate but separately from all other types of stock options and other forms of awards) granted under the Plan during the Plan’s entire existence will be equal to common shares.

If any portion of a SAR is settled (paid) upon the exercise of such SAR portion by the issuance or payment of common shares, the total number of common shares on which such SAR portion was based will be counted as common shares issued or paid under the Plan for purposes of the foregoing limits, regardless of the number of common shares actually issued or paid to settle such SAR portion upon its exercise.

Also, if any award or portion of any award is forfeited, expires, or otherwise terminates without the payment of common shares or any other amount, or is settled other than wholly by delivery of common shares, the maximum number of common shares on which such award or portion of an award was based or which could have been paid under the award or portion of the award will again be available to be issued or paid under the Plan and to be the basis on which other awards may be granted under the Plan. As a result, they will not be counted as common shares that were issued or paid under the Plan in determining whether any of the foregoing limits are violated.

Further, any common shares that would be issued or paid under an award but are withheld in payment of any purchase price or tax withholding requirements will not again be deemed to be available to be issued or paid under the Plan or to be the basis on which other awards may be granted under the Plan and thus will be counted as common shares that were issued or paid under the Plan in determining whether any of the foregoing limits are violated.

Other Award Limits. In addition to the foregoing limits and subject to adjustment in the case of certain changes in the capital structure of the company, (i) the limits set forth below in subparagraphs (a) and (b) will apply in determining the maximum number of common shares or maximum amount of compensation that may

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ultimately be payable under any awards that are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code and that are granted under the Plan to any participant during any one calendar year and (ii) the limits set forth below in subparagraphs (c) and (d) will apply in determining the maximum number of common shares or maximum amount of compensation that may ultimately be payable under any awards that are granted under the Plan to any non-employee member of our board of directors during any one calendar year.

(a) The maximum number of common shares on which all stock option, SAR, restricted stock, performance share, share-based performance unit, non-restricted stock awards and other share-based awards (considered in the aggregate) granted under the Plan to any participant during each and any calendar year may be based (that is, the maximum number of common shares that can be issued or paid under such awards or have their fair market value or increase in fair market value over a period used to determine the amount of payments under such awards) will be common shares.

(b) The maximum value that is payable under all nonshare-based awards granted under the Plan to any participant during each and any calendar year will be $5,000,000.

(c) The maximum number of common shares on which all stock option, SAR, restricted stock, performance share, share-based performance unit, non-restricted stock awards and other share-based awards (considered in the aggregate) granted under the Plan to any non-employee member of our board of directors during each and any calendar year may be based (that is, the maximum number of common shares that can be issued or paid under such awards or have their fair market value or increase in fair market value over a period used to determine the amount of payments under such awards) will be common shares, provided that any awards approved by the Committee or the board of directors of CBI and granted to a non-employee member of our board of directors in connection with this offering will not count against this share limit.

(d) The maximum value that is payable under all nonshare-based awards granted under the Plan to any non-employee member of our board of directors during each and any calendar year will be $200,000, provided that any awards approved by the Committee or the board of directors of CBI and granted to a non-employee member of our board of directors in connection with this offering will not count against this $200,000 limit.

6. Performance Goals . In general, to the extent the meeting of performance goals is a condition to the exercise of or payment under any award granted under the Plan, such performance goals will be determined by the Committee in its discretion. However, if any award granted under the Plan is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, the Committee must base the relevant performance goals on one or more of the following criteria: (i) free cash flow (cash generated by operating activities, minus capital expenditures and other investing activities, dividend payments and proceeds from the issuance of equity securities, and proceeds from the sale of assets); (ii) operating cash flow; (iii) cash available for distribution; (iv) EBITDA; (v) earnings per share; (vi) FFO; (vii) FFO As Adjusted; (viii) operating efficiency; (ix) operating income; (x) total stockholder returns; (xi) profit targets; (xii) revenue targets; (xiii) profitability targets as measured by return ratios; (xiv) working capital; (xv) market share (in the aggregate or by segment); (xvi) portfolio and regional occupancy rates; (xvii) net income; (xviii) return on investment or capital; (xix) return on assets; (xx) return on equity; (xxi) return on sales; (xxii) return on development and (xxiii) level or amount of acquisitions.

Any performance criteria applicable to an award granted under the Plan will be measured or determined on the basis of a period of not less than one year or in excess of 10 years and will be able to be objectively determined by the Committee. In addition, any such performance criteria (i) may be measured or determined for CyrusOne, for any organization other than CyrusOne that is part of the company, for the entire company in the aggregate, or for any group of corporations or organizations that are included in the company and (ii) may also be measured and determined in an absolute sense and/or in comparison to the analogous performance criteria of other publicly-traded companies (that are selected for such comparison purposes by the Committee).

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Further, the Committee may provide in the terms of an award granted under the Plan that, in determining whether any of the above listed performance criteria has been attained, certain special or technical factors will be ignored or, conversely, taken into account, in whole or in part. Such special factors may include, but are not limited to, the gain, loss, or other impact of any one or more of the following: (i) changes in generally accepted accounting principles; (ii) an extraordinary event; (iii) nonrecurring events; (iv) the disposition of a business, in whole or in part, the sale of investments or non-core assets, or discontinued operations, categories, or segments of businesses; (v) claims and/or litigation and insurance recoveries relating to claims or litigation; (vi) the impairment of tangible or intangible assets; (vii) restructuring activities, including reductions in force; (viii) investments or acquisitions; (ix) political and legal changes that impact operations, as a consequence of war, insurrection, riot, terrorism, confiscation, expropriation, business interruption, or similar events; (x) natural catastrophes; (xi) currency fluctuations; (xii) the issuance of stock options and/or other stock-based compensation; (xiii) the early retirement of debt; and/or (xiv) the conversion of convertible debt securities.

Except as otherwise permitted by Section 162(m) of the Code, with respect to any award that is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, in no event may any discretionary authority granted to the Committee under the Plan be used to grant or provide payment in respect of performance awards for which the performance goals described above have not been attained, increase such performance award for any participant at any time after the first 90 days of the performance period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) or increase such performance award above the maximum amount payable under the underlying award.

7. Change in Control . In the event a change in control of CyrusOne (as described below) occurs, then, unless provision was made in connection with the change in control for assumption of, or substitution for, awards previously granted (unless otherwise prescribed by the terms of the applicable award): (i) all then outstanding stock options and SARs that were granted under the Plan will become exercisable in full; (ii) the restrictions still then in force and applicable to any common shares that have been awarded under the Plan as restricted stock and any nonshare-based performance award (other than nonshare-based performance units) will lapse; (iii) all then outstanding restricted stock units will be deemed to have vested, and the shares of common stock subject thereto will be delivered no later than 10 days following the change in control; (iv) and any performance share, share-based performance unit and nonshare-based performance unit awards granted under the Plan will become payable at the maximum payment amount that was attainable under such awards if all performance goals and other criteria or conditions applicable to the awards were satisfied.

In addition, unless otherwise prescribed by the Committee in an award agreement, in the event of a change in control of CyrusOne, the Committee will have discretion (i) to pay in cash (in lieu of the right to exercise) the then value of any then outstanding stock option or SAR provided that the then fair market value of the common shares that are subject to such option or SAR exceeds such option’s or SAR’s purchase price or grant price as to such shares and (ii) to pay in cash (instead of in common shares) the then value of any then outstanding restricted stock units, performance share, share-based performance unit, nonshare-based performance unit awards and other nonshare-based awards.

Unless otherwise provided pursuant to an award agreement, a change in control is defined to mean any of the following events, generally: (i) during any period of 24 consecutive calendar months, a change in the composition of a majority of the board of directors, as constituted on the first day of such period, that was not supported by a majority of the incumbent board of directors or CBI; (ii) an acquisition by any individual, entity or group (other than CBI and certain such individuals, entities or groups as provided in the Plan) of beneficial ownership of a percentage of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors that was equal to or greater than 20%; (iii) consummation of certain mergers or consolidations of the company with any other corporation following which our stockholders hold 40% or less of the combined voting power of the surviving entity; or (iv) the stockholders approve a plan of complete liquidation or dissolution of CyrusOne.

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Although award agreements may provide for a different definition of change in control than is provided for in the Plan, except in the case of a transaction described in clause (iv) above, any definition of change in control set forth in any award agreement will provide that a change in control will not occur until consummation or effectiveness of a change in control of CyrusOne, rather than upon the announcement, commencement, stockholder approval or other potential occurrence of any event or transaction that, if completed, would result in a change in control of CyrusOne.

8. Adjustments for Stock Dividends, Stock Splits, and Other Corporate Transactions . In the event of any change affecting the common shares by reason of any stock dividend or split, recapitalization, merger, consolidation, spin-off, combination or exchange of shares, or other corporate change in the company, or any distributions to common stockholders of the company including extraordinary cash dividends, the Committee will make such adjustments in the aggregate number or class of common shares which may be distributed under the Plan and in the number, class, and purchase, grant, or other price of shares on which the outstanding awards granted under the Plan are based as it determines to be necessary or appropriate to prevent any rights provided under the Plan and its awards from being enlarged or diluted by such event.

9. Fair Market Value of Common Shares . For purposes of the Plan, the fair market value of a common share on any date will generally be deemed to be the closing price of a common share on the national stock exchange or quotation system on which the common shares may be listed on such date (or, if no trading in any stocks occurred at all on such exchange on such date, on the next subsequent date on which trading of stocks occurred on such exchange). If, however, common shares are not listed or traded at all on any such exchange on any date as of which a common share’s fair market value is needed to be determined for purposes of the Plan, then the fair market value of a common share on such date will be determined by the Committee in good faith.

10. Amendment and Termination . The Plan may generally be amended or terminated by our board of directors, provided that no such action may impair the rights of a participant with respect to a previously granted award without the participant’s consent.

In addition, the Plan provides that no amendment to the Plan may be made without approval of our stockholders if such amendment would: (i) increase the total number of common shares reserved for issuance under all awards that may be granted under the Plan; (ii) change the class of participants eligible for awards under the Plan; (iii) increase the total number of shares reserved for issuance under all ISOs that may be granted under the Plan; or (iv) make any other change in the Plan that is required by applicable law, the rules of the national stock exchange or quotation system on which the common shares are listed or Section 162(m) of the Code if the Plan is intended to be a stockholder approved plan for purposes of Section 162(m) of the Code, to be approved by our stockholders in order to be effective.

The Committee may generally waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate any award previously granted, prospectively or retroactively. However, unless otherwise provided by the Committee in the applicable award agreement or in the Plan, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely impair the rights of any participant to any award previously granted would not to that extent be effective without the consent of the affected participant. In addition, in no event may any award (i) be amended to decrease the applicable exercise price or other similar price, (ii) be cancelled at a time when its exercise price exceeds the fair market value of the underlying shares in exchange for another award under any other equity-compensation plan or any cash payment or (iii) be subject to any action that would be treated, for accounting purposes, as a “repricing” of such award, unless such amendment, cancellation or action is approved by our stockholders.

11. Miscellaneous . The Plan generally requires that any purchase price or tax withholding obligations that apply to a participant with respect to an award granted under the Plan to him or her must be satisfied by the participant when the award is exercised or when the award’s benefits become payable or are no longer subject to a substantial risk of forfeiture. The Plan provides several different methods that the Committee can use or permit to ensure that such purchase price and tax withholding requirements are satisfied.

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Any award granted under the Plan to a participant who is, at the time of the award, an employee of a corporation that is not CyrusOne but is part of the company may be based on common shares of such other corporation. In such case, all of the provisions of the Plan and this discussion, including the common share limits noted above, apply to such award in the same manner as if such other corporation’s shares were common shares of CyrusOne.

Further, in no event will we ever be obligated to issue or deliver any common shares in connection with an award granted under the Plan unless and until we determine that such issuance or delivery will not constitute a violation of the provisions of any applicable law (or regulation issued under such law) or the rules of any securities exchange on which our common shares are listed.

Immediately following consummation of this offering, we expect to grant to our employees, including our executive officers, initial equity awards in the form of restricted stock pursuant to the Plan, with an aggregate grant-date value of approximately $18.2 million. The number of shares of restricted stock granted to each employee will be determined by dividing the grant-date value by the closing price of one share of our common stock on the date of grant. We expect the restricted stock to vest in full on the third anniversary of the date of grant, subject to the employee’s continued employment through such date. The following table sets forth the expected grant-date value of the equity awards to be made to each of our executive officers immediately following consummation of this offering.


Name	Grant-Date Value
Gary J. Wojtaszek	$	3,500,000

Kimberly H. Sheehy	$	1,750,000

Michael L. Duckett	$	1,750,000

Kevin L. Timmons	$	1,750,000

Tesh Durvasula	$	1,750,000

2013 Short Term Incentive Plan

The full text of the CyrusOne 2013 Short Term Incentive Plan (the “Short Term Incentive Plan”) is set forth in Exhibit 10.8 of this prospectus and the following discussion is qualified in its entirety by reference to such text.

The Short Term Incentive Plan provides for the grant of annual incentive awards, including awards that are designed to qualify as “performance-based compensation” under Section 162(m) of the Code. Section 162(m) of the Code currently provides that if, in any year, the compensation that is paid to our Chief Executive Officer or to any of our three other most highly compensated executive officers (excluding our Chief Financial Officer) exceeds $1,000,000 per person, any amounts that exceed the $1,000,000 threshold will not be deductible by us for federal income tax purposes, unless the compensation qualifies for an enumerated exception under Section 162(m) of the Code. Compensation that is “performance-based,” within the meaning of Section 162(m) of the Code, is not subject to these deduction limits. To qualify as performance-based compensation, among other requirements, the compensation must be paid only upon the attainment of certain performance goals.

The principal provisions of the Short Term Incentive Plan are summarized below:

1. Purpose of Plan . The purpose of the Short Term Incentive Plan is to provide our key employees with annual incentive compensation based upon the achievement of company performance and individual performance goals.

2. Administration . The Short Term Incentive Plan will be administered by the compensation committee of our board of directors (for purposes of this discussion as to the Short Term Incentive Plan, the “Committee”). Subject to the limits and terms of the Short Term Incentive Plan, the Committee (i) selects the key employees

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who will be granted awards, (ii) makes awards, in such amounts and on such conditions as it determines, (iii) interprets the terms of the Short Term Incentive Plan and adopts administrative guidelines and rules in connection with its operation, (iv) appoints certain employees to act on its behalf as its representatives, and (v) performs all other administrative functions. If the Committee makes an award under the Short Term Incentive Plan to our Chief Executive Officer, the award must also be approved by our board of directors before it is effective.

3. Eligible Participants . Awards may be granted under the Short Term Incentive Plan to, and only to, our key employees. A key employee refers to a person who is both (i) employed and classified as an employee of the company and (ii) an officer of the company who is subject to Section 16 of the Exchange Act.

4. Awards . Any award granted under the Short Term Incentive Plan to a participant will be made with respect to a specific CyrusOne tax year for federal income tax purposes (the award’s “award year”) and will be composed of one or more parts. Each part of an award granted to a participant under the Short Term Incentive Plan is an “award part.” An award part will be payable only if certain performance goals applicable to the award part are met. The total amount payable for an award granted under the Short Term Incentive Plan will be equal to the sum of the amounts, if any, payable under each award part and will be paid in a lump sum in cash or equity-based awards, as determined by the Committee, after the end of the award’s award year, but no later than the 15 ^th day of the third month that follows the end of the applicable award year. Any equity-based award granted to a participant in payment of an award granted under the Short Term Incentive Plan will be subject to the terms of our 2012 Long Term Incentive Plan.

Any award granted under the Short Term Incentive Plan to a participant generally will specify a target payment amount (the award’s “target”) and assign a percent of the award’s target to each award part of the award (an award part’s “target share”), subject to the achievement of certain performance goals as determined by the Committee. In addition, the award part may specify a payment amount that is more than or less than the award’s target if a higher level or lower level, respectively, of the applicable performance goals are satisfied.

Notwithstanding the foregoing, the Committee (or the Board with respect to awards granted to the Chief Executive Officer) may, prior to any payment being made under an award in its sole discretion, reduce the amount payable under any award granted under the Short Term Incentive Plan below the amount that would otherwise be payable under the award based solely on the achievement of company performance goals applicable to the award. The Committee could, for instance, exercise its negative discretion because it determines that the performance goals applicable to the award part were unduly affected by extraordinary or nonrecurring events or because the participant to whom the award was granted failed to meet certain individual goals applicable to the award.

Except as otherwise permitted by Section 162(m) of the Code, with respect to any award that is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, in no event may any discretionary authority granted to the Committee under the Short Term Incentive Plan be used to grant or provide payment in respect of awards for which the performance goals have not been attained, increase such award for any participant at any time after the first 90 days of the performance period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) or increase such award above the maximum amount payable under the underlying award.

In addition, and notwithstanding the foregoing, the amount that is otherwise payable under an award granted under the Short Term Incentive Plan to a participant is generally reduced on a pro rata basis to reflect any portion in the award’s award year during which (i) the participant is not a key employee of the company because the participant only became a key employee after the start of such year or ceased to be a key employee prior to the end of such year for a reason other than retirement or death, (ii) the participant receives disability benefits under a company plan for more than three months in the award’s award year or (iii) the participant is on a leave of absence approved by the company for more than three months in such award’s award year.

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Further, and also notwithstanding the foregoing, a participant to whom an award has been granted under the Short Term Incentive Plan will not in any event be entitled to receive any amount by reason of the award unless the participant: (i) either is an employee of the company on the last day of the award’s award year or terminated his or her employment with the company during such year because of disability, retirement or death; and (ii) has had at least three months of active service with the company during the award’s award year (not including any time the participant was absent from active service during such award year by reason of any leave of absence or for any other reason, including an absence on account of disability).

Notwithstanding any other provision of the Short Term Incentive Plan to the contrary, the amount payable to a participant with respect to an award with respect to any calendar year will not in any event exceed $3,000,000.

5. Company Performance Goals . In general, to the extent the meeting of company performance goals is a condition to the payment under any award granted under the Short Term Incentive Plan, such performance goals will be determined by the Committee in its discretion. However, if any award granted under the Short Term Incentive Plan is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, the Committee must base the relevant performance goals on one or more of the following criteria: (i) free cash flow (cash generated by operating activities, minus capital expenditures and other investing activities, dividend payments and proceeds from the issuance of equity securities, and proceeds from the sale of assets); (ii) operating cash flow; (iii) cash available for distribution; (iv) EBITDA; (v) earnings per share; (vi) FFO; (vii) FFO As Adjusted; (viii) operating efficiency; (ix) operating income; (x) total stockholder returns; (xi) profit targets; (xii) revenue targets; (xiii) profitability targets as measured by return ratios; (xiv) working capital; (xv) market share (in the aggregate or by segment); (xvi) portfolio and regional occupancy rates; (xvii) net income; (xviii) return on investment or capital; (xix) return on assets; (xx) return on equity; (xxi) return on sales; (xxii) return on development and (xxiii) level or amount of acquisitions.

Further, the Committee may provide in the terms of an award granted under the Short Term Incentive Plan that, in determining whether any of the above listed performance criteria has been attained, certain special or technical factors will be ignored or, conversely, taken into account, in whole or in part. Such special factors may include, but are not limited to, the gain, loss, or other impact of any one or more of the following: (i) changes in generally accepted accounting principles; (ii) an extraordinary event; (iii) nonrecurring events; (iv) the disposition of a business, in whole or in part, the sale of investments or non-core assets, or discontinued operations, categories, or segments of businesses; (v) claims and/or litigation and insurance recoveries relating to claims or litigation; (vi) the impairment of tangible or intangible assets; (vii) restructuring activities, including reductions in force; (viii) investments or acquisitions; (ix) political and legal changes that impact operations, as a consequence of war, insurrection, riot, terrorism, confiscation, expropriation, business interruption, or similar events; (x) natural catastrophes; (xi) currency fluctuations; (xii) the issuance of stock options and/or other stock-based compensation; (xiii) the early retirement of debt; and/or (xiv) the conversion of convertible debt securities.

Any performance criteria applicable to an award granted under the Short Term Incentive Plan will be measured or determined on the basis of an award year and will be able to be objectively determined by the Committee. In addition, any such performance criteria (i) may be measured or determined for CyrusOne, for any organization other than CyrusOne that is part of the company, for the entire company in the aggregate, or for any group of corporations or organizations that are included in the company and (ii) may also be measured and determined in an absolute sense and/or in comparison to the analogous performance criteria of other publicly-traded companies (that are selected for such comparison purposes by the Committee).

6. Individual Performance Goals . In general, to the extent the meeting of individual performance goals is a condition to the payment under any award granted under the Short Term Incentive Plan, such performance goals will be determined by the Committee in its discretion and may be set at any time, including after the end of the award year applicable to the award. With respect to awards granted to our Chief Executive Officer, our board of directors will have final approval as to the determination of whether our Chief Executive Officer has met any

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such individual performance criteria. However, if any award granted under the Short Term Incentive Plan is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, such award will not be subject to the achievement of individual performance goals.

7. Change in Control . In the event that a “change in control” of CyrusOne (as defined in the 2012 Long Term Incentive Plan and described in “—2012 Long Term Incentive Plan” above) occurs, then, unless otherwise prescribed by the terms of the applicable award, within five business days following the date of the change of control the participant will receive (i) any amount payable that has not yet been paid with respect to any award that was granted under the Short Term Incentive Plan with respect to CyrusOne’s tax year that immediately precedes the tax year in which the change in control occurs (and, if the amount of such award has not been determined by the Committee by the date of the change in control, its amount will be deemed to be equal to the award’s target), and (ii) a pro rata portion of any award granted under the Short Term Incentive Plan with respect to CyrusOne’s tax year in which the change in control occurs. The pro rata portion of such award will generally be based on the award’s target multiplied by a fraction that has a numerator equal to the number of full and partial months from the first day of the tax year in which the change in control occurs to the date of the change in control and a denominator equal to twelve.

8. Amendment and Termination . The Short Term Incentive Plan may generally be amended or terminated by our board of directors, provided that no such action may impair the rights of a participant with respect to a previously granted award without the participant’s consent. In addition, the Short Term Incentive Plan provides that no amendment to the Short Term Incentive Plan may be made without approval of our stockholders if such amendment would make any change in the Short Term Incentive Plan that is required by law to be approved by our stockholders in order to become effective.

9. Withholding . In general, the company may withhold from any payment of any award granted under the Short Term Incentive Plan a sufficient amount of cash to satisfy all withholding tax obligations applicable to such award.

Indemnification and Limitation of Directors’ and Officers’ Liability

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages, except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty that is established by a final judgment and which is material to the cause of action. Our charter contains a provision that eliminates the liability of our directors and officers to the maximum extent permitted by Maryland law.

The MGCL requires us (unless our charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity. The MGCL permits us to indemnify our present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that:

•

the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty;

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•

the director or officer actually received an improper personal benefit in money, property or services; or

•

in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

Under the MGCL, we may not indemnify a director or officer in a suit by us or in our right in which the director or officer was adjudged liable to us or in a suit in which the director or officer was adjudged liable on the basis that personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by us or in our right, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses.

In addition, the MGCL permits us to advance reasonable expenses to a director or officer upon our receipt of:

•

a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation; and

•

a written undertaking by or on behalf of the director or officer to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director or officer did not meet the standard of conduct.

Our charter authorizes us to obligate ourselves, and our bylaws obligate us, to the maximum extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to:

•

any present or former director or officer who is made or threatened to be made a party to a proceeding by reason of his or her service in that capacity; or

•

any individual who, while a director or officer of our company and at our request, serves or has served as a director, officer, partner, trustee, member or manager of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or any other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity.

Our charter and bylaws also permit us to indemnify and advance expenses to any person who served a predecessor of ours in any of the capacities described above and to any employee or agent of our company or a predecessor of our company.

In addition, the partnership agreement of CyrusOne LP provides that we, our directors, officers and employees, CyrusOne GP, as general partner, and its trustees, officers and employees, employees of our operating partnership and any other persons whom the general partner may designate are indemnified to the fullest extent permitted by law, but that CyrusOne LP shall not indemnify any indemnitee for any liability (i) if it is established that the act or omission of the indemnitee constituted fraud, intentional harm or gross negligence on the part of the indemnitee, (ii) arising from an action or proceeding initiated by the indemnitee (other than to enforce such indemnitee’s rights to indemnification or advance of expenses) or (iii) with respect to any claim as to which the indemnitee is found to be liable to CyrusOne LP.

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Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our company pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Compensation Committee Interlocks and Insider Participation

There are no compensation committee interlocks and none of our employees participate on the compensation committee.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Contribution Agreements

On November 20, 2012, each of the Contributors entered into a contribution agreement with our operating partnership pursuant to which such Contributor contributed direct or indirect interests in a portfolio of properties and certain other assets related to such properties to the operating partnership in exchange for operating partnership units and assumption of liabilities. See “Structure and Formation of our Company—Formation Transactions.” The aggregate historical combined net tangible book value of the properties and assets contributed to us by the Contributors was approximately $690 million as of September 30, 2012.

The contribution agreements provide that we will assume or succeed to all of the Contributor’s rights, liabilities and obligations with respect to the property entity, properties interests and assets contributed. The contribution agreements each contain qualified representations and warranties by the relevant Contributor to our operating partnership with respect to the property entity, property interests and assets contributed to us by such Contributor, such as title to any owned property, compliance with laws (including environmental laws), enforceability of certain material contracts and leases and other limited matters. In the event of a breach of such representations and warranties, the Contributors will indemnify our operating partnership for any resulting losses.

No Contributor will be liable unless and until the amount of losses exceeds 1% of the aggregate value of the operating partnership units received by the Contributor that contributed the property to which such losses relate. The liability of each Contributor is limited to 10% of the aggregate value of the operating partnership units received by such Contributor in connection with the contribution transactions, and, with respect to any liability that arises from a specific contributed property, such liability is limited to 10% of the aggregate value of the operating partnership units issued in respect of such contributed property.

The foregoing limitations on the Contributors’ indemnification obligations will not apply to any breach of representations and warranties with respect to title to any specific owned property or material leased property contributed to us until such time as we obtain title insurance with respect to such property. We are currently assessing our title insurance requirements. We expect to seek either endorsements to provide us with the benefits of existing title insurance policies of CBI and its subsidiaries with respect to the contributed owned properties and material leased properties or new title insurance policies for such properties. In addition, we are obliged to seek new title insurance policies in connection with our new revolving credit facility for such properties. However, we do not expect to have such policies in effect at the closing of this offering, and there is no assurance that we will obtain such policies after such date. See “Risk Factors—Our properties may not be covered by title insurance.”

All representations and warranties made by the Contributors will survive for a period of one year after the closing of the contribution transactions. In the event we do not become aware of a breach until after such period, or if we otherwise fail to assert a claim prior to the end of such period, we will have no further recourse against the Contributors.

Aggregate Consideration to CBI

As a result of the formation transactions, related financing transactions and this offering, CBI will receive aggregate consideration with a value of approximately $ million, consisting of operating partnership units in CyrusOne LP received pursuant to the contribution agreements described above, as adjusted to reflect a unit split immediately prior to the completion of this offering. Concurrently with the completion of this offering, we have agreed to issue shares of our common stock to CBI in exchange for the satisfaction and discharge of intercompany indebtedness related to CBI’s incurrence of certain offering expenses on our behalf. Upon the completion of this offering, we also expect to redeem of CBI’s operating partnership units in exchange for an equivalent number of shares of our common stock, which, together with the shares issued to CBI in exchange for the satisfaction and discharge of intercompany indebtedness, will represent 9.8% of the total number of shares of our common stock outstanding upon the completion of this offering. Upon the closing of the formation transactions, CBI also received approximately $480 million in cash representing the repayment of intercompany indebtedness.

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We have granted CBI a waiver of the ownership restrictions contained in our charter, subject to certain initial and ongoing conditions designed to protect our status as a REIT, including the receipt of an IRS private letter ruling or an opinion of counsel from a nationally recognized law firm that the exercise of any such exemption should not cause any rent payable to CBI to jeopardize our REIT status.

Partnership Agreement

Concurrently with the completion of this offering, we expect to amend and restate the agreement of limited partnership of our operating partnership to reflect the issuance of additional operating partnership units in order to establish a value for each operating partnership unit that is equivalent with the value of each share of our common stock issued in this offering, as well as to grant the Contributors certain redemption rights and to grant CBI certain board nomination rights, approval rights over certain change of control transactions and other rights, and to provide for additional voting rights of limited partners of our operating partnership. Pursuant to the amended and restated partnership agreement, persons holding operating partnership units as a result of the formation transactions will have rights beginning 12 months after the completion of this offering to cause our operating partnership to redeem each of their operating partnership units for cash equal to the then-current market value of one share of common stock, or, at our election, to exchange their operating partnership units for shares of our common stock on a one-for-one basis. See “Description of the Partnership Agreement of CyrusOne LP.”

Employment Agreements and Arrangements

In connection with this offering, we anticipate entering into employment agreements or arrangements with certain of our executive officers as described in “Management—CyrusOne Employment Agreements and Arrangements.” Although we have not yet determined the specific provisions of such agreements and arrangements, we anticipate that they will provide for salary, bonuses and other benefits, including severance benefits upon a termination of employment as well as equity awards, among other matters.

Registration Rights

CBI will receive registration rights upon the consummation of this offering to cause us, beginning 14 months after the completion of this offering, to register shares of our common stock acquired by CBI in connection with the formation transactions or its exercise of redemption/exchange rights under the partnership agreement of our operating partnership. See “Shares Eligible for Future Sale—Registration Rights.”

Indemnification of Officers and Directors

Effective upon completion of this offering, we expect to enter into an indemnification agreement with each of our directors and executive officers as described in “Management—Indemnification and Limitation of Directors’ and Officers’ Liability.”

Transition Services Agreements

Effective January 1, 2012, the Predecessor entered into a transition services agreement with CBTS, pursuant to which each party agreed to provide certain services to the other party. Services provided by CBTS to the Predecessor included network support, service calls, monitoring and management, storage and backup and IT systems support. The annual fee to be paid for these services is approximately $1.6 million. Services provided by the Predecessor to CBTS included data center colocation and network interface charges for a fiber network. The Predecessor will earn annual revenue of approximately $1.9 million for these services.

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telephony and IT services by our employees, as well as back office billing transition support for customers that have not yet been transitioned off of the CBTS billing platform. The annual fee to be paid by us for these services is approximately $0.3 million. Services provided by us to CBTS consist of network interface charges. The annual fee to be paid by CBTS for these services is approximately $0.5 million, which may decline in future periods as CBTS migrates its network interfaces on to an independently architected and managed CBTS network. These services will be provided on a month-to-month basis, until such time as both parties agree that the services in question have been fully transitioned, which we expect may be as long as 24 months for certain services.

Other Services

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Marketing Agreement

Employment Relationships

Our Chairman is the President and Chief Executive Officer and a director of CBI and will continue in those roles following the completion of this offering. Our Chief Executive Officer is also a director of CBI and is expected to resign as a member of CBI’s board of directors upon the completion of this offering.

Other Benefits to Related Parties and Related Party Transactions

Some of our directors and executive officers own a substantial amount of CBI common stock, options and other instruments, the value of which is related to the value of common stock of CBI. The direct and indirect interests of our directors and executive officers in common stock of CBI, and us, could create, or appear to create, conflicts of interest with respect to decisions involving both CBI and us that could have different implications for CBI than they do for us.

We have also entered into services agreements with CBT and CBTS. Under the CBTS services agreement, CBTS has agreed to provide us with certain managed storage and backup services. These services will be provided on a month-to-month basis, and charges will be based on the variable amount of gigabytes managed by CBTS each month. CBTS will charge us a rate of $0.56 per gigabyte and the annual fee to be paid by us for these services is approximately $0.2 million. We expect that services under this agreement may extend for as long as 36 months.

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senior notes offering. CBT continues to own the adjacent property that was historically operated together with 229 West Seventh Street as one property. We also executed a reciprocal easement and shared services agreement and a right of first opportunity and refusal agreement with CBT with respect to such properties. Pursuant to the reciprocal easement and shared services agreement, we granted reciprocal easements to each other; CBT has easements for continued use of portions of our building and CBT provides fuel storage, fire suppression and other building services to us; and we provide chilled water, building automation systems related to HVAC and other building services to CBT. The shared services agreement is expected to continue for a period of 15 years with five renewal options of five years each. Initially, we are responsible for operating and managing the services facilities for both buildings. Each party will bear its own utility costs, as well as property taxes and insurance. Shared building operating costs will be charged to each party on the basis of the actual costs incurred, allocated based on the proportionate share of usage. Each party will also pay the other party less than $0.2 million per year to maintain shared building infrastructure systems. This agreement contains a make-whole provision that requires us to make a payment to CBT if CBT’s carrier access revenue declines below $5.0 million per annum as a result of certain actions taken by us which result in circuit disconnections or reductions at CBT. The term of this make-whole provision is approximately four years.

Prior to this offering, we entered into agreements to lease office space to CBT at our Goldcoast Drive (Goldcoast) data center facility and to CBTS at our Parkway (Mason) data center facility. The aggregate annual base rent for these spaces will be approximately $0.3 million per year. The term of these agreements will be five years each. Both agreements contain three five-year renewal options at market rates.

On November 20, 2012, we also entered into a non-competition agreement with CBI, pursuant to which we and CBI have agreed not to enter into each other’s lines of business, subject to certain exceptions, for a period of four years from such date. Pursuant to the terms of this agreement, we have agreed not to directly or indirectly engage in, or have any interest in any entity that engages in, the business of providing telecommunications services in certain areas of Ohio, Kentucky and Indiana in which CBI operates as of such date. We have also agreed not to seek, request or apply for any certification or license to provide telecommunications services in such areas during the term of the agreement. CBI has agreed not to directly or indirectly engage in, or have any

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interest in any entity that engages in, the business of constructing and selling, operating or providing data center services in the United States or any foreign jurisdiction in which we operate. However, CBI may continue to offer certain data center services, provided that such services are ancillary to its provision of existing IT services, and CBI does not own, lease or is contracted to own, lease or manage the data center infrastructure of the facility in which such existing IT services are being provided.

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POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

The following is a discussion of certain of our investment, financing and other policies. These policies may be amended or revised from time to time at the discretion of our board of directors without a vote of our stockholders.

Investment Policies

Investment in Real Estate or Interests in Real Estate

We will conduct all of our investment activities through our operating partnership and its subsidiaries. Our investment objectives are to maximize the long-term cash flow of our properties, provide quarterly cash distributions and achieve long-term capital appreciation for our stockholders through increases in the value of our company. We have not established a specific policy regarding the relative priority of these investment objectives. For a discussion of the properties and our acquisition and other strategic objectives, see “Business and Properties.”

We expect to pursue our investment objectives primarily through the ownership by our operating partnership of the properties and other acquired properties and assets. We currently intend to invest primarily in technology-related real estate. Future investment or development activities will not be limited to any geographic area, property type or to a specified percentage of our assets. While we may diversify in terms of property locations, size and market, we do not have any limit on the amount or percentage of our assets that may be invested in any one property or any one geographic area. We intend to engage in such future investment activities in a manner that is consistent with the maintenance of our status as a REIT for U.S. federal income tax purposes. In addition, we may purchase or lease income-producing technology-related and other types of properties for long-term investment, expand and improve the properties we presently own or other acquired properties, or sell such properties, in whole or in part, when circumstances warrant.

We may also participate with third parties in property ownership through joint ventures or other types of co-ownership. These types of investments may permit us to own interests in larger assets without unduly restricting our diversification and, therefore, provide us with flexibility in structuring our portfolio. We will not, however, enter into a joint venture or other partnership arrangement to make an investment that would not otherwise meet our investment policies.

Equity investments in acquired properties may be subject to existing mortgage financing and other indebtedness or to new indebtedness which may be in acquired properties incurred in connection with acquiring or refinancing these investments. Debt service on such financing or indebtedness will have a priority over any distributions with respect to our common stock. Investments are also subject to our policy not to be treated as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”).

Investments in Real Estate Mortgages

While our current portfolio consists of, and our business objectives emphasize, equity investments in technology-related real estate, we may, at the discretion of our board of directors, invest in mortgages and other types of real estate interests consistent with our qualification as a REIT. We do not presently intend to invest in mortgages or deeds of trust, but may invest in participating or convertible mortgages if we conclude that we may benefit from the gross revenues or any appreciation in value of the property. Investments in real estate mortgages run the risk that one or more borrowers may default under the mortgages and that the collateral securing those mortgages may not be sufficient to enable us to recoup our full investment.

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Securities of or Interests in Persons Primarily Engaged in Real Estate Activities and Other Issuers

Subject to the percentage of ownership limits and gross income and asset tests necessary for REIT qualification, we may invest in securities of other REITs, other entities engaged in real estate activities or securities of other issuers, including for the purpose of exercising control over such entities.

Dispositions

We do not currently intend to dispose of any of our properties, although we reserve the right to do so if, based upon management’s periodic review of our portfolio, our board of directors determines that such action would be in the best interests of our company.

Financing Policies

Our charter and bylaws do not limit the amount or percentage of indebtedness that we may incur, nor have we adopted any policies addressing this. We are, however, subject to certain indebtedness limitations pursuant to the restrictive covenants of our outstanding indebtedness, including our revolving credit facility. Our board of directors may limit our debt incurrence to be more restrictive than our debt covenants allow and from time to time may modify these limits in light of then-current economic conditions, relative costs of debt and equity capital, market values of our properties, general conditions in the market for debt and equity securities, fluctuations in the market price of our common stock, growth and acquisition opportunities and other factors. If these limits are relaxed, we could become more highly leveraged, resulting in an increased risk of default on our obligations and a related increase in debt service requirements that could adversely affect our financial condition and results of operations and our ability to make distributions to our stockholders. We intend to adopt a policy relating to the use of derivative financial instruments to hedge interest rate risks related to our borrowings. This policy will govern our use of derivatives to manage the interest rates on our variable rate borrowings. We expect our policy to state that we will not use derivatives for speculative or trading purposes and will only enter into contracts with major financial institutions based on their credit rating and other factors. See “Risk Factors—Risks Related to Our Business and Operations—Our level of indebtedness and debt service obligations could have adverse effects on our business.” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Conflict of Interest Policies

Sale or Refinancing of Properties.

While CyrusOne GP will have the exclusive authority under the partnership agreement to determine whether, when and on what terms to sell a property or when to refinance or repay indebtedness, any such decision would require the approval of us, which will require the approval of our board of directors. Conflicts of interest exist or could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our operating partnership or any partner thereof, on the other. Our directors and officers have duties to our company under applicable Maryland law in connection with their direction of the management of our company. At the same time, we, as trustee, have duties to CyrusOne GP which, in turn, as general partner of our operating partnership, has duties to our operating partnership and to the limited partners under Maryland law in connection with the management of our operating partnership. Under Maryland law, the general partner of a Maryland limited partnership has fiduciary duties of care and loyalty, and an obligation of good faith, to the partnership and its partners. While these duties and obligations cannot be eliminated entirely in the limited partnership agreement, Maryland law permits the parties to a limited partnership agreement to specify certain types or categories of activities that do not violate the general partner’s duty of loyalty and to modify the duty of care and obligation of good faith, so long as such modifications are not unreasonable. These duties as general partner of our operating partnership to the partnership and its partners may come into conflict with the interests of our company. Under the partnership agreement of our operating partnership, the limited partners of our operating partnership will expressly agree that the general partner of our operating partnership is acting for the

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benefit of the operating partnership, the limited partners of our operating partnership and our stockholders, collectively. The general partner is under no obligation to give priority to the separate interests of the limited partners in deciding whether to cause our operating partnership to take or decline to take any actions. If there is a conflict between the interests of us or our stockholders, on the one hand, and the limited partners of our operating partnership, on the other, the partnership agreement of our operating partnership provides that any action or failure to act by the general partner that gives priority to the separate interests of us or our stockholders that does not result in a violation of the contractual rights of the limited partners of our operating partnership under the partnership agreement will not violate the duties that the general partner owes to our operating partnership and its partners. See “Description of the Partnership Agreement of CyrusOne LP.”

Policies Applicable to All Directors and Officers.

We have adopted certain policies that are designed to eliminate or minimize certain potential conflicts of interest. Upon completion of this offering, our board of directors will establish a code of business conduct and ethics that is designed to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between our employees, officers and directors and our company. However, there can be no assurance that these policies or provisions of law will always be successful in eliminating the influence of such conflicts, and, if they are not successful, decisions could be made that might fail to reflect fully the interests of all stockholders.

Interested Director and Officer Transactions

Pursuant to the MGCL, a contract or other transaction between us and a director or between us and any other corporation or other entity in which any of our directors is a director or has a material financial interest is not void or voidable solely on the grounds of such common directorship or interest, the presence of such director at the meeting at which the contract or transaction is authorized, approved or ratified or the counting of the director’s vote in favor thereof; provided that:

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the fact of the common directorship or interest is disclosed or known to our board of directors or a committee of our board, and our board or committee authorizes, approves or ratifies the transaction or contract by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum;

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the fact of the common directorship or interest is disclosed or known to our stockholders entitled to vote thereon, and the transaction or contract is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote other than the votes of shares owned of record or beneficially by the interested director or corporation, firm or other entity; or

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the transaction or contract is fair and reasonable to us.

We will adopt a policy which requires that all contracts and transactions between us, our operating partnership or any of our subsidiaries, on the one hand, and any of our directors or executive officers or any entity in which such director or executive officer is a director or has a material financial interest, on the other hand, must be approved by the affirmative vote of a majority of the disinterested directors even if less than a quorum. Where appropriate in the judgment of the disinterested directors, our board of directors may obtain a fairness opinion or engage independent counsel to represent the interests of nonaffiliated securityholders, although our board of directors will have no obligation to do so.

Policies With Respect to Other Activities

We have authority to offer common stock, preferred stock or options to purchase stock in exchange for property and to repurchase or otherwise acquire our common stock or other securities in the open market or otherwise, and we may engage in such activities in the future. As described in “Description of the Partnership Agreement of CyrusOne LP” we expect, but are not obligated, to issue common stock to operating partnership

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unit holders upon exercise of their redemption rights. Except in connection with the formation transactions or employment arrangements, we have not issued common stock, operating partnership units or any other securities in exchange for property or any other purpose, and our board of directors has no present intention of causing us to repurchase any common stock. Our board of directors has the power, without stockholder approval, to increase the number of authorized shares of common stock or preferred stock and issue additional shares of common stock or preferred stock, in one or more classes or series, in any manner, and on the terms and for the consideration, it deems appropriate. See “Description of Securities.” We have not engaged in trading, underwriting or agency distribution or sale of securities of other issuers other than our operating partnership and do not intend to do so. At all times, we intend to make investments in such a manner as to qualify as a REIT, unless because of circumstances or changes in the Code or the Treasury regulations, our board of directors determines that it is no longer in our best interests to qualify as a REIT. We have not made any loans to third parties, although we may in the future make loans to third parties, including, without limitation, to joint ventures in which we participate. We intend to make investments in such a way that we will not be treated as an investment company under the 1940 Act.

Reporting Policies

We intend to make available to our stockholders our annual reports, including our audited financial statements. After this offering, we will become subject to the information reporting requirements of the Exchange Act. Pursuant to those requirements, we will be required to file annual and periodic reports, proxy statements and other information, including audited financial statements, with the SEC.

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STRUCTURE AND FORMATION OF OUR COMPANY

As a result of the consummation of the formation transactions and the related financing transactions, substantially all of our assets are held by, and our operations run through, our operating partnership. The Contributors contributed interests in the properties in exchange for operating partnership units and are limited partners of the operating partnership. Upon completion of this offering, we will contribute the net proceeds of this offering to our operating partnership in exchange for the remaining operating partnership units. Upon completion of this offering, we will also amend and restate the agreement of limited partnership of our operating partnership to reflect the issuance of additional operating partnership units in order to establish a value for each operating partnership unit that is equivalent with the value of each share of our common stock issued in this offering, as well as to grant CBI certain board nomination rights, approval rights over certain change of control transactions and other rights, and to provide for additional voting rights of limited partners of our operating partnership. In general, our interest in our operating partnership will entitle us to share in cash distributions from, and in the profits and losses of, our operating partnership in proportion to our percentage ownership. As sole general partner of the operating partnership, CyrusOne GP, for which we are the sole trustee and owner, will generally have the exclusive power under the partnership agreement of our operating partnership to manage and conduct its business, subject to certain limited approval and voting rights of the other limited partners including, without limitation, approval and voting rights with respect to certain change of control transactions as described more fully below in “Description of the Partnership Agreement of CyrusOne LP.” Our board of directors will manage the business and affairs of our company by directing the affairs of CyrusOne GP, which will direct the affairs of our operating partnership.

Beginning on or after the date which is 12 months after the completion of this offering, limited partners of our operating partnership will have the right to require our operating partnership to redeem part or all of their operating partnership units for cash or, at our election, shares our common stock, based upon the fair market value of an equivalent number of shares of our common stock at the time of the redemption, subject to the ownership limits set forth in our charter and described under the section entitled “Description of Securities—Restrictions on Ownership and Transfer.” With each redemption of operating partnership units, we will increase our percentage ownership interest in our operating partnership and our share of the operating partnership’s cash distributions and profits and losses. See “Description of the Partnership Agreement of CyrusOne LP.”

Formation Transactions

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CyrusOne Inc. was formed as a Maryland corporation on July 31, 2012.

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Our operating partnership, CyrusOne LP, was formed as a Maryland limited partnership on July 31, 2012.

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CyrusOne GP, the general partner of our operating partnership, was formed as a Maryland statutory trust on July 31, 2012.

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Our operating partnership received a contribution of direct and indirect interests in the portfolio of properties owned by CBI and certain of its subsidiaries set forth under “Prospectus Summary—CyrusOne Inc.—Our Portfolio” in exchange for operating partnership units, as adjusted to reflect a unit split immediately prior to the completion of this offering, having a total value of $ based on the midpoint of the price range set forth on the cover of this prospectus. Certain of the properties were directly contributed to CyrusOne LP and certain properties were contributed through the contribution of the equity interests of the entity that directly owns those properties.

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Our operating partnership used the net proceeds of the senior notes issuance to repay approximately $480 million of indebtedness owed to CBI.

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We will sell shares of our common stock in this offering plus an additional shares if the underwriters exercise their over allotment option in full, and we will contribute the net proceeds of this offering to our operating partnership in exchange for operating partnership units.

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We will enter into transition services, registration rights and other commercial agreements with CBI and certain of its subsidiaries. See “Certain Relationships and Related Transactions.”

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Gary Wojtaszek, President and Chief Executive Officer, Kimberly Sheehy, Chief Financial Officer and Treasurer, Kevin Timmons, Chief Technology Officer, Michael Duckett, Chief Operating Officer and Tesh Durvasula, Chief Commercial Officer, will become executives of our company. The employees dedicated to CBI’s data center business will become employees of our company.

Upon completion of this offering:

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Purchasers of our common stock in this offering will own approximately % of our outstanding common stock and we will be the sole beneficial owner and sole trustee of CyrusOne GP, which is the sole general partner of our operating partnership. We will also own approximately % of the outstanding operating partnership units of our operating partnership.

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Our directors and executive officers will own shares of restricted stock representing approximately % of our outstanding shares of common stock.

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All the properties and other interests transferred to CyrusOne LP were contributed by wholly-owned subsidiaries of CBI. Because both CyrusOne LP and the Contributors will be under the common control of CBI until the completion of this offering and were under common control at the time of the formation transactions, the transfer of assets and liabilities of each of these entities will be accounted for at historical cost in a manner similar to a pooling-of-interests.

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Consequences of this Offering and the Formation Transactions

The following diagram depicts our ownership structure upon completion of this offering.

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Determination of Offering Price

Prior to this offering, there has been no public market for our common stock. Consequently, the initial public offering price of shares of our common stock will be determined by negotiations between us and the underwriters. Among the factors to be considered in determining the initial public offering price are our record of operations, our management, our estimated net income, our estimated FFOs, our estimated cash available for distribution, our anticipated dividend yield, our growth prospects, the current market valuations, financial performance and dividend yields of publicly traded companies considered by us and the underwriters to be comparable to us and the current state of the commercial real estate industry and the economy as a whole. The initial public offering price does not necessarily bear any relationship to our book value, assets, financial condition or any other established criteria of value and may not be indicative of the market price for our common stock after this offering.

Based on the issuance of shares of our common stock in this offering, we expect to hold a % ownership interest in our operating partnership and CBI to hold a % ownership interest in our operating partnership. If the underwriters exercise their over-allotment option in full, we expect to hold a % ownership interest in our operating partnership and CBI to hold a % ownership interest in our operating partnership.

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DESCRIPTION OF THE PARTNERSHIP AGREEMENT OF CYRUSONE LP

We have summarized the material terms and provisions of the Amended and Restated Agreement of Limited Partnership of CyrusOne LP, which we refer to as the “partnership agreement.” This summary is not complete. For more detail, you should refer to the partnership agreement itself, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part. For purposes of this section, references to “we,” “our,” “us” and “our company” refer to CyrusOne Inc.

Management of Our Operating Partnership

Our operating partnership, CyrusOne LP, is a Maryland limited partnership that was formed on July 31, 2012. CyrusOne GP, our wholly-owned subsidiary, is the sole general partner of our operating partnership, and we intend to conduct substantially all of our business in or through our operating partnership. In connection with this offering, we will enter into the amended and restated agreement of limited partnership, as special limited partner, and CBI will continue to be a limited partner of our operating partnership. The provisions of the partnership agreement described below and elsewhere in this prospectus will be in effect after the completion of this offering.

As the sole trustee of the sole general partner of our operating partnership, we will exercise exclusive and complete responsibility and discretion in its day-to-day management and control. We can cause our operating partnership to enter into major transactions, including acquisitions, dispositions and refinancings, subject to certain limited exceptions. The limited partners of our operating partnership may not transact business for, or participate in the management activities or decisions of, our operating partnership, except as provided in the partnership agreement and as required by applicable law. The general partner of our operating partnership may not be removed as general partner by the limited partners. The partnership agreement restricts our ability to engage in certain business combinations as more fully described below.

The limited partners of our operating partnership expressly agree that the general partner of our operating partnership is acting for the benefit of the operating partnership, the limited partners of our operating partnership and our stockholders collectively. The general partner is under no obligation to give priority to the separate interests of the limited partners in deciding whether to cause our operating partnership to take or decline to take any actions. If there is a conflict between the interests of us or our stockholders, on the one hand, and the limited partners of our operating partnership, on the other, the partnership agreement provides that any action or failure to act by the general partner that gives priority to the separate interests of our stockholders or us that does not result in a violation of the contractual rights of the limited partners of our operating partnership under the partnership agreement will not violate the duties that the general partner owes to our operating partnership and its partners.

The partnership agreement provides that all of our business activities, including all activities pertaining to the acquisition and operation of properties, must generally be conducted through our operating partnership. The partnership agreement does permit us, under certain circumstances, to hold certain assets other than through our operating partnership. However, we must make commercially reasonable efforts to insure that the economic benefits and burdens of such assets are vested in the operating partnership.

Transferability of Interests

The general partner may not voluntarily withdraw from our operating partnership or transfer or assign all or any portion of its interest in our operating partnership (other than a transfer to us or one of our wholly-owned subsidiaries or in connection with a permitted Termination Transaction) without the consent of the partners (including us, the general partner and entities controlled by us or the general partner) holding a majority of the operating partnership units then held by partners (including us, the general partner and entities controlled by us or the general partner) entitled to vote on or consent to such matter, and, for so long as CBI and entities controlled

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by CBI hold more than 20% of the outstanding operating partnership units, the consent of CBI. A limited partner may not sell, assign, encumber or otherwise dispose of its operating partnership units in our operating partnership without the general partner’s consent during the 12-month period following such limited partner’s acquisition of such operating partnership units, other than to family members or trusts for their exclusive benefit, to a charity or trust for the benefit of a charity, to entities that are controlled by the limited partner, its family members or affiliates, or to a lending institution that is not an affiliate of the limited partner as collateral for a bona fide loan, subject to certain limitations. After the 12-month period following such limited partner’s acquisition of operating partnership units, any transfer of such operating partnership units by the limited partner, except to the parties specified above, will be subject to a right of first refusal by us. All transfers must be made only to “accredited investors” as defined under Rule 501 of the Securities Act and are subject to other limitations and conditions set forth in the partnership agreement.

Limited partners, including CBI and its controlled entities, may pledge their interests in our operating partnership to one or more banks or lending institutions (which are not affiliates of the pledging limited partner). The transfer of such partnership units pursuant to the lender’s or financial institution’s enforcement of its remedies under the applicable financing documents is permitted by the partnership agreement.

Board of Directors

Our bylaws require that nominees for election as a director, whether by the stockholders or by the board of directors, shall include such number of individuals as are entitled to be nominated pursuant to the partnership agreement. The operating partnership agreement provides that, for so long as the number of shares of our common stock held by CBI and entities controlled by CBI is equal to or greater than 50% of the total number of outstanding shares of our common stock (assuming all outstanding operating partnership units, excluding operating partnership units held by us or the general partner, have been exchanged for shares of our common stock), CBI will have the right to nominate (i) if there is an even number of directors, 50% of the number of directors minus one; or (ii) if there is an odd number of directors, 50% of the number of directors minus 0.5, but not less than one director, provided that at least one CBI nominee must meet the independence requirements under the rules, regulations and listing qualifications of the NASDAQ Global Select Market. With our board of directors having eight members, this would enable CBI to nominate three directors, although the election of each such nominee will be subject to the vote of our stockholders. Such rights to nominate directors would also decrease as follows:

•

if CBI owned less than 50% but at least 10% of the outstanding shares of common stock (assuming all outstanding operating partnership units, excluding operating partnership units held by us or the general partner, have been exchanged for shares of our common stock), then CBI would be entitled to nominate 20% of the number of directors established in accordance with our charter and bylaws (rounded down, if necessary, to the nearest whole number), but not less than one director;

•

if CBI owned less than 10% of the outstanding shares of common stock (assuming all outstanding operating partnership units, excluding operating partnership units held by us or the general partner, have been exchanged for shares of our common stock), then CBI would no longer be entitled to nominate any directors (except in accordance with provisions in our bylaws applicable to all stockholders).

As long as CBI has the right to nominate at least one director, CBI will have the right to designate at least one of its nominees then serving as a director to be appointed to each committee of our board of directors (provided that such nominee is qualified as independent under the rules, regulations and listing qualifications of the NASDAQ Global Select Market for service on any applicable committee) other than any committee whose purpose is to evaluate or negotiate any transaction with CBI.

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directors, it will be a qualification of a director that fills such vacancy that he or she was approved by a majority vote of the nominees of CBI then serving as directors.

Upon completion of this offering, our board of directors will consist of eight directors. Our charter and bylaws provide that the number of directors constituting our board of directors may be increased or decreased by a majority vote of our board of directors, provided that the number of directors may not be decreased to fewer than the minimum number required under the MGCL. In the event that any increase in the size of our board of directors results in CBI being entitled to designate an additional individual to the board of directors, it will be a qualification of a director that fills the resulting vacancy that he or she is a nominee of CBI.

Amendments to the Partnership Agreement

Amendments to the partnership agreement may be proposed by the general partner or limited partners holding a majority of the operating partnership units then held by limited partners. The general partner must approve all amendments to the partnership agreement.

Generally, the partnership agreement may not be amended, modified or terminated without the approval of both the general partner and the partners holding a majority of the operating partnership units then held by all partners (including us, the general partner and entities controlled by us or the general partner) entitled to vote on, or consent to such matter. The general partner will have the power to unilaterally make certain amendments to the partnership agreement without obtaining the consent of any other partners as may be required to:

•

add to its obligations as general partner or surrender any right or power granted to it as general partner for the benefit of the limited partners;

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reflect the admission, substitution or withdrawal of partners or termination of our operating partnership in accordance with the terms of the partnership agreement;

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reflect a change of an inconsequential nature or that does not adversely affect the limited partners in any material respect, or cure any ambiguity, correct or supplement any provisions of the partnership agreement not inconsistent with law or with other provisions of the partnership agreement, or make other changes concerning matters under the partnership agreement that will not otherwise be inconsistent with law or the partnership agreement;

•

satisfy any requirements, conditions or guidelines of federal or state law;

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reflect changes that are reasonably necessary for us to maintain our status as a REIT or to satisfy REIT requirements;

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reflect the issuance of additional operating partnership units;

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make certain modifications to the manner in which capital accounts are adjusted, computed or maintained, or net income or net loss are allocated;

•

set forth or amend the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of any additional class or series of partnership interest permitted to be issued under the partnership agreement;

•

modify, if the operating partnership is the surviving partnership in any Termination Transaction, certain provisions of the partnership agreement to provide the holders of interests in such surviving partnership rights that are consistent with the partnership agreement; or

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reflect any other modification as is reasonably necessary for the business or operations of the operating partnership or us, which does not violate the restrictions on the general partner described below.

Subject to certain exceptions, amendments that would, among other things, convert a limited partner into a general partner (except in connection with a permitted transfer of the general partner’s interest), modify the

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limited liability of a limited partner, adversely alter a partner’s right to receive any distributions or allocations of profits or losses, adversely alter or modify the redemption rights of limited partners and qualifying assignees (except as permitted in connection with a permitted Termination Transaction), amend the rights of CBI described above under “—Board of Directors” or amend these restrictions must be approved by each limited partner that would be adversely affected by such amendment; provided, however, that the consent of any individual partner adversely affected shall not be required for any amendment or action that affects all partners holding the same class or series of our partnership units on a uniform or pro rata basis, if approved by a majority of the partners of such class or series.

These nomination and other special rights of CBI automatically terminate at such time as CBI, together with entities it controls, cease to own operating partnership units that represent at least 10% of the outstanding operating partnership units. Until such termination, no amendment to CBI’s nomination rights may be made without the prior written consent of CBI.

Restrictions on General Partner’s Authority

The general partner may not take any action in contravention of an express prohibition or limitation contained in the partnership agreement, including:

•

any action that would make it impossible to carry on the ordinary business of the operating partnership, except as otherwise provided in the partnership agreement;

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admitting any person as a partner, except as otherwise provided in the partnership agreement;

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perform any act that would subject a limited partner to liability not contemplated in the partnership agreement or under the Maryland Limited Liability Company Act; or

•

enter into any contract, mortgage loan or other agreement that expressly prohibits or restricts us or our operating partnership from performing our or its specific obligations in connection with a redemption of operating partnership units as described below or expressly prohibits or restricts the ability of a limited partner to exercise its redemption rights in full without the written consent of such limited partner.

In addition, without the consent of partners (including us, the general partner and entities controlled by us or the general partner) holding a majority of the operating partnership units then held by the partners (including us, the general partner and entities controlled by us or the general partner), entitled to vote on or consent to such matter, the general partner may not do any of the following:

•

amend, modify or terminate the partnership agreement, except as explicitly permitted therein;

•

transfer any portion of its partnership interest or admit into the partnership any additional or successor general partner (other than to us or one of our wholly-owned subsidiaries or in connection with a permitted Termination Transaction);

•

voluntarily withdraw as general partner except in connection with a permitted transfer of its entire interest to an entity that will become the new general partner or in connection with a permitted Termination Transaction;

•

make a general assignment for the benefit of creditors, appoint or acquiesce in the appointment of a custodian, receiver or trustee for all or any part of the assets of our operating partnership;

•

institute any proceeding for bankruptcy by our operating partnership;

•

undertake a merger or consolidation of our operating partnership with or into another person, or a conversion of our operating partnership into another entity, other than in connection with a termination transaction effected in accordance with the partnership agreement; or

•

effect a sale, lease, exchange or other transfer of all or substantially all of the assets of our operating partnership in a single transaction or a series of related transactions outside the ordinary course of our operating partnership’s business, other than in connection with a termination transaction;

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provided, however, that except with respect to the fourth and fifth bullet points, for so long as CBI and entities controlled by CBI own at least 20% of the outstanding operating partnership units held by all partners, the consent of CBI shall be required.

Distributions to Holders of Operating Partnership Units

The partnership agreement provides that holders of operating partnership units are generally entitled to receive distributions on a pro rata basis in accordance with their respective operating partnership units (subject to the rights of the holders of any class of preferred partnership interests that may be authorized and issued after this offering).

Redemption/Exchange Rights

A limited partner or an assignee will have the right, commencing on or after the date which is 12 months after its acquisition of operating partnership units, to require our operating partnership to redeem part or all of such operating partnership units for cash based upon the fair market value of an equivalent number of shares of our common stock at the time of the redemption, determined in accordance with and subject to adjustment as provided in the partnership agreement. Alternatively, we may elect to acquire those operating partnership units in exchange for shares of our common stock. Our acquisition will be on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, distributions of warrants or stock rights, specified extraordinary distributions and similar events. A limited partner or assignee may not require us to redeem such limited partner’s or assignee’s operating partnership units if our election to acquire such operating partnership units in exchange for shares of our common stock would cause any person to violate the ownership limits or the other restrictions on ownership and transfer of our common stock, after giving effect to any waivers or modifications of such limits granted by our board of directors. With each redemption or exchange, we increase our percentage ownership interest in our operating partnership.

In addition, if our election to acquire operating partnership units tendered for redemption in exchange for shares of our common stock would cause any person to violate the restrictions on ownership and transfer of our stock and such excess operating partnership units (and any other operating partnership units that the tendering limited partner agrees to treat as such) have a value of at least $50,000,000 (based on an operating partnership unit having a value equal to the trailing ten-day daily trading price of our common stock) and we are eligible to file a registration statement on Form S-3 under the Securities Act, then we may also elect to redeem the operating partnership units with the proceeds from a public offering or private placement of our common stock. In the event we elect this option, we may require the other limited partners to also elect whether or not to participate. Participating limited partners will receive on the redemption date for each operating partnership unit (subject to adjustment) the net proceeds per share received in the public offering but will have a limited opportunity to withdraw their operating partnership units from the redemption immediately prior to the pricing of the public offering.

Issuance of Units, Stock or Other Securities

The general partner of our operating partnership has the power to cause our operating partnership to issue additional units of limited partnership interest in one or more classes or series. These additional units of limited partnership interest may include preferred partnership units. Generally, we may issue additional shares of our stock, or rights, options, warrants or convertible or exchangeable securities having the right to subscribe for or purchase shares of our stock, only if we cause our operating partnership to issue to us partnership interests or rights, options, warrants or convertible or exchangeable securities of our operating partnership having economic rights that are substantially similar to the securities that we have issued.

Capital Contributions

The partnership agreement provides that the general partner may authorize the issuance of additional partnership interests in exchange for such capital contributions, if any, as the general partner may approve. Under

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the partnership agreement, we are generally obligated to contribute the net proceeds we receive from any offering of our shares of stock as additional capital to our operating partnership in exchange for additional operating partnership units.

The partnership agreement provides that we may make additional capital contributions, including contributions of properties, to our operating partnership in exchange for additional operating partnership units. If we contribute additional capital and receive additional operating partnership units in exchange for the capital contribution, our percentage interest in the operating partnership will be increased on a proportionate basis based on the amount of the additional capital contributions and the value of our operating partnership at the time of the contributions. In addition, if we contribute additional capital and receive additional operating partnership units for the capital contribution, the capital accounts of the partners may be adjusted upward or downward to reflect any unrealized gain or loss attributable to the properties as if there were an actual sale of the properties at the fair market value thereof. No person has any preemptive, preferential or other similar right with respect to making additional capital contributions or loans to the operating partnership or the issuance or sale of any operating partnership units or other partnership interests.

Our operating partnership could issue preferred partnership interests in connection with acquisitions of property or otherwise. Any such preferred partnership interests would have priority over common partnership interests with respect to distributions from our operating partnership, including the partnership interests that we own.

Borrowing by the Operating Partnership

The general partner may cause our operating partnership to borrow money and to issue and guarantee debt as the general partner deems necessary for the conduct of the activities of our operating partnership. Such debt may be secured, among other things, by mortgages, deeds of trust, liens or encumbrances on the properties of our operating partnership.

Tax Matters

The general partner is the tax matters partner of our operating partnership and, as the sole trustee of the general partner, we have the authority under the Code to handle tax audits on behalf of our operating partnership. In addition, as the sole trustee of the general partner, we have the authority to arrange for the preparation and filing of our operating partnership’s tax returns and to make tax elections under the Code on behalf of our operating partnership.

Allocations of Net Income and Net Losses to Partners

The net income or net loss of our operating partnership will generally be allocated to the general partner and the limited partners of our operating partnership in accordance with their respective ownership of operating partnership units. However, in some cases, gains or losses may be disproportionately allocated to partners who have contributed property to or guaranteed debt of our operating partnership. The allocations described above are subject to special allocations relating to depreciation deductions and to compliance with the provisions of Sections 704(b) and 704(c) of the Code and the associated Treasury regulations. See “U.S. Federal Income Tax Considerations—Tax Aspects of Our Operating Partnership and any Subsidiary Partnerships.”

Operations

We intend to cause the general partner of our operating partnership to manage our operating partnership in a manner that will enable us to maintain our qualification as a REIT and to minimize any U.S. federal income tax liability.

The partnership agreement provides that our operating partnership will assume and pay when due, or reimburse us for payment of, all costs and expenses relating to the operations of or for the benefit of our operating partnership.

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Change of Control and Termination Transactions

Pursuant to the partnership agreement of our operating partnership, neither we nor the general partner may engage in, or cause or permit, a Termination Transaction (as defined below), other than with the consent of limited partners (other than us, the general partner and entities controlled by us or the general partner) holding a majority of all the outstanding operating partnership units held by all partners (other than us, the general partner and entities controlled by us or the general partner) entitled to vote on or consent to such matter, or if the requirements discussed below are satisfied. A “Termination Transaction” means any direct or indirect transfer of all or any portion of our limited partnership interest in our operating partnership or any direct or indirect transfer of our interest in the general partner in connection with, or any other occurrence of:

•

a merger, consolidation or other combination transaction involving us or the general partner;

•

a sale, lease, exchange or other transfer of all or substantially all of our assets not in the ordinary course of its business, whether in a single transaction or a series of related transactions;

•

a reclassification, recapitalization or change of our outstanding shares of common stock (other than a change in par value, or from par value to no par value, or as a result of a stock split, stock dividend or similar subdivision);

•

the adoption of any plan of liquidation or dissolution of us or the general partner; or

•

any other direct or indirect transfer of all or any portion of our limited partnership interest in our operating partnership or any direct or indirect transfer of our interest in the general partner, other than certain permitted transfers to affiliated entities.

The consent of the limited partners to a Termination Transaction is not required if either:

(i) in connection with the Termination Transaction, each operating partnership unit is entitled to receive the “transaction consideration,” defined as the fair market value, at the time of the Termination Transaction, of an amount of cash, securities or other property equal to the product of:

•

the number of shares of our common stock into which each operating partnership unit is then exchangeable; and

•

the greatest amount of cash, securities or other property paid to the holder of one share of our common stock in consideration of such share in connection with the Termination Transaction;

provided that, if, in connection with the Termination Transaction, a purchase, tender or exchange offer is made to and accepted by the holders of a majority of the outstanding shares of our common stock, the transaction consideration will refer to the fair market value of the greatest amount of cash, securities or other property which such holder would have received had it exercised its redemption right and received shares of our common stock in exchange for its operating partnership units immediately prior to the expiration of such purchase, tender or exchange offer and had accepted such purchase, tender or exchange offer; or

(ii) all of the following conditions are met: (i) substantially all of the assets directly or indirectly owned by our operating partnership prior to the announcement of the Termination Transaction are, immediately after the Termination Transaction, owned directly or indirectly by our operating partnership or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets with our operating partnership, which we refer to as the “surviving partnership,” (ii) the surviving partnership is classified as a partnership for U.S. Federal income tax purposes; (iii) the limited partners (other than us) that held operating partnership units immediately prior to the consummation of such Termination Transaction own a percentage interest of the surviving partnership based on the relative fair market value of the net assets of our operating partnership and the other net assets of the surviving partnership immediately prior to the consummation of such transaction; (iv) the rights of such limited partners with respect to the surviving partnership are at least as

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favorable as those of limited partners prior to the consummation of such transaction and as those applicable to any other limited partners or non-managing members of the surviving partnership; and (v) such rights include:

(a) if we or our successor is a REIT with a single class of publicly traded common equity securities, the right to redeem their interests in the surviving partnership at any time for either: (1) a number of such REIT’s publicly traded common equity securities with a fair market value, as of the date of consummation of such Termination Transaction, equal to the transaction consideration referred to above, subject to antidilution adjustments, which we refer to as the “successor shares amount;” or (2) cash in an amount equal to the fair market value of the successor shares amount at the time of such redemption; or

(b) if we or our successor is not a REIT with a single class of publicly traded common equity securities, the right to redeem their interests in the surviving partnership at any time for cash in an amount equal to the fair market value of such interest at the time of redemption, as determined at least once every calendar quarter by an independent appraisal firm of recognized national standing retained by the surviving partnership.

In addition to the foregoing, if the consent of the limited partners is not obtained and if CBI and entities controlled by CBI own at least 20% of the outstanding common partnership units of our operating partnership held by all partners, neither we nor the general partner may engage in, or cause or permit, a Termination Transaction in connection with which we have or will seek the approval of our common stockholders, without the consent of the limited partners (other than us, the general partner and entities controlled by us or the general partner) holding a majority of the outstanding operating partnership units held by all partners (other than us, the general partner and entities controlled by us or the general partner) entitled to vote on or consent to such matter, unless we provide CBI and its controlled entities with advance notice of such transaction at least equal in time to the notice seeking our stockholder vote and with written materials describing the proposed Termination Transaction as well as the tax effect of the consummation thereof, and such Termination Transaction is approved by a number of affirmative votes cast, or deemed to have been cast, by “designated partners” as would be sufficient (measured as a percentage of the total number of votes cast or entitled to be cast (or deemed to be cast), to approve the Termination Transaction, if such approval was to be given by the holders of shares of our common stock. For purposes of this partnership vote, designated partners holding operating partnership units shall be entitled to cast a number of votes equal to the total votes they would have been entitled to cast at our stockholder meeting had they submitted their operating partnership units for redemption and such operating partnership units had been acquired by us for our shares as of the record date for the stockholder meeting. In addition, in connection with such partnership vote, we and our subsidiaries will be deemed to have cast all votes that we would otherwise have been entitled to cast in proportion to the manner in which all of our outstanding shares of common stock were voted in our stockholder vote. Designated partners means, collectively, (i) us and each of our wholly-owned subsidiaries that owns operating partnership units and (ii) CBI and all of the entities it controls that own operating partnership units.

In addition, as long as CBI, together with entities controlled by CBI, own at least 20% of the outstanding operating partnership units held by all partners, we may not engage in a Termination Transaction effected as a short-form merger without a stockholder vote pursuant to Section 3-106 of the MGCL, unless we have previously obtained either the consent of CBI or the consent of the limited partners with respect to such transaction.

Term

Our operating partnership will continue in full force and effect until dissolved in accordance with its terms or as otherwise provided by law.

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Indemnification and Limitation of Liability

To the extent permitted by applicable law, the partnership agreement indemnifies us, our directors, officers and employees, the general partner and its trustees, officers and employees, employees of our operating partnership and any other persons whom the general partner may designate from and against any and all claims arising from or that relate to the operations of our operating partnership in which any indemnitee may be involved, or is threatened to be involved, as a party or otherwise unless:

•

it is established that the act or omission of the indemnitee constituted fraud, intentional harm or gross negligence on the part of the indemnitee;

•

the claim is brought by the indemnitee (other than to enforce the indemnitee’s rights to indemnification or advance of expenses); or

•

the indemnitee is found to be liable to our operating partnership, and then only with respect to each such claim.

Partners of our operating partnership, including the general partner, are not liable to our operating partnership or its partners except for fraud, willful misconduct or gross negligence, and no trustee, officer or agent of the general partner (including us, in our capacity as the sole trustee of the general partner), and none of our directors, officers or agents have any duties directly to our operating partnership or its partners, and will not be liable to our operating partnership or its partners for money damages by reason of their service as such.

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PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of shares of our common stock and shares of common stock into which operating partnership units are exchangeable immediately following the completion of this offering for (i) each person who is expected to be the beneficial owner of 5% or more of the outstanding common stock immediately following the completion of this offering, (ii) directors, proposed directors and the executive officers and (iii) directors, proposed directors and executive officers as a group. Each person named in the table has sole voting and investment power with respect to all of the shares of our common stock shown as beneficially owned by such person, except as otherwise set forth in the notes to the table. The extent to which a person will hold shares of common stock as opposed to operating partnership units is set forth in the footnotes below. Unless otherwise indicated, the address of each named person is c/o CyrusOne Inc., 1649 West Frankford Road, Carrollton, TX 75007.


Name of Beneficial Owner	Number of Shares and Operating Partnership Units Beneficially Owned	Percent of All Shares ⁽¹⁾		Percent of All Shares and Operating Partnership Units ⁽²⁾
Beneficial owners of 5% or more of our common stock :
Cincinnati Bell Inc. ⁽³⁾			%		%
Directors, proposed directors and executive officers:
Gary J. Wojtaszek
Kimberley H. Sheehy
Kevin L. Timmons
Michael L. Duckett
Tesh Duvasula
John F. Cassidy
William E. Sullivan
Roger T. Staubach
T. Tod Nielsen
Alex Shumate
Melissa E. Hathaway
David H. Ferdman
All directors, proposed directors and executive officers as a group (12 persons)

⁽¹⁾

Assumes shares of common stock are outstanding immediately following this offering. In addition, amounts listed for each person assumes that all operating partnership units held by such person are exchanged for shares of our common stock, and amounts for all directors and executive officers as a group assume none of the operating partnership units held by other persons are exchanged for shares of our common stock.

⁽²⁾	Assumes a total of shares of common stock and operating partnership units are outstanding immediately following this offering, comprised of shares of our common stock and operating partnership units which may be exchanged for cash or shares of common stock under certain circumstances.

⁽³⁾	Amounts shown reflect shares of our common stock and operating partnership units that, upon completion of this offering, will be owned by CBI.

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DESCRIPTION OF SECURITIES

The following summary of the terms of the stock of our company does not purport to be complete and is subject to and qualified in its entirety by reference to the MGCL and our charter and bylaws. For purposes of this summary, references to “tenants” mean those persons who are referred to as “customers” elsewhere in this prospectus. Copies of our charter and bylaws are filed as exhibits to the registration statement of which this prospectus is a part. See “Where You Can Find More Information.”

General

Our charter provides that we may issue up to 500,000,000 shares of common stock, $0.01 par value per share, and 100,000,000 shares of preferred stock, $0.01 par value per share. Our charter authorizes our board of directors, without stockholder approval, to amend our charter to increase or decrease the aggregate number of shares of stock that we are authorized to issue or the number of authorized shares of any class or series of stock. Upon completion of this offering, shares of our common stock and no shares of our preferred stock will be issued and outstanding. Under Maryland law, our stockholders generally are not liable for our debts or obligations solely as a result of their status as stockholders.

Shares of Common Stock

All of the shares of common stock offered by this prospectus will be duly authorized, and, when issued, will be fully paid and nonassessable. Subject to the preferential rights, if any, of holders of any other class or series of our stock and to the provisions of our charter relating to the restrictions on ownership and transfer of our stock, holders of our common stock are entitled to receive distributions when authorized by our board of directors and declared by us out of assets legally available for distribution to our stockholders and will be entitled to share ratably in our assets legally available for distribution to our stockholders in the event of our liquidation, dissolution or winding up after payment of or adequate provision for all of our known debts and liabilities.

Subject to the provisions of our charter regarding the restrictions on ownership and transfer of our stock and except as may be otherwise specified in the terms of any class or series of common stock, each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors, and, except as may be provided with respect to any other class or series of our stock, the holders of shares of our common stock will possess the exclusive voting power. There is no cumulative voting in the election of directors. Consequently, the holders of a majority of the outstanding shares of our common stock can elect all of the directors then standing for election, and the holders of the remaining shares will not be able to elect any directors. Directors will be elected by a plurality of all of the votes cast in the election of directors.

Holders of shares of our common stock have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any securities of our company. Subject to the provisions of our charter regarding the restrictions on ownership and transfer of our stock, shares of our common stock will have equal distribution, liquidation and other rights.

Under the MGCL, a Maryland corporation generally cannot dissolve, amend its charter, merge or consolidate with another entity, sell all or substantially all of its assets or engage in a statutory share exchange unless the action is advised by the board of directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter, unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is specified in the corporation’s charter. Our charter provides that these actions must be approved by a majority of all of the votes entitled to be cast on the matter.

Maryland law also permits a corporation to transfer all or substantially all of its assets without the approval of its stockholders to an entity owned, directly or indirectly, by the corporation. Because our operating assets will

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be held by our operating partnership’s wholly owned subsidiaries, these subsidiaries may be able to merge or transfer all or substantially all of their assets without the approval of our stockholders.

Power to Increase or Decrease Authorized Shares of Stock, Reclassify Unissued Shares of Stock and Issue Additional Shares of Common and Preferred Stock

Our charter authorizes our board of directors, with the approval of a majority of the entire board and without stockholder approval, to amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of any class or series of stock that we are authorized to issue. In addition, our charter authorizes our board of directors to authorize the issuance from time to time of shares of our common and preferred stock.

Our charter also authorizes our board of directors to classify and reclassify any unissued shares of our common or preferred stock into other classes or series of stock, including one or more classes or series of stock that have priority over our common stock with respect to voting rights, distributions or upon liquidation, and authorize us to issue the newly classified shares. Prior to the issuance of shares of each new class or series, our board of directors is required by Maryland law and by our charter to set, subject to the provisions of our charter regarding the restrictions on ownership and transfer of our stock, the preferences, conversion and other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption for each class or series. Therefore, although our board of directors does not currently intend to do so, it could authorize the issuance of shares of common or preferred stock with terms and conditions that could have the effect of delaying, deferring or preventing a change in control or other transaction that might involve a premium price for shares of our common stock or otherwise be in the best interests of our stockholders. No shares of preferred stock are presently outstanding, and we have no present plans to issue any shares of preferred stock.

We believe that the power of our board of directors to approve amendments to our charter to increase or decrease the number of authorized shares of stock, to authorize us to issue additional authorized but unissued shares of common or preferred stock and to classify or reclassify unissued shares of common or preferred stock and thereafter to authorize us to issue such classified or reclassified shares of stock will provide us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that might arise.

Restrictions on Ownership and Transfer

In order for us to qualify as a REIT under the Code, shares of our stock must be owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to qualify as a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the outstanding shares of our stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities such as private foundations) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made). To qualify as a REIT, we must satisfy other requirements as well. See “U.S. Federal Income Tax Considerations—Requirements for Qualification—General.”

Our charter contains restrictions on the ownership and transfer of our stock that will become effective upon the completion of this offering. The relevant sections of our charter provide that, subject to the exceptions described below, from and after the completion of this offering, no person or entity may own, or be deemed to own, beneficially or by virtue of the applicable constructive ownership provisions of the Code, more than 9.8%, in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock (the “common stock ownership limit”) or 9.8% in value of the outstanding shares of all classes or series of our stock (the “aggregate stock ownership limit”). We refer to the common stock ownership limit and the aggregate stock ownership limit collectively as the “ownership limits.” We refer to the person or entity that, but for operation of the ownership limits or another restriction on ownership and transfer of our stock as described below, would beneficially own or constructively own shares of our stock in violation of such limits or restrictions and, if appropriate in the context, a person or entity that would have been the record owner of such shares of our stock as a “prohibited owner.”

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The constructive ownership rules under the Code are complex and may cause shares of stock owned beneficially or constructively by a group of related individuals and/or entities to be owned beneficially or constructively by one individual or entity. As a result, the acquisition of less than 9.8%, in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock, or less than 9.8% in value of the outstanding shares of all classes and series of our stock (or the acquisition by an individual or entity of an interest in an entity that owns, beneficially or constructively, shares of our stock), could, nevertheless, cause that individual or entity, or another individual or entity, to own beneficially or constructively shares of our stock in excess of the ownership limits.

Our board of directors, in its sole discretion, may exempt, prospectively or retroactively, a particular stockholder from the ownership limits or establish a different limit on ownership (the “excepted holder limit”) if our board of directors determines that:

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no individual’s beneficial or constructive ownership of our stock will result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT; and

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such stockholder does not and will not own, actually or constructively, an interest in a tenant of ours (or a tenant of any entity owned or controlled by us) that would cause us to own, actually or constructively, more than a 9.9% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant (or our board of directors determines that revenue derived from such tenant will not affect our ability to qualify as a REIT).

Any violation or attempted violation of any such representations or undertakings will result in such stockholder’s shares of stock being automatically transferred to a charitable trust. As a condition of granting the waiver or establishing the excepted holder limit, our board of directors may require an opinion of counsel or a ruling from the IRS, in either case in form and substance satisfactory to our board of directors, in its sole discretion, in order to determine or ensure our status as a REIT and such representations and undertakings from the person requesting the exception as our board of directors may require in its sole discretion to make the determinations above. Our board of directors may impose such conditions or restrictions as it deems appropriate in connection with granting such a waiver or establishing an excepted holder limit. Our board of directors has granted CBI exemptions from the ownership limits applicable to other holders of our common stock, subject to certain initial and ongoing conditions designed to protect our status as a REIT, including the receipt of an IRS private letter ruling or an opinion of counsel from a nationally recognized law firm that the exercise of any such exemption should not cause any rent payable by CBI to jeopardize our REIT status.

In connection with granting a waiver of the ownership limits or creating an excepted holder limit or at any other time, our board of directors may from time to time increase or decrease the common stock ownership limit, the aggregate stock ownership limit or both, for all other persons, unless, after giving effect to such increase, five or fewer individuals could beneficially own, in the aggregate, more than 49.9% in value of our outstanding stock or we would otherwise fail to qualify as a REIT. A reduced ownership limit will not apply to any person or entity whose percentage ownership of our common stock or our stock of all classes and series, as applicable, is, at the effective time of such reduction, in excess of such decreased ownership limit until such time as such person’s or entity’s percentage ownership of our common stock or our stock of all classes and series, as applicable, equals or falls below the decreased ownership limit, but any further acquisition of shares of our common stock or stock of all other classes or series, as applicable, will violate the decreased ownership limit.

Upon the completion of this offering, our charter will further prohibit:

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any person from beneficially or constructively owning, applying certain attribution rules of the Code, shares of our stock that would result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise cause us to fail to qualify as a REIT;

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any person from transferring shares of our stock if the transfer would result in shares of our stock being beneficially owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code); and

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any person from beneficially owning shares of our stock to the extent such ownership would result in our failing to qualify as a “domestically controlled qualified investment entity” within the meaning of Section 897(h) of the Code.

Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our stock that will or may violate the ownership limits or any of the other restrictions on ownership and transfer of our stock described above, or who would have owned shares of our stock transferred to the trust as described below, must immediately give notice to us of such event or, in the case of an attempted or proposed transaction, give us at least 15 days’ prior written notice and provide us with such other information as we may request in order to determine the effect of such transfer on our status as a REIT. The foregoing restrictions on ownership and transfer of our stock will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance with the restrictions and limits on ownership and transfer of our stock described above is no longer required in order for us to qualify as a REIT.

If any transfer of shares of our stock would result in shares of our stock being beneficially owned by fewer than 100 persons, the transfer will be null and void and the intended transferee will acquire no rights in the shares. In addition, if any purported transfer of shares of our stock or any other event would otherwise result in any person violating the ownership limits or an excepted holder limit established by our board of directors, or in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT or as a “domestically controlled qualified investment entity” within the meaning of Section 897(h) of the Code, then that number of shares (rounded up to the nearest whole share) that would cause the violation will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us, and the intended transferee or other prohibited owner will acquire no rights in the shares. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a transfer to the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limits or our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or our otherwise failing to qualify as a REIT or as a “domestically controlled qualified investment entity,” then our charter provides that the transfer of the shares will be null and void and the intended transferee will acquire no rights in such shares.

Shares of our stock held in the trust will be issued and outstanding shares. The prohibited owner will not benefit economically from ownership of any shares of our stock held in the trust and will have no rights to distributions and no rights to vote or other rights attributable to the shares of our stock held in the trust. The trustee of the trust will exercise all voting rights and receive all distributions with respect to shares held in the trust for the exclusive benefit of the charitable beneficiary of the trust. Any distribution made before we discover that the shares have been transferred to a trust as described above must be repaid by the recipient to the trustee upon demand by us. Subject to Maryland law, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority to rescind as void any vote cast by a prohibited owner before our discovery that the shares have been transferred to the trust and to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary of the trust. However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote.

Shares of our stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price paid by the prohibited owner for the shares (or, in the case of a devise or gift, the market price at the time of such devise or gift) and (ii) the market price on the date we accept, or our

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designee, accepts such offer. We may reduce the amount so payable to the trustee by the amount of any distribution that we made to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed by the prohibited owner to the trustee as described above, and we may pay the amount of any such reduction to the trustee for distribution to the charitable beneficiary. We have the right to accept such offer until the trustee has sold the shares of our stock held in the trust as discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates, and the trustee must distribute the net proceeds of the sale to the prohibited owner and must distribute any distributions held by the trustee with respect to such shares to the charitable beneficiary.

If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limits or the other restrictions on ownership and transfer of our stock. After the sale of the shares, the interest of the charitable beneficiary in the shares transferred to the trust will terminate and the trustee must distribute to the prohibited owner an amount equal to the lesser of (i) the price paid by the prohibited owner for the shares (or, if the prohibited owner did not give value for the shares in connection with the event causing the shares to be held in the trust (for example, in the case of a gift, devise or other such transaction), the market price of the shares on the day of the event causing the shares to be held in the trust) and (ii) the sales proceeds (net of any commissions and other expenses of sale) received by the trust for the shares. The trustee may reduce the amount payable to the prohibited owner by the amount of any distribution that we paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed by the prohibited owner to the trustee as described above. Any net sales proceeds in excess of the amount payable to the prohibited owner must be paid immediately to the charitable beneficiary, together with any distributions thereon. In addition, if, prior to the discovery by us that shares of stock have been transferred to a trust, such shares of stock are sold by a prohibited owner, then such shares will be deemed to have been sold on behalf of the trust and, to the extent that the prohibited owner received an amount for or in respect of such shares that exceeds the amount that such prohibited owner was entitled to receive, such excess amount will be paid to the trustee upon demand. The prohibited owner has no rights in the shares held by the trustee.

In addition, if our board of directors determines in good faith that a transfer or other event has occurred that would violate the restrictions on ownership and transfer of our stock described above, our board of directors may take such action as it deems advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us to redeem shares of our stock, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer.

Every owner of 5% or more (or such lower percentage as required by the Code or the regulations promulgated thereunder) of our stock, within 30 days after the end of each taxable year, must give us written notice stating the stockholder’s name and address, the number of shares of each class and series of our stock that the stockholder beneficially owns and a description of the manner in which the shares are held. Each such owner must provide to us in writing such additional information as we may request in order to determine the effect, if any, of the stockholder’s beneficial ownership on our status as a REIT and to ensure compliance with the ownership limits. In addition, any person or entity that is a beneficial owner or constructive owner of shares of our stock and any person or entity (including the stockholder of record) who is holding shares of our stock for a beneficial owner or constructive owner must, on request, provide to us such information as we may request in good faith in order to determine our status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance and to ensure compliance with the ownership limits.

Any certificates representing shares of our stock will bear a legend referring to the restrictions on ownership and transfer of our stock described above.

These restrictions on ownership and transfer of our stock will take effect upon consummation of this offering and will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance is no longer required in order for us to qualify as a REIT.

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The restrictions on ownership and transfer of our stock described above could delay, defer or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise be in the best interests of our stockholders.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock will be Computershare Trust Company N.A.

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CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS

The following summary of certain provisions of Maryland law and of our charter and bylaws does not purport to be complete and is subject to and qualified in its entirety by reference to Maryland law, including the MGCL, and our charter and bylaws. Copies of our charter and bylaws are filed as exhibits to the registration statement of which this prospectus is a part. See “Where You Can Find More Information.”

Our Board of Directors

Our charter and bylaws provide that the number of directors we have may be established only by our board of directors but may never be less than the minimum number required by the MGCL, and our bylaws provide that the number of our directors may not be more than 15. The partnership agreement of our operating partnership provides that, for so long as the number of operating partnership units and shares of common stock held by CBI is equal to or greater than 50% of the total number of outstanding shares of common stock and operating partnership units (excluding operating partnership units held by us or the general partner), CBI will have the right to nominate (i) if there is an even number of directors, 50% of the number of directors minus one; or (ii) if there is an odd number of directors, 50% of the number of directors minus 0.5, but not less than one director, provided that at least one CBI nominee must meet the independence requirements under the rules, regulations and listing qualifications of the NASDAQ Global Select Market. With the board of directors having eight members, this would enable CBI to nominate three directors, although the election of each such nominee will be subject to the vote of our stockholders. Such rights to nominate directors would also decrease as follows:

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if CBI owned less than 50% but at least 10% of the outstanding shares of common stock and operating partnership units (excluding operating partnership units held by us or the general partner), then CBI would be entitled to nominate 20% of the directors (rounded down, if necessary, to the nearest whole number), but not less than one director;

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if CBI owned less than 10% of the outstanding shares of common stock and operating partnership units (excluding operating partnership units held by us or the general partner), then CBI would no longer be entitled to nominate any directors (except in accordance with the advance notice provisions in our bylaws, similarly to all other stockholders).

In addition, if a vacancy on the board of directors arises as a result of the death, disability, retirement, resignation or removal (with or without cause) of a CBI nominee and such vacancy results in the number of CBI nominees then on the board being less than the number that CBI is then entitled to nominate to the board of directors, it will be a qualification of a director that fills such vacancy that he or she was approved by a majority vote of the nominees of CBI then serving as directors.

Upon the completion of this offering, subject to the terms of any class or series of preferred stock, vacancies on our board of directors may be filled only by a majority of the remaining directors, even if the remaining directors do

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not constitute a quorum, and any director elected to fill a vacancy will hold office for the remainder of the full term of the directorship in which the vacancy occurred and until his or her successor is duly elected and qualifies.

Each of our directors is elected by our stockholders to serve until the next annual meeting of our stockholders and until his or her successor is duly elected and qualifies. Holders of shares of common stock will have no right to cumulative voting in the election of directors. Consequently, the holders of a majority of the outstanding shares of our common stock can elect all of the directors then standing for election, and the holders of the remaining shares will not be able to elect any directors. Directors will be elected by a plurality of all of the votes cast in the election of directors.

Removal of Directors

Our charter provides that a director may be removed only for cause (as defined in our charter) and only by the affirmative vote of a majority of the votes entitled to be cast generally in the election of directors. This provision, when coupled with the exclusive power of our board of directors to fill vacancies on our board of directors, precludes stockholders from removing incumbent directors (except for cause and upon a substantial affirmative vote) and filling the vacancies created by such removal with their own nominees.

Business Combinations

Under the MGCL, certain “business combinations” (including a merger, consolidation, statutory share exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and an interested stockholder (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock or an affiliate or associate of the corporation who, at any time during the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding stock of the corporation) or an affiliate of such an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Thereafter, any such business combination must generally be recommended by the board of directors of the corporation and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation, other than shares held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate or associate of the interested stockholder, unless, among other conditions, the corporation’s common stockholders receive a minimum price (as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. A corporation’s board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

Pursuant to the statute, our board of directors has by resolution exempted business combinations between us and CBI or its affiliates and between us and any other person, provided that in the latter case the business combination is first approved by our board of directors (including a majority of our directors who are not affiliates or associates of such person). Consequently, the five-year prohibition and the supermajority vote requirements will not apply to a business combination between us and CBI or its affiliates or to a business combination between us and any other person if the board of directors has first approved the combination. As a result, any person described in the preceding sentence may be able to enter into business combinations with us that may not be in the best interests of our stockholders, without compliance with the supermajority vote requirements and other provisions of the statute. We cannot assure you that our board of directors will not amend or repeal this resolution in the future.

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Control Share Acquisitions

The MGCL provides that holders of “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights with respect to such shares except to the extent approved by the affirmative vote of at least two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from shares entitled to vote on the matter.

“Control shares” are voting shares of stock that, if aggregated with all other such shares of stock owned by the acquirer, or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power:

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one-tenth or more but less than one-third;

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one-third or more but less than a majority; or

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a majority or more of all voting power.

Control shares do not include shares that the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval or shares acquired directly from the corporation. A “control share acquisition” means the acquisition of issued and outstanding control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses and making an “acquiring person statement” as described in the MGCL), may compel the board of directors to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an “acquiring person statement” as required by the statute, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or if a meeting of stockholders was held at which the voting rights of such shares are considered and not approved, as of the date of such meeting. If voting rights for control shares are approved at a stockholders’ meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition.

The control share acquisition statute does not apply to shares acquired in a merger, consolidation or statutory share exchange if the corporation is a party to the transaction or acquisitions approved or exempted by the charter or bylaws of the corporation.

Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock. This provision may be amended or eliminated at any time in the future by our board of directors.

Subtitle 8

Subtitle 8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions of the MGCL that provide, respectively, for:

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a classified board;

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a two-thirds vote requirement for removing a director;

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a requirement that the number of directors be fixed only by vote of the board of directors;

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a requirement that a vacancy on the board be filled only by the remaining directors in office and (if the board is classified) for the remainder of the full term of the class of directors in which the vacancy occurred; and

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a majority requirement for the calling of a stockholder-requested special meeting of stockholders.

Our charter provides that, at such time as we are able to make a Subtitle 8 election, vacancies on our board may be filled only by the remaining directors and that directors elected by the board to fill vacancies will serve for the remainder of the full term of the directorship in which the vacancy occurred. Through provisions in our charter and bylaws unrelated to Subtitle 8, we already (i) vest in the board the exclusive power to fix the number of directorships and (ii) require, unless called by our Chairman of the board, our Chief Executive Officer, our President or our board of directors, the written request of stockholders entitled to cast a majority of all of the votes entitled to be cast at such a meeting to call a special meeting.

Meetings of Stockholders

Pursuant to our bylaws, a meeting of our stockholders for the election of directors and the transaction of any business will be held annually on a date and at the time and place set by our board of directors, beginning in 2013. The chairman of our board of directors, our chief executive officer, our president or our board of directors may call a special meeting of our stockholders. Subject to the provisions of our bylaws, a special meeting of our stockholders to act on any matter that may properly be brought before a meeting of our stockholders must also be called by our secretary upon the written request of the stockholders entitled to cast a majority of all the votes entitled to be cast on such matter at the meeting and containing the information required by our bylaws. Our secretary will inform the requesting stockholders of the reasonably estimated cost of preparing and delivering the notice of meeting (including our proxy materials), and the requesting stockholder must pay such estimated cost before our secretary is required to prepare and deliver the notice of the special meeting.

Amendments to Our Charter and Bylaws

Except for those amendments permitted to be made without stockholder approval under Maryland law or our charter, our charter generally may be amended only if the amendment is first declared advisable by our board of directors and thereafter approved by the affirmative vote of stockholders entitled to cast a majority of all of the votes entitled to be cast on the matter.

Subject to certain consent rights of CBI, our board of directors has the exclusive power to adopt, alter or repeal any provision of our bylaws and to make new bylaws.

Transactions Outside the Ordinary Course of Business

Under the MGCL, a Maryland corporation generally may not dissolve, merge or consolidate with another entity, sell all or substantially all of its assets or engage in a statutory share exchange unless the action is declared advisable by the board of directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter, unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is specified in the corporation’s charter. Our charter provides that these actions must be approved by a majority of all of the votes entitled to be cast on the matter.

Dissolution of Our Company

The dissolution of our company must be declared advisable by a majority of our entire board of directors and approved by the affirmative vote of the holders of a majority of all of the votes entitled to be cast on the matter.

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Advance Notice of Director Nominations and New Business

Our bylaws provide that, with respect to an annual meeting of our stockholders, nominations of individuals for election to our board of directors and the proposal of other business to be considered by our stockholders may be made only (i) pursuant to our notice of the meeting, (ii) by or at the direction of our board of directors or (iii) by any stockholder who was a stockholder of record both at the time of giving the notice required by our bylaws and at the time of the meeting, who is entitled to vote at the meeting on such business or in the election of such nominee and has provided notice to us within the time period, and containing the information and other materials, specified in the advance notice provisions of our bylaws.

With respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought before the meeting. Nominations of individuals for election to our board of directors may be made only (i) by or at the direction of our board of directors or (ii) if the meeting has been called for the purpose of electing directors, by any stockholder who was a stockholder of record both at the time of giving the notice required by our bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each such nominee and who has provided notice to us within the time period, and containing the information and other materials, specified in the advance notice provisions of our bylaws.

The advance notice procedures of our bylaws provide that, to be timely, a stockholder’s notice with respect to director nominations or other proposals for an annual meeting must be delivered to our corporate secretary at our principal executive office not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement for our preceding year’s annual meeting. With respect to our 2013 annual meeting or in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, to be timely, a stockholder’s notice must be delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the close of business on the later of the 120th day prior to the date of such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made.

REIT Qualification

Our charter provides that our board of directors may authorize us to revoke or otherwise terminate our REIT election, without approval of our stockholders, if it determines that it is no longer in our best interests to continue to qualify as a REIT.

Effects of Certain Provisions of Maryland Law and of Our Charter and Bylaws

Our charter and bylaws and Maryland law contain provisions that may delay, defer or prevent a change in control or other transaction that might involve a premium price for shares of our common stock or otherwise be in the best interests of our stockholders, including business combination provisions, supermajority vote requirements and advance notice requirements for director nominations and other stockholder proposals. Likewise, if the provision in our bylaws opting out of the control share acquisition provisions of the MGCL were rescinded or if we were to opt in to the classified board or other provisions of Subtitle 8, these provisions of the MGCL could have similar anti-takeover effects.

Indemnification and Limitation of Directors’ and Officers’ Liability

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages, except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty that is established by a final judgment and that is material to the cause of action. Our charter contains a provision that eliminates the liability of our directors and officers to the maximum extent permitted by Maryland law.

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the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty;

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the director or officer actually received an improper personal benefit in money, property or services; or

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in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

In addition, the MGCL permits us to advance reasonable expenses to a director or officer upon our receipt of:

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a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by us; and

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a written undertaking by or on behalf of the director or officer to repay the amount paid or reimbursed by us if it is ultimately determined that the director or officer did not meet the standard of conduct.

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any present or former director or officer who is made or threatened to be made a party to a proceeding by reason of his or her service in that capacity; or

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Effective upon completion of this offering, we will enter into indemnification agreements with each of our directors and executive officers that provide for indemnification to the maximum extent permitted by Maryland law. See “Management—Indemnification and Limitation of Directors’ and Officers’ Liability.”

The partnership agreement provides that we, our directors, officers and employees, the general partner and its trustees, officers and employees, employees of our operating partnership and any other persons whom the

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general partner may designate are indemnified to the fullest extent permitted by law. See “Description of the Partnership Agreement of CyrusOne LP—Indemnification and Limitation of Liability.”

Insofar as the foregoing provisions permit indemnification of directors, officers or persons controlling us for liability arising under the Securities Act, we have been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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SHARES ELIGIBLE FOR FUTURE SALE

General

Upon completion of this offering, based upon an offering at the midpoint of the price range indicated on the front cover of this prospectus, we expect to have outstanding shares of our common stock ( shares if the underwriters exercise their over-allotment option in full). In addition, shares of our common stock are reserved for issuance upon exchange of operating partnership units.

The shares sold in this offering ( shares if underwriters exercise their over-allotment option in full) will be freely transferable without restriction or further registration under the Securities Act, subject to the limits on ownership set forth in our charter, except for any shares held by our “affiliates,” as that term is defined by Rule 144 under the Securities Act (“Rule 144”). Any shares purchased by affiliates in this offering and the shares of our common stock owned by affiliates upon redemption/exchange of operating partnership units will be “restricted shares” as defined in Rule 144.

Rule 144

In general, under Rule 144 as currently in effect, beginning 90 days after the completion of this offering, a person (or persons whose common stock is required to be aggregated), who is an affiliate and who has beneficially owned our common stock for at least six months is entitled to sell in any three-month period a number of shares that does not exceed the greater of:

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1% of the number of shares then outstanding, which will equal approximately shares immediately after completion of this offering; or

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the average weekly trading volume in our shares on the NASDAQ Global Select Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such a sale, subject to restrictions.

Sales by our affiliates under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. An “affiliate” is a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with an issuer.

Under Rule 144, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months (including the holding period of any prior owner other than an affiliate), would be entitled to sell those shares without limitation subject only to availability of current, public information about our company, and after beneficially owning such shares for at least 12 months such person would be able to sell those shares without limitation regardless of the availability of public information about our company. To the extent that our affiliates sell their common stock, other than pursuant to Rule 144 or a registration statement, the purchaser’s holding period for the purpose of affecting a sale under Rule 144 commences on the date of transfer from the affiliate.

Rule 701

In general, under Rule 701 of the Securities Act, any of our directors, officers, employees, consultants or advisors who purchased shares of stock from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering, or who purchased shares of stock from us after that date upon the exercise of options granted before that date, are eligible to resell such shares of stock 90 days after the effective date of this offering in reliance upon Rule 144. If such person is not an affiliate, such sale may be made subject only to the manner of sale provisions of Rule 144. If such a person is an affiliate, such sale may be made under Rule 144 without compliance with its six-month minimum holding period, but subject to the other Rule 144 restrictions described above.

Redemption/Exchange Rights

In connection with the formation transactions, our operating partnership will issue an aggregate of operating partnership units to CBI. Beginning on or after the date which is 12 months after the completion of this offering, limited

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partners of our operating partnership have the right to require our operating partnership to redeem part or all of their operating partnership units for cash, or, at our election, shares of our common stock, based upon the fair market value of an equivalent number of shares of our common stock at the time of the redemption, subject to the ownership limits set forth in our charter and described under the section entitled “Description of Securities—Restrictions on Ownership and Transfer.” See “Description of the Partnership Agreement of CyrusOne LP.”

In addition, if our election to acquire operating partnership units tendered for redemption in exchange for shares of our common stock would cause any person to violate the restrictions on ownership and transfer of our stock and such excess operating partnership units (and any other operating partnership units that the tendering limited partner agrees to treat as such) have a value of at least $50,000,000 (based on an operating partnership unit having a value equal to the trailing ten-day daily price of our common stock) and we are eligible to file a registration statement on Form S-3 under the Securities Act, then we may also elect to redeem the operating partnership units with the proceeds from a public offering or private placement of our common stock. In the event we elect this option, we may require the other limited partners to also elect whether or not to participate. Participating limited partners will receive on the redemption date for each operating partnership unit (subject to adjustment) the net proceeds per share received in the public offering, but will have a limited opportunity to withdraw their operating partnership units from the redemption immediately prior to the pricing of the public offering.

Registration Rights

CBI will receive certain registration rights with respect to the shares of our common stock acquired by CBI in connection with the formation transactions or the exercise of the redemption/exchange rights under the partnership agreement of our operating partnership. These registration rights require us to seek to register all such shares of our common stock effective as of that date which is 14 months following completion of this offering pursuant to a “shelf” registration statement under the Securities Act. In the event we fail to file this “shelf” registration statement or, if filed, fail to maintain its effectiveness, CBI will have the right (subject to certain limitations) to require us to register all such shares of our common stock, provided that we will not be required to effect more than three such demand registrations in any 12 month period. CBI also has the right (subject to certain limitations) to have its shares included in any registration statement we file for an underwritten public offering. We will bear expenses incident to our registration requirements under the registration rights agreement, except that such expenses shall not include any underwriting fees, discounts or commissions attributable to the sale of such shares of our common stock or any transfer taxes relating to such shares.

Lock-up Agreements and Other Contractual Restrictions on Resale

In addition to the limits placed on the sale of shares of our common stock by operation of Rule 144 and other provisions of the Securities Act, (i) our executive officers and directors have agreed, subject to certain limited exceptions, not to sell or otherwise transfer or encumber any shares of our common stock or securities convertible into common stock (including operating partnership units) owned by them at the completion of this offering or thereafter acquired by them for a period of 180 days after the completion of this offering without the consent of Morgan Stanley & Co. LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, (ii) CBI has agreed, subject to certain limited exceptions, not to sell or otherwise transfer or encumber any shares of our common stock or securities convertible into common stock (including operating partnership units) owned by them at the completion of this offering or thereafter acquired by them for a period of 12 months after the completion of this offering without the consent of Morgan Stanley & Co. LLC and Merrill, Lynch, Pierce, Fenner & Smith Incorporated and (iii) we have agreed that we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of the ownership of, or file with the SEC a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock without the prior written consent of Morgan Stanley & Co. LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated for a period of 180 days after the date of this prospectus, subject to certain limited exceptions set forth in “Underwriting.” At the conclusion of the periods referenced in clauses (i) and (ii) above, common stock issued upon the subsequent exchange of operating partnership units may be sold by our executive officers and directors or CBI in the public market once registered pursuant to the registration rights described above.

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U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of the material U.S. federal income tax consequences of an investment in our common stock. For purposes of this section under the heading “U.S. Federal Income Tax Considerations,” references to “CyrusOne Inc.,” “we,” “our” and “us” generally mean only CyrusOne Inc. and not its subsidiaries or other lower-tier entities, except as otherwise indicated, and references to “tenants” are to persons who are treated as lessees of real property for purposes of the REIT requirements including, in general, persons who are referred to as “customers” elsewhere in this prospectus. This summary is based upon the Code, the regulations promulgated by the Treasury, rulings and other administrative pronouncements issued by the IRS, and judicial decisions, all as currently in effect, and all of which are subject to differing interpretations or to change, possibly with retroactive effect. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below. The summary is also based upon the assumption that we and our subsidiaries and affiliated entities will operate in accordance with our and their applicable organizational documents. This summary is for general information only and is not tax advice. It does not discuss any state, local or non-U.S. tax consequences relevant to us or an investment in our common stock, and it does not purport to discuss all aspects of U.S. federal income taxation that may be important to a particular investor in light of its investment or tax circumstances or to investors subject to special tax rules, such as:

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financial institutions;

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insurance companies;

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broker-dealers;

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regulated investment companies;

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partnerships, other pass-through entities and trusts;

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persons who hold our stock on behalf of other persons as nominees;

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persons who receive our stock through the issuance of restricted stock pursuant to our 2012 Long Term Incentive Plan or otherwise as compensation;

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persons holding our stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment;

and, except to the extent discussed below:

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tax-exempt organizations; and

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foreign investors.

This summary assumes that investors will hold their common stock as a capital asset, which generally means property held for investment.

The U.S. federal income tax treatment of holders of our common stock depends in some instances on determinations of fact and interpretations of complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. In addition, the tax consequences to any particular stockholder of holding our common stock will depend on the stockholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the U.S. federal, state, local, and foreign income and other tax consequences to you in light of your particular investment or tax circumstances of acquiring, holding, exchanging, or otherwise disposing of our common stock.

Taxation of CyrusOne Inc.

We intend to elect to be taxed as a REIT commencing with our taxable year ending December 31, 2012, upon the filing of our U.S. federal income tax return for such year. We believe that we have been organized, and we expect to operate, in such a manner as to qualify for taxation as a REIT under the applicable provisions of the Code.

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The law firm of Skadden, Arps, Slate, Meagher & Flom LLP has acted as our special REIT tax counsel (“Special Tax Counsel”) in connection with our formation and election to be taxed as a REIT. In connection with this offering of our common stock, we expect to receive an opinion of Special Tax Counsel to the effect that we have been organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and that our proposed method of operation will enable us to meet the requirements for qualification and taxation as a REIT commencing with our initial taxable year ending December 31, 2012. It must be emphasized that the opinion of Special Tax Counsel will be based on various assumptions relating to our organization and operation, and will be conditioned upon fact-based representations and covenants made by our management regarding our organization, assets, and income, and the present and future conduct of our business operations. While we intend to operate so that we will qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in our circumstances, no assurance can be given by Special Tax Counsel or by us that we will qualify as a REIT for any particular year. The opinion will be expressed as of the date issued. Special Tax Counsel will have no obligation to advise us or our stockholders of any subsequent change in the matters stated, represented or assumed, or of any subsequent change in the applicable law. You should be aware that opinions of counsel are not binding on the IRS, and no assurance can be given that the IRS will not challenge the conclusions set forth in such opinions.

Qualification and taxation as a REIT depends on our ability to meet on a continuing basis, through actual operating results, distribution levels, and diversity of stock ownership, various qualification requirements imposed upon REITs by the Code, the compliance with which will not be reviewed by Special Tax Counsel. Our ability to qualify as a REIT also requires that we satisfy certain asset tests, some of which depend upon the fair market values of assets that we own directly or indirectly. Such values may not be susceptible to a precise determination. Accordingly, no assurance can be given that the actual results of our operations for any taxable year will satisfy such requirements for qualification and taxation as a REIT.

Taxation of REITs in General

As indicated above, our qualification and taxation as a REIT depends upon our ability to meet, on a continuing basis, various qualification requirements imposed upon REITs by the Code. The material qualification requirements are summarized below under “—Requirements for Qualification—General.” While we intend to operate so that we qualify as a REIT, no assurance can be given that the IRS will not challenge our qualification, or that we will be able to operate in accordance with the REIT requirements in the future. See “—Failure to Qualify.”

Provided that we qualify as a REIT, generally we will be entitled to a deduction for dividends that we pay and therefore will not be subject to U.S. federal corporate income tax on our net taxable income that is currently distributed to our stockholders. This treatment substantially eliminates the “double taxation” at the corporate and stockholder levels that generally results from an investment in a C corporation. A “C corporation” is a corporation that generally is required to pay tax at the corporate level. Double taxation means taxation once at the corporate level when income is earned and once again at the stockholder level when the income is distributed. In general, the income that we generate is taxed only at the stockholder level upon a distribution of dividends to our stockholders.

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For tax years through 2012, most U.S. stockholders that are individuals, trusts or estates are taxed on corporate dividends at a maximum U.S. federal income tax rate of 15% (the same as long-term capital gains). With limited exceptions, however, dividends from us or from other entities that are taxed as REITs are generally not eligible for this rate and will continue to be taxed at rates applicable to ordinary income. Under current law, the highest marginal non-corporate U.S. federal income tax rate applicable to ordinary income is 35% through 2012, after which such rate is scheduled to increase to 39.6%. See “—Taxation of Stockholders—Taxation of Taxable U.S. Stockholders—Distributions.”

Any net operating losses, foreign tax credits and other tax attributes generally do not pass through to our stockholders, subject to special rules for certain items such as the capital gains that we recognize. See “—Taxation of Stockholders—Taxation of Taxable U.S. Stockholders—Distributions.”

If we qualify as a REIT, we will nonetheless be subject to U.S. federal tax in the following circumstances:

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We will be taxed at regular corporate rates on any undistributed net taxable income, including undistributed net capital gains.

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We may be subject to the “alternative minimum tax” on our items of tax preference, including any deductions of net operating losses.

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If we have net income from prohibited transactions, which are, in general, sales or other dispositions of inventory or property held primarily for sale to customers in the ordinary course of business, other than foreclosure property, such income will be subject to a 100% tax. See “—Prohibited Transactions” and “—Foreclosure Property” below.

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If we elect to treat property that we acquire in connection with a foreclosure of a mortgage loan or certain leasehold terminations as “foreclosure property,” we may thereby avoid the 100% tax on gain from a resale of that property (if the sale would otherwise constitute a prohibited transaction), but the income from the sale or operation of the property may be subject to corporate income tax at the highest applicable rate (currently 35%).

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If we fail to satisfy the 75% gross income test or the 95% gross income test, as discussed below, but nonetheless maintain our qualification as a REIT because we satisfy other requirements, we will be subject to a 100% tax on an amount based on the magnitude of the failure, as adjusted to reflect the profit margin associated with our gross income.

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If we violate the asset tests (other than certain de minimis violations) or other requirements applicable to REITs, as described below, and yet maintain our qualification as a REIT because there is reasonable cause for the failure and other applicable requirements are met, we may be subject to a penalty tax. In that case, the amount of the penalty tax will be at least $50,000 per failure, and, in the case of certain asset test failures, will be determined as the amount of net income generated by the nonqualifying assets in question multiplied by the highest corporate tax rate (currently 35%) if that amount exceeds $50,000 per failure.

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If we fail to distribute during each calendar year at least the sum of (i) 85% of our ordinary income for such year, (ii) 95% of our capital gain net income for such year and (iii) any undistributed net taxable income from prior periods, we will be subject to a nondeductible 4% excise tax on the excess of the required distribution over the sum of (a) the amounts that we actually distributed and (b) the amounts we retained and upon which we paid income tax at the corporate level.

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We may be required to pay monetary penalties to the IRS in certain circumstances, including if we fail to meet record-keeping requirements intended to monitor our compliance with rules relating to the composition of a REIT’s stockholders, as described below in “—Requirements for Qualification—General.”

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A 100% tax may be imposed on transactions between us and a TRS that do not reflect arm’s length terms.

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If we acquire appreciated assets from a corporation that is not a REIT (i.e., a corporation taxable under subchapter C of the Code) in a transaction in which the adjusted tax basis of the assets in our hands is determined by reference to the adjusted tax basis of the assets in the hands of the subchapter C corporation, we may be subject to tax on such appreciation at the highest corporate income tax rate then applicable if we subsequently recognize gain on a disposition of any such assets during the ten-year period following their acquisition from the subchapter C corporation.

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The earnings of our TRSs will generally be subject to U.S. federal corporate income tax.

In addition, we and our subsidiaries may be subject to a variety of taxes, including payroll taxes and state, local, and foreign income, property, gross receipts and other taxes on our assets and operations. We could also be subject to tax in situations and on transactions not presently contemplated.

Requirements for Qualification—General

The Code defines a REIT as a corporation, trust or association:

that is managed by one or more trustees or directors;

the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;

that would be taxable as a domestic corporation but for its election to be subject to tax as a REIT;

that is neither a financial institution nor an insurance company subject to specific provisions of the Code;

the beneficial ownership of which is held by 100 or more persons;

in which, during the last half of each taxable year, not more than 50% in value of the outstanding stock is owned, directly or indirectly, by five or fewer “individuals” (as defined in the Code to include specified tax-exempt entities); and

that meets other tests described below, including with respect to the nature of its income and assets.

The Code provides that conditions (1) through (4) must be met during the entire taxable year, and that condition (5) must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a shorter taxable year. Conditions (5) and (6) need not be met during a corporation’s initial tax year as a REIT (which, in our case, will be 2012). Our charter provides restrictions regarding the ownership and transfers of our stock, which are intended to assist us in satisfying the stock ownership requirements described in conditions (5) and (6) above. These restrictions, however, may not ensure that we will, in all cases, be able to satisfy the share ownership requirements described in conditions (5) and (6) above. If we fail to satisfy these share ownership requirements, except as provided in the next sentence, our status as a REIT will terminate. If, however, we comply with the rules contained in applicable Treasury regulations that require us to ascertain the actual ownership of our shares and we do not know, or would not have known through the exercise of reasonable diligence, that we failed to meet the requirement described in condition (6) above, we will be treated as having met this requirement.

To monitor compliance with the stock ownership requirements, we generally are required to maintain records regarding the actual ownership of our stock. To do so, we must demand written statements each year from the record holders of significant percentages of our stock pursuant to which the record holders must disclose the actual owners of the stock (i.e., the persons required to include our dividends in their gross income). We must maintain a list of those persons failing or refusing to comply with this demand as part of our records. We could be subject to monetary penalties if we fail to comply with these record-keeping requirements. If you

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fail or refuse to comply with the demands, you will be required by Treasury regulations to submit a statement with your tax return disclosing your actual ownership of our stock and other information.

In addition, a corporation generally may not elect to become a REIT unless its taxable year is the calendar year. We intend to adopt December 31 as our year-end, and thereby satisfy this requirement.

Effect of Subsidiary Entities

Ownership of Partnership Interests. If we are a partner in an entity that is treated as a partnership for U.S. federal income tax purposes, such as our operating partnership, Treasury regulations provide that we are deemed to own our proportionate share of the partnership’s assets, and to earn our proportionate share of the partnership’s income, for purposes of the asset and gross income tests applicable to REITs. Our proportionate share of a partnership’s assets and income is based on our capital interest in the partnership (except that for purposes of the 10% value test, described below, our proportionate share of the partnership’s assets is based on our proportionate interest in the equity and certain debt securities issued by the partnership). In addition, the assets and gross income of the partnership are deemed to retain the same character in our hands. Thus, our proportionate share of the assets and items of income of any of our subsidiary partnerships will be treated as our assets and items of income for purposes of applying the REIT requirements.

We generally have control of our operating partnership and the subsidiary partnerships and limited liability companies and intend to operate them in a manner consistent with the requirements for our qualification as a REIT. If we become a limited partner or non-managing member in any partnership or limited liability company and such entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. In addition, it is possible that a partnership or limited liability company could take an action which could cause us to fail a gross income or asset test, and that we would not become aware of such action in time to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely basis. In that case, we could fail to qualify as a REIT unless we were entitled to relief, as described below.

Disregarded Subsidiaries. If we own a corporate subsidiary that is a “qualified REIT subsidiary,” that subsidiary is generally disregarded as a separate entity for U.S. federal income tax purposes, and all of the subsidiary’s assets, liabilities and items of income, deduction and credit are treated as our assets, liabilities and items of income, deduction and credit, including for purposes of the gross income and asset tests applicable to REITs. A qualified REIT subsidiary is any corporation, other than a TRS (as described below), that is directly or indirectly wholly-owned by a REIT. Other entities that are wholly-owned by us, including single member limited liability companies that have not elected to be taxed as corporations for U.S. federal income tax purposes, are also generally disregarded as separate entities for U.S. federal income tax purposes, including for purposes of the REIT income and asset tests. Disregarded subsidiaries, along with any partnerships in which we hold an equity interest, are sometimes referred to herein as “pass-through subsidiaries.”

In the event that a disregarded subsidiary of ours ceases to be wholly-owned—for example, if any equity interest in the subsidiary is acquired by a person other than us or another disregarded subsidiary of ours—the subsidiary’s separate existence would no longer be disregarded for U.S. federal income tax purposes. Instead, the subsidiary would have multiple owners and would be treated as either a partnership or a taxable corporation. Such an event could, depending on the circumstances, adversely affect our ability to satisfy the various asset and gross income requirements applicable to REITs, including the requirement that REITs generally may not own, directly or indirectly, more than 10% of the securities of another corporation. See “—Asset Tests” and “—Income Tests.”

Taxable REIT Subsidiaries. In general, we may jointly elect with a subsidiary corporation, whether or not wholly-owned, to treat such subsidiary corporation as a TRS. We generally may not own more than 10% of the securities of a taxable corporation, as measured by voting power or value, unless we and such corporation elect to treat such corporation as a TRS. The separate existence of a TRS or other taxable corporation is not ignored for

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U.S. federal income tax purposes. Accordingly, a TRS or other taxable subsidiary corporation generally is subject to corporate income tax on its earnings, which may reduce the cash flow that we and our subsidiaries generate in the aggregate, and may reduce our ability to make distributions to our stockholders.

We are not treated as holding the assets of a TRS or other taxable subsidiary corporation or as receiving any income that the subsidiary earns. Rather, the stock issued by a taxable subsidiary corporation to us is an asset in our hands, and we treat the dividends paid to us from such taxable subsidiary corporation, if any, as income. This treatment can affect our income and asset test calculations, as described below. Because we do not include the assets and income of TRSs or other taxable subsidiary corporations on a look-through basis in determining our compliance with the REIT requirements, we may use such entities to undertake indirectly activities that the REIT rules might otherwise preclude us from doing directly or through pass-through subsidiaries. For example, we may use TRSs or other taxable subsidiary corporations to perform services or conduct activities that give rise to certain categories of income such as management fees, or to conduct activities that, if conducted by us directly, would be treated in our hands as prohibited transactions.

The TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. Further, the rules impose a 100% excise tax on transactions between a TRS and its parent REIT or the REIT’s tenants that are not conducted on an arm’s length basis. We intend that all of our transactions with our TRSs, if any, will be conducted on an arm’s length basis.

Income Tests

In order to qualify as a REIT, we must satisfy two gross income requirements on an annual basis. First, at least 75% of our gross income for each taxable year, excluding gross income from sales of inventory or dealer property in “prohibited transactions,” discharge of indebtedness and certain hedging transactions, generally must be derived from “rents from real property,” gains from the sale of real estate assets, interest income derived from mortgage loans secured by real property (including certain types of mortgage-backed securities), dividends received from other REITs, and specified income from temporary investments. Second, at least 95% of our gross income in each taxable year, excluding gross income from prohibited transactions, discharge of indebtedness and certain hedging transactions, must be derived from some combination of income that qualifies under the 75% gross income test described above, as well as other dividends, interest, and gain from the sale or disposition of stock or securities, which need not have any relation to real property. Income and gain from certain hedging transactions will be excluded from both the numerator and the denominator for purposes of both the 75% and 95% gross income tests.

Rents from Real Property. Rents we receive from a tenant will qualify as “rents from real property” for the purpose of satisfying the gross income requirements for a REIT described above only if all of the conditions described below are met.

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The amount of rent is not based in whole or in part on the income or profits of any person. However, an amount we receive or accrue generally will not be excluded from the term “rents from real property” solely because it is based on a fixed percentage or percentages of receipts or sales;

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Neither we nor an actual or constructive owner of 10% or more of our stock actually or constructively owns 10% or more of the interests in the assets or net profits of a non-corporate tenant, or, if the tenant is a corporation, 10% or more of the total combined voting power of all classes of stock entitled to vote or 10% or more of the total value of all classes of stock of the tenant. Rents we receive from such a tenant that is a TRS of ours, however, will not be excluded from the definition of “rents from real property” as a result of this condition if at least 90% of the space at the property to which the rents relate is leased to third parties, and the rents paid by the TRS are substantially comparable to rents paid by our other tenants for comparable space. Whether rents paid by a TRS are substantially comparable to rents paid by other tenants is determined at the time the lease with the TRS is entered into, extended, and modified, if such modification increases the rents due under such lease. Notwithstanding the

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foregoing, however, if a lease with a “controlled TRS” is modified and such modification results in an increase in the rents payable by such TRS, any such increase will not qualify as “rents from real property.” For purposes of this rule, a “controlled TRS” is a TRS in which the parent REIT owns stock possessing more than 50% of the voting power or more than 50% of the total value of the outstanding stock of such TRS;

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Rent attributable to personal property that is leased in connection with a lease of real property is not greater than 15% of the total rent received under the lease. If this condition is not met, then the portion of the rent attributable to personal property will not qualify as “rents from real property”; and

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We generally do not operate or manage the property or furnish or render services to our tenants, subject to a 1% de minimis exception and except as provided below. We are permitted, however, to perform directly certain services that are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not otherwise considered “rendered to the occupant” of the property. Examples of these permitted services include the provision of light, heat, or other utilities, trash removal and general maintenance of common areas. In addition, we are permitted to employ an independent contractor from whom we derive no revenue to provide customary services to our tenants, or a TRS, which may be wholly or partially owned by us, to provide both customary and non-customary services to our tenants without causing the rent that we receive from those tenants to fail to qualify as “rents from real property.” Any amounts that we receive from a TRS with respect to the TRS’s provision of non-customary services will, however, be nonqualifying income under the 75% gross income test and, except to the extent received through the payment of dividends, the 95% gross income test.

A significant portion of the value of our properties is attributable to structural components related to the provision of electricity, heating ventilation and air conditioning, regulation of humidity, security and fire protection, and telecommunications infrastructure. In addition, we or our affiliates will provide certain services to tenants of our properties. We expect that our structural components will be treated as real property for purposes of the REIT gross income tests, and we intend to structure the provision of services in a manner that does not prevent our rental income from qualifying as “rents from real property.” We have received a private letter ruling from the IRS with respect to certain issues relevant to our qualification as a REIT. In general, the ruling provides, subject to the terms and conditions contained therein, that certain structural components of our properties (e.g., relating to the provision of electricity, heating, ventilation and air conditioning, regulation of humidity, security and fire protection, and telecommunication services), and certain services that we or CBI may provide, directly or through subsidiaries, to our tenants, will not adversely affect our qualification as a REIT. Although we may generally rely upon the ruling, no assurance can be given that the IRS will not challenge our qualification as a REIT on the basis of other issues or facts outside the scope of the ruling.

As described above, upon the completion of this offering CBI will own approximately 9.8% of our common stock and a majority of our operating partnership units. In certain circumstances, CBI may be able to convert those units into shares of our stock, and any such conversion may result in CBI owning a significant percentage of our stock. See “Description of the Partnership Agreement of CyrusOne LP—Redemption/Exchange Rights.” We have granted CBI a waiver of the ownership restrictions contained in our charter, subject to certain initial and ongoing conditions designed to protect our status as a REIT, including the receipt of an IRS private letter ruling or an opinion of counsel from a nationally recognized law firm that the exercise of any such exemption should not cause any rent payable by CBI to jeopardize our REIT status. Such an opinion of counsel or a private letter ruling will be based on certain facts and assumptions, which, if incorrect, could result in certain rents we receive being treated as non-qualifying income for purposes of the REIT requirements. An opinion of counsel is not binding on the IRS or a court, so there can be no certainty that the IRS will not challenge the conclusions reflected in the opinion or that a court would not sustain such a challenge. Even if we have reasonable cause for a failure to meet the REIT income tests as a result of receiving non-qualifying rental income, we would nonetheless be required to pay a penalty tax in order to retain our REIT status.

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We intend to cause any services that are not “usually or customarily rendered,” or that are for the benefit of a particular tenant in connection with the rental of real property, to be provided through a TRS or through an “independent contractor.” However, no assurance can be given that the IRS will concur with our determination as to whether a particular service is usual or customary, or otherwise in this regard.

Interest Income. Interest income constitutes qualifying mortgage interest for purposes of the 75% gross income test (as described above) to the extent that the obligation upon which such interest is paid is secured by a mortgage on real property. If we receive interest income with respect to a mortgage loan that is secured by both real property and other property, and the highest principal amount of the loan outstanding during a taxable year exceeds the fair market value of the real property on the date that we acquired or originated the mortgage loan, the interest income will be apportioned between the real property and the other collateral, and our income from the arrangement will qualify for purposes of the 75% gross income test only to the extent that the interest is allocable to the real property. Even if a loan is not secured by real property, or is undersecured, the income that it generates may nonetheless qualify for purposes of the 95% gross income test. For these purposes, the term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination of all or some of the amount depends in any way on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term “interest” solely by reason of being based on a fixed percentage or percentages of receipts or sales.

Dividend Income. We may directly or indirectly receive distributions from TRSs or other corporations that are not REITs or qualified REIT subsidiaries. These distributions generally are treated as dividend income to the extent of the earnings and profits of the distributing corporation. Such distributions will generally constitute qualifying income for purposes of the 95% gross income test, but not for purposes of the 75% gross income test. Any dividends that we receive from another REIT, however, will be qualifying income for purposes of both the 95% and 75% gross income tests.

Fee Income. Any fee income that we earn will generally not be qualifying income for purposes of either gross income test. Any fees earned by a TRS, however, will not be included for purposes of our gross income tests.

Hedging Transactions. Any income or gain that we or our pass-through subsidiaries derive from instruments that hedge certain risks, such as the risk of changes in interest rates, will be excluded from gross income for purposes of both the 75% and 95% gross income tests, provided that specified requirements are met, including the requirement that the instrument is entered into during the ordinary course of our business, the instrument hedges risks associated with indebtedness issued by us or our pass-through subsidiary that is incurred to acquire or carry “real estate assets” (as described below under “—Asset Tests”), and the instrument is properly identified as a hedge along with the risk that it hedges within prescribed time periods. Income and gain from all other hedging transactions will not be qualifying income for either the 95% or 75% gross income test.

Failure to Satisfy the Gross Income Tests. If we fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, including as a result of rents received by us from CBI failing to qualify as “rents from real property,” we may still qualify as a REIT for such year if we are entitled to relief under applicable provisions of the Code. These relief provisions will be generally available if (i) our failure to meet these tests was due to reasonable cause and not due to willful neglect and (ii) following our identification of the failure to meet the 75% or 95% gross income test for any taxable year, we file a schedule with the IRS setting forth each item of our gross income for purposes of the 75% or 95% gross income test for such taxable year in accordance with Treasury regulations, which have not yet been issued. It is not possible to state whether we would be entitled to the benefit of these relief provisions in all circumstances. If these relief provisions are inapplicable to a particular set of circumstances, we will not qualify as a REIT. Even if these relief provisions apply, and we retain our status as a REIT, the Code imposes a tax based upon the amount by which we fail to satisfy the particular gross income test.

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Asset Tests

At the close of each calendar quarter, we must also satisfy four tests relating to the nature of our assets. First, at least 75% of the value of our total assets must be represented by some combination of “real estate assets,” cash, cash items, U.S. government securities, and, under some circumstances, stock or debt instruments purchased with new capital. For this purpose, real estate assets include interests in real property and stock of other corporations that qualify as REITs, as well as some kinds of mortgage-backed securities and mortgage loans. Assets that do not qualify for purposes of the 75% asset test are subject to the additional asset tests described below.

Second, the value of any one issuer’s securities that we own may not exceed 5% of the value of our total assets.

Third, we may not own more than 10% of any one issuer’s outstanding securities, as measured by either voting power or value. The 5% and 10% asset tests do not apply to securities of TRSs and qualified REIT subsidiaries and the 10% asset test does not apply to “straight debt” having specified characteristics and to certain other securities described below. Solely for purposes of the 10% asset test, the determination of our interest in the assets of a partnership or limited liability company in which we own an interest will be based on our proportionate interest in any securities issued by the partnership or limited liability company, excluding for this purpose certain securities described in the Code.

Fourth, the aggregate value of all securities of TRSs that we hold, together with other non-qualified assets (such as furniture and equipment or other tangible personal property, or non-real estate securities) may not, in the aggregate, exceed 25% of the value of our total assets.

Notwithstanding the general rule, as noted above, that for purposes of the REIT income and asset tests we are treated as owning our proportionate share of the underlying assets of a subsidiary partnership, if we hold indebtedness issued by a partnership, the indebtedness will be subject to, and may cause a violation of, the asset tests unless the indebtedness is a qualifying mortgage asset or other conditions are met. Similarly, although stock of another REIT is a qualifying asset for purposes of the REIT asset tests, any non-mortgage debt that is issued by another REIT may not so qualify (although such debt will not be treated as “securities” for purposes of the 10% asset test, as explained below).

Certain securities will not cause a violation of the 10% asset test described above. Such securities include instruments that constitute “straight debt,” which term generally excludes, among other things, securities having contingency features. A security does not qualify as “straight debt” where a REIT (or a controlled TRS of the REIT) owns other securities of the same issuer which do not qualify as straight debt, unless the value of those other securities constitute, in the aggregate, 1% or less of the total value of that issuer’s outstanding securities. In addition to straight debt, the Code provides that certain other securities will not violate the 10% asset test. Such securities include (i) any loan made to an individual or an estate, (ii) certain rental agreements pursuant to which one or more payments are to be made in subsequent years (other than agreements between a REIT and certain persons related to the REIT under attribution rules), (iii) any obligation to pay rents from real property, (iv) securities issued by governmental entities that are not dependent in whole or in part on the profits of (or payments made by) a non-governmental entity, (v) any security (including debt securities) issued by another REIT and (vi) any debt instrument issued by a partnership if the partnership’s income is of a nature that it would satisfy the 75% gross income test described above under “—Income Tests.” In applying the 10% asset test, a debt security issued by a partnership is not taken into account to the extent, if any, of the REIT’s proportionate interest in the equity and certain debt securities issued by that partnership.

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subject to the terms and conditions contained therein, generally to that effect. If, however, any structural components not covered by the IRS ruling are subsequently determined not to constitute real property for purposes of the REIT asset tests, we could fail to satisfy such tests.

No independent appraisals have been obtained to support our conclusions as to the value of our total assets or the value of any particular security or securities. Moreover, the values of some assets may not be susceptible to a precise determination, and values are subject to change in the future. Furthermore, the proper classification of an instrument as debt or equity for U.S. federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT asset requirements. Accordingly, there can be no assurance that the IRS will not contend that our interests in our subsidiaries or in the securities of other issuers will not cause a violation of the REIT asset tests.

However, certain relief provisions are available to allow REITs to satisfy the asset requirements or to maintain REIT qualification notwithstanding certain violations of the asset and other requirements. For example, if we should fail to satisfy the asset tests at the end of a calendar quarter such a failure would not cause us to lose our REIT qualification if we (i) satisfied the asset tests at the close of the preceding calendar quarter and (ii) the discrepancy between the value of our assets and the asset requirements was not wholly or partly caused by an acquisition of non-qualifying assets, but instead arose from changes in the relative market values of our assets. If the condition described in (ii) were not satisfied, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the calendar quarter in which it arose or by making use of the relief provisions described above.

In the case of de minimis violations of the 10% and 5% asset tests, a REIT may maintain its qualification despite a violation of such requirements if (i) the value of the assets causing the violation does not exceed the lesser of 1% of the REIT’s total assets and $10,000,000 and (ii) the REIT either disposes of the assets causing the failure within six months after the last day of the quarter in which it identifies the failure, or the relevant tests are otherwise satisfied within that time frame.

Even if we did not qualify for the foregoing relief provisions, one additional provision allows a REIT which fails one or more of the asset requirements to nevertheless maintain its REIT qualification if (i) the REIT provides the IRS with a description of each asset causing the failure, (ii) the failure is due to reasonable cause and not willful neglect, (iii) the REIT pays a tax equal to the greater of (a) $50,000 per failure and (b) the product of the net income generated by the assets that caused the failure multiplied by the highest applicable corporate tax rate (currently 35%) and (iv) the REIT either disposes of the assets causing the failure within six months after the last day of the quarter in which it identifies the failure, or otherwise satisfies the relevant asset tests within that time frame.

Annual Distribution Requirements

In order to qualify as a REIT, we are required to distribute dividends, other than capital gain dividends, to our stockholders in an amount at least equal to:

(a)

the sum of

(i)

90% of our REIT taxable income, computed without regard to our net capital gains and the deduction for dividends paid; and

(ii)

90% of our after tax net income, if any, from foreclosure property (as described below); minus

(b)

the excess of the sum of specified items of non-cash income over 5% of our REIT taxable income, computed without regard to our net capital gains and the deduction for dividends paid.

We generally must make these distributions in the taxable year to which they relate, or in the following taxable year if declared before we timely file our tax return for the year and if paid with or before the first regular

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dividend payment after such declaration. These distributions will be treated as received by our stockholders in the year in which paid. In order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT-level tax deduction, the distributions must not be “preferential dividends.” A dividend is not a preferential dividend if the distribution is (i) pro rata among all outstanding shares of stock within a particular class and (ii) in accordance with any preferences among different classes of stock as set forth in our organizational documents.

To the extent that we distribute at least 90%, but less than 100%, of our REIT taxable income, as adjusted, we will be subject to tax at ordinary corporate tax rates on the retained portion. We may elect to retain, rather than distribute, some or all of our net long-term capital gains and pay tax on such gains. In this case, we could elect for our stockholders to include their proportionate shares of such undistributed long-term capital gains in income, and to receive a corresponding credit for their share of the tax that we paid. Our stockholders would then increase the adjusted basis of their stock by the difference between (i) the amounts of capital gain dividends that we designated and that they include in their taxable income, minus (ii) the tax that we paid on their behalf with respect to that income.

To the extent that in the future we may have available net operating losses carried forward from prior tax years, such losses may reduce the amount of distributions that we must make in order to comply with the REIT distribution requirements. Such losses, however, will generally not affect the tax treatment to our stockholders of any distributions that are actually made. See “—Taxation of Stockholders—Taxation of Taxable U.S. Stockholders—Distributions.”

If we fail to distribute during each calendar year at least the sum of (i) 85% of our ordinary income for such year, (ii) 95% of our capital gain net income for such year and (iii) any undistributed net taxable income from prior periods, we will be subject to a non-deductible 4% excise tax on the excess of such required distribution over the sum of (a) the amounts actually distributed, plus (b) the amounts of income we retained and on which we have paid corporate income tax.

We expect that our REIT taxable income will be less than our cash flow because of depreciation and other non-cash charges included in computing REIT taxable income. Accordingly, we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the distribution requirements described above. However, from time to time, we may not have sufficient cash or other liquid assets to meet these distribution requirements due to timing differences between the actual receipt of income and actual payment of deductible expenses, and the inclusion of income and deduction of expenses in determining our taxable income. In addition, we may decide to retain our cash, rather than distribute it, in order to repay debt, acquire assets, or for other reasons. If these timing differences occur, we may borrow funds to pay dividends or pay dividends through the distribution of other property (including shares of our stock) in order to meet the distribution requirements, while preserving our cash.

If our taxable income for a particular year is subsequently determined to have been understated, we may be able to rectify a resultant failure to meet the distribution requirements for a year by paying “deficiency dividends” to stockholders in a later year, which may be included in our deduction for dividends paid for the earlier year. In this case, we may be able to avoid losing REIT qualification or being taxed on amounts distributed as deficiency dividends, subject to the 4% excise tax described above. We will be required to pay interest based on the amount of any deduction taken for deficiency dividends.

For purposes of the 90% distribution requirement and excise tax described above, any dividend that we declare in October, November or December of any year and that is payable to a stockholder of record on a specified date in any such month will be treated as both paid by us and received by the stockholder on December 31 of such year, provided that we actually pay the dividend before the end of January of the following calendar year.

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Prohibited Transactions

Net income that we derive from a prohibited transaction is subject to a 100% tax. The term “prohibited transaction” generally includes a sale or other disposition of property (other than foreclosure property, as discussed below) that is held as inventory or primarily for sale to customers in the ordinary course of a trade or business. We intend to conduct our operations so that no asset that we own (or are treated as owning) will be treated as, or as having been, held as inventory or for sale to customers, and that a sale of any such asset will not be treated as having been in the ordinary course of our business. Whether property is held as inventory or “primarily for sale to customers in the ordinary course of a trade or business” depends on the particular facts and circumstances. No assurance can be given that any property that we sell will not be treated as inventory or property held for sale to customers, or that we can comply with certain safe-harbor provisions of the Code that would prevent such treatment. The 100% tax does not apply to gains from the sale of property that is held through a TRS or other taxable corporation, although such income will be subject to tax in the hands of the corporation at regular corporate rates. We intend to structure our activities to avoid prohibited transaction characterization.

Like-Kind Exchanges

We may dispose of properties in transactions intended to qualify as like-kind exchanges under the Code. Such like-kind exchanges are intended to result in the deferral of gain for U.S. federal income tax purposes. The failure of any such transaction to qualify as a like-kind exchange could require us to pay federal income tax, possibly including the 100% prohibited transaction tax, depending on the facts and circumstances surrounding the particular transaction.

Derivatives and Hedging Transactions

We may enter into hedging transactions with respect to interest rate exposure on one or more of our assets or liabilities. Any such hedging transactions could take a variety of forms, including the use of derivative instruments such as interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, and options. Except to the extent provided by Treasury regulations, any income from a hedging transaction we enter into (i) in the normal course of our business primarily to manage risk of interest rate changes or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets, which is clearly identified as specified in Treasury regulations before the close of the day on which it was acquired, originated, or entered into, including gain from the sale or disposition of a position in such a transaction and (ii) primarily to manage risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% income tests which is clearly identified as such before the close of the day on which it was acquired, originated, or entered into, will not constitute gross income for purposes of the 75% or 95% gross income test. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of both of the 75% and 95% gross income tests. Moreover, to the extent that a position in a hedging transaction has positive value at any particular point in time, it may be treated as an asset that does not qualify for purposes of the REIT asset tests. We intend to structure any hedging transactions in a manner that does not jeopardize our qualification as a REIT. We may conduct some or all of our hedging activities (including hedging activities relating to currency risk) through a TRS or other corporate entity, the income from which may be subject to U.S. federal income tax, rather than by participating in the arrangements directly or through pass-through subsidiaries. No assurance can be given, however, that our hedging activities will not give rise to income or assets that do not qualify for purposes of the REIT tests, or that our hedging activities will not adversely affect our ability to satisfy the REIT qualification requirements.

Foreclosure Property

Foreclosure property is real property and any personal property incident to such real property (i) that we acquire as the result of having bid in the property at foreclosure, or having otherwise reduced the property to

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ownership or possession by agreement or process of law, after a default (or upon imminent default) on a lease of the property or a mortgage loan held by us and secured by the property, (ii) for which we acquired the related loan or lease at a time when default was not imminent or anticipated and (iii) with respect to which we made a proper election to treat the property as foreclosure property. We generally will be subject to tax at the maximum corporate rate (currently 35%) on any net income from foreclosure property, including any gain from the disposition of the foreclosure property, other than income that would otherwise be qualifying income for purposes of the 75% gross income test. Any gain from the sale of property for which a foreclosure property election has been made will not be subject to the 100% tax on gains from prohibited transactions described above, even if the property would otherwise constitute inventory or dealer property. We do not anticipate receiving any income from foreclosure property that does not qualify for purposes of the 75% gross income test.

Penalty Tax

Any redetermined rents, redetermined deductions or excess interest we generate will be subject to a 100% penalty tax. In general, redetermined rents are rents from real property that are overstated as a result of any services furnished to any of our tenants by a TRS, and redetermined deductions and excess interest represent any amounts that are deducted by a TRS for amounts paid to us that are in excess of the amounts that would have been deducted based on arm’s length negotiations. Rents that we receive will not constitute redetermined rents if they qualify for certain safe harbor provisions contained in the Code.

From time to time, our TRS may provide services to our tenants. We intend to set the fees paid to our TRS for such services at arm’s length rates, although the fees paid may not satisfy the safe-harbor provisions described above. These determinations are inherently factual, and the IRS has broad discretion to assert that amounts paid between related parties should be reallocated to clearly reflect their respective incomes. If the IRS successfully made such an assertion, we would be required to pay a 100% penalty tax on the excess of an arm’s length fee for tenant services over the amount actually paid.

Failure to Qualify

If we fail to satisfy one or more requirements for REIT qualification other than the income or asset tests, we could avoid disqualification as a REIT if our failure is due to reasonable cause and not to willful neglect and we pay a penalty of $50,000 for each such failure. Relief provisions are also available for failures of the income tests and asset tests, as described above in “—Income Tests” and “—Asset Tests.”

If we fail to qualify for taxation as a REIT in any taxable year, and the relief provisions described above do not apply, we would be subject to tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates. We cannot deduct distributions to stockholders in any year in which we are not a REIT, nor would we be required to make distributions in such a year. In this situation, to the extent of current and accumulated earnings and profits, distributions to stockholders would be taxable as regular corporate dividends. Such dividends paid to U.S. stockholders that are individuals, trusts and estates may be taxable at the preferential income tax rates (i.e., the 15% maximum U.S. federal rate through 2012) for qualified dividends. In addition, subject to the limitations of the Code, corporate distributees may be eligible for the dividends received deduction. Unless we are entitled to relief under specific statutory provisions, we would also be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year during which we lost our qualification. It is not possible to state whether, in all circumstances, we would be entitled to this statutory relief.

Tax Aspects of Our Operating Partnership and any Subsidiary Partnerships

General. All of our investments will be held through our operating partnership. In addition, our operating partnership may hold certain of its investments indirectly through subsidiary partnerships and limited liability companies which we expect will be treated as partnerships or disregarded entities for U.S. federal income tax purposes. In general, entities that are treated as partnerships or disregarded entities for U.S. federal income tax

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purposes are “pass-through” entities which are not required to pay federal income tax. Rather, partners or members of such entities are allocated their shares of the items of income, gain, loss, deduction and credit of the partnership or limited liability company, and are potentially required to pay tax on this income, without regard to whether they receive a distribution from the partnership or limited liability company. We will include in our income our share of these partnership and limited liability company items for purposes of the various gross income tests, the computation of our REIT taxable income, and the REIT distribution requirements. Moreover, for purposes of the asset tests, we will include our pro rata share of assets held by our operating partnership, including its share of its subsidiary partnerships and limited liability companies, based on our capital interest in each such entity. See “—Taxation of CyrusOne Inc.”

Entity Classification. Our interests in our operating partnership and the subsidiary partnerships and limited liability companies involve special tax considerations, including the possibility that the IRS might challenge the status of these entities as partnerships (or disregarded entities), as opposed to associations taxable as corporations for U.S. federal income tax purposes. If our operating partnership or a subsidiary partnership or limited liability company were treated as an association, it would be taxable as a corporation and would be required to pay an entity-level tax on its income. In this situation, the character of our assets and items of gross income would change and could prevent us from satisfying the REIT asset tests and possibly the REIT income tests. See “—Taxation of CyrusOne Inc.—Asset Tests” and “—Income Tests.” This, in turn, could prevent us from qualifying as a REIT. See “—Failure to Qualify” for a discussion of the effect of our failure to meet these tests. In addition, a change in the tax status of our operating partnership, a subsidiary partnership or limited liability company might be treated as a taxable event. If so, we might incur a tax liability without any related cash distributions. We believe that our operating partnership and each of our other partnerships and limited liability companies will be classified as partnerships or disregarded entities for U.S. federal income tax purposes.

Allocations of Income, Gain, Loss and Deduction. A partnership agreement (or, in the case of a limited liability company treated as a partnership for U.S. federal income tax purposes, the limited liability company agreement) will generally determine the allocation of partnership income and loss among partners. Generally, Section 704(b) of the Code and the Treasury regulations thereunder require that partnership allocations respect the economic arrangement of the partners. If an allocation of partnership income or loss does not comply with the requirements of Section 704(b) of the Code and the Treasury regulations thereunder, the item subject to the allocation will be reallocated in accordance with the partners’ interests in the partnership. This reallocation will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. Our operating partnership’s allocations of taxable income and loss are intended to comply with the requirements of Section 704(b) of the Code and the Treasury regulations thereunder.

Tax Allocations with Respect to the Properties. Under Section 704(c) of the Code, income, gain, loss and deduction attributable to appreciated or depreciated property that is contributed to a partnership (including a limited liability company treated as a partnership for U.S. federal income tax purposes) in exchange for an interest in the partnership, must be allocated in a manner so that the contributing partner is charged with the unrealized gain or benefits from the unrealized loss associated with the property at the time of the contribution, as adjusted from time to time. The amount of the unrealized gain or unrealized loss generally is equal to the difference between the fair market value or book value and the adjusted tax basis of the contributed property at the time of contribution (this difference is referred to as a book-tax difference), as adjusted from time to time. These allocations are solely for U.S. federal income tax purposes and do not affect the book capital accounts or other economic or legal arrangements among the partners.

Appreciated property was contributed to our operating partnership in exchange for interests in our operating partnership in connection with the formation transactions. The partnership agreement requires that allocations be made in a manner consistent with Section 704(c) of the Code. Treasury regulations issued under Section 704(c) of the Code provide partnerships with a choice of several methods of accounting for such book-tax differences. We and our operating partnership have agreed to use a permissible method for accounting for book-tax

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differences for the properties initially contributed to our operating partnership. See “—Taxation of CyrusOne Inc.—Requirements for Qualification—General” and “—Annual Distribution Requirements.”

Any property acquired by our operating partnership in a taxable transaction will initially have a tax basis equal to its fair market value, and Section 704(c) of the Code will not apply.

Taxation of Stockholders

Taxation of Taxable U.S. Stockholders

The following is a summary of certain U.S. federal income tax consequences of the ownership and disposition of our stock applicable to taxable U.S. stockholders. A “U.S. stockholder” is any holder of our common stock that is, for U.S. federal income tax purposes:

•

an individual who is a citizen or resident of the United States;

•

a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, or of any state thereof, or the District of Columbia;

•

an estate, the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source; or

•

a trust if a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust.

If a partnership, including for this purpose any entity that is treated as a partnership for U.S. federal income tax purposes, holds our common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. An investor that is a partnership and the partners in such partnership should consult their tax advisors about the U.S. federal income tax consequences of the acquisition, ownership and disposition of our common stock.

Distributions. So long as we qualify as a REIT, the distributions that we make to our taxable U.S. stockholders out of current or accumulated earnings and profits that we do not designate as capital gain dividends will generally be taken into account by such stockholders as ordinary income and will not be eligible for the dividends received deduction for corporations. With limited exceptions, our dividends are not eligible for taxation at the preferential income tax rates (i.e., the 15% maximum U.S. federal rate through 2012) for qualified dividends received by most U.S. stockholders that are individuals, trusts and estates from taxable C corporations. Such stockholders, however, are taxed at the preferential rates on dividends designated by and received from REITs to the extent that the dividends are attributable to:

•

income retained by the REIT in the prior taxable year on which the REIT was subject to corporate level income tax (less the amount of tax);

•

dividends received by the REIT from TRSs or other taxable C corporations; or

•

income in the prior taxable year from the sales of “built-in gain” property acquired by the REIT from C corporations in carryover basis transactions (less the amount of corporate tax on such income).

Distributions that we designate as capital gain dividends will generally be taxed to our U.S. stockholders as long-term capital gains, to the extent that such distributions do not exceed our actual net capital gain for the taxable year, without regard to the period for which the stockholder that receives such distribution has held its stock. We may elect to retain and pay taxes on some or all of our net long-term capital gains, in which case we may elect to apply provisions of the Code, which treat our U.S. stockholders as having received, solely for tax purposes, our undistributed capital gains, and the stockholders as receiving a corresponding credit for taxes that we paid on such undistributed capital gains. See “Taxation of CyrusOne Inc.—Annual Distribution Requirements.” Corporate stockholders may be required to treat up to 20% of some capital gain dividends as

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ordinary income. Long-term capital gains are generally taxable at maximum U.S. federal rates of 15% (through 2012) in the case of U.S. stockholders that are individuals, trusts and estates, and 35% in the case of U.S. stockholders that are corporations. Capital gains attributable to the sale of depreciable real property held for more than 12 months are subject to a 25% maximum U.S. federal income tax rate for taxpayers who are taxed as individuals, to the extent of previously claimed depreciation deductions.

Distributions in excess of our current and accumulated earnings and profits will generally represent a return of capital and will not be taxable to a stockholder to the extent that the amount of such distributions does not exceed the adjusted basis of the stockholder’s shares in respect of which the distributions were made. Rather, the distribution will reduce the adjusted basis of the stockholder’s shares. To the extent that such distributions exceed the adjusted basis of a stockholder’s shares, the stockholder generally must include such distributions in income as long-term capital gain if the shares have been held for more than one year, or short-term capital gain if the shares have been held for one year or less. In addition, any dividend that we declare in October, November or December of any year and that is payable to a stockholder of record on a specified date in any such month will be treated as both paid by us and received by the stockholder on December 31 of such year, provided that we actually pay the dividend before the end of January of the following calendar year.

To the extent that we have available net operating losses and capital losses carried forward from prior tax years, such losses may reduce the amount of distributions that we must make in order to comply with the REIT distribution requirements. See “Taxation of CyrusOne Inc.—Annual Distribution Requirements.” Such losses, however, are not passed through to stockholders and do not offset income of stockholders from other sources, nor would such losses affect the character of any distributions that we make, which are generally subject to tax in the hands of stockholders to the extent that we have current or accumulated earnings and profits.

Dispositions of our Stock. If a U.S. stockholder sells or disposes of shares of our stock, it will generally recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale or other disposition and the stockholder’s adjusted tax basis in the shares of stock. In general, capital gains recognized by individuals, trusts and estates upon the sale or disposition of our stock will be subject to a maximum U.S. federal income tax rate of 15% (through 2012) if the stock is held for more than one year, and will be taxed at ordinary income rates (of up to 35% through 2012, and 39.6% thereafter) if the stock is held for one year or less. Gains recognized by stockholders that are corporations are subject to U.S. federal income tax at a maximum rate of 35%, whether or not such gains are classified as long-term capital gains. Capital losses recognized by a stockholder upon the disposition of our stock that was held for more than one year at the time of disposition will be considered long-term capital losses, and are generally available only to offset capital gain income of the stockholder but not ordinary income (except in the case of individuals, who may also offset up to $3,000 of ordinary income each year). In addition, any loss upon a sale or exchange of shares of our stock by a stockholder who has held the shares for six months or less, after applying holding period rules, will be treated as a long-term capital loss to the extent of actual or deemed distributions that we make that are required to be treated by the stockholder as long-term capital gain.

If an investor recognizes a loss upon a subsequent disposition of our stock or other securities in an amount that exceeds a prescribed threshold, it is possible that the provisions of Treasury regulations involving “reportable transactions” could apply, with a resulting requirement to separately disclose the loss-generating transaction to the IRS. These regulations, though directed towards “tax shelters,” are broadly written and apply to transactions that would not typically be considered tax shelters. The Code imposes significant penalties for failure to comply with these requirements. You should consult your tax advisor concerning any possible disclosure obligation with respect to the receipt or disposition of our stock or securities or transactions that we might undertake directly or indirectly. Moreover, you should be aware that we and other participants in the transactions in which we are involved (including their advisors) might be subject to disclosure or other requirements pursuant to these regulations.

Passive Activity Losses and Investment Interest Limitations. Distributions that we make and gains arising from the sale or exchange by a U.S. stockholder of our stock will not be treated as passive activity income. As a

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result, stockholders will not be able to apply any “passive losses” against income or gain relating to our stock. To the extent that distributions we make do not constitute a return of capital, they will be treated as investment income for purposes of computing the investment interest limitation.

Taxation of Non-U.S. Stockholders

The following is a summary of certain U.S. federal income and estate tax consequences of the ownership and disposition of our stock applicable to non-U.S. stockholders. A “non-U.S. stockholder” is any holder of our common stock other than a partnership or U.S. stockholder.

Ordinary Dividends. The portion of dividends received by non-U.S. stockholders that (i) is payable out of our earnings and profits, (ii) is not attributable to capital gains that we recognize and (iii) is not effectively connected with a U.S. trade or business of the non-U.S. stockholder, will be subject to U.S. withholding tax at the rate of 30%, unless reduced or eliminated by treaty.

In general, non-U.S. stockholders will not be considered to be engaged in a U.S. trade or business solely as a result of their ownership of our stock. In cases where the dividend income from a non-U.S. stockholder’s investment in our stock is, or is treated as, effectively connected with the non-U.S. stockholder’s conduct of a U.S. trade or business, the non-U.S. stockholder generally will be subject to U.S. federal income tax at graduated rates, in the same manner as U.S. stockholders are taxed with respect to such dividends. Such effectively connected income must generally be reported on a U.S. income tax return filed by or on behalf of the non-U.S. stockholder. The income may also be subject to a branch profits tax at the rate of 30% (unless reduced or eliminated by treaty) in the case of a non-U.S. stockholder that is a corporation.

Non-Dividend Distributions. Unless our stock constitutes a U.S. real property interest (“USRPI”) distributions that we make which are not dividends out of our earnings and profits will not be subject to U.S. income tax. If we cannot determine at the time a distribution is made whether or not the distribution will exceed current and accumulated earnings and profits, the distribution will be subject to withholding at the rate applicable to dividends. The non-U.S. stockholder may seek a refund from the IRS of any amounts withheld if it is subsequently determined that the distribution was, in fact, in excess of our current and accumulated earnings and profits. If our stock constitutes a USRPI, as described below, distributions that we make in excess of the sum of (i) the stockholder’s proportionate share of our earnings and profits, plus (ii) the stockholder’s basis in its stock, will be taxed under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”), at the rate of tax, including any applicable capital gains rates, that would apply to a U.S. stockholder of the same type (e.g., an individual or a corporation, as the case may be), and the collection of the tax will be enforced by a withholding at a rate of 10% of the amount by which the distribution exceeds the stockholder’s share of our earnings and profits.

Capital Gain Dividends. Under FIRPTA, a distribution that we make to a non-U.S. stockholder, to the extent attributable to gains from dispositions of USRPIs that we held directly or through pass-through subsidiaries, or USRPI capital gains, will, except as described below, be considered effectively connected with a U.S. trade or business of the non-U.S. stockholder and will be subject to U.S. income tax at the rates applicable to U.S. individuals or corporations, without regard to whether we designate the distribution as a capital gain dividend. See above under “—Taxation of Non-U.S. Stockholders—Ordinary Dividends,” for a discussion of the consequences of income that is effectively connected with a U.S. trade or business. In addition, we will be required to withhold tax equal to 35% of the maximum amount that could have been designated as USRPI capital gains dividends. Distributions subject to FIRPTA may also be subject to a branch profits tax at the rate of 30% (unless reduced or eliminated by treaty) in the hands of a non-U.S. stockholder that is a corporation. A distribution is not attributable to USRPI capital gain if we held an interest in the underlying asset solely as a creditor. Capital gain dividends received by a non-U.S. stockholder that are attributable to dispositions of our assets other than USRPIs are not subject to U.S. federal income or withholding tax, unless (i) the gain is effectively connected with the non-U.S. stockholder’s U.S. trade or business, in which case the non-U.S. stockholder would be subject to the same treatment as U.S. stockholders with respect to such gain, except that a non-U.S. stockholder that is a corporation may also be subject to a branch profits tax at the rate of 30% (unless reduced or eliminated by treaty), or (ii) the non-U.S. stockholder is

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a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, in which case the non-U.S. stockholder will incur a 30% tax on his capital gains. We expect that a significant portion of our assets will be USRPIs.

A capital gain dividend that would otherwise have been treated as a USRPI capital gain will not be so treated or be subject to FIRPTA, and generally will not be treated as income that is effectively connected with a U.S. trade or business, and instead will be treated in the same manner as an ordinary dividend (see “—Taxation of Non-U.S. Stockholders—Ordinary Dividends”), if (i) the capital gain dividend is received with respect to a class of stock that is regularly traded on an established securities market located in the United States and (ii) the recipient non-U.S. stockholder does not own more than 5% of that class of stock at any time during the year ending on the date on which the capital gain dividend is received. We anticipate that our common stock will be “regularly traded” on an established securities exchange.

Dispositions of our Stock. Unless our stock constitutes a USRPI, a sale of our stock by a non-U.S. stockholder generally will not be subject to U.S. taxation under FIRPTA. Subject to certain exceptions discussed below, our stock will be treated as a USRPI if 50% or more of our assets throughout a prescribed testing period consist of interests in real property located within the United States, excluding, for this purpose, interests in real property solely in a capacity as a creditor. We expect that 50% or more of our assets will consist of USRPIs.

Even if the foregoing 50% test is met, however, our stock will not constitute a USRPI if we are a “domestically controlled qualified investment entity.” A domestically controlled qualified investment entity includes a REIT, less than 50% of value of which is held, directly or indirectly, by non-U.S. stockholders at all times during a specified testing period. As described above, our charter contains restrictions designed to protect our status as a “domestically controlled qualified investment entity,” and we believe that we will be and will remain a domestically controlled qualified investment entity, and that a sale of our stock should not be subject to taxation under FIRPTA. However, no assurance can be given that we will be or will remain a domestically controlled qualified investment entity.

In the event that we are not a domestically controlled qualified investment entity, but our stock is “regularly traded,” as defined by applicable Treasury regulations, on an established securities market, a non-U.S. stockholder’s sale of our common stock nonetheless also would not be subject to tax under FIRPTA as a sale of a USRPI, provided that the selling non-U.S. stockholder held 5% or less of our outstanding common stock any time during a prescribed testing period. We expect that our common stock will be regularly traded on an established securities market.

If gain on the sale of our stock were subject to taxation under FIRPTA, the non-U.S. stockholder would be required to file a U.S. federal income tax return and would be subject to the same treatment as a U.S. stockholder with respect to such gain, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of non-resident alien individuals. Moreover, in order to enforce the collection of the tax, the purchaser of the stock could be required to withhold 10% of the purchase price and remit such amount to the IRS.

Gain from the sale of our stock that would not otherwise be subject to FIRPTA will nonetheless be taxable in the United States to a non-U.S. stockholder in two cases: (i) if the non-U.S. stockholder’s investment in our stock is effectively connected with a U.S. trade or business conducted by such non-U.S. stockholder, the non-U.S. stockholder will be subject to the same treatment as a U.S. stockholder with respect to such gain, except that a non-U.S. stockholder that is a corporation may also be subject to a branch profits tax at a rate of 30% (unless reduced or eliminated by treaty), or (ii) if the non-U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, the nonresident alien individual will be subject to a 30% tax on the individual’s capital gain. In addition, even if we are a domestically controlled qualified investment entity, upon disposition of our stock (subject to the 5% exception applicable to “regularly traded” stock described above), a non-U.S. stockholder may be treated as having gain from the sale or exchange of a USRPI if the non-U.S. stockholder (a) disposes of our common stock within a 30-day period preceding the ex-dividend date of a distribution, any portion of which, but for the

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disposition, would have been treated as gain from the sale or exchange of a USRPI and (b) acquires, or enters into a contract or option to acquire, other shares of our common stock within 30 days after such ex-dividend date.

Estate tax. If our stock is owned or treated as owned by an individual who is not a citizen or resident (as specially defined for U.S. federal estate tax purposes) of the United States at the time of such individual’s death, the stock will be includable in the individual’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise, and may therefore be subject to U.S. federal estate tax.

Non-U.S. stockholders are urged to consult their tax advisors regarding the U.S. federal, state, local and foreign income and other tax consequences of owning our stock.

Taxation of Tax-Exempt Stockholders

Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts, generally are exempt from U.S. federal income taxation. However, they may be subject to taxation on their unrelated business taxable income (“UBTI”). While some investments in real estate may generate UBTI, the IRS has ruled that dividend distributions from a REIT to a tax-exempt entity do not constitute UBTI. Based on that ruling, and provided that (i) a tax-exempt stockholder has not held our stock as “debt financed property” within the meaning of the Code (i.e., where the acquisition or holding of the property is financed through a borrowing by the tax-exempt stockholder) and (ii) our stock is not otherwise used in an unrelated trade or business, distributions that we make and income from the sale of our stock generally should not give rise to UBTI to a tax-exempt stockholder.

Tax-exempt stockholders that are social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans exempt from U.S. federal income taxation under sections 501(c)(7), (c)(9), (c)(17) and (c)(20) of the Code are subject to different UBTI rules, which generally require such stockholders to characterize distributions that we make as UBTI.

In certain circumstances, a pension trust that owns more than 10% of our stock could be required to treat a percentage of any dividends received from us as UBTI if we are a “pension-held REIT.” We will not be a pension-held REIT unless (i) we are required to “look through” one or more of our pension trust stockholders in order to satisfy the REIT “closely-held” test and (ii) either (a) one pension trust owns more than 25% of the value of our stock or (b) one or more pension trusts, each individually holding more than 10% of the value of our stock, collectively own more than 50% of the value of our stock. Certain restrictions on ownership and transfer of our stock generally should prevent a tax-exempt entity from owning more than 10% of the value of our stock and generally should prevent us from becoming a pension-held REIT.

Tax-exempt stockholders are urged to consult their tax advisors regarding the U.S. federal, state, local and foreign income and other tax consequences of owning our stock.

Other Tax Considerations

Legislative or Other Actions Affecting REITs

The present U.S. federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time. The REIT rules are constantly under review by persons involved in the legislative process and by the IRS and the Treasury which may result in statutory changes as well as revisions to regulations and interpretations. Changes to the U.S. federal tax laws and interpretations thereof could adversely affect an investment in our common stock.

Medicare 3.8% Tax on Investment Income

For taxable years beginning after December 31, 2012, certain U.S. stockholders who are individuals, estates or trusts and whose income exceeds certain thresholds will be required to pay a 3.8% Medicare tax on dividends and certain other investment income, including capital gains from the sale or other disposition of our common stock.

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Foreign Account Tax Compliance Act

Legislation enacted in 2010 and existing guidance issued thereunder will require, after December 31, 2013, withholding at a rate of 30% on dividends in respect of, and, after December 31, 2016, gross proceeds from the sale of, our common stock held by or through certain foreign financial institutions (including investment funds), unless such institution enters into an agreement with the Treasury to report, on an annual basis, information with respect to shares in the institution held by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments. An intergovernmental agreement between the United States and an applicable foreign country, or future Treasury regulations or other guidance may modify these requirements. Accordingly, the entity through which our common stock is held will affect the determination of whether such withholding is required. Similarly, dividends in respect of, and gross proceeds from the sale of, our common stock held by an investor that is a non-financial non-U.S. entity which does not qualify under certain exemptions will be subject to withholding at a rate of 30%, unless such entity either (i) certifies to us that such entity does not have any “substantial United States owners” or (ii) provides certain information regarding the entity’s “substantial United States owners,” which we will in turn provide to the Secretary of the Treasury. We will not pay any additional amounts to stockholders in respect of any amounts withheld. Non-U.S. stockholders are encouraged to consult their tax advisors regarding the possible implications of the legislation on their investment in our common stock.

State, Local and Foreign Taxes

We and our subsidiaries and stockholders may be subject to state, local or foreign taxation in various jurisdictions including those in which we or they transact business, own property or reside. Our state, local or foreign tax treatment and that of our stockholders may not conform to the U.S. federal income tax treatment discussed above. Any foreign taxes that we incur do not pass through to stockholders as a credit against their U.S. federal income tax liability. Prospective investors should consult their tax advisors regarding the application and effect of state, local and foreign income and other tax laws on an investment in our stock.

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ERISA CONSIDERATIONS

General

The following is a summary of certain material considerations arising under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the prohibited transaction provisions of Section 4975 of the Code, that may be relevant to a prospective purchaser that is an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA (an “ERISA Plan”), and may also be relevant to a prospective purchaser that is not an “employee benefit plan” but a tax-qualified retirement plan or an individual retirement account, individual retirement annuity, medical savings account or education individual retirement account (collectively, an “IRA”), that is subject to Section 4975 of the Code, a plan such as a “governmental plan” (as defined in Section 3(32) of ERISA), or a “church plan” (as defined in Section 3(33) of ERISA that has made no election under Section 410(d) of the Code) or any other arrangement that is exempt from all or certain provisions of ERISA and Section 4975 of the Code but is subject to provisions under applicable federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (each, a “Plan”). This discussion does not address all aspects of ERISA or Section 4975 of the Code or, to the extent not preempted, state law that may be relevant to a particular Plan in light of its particular circumstances.

Plans should also consider the entire discussion under the heading “U.S. Federal Income Tax Considerations,” as material contained in that section is relevant to any decision by a Plan to purchase our common stock.

Fiduciary Obligations

Each fiduciary of an ERISA Plan should carefully consider whether an investment in shares of our common stock is consistent with its fiduciary responsibilities under ERISA. In particular, the fiduciary requirements of Part 4 of Subtitle B of Title I of ERISA require that:

•

an ERISA Plan make investments that are prudent and in the best interests of the ERISA Plan, its participants and beneficiaries;

•

an ERISA Plan make investments that are diversified in order to reduce the risk of large losses, unless it is clearly prudent for the ERISA Plan not to do so;

•

an ERISA Plan’s investments are authorized under ERISA and the terms of the governing documents of the ERISA Plan; and

•

the fiduciary not cause the ERISA Plan to enter into transactions prohibited under Section 406 of ERISA (and certain corresponding provisions of the Code).

In determining whether an investment in shares of our common stock is prudent for ERISA purposes, the appropriate fiduciary of an ERISA Plan should consider all of the facts and circumstances, including whether the investment is reasonably designed, as a part of the ERISA Plan’s portfolio for which the fiduciary has investment responsibility, to meet the objectives of the ERISA Plan, taking into consideration the risk of loss and opportunity for gain or other return from the investment, the diversification, cash flow and funding requirements of the ERISA Plan, and the liquidity and current return of the ERISA Plan’s portfolio. A fiduciary should also take into account the nature of our business, the length of our operating history and other matters described in the section entitled “Risk Factors.”

In addition to the imposition of general fiduciary standards of investment prudence and diversification, ERISA, and the corresponding provisions of the Code, prohibit a wide range of transactions involving the assets of the plan and persons who have certain specified relationships to the plan (“parties in interest” within the meaning of Section 3(14) of ERISA, or “disqualified persons” within the meaning of the Code). Thus, a plan fiduciary considering an investment in our common shares also should consider whether the acquisition or the continued holding of the shares might constitute or give rise to a direct or indirect prohibited transaction that is not subject to an exemption issued by the U.S. Department of Labor (the “DOL”).

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The fiduciary of an IRA or other Plans should consider that it may only make investments that are either authorized or not prohibited by the appropriate governing documents, not prohibited under ERISA or Section 4975 of the Code and permitted under other applicable law.

Our Status Under ERISA

In some circumstances where an ERISA Plan holds an interest in an entity, the assets of the entity are deemed to be ERISA “plan assets.” This is known as the “look-through rule.” Under those circumstances, the obligations and other responsibilities of plan sponsors, plan fiduciaries and plan administrators, and of parties in interest and disqualified persons, may be expanded, and there may be an increase in their liability under these and other provisions of ERISA and the Code (except to the extent (if any) that a favorable statutory or administrative exemption or exception applies). For example, a prohibited transaction may occur if our assets are deemed to be assets of investing ERISA Plans and persons who are parties in interest or disqualified persons deal with these assets. Further, if our assets are deemed to be assets of investing ERISA Plans, any person that exercises authority or control with respect to the management or disposition of the assets may be an ERISA Plan fiduciary.

ERISA “plan assets” are not defined in ERISA or the Code, but the DOL has issued regulations (the “DOL Regulations”) that outline the circumstances under which an ERISA Plan’s interest in an entity will be subject to the look-through rule. The DOL Regulations apply to the purchase by an ERISA Plan of an “equity interest” in an entity, such as common stock of a REIT. However, the DOL Regulations provide an exception to the look-through rule for equity interests that are “publicly offered securities.”

Under the DOL Regulations, a “publicly offered security” is a security that is:

•

freely transferable;

•

part of a class of securities that is widely held; and

•

either part of a class of securities that is registered under section 12(b) or 12(g) of the Exchange Act or sold to an ERISA Plan as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act, and the class of securities of which this security is a part is registered under the Exchange Act within 120 days, or longer if allowed by the SEC, after the end of the fiscal year of the issuer during which this offering of these securities to the public occurred.

Whether a security is considered “freely transferable” depends on the facts and circumstances of each case. Under the DOL Regulations, if the security is part of an offering in which the minimum investment is $10,000 or less, then any restriction on or prohibition against any transfer or assignment of the security for the purposes of preventing a termination or reclassification of the entity for federal or state tax purposes will not ordinarily prevent the security from being considered freely transferable. Additionally, limitations or restrictions on the transfer or assignment of a security which are created or imposed by persons other than the issuer of the security or persons acting for or on behalf of the issuer will ordinarily not prevent the security from being considered freely transferable.

A class of securities is considered “widely held” if it is a class of securities that is owned by 100 or more investors independent of the issuer and of one another. A security will not fail to be “widely held” because the number of independent investors falls below 100 subsequent to the initial public offering as a result of events beyond the issuer’s control.

The shares of our common stock offered in this prospectus may meet the criteria of the publicly offered securities exception to the look-through rule. First, the common stock could be considered to be freely transferable, as the minimum investment will be less than $10,000 and the only restrictions upon its transfer are those generally permitted under the DOL Regulations, those required under federal tax laws to maintain our status as a REIT and to prevent us from ceasing to be a “domestically controlled qualified investment entity” for

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U.S. federal income tax purposes, and those agreed to by us, our operating partnership, CBI and our executive officers and directors restricting transfer of our stock for a period of 12 months, with respect to CBI, and 180 days, with respect to us and our executive officers and directors.

Second, we expect that our common stock will be held by 100 or more investors, as required by the Code to maintain our status as a REIT, and we expect that at least 100 or more of these investors will be independent of us and of one another.

Third, the shares of our common stock will be part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act and the common stock will be registered under the Exchange Act.

In addition, the DOL Regulations provide independent exceptions to the look-through rule for equity interests in some types of entities, including any entity which qualifies as a “venture capital operating company.”

Under the DOL Regulations, a “venture capital operating company” is defined as an entity which:

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on certain testing dates has at least 50% of its assets, other than short-term investments pending long-term commitment or distribution to investors, valued at cost, invested in one or more operating companies with respect to which the entity has management rights; and

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in the ordinary course of its business, actually exercises its management rights with respect to one or more of the operating companies in which it invests.

The shares of our common stock offered by this prospectus may meet the criteria of the “venture capital operating company” exception to the look-through rule. First, we expect that at least 50% of our assets will be invested in CyrusOne LP, which we expect will qualify as an operating company within the meaning of the DOL Regulations. Second, we will have, and expect to exercise, contractual management rights with respect to CyrusOne LP. We have not endeavored to determine whether we will satisfy the “venture capital operating company” exception.

If for any reason our assets are deemed to be ERISA “plan assets” because we do not qualify for any exception under the DOL Regulations, certain transactions that we might enter into, or may have entered into, in the ordinary course of our business might constitute non-exempt prohibited transactions under ERISA or the Code and might have to be rescinded and may give rise to prohibited transaction excise taxes and fiduciary liability, as described above. In addition, if our assets are deemed to be ERISA “plan assets,” our management may be considered to be fiduciaries under ERISA and the Code. Moreover, if our underlying assets were deemed to be assets constituting “plan assets,” there are several other provisions of ERISA that could be implicated for an ERISA Plan if it were to acquire and hold our common stock either directly or by investing in an entity whose underlying assets are deemed to be assets of the ERISA Plan.

Prior to making an investment in the shares offered by this prospectus, prospective Plan investors (whether or not subject to ERISA or Section 4975 of the Code) should consult with their legal and other advisors concerning the impact of ERISA and the Code (and, particularly in the case of Plans not subject to ERISA, any additional state, local and non-U.S. law considerations), as applicable, and the potential consequences in their specific circumstances of an investment in such shares.

Each holder of our common stock will be deemed to have represented and agreed that its purchase and holding of such common shares (or any interest therein) will not constitute or result in a non-exempt prohibited transaction under ERISA or the Code.

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UNDERWRITING

Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares indicated below:


Name		Number of Shares
Morgan Stanley & Co. LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Deutsche Bank Securities Inc.
Barclays Capital Inc.

Total:

The underwriters and the representatives are collectively referred to as the “underwriters” and the “representatives,” respectively. The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option described below. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased, or, in certain circumstances, the underwriting agreement may be terminated.

The underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $ a share under the public offering price. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representatives.

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with this offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed next to the underwriter’s name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table.

The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional shares of common stock.

Total

Per Share

No Exercise

Full Exercise

Public offering price

Underwriting discounts and commissions to be paid by us

Proceeds, before expenses, to us

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The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $ .

The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by them.

We have applied for the listing of our common stock on the NASDAQ Global Select Market under the trading symbol “CONE.”

We have agreed that, without the prior written consent of Morgan Stanley & Co. LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated on behalf of the underwriters, we will not, during the period ending 180 days after the completion of this offering, subject to certain exceptions:

•

offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock (including units in our operating partnership);

•

enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock; or

•

file any registration statement with the SEC relating to this offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock;

whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise.

All of our directors and executive officers and CBI have agreed that, without the prior written consent of Morgan Stanley & Co. LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated on behalf of the underwriters, they will not offer, sell or transfer any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock (including units in our operating partnership) beneficially owned by them for 180 days (12 months in the case of CBI) after the completion of this offering, subject to certain exceptions.

At our request, the underwriters have reserved for sale, at the initial public offering price, up to % of the shares of our common stock to be sold in this offering for our directors, officers, employees and related persons through a directed share program. The number of shares of our common stock available for sale to the general public pursuant to this offering will be reduced to the extent such persons purchase such reserved shares. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares to be sold in this offering. Any shares sold in the directed share program to our directors or officers shall be subject to the lock-up agreement described above. We and our operating partnership have agreed to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with the directed share program.

In order to facilitate this offering of our common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase, creating a short position in the common stock for their own account. In addition, to cover over-allotments, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of the common stock. Finally, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the common stock in this offering, if the syndicate repurchases previously distributed common stock in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the

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market price of the common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.

We, our operating partnership, CBI and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

A prospectus in electronic format may be made available on websites maintained by one or more underwriters or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.

Pricing of this Offering

Prior to this offering, there has been no public market for our common stock. The initial public offering price was determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours. We cannot assure you that the prices at which the shares will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our common stock will develop and continue after this offering.

Relationships with Underwriters

From time to time in the ordinary course of business, certain of the underwriters and their respective affiliates have performed, and may in the future perform, various commercial banking, investment banking and other financial services for us or for CBI for which they received, or will receive, customary fees and reimbursement of expenses. For instance, an affiliate of Deutsche Bank Securities Inc. is the administrative agent and Deutsche Bank Securities Inc. was a joint lead arranger and joint book-running manager of our new revolving credit facility. Barclays Capital Inc. was also a joint book-running manager of our operating partnership’s senior notes offering and acted as the dealer manager of the related tender offer for outstanding senior notes of CBI. In addition, an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated was the administrative agent, affiliates of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Capital Inc. were the joint lead arrangers and affiliates of Morgan Stanley & Co. LLC and Barclays Capital Inc. were joint book-runners, of the credit facilities that CBI entered into in June 2010 in connection with its acquisition of Cyrus Networks. Each of Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc. and Barclays Capital Inc. were joint book-running managers of CBI’s senior notes offerings in September 2009 and October 2010 and senior subordinated notes offering in March 2010. Deutsche Bank Securities Inc. was the sole book-running manager of CBI’s senior notes offering in November 2010. In addition, affiliates of Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc. and Barclays Capital Inc. hold commitments as lenders, and Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as a joint lead arranger and joint book manager under CBI’s current revolving credit facility.

Selling Restrictions

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any

213

shares of our common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

•

to any legal entity which is a qualified investor as defined in the Prospectus Directive;

•

to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or

•

in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase or subscribe to any shares of our common stock, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

Dubai International Financial Centre

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers (as defined by the DFSA). The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus, you should consult an authorized financial advisor.

Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or this offering may be publicly distributed or otherwise made publicly available in Switzerland. Neither this document nor any other offering or marketing material relating to this offering, the Company or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority (“FINMA”), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of the shares.

214

United Kingdom

This prospectus and any other material in relation to the shares described herein is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospective Directive (“qualified investors”) that also (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”), (ii) who fall within Article 49(2)(a) to (d) of the Order or (iii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). The shares of common stock are only available to, and any invitation, offer or agreement to purchase or otherwise acquire such shares will be engaged in only with, relevant persons. This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this prospectus or any of its contents.

215

LEGAL MATTERS

Certain legal matters will be passed upon for us by Cravath, Swaine & Moore LLP and Skadden, Arps, Slate, Meagher & Flom LLP, and for the underwriters by Latham & Watkins LLP. Venable LLP will issue an opinion to us regarding certain matters of Maryland law, including the validity of the shares of common stock offered hereby.

216

EXPERTS

The financial statement of CyrusOne included in this prospectus has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statement is included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The financial statements of the Data Center Predecessor included in this prospectus and the related financial statement schedule included elsewhere in the registration statement have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein, which report expresses an unqualified opinion on the financial statements and financial statement schedule and includes an explanatory paragraph referring to the allocation of certain corporate overhead expenses from CBI. Such financial statements and financial statement schedule have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The financial statements of Cyrus Networks as of and for the years ended December 31, 2007, 2008 and 2009 have been audited by BKD, LLP, an independent registered public accounting firm, as stated in their reports, which are included herein and in the registration statement in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

Unless otherwise indicated, all of the information presented in the sections in this prospectus entitled “Prospectus Summary–Industry Overview” and “Industry Background/Market Opportunity,” including the analysis of the various sectors of the data center industry, has been provided by IDC. IDC has reviewed the aforementioned sections and has confirmed to us that they accurately describe the data center industry, subject to the limitations related to the data supporting the quantitative information presented in this prospectus, as indicated in the consent of IDC filed as an exhibit to the registration statement on Form S-11 under the Securities Act of which this prospectus is a part.

217

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-11, including exhibits, schedules and amendments filed with this registration statement, under the Securities Act with respect to the shares of our common stock to be sold in this offering. This prospectus does not contain all of the information set forth in the registration statement and exhibits and schedules to the registration statement. For further information with respect to our company and the shares of our common stock to be sold in this offering, reference is made to the registration statement, including the exhibits and schedules to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document referred to in this prospectus are not necessarily complete and, where that contract is an exhibit to the registration statement, each statement is qualified in all respects by the exhibit to which the reference relates. Copies of the registration statement, including the exhibits and schedules to the registration statement, may be examined without charge at the public reference room of the Securities and Exchange Commission, 450 Fifth Street, N.W. Room 1024, Washington, DC 20549. Information about the operation of the public reference room may be obtained by calling the SEC at 1-800-SEC-0300. Copies of all or a portion of the registration statement can be obtained from the public reference room of the SEC upon payment of prescribed fees. Our SEC filings, including our registration statement, are also available to you on the SEC Web site, www.sec.gov.

AS A RESULT OF THIS OFFERING, WE WILL BECOME SUBJECT TO THE INFORMATION AND REPORTING REQUIREMENTS OF THE EXCHANGE ACT, AND WILL FILE ANNUAL, QUARTERLY AND OTHER PERIODIC REPORTS AND PROXY STATEMENTS AND WILL MAKE AVAILABLE TO OUR STOCKHOLDERS QUARTERLY REPORTS FOR THE FIRST THREE QUARTERS OF EACH FISCAL YEAR CONTAINING UNAUDITED INTERIM FINANCIAL INFORMATION.

218

I NDEX TO FINANCIAL STATEMENTS


	Page
CyrusOne Inc. Pro Forma Condensed Combined Financial Statements:

Pro Forma Condensed Combined Balance Sheet as of September 30, 2012 (unaudited)		F-4

Pro Forma Condensed Combined Statement of Operations For the Three Months Ended September 30, 2012 (unaudited)		F-5

Pro Forma Condensed Combined Statement of Operations For the Nine Months Ended September 30, 2012 (unaudited)		F-6

Pro Forma Condensed Combined Statement of Operations For the Year Ended December 31, 2011 (unaudited)		F-7

Notes to Pro Forma Financial Statements		F-8

CyrusOne Inc. Financial Statement:

Report of Independent Registered Public Accounting Firm		F-11

Balance Sheet as of August 6, 2012		F-12

Notes to Financial Statement		F-13

Data Center Predecessor Condensed Combined Interim Financial Statements:

Condensed Combined Balance Sheets as of September 30, 2012 and December 31, 2011 (unaudited)		F-15

Condensed Combined Statements of Operations For the Three and Nine Months Ended September 30, 2012 and 2011 (unaudited)		F-16

Condensed Combined Statements of Cash Flows For the Nine Months Ended September 30, 2012 and 2011 (unaudited)		F-17

Notes to Combined Financial Statements		F-18

Data Center Predecessor Combined Financial Statements:

Report of Independent Registered Public Accounting Firm		F-24

Combined Balance Sheets as of December 31, 2011 and 2010		F-25

Combined Statements of Operations For the Years Ended December 31, 2011, 2010 and 2009		F-26

Combined Statements of Cash Flows For the Years Ended December 31, 2011, 2010 and 2009		F-27

Combined Statement of Divisional Control For the Years Ended December 31, 2011, 2010 and 2009		F-28

Notes to Combined Financial Statements		F-29

Supplemental Schedule—Schedule III—Real Estate Properties and Accumulated Depreciation		F-50

Cyrus Networks, LLC Condensed Interim Financial Statements:

Condensed Balance Sheet as of March 31, 2010 (unaudited)		F-52

Condensed Statements of Income For the Three Months Ended March 31, 2010 and 2009 (unaudited)		F-53

Condensed Statements of Member’s Equity For the Three Months Ended March 31, 2010 and 2009 (unaudited)		F-54

Condensed Statements of Cash Flows For the Three Months Ended March 31, 2010 and 2009 (unaudited)		F-55

Notes to Condensed Financial Statements		F-56

F-1


	Page

Cyrus Networks, LLC Financial Statements:

Report of Independent Registered Public Accounting Firm		F-60

Balance Sheet as of December 31, 2009		F-61

Statement of Income For the Year Ended December 31, 2009		F-62

Statement of Member’s Equity For the Year Ended December 31, 2009		F-63

Statement of Cash Flows For the Year Ended December 31, 2009		F-64

Notes to Financial Statements For the Year Ended December 31, 2009		F-65

Report of Independent Registered Public Accounting Firm		F-73

Balance Sheet as of December 31, 2008		F-74

Statement of Income For the Year Ended December 31, 2008		F-75

Statement of Member’s Equity For the Year Ended December 31, 2008		F-76

Statement of Cash Flows For the Year Ended December 31, 2008		F-77

Notes to Financial Statements For the Year Ended December 31, 2008		F-78

Report of Independent Registered Public Accounting Firm		F-87

Balance Sheet as of December 31, 2007		F-88

Statements of Operations For the Periods From January 1, 2007 Through July 3, 2007 and July 4, 2007 Through December 31, 2007		F-89

Statement of Member’s Equity For the Periods From January 1, 2007 Through July 3, 2007 and July 4, 2007 Through December 31, 2007		F-90

Statements of Cash Flows For the Periods From January 1, 2007 Through July 3, 2007 and July 4, 2007 Through December 31, 2007		F-91

Notes to Financial Statements For the Year Ended December 31, 2007		F-92

F-2

CyrusOne Inc.

Pro Forma Condensed Combined Financial Statements

(unaudited)

The accompanying pro forma condensed combined financial statements include the data center assets and operations of Cincinnati Bell Inc. and, unless the context otherwise requires, its consolidated subsidiaries (“CBI”) which comprise the data center business (the “Predecessor”). The unaudited pro forma condensed combined financial statements as of September 30, 2012, and for the three and nine months ended September 30, 2012 and for the year ended December 31, 2011, are derived from CyrusOne Inc. (the “Company” or “CyrusOne”) and the Predecessor’s combined financial statements and are presented as if this offering, the formation transactions and related financing transactions had all occurred on September 30, 2012 for the pro forma condensed combined balance sheet and as of January 1, 2011 for the pro forma condensed combined statement of operations.

Prior to the completion of this offering, subsidiaries of CBI (the “Contributors”) contributed to CyrusOne LP (the “operating partnership”) 100% of their interest in the properties that comprise CBI’s data center business and substantially all the other non-cash assets used in the business. In exchange for this contribution, CyrusOne LP assumed related Predecessor liabilities and issued to the Contributors an aggregate of operating partnership units, as adjusted to reflect a unit split immediately prior to the completion of this offering, which, after 12 months from the date of the Contributors’ initial acquisition of such operating partnership units, will be redeemable for cash or, at our option, exchangeable into our common stock on a one-to-one basis and have a total value of $ million, based upon the midpoint of the range set forth on the cover page of this prospectus.

Interests contributed by CBI’s subsidiaries in the formation transactions are recorded at historical cost, as this transaction is deemed a common control merger.

The Company was formed on July 31, 2012 and has had no corporate or business activity since its formation other than incurrence of costs to support this offering and the issuance of 100 shares of common stock at par value of $0.01. Upon completion of this offering, the Company will own directly or indirectly a % interest in the operating partnership and, as sole beneficial owner and sole trustee of CyrusOne GP, which is the sole general partner of the operating partnership, will have control over major decisions related to the sale or refinancing of the properties, acquisition of additional properties and day-to-day operations of the operating partnership and its subsidiaries.

The pro forma condensed combined financial statements are for informational purposes only and should be read in conjunction with the historical financial statements of the Predecessor, including the notes thereto, included elsewhere in this prospectus. The adjustments to the pro forma condensed combined financial statements are based on available information and assumptions that we consider reasonable. The pro forma condensed combined financial statements do not purport to represent our financial position or results of operations that would have actually occurred assuming this offering, the related financing transactions and the consummation of the formation transactions had all occurred on September 30, 2012 or on January 1, 2011, nor does the information purport to project our financial position or results of operations as of any future date or for any future periods.

F-3

CyrusOne Inc.

Pro Forma Condensed Combined Balance Sheet As of September 30, 2012

(unaudited)

(dollars in millions)


	(A) CyrusOne Historical		(B) Predecessor Historical			(C) Acquisition of 229 West Seventh Street Property			(D) Financing Transactions			(E) Receipt and Use of the Proceeds From Initial Public Offering and Related Transactions			Other Pro Forma Adjustments					Pro Forma
Assets
Investment in real estate:
Land	$	—	$	41.2		$	—		$	—		$	—		$	—				$	41.2
Buildings and improvements		—		666.5			—			—			—			—					666.5
Equipment		—		43.2			—			—			—			—					43.2
Construction in progress		—		56.6			—			—			—			—					56.6

Subtotal		—		807.5			—			—			—			—					807.5
Accumulated depreciation		—		(162.9	)		—			—			—			—					(162.9	)

Net investment in real estate		—		644.6			—			—			—			—					644.6
Cash and cash equivalents		—		3.2			—			26.3			278.0			—					307.5
Restricted cash		—		10.4			—			—			—			—					10.4
Goodwill		—		276.2			—			—			—			—					276.2
Intangible assets, net		—		106.7			—			—			—			—					106.7
Related party notes receivable		—		9.6			—			—			—			(9.6	)	(F	)		—
Other assets		6.9		40.1			2.8			18.7			(6.9	)		18.0		(G	)		79.6

Total assets	$	6.9	$	1,090.8		$	2.8		$	45.0		$	271.1		$	8.4				$	1,425.0

Liabilities and Stockholders’ Equity
Accounts payable and accrued expenses	$	—	$	41.2		$	—		$	—		$	—		$	—				$	41.2
Deferred revenue		—		52.1			—			—			—			—					52.1
Capital lease obligations		—		38.0			—			—			—			—					38.0
Related party notes payable		6.9		612.1			18.0			(480.0	)		—			(157.0	)	(F	)		—
Third-party debt		—		—			—			525.0			—			—					525.0
Other financing arrangements		—		49.2			—			—			—			—					49.2
Other liabilities		—		0.7			—			—			—			(0.5	)	(G	)		0.2

Total liabilities		6.9		793.3			18.0			45.0			—			(157.5	)				705.7

Divisional control		—		297.5			(15.2	)		—			—			(282.3	)	(H	)		—
Common stock		—		—			—			—			—			—					—
Paid in capital		—		—			—			—			271.1			—					271.1
Noncontrolling interests		—		—			—			—			—			448.2		(H	)		448.2

Total divisional control/stockholders’ equity		—		297.5			(15.2	)		—			271.1			165.9					719.3

Total liabilities and stockholders’ equity	$	6.9	$	1,090.8		$	2.8		$	45.0		$	271.1		$	8.4				$	1,425.0

The accompanying notes are an integral part of the financial statements.

F-4

CyrusOne Inc.

Pro Forma Condensed Combined Statement of Operations

For the Three Months Ended September 30, 2012

(unaudited)

(dollars in millions)


	(AA) Predecessor Historical			(BB) Financing Transactions		Other Pro Forma Adjustments					(II) Non- controlling Interests		Pro Forma
Revenue	$	56.7		$	—	$	—				$	—	$	56.7
Costs and expenses:
Property operating expenses		20.0			—		0.1		(CC	)		—		20.1
Sales and marketing		2.1			—		0.4		(DD	)		—		2.5
General and administrative		5.3			—		0.1		(EE	)		—		5.4
Depreciation and amortization		18.8			—		—					—		18.8
Transaction costs		0.6			—		—					—		0.6
Management fees charged by CBI		0.9			—		(0.9	)	(FF	)		—		—
Loss on sale of receivables to CBF		1.3			—		(1.3	)	(GG	)		—		—

Total costs and expenses		49.0			—		(1.6	)				—		47.4

Operating income		7.7			—		1.6					—		9.3
Interest expense		11.3			—		—					—		11.3

(Loss) income before income taxes		(3.6	)		—		1.6					—		(2.0	)
Income tax (benefit) expense		(0.7	)		—		0.9		(HH	)		—		0.2

(Loss) income from continuing operations		(2.9	)		—		0.7					—		(2.2	)
Gain on sale of real estate improvements		(0.1	)		—		—					—		(0.1	)

(Loss) income before noncontrolling interests		(2.8	)		—		0.7					—		(2.1	)
Noncontrolling interests		—			—		—

Net (loss) income	$	(2.8	)	$	—	$	0.7				$		$

The accompanying notes are an integral part of the financial statements.

F-5

CyrusOne Inc.

Pro Forma Condensed Combined Statement of Operations For the Nine Months Ended September 30, 2012

(unaudited)

(dollars in millions)


	(AA) Predecessor Historical			(BB) Financing Transactions		Other Pro Forma Adjustments					(II) Non- controlling Interests		Pro Forma
Revenue	$	162.8		$	—	$	—				$	—	$	162.8
Costs and expenses:
Property operating expenses		55.3			—		0.3		(CC	)		—		55.6
Sales and marketing		5.8			—		1.1		(DD	)		—		6.9
General and administrative		15.4			—		1.7		(EE	)		—		17.1
Depreciation and amortization		52.9			—		—					—		52.9
Transaction costs		1.3			—		—					—		1.3
Management fees charged by CBI		2.1			—		(2.1	)	(FF	)		—		—
Loss on sale of receivables to CBF		3.7			—		(3.7	)	(GG	)		—		—
Asset impairments		13.3			—		—					—		13.3

Total costs and expenses		149.8			—		(2.7	)				—		147.1

Operating income		13.0			—		2.7					—		15.7
Interest expense		31.2			—		—					—		31.2

(Loss) income before income taxes		(18.2	)		—		2.7					—		(15.5	)
Income tax (benefit) expense		(4.7	)		—		5.2		(HH	)		—		0.5

(Loss) income from continuing operations		(13.5	)		—		(2.5	)				—		(16.0	)
Gain on sale of real estate improvements		(0.1	)		—		—					—		(0.1	)

(Loss) income before noncontrolling interests		(13.4	)		—		(2.5	)				—		(15.9	)
Noncontrolling interests		—			—		—

Net (loss) income	$	(13.4	)	$	—	$	(2.5	)			$		$

The accompanying notes are an integral part of the financial statements.

F-6

CyrusOne Inc.

Pro Forma Condensed Combined Statement of Operations For the Year Ended December 31, 2011

(unaudited)

(dollars in millions)


	(AA) Predecessor Historical		(BB) Financing Transactions			Other Pro Forma Adjustments					(II) Non- controlling Interests		Pro Forma
Revenue	$	181.7	$	—		$	—				$	—	$	181.7
Costs and expenses
Property operating expenses		58.2		—			0.3		(CC	)		—		58.5
Sales and marketing		9.1		—			1.5		(DD	)		—		10.6
General and administrative		12.5		—			3.8		(EE	)		—		16.3
Depreciation and amortization		55.5		—			—					—		55.5
Acquisition costs		2.6		—			—					—		2.6
Management fees charged by CBI		2.3		—			(2.3	)	(FF	)		—		—
Loss on sale of receivables to CBF		3.5		—			(3.5	)	(GG	)		—		—

Total costs and expenses		143.7		—			(0.2	)				—		143.5

Operating income (loss)		38.0		—			0.2					—		38.2
Interest expense		32.9		6.7			—					—		39.6
Loss on extinguishment of debt		1.4		—			—					—		1.4

Income (loss) before income taxes		3.7		(6.7	)		0.2					—		(2.8	)
Income tax expense		2.2		—			(1.6	)	(HH	)		—		0.6

Income (loss) before noncontrolling interests		1.5		(6.7	)		1.8					—		(3.4	)
Noncontrolling interests		—		—			—

Net income (loss)	$	1.5	$	(6.7	)	$	1.8				$		$

The accompanying notes are an integral part of the financial statements.

F-7

NOTES TO PRO FORMA FINANCIAL STATEMENTS

1. Adjustments to the Pro Forma Combined Balance Sheet as of September 30, 2012

The adjustments to the pro forma condensed combined balance sheet as of September 30, 2012 are as follows:

(A) Reflects the balance sheet of CyrusOne on September 30, 2012. CyrusOne was organized in the state of Maryland on July 31, 2012 and issued 100 shares of its common stock to CBI in connection with its initial capitalization. CyrusOne intends to elect to be taxed and to operate in a manner that will allow it to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2012. In order to maintain its qualification as a REIT, CyrusOne plans to distribute at least 90% of its taxable income in the form of qualifying distributions to its stockholders.

As of September 30, 2012, CyrusOne had not commenced operations, nor had it entered into any contracts to acquire properties, other than the agreements entered into with the Contributors, as described below. CyrusOne will contribute proceeds from the offering to CyrusOne LP for operating partnership units. CyrusOne is the sole beneficial owner and sole trustee of CyrusOne GP, which is the sole general partner of CyrusOne LP and plans to conduct substantially all of its business through CyrusOne LP following the consummation of this offering.

In connection with the offering, CyrusOne incurred offering costs through November 20, 2012, the closing date of the formation transactions, which were paid by CBI. Concurrently with the completion of the offering, CyrusOne has agreed to issue shares of its common stock to CBI in exchange for the satisfaction and discharge of intercompany indebtedness related to CBI’s payment of such expenses.

(B) Reflects the Predecessor’s historical condensed combined balance sheet as of September 30, 2012. Pursuant to a contribution agreement between the Contributors and CyrusOne LP, CyrusOne LP received a contribution of interests in certain of CBI’s properties in exchange for the assumption of certain liabilities and the issuance of limited partnership interests in CyrusOne LP.

(C) Reflects the issuance of a promissory note to Cincinnati Bell Telephone Company LLC for the acquisition of 229 West Seventh Street and to fund certain building improvements. This property has been presented as owned in the Predecessor’s historical financial statements.

(D) Reflects the issuance of $525.0 million of senior notes and a $225 million revolving credit facility by CyrusOne LP, net of financing costs of $18.7 million. Approximately $480 million of the proceeds of this senior notes issuance were utilized to partially repay related party notes payable with CBI. Debt issuance costs will be amortized over the term of the senior notes and revolving credit facility using the interest method.


(dollars in millions)
Proceeds from senior notes issuance	$	525.0
Less issuance costs:
Financing costs		(13.9	)

Net cash proceeds		511.1
Proceeds used to pay revolving credit facility issuance costs		(4.8	)
Repayment of related party notes		(480.0	)

Increase in cash and cash equivalents	$	26.3

(E) Reflects the sale of million shares of common stock in this public offering at the initial offering price of $ per share:


(dollars in millions)
Proceeds from this offering	$	300.0
Less costs of offering paid at closing		(22.0	)

Net cash proceeds		278.0
Less costs of offering incurred prior to September 30, 2012		(6.9	)

Increase in paid in capital	$	271.1

F-8

(F) Reflects the elimination of related party receivables and notes payable which will not be contributed to CyrusOne LP.

(G) Reflects trade receivables of $25.7 million, net of allowance for doubtful accounts, transferred to CyrusOne upon termination of the Predecessor’s participation in CBI’s accounts receivable securitization program. Also reflects the elimination of deferred tax assets and tax liabilities of $7.7 million and $0.5 million, respectively, which were not contributed to CyrusOne LP.

(H) Reflects the recording of noncontrolling interests in CyrusOne LP as a result of an aggregate of operating partnership units issued to the Contributors of the properties pursuant to the contribution agreements. In exchange for the properties contributed pursuant to the contribution agreements, CyrusOne LP issued to the Contributors an aggregate of operating partnership units, which will be redeemable by the holder for cash or, at our option, exchangeable into our common stock on a one-to-one basis and have a total value of $ million based upon the midpoint of the range set forth on the cover of this prospectus. The value of the operating partnership units that CyrusOne LP gave for contributed property interests and other assets will increase or decrease based on the initial public offering price of CyrusOne’s common stock in the offering. The noncontrolling interests are classified as permanent equity within the pro forma condensed combined balance sheet.

2. Adjustments to the Pro Forma Condensed Combined Statement of Operations

Adjustments to the pro forma condensed combined statement of operations for the three and nine months ended September 30, 2012 and the year ended December 31, 2011, are as follows:

(AA) Reflects the Predecessor’s historical condensed combined statement of operations for the three and nine months ended September 30, 2012 and the year ended December 31, 2011.

(BB) Reflects pro forma adjustments to interest expense as if the related financing transactions had occurred as of January 1, 2011. Interest expense on related party notes payable has been eliminated because such notes have been repaid or have not been contributed to the operating partnership. Interest expense on the senior notes has been calculated by applying an interest rate of 6.375%. Amortization of deferred financing costs has been calculated using a 10 year term on the senior notes and a five year term on the revolving credit facility. Revolver and letter of credit fees have been estimated assuming that approximately $20 million of letters of credit are outstanding and no borrowings on the revolver are outstanding. Fees on the revolver and letters of credit are estimated to approximate 50 and 350 basis points, respectively. Capitalized interest has been adjusted to the interest rate on the senior notes for all periods presented. The adjustments to interest expense set forth below are based upon our estimates and assumptions that we believe to be reasonable at this time and are subject to change in the future.


(dollars in millions)	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Year Ended December 31, 2011
Interest expense on retired related party notes	$	(9.3	)	$	(27.7	)	$	(30.1	)
Interest expense on the senior notes		8.4			25.1			33.5
Financing costs		1.0			3.1			4.0
Capitalized interest		(0.1	)		(0.5	)		(0.7	)

Net adjustment to interest expense	$	—		$	—		$	6.7

(CC) Reflects compensation expense for restricted stock granted to operations employees in connection with the offering.

(DD) Reflects compensation expense for restricted stock and performance units granted to sales and marketing employees in connection with the offering. Also includes bad debt expense that CyrusOne would incur as a standalone company. Effective October 1, 2012, CyrusOne terminated its participation in CBI’s accounts receivable securitization program.

F-9

(EE) Reflects compensation expense for restricted stock and performance units granted to the board of directors, senior management and other administrative employees in connection with the offering.

The pro forma financial statements may not be indicative of CyrusOne’s future results of operations as additional general and administrative costs will be incurred to operate as a standalone company. Management estimates these costs will approximate $5.0 million on an annual basis exclusive of stock compensation costs. These costs will consist of compensation to hire personnel to perform functions previously performed by CBI, board of directors fees, audit fees and other general administrative costs. These costs have been excluded from the pro forma statement of operations as they represent a forward-looking estimate.

(FF) Reflects the elimination of the management fees recorded by the Predecessor for management compensation and certain functions, such as legal, treasury, tax, payroll and human resources, which had been performed by CBI. As a standalone company, such management fees will not be incurred. Rather, these costs will be replaced with direct general and administrative costs as CyrusOne assumes these functions.

(GG) Reflects the elimination of loss on sale of receivables to Cincinnati Bell Funding LLC, a subsidiary of CBI (“CBF”). Effective October 1, 2012, CyrusOne terminated its participation in this accounts receivable securitization program.

(HH) CyrusOne expects to qualify as a REIT and thereby generally be exempt from U.S. federal income taxes as a result of its eligibility for a deduction for dividends that it pays, beginning with its initial taxable year ending December 31, 2012. As a standalone company, CyrusOne expects it will continue to be subject to certain U.S. federal, state, local and foreign income and other taxes, as well as subject to tax on taxable income earned by its taxable REIT subsidiary. The tax provision as a standalone company has been estimated using statutory rates applied to forecasted pre-tax income generated by each tax-paying entity. The following table shows the components of the pro forma adjustment:


(dollars in millions)	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Year Ended December 31, 2011
Income tax (benefit) expense per historical financial statements	$	(0.7	)	$	(4.7	)	$	2.2
Pro forma adjustment		0.9			5.2			(1.6	)

Pro forma income tax expense (benefit)	$	0.2		$	0.5		$	0.6

(II) Reflects the non-controlling interests in the earnings of CyrusOne LP assuming that the noncontrolling interest represents % of the economic interests of CyrusOne LP:


(dollars in millions)	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012			Year Ended December 31, 2011
Loss before noncontrolling interests		$(2.1	)		$(15.9	)		$(3.4	)
Noncontrolling interests percentage			%			%			%

Noncontrolling interests share of net loss		$			$			$

F-10

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of CyrusOne Inc.

We have audited the accompanying balance sheet of CyrusOne Inc. (the “Company”), as of August 6, 2012. This financial statement is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion . An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such financial statement presents fairly, in all material respects, the financial position of CyrusOne Inc. at August 6, 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Cincinnati, Ohio

August 7, 2012

F-11

CyrusOne Inc.

BALANCE SHEET

As of August 6, 2012

(dollars in millions)


Assets

Cash and cash equivalents	$	0.1
Deferred offering costs		4.5

Total assets	$	4.6


Liabilities and Stockholder’s Equity

Due to affiliates	$	4.6
Stockholder’s equity
Common shares, $.01 par value, 1,000 shares authorized, 100 shares issued and outstanding		—
Paid in capital		—

Total liabilities and stockholder’s equity	$	4.6

The accompanying notes are an integral part of the financial statements.

F-12

NOTES TO FINANCIAL STATEMENT

1. Organization and Description of Business

CyrusOne Inc. (“CyrusOne”) was organized in the state of Maryland on July 31, 2012, and issued 100 shares of its common stock to CBI for $1,000 in connection with its initial capitalization. CyrusOne expects to file a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) with respect to a proposed public offering of common stock (the “offering”).

CyrusOne is the sole beneficial owner and sole trustee of CyrusOne GP, which is the sole general partner of CyrusOne LP, which was formed on July 31, 2012 in anticipation of the offering. Upon completion of the offering, CyrusOne, through CyrusOne LP, will continue to operate and expand the business of the Predecessor. The “Predecessor” is not a legal entity; rather it is a combination of the data center operations of Cincinnati Bell Inc. and, unless the context otherwise requires, its consolidated subsidiaries (“CBI”). The Predecessor is engaged in the business of providing data center colocation services to businesses. CyrusOne and CyrusOne LP’s operations will commence upon completion of the offering.

CyrusOne and CyrusOne LP, together with the owners of the Predecessor, will engage in certain formation transactions. The formation transactions are designed to (i) continue the operations of the Predecessor, (ii) enable CyrusOne to raise additional capital to repay certain related party debt to CBI, (iii) fund operating costs, capital expenditures and working capital, (iv) provide a funding vehicle for potential business acquisitions and (v) enable CyrusOne to comply with requirements under the federal income tax laws and regulations related to real estate investment trusts (“REIT”).

CyrusOne’s operations will be carried on primarily through CyrusOne LP, the operating partnership. It is CyrusOne’s intent to elect the status of and qualify as a REIT under Section 856 through 860 of the Internal Revenue Code of 1986, as amended, subsequent to the proposed offering.

Pursuant to a contribution agreement among the owners of the businesses comprising the Predecessor and CyrusOne LP, CyrusOne LP will receive a contribution of interests in certain of CBI’s properties in exchange for limited partnership interests in CyrusOne LP. The value of the operating partnership units that CyrusOne LP will give for contributed property interests and other assets will increase or decrease based on the initial public offering price of CyrusOne’s common stock in the offering.

CyrusOne has committed to purchase a portion of CyrusOne LP’s interests from CBI following the completion of the offering. The purchase price is expected to be equal to the value of CyrusOne LP’s units based on the initial public offering price of CyrusOne’s stock, net of underwriting discounts and commissions and financial advisory fees.

2. Basis of Presentation and Accounting Policies

Basis of Presentation— The accompanying financial statement of CyrusOne has been prepared pursuant to accounting principles generally accepted in the United States of America and in accordance with the rules and regulations of the SEC. In the opinion of management, this financial statement includes all adjustments necessary for a fair presentation of its financial position.

Use of Estimates —Preparation of the financial statement in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statement and accompanying notes. Actual results may differ from these estimates and assumptions.

F-13

3. Income Taxes

As a REIT, CyrusOne will be permitted to deduct dividends paid to its stockholders, eliminating the federal taxation of income represented by such dividends at the CyrusOne level. REITs are subject to a number of organizational and operational requirements. If CyrusOne fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates.

To maintain REIT status, we will dividend a minimum of 90% of CyrusOne’s taxable income. Any taxable income prior to the completion of the offering will be the responsibility of CBI. CyrusOne is subject to statutory tax requirements of the locations in which it conducts its business. State and local income taxes will be accrued as deemed required in the best judgment of management based on analysis and interpretation of respective tax laws.

We will elect to treat one of our subsidiaries as a taxable REIT subsidiary (“TRS”). Certain activities that we undertake must be conducted by a TRS, such as services for our customers that would otherwise be impermissible for us to perform and holding assets that we cannot hold directly. A TRS is subject to corporate level federal and state income taxes.

4. Deferred Offering Costs

In connection with the offering, CyrusOne has incurred legal, accounting and related costs. Such costs will be deducted from the gross proceeds of the offering.

F-14

Data Center Predecessor

CONDENSED COMBINED BALANCE SHEETS

(dollars in millions)

(unaudited)


	As of September 30, 2012			As of December 31, 2011
Assets
Investment in real estate:
Land	$	41.2		$	26.5
Buildings and improvements		666.5			568.6
Equipment		43.2			16.1
Construction in progress		56.6			49.0

Subtotal		807.5			660.2
Accumulated depreciation		(162.9	)		(131.2	)

Net investment in real estate		644.6			529.0

Cash and cash equivalents		3.2			0.6
Restricted cash		10.4			—
Goodwill		276.2			276.2
Intangible assets, net		106.7			120.7
Related party notes receivable		9.6			—
Other assets		40.1			28.2

Total assets	$	1,090.8		$	954.7

Liabilities and Divisional Control
Accounts payable and accrued expenses	$	41.2		$	22.2
Deferred revenue		52.1			49.0
Capital lease obligations		38.0			42.9
Related party notes payable		612.1			480.2
Other financing arrangements		49.2			48.2
Other liabilities		0.7			0.7

Total liabilities		793.3			643.2
Divisional control		297.5			311.5

Total liabilities and divisional control	$	1,090.8		$	954.7

The accompanying notes are an integral part of the combined financial statements.

F-15

Data Center Predecessor

CONDENSED COMBINED STATEMENTS OF OPERATIONS

(dollars in millions)

(unaudited)


	For the Three Months Ended September 30,					For the Nine Months Ended September 30
	2012			2011		2012			2011
Revenue	$	56.7		$	46.5	$	162.8		$	133.7
Costs and expenses:
Property operating expenses		20.0			15.5		55.3			43.3
Sales and marketing		2.1			2.6		5.8			7.1
General and administrative		5.3			3.7		15.4			8.5
Depreciation and amortization		18.8			13.8		52.9			40.0
Transaction costs		0.6			—		1.3			2.6
Management fees charged by CBI		0.9			0.6		2.1			1.9
Loss on sale of receivables to CBF		1.3			1.2		3.7			2.3
Asset impairments		—			—		13.3			—

Total costs and expenses		49.0			37.4		149.8			105.7

Operating income		7.7			9.1		13.0			28.0
Interest expense		11.3			7.9		31.2			24.1

(Loss) income before income taxes		(3.6	)		1.2		(18.2	)		3.9
Income tax (benefit) expense		(0.7	)		0.7		(4.7	)		2.1

(Loss) income from continuing operations		(2.9	)		0.5		(13.5	)		1.8
Gain on sale of real estate improvements		(0.1	)		—		(0.1	)		—

Net (loss) income	$	(2.8	)	$	0.5	$	(13.4	)	$	1.8

The accompanying notes are an integral part of the combined financial statements.

F-16

Data Center Predecessor

CONDENSED COMBINED STATEMENTS OF CASH FLOWS

(dollars in millions)

(unaudited)


	For the Nine Months Ended September 30,
	2012			2011
Cash flows from operating activities
Net (loss)/income	$	(13.4	)	$	1.8
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		52.9			40.0
Net loss on sale of receivables and sale or disposal of other assets		3.4			2.3
Asset impairments		13.3			—
Deferred income tax expense, including valuation allowance change		(5.3	)		1.6
Changes in operating assets and liabilities:
Increase in other assets		(10.1	)		(0.9	)
(Decrease)/increase in accounts payable and accrued expenses		(1.2	)		0.9
Increase in deferred revenue		3.2			2.4
Increase in other liabilities		—			0.1

Net cash provided by operating activities		42.8			48.2

Cash flows from investing activities
Capital expenditures – acquisitions of real estate		(25.4	)		(14.8	)
Capital expenditures – other		(121.0	)		(61.5	)
Increase in restricted cash		(11.1	)		—
Release of restricted cash		0.7			—
Advances (to) from affiliates		(9.6	)		11.6
Proceeds from sale of assets		0.2			—

Net cash used in investing activities		(166.2	)		(64.7	)

Cash flows from financing activities
Borrowings from affiliates, net		131.9			21.7
Payments on capital lease obligations		(5.2	)		(5.5	)
Distributions to parent, net		(0.7	)		(3.6	)

Net cash provided by financing activities		126.0			12.6

Net increase (decrease) in cash and cash equivalents		2.6			(3.9	)
Cash and cash equivalents at beginning of period		0.6			4.9

Cash and cash equivalents at end of period	$	3.2		$	1.0

Supplemental disclosures
Cash paid for interest	$	32.9		$	23.4
Noncash investing and financing transactions:
Acquisition of property by assuming debt and other noncurrent liabilities		—			31.3
Acquisition of property on account		26.4			—

The accompanying notes are an integral part of the combined financial statements.

F-17

DATA CENTER PREDECESSOR

NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)

1. Description of Business

The Data Center Predecessor (the “Predecessor”, “we” or “our”) is an owner, operator and developer of enterprise-class, carrier neutral data centers. Our customers operate in a number of industries, including energy, oil and gas, mining, medical, technology, finance and consumer goods and services. We currently operate 23 data centers located in the United States, United Kingdom and Singapore. A large portion of our revenues are generated by data centers located in Texas and Ohio. An economic downtown or natural disaster occurring in these operating territories could have a disproportionate effect on our business, financial condition, results of operations and cash flows compared to similar companies operating in different geographic areas.

The Predecessor is not a legal entity or a combination of legal entities. The accompanying combined financial statements of the Predecessor represent the data center assets and operations owned by Cincinnati Bell Inc. and, unless the context otherwise requires, its consolidated subsidiaries (“CBI”) which historically have been maintained in various legal entities, some of which had significant unrelated business activities.

The Predecessor’s historical financial statements have been “carved out” of CBI’s consolidated financial statements and reflect significant assumptions and allocations. The financial statements do not fully reflect what the Predecessor’s financial position, results of operations and cash flows would have been had the Predecessor been a stand-alone company during the periods presented. As a result, historical financial information is not necessarily indicative of the Predecessor’s future results of operations, financial position and cash flows.

The Predecessor’s historical financial statements were prepared using CBI’s historical basis in the assets and liabilities of its data center business. The Predecessor’s historical financial statements include all revenues, costs, assets and liabilities directly attributable to the data center business. In addition, certain expenses reflected in the financial statements include allocations of corporate expenses from CBI, which in the opinion of management are reasonable.

Related party notes receivable (payable) in the accompanying combined financial statements reflect contractual amounts due from/to CBI or other affiliated entities pursuant to a cash management variable rate note and a long-term fixed rate note. All intercompany transactions have been eliminated from the accompanying financial statements.

CyrusOne Inc. (“CyrusOne”), CyrusOne GP, of which CyrusOne is the sole beneficial owner and sole trustee, and its limited partnership, CyrusOne LP (the “operating partnership”), of which CyrusOne GP is the general partner, were formed on July 31, 2012. CyrusOne anticipates selling its common stock through an initial public offering (the “offering”). Prior to this offering, CyrusOne and the operating partnership will engage in certain formation transactions designed to (i) continue the operations of the Predecessor, (ii) enable CyrusOne to raise necessary capital to repay certain debt to CBI, a related party, (iii) fund operating costs, capital expenditures and working capital, (iv) provide a funding vehicle for potential business acquisitions, and (v) enable CyrusOne to comply with the requirements under the federal income tax laws and regulations related to real estate investment trusts (“REIT”).

CyrusOne’s operations will be conducted primarily through the operating partnership. It is management’s intent that CyrusOne will elect the status of and qualify as a REIT under Sections 856 and 860 of the Internal Revenue Code of 1986, as amended, subsequent to the proposed offering. Pursuant to a contribution agreement among CBI and the operating partnership, the operating partnership will receive a contribution of interests in the real estate properties and certain other assets from CBI in exchange for limited partnership interests and the assumption of certain liabilities. The Predecessor will contribute all its assets and liabilities, except for certain related party notes receivable and payable and deferred tax assets and liabilities.

F-18

2. Basis of Presentation and Significant Accounting Policies

The condensed combined financial statements of the Predecessor have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in the opinion of management, include all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for each period presented.

The adjustments referred to above are of a normal and recurring nature. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules and regulations for interim reporting.

The condensed combined balance sheet as of December 31, 2011 was derived from audited financial statements, included in this prospectus, but does not include all disclosures required by U.S. GAAP. These condensed combined financial statements should be read in conjunction with the Predecessor’s audited combined financial statements as of December 31, 2011 and 2010 and for the three years ended December 31, 2011 included within this prospectus. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results expected for the full year or any other interim period.

Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions are based on management’s best knowledge of current events and actions that the Predecessor may undertake in the future. Actual results may differ from these estimates and assumptions.

3. Recently Issued Accounting Standards

In December 2011, the Financial Accounting Standards Board (“FASB”) amended the guidance in Accounting Standards Codification (“ASC”) 210 related to disclosures about offsetting assets and liabilities. The amendments would require an entity to disclose information about financial instruments and derivative instruments that are either offset subject to ASC 210-20-45 or ASC 815-10-45 or subject to enforceable master netting arrangements or similar arrangements. We will be required to adopt this guidance beginning with our interim financial statements for the three months ended March 31, 2013. The adoption of this accounting standard is not expected to have a material impact on our financial statements.

In September 2011, the FASB amended the guidance in ASC 350-20 on testing goodwill for impairment. Under the revised guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before calculating the fair value of the reporting unit. If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test would be required. We adopted this guidance beginning with interim financial statements for the three months ended March 31, 2012. The adoption of this accounting standard did not have a material impact on our financial statements.

In June 2011, the FASB issued new guidance under ASC 220 regarding the presentation of comprehensive income in financial statements. An entity has the option to present the components of net income and other comprehensive income either in a single continuous statement or in two separate but consecutive statements. We adopted this guidance beginning with our interim financial statements for the three months ended March 31, 2012. The adoption of this accounting standard did not have a material impact on our financial statements, as we do not have any significant differences between net income and comprehensive income; rather it prescribes how we will present other comprehensive income in our financial statements. Separately, in December 2011, the FASB amended a portion of this guidance to defer proposed changes to the presentation of reclassification adjustments.

F-19

4. Investment in Real Estate

A rollforward of our gross investment in real estate follows:


(dollars in millions)	Nine Months Ended September 30, 2012
Beginning of period balance	$	660.2

Additions		164.6
Impairments		(17.1	)
Disposals		(0.2	)

End of period balance	$	807.5

For the first nine months ended September 30, 2012, buildings and improvements additions were $115.2 million consisting primarily of expansions at Metropolis Drive (Austin 2), Westway Park Blvd (Houston West) and Frankford Road (Carrollton). For the first nine months of 2012, the historical cost basis of buildings and improvements impairments was $17.1 million related to data center assets primarily associated with our GramTel acquisition. Disposals associated with buildings and improvements were $0.2 million.

In January 2012, the Predecessor purchased a 30-acre parcel of land and a 659,340 square foot building in Carrollton, Texas (Dallas metro area) for $23.4 million. Land was allocated $16.1 million of the purchase price and the remaining $7.3 million was associated with construction in progress, as CyrusOne is developing this building into an operating data center.

In July 2012, the Predecessor purchased six acres of land adjacent to the Westway Park (Houston West) facility, for $2.0 million. Concurrent with this purchase, the Predecessor committed to fund construction of a 157,000 square foot building at a cost of $11.1 million. The Predecessor deposited these funds into an escrow account to fund construction and $0.7 million was drawn to fund construction costs as of September 30, 2012. This account is presented as restricted cash in the accompanying condensed combined balance sheet. Upon completion of construction, this building will be developed into a data center.

5. Impairment of Long-Lived & Intangible Assets

During the second quarter of 2012, management identified impairment indicators for a customer relationship intangible and property and equipment primarily related to our GramTel acquisition. In the nine months ended September 30, 2012, asset impairments of $13.3 million were recognized on these assets. Management engaged a third-party valuation specialist to assist in the Company’s estimation of the fair value of these assets. Management estimated the fair value of the customer relationship intangible at $2.8 million, resulting in an impairment loss of $1.5 million. Management estimated the fair value of other long-lived assets, primarily leasehold improvements, at $2.4 million, resulting in an impairment loss of $11.8 million.

6. Debt and Other Financing Arrangements

The following table summarizes the components of debt and other financing arrangements presented in the accompanying financial statements:


(dollars in millions)	September 30, 2012		December 31, 2011
Capital lease obligations	$	38.0	$	42.9
Related party note due on demand		212.1		80.2
Related party note due 2018		400.0		400.0
Other financing arrangements		49.2		48.2

Total	$	699.3	$	571.3

F-20

The following summarizes the key terms of the Predecessor’s long-term debt:

Capital lease obligations —The Predecessor uses leasing as a source of financing for certain of its data center facilities and related equipment.

Related party note due on demand —The Predecessor participates in CBI’s centralized cash management program. Borrowings under this arrangement are due upon demand. All advances/borrowings bear interest at the average 30-day Eurodollar rate for the calendar month plus the applicable credit spread for Eurodollar rate borrowings charged for CBI’s revolving line of credit. For the three and nine months ended September 30, 2012, the average annual interest rate was approximately 5%.

Related party note due 2018 —On December 31, 2010, the Predecessor issued a note to CBI, an affiliated entity, for $400 million. This note bears interest at 7.25% and matures in 2018. Interest is settled on a monthly basis through CBI’s centralized cash management system. The Predecessor may prepay this note in whole or in part at any time at par. Events of default consist of nonpayment of amounts due, a bankruptcy filing, foreclosure proceedings, the filing of a lien against all or substantially all of the borrower’s assets, or a default on other indebtedness greater than $100,000 which accelerates the maturity date of such borrowings.

Other financing arrangements —Other financing arrangements represent leases of real estate in which we are involved in the construction of structural improvements to develop buildings into data centers. When we bear substantially all the construction period risk, such as managing or funding construction, we are deemed to be the accounting owner of the leased property, and, at the lease inception date, we are required to record at fair value the property and associated liability on our balance sheet. These transactions generally do not qualify for sale-leaseback accounting due to our continued involvement in these data center operations.

7. Fair Value of Financial Instruments and Fair Value Measurements

The fair value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses approximates carrying value because of the short-term nature of these instruments. The carrying value and fair value of the Predecessor’s other financial instruments are as follows:


	September 30, 2012				December 31, 2011
(dollars in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Related party note due on demand	$	212.1	$	212.1	$	80.2	$	80.2
Related party note due 2018		400.0		427.3		400.0		415.1
Other financing arrangements		49.2		48.5		48.2		47.5

The fair value of the related party note due on demand is equal to its carrying value as it bears interest at a current market rate. The fair value of long-term debt and other financing arrangements was calculated using a discounted cash flow model that incorporates current borrowing rates for obligations of similar duration. This fair value measurement is considered Level 3 of the fair value hierarchy.

Non-Recurring Fair Value Measurements

Certain long-lived assets, intangibles, and goodwill are required to be measured at fair value on a non-recurring basis subsequent to their initial measurement. These non-recurring fair value measurements generally occur when evidence of impairment has occurred.

F-21

As of June 30, 2012, the following assets were measured at fair value:


			Fair Value Measurements Using
(dollars in millions)	June 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Impairment Losses
Customer relationship intangible	$	2.8	$	—	$	—	$	2.8	$	(1.5	)
Buildings and improvements		2.4		—		—		2.4		(11.8	)

Impairment losses									$	(13.3	)

In the second quarter of 2012, the customer relationship intangible obtained in the GramTel acquisition was deemed impaired. The fair value of this asset was estimated at $2.8 million, resulting in an impairment loss of $1.5 million. The fair value of this asset was estimated by management with the assistance of a third-party valuation specialist. Management estimated the fair value using the income approach, which discounted the expected future earnings attributable to current customer contracts, and includes estimates of future expenses, capital expenditures and an appropriate discount rate. This fair value measurement is considered a Level 3 measurement due to the significance of its unobservable inputs.

In addition, leasehold improvements and other property at data centers acquired with GramTel were deemed impaired. Prior to recognizing the impairment, these assets had a net book value of $14.2 million as of June 30, 2012. The fair value of the assets was written down to the estimated fair value of $2.4 million, resulting in an impairment loss of $11.8 million. The fair value of these assets was estimated by management with the assistance of a third-party valuation specialist. Management estimated the fair value using an income approach. Projected discounted cash flows included estimates regarding future revenues and expenses, projected capital expenditures and an appropriate discount rate. This fair value measurement is considered a Level 3 measurement due to the significance of its unobservable inputs.

8. Commitment and Contingencies

Guarantee of CBI Debt

As of September 30, 2012, CBI had $2.2 billion of unsecured long-term debt which has been guaranteed by the following CBI subsidiaries: CyrusOne Inc., CyrusOne Foreign Holdings LLC, GramTel Inc., Cincinnati Bell Entertainment, Inc., Cincinnati Bell Any Distance, Inc., Cincinnati Bell Telecommunications Services LLC, Cincinnati Bell Wireless LLC, CBTS Software LLC, Cincinnati Bell Shared Services LLC, Cincinnati Bell Technology Solutions, Inc., Cincinnati Bell Any Distance of Virginia LLC, and eVolve Business Solutions LLC. Effective October 15, 2012, GramTel Inc. was merged into CyrusOne Inc.

CBI also has a corporate credit facility which is guaranteed by the same subsidiaries referenced above. These guarantees are full and unconditional and joint and several. In certain customary circumstances, a subsidiary may be released from its guarantee obligation. These circumstances are as follows:

•

upon the sale of all of the capital stock of a subsidiary;

•

if CBI designates the subsidiary as an unrestricted subsidiary under the terms of its indentures; or

•

if the subsidiary is released as a guarantor from CBI’s credit facility.

In the event that CBI defaults on any of the aforementioned obligations prior to release of these guarantees, the CBI subsidiaries whose operations comprise the Predecessor may be called upon to repay all or a portion of the unpaid amounts. While the maximum amount that such subsidiaries could be required to pay pursuant to its guarantees is $2.2 billion, the actual amount that such subsidiaries may be required to repay pursuant to its guarantees is not determinable. The amount payable would be determined based upon the amount of CBI’s unpaid principal and interest as well as the amounts that other guarantors could be required to pay. As of the date of this report, CBI was current on all its debt service obligations. The guarantees of the CBI subsidiaries whose operations comprise the Predecessor will expire when such subsidiaries have been released from their guarantee obligation or when these notes have been repaid in full.

F-22

Contingencies

The Predecessor is involved in legal, tax and regulatory proceedings arising from the conduct of its business activities. Liabilities are established for loss contingencies when losses associated with such claims are deemed to be probable and the loss can be reasonably estimated. Based on information currently available and consultation with legal counsel, we believe that the outcome of all claims will not, individually or in the aggregate, have a material effect on the Predecessor’s financial statements. In the nine months ended September 30, 2012, the Predecessor recognized $0.5 million for the probable settlement of an employee dispute related to sales commissions. As of September 30, 2012, this settlement had been paid.

9. Related Party Transactions

The Predecessor was not a separate legal entity and was operated by CBI during the periods presented. The following summarizes the related party transactions which commenced in 2012.

Effective January 1, 2012, the Predecessor entered into a transition services agreement with Cincinnati Bell Technology Solutions (“CBTS”), a wholly-owned subsidiary of CBI, in which each party agreed to provide certain services to the other party. Services provided by CBTS to the Predecessor include network support, service calls, monitoring and management, storage and backup and IT systems support. The annual fee to be paid for these services is approximately $1.6 million. Services provided by the Predecessor to CBTS include data center colocation and network interface charges for a fiber network. The Predecessor will earn annual revenue of approximately $1.9 million for these services. The term of this agreement expires on December 31, 2012. The term of the agreement may be extended by mutual agreement of the parties.

Also effective January 1, 2012, the Predecessor entered into marketing agreements with Cincinnati Bell Telephone Company LLC (“CBT”) and CBTS to appoint these affiliates as CyrusOne’s authorized marketing representatives. The Predecessor will pay these affiliates a commission for all new leases they attain, which is calculated as a percentage of the first month’s recurring revenue, which ranges from 30% to 140%, depending on the lease term. For the three and nine months ended September 30, 2012, commissions earned pursuant to these arrangements were $0.1 million. This agreement can be terminated by either party with 90 days’ advance notice. The term of this agreement expires on December 31, 2012 and may be extended by mutual agreement of the parties.

10. Subsequent Event

Management has evaluated subsequent events through the date of this filing. Effective October 1, 2012, the Predecessor terminated its participation in CBI’s accounts receivable securitization program. As of this date, trade receivables of $25.9 million and an allowance for doubtful accounts of $0.2 million were recognized on the Predecessor’s balance sheet.

On October 29, 2012, the Company purchased 229 West Seventh Street from CBT for $18 million. This purchase was funded with a promissory note which bears interest at 10% and is due upon demand. The Company intends to repay this note with the proceeds from the senior notes described below. This property has been presented as owned in all periods in the Predecessor’s combined financial statements at its historical cost.

In November 2012, CyrusOne LP issued $525 million of senior notes due in 2022 and entered into a $225 million revolving credit agreement. The proceeds from this debt were utilized to partially repay related party notes payable. Concurrent with these financing transactions, the legal entities which comprise the Predecessor were released from their guarantee of CBI debt.

As of October 31, 2012, the Company leased approximately 83,000 net rentable square feet (“NRSF”) at our Knightsbridge Drive (Hamilton) data center. A customer occupying approximately 47,000 NRSF in this data center recently gave notice of its intent to exercise its option to purchase this property. After the closing of this transaction, revenue from this customer will only be recognized for data center services and power, not space. The projected decline in annual revenues is approximately $1.2 million. The Company will continue to lease space within this building.

F-23

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of Cincinnati Bell Inc.

We have audited the accompanying combined balance sheets of the Data Center Predecessor (the “Company”) as of December 31, 2011 and 2010, and the related combined statements of operations, divisional control, and cash flows for each of the three years in the period ended December 31, 2011. Our audits also included the financial statement schedule included on page F-50. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion . An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such combined financial statements present fairly, in all material respects, the financial position of the Data Center Predecessor at December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic combined financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 1, the combined financial statements of the Company include allocation of certain corporate overhead costs from Cincinnati Bell Inc. (“CBI”). These costs may not be reflective of the actual level of costs which would have been incurred had the Company operated as a separate entity apart from CBI.

/s/ Deloitte & Touche LLP

Cincinnati, Ohio

August 7, 2012

F-24

Data Center Predecessor

COMBINED BALANCE SHEETS

(dollars in millions)


	As of December 31,
	2011			2010
Assets
Investments in real estate:
Land	$	26.5		$	5.5
Buildings and improvements		568.6			460.0
Equipment		16.1			14.6
Construction in progress		49.0			18.3

Subtotal		660.2			498.4
Accumulated depreciation		(131.2	)		(94.7	)

Net investment in real estate		529.0			403.7
Cash and cash equivalents		0.6			4.9
Goodwill		276.2			276.3
Intangible assets, net		120.7			136.2
Advances to affiliates		—			11.6
Other assets		28.2			29.6

Total assets	$	954.7		$	862.3

Liabilities and Divisional Control
Accounts payable and accrued expenses	$	22.2		$	11.5
Deferred revenue		49.0			46.6
Capital lease obligations		42.9			38.4
Related party notes payable		480.2			413.6
Other financing arrangements		48.2			32.5
Other liabilities		0.7			1.9

Total liabilities		643.2			544.5
Divisional control		311.5			317.8

Total liabilities and divisional control	$	954.7		$	862.3

The accompanying notes are an integral part of the combined financial statements.

F-25

Data Center Predecessor

COMBINED STATEMENTS OF OPERATIONS

(dollars in millions)


	Year Ended December 31,
	2011		2010		2009
Revenue	$	181.7	$	127.5	$	74.1
Costs and expenses
Property operating expenses		58.2		43.9		31.0
Sales and marketing		9.1		6.8		5.1
General and administrative		12.5		7.0		4.2
Depreciation and amortization		55.5		36.2		18.0
Acquisition costs		2.6		9.0		—
Management fees charged by CBI		2.3		3.6		1.5
Loss on sale of receivables to CBF		3.5		1.8		1.2
Restructuring costs		—		1.4		—

Total costs and expenses		143.7		109.7		61.0

Operating income		38.0		17.8		13.1
Interest expense		32.9		11.5		3.1
Loss on extinguishment of debt		1.4		—		—

Income before income taxes		3.7		6.3		10.0
Income tax expense		2.2		2.7		3.9

Income from continuing operations		1.5		3.6		6.1
Loss on sale of real estate improvements		—		0.1		—

Net income	$	1.5	$	3.5	$	6.1

The accompanying notes are an integral part of the combined financial statements.

F-26

Data Center Predecessor

COMBINED STATEMENTS OF CASH FLOWS

(dollars in millions)


	Year Ended December 31,
	2011			2010			2009
Cash flows from operating activities
Net income	$	1.5		$	3.5		$	6.1
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		55.5			36.2			18.0
Loss on sale of receivables and other assets		3.5			2.0			1.2
Loss on extinguishment of debt		1.4			—			—
Noncash interest expense		—			0.7			—
Deferred income tax expense, including valuation allowance change		1.6			2.4			3.9
Changes in operating assets and liabilities, net of effects of acquisitions
Increase in other assets		(1.6	)		(4.3	)		(2.2	)
Increase in accounts payable and accrued expenses		3.5			4.2			—
Increase (decrease) in deferred revenues		2.3			(1.8	)		(2.3	)
(Decrease) increase in other liabilities		(1.7	)		0.6			(0.1	)

Net cash provided by operating activities		66.0			43.5			24.6

Cash flows from investing activities
Capital expenditures – acquisitions of real estate		(22.4	)		—			—
Capital expenditures – other		(95.1	)		(29.3	)		(20.7	)
Advances from (to) affiliates		11.6			(11.6	)		—
Other, net		0.1			0.4			0.5

Net cash used in investing activities		(105.8	)		(40.5	)		(20.2	)

Cash flows from financing activities
Borrowings from affiliates, net		66.6			15.5			2.1
Payments on capital lease obligations		(7.0	)		(10.2	)		(5.5	)
Payments on financing obligations		(16.2	)		—			—
Distributions to parent, net		(7.8	)		(3.7	)		(1.0	)
Other, net		(0.1	)		0.3			—

Net cash provided by (used in) financing activities		35.5			1.9			(4.4	)

Net (decrease) increase in cash and cash equivalents		(4.3	)		4.9			—
Cash and cash equivalents at beginning of year		4.9			—			—

Cash and cash equivalents at end of year	$	0.6		$	4.9		$	—

Supplemental disclosures
Cash paid for interest	$	33.0		$	11.4		$	3.4
Noncash investing and financing transactions:
Acquisition of property on account		7.6			0.3			0.9
Acquisition of property by assuming capital lease obligations or other financing arrangements		43.7			1.8			8.7
Acquisition of real estate contributed by parent		—			2.8			—
Acquisition of business funded by parent debt and divisional control contribution		—			526.3			—
Divisional control distribution funded by related party notes payable		—			215.0			—

The accompanying notes are an integral part of the combined financial statements.

F-27

Data Center Predecessor

COMBINED STATEMENT OF DIVISIONAL CONTROL

(dollars in millions)


Balance as of January 1, 2009	$	158.3
Net income		6.1
Distributions to Parent		(1.0	)

Balance as of December 31, 2009		163.4
Net income		3.5
Contributions from Parent related to acquisition of Cyrus Networks		366.7
Distributions to Parent related to recapitalization		(215.0	)
Other distributions to Parent, net		(0.8	)

Balance as of December 31, 2010		317.8
Net income		1.5
Distributions to Parent		(7.8	)

Balance as of December 31, 2011	$	311.5

The accompanying notes are an integral part of the combined financial statements.

F-28

NOTES TO COMBINED FINANCIAL STATEMENTS

1. Description of Business and Basis of Presentation

The Data Center Predecessor (the “Predecessor”, “we” or “our”) is an owner, operator and developer of enterprise-class, carrier neutral data centers. Our customers operate in a number of industries, including energy, oil and gas, mining, medical, technology, finance and consumer goods and services. We currently operate 21 data centers located in the United States, United Kingdom and Singapore. A large portion of our revenues are generated by data centers located in Texas and Ohio. An economic downturn or natural disaster occurring in this operating territory could have a disproportionate effect on our business, financial condition, results of operations and cash flows compared to similar companies operating in different geographic areas.

CyrusOne Inc. (“CyrusOne”), CyrusOne GP, of which CyrusOne is the sole beneficial owner and sole trustee, and its limited partnership, CyrusOne LP, of which CyrusOne GP is the general partner, were formed on July 31, 2012. CyrusOne anticipates selling its common stock through an initial public offering (the “offering”). Prior to this offering, CyrusOne and CyrusOne LP will engage in certain formation transactions designed to (i) continue the operations of the Predecessor, (ii) enable CyrusOne to raise necessary capital to repay certain debt to CBI, a related party, (iii) fund operating costs, capital expenditures and working capital, (iv) provide a funding vehicle for potential business acquisitions, and (v) enable CyrusOne to comply with the requirements under the federal income tax laws and regulations related to real estate investment trusts (“REIT”).

CyrusOne’s operations will be primarily conducted through CyrusOne LP, its limited partnership. It is management’s intent that CyrusOne will elect the status of and qualify as a REIT under Sections 856 and 860 of the Internal Revenue Code of 1986, as amended, for the taxable year ended December 31, 2012. CyrusOne will be the sole beneficial owner and sole trustee of CyrusOne GP, which will be the sole general partner in CyrusOne LP. Pursuant to a contribution agreement between CBI and CyrusOne LP, CyrusOne LP will receive a contribution of interests in the real estate properties from CBI in exchange for limited partnership interests in CyrusOne LP and the assumption of debt and other specified liabilities.

The accompanying combined financial statements of the Predecessor have been prepared pursuant to generally accepted accounting principles in the United States and in accordance with the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the combined financial statements include all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for each period presented.

F-29

Related party notes payable in the accompanying combined financial statements reflect contractual amounts due to CBI or other affiliated entities pursuant to a cash management variable rate note due on demand and a fixed rate term note due in 2018. All intercompany transactions have been eliminated from the accompanying combined financial statements.

2. Significant Accounting Policies

Use of Estimates —Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions are based on management’s knowledge of current events and actions that the Predecessor may undertake in the future. Estimates are used in determining the fair value of leased real estate, the useful lives of real estate and other long-lived assets, future cash flows associated with goodwill and other long-lived asset impairment testing, deferred tax assets and liabilities and loss contingencies. Estimates are also utilized in the determination of allocations of shared employees payroll, benefits and incentives and management fees. Actual results may differ from these estimates and assumptions.

Investments in Real Estate —Investments in real estate consist of land, buildings, improvements and integral equipment utilized in our data center operations. Real estate acquired from third parties has been recorded at its acquisition cost. Real estate acquired from CBI and its affiliates has been recorded at its historical cost basis. Additions and improvements which extend an asset’s useful life or increase its functionality are capitalized and depreciated over the asset’s remaining life. Maintenance and repairs are expensed as incurred.

When we are involved in the construction of structural improvements to the leased property, we are deemed the accounting owner of leased real estate. In these instances, we bear substantially all the construction period risk, such as managing or funding construction. These transactions generally do not qualify for sale-leaseback accounting due to our continued involvement in these data center operations. At inception, the fair value of the real estate, which generally consists of a building shell, and our associated obligation is recorded as construction in progress. As construction progresses, the value of the asset and obligation increase by the fair value of the structural improvements. When construction is complete, the asset is placed in service and depreciation commences. Leased real estate is depreciated to the lesser of (i) its estimated fair value at the end of the term or (ii) the expected amount of the unamortized obligation at the end of the term. As of December 31, 2011 and 2010, leased assets, where we are deemed the accounting owner, were $48.2 million and $32.5 million, respectively. The associated obligation is presented as other financing arrangements in the accompanying combined balance sheets.

When we are not deemed the accounting owner, we further evaluate leased real estate to determine whether the lease should be classified as a capital or operating lease. One of the following four characteristics must be present to classify a lease as a capital lease: (i) the lease transfers ownership of the property to the lessee by the end of the lease term, (ii) the lease contains a bargain purchase option, (iii) the lease term is equal to 75% or more of the estimated economic life of the leased property, or (iv) the net present value of the lease payments are at least 90% of the fair value of the leased property. As of December 31, 2011 and 2010, capital lease assets included in investment in real estate were $59.2 million and $50.2 million, respectively.

Construction in progress includes direct and indirect expenditures for the construction and expansion of our data centers and is stated at its acquisition cost. Independent contractors perform substantially all of the construction and expansion efforts of our data centers. Construction in progress includes costs incurred under construction contracts including project management services, engineering and schematic design services, design development, construction services and other construction-related fees and services. Interest, property taxes and certain labor costs are also capitalized during the construction of an asset. Capitalized interest in 2011, 2010, and 2009 was $2.6 million, $0.5 million, and $0.3 million, respectively. These costs are depreciated over the estimated useful life of the related assets.

F-30

Depreciation is calculated using the straight-line method over the estimated useful life of the asset. Useful lives range from 20 to 48 years for buildings, 3 to 25 years for building improvements, and 3 to 5 years for equipment. Leasehold improvements are amortized over the shorter of the asset’s useful life or the remaining lease term, including renewal options which are reasonably assured.

Cash and Cash Equivalents —Cash and cash equivalents consist of funds on deposit at financial institutions. As of December 31, 2011, the Predecessor had minimal cash on hand as it participated in CBI’s centralized cash management system. As of December 31, 2010, the Predecessor had a larger cash balance on hand as a recently acquired business was not yet participating in CBI’s centralized cash management system.

Goodwill —Goodwill represents the excess of the purchase price over the fair value of net assets acquired in connection with business acquisitions. We perform testing of goodwill, at the reporting unit level, on an annual basis or more frequently if indicators of potential impairment exist. The fair value of the Predecessor’s reporting units was determined using a combination of market-based valuation multiples for comparable businesses and discounted cash flow analysis based on internal financial forecasts incorporating market participant assumptions. The fair value of each reporting unit exceeded its corresponding carrying value; therefore, no impairments were recognized in 2011, 2010 or 2009.

Long-Lived and Intangible Assets —Intangible assets represent purchased assets that lack physical substance, but can be separately distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged, either on its own or in combinations with a related contract, asset, or liability. Intangible assets with finite lives consist of trademarks, customer relationships, and a favorable leasehold interest.

Management reviews the carrying value of long-lived assets, including intangible assets with definite lives, when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Examples of such indicators may include a significant adverse change in the extent to which or manner in which the property is being used, an accumulation of costs significantly in excess of the amount originally expected for acquisition or development, or a history of operating or cash flow losses. When such indicators exist, we review an estimate of the undiscounted future cash flows expected to result from the use of an asset (or group of assets) and its eventual disposition and compare such amount to its carrying amount. We consider factors such as future operating income, leasing demand, competition and other factors. If our undiscounted net cash flows indicate that we are unable to recover the carrying value of the asset, an impairment loss is recognized. An impairment loss is measured as the amount by which the asset’s carrying value exceeds its estimated fair value. No asset impairments were recorded in 2011, 2010 or 2009.

Receivables —Receivables consist principally of trade receivables from customers, are generally unsecured and are due within 30 to 90 days. Unbilled receivables arise from services rendered but not yet billed. Expected credit losses associated with trade receivables are recorded as an allowance for uncollectible accounts. The allowance for uncollectible accounts is estimated based upon historic patterns of credit losses for aged receivables as well as specific provisions for certain identifiable, potentially uncollectible balances. When internal collection efforts on accounts have been exhausted, the accounts are written off and the associated allowance for uncollectible accounts is reduced.

Historically, the Predecessor has sold most of its trade and other accounts receivable without recourse to Cincinnati Bell Funding LLC (“CBF”), a bankruptcy-remote subsidiary of CBI, at a 2.5% discount to the receivables’ face value. Cincinnati Bell Technology Solutions (“CBTS”), a wholly-owned subsidiary of CBI, and Cyrus Networks LLC (“Cyrus Networks”) began selling their receivables to CBF in March 2009 and June 2011, respectively. The transfer of these assets qualifies as a sale pursuant to Accounting Standards Codification (“ASC”) 860-10, Transfers of Financial Assets, as these receivables have been isolated from the Predecessor and its creditors. The Predecessor continues to service these receivables and receives a fee for this service.

F-31

As of December 31, 2011 and 2010, receivables were $0.8 million and $10.5 million, respectively. As of December 31, 2010, the allowance for uncollectible accounts was $0.2 million. The allowance for uncollectible accounts was immaterial as of December 31, 2011. The Predecessor had receivables from one customer that exceeded 10% of outstanding receivables as of December 31, 2010. Receivables are presented within other assets in the accompanying combined balance sheets.

Deferred Leasing Costs —Sales commissions incurred at the commencement of a new lease are capitalized and amortized on a straight-line basis over the expected life of the customer relationship. Amortization of deferred leasing costs is presented with depreciation and amortization in the accompanying combined statements of operations. If a lease terminates prior to the expected life of the customer relationship, the remaining unamortized cost is written off to amortization expense.

Guarantees of Parent Debt —Certain subsidiaries of CBI, including those whose operations comprise the Predecessor, have guaranteed certain long-term debt obligations of CBI. Each guarantee is full and unconditional and joint and several. Collectively, the guarantors generate substantially all of CBI’s income and cash flow and generally distribute or advance the funds necessary to meet CBI’s debt service obligation. Since these guarantees are between the entities comprising the Predecessor and their parent, they are not subject to the recognition provisions of ASC 460 Guarantees. See Note 16 for further details on this guarantee obligation.

Pushdown of CBI Acquisition-Related Debt —In June 2010, CBI borrowed $526 million on its corporate credit facility to finance the acquisition of Cyrus Networks. In accordance with Staff Accounting Bulletin Topic 5J (“SAB Topic 5J”), we presented $168 million of CBI acquisition-related debt in the accompanying combined financial statements. We considered various allocation methodologies in determining the amount of debt to be recognized in the financial statements. The method selected was based on a leverage ratio common to the industry. As of December 31, 2010, the pushdown of CBI acquisition debt was derecognized from the Predecessor’s financial statements concurrent with a divisional control distribution from the Predecessor and issuance of a $400 million note payable to CBI. The derecognition of debt was offset by an increase to divisional control.

Other Financing Arrangements —Other financing arrangements represent leases of real estate where we are involved in the construction of structural improvements to develop buildings into data centers. When we bear substantially all the construction period risk, such as managing or funding construction, we are deemed to be the accounting owner of the leased property, and, at the lease inception date, we are required to record at fair value the property and associated liability on our combined balance sheet. These transactions generally do not qualify for sale-leaseback accounting due to our continued involvement in these data center operations.

Revenue Recognition —Colocation rentals are generally billed monthly in advance and some contracts have escalating payments over the non-cancellable term of the contract. If rents escalate without the lessee gaining access to or control over additional leased space or power, and the lessee takes possession of, or controls the physical use of the property (including all contractually committed power) at the beginning of the lease term, the rental payments by the lessee are recognized as revenue on a straight-line basis over the term of the lease. If rents escalate because the lessee gains access to and control over additional leased space or power, revenue is recognized in proportion to the additional space or power in the years that the lessee has control over the use of the additional space or power. The excess of revenue recognized over amounts contractually due is recognized in other assets in the accompanying combined balance sheets.

Some of our leases are structured on a full-service gross basis in which the customer pays a fixed amount for both colocation rental and power. Other leases provide that the customer will be billed for power based upon actual usage which is separately metered. In both cases, this revenue is presented on a gross basis in the accompanying combined statements of operations. Power is generally billed one month in arrears and an estimate of this revenue is accrued in the month that the associated costs are incurred. We generally are not entitled to reimbursements for real estate taxes, insurance or other operating expenses.

F-32

Revenue is recognized for services or products that are deemed separate units of accounting. When a customer makes an advance payment which is not deemed a separate unit of accounting, deferred revenue is recorded. This revenue is recognized ratably over the expected term of the customer relationship, unless the pattern of service suggests otherwise. As of December 31, 2011 and 2010, deferred revenue was $49.0 million and $46.6 million, respectively.

Property Operating Expenses —Property operating expenses generally consist of electricity, salaries and benefits of data center operations personnel, real estate taxes, security, rent, insurance and other site operating and maintenance costs.

Sales and Marketing Expense —Sales and marketing expense is comprised of compensation and benefits associated with sales and marketing personnel as well as advertising and marketing costs. Prior to January 1, 2011, certain commissions were paid as a percentage of monthly recurring revenue, and these amounts were included in sales and marketing expense. These commission plans were terminated on December 31, 2010. Costs related to advertising are expensed as incurred and amounted to $1.4 million and $0.2 million in 2011 and 2010, respectively. In 2009, advertising costs were immaterial.

Legal Costs —Legal costs are expensed as incurred.

Depreciation and Amortization Expense —Depreciation expense is recognized over the estimated useful lives of real estate applying the straight-line method. The useful life of leased real estate and leasehold improvements is the lesser of the economic useful life of the asset or the term of the lease, including optional renewal periods if renewal of the lease is reasonably assured. The residual value of leased real estate is estimated as the lesser of (i) the expected fair value of the asset at the end of the lease term or (ii) the expected amount of the unamortized liability at the end of the lease term. Estimated useful lives are periodically reviewed. Depreciation expense was $39.1 million in 2011, $26.9 million in 2010 and $16.8 million in 2009.

Amortization expense is recognized over the estimated useful lives of finite-lived intangibles. An accelerated method of amortization is utilized to amortize the Cyrus Networks customer relationship intangible, consistent with the benefit expected to be derived from this asset. The straight-line method is utilized to amortize the trademark, favorable leasehold interest and deferred leasing costs, as a straight-line method is consistent with the benefit expected to be derived from these assets. The estimated useful life of trademarks and customer relationships is eight to 15 years. The favorable leasehold interest is being amortized over the remaining lease term of 56 years. Deferred leasing costs are amortized over 3 to 5 years.

Acquisition Costs —Acquisition costs represent legal, accounting and professional fees incurred in connection with completed and potential business combinations. Acquisition costs are expensed as incurred.

Restructuring Costs —A restructuring charge was recognized in 2010 to terminate an existing sales commission plan in order to transition to a common plan for all commissioned employees.

Operating and Transactional Taxes —Certain operating taxes, such as property, sales and use and value added taxes, are reported as expenses in operating income. These taxes are not included in income tax expense because the amounts to be paid are not dependent on the level of income generated. We also record operating expenses for the establishment of liabilities related to certain operating tax audit exposures. These liabilities are established based on our assessment of the probability of payment. Upon resolution of an audit, any remaining liability not paid is released and increases operating income.

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Income Taxes —The Predecessor is included in CBI’s consolidated tax returns in various jurisdictions. In the accompanying combined financial statements, we have accounted for income taxes as if the Predecessor was a separate stand-alone company. The income tax provision consists of an amount for taxes currently payable and an amount for tax consequences deferred to future periods.

Deferred income taxes are provided for temporary differences in the bases between financial statement and income tax assets and liabilities. Deferred income taxes are recalculated annually at rates then in effect. Valuation allowances are recorded to reduce deferred tax assets to amounts that are more likely than not to be realized. The ultimate realization of the deferred income tax assets depends upon the Predecessor’s ability to generate future taxable income during the periods in which basis differences and other deductions become deductible and prior to the expiration of the net operating loss carryforwards.

Foreign Currency Translation and Transactions —The financial position of foreign subsidiaries is translated at the exchange rates in effect at the end of the period, while revenues and expenses are translated at average rates of exchange during the period. Gains or losses from translation of foreign operations where the local currency is the functional currency are included as components of accumulated other comprehensive (loss)/income. Gains and losses arising from foreign currency transactions are recorded in other income (expense) in the period incurred. Gains and losses from translation and foreign currency transactions were immaterial in 2011, 2010 and 2009.

Comprehensive Income —Comprehensive income represents the change in net assets of a company from transactions and other events from non-owner sources. The Predecessor’s comprehensive income equaled its net income in 2011, 2010 and 2009.

Earnings per Share —For the historical periods presented, the Predecessor operated without a defined capital structure or designated equity. As a result, earnings per share has not been presented for historical periods.

Business Combinations —In accounting for business combinations, we apply the accounting requirements of ASC 805, Business Combinations, which requires the recording of net assets of acquired businesses at fair value. In developing estimates of fair value of acquired assets and assumed liabilities, management analyzed a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets. Acquisition costs are expensed as incurred.

Related Party Transactions —CBI provides the Predecessor with a variety of services. Cost allocation methods which were employed to determine the costs to be recognized in the accompanying combined financial statements included the following:

•

Specific identification—Applied when amounts were specifically identifiable to the Predecessor’s operations.

•

Reasonable allocation method—When amounts were not clearly or specifically identifiable to the Predecessor’s operations, management applied a reasonable allocation method.

Insurance Programs —CBI provides the Predecessor with coverage for certain employee health care benefits as well as losses incurred related to general liability, workers’ compensation and automobile claims. CBI has purchased third-party insurance policies for these risks and is self-insured up to certain limits. The Predecessor’s portion of CBI’s self-insured insurance expense has been determined based on its historical experience of paid claims.

Pension and Postretirement —Some of the Predecessor’s employees participated in CBI’s pension and postretirement benefit plans. These plans have been accounted for as multi-employer plans which require the Predecessor to recognize expense for its proportionate share of the annual contributions to these plans. The

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Predecessor’s proportionate share of these contributions was determined using the projected benefit obligation associated with the Predecessor’s plan participants compared to CBI’s plan participants and was immaterial in 2011, 2010 and 2009.

Stock-Based Compensation —Some of the Predecessor’s employees participated in CBI’s stock-based compensation plans. CBI values all share-based payments to employees at fair value on the date of grant and expenses this amount over the applicable vesting period. The fair value of stock options and stock appreciation rights is determined using the Black-Scholes option-pricing model using assumptions such as volatility, risk-free interest rate, holding period and expected dividends. The fair value of stock awards is based upon the closing market price of CBI’s common stock on the date of grant. For all share-based awards, a forfeiture rate is estimated based upon the historical forfeiture patterns. The forfeiture rate reduces the total fair value of the awards to be recognized as compensation expense. For graded vesting awards, CBI’s policy is to recognize compensation expense on a straight-line basis over the vesting period. Certain employees have been granted awards, which are indexed to the change in CBI’s common stock price, which will be cash settled. These awards are marked to fair market value and the adjusted compensation cost is expensed on a pro-rata basis over the remaining vesting period. The accompanying combined financial statements include an allocation of stock-based compensation costs for awards granted to the Predecessor’s employees.

Fair Value Measurements —Fair value measurements are utilized in accounting for business combinations and testing of goodwill and other long-lived assets for impairment. Fair value of financial and non-financial assets and liabilities is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for asset and liabilities, is as follows:

Level 1—Observable inputs for identical instruments such as quoted market prices;

Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs); and

Level 3—Unobservable inputs that reflect our determination of assumptions that market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including our own data.

Business Segments —Business segments are components of an enterprise for which separate financial information is available and regularly viewed by the chief operating decision maker to assess performance and allocate resources. Our chief operating decision maker reviews our financial information on an aggregate basis. Furthermore, our data centers have similar economic characteristics and customers across all geographic locations, our service offerings have similar production processes, deliver services in a similar manner and use the same types of facilities and similar technologies. As a result, we have concluded that we have one reportable business segment.

Subsequent Events —During the second quarter of 2012, management identified impairment indicators for a customer relationship intangible associated with the acquisition of GramTel USA, Inc., and property and equipment located at our Springer Street (Lombard) and McAuley Place (Blue Ash) data centers. We performed step one of the impairment tests for these assets utilizing cash flow projections from our most recent long-term business plan and other updated assumptions. The results of these tests indicated that an impairment loss may exist for each of these asset groups. We engaged third-party valuation specialists to assist with the Company’s estimation of the fair value of these assets. Management’s preliminary estimate of the impairment loss is $13 million. This estimate is subject to change upon completion of the third-party valuation specialists’ report. The Predecessor will recognize this impairment loss in its results of operations for the period ending June 30, 2012.

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In July 2012, the Predecessor purchased six acres of land adjacent to its Westway Park Blvd (Houston West) property for $2.0 million. Concurrent with this purchase, we committed to fund construction of a 157,000 square foot building at this site at a cost of $11.1 million. Upon completion of construction, we will develop this building as a data center.

3. Recently Issued Accounting Standards

In December 2011, the Financial Accounting Standards Board (“FASB”) amended the guidance in ASC 210 related to disclosures about offsetting assets and liabilities. The amendments would require an entity to disclose information about financial instruments and derivative instruments that are either offset or subject to enforceable master netting arrangements or similar arrangements. We will be required to adopt this guidance beginning with our interim financial statements for the three months ending March 31, 2013. The adoption of this accounting standard is not expected to have a material impact on our financial statements.

In December 2010, the FASB issued an amendment to ASC 805 related to disclosure of supplementary pro forma information for business combinations. The amendment clarifies that if a public entity presents comparative financial statements, the pro forma disclosures of revenues and earnings of the combined entity should be prepared as though the business combination occurred as of the beginning of the comparable prior annual reporting period only. The amendment also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, non-recurring pro forma adjustments included in the pro forma revenue and earnings. This amendment is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. We have applied this guidance in preparing our supplementary pro forma disclosures shown in Note 4.

In October 2009, new accounting guidance under ASC 605 related to revenue arrangements with multiple deliverables was issued. The guidance addresses the unit of accounting for arrangements involving multiple deliverables, how arrangement consideration should be allocated to the separate units of accounting and eliminates the criterion that objective and reliable evidence of fair value of any undelivered items must exist for the delivered item to be considered a separate unit of accounting. Effective January 1, 2011, we prospectively adopted this standard for revenue arrangements entered into or materially modified after the adoption date. The adoption of this accounting standard did not have a material impact on our financial statements.

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4. Acquisitions

Cyrus Networks —On June 11, 2010, CBI purchased 100% of the equity interests of Cyrus Networks, LLC, a data center business based in Texas, for approximately $526 million, net of cash acquired. This acquisition expanded the Predecessor’s data center operations beyond the Midwest. This transaction has been accounted for as a business combination applying the acquisition method. The results of this acquired business have been included in the Predecessor’s combined statement of operations subsequent to its acquisition date. The Predecessor’s results of operations for the twelve months ended December 31, 2010 included revenues of $44.9 million and operating income of $0.6 million associated with this acquired entity. Acquisition costs of $9.0 million and management fees of $1.8 million were associated with the acquisition and allocated to the Predecessor in 2010.

The following table summarizes the fair value of the assets acquired and liabilities assumed:


(dollars in millions)
Assets acquired
Investment in real estate:
Buildings and improvements	$	136.8
Equipment		4.6
Construction in progress		10.4

Investment in real estate		151.8

Goodwill		269.5
Intangible assets		138.0
Other assets		12.8

Total assets acquired		572.1


Liabilities assumed
Accounts payable and accrued expenses		5.2
Deferred revenue		7.7
Other financing arrangements		32.1
Other liabilities		0.8

Total liabilities assumed		45.8

Net assets acquired	$	526.3

As required under ASC 805, we valued the assets acquired and liabilities assumed at fair value. The fair value of investment in real estate, intangible assets and other financing arrangements were estimated by management with the assistance of an independent valuation firm. All other fair value measurements were determined solely by management. Goodwill decreased by $0.1 million upon finalization of the purchase price allocation in early 2011.

The following table presents the allocation of the purchase price to intangible assets acquired:


(dollars in millions)	Fair Value		Weighted-Average Amortization Period (in Years)
Intangible assets subject to amortization:
Customer relationships	$	126.7		15
Trademark		7.4		15
Favorable leasehold interest		3.9		56

Total intangible assets subject to amortization	$	138.0		16

Customer relationships have been amortized on an accelerated method relative to the estimated economic value generated by these assets in future years. The trademark and favorable leasehold interest are both amortized on a straight-line basis, which approximates the estimated economic value generated by this asset in future years. We expect goodwill and intangible assets to be fully deductible for tax purposes.

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The following unaudited pro forma results of operations assumes this acquisition was completed as of January 1, 2009:


(dollars in millions)	Year Ended December 31,
(dollars in millions)	2010		2009
Revenue	$	159.1	$	130.8
Income (loss) from continuing operations		8.8		(1.5	)

These pro forma results include adjustments related to the purchase price allocation and financing of the acquisition as well as the results of Cyrus Networks prior to the acquisition. The pro forma adjustments and their effect on the income (loss) from continuing operations were as follows:


	Year Ended December 31,
(dollars in millions)	2010			2009
Elimination of deferred installation revenue	$	(1.7	)	$	(1.6	)
Elimination of deferred sales commissions		0.8			0.8
Increase in depreciation and amortization on acquired property and intangibles		(6.5	)		(12.9	)
Reclass acquisition costs to earliest year presented		9.0			(9.0	)
Higher interest costs associated with acquisition-related debt		(1.4	)		(4.4	)
Tax effects of above entries		(2.6	)		5.1

Total	$	(2.4	)	$	(22.0	)

The pro forma information shown above does not necessarily reflect the actual results of operations had the acquisition been consummated at the beginning of the annual reporting period indicated nor is it necessarily indicative of future operating results. The pro forma information does not include any (i) potential revenue enhancements, cost synergies or other operating efficiencies that could result from the acquisition or (ii) transaction or integration costs relating to the acquisition.

Real Estate —In September 2011, the Predecessor purchased 56 acres of land to build a data center near Phoenix, Arizona. The purchase price of this property was $14.8 million. Construction will begin in 2012 on the development of a building shell and an initial build out of 37,000 square feet of colocation space.

In December 2011, the Predecessor purchased a 10-acre parcel of land and building in San Antonio, Texas. The purchase price of this property was $7.6 million. The purchase price was allocated $4.6 million to land with the remaining $3.0 million allocated to the building. Development of this property will begin in 2012 with an initial build out of 36,000 square feet of data center colocation space.

5. Goodwill and Intangible Assets

Goodwill and intangible assets were recognized in connection with the acquisition of Cyrus Networks as well as prior acquisitions. For the years ended December 31, 2011 and 2010, the changes in the carrying amount of goodwill were as follows:


(dollars in millions)
Balance as of December 31, 2009	$	6.7
Acquisition of Cyrus Networks		269.6

Balance as of December 31, 2010		276.3
Purchase price adjustment		(0.1	)

Balance as of December 31, 2011	$	276.2

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Summarized below are the carrying values for the major classes of intangible assets:


	Weighted- Average Life (in years)		December 31, 2011					December 31, 2010
	Weighted- Average Life (in years)		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
(dollars in millions)
Customer relationships		15	$	136.6	$	(26.4	)	$	136.6	$	(11.4	)
Trademark		15		7.4		(0.7	)		7.4		(0.3	)
Favorable leasehold interest		56		3.9		(0.1	)		3.9		—

Total			$	147.9	$	(27.2	)	$	147.9	$	(11.7	)

Amortization expense for intangible assets subject to amortization was $15.5 million in 2011, $9.2 million in 2010 and $1.2 million in 2009.

The following table presents estimated amortization expense for 2012 through 2016:


(dollars in millions)
2012	$	16.8
2013		17.3
2014		17.4
2015		15.0
2016		11.5

6. Sale of Accounts Receivable

The Predecessor sells most of its receivables to an affiliated entity at a discount of 2.5% of the receivables’ face value. Proceeds from the sale of these assets are settled through CBI’s centralized cash management system.

As of December 31, 2011 and 2010, derecognized receivables associated with this arrangement were $20.7 million and $10.3 million, respectively. Delinquent receivables were $3.3 million and $0.7 million as of December 31, 2011 and 2010, respectively. We continue to service these receivables at market rates, but we have no other continuing involvement in these transferred assets as well as no retained interests in these receivables following their sale. Credit losses on sold receivables have been immaterial.


	For the years ending December 31,
(dollars in millions)	2011		2010		2009
Receivables sold	$	137.5	$	70.2	$	49.2
Proceeds upon sale		134.0		68.4		48.0
Loss on sale		3.5		1.8		1.2
Servicing fees received		0.1		0.1		—

7. Debt and Other Financing Arrangements

Debt and other financing arrangements presented in the accompanying financial statements consist of the following:


	December 31,
(dollars in millions)	2011		2010
Capital lease obligations	$	42.9	$	38.4
Related party note due on demand		80.2		13.6
Related party note due 2018		400.0		400.0
Other financing arrangements		48.2		32.5

Total	$	571.3	$	484.5

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Capital lease obligations —The Predecessor uses leasing as a source of financing for certain of its data center facilities and related equipment. We currently operate five data center facilities recognized as capital leases. We have options to extend the initial lease term on all these leases and options to purchase the facility for two of these leases. Interest expense on capital lease obligations was $5.4 million, $4.3 million and $2.9 million in 2011, 2010 and 2009, respectively.

Related party note due on demand —The Predecessor participates in CBI’s centralized cash management program. On a daily basis, all excess cash is transferred to CBI’s corporate cash accounts. Likewise, substantially all funds to finance our operations and capital expenditures are funded by CBI. Advances and borrowings between affiliates are governed by an intercompany cash management note. Borrowings are unsecured. Effective November 19, 2010, all advances/borrowings bear interest at the average 30-day Eurodollar rate for the calendar month plus the applicable credit spread for Eurodollar rate borrowings charged for CBI’s revolving line of credit. Prior to this date, the interest rate applied to such advances and borrowings was CBI’s short-term borrowing rate. The average rate earned or charged was 5.0% in 2011, 4.2% in 2010 and 2.4% in 2009.

Related party note due 2018 —On December 31, 2010, the Predecessor funded a distribution to CBI by issuing a note payable to CBI for $400 million (see further discussion of the distribution in Note 9). This note bears interest at 7.25% and matures in 2018. Interest is settled on a monthly basis through CBI’s centralized cash management system. The Predecessor may prepay this note in whole or in part at any time at par. Events of default consist of nonpayment of amounts due, a bankruptcy filing, foreclosure proceedings, the filing of a lien against all or substantially all of the borrower’s assets, or a default on other indebtedness greater than $100,000 which accelerates the maturity date of such borrowings.

CBI acquisition-related debt —In June 2010, CBI borrowed $526 million under its credit agreement which was used to fund the acquisition of Cyrus Networks. Pursuant to SAB Topic 5J, $168 million of the parent’s acquisition debt was recognized in the accompanying financial statements. On December 31, 2010, this debt was derecognized from the Predecessor’s financial statements concurrent with the recapitalization of the Predecessor’s business and the issuance of the $400 million note. Interest expense on this debt, inclusive of amortization of discount upon issuance and financing costs, was $6.8 million in 2010. The weighted average interest rate on this debt was 6.5%.

The following table summarizes annual principal maturities of our related party notes and capital leases for the five years subsequent to December 31, 2011, and thereafter. Related party notes which are due upon demand are presented as due in 2012.


(dollars in millions)	Capital Leases		Related Party Notes		Total Debt
2012	$	7.4	$	80.2	$	87.6
2013		13.3		—		13.3
2014		2.3		—		2.3
2015		2.3		—		2.3
2016		2.6		—		2.6
Thereafter		15.0		400.0		415.0

Total debt	$	42.9	$	480.2	$	523.1

Other financing arrangements —Other financing arrangements represents leases of real estate in which we are involved in the construction of structural improvements to develop buildings into data centers. When we bear substantially all the construction period risk, such as managing or funding construction, we are deemed to be the accounting owner of the leased property, and, at the lease inception date, we are required to record at fair value the property and associated liability on our balance sheet. These transactions generally do not qualify for sale-leaseback accounting due to our continued involvement in these data center operations.

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The following table summarizes our annual minimum payments associated with our other financing arrangements for the five years subsequent to December 31, 2011 and thereafter:


(dollars in millions)
2012	$	3.8
2013		5.6
2014		6.4
2015		6.5
2016		6.6
Thereafter		48.7

Total financing arrangements	$	77.6

In 2011, the Predecessor terminated the financing obligation for one of these facilities by purchasing the property from the former lessor. The Predecessor recognized a loss on extinguishment of debt of $1.4 million upon the termination of this arrangement.

8. Fair Value of Financial Instruments

The fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their carrying value because of the short-term nature of these instruments. The carrying value and fair value of other financial instruments are as follows:


	December 31, 2011				December 31, 2010
(dollars in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Related party note due on demand	$	80.2	$	80.2	$	13.6	$	13.6
Related party note due 2018		400.0		415.1		400.0		400.0
Other financing arrangements		48.2		47.5		32.5		32.3

The fair value of financial instruments was calculated using a discounted cash flow model that incorporates current borrowing rates for obligations of similar duration. This fair value measurement is considered Level 3 of the fair value hierarchy. The fair value of the related party note due on demand is equal to its carrying value as it bears interest at a current market rate. The fair value of the related party note due in 2018 was equal to its carrying value as of December 31, 2010 as this note was issued on that date.

9. Divisional Control

The Predecessor was not a separate legal entity and was operated by CBI during the periods presented. Divisional control represents CBI’s net investment in the Predecessor.

In 2011, the Predecessor distributed $7.8 million to CBI.

In 2010, the Predecessor received a $366.7 million contribution from CBI to fund the acquisition of Cyrus Networks and assumed $159.6 million of parent acquisition-related debt, net of associated discount and issuance costs.

On December 31, 2010, CBI restructured its data center legal entities, including intercompany borrowings. In conjunction with this restructuring, parent acquisition-related debt of $160.2 million (net of unamortized discount and debt issue costs) and related party notes payable to CBI of $24.8 million were subsumed into a new $400 million note payable to CBI and a distribution was issued to CBI in the amount of $215.0 million.

Other distributions to Parent, net, were $0.8 million in 2010, inclusive of CBI’s contribution of the Goldcoast Drive (Goldcoast) data center at historical carrying value.

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10. Customer Leases

Customer lease arrangements customarily contain provisions that either allow for renewal or continuation on a month-to-month arrangement. Certain leases contain early termination rights. At lease inception, early termination is generally not deemed reasonably assured due to the significant economic penalty incurred by the lessee to exercise its termination right and to relocate its equipment. The future minimum lease payments to be received under noncancelable operating leases, excluding month-to-month arrangements and submetered power, for the next five years are shown below:


(dollars in millions)
2012	$	134.4
2013		97.8
2014		57.5
2015		43.0
2016		28.2

11. Pension and Other Employee Benefit Plans

Some of the Predecessor’s shared employees and retirees have historically participated in CBI’s pension and other benefit plans. CBI manages these plans on a combined basis for all its affiliates and funds all plan contributions.

The Predecessor’s employees are also eligible to participate in one of two sponsored defined contribution plans. One of these plans is sponsored by the Predecessor and the other by CBI. Employee contributions to these plans are matched by the sponsoring employer. Our direct and allocated contributions to these plans were $0.4 million, $0.3 million, and $0.2 million in 2011, 2010, and 2009, respectively.

Some of our shared employees also participate in CBI sponsored health care plans which provide medical, dental, vision and prescription benefits. This plan is also managed by CBI on a combined basis for all its affiliates. We are unable to estimate our share of CBI’s liability for claims incurred but not reported or reported but not paid. Our allocated cost of these plans was $0.8 million, $0.9 million and $0.7 million in 2011, 2010, and 2009, respectively.

12. Stock-Based Compensation Plans

Some of the Predecessor’s employees have been granted stock options, stock appreciation rights, restricted shares and other share-based awards under CBI sponsored long-term incentive plans. These awards may be time-based or performance-based. Generally, stock options and restricted share awards vest three years from the grant date. Stock option awards generally expire ten years from the date of grant. Performance-based stock option and other awards generally vest over three to four years and upon the achievement of certain performance-based objectives. Performance-based awards are expensed based on their grant date fair value, if it is probable that the performance conditions will be achieved.

Allocated stock-based compensation expense/(benefit) was $0.6 million, $(0.2) million and $(0.2) million in 2011, 2010 and 2009, respectively. The allocated cost was determined based upon specific identification of awards to specific data center employees as well as shared employees. For shared employees, the allocated cost was based upon the individual’s estimated percentage of time spent on data center activities. In 2010, a performance-based award was forfeited resulting in the reversal of previously recognized compensation costs. In 2009, the probability of achieving the performance-based targets was reassessed resulting in a reversal of previously recognized compensation costs. The tax (benefit)/expense associated with stock-based compensation was $(0.2) million, $0.1 million and $0.1 million in 2011, 2010 and 2009, respectively.

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13. Related Party Transactions

The Predecessor was not a separate legal entity and was operated by CBI during the periods presented. As discussed in Note 1, the financial statements have been prepared from the records maintained by CBI and may not necessarily be indicative of the conditions that would have existed or the results of operations that would have occurred if the business had been operated as an unaffiliated company. The Predecessor’s financial statements reflect the following transactions with CBI and its affiliated entities.

Revenues —The Predecessor leases space in its data centers to Cincinnati Bell Telephone Company LLC (“CBT”), an affiliated entity. Revenue recognized from this arrangement was $4.4 million in 2011, $2.0 million in 2010 and $1.0 million in 2009. This contract has no stated expiration date but is cancellable by either party with proper notice.

As of July 31, 2012, certain of the Predecessor’s leases had not yet been assigned to CyrusOne. CBTS is the lessor named in these contracts. Revenues associated with these leases were $23.7 million in 2011, $20.2 million in 2010 and $12.9 million in 2009. In 2012, the Predecessor entered into an agreement to lease this data center space to CBTS until the underlying customer leases can be assigned to CyrusOne. In addition, CBTS will continue to perform billing and collections on these accounts until the assignment has been completed.

Benefits and Insurance —Some of our employees participate in pension, postretirement, health care and stock-based compensation plans sponsored by CBI or an affiliate. Our allocated costs for employee benefits was determined by specific identification of the costs associated with our participating employees or based upon the percentage that our employees represent of total plan participants. Our allocated employee benefit plan costs were $1.8 million, $1.1 million and $1.0 million in 2011, 2010 and 2009, respectively. See Notes 11 and 12 for further details.

Management Fees —The Predecessor receives various other management services from CBI, including executive management, legal, treasury, accounting, tax, internal audit and information technology (“IT”) services. Our allocated cost for these services was based upon specific identification of costs incurred on our behalf or a reasonable estimate of costs incurred on our behalf, such as relative revenues. Our allocated cost for management services was $2.3 million, $3.6 million and $1.5 million in 2011, 2010 and 2009, respectively.

Loss on Sale of Receivables —The Predecessor participates in an accounts receivable securitization program sponsored by CBI for certain of its subsidiaries. Under this program, we continuously sell certain trade accounts receivable to CBF at a 2.5% discount to the receivables’ face value. In turn, CBF grants, without recourse, a senior undivided interest in the pooled receivables to commercial paper conduits in exchange for cash. The loss on sale of these assets was $3.5 million in 2011, $1.8 million in 2010 and $1.2 million in 2009. See Note 6 for further details.

Interest Expense— On December 31, 2010, CBI restructured its data center legal entities, including their intercompany borrowings. The Predecessor issued a $400 million note to CBI, which bears interest at 7.25%, and matures in 2018. Interest on this note is settled monthly through CBI’s centralized cash management program. Interest expense of $29 million was recognized on this note in 2011, with no such cost in prior years.

The Predecessor participates in CBI’s centralized cash management program. On a periodic basis, all excess cash is transferred to CBI’s corporate cash accounts. Likewise, substantially all funds to finance our operations, as

F-43

well as capital expenditures, are funded by CBI. Advances and borrowings between affiliates are governed by an intercompany cash management agreement. Effective November 19, 2010, all advances/borrowings bear interest at the average 30-day Eurodollar rate for the calendar month plus the applicable credit spread for Eurodollar rate borrowings charged for CBI’s revolving line of credit. Prior to this date, the interest rate applied to such advances and borrowings was CBI’s short-term borrowing rate. The average rate earned or charged was 5.0% in 2011, 4.2% in 2010 and 2.4% in 2009. All borrowings are payable upon demand. As of December 31, 2011 and 2010, borrowings of $80.2 million and $13.6 million, respectively, were presented within related party notes payable in the accompanying financial statements. As of December 31, 2010, advances of $11.6 million were outstanding from related parties. Net interest expense recognized on notes due to or from related parties was $1.1 million in both 2011 and 2010 and $0.6 million in 2009.

14. Restructuring Charges

In 2010, the Predecessor terminated a sales commission plan in order to transition to a common plan across all its locations. Effective January 1, 2011, all sales commissions are calculated as a percentage of the initial customer billing and paid at lease commencement. Prior to this date, certain sales commissions were determined as a percentage of monthly billings over the term of the customer relationship. A restructuring charge of $1.4 million was recognized in 2010 to settle all remaining commission obligations associated with the terminated plan. As of December 31, 2010, this liability was presented within accounts payable and accrued expenses in the accompanying balance sheets. This amount was paid in full in 2011. No restructuring charges were recognized in 2011 or 2009.

15. Income Taxes

The Predecessor is included in CBI’s consolidated tax return. The Predecessor has accounted for income taxes on a separate company basis. Income tax expense consists of the following:


	Year Ended December 31,
(dollars in millions)	2011		2010			2009
Income tax expense (benefit):
Continuing operations	$	2.2	$	2.7		$	3.9
Loss on sale of real estate improvements		—		(0.1	)		—

Total	$	2.2	$	2.6		$	3.9


	Year Ended December 31,
(dollars in millions)	2011			2010		2009
Current:
Federal	$	—		$	—	$	—
Foreign		—			—		—
State and local		0.6			0.3		—

Total current		0.6			0.3		—
Deferred:
Federal		1.5			2.1		3.4
Foreign		(0.2	)		—		—
State and local		—			0.3		0.4

Total deferred		1.3			2.4		3.8
Valuation allowance		0.3			—		0.1

Total	$	2.2		$	2.7	$	3.9

Current tax expense is considered paid as incurred through CBI’s centralized cash management program.

F-44

The following is a reconciliation of the statutory federal income tax rate with the Predecessor’s effective tax rate for each year:


	Year Ended December 31,
	2011			2010			2009
U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of federal income tax		11.6			5.7			2.4
Change in valuation allowance, net of federal income tax		6.6			0.3			0.3
Nondeductible portion of meals and entertainment		3.6			1.5			0.7
Effects of foreign income taxes		2.2			—			—
Other differences, net		0.4			0.2			0.1

Effective tax rate		59.4	%		42.7	%		38.5	%

The components of the Predecessor’s deferred tax assets and liabilities are as follows:


	December 31,
(dollars in millions)	2011			2010
Deferred tax assets:
Net operating loss carryforwards	$	16.0		$	7.7
Unearned revenue		5.7			4.2
Other		0.3			0.9

Total deferred tax assets		22.0			12.8
Valuation allowance		(0.3	)		(0.1	)

Total deferred tax assets, net of valuation allowance		21.7			12.7

Deferred tax liabilities:
Real estate and other property		17.5			8.2
Employee compensation		1.7			0.6
Other		0.6			0.5

Total deferred tax liabilities		19.8			9.3

Net deferred tax assets	$	1.9		$	3.4

As of December 31, 2011, the Predecessor had approximately $43.4 million of federal tax operating losses with a deferred tax asset value of $15.2 million, state and local tax net operating loss carryforwards of $0.7 million, and foreign net operating loss carryforwards of $0.1 million. The majority of the tax loss carryforwards will expire between 2029 and 2031.

The ultimate realization of the deferred income tax assets depends upon the Predecessor’s ability to generate future taxable income during the periods in which basis differences and other deductions become deductible and prior to the expiration of the net operating loss carryforwards. Based upon historical and future projected earnings, we believe the Predecessor will fully utilize federal and state net operating loss carryforwards prior to their expiration. Management has concluded that it is more likely than not that certain foreign and local tax loss carryforwards will not be realized prior to their expiration. As of December 31, 2011 and 2010, the valuation allowance associated with these net operating losses was $0.3 million and $0.1 million, respectively.

As of December 31, 2011 and 2010, there were no unrecognized tax benefits. We do not currently anticipate that the amount of unrecognized tax benefits will change significantly over the next year.

The Predecessor files separate tax returns in various state, local and foreign jurisdictions. The Predecessor is included in the consolidated filings of CBI and its subsidiaries for the federal jurisdiction and certain state and local jurisdictions. With a few exceptions, CBI and its subsidiaries are no longer subject to U.S. federal, state or local examinations for years prior to 2008.

F-45

16. Commitment and Contingencies

Guarantee of CBI Debt

As of December 31, 2011, CBI has issued $2.2 billion of unsecured long-term debt which has been guaranteed by the following CBI subsidiaries: CyrusOne Inc., CyrusOne Foreign Holdings LLC, GramTel Inc., Cincinnati Bell Entertainment, Inc., Cincinnati Bell Any Distance, Inc., Cincinnati Bell Telecommunications Services LLC, Cincinnati Bell Wireless LLC, CBTS Software LLC, Cincinnati Bell Shared Services LLC, Cincinnati Bell Technology Solutions, Inc., Cincinnati Bell Any Distance of Virginia LLC, and eVolve Business Solutions LLC.

•

upon the sale of all of the capital stock of a subsidiary,

•

if CBI designates the subsidiary as an unrestricted subsidiary under the terms of its indentures, or

•

if the subsidiary is released as a guarantor from CBI’s credit facility.

The following table summarizes the face value of CBI debt which has been guaranteed by the Predecessor and other CBI subsidiaries as of December 31, 2011:


($ in millions)
CBI Corporate Credit Facility	$	—
7% Senior Notes due 2015		250.0
8 ¹ / ₄ % Senior Notes due 2017		500.0
8 ³ / ₄ % Senior Subordinated Notes due 2018		625.0
8 ³ / ₈ % Senior Notes due 2020		775.0

Total	$	2,150.0

While the maximum amount that the CBI subsidiaries whose operations comprise the Predecessor could be required to pay pursuant to this guarantee is $2.2 billion, the actual amount that the CBI subsidiaries may be required to repay pursuant to this guarantee is not determinable. The amount payable would be determined based upon the amount of CBI’s unpaid principal and interest, as well as the amounts that other guarantors could be required to pay.

The following are the key terms of CBI’s debt which is guaranteed by the same subsidiaries referenced above:

Corporate Credit Facility —CBI’s corporate credit facility provides a $210 million revolving line of credit. Borrowings under this facility bear interest, at CBI’s election, at a rate per annum equal to (i) LIBOR plus the applicable margin or (ii) the base rate plus the applicable margin. The applicable margin is based on financial ratios and ranges between 4.25% and 5.00% for LIBOR rate advances and 3.25% and 4.00% for base rate advances. Base rate is the greater of the bank prime rate, the LIBOR rate plus one percent or the federal funds rate plus one-half percent. As of December 31, 2011, CBI had no outstanding borrowings or letters of credit drawn on this facility. This line of credit terminates in June 2014.

CBI’s obligations under its corporate credit facility are collateralized by perfected first priority pledges and security interests in the following:

•

substantially all of the equity interests of CBI’s U.S. subsidiaries (other than CBF and subsidiaries of CBT, Cincinnati Bell Extended Territories LLC (“CBET”) and certain immaterial subsidiaries) and 66% of its equity interests in foreign subsidiaries; and

•

certain personal property and intellectual property of CBI and its subsidiaries (other than that of CBT, CBET and certain immaterial subsidiaries) with a total carrying value of approximately $700 million as of December 31, 2011.

F-46

7% Senior Notes due 2015 —Interest on the 7% Senior Notes is payable semi-annually in cash in arrears on February 15 and August 15 of each year. The 7% Senior Notes are unsecured senior obligations ranking equally with all existing and future senior debt and ranking senior to all existing and future senior subordinated indebtedness and subordinated indebtedness. The indenture governing the 7% Senior Notes provides for customary events of default, including for nonpayment at final maturity and for a default of any other existing debt instrument that exceeds $20 million.

8 ¹ / ₄ % Senior Notes due 2017 —Interest on the 8 ¹ / ₄ % Senior Notes is payable semi-annually in cash in arrears on April 15 and October 15 of each year. The 8 ¹ / ₄ % Senior Notes are unsecured senior obligations ranking equally with all existing and future senior debt and ranking senior to all existing and future senior subordinated indebtedness and subordinated indebtedness. The indenture governing the 8 ¹ / ₄ % Senior Notes provides for customary events of default, including for nonpayment at final maturity and for a default of any other existing debt instrument that exceeds $35 million.

8 ³ / ₄ % Senior Subordinated Notes due 2018 —Interest on the 8 ³ / ₄ % Senior Subordinated Notes is payable semi-annually in cash in arrears on March 15 and September 15 of each year. The 8 ³ / ₄ % Senior Subordinated Notes are unsecured senior subordinated obligations ranking junior to all existing and future senior debt, ranking equally to all existing and future senior subordinated indebtedness, and ranking senior to all existing and future subordinated indebtedness. The indenture governing the 8 ³ / ₄ % Senior Subordinated Notes provides for customary events of default, including for nonpayment at final maturity and for a default of any other existing debt instrument that exceeds $35 million.

8 ³ / ₈ % Senior Notes due 2020 —Interest on the 8 ³ / ₈ % Senior Notes is payable semi-annually in cash in arrears on April 15 and October 15 of each year. The 8 ³ / ₈ % Senior Notes are unsecured senior obligations ranking equally with all existing and future senior debt and ranking senior to all existing and future senior subordinated indebtedness and subordinated indebtedness. The indenture governing the 8 ³ / ₈ % Senior Notes provides for customary events of default, including for nonpayment at final maturity and for a default of any other existing debt instrument that exceeds $35 million.

The following table summarizes the contractual maturities of CBI’s debt as of December 31, 2011. CBI may redeem any of these notes earlier than their contractual maturity date at redemption prices stated in each indenture.


(dollars in millions)
2012	$	—
2013		—
2014		—
2015		250.0
2016		—
Thereafter		1,900.0

Total	$	2,150.0

In the event that CBI defaults on any of the aforementioned obligations prior to release of the guarantees, the Predecessor may be called upon to repay all or a portion of the unpaid amounts. The maximum amount that the Predecessor could be required to pay pursuant to its guarantees is not determinable. The amount payable would be determined based upon the amount of CBI’s unpaid principal and interest as well as the amounts that other guarantors could be required to pay. As of the date of this report, CBI was current on all its debt service obligations.

Affiliate Guarantees of Lease Obligations

CBI has guaranteed our performance under certain leases. CBI has also issued a letter of credit to provide assurance that we will meet our lease commitments. As of December 31, 2011, this outstanding letter of credit

F-47

was $16.9 million. This letter of credit expires in December 2012, but is generally renewed on an annual basis. Fees for maintaining this letter of credit are paid by CBI and allocated to the Predecessor through management fees. These fees were $0.4 million in 2011, $0.7 million in 2010, and $0.4 million in 2009.

Performance Guarantees

Customer contracts generally require specified levels of performance related to uninterrupted service and cooling temperatures. If these performance standards are not met, the Predecessor could be obligated to issue billing credits to the customer. Management assesses the probability that a performance standard will not be achieved. As of December 31, 2011 and 2010, no amounts had been accrued for performance guarantees.

Operating Leases

The Predecessor leases certain data center facilities and equipment from third parties. Operating lease expense was $5.7 million, $1.5 million and $0.9 million in 2011, 2010 and 2009, respectively. Certain of these leases provide for renewal options with fixed rent escalations beyond the initial lease term.

At December 31, 2011, future minimum lease payments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year are as follows:


(dollars in millions)
2012	$	5.5
2013		3.4
2014		0.9
2015		0.7
2016		0.4
Thereafter		1.0

Total	$	11.9

Indemnifications

During the normal course of business, the Predecessor makes certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. These include (i) intellectual property indemnities to customers in connection with the use, sales, and/or license of products and services, (ii) indemnities to vendors and service providers pertaining to claims based on negligence or willful misconduct and (iii) indemnities involving the representations and warranties in certain contracts. The majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum potential for future payments that the Predecessor could be obligated to make.

Purchase Commitments

As of December 31, 2011, the Predecessor was committed to purchase a 659,340 square foot building located on 30 acres of land in Dallas, Texas for $23.4 million. In January 2012, the purchase of this property was completed. This building will be developed into a data center.

The Predecessor also has non-cancelable purchase commitments related to certain services. These agreements range from one to two years and provide for payments for early termination or require minimum payments for the remaining term. As of December 31, 2011, the minimum commitments for these arrangements were $24.8 million. The Predecessor also has purchase orders and contracts related to construction of data center facilities and equipment. The Predecessor generally has the right to cancel open purchase orders prior to delivery and to terminate the contracts without cause.

F-48

Contingencies

Contingent Compensation Plan

Some of the Predecessor’s employees participate in a contingent long-term incentive program sponsored by CBI. Payment is contingent upon the completion of a qualifying transaction and attainment of an increase in the equity value of the data center business as defined in the plans. The maximum payout is limited to $60 million and would be funded by CBI. Additional awards may be granted in future periods. No compensation expense has been recognized in the accompanying financial statements for this plan as payment was not deemed probable.

F-49

Data Center Predecessor

Schedule III

Real Estate Properties and Accumulated Depreciation

December 31, 2011


(dollars in millions)	Initial Costs						Cost Capitalized Subsequent to Acquisition						Gross Carrying Amount 12/31/2011
Description	Land		Building and Improvements		Equipment		Land		Building and Improvements		Equipment		Land		Buildings and Improvements		Equipment		Accumulated Depreciation and Amortization		Date of Acquisition
West Seventh St., Cincinnati, OH (7th Street)	$	0.9	$	42.2	$	—	$	—	$	64.6	$	2.4	$	0.9	$	106.8	$	2.4	$	51.9		1999
Parkway Dr., Mason, OH (Mason)		—		—		—		—		20.0		0.2		—		20.0		0.2		7.4		2004
Industrial Rd., Florence, KY (Florence)		—		7.7		—		—		40.2		0.1		—		47.9		0.1		16.8		2005
Goldcoast Dr., Cincinnati, OH (Goldcoast)		0.6		—		—		—		6.7		—		0.6		6.7		—		1.2		2007
Knightsbridge Dr., Hamilton, OH (Hamilton)		—		9.5		—		—		40.7		2.9		—		50.2		2.9		11.8		2007
E. Monroe St., South Bend, IN (Monroe St.)		—		—		—		—		2.9		0.9		—		2.9		0.9		2.1		2007
Bridge St., Grand Rapids, MI (a)		—		—		—		—		0.9		—		—		0.9		—		0.9		2007
Springer St., Lombard, IL (Lombard)		—		3.2		—		—		13.7		—		—		16.9		—		3.6		2008
Crescent Circle, South Bend, IN (Blackthorn)		—		1.1		—		—		1.7		—		—		2.8		—		0.6		2008
Kingsview Dr., Lebanon, OH (Lebanon)		4.0		12.3		—		—		58.3		1.0		4.0		70.6		1.0		9.2		2008
McAuley Place, Blue Ash, OH (Blue Ash)		—		2.6		—		—		0.3		—		—		2.9		—		0.5		2009
Westway Park Blvd., Houston, TX (Houston West)		1.4		21.4		0.1		—		50.8		1.2		1.4		72.2		1.3		3.9		2010
Southwest Fwy., Houston, TX (Galleria)		—		56.0		2.0		—		9.0		0.9		—		65.0		2.9		8.4		2010
E. Ben White Blvd., Austin, TX (Austin 1)		—		11.9		0.2		—		2.5		0.3		—		14.4		0.5		2.1		2010
S. State Highway 121 Business Lewisville, TX (Lewisville)		—		46.2		2.2		—		31.0		1.3		—		77.2		3.5		9.1		2010
Marsh Lane Carrollton, TX		—		—		—		—		0.2		0.2		—		0.2		0.2		—		2010
Midway Rd., Carrollton, TX		—		1.8		—		—		0.2		0.2		—		2.0		0.2		1.1		2010
Bryan St., Dallas, TX		—		0.1		—		—		—		—		—		0.1		—		0.1		2010
North Freeway, Houston, Texas (Greenspoint)		—		—		—		—		1.3		—		—		1.3		—		0.4		2010
South Ellis Street Chandler, AZ (Phoenix)		15.0		—		—		—		3.9		—		15.0		3.9		—		—		2011
Westover Hills Blvd., San Antonio, TX (San Antonio)		4.6		—		—		—		3.5		—		4.6		3.5		—		—		2011
Metropolis Dr., Austin, Texas (Austin 2)		—		—		—		—		22.7		—		—		22.7		—		—		2011
Kestral Way (London)		—		16.5		—		—		1.0		—		—		17.5		—		0.1		2011
Jurong East (Singapore)		—		9.0		—		—		—		—		—		9.0		—		—		2011

(a)	This lease expired in January 2012.

The aggregate cost of the total properties for federal income tax purposes was $548.7 million at December 31, 2011.

F-50

Historical Cost and Accumulated Depreciation and Amortization

The following table reconciles the historical cost and accumulated depreciation for the years ended December 31, 2011, 2010, and 2009.


	Year Ended December 31,
(dollars in millions)	2011			2010			2009
Property
Balance-Beginning of Period	$	498.4		$	317.6		$	290.6
Disposals		(1.2	)		(0.5	)		—
Additions (acquisitions and improvements)		163.0			181.3			27.0

Balance, end of period	$	660.2		$	498.4		$	317.6

Accumulated Depreciation
Balance-Beginning of Period	$	94.7		$	69.0		$	54.4
Additions (depreciation and amortization expense)		37.7			25.8			14.6
Deductions during period		(1.2	)		(0.1	)		—

Balance, end of period	$	131.2		$	94.7		$	69.0

Additions to buildings and improvements were $108.8 million, $160.1 million and $65.7 million in 2011, 2010 and 2009, respectively. In 2010, the acquisition of Cyrus Networks added $136.8 million to buildings and improvements. Disposals of buildings and improvements were $0.2 million in 2011 and $0.5 million in 2010. The after-tax loss on disposal of buildings and improvements was $0.1 million in 2010.

F-51

Cyrus Networks, LLC

Condensed Balance Sheet (Unaudited)

March 31, 2010


Assets

Current Assets
Cash	$	10,090,629
Accounts receivable, net of allowance of $224,538		6,223,418
Prepaid expenses and other		3,021,216

Total current assets		19,335,263


Property and Equipment, at Cost
Buildings and improvements		138,354,859
Process equipment		6,249,151
Computer hardware		2,098,106
Software		481,026
Office furniture and equipment		597,422

		147,780,564
Less accumulated depreciation and amortization		(13,484,128	)

Depreciable property and equipment, net		134,296,436
Construction in progress		5,677,531

Total property and equipment, net		139,973,967


Other Assets
Goodwill		62,854,019
Intangible assets, net		24,831,667
Deferred costs, net		8,074,329
Other		151,049

Total other assets		95,911,064

Total Assets	$	255,220,294


Liabilities and Member’s Equity
Current Liabilities
Current maturities of long-term debt	$	2,500,000
Accounts payable		4,982,473
Accrued expenses		2,233,335
Unearned revenue		4,507,475
Deferred installation charges		3,903,765
Accrued interest		703,125

Total current liabilities		18,830,173

Long-term Debt, Net of Current Portion		97,500,000

Other Long-term Obligations		29,059,340

Deferred Installation Charges, Net of Current Portion		7,848,434

Total liabilities		153,237,947

Member’s Equity		101,982,347

Total Liabilities and Member’s Equity	$	255,220,294

See Notes to Condensed Financial Statements

F-52

Cyrus Networks, LLC

Condensed Statements of Income (Unaudited)

Three Months Ended March 31, 2010 and 2009


	Three Months Ended March 31,
	2010			2009
Net Sales	$	18,333,425		$	11,825,242
Cost of Sales		4,826,893			3,591,658

Gross Profit		13,506,532			8,233,584


Operating Expenses
General and administrative		2,248,953			1,224,282
Selling and marketing		1,034,381			757,178
Depreciation and amortization		3,473,311			1,711,162

		6,756,645			3,692,622


Operating Income		6,749,887			4,540,962


Other Income (Expense)
Interest expense		(2,851,264	)		(2,015,227	)
Rental income		—			68,670
Other income, net		1,687			31,622

		(2,849,577	)		(1,914,935	)


Income Before Income Taxes		3,900,310			2,626,027

Provision for Income Taxes
Texas franchise tax		126,000			75,000

Net Income	$	3,774,310		$	2,551,027

See Notes to Condensed Financial Statements

F-53

Cyrus Networks, LLC

Condensed Statements of Member’s Equity (Unaudited)

Three Months Ended March 31, 2010 and 2009


	Three Months Ended March 31,
	2010		2009
Member’s equity, beginning balance	$	97,787,406	$	61,893,466
Capital contributions (including non-cash stock compensation)		420,631		—
Net income		3,774,310		2,551,027


Member’s equity, ending balance	$	101,982,347	$	64,444,493

See Notes to Condensed Financial Statements

F-54

Cyrus Networks, LLC

Condensed Statements of Cash Flows (Unaudited)

Three Months Ended March 31, 2010 and 2009


	Three Months Ended March 31,
	2010			2009
Operating Activities
Net income	$	3,774,310		$	2,551,027
Items not requiring cash:
Depreciation and amortization		3,473,310			1,711,162
Provision for bad debts		30,000			101,000
Loss on sale of property and equipment		18,500			—
Stock compensation expense		420,631			—
Noncash interest expense		607,729			302,209
Changes in:
Accounts receivable		(1,316,877	)		1,140,977
Deferred costs		447,350			15,717
Unearned revenue		(122,274	)		529,991
Accounts payable and accrued expenses		467,895			(3,774,638	)
Deferred installation charges		121,321			547,250
Other assets and liabilities		(279,936	)		(1,381,149	)

Net cash provided by operating activities		7,641,959			1,743,546


Investing Activities
Purchases of property and equipment		(6,885,693	)		(3,677,657	)
Return of escrow on Houston lease		2,400,000			—

Net cash used in investing activities		(4,485,693	)		(3,677,657	)


Financing Activities
Borrowing on revolving facility		—			2,000,000
Principal payments on long-term debt		—			(101,031	)
Payments on lease obligations		(308,541	)		(75,247	)

Net cash used in financing activities		(308,541	)		1,823,722


Increase (Decrease) in Cash		2,847,725			(110,389	)

Cash, Beginning of Period		7,242,904			1,314,865


Cash, End of Period	$	10,090,629		$	1,204,476

See Notes to Condensed Financial Statements

F-55

Cyrus Networks, LLC

Notes to Condensed Financial Statements

March 31, 2010

Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Cyrus Networks, LLC (the “Company”) is a wholly owned subsidiary of Cy-One Parent LLC (the Parent Company) and is a Delaware limited liability company. The Parent Company is a wholly owned subsidiary of Cy-One Holdings LLC (“Holdings”), a Delaware limited liability company and a guarantor for the Company’s debt.

The Company earns revenues predominately from providing information technology infrastructure and colocation services for businesses in Houston, Dallas and Austin, Texas, and surrounding areas.

Basis of Presentation

The Condensed Financial Statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and, in the opinion of management, include all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for each period presented. The Company has evaluated subsequent events through May 20, 2010.

The adjustments referred to above are of a normal and recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to SEC rules and regulations.

These Condensed Financial Statements should be read in conjunction with the Company’s 2009 audited financial statements. Operating results for the three months ended March 31, 2010, are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2010.

Recently Issued Accounting Standards

In September 2009, new accounting guidance under ASC 605 related to revenue arrangements with multiple deliverables was issued. The guidance addresses the unit of accounting for arrangements involving multiple deliverables, how arrangement consideration should be allocated to the separate units of accounting and eliminates the criterion that objective and reliable evidence of fair value of any undelivered items must exist for the delivered item to be considered a separate unit of accounting. Such guidance is effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company has not yet assessed the impact of this guidance on the Company’s financial statements.

In September 2009, new accounting guidance under ASC 605 was issued regarding tangible products containing both software and non-software components that function together to deliver the product’s essential functionality. Such guidance is effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company has not yet assessed the impact of this guidance on the Company’s financial statements.

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Note 2: Acquired Intangible Assets

The carrying basis and accumulated amortization of recognized intangible assets at March 31, 2010, were as follows:


	Gross Carrying Amount		Accumulated Amortization
Customer relationships	$	24,400,000	$	4,473,333
Trade name		5,400,000		495,000

	$	29,800,000	$	4,968,333

The acquired intangible assets have a weighted-average useful life of approximately 18 years. Amortization expense for the three months ended March 31, 2010 and 2009, was $451,666.

Note 3: Revolving Loan

The Company has a $25,000,000 revolving line of credit expiring in 2014, the available portion of which is determined partially based on the amount of other debt outstanding, as well as a multiple of the previously reported last three months’ earnings before interest, taxes, depreciation and amortization (as defined under the Amended and Restated Credit Agreement). At March 31, 2010, there was no amount borrowed against this line of credit. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow (as defined under the Amended and Restated Credit Agreement). The line of credit is collateralized by a first lien on substantially all the assets of the Company. The Company has the option to pay interest based on either the prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter.

Note 4: Long-term Debt


Term loan (A)	$	100,000,000
Delayed Draw Term Loan (DDTL) (B)		—

		100,000,000
Less current maturities		2,500,000

Total long-term debt	$	97,500,000

(A)

Principal payments are due quarterly as specified under the Amended and Restated Credit Agreement and commence on December 31, 2010. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow (as defined under the Amended and Restated Credit Agreement). The Company has the option to pay interest based on either the prime rate or LIBOR, with a LIBOR floor of 2.00 percent, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At March 31, 2010, the Company had this principal balance under a LIBOR loan, plus 5.50 percent or 7.50 percent. The terms of the Amended and Restated Credit Agreement also place certain restrictions on payments to the member and others. This loan is secured by substantially all of the assets of the Company and matures November 20, 2014.

(B)

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cash flow (as defined under the Amended and Restated Credit Agreement). The Company has the option to pay interest based on either the prime rate or LIBOR, with a LIBOR floor of 2.00 percent, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. The Company had not made any draws against the DDTL funds at March 31, 2010. The terms of the Amended and Restated Credit Agreement also place certain restrictions on payments to the member and others. This loan is secured by substantially all of the assets of the Company and matures November 20, 2014.

Note 5: Other Long-term Obligations

The Company leases data center facilities and equipment used in its operations, some of which are required to be recorded in accordance with Accounting Standards Codification (ASC) 840, Leases . In certain situations, this guidance requires initial recording of the assets for which the Company is considered to be the owner due to lessee involvement in the assets’ construction at estimated fair value and offsetting amounts as liabilities.

At March 31, 2010, the Company had $29,059,340 of total long-term obligations relating to certain leases, all of which are recorded as long term on the balance sheet. For the three months ended March 31, 2010 and 2009, the Company recorded $607,727 and $302,209, respectively, of interest expense related to other long-term obligations.

Note 6: Operating Leases

Noncancellable operating leases for operational facilities, offices and equipment expire in various years through 2012. The facility leases typically contain renewal options for additional five-year terms and require the Company to pay its proportional share of all executory costs (property taxes, maintenance and insurance). In addition, the Company has a noncancellable ground lease for one of its buildings in Houston. This lease expires in 2066.

On March 3, 2010, the Company entered into a lease amendment for its Lewisville facility. The lease amendment expands the amount of space leased by 27,758 square feet, commences on March 3, 2010, and has an initial term of 13 years and six months with two five-year renewal options. In addition, the lease amendment extended the term on approximately 60,000 square feet of previously leased space at the same location by approximately four years.

Note 7: Unit Incentive Plan

Under the Holdings’ Amended and Restated Limited Liability Company Agreement dated July 3, 2007, Holdings is authorized to issue an unlimited number of Class C units. These shares are used as incentives for executive management and other employees as part of the Company’s overall compensation plan. The vesting of the Class C units differs by individual; but in all cases, one-fifth of the units vest in each of the five years following the grant date.

In the event of termination of employment, all non-vested units automatically revert to, and become, the property of Holdings. If the employee is an executive and is terminated for cause or resigns voluntarily when Holdings can demonstrate cause existed, the vested units will be purchased from the employee for an aggregate purchase price of $1. For all other cases where the executive employee resigns voluntarily, Holdings may elect to purchase all or any portion of the vested units at fair market value, as defined in the Incentive Share Agreements. For employees other than executives receiving the Class C shares, all vested and non-vested shares forfeit back to Holdings upon termination of employment.

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The following table summarizes unit incentive share activity for the three months ended March 31, 2010:


	Shares
Outstanding, December 31, 2009		13,770,696
Granted		303,318

Outstanding, March 31, 2010		14,074,014

Vested at March 31, 2010		7,304,763

The Company recognized compensation expense of $420,631 related to Class C units for the three months ended March 31, 2010. There was no compensation expense related to the Class C units recorded during the three months ended March 31, 2009, as the amount was considered immaterial to the financial statements due to the insignificant value of the Class C units at the date of grant. As of March 31, 2010, there was $428,661 of unrecognized compensation expense related to the Class C units, which is expected to be recognized over a weighted-average period of approximately two years. At March 31, 2010, the aggregate intrinsic value of these Class C units was approximately $39,407,239.

For Class C units issued in the first quarter of 2010, the weighted-average fair value at the dates of grant were estimated at $2.80 per unit using the payment expected to be received for each Class C unit based on the purchase price stated in the Letter of Intent signed in March 2010 and definitive agreement signed in May 2010 between the Company and Cincinnati Bell Inc. and Cincinnati Bell Technology Solutions Inc. (see Note 9).

Note 8: Disclosures About Fair Value of Assets and Liabilities

The carrying value of the Company’s financial instruments does not materially differ from their estimated fair values as of March 31, 2010.

Note 9: Subsequent Event

On May 12, 2010, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) pursuant to which Cincinnati Bell Inc. and Cincinnati Bell Technology Solutions Inc. (the “Buyer”) will acquire the equity interests of the Company for $525,000,000 in cash, less any indebtedness and transaction fees and other amounts, and subject to customary working capital and capital expenditure adjustment, as provided in the Purchase Agreement.

The Purchase Agreement contains customary representations, warranties, indemnities and covenants, including certain customary operating restrictions on the conduct of the business of the Company during the period from the execution of the Purchase Agreement to the closing of the acquisition. The Purchase Agreement requires that the Buyer use commercially reasonable efforts to arrange the Financing (as defined in the Purchase Agreement) and, if the Financing becomes unavailable, to arrange alternative financing on terms no less favorable to the Buyer. The Company is required to cooperate with the Buyer in connection with the arrangement of the Financing.

Each party’s obligation to consummate the acquisition is conditioned upon the expiration or termination of the applicable waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions, as described in the Purchase Agreement. The obligation of the Buyer to consummate the acquisition at the closing is not conditioned upon the availability of financing. The Company expects the closing of the acquisition to occur by the end of the second quarter of 2010.

The Purchase Agreement also reflects that the Buyer has entered into new employment agreements with four executive officers of the Company, which provide they will remain in their roles as executive officers of the Company after the closing of the acquisition.

The foregoing description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the Purchase Agreement.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Unitholder

Cyrus Networks, LLC

Houston, Texas

We have audited the accompanying balance sheet of Cyrus Networks, LLC, as of December 31, 2009, and the related statements of income, member’s equity and cash flows for the year then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit also included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cyrus Networks, LLC, as of December 31, 2009, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ BKD, LLP

Houston, Texas

October 7, 2010

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Cyrus Networks, LLC

Balance Sheet

December 31, 2009


Assets
Current Assets
Cash	$	7,242,904
Accounts receivable, net of allowance of $239,296		4,936,541
Prepaid expenses and other		5,366,395

Total current assets		17,545,840

Property and Equipment, At Cost
Building and improvements		137,093,241
Process equipment		5,630,348
Computer hardware		1,648,164
Software		474,932
Office furniture and equipment		553,836

		145,400,521
Less accumulated depreciation and amortization		10,462,485

Depreciable property and equipment, net		134,938,036
Construction in progress		1,190,382

Total property and equipment, net		136,128,418

Other Assets
Goodwill		62,854,019
Intangible assets, net		25,283,333
Deferred costs, net		8,521,679
Other		151,048

		96,810,079

Total assets	$	250,484,337

Liabilities and Member’s Equity
Current Liabilities
Current maturities of long-term debt	$	1,250,000
Accounts payable		4,593,291
Accrued expenses		2,154,622
Unearned revenue		4,629,749
Deferred installation charges		3,673,701
Accrued interest		928,239

Total current liabilities		17,229,602

Long-term Debt, Net of Current Portion		98,750,000

Other Long-term Obligations		28,760,152

Deferred Installation Charges, Net of Current Portion		7,957,177
Member’s Equity		97,787,406

Total liabilities and member’s equity	$	250,484,337

See Notes to Financial Statements

F-61

Cyrus Networks, LLC

Statement of Income

Year Ended December 31, 2009


Net Sales	$	58,298,398

Cost of Sales		17,803,322

Gross Profit		40,495,076

Operating Expenses
General and administrative		4,993,769
Selling and marketing		3,533,489
Depreciation and amortization		7,652,402

		16,179,660

Operating Income		24,315,416

Other Income (Expense)
Interest expense		(9,654,039	)
Rental income		135,671
Other expense		(22,126	)

		(9,540,494	)

Income Before Income Taxes		14,774,922

Provision for Income Taxes
Texas franchise tax		405,982

Net Income	$	14,368,940

See Notes to Financial Statements

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Cyrus Networks, LLC

Statement of Member’s Equity

Year Ended December 31, 2009


Balance, January 1, 2009	$	61,893,466
Capital contributions		21,525,000
Net income		14,368,940

Balance, December 31, 2009	$	97,787,406

See Notes to Financial Statements

F-63

Cyrus Networks, LLC

Statement of Cash Flows

Year Ended December 31, 2009


Operating Activities

Net income	$	14,368,940
Items not requiring cash:
Depreciation and amortization		7,652,402
Provision for bad debts		264,000
Loss on sale of property and equipment		109,941
Noncash interest		1,368,491
Changes in:
Accounts receivable		1,061,369
Deferred costs		(3,780,993	)
Unearned revenue		2,276,705
Accounts payable and accrued expenses		592,681
Deferred installation charges		5,729,891
Other current assets and liabilities		(2,319,093	)

Net cash provided by operating activities		27,324,334

Investing Activities
Purchases of property and equipment		(46,626,045	)
Escrow on Houston lease		(2,400,000	)

Net cash used in investing activities		(49,026,045	)

Financing Activities
Gross borrowings on first lien revolving facility		2,000,000
Principal payments on CapEx debt		(1,245,976	)
Principal payments on first lien debt		(3,636,604	)
Payoff of revolver with refinancing		(2,691,827	)
Payoff of first lien CapEx with refinancing		(9,199,124	)
Payoff of first lien term loan with refinancing		(24,611,514	)
Payoff on second lien term loan with refinancing		(27,000,000	)
Payoff on second lien CapEx line with refinancing		(9,684,675	)
Proceeds from issuance of long-term debt with refinancing		82,174,470
Capital contributions		21,525,000

Net cash provided by financing activities		27,629,750

Increase in Cash	$	5,928,039
Cash, Beginning of Year		1,314,865

Cash, End of Year	$	7,242,904

Supplemental Cash Flows Information
Interest paid	$	4,976,894
Accounts payable incurred for construction in progress at December 31		257,440
Property and equipment acquired by issuance of financing obligations		12,028,462
Texas franchise taxes paid		212,000

See Notes to Financial Statements

F-64

NOTES TO CYRUS NETWORKS, LLC FINANCIAL STATEMENTS

December 31, 2009

Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Cyrus Networks, LLC (the Company), is a wholly owned subsidiary of Cy-One Parent LLC (the Parent Company) and is a Delaware limited liability company. The Parent Company is a wholly owned subsidiary of Cy-One Holdings LLC (Holdings), a Delaware limited liability company and a guarantor for the Company’s debt.

The Company earns revenues predominately from providing IT infrastructure and colocation services (which are considered one operating segment) for businesses in Houston, Dallas and Austin, Texas, and surrounding areas. The Company extends unsecured credit to its customers, with credit extended to four customers exceeding 50 percent of accounts receivable at December 31, 2009.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2009, there were no cash equivalents.

The financial institutions holding the Company’s cash accounts are participating in the Federal Deposit Insurance Corporation’s (FDIC) Transaction Account Guarantee Program. Under that program, through December 31, 2010, all noninterest-bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account.

Accounts Receivable

Accounts receivable are stated at the amount billed to customers, plus any accrued and unpaid interest. The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Accounts receivable are ordinarily due 30 days after the issuance of the invoice. Accounts past due more than 120 days are considered delinquent. Interest accrues on delinquent accounts until the account is brought current or is written off. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. There was no material change in the allowance for doubtful accounts during 2009.

Property and Equipment

Property and equipment acquisitions are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is charged to expense on the straight-line basis over the estimated useful life of each asset. Building improvements are amortized over the shorter of the lease term or their estimated useful lives.


Buildings and improvements			3-20 years
Process equipment			2-7 years
Software and hardware			1-5 years
Furniture and fixtures			3-10 years

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Gross property and equipment includes $27,998,527 of assets related to three data center facilities for which the Company is considered the owner pursuant to accounting standards for lessee’s involvement in asset construction as of December 31, 2009. These assets are primarily included in the caption buildings and improvements. Accumulated amortization on these assets at December 31, 2009, is $280,073.

Goodwill

Goodwill is tested annually for impairment. If the implied fair value of goodwill is lower than its carrying amount, a goodwill impairment is indicated and goodwill is written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the financial statements.

Intangible Assets

Intangible assets are being amortized on the straight-line basis over periods ranging from 15 to 30 years. Such assets are periodically evaluated as to the recoverability of their carrying value.

Long-lived Asset Impairment

The Company evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value. No asset impairment was recognized during the year ended December 31, 2009.

Income Taxes

The Company’s member has elected to have the Company’s income taxed as a partnership under provisions of the Internal Revenue Code. Therefore, taxable income or loss is reported to the individual member for inclusion in his or her tax return and no provision for federal income taxes is included in these financial statements. The provision for income taxes reflected in these financial statements is for Texas franchise taxes only. The Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2005.

Significant changes were made to the Texas franchise tax during the 79 ^th and 80 ^th sessions of the Texas Legislature. The revised tax base is based on a taxable entity’s margin. The franchise tax is calculated at a rate of 1 percent on the lesser of three calculations: a) total revenue less cost of goods sold; b) total revenue less compensation; or c) total revenue times 70 percent.

Revenue Recognition

The Company provides services to customers, which includes non-recurring charges (such as installation charges at the origination of a contract) and recurring charges (such as ongoing maintenance and service charges through the life of the contract). Non-recurring charges billed at contract origination are recorded as deferred installation charges and amortized to income, on the straight-line basis, over the life of each contract. For certain new customers, the Company performs specific project work, such as planning and physically moving equipment to the data center. This project revenue is recognized as obligations until the project is completed. Recurring charges billed monthly (one month in advance of providing the services) are recorded as unearned revenue and recognized into income the following month (when the service is actually provided).

F-66

expense, on the straight-line basis, over the life of each contract. All expenses, including the use of third-party movers, related to project revenues are recognized as incurred during the project.

Taxes Collected From Customers and Remitted to Governmental Authorities

Taxes collected from customers and remitted to governmental authorities are presented in the accompanying statement of income on a net basis.

Note 2: Acquired Intangible Assets

The carrying basis and accumulated amortization of recognized intangible assets at December 31, 2009, were as shown below.


	Gross Carrying Amount		Accumulated Amortization
Customer relationships	$	24,400,000	$	4,066,667
Trade name		5,400,000		450,000

	$	29,800,000	$	4,516,667

The acquired intangible assets have a weighted-average useful life of approximately 18 years. Amortization expense for the year ended December 31, 2009, was $1,806,667. Estimated amortization expense for each of the following five years was:


2010	$	1,806,667
2011		1,806,667
2012		1,806,667
2013		1,806,667
2014		1,806,667

Note 3: Extinguishment of Debt

The Company retired all of its long-term debt and revolving line of credit during the year ended December 31, 2009, and replaced it with a new term loan and credit facility. Unamortized deferred financing costs, at the date of retirement, were written off and resulted in a $1,499,615 charge to expense in the accompanying statement of income.

Note 4: Revolving Loan

The Company has a $25,000,000 revolving line of credit expiring in 2014, the available portion of which is determined partially based on the amount of other debt outstanding, as well as a multiple of the previously reported last three months’ earnings before interest, taxes, depreciation and amortization (as defined under the Amended and Restated Credit Agreement). At December 31, 2009, there was no amount borrowed against this line of credit. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow (as defined under the Amended and Restated Credit Agreement). The line of credit is collateralized by a first lien on substantially all the assets of the Company. The Company has the option to pay interest based on either the prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter.

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Note 5: Long-term Debt


Term loan (A)	$	100,000,000
Delayed Draw Term Loan (DDTL) (B)		—

		100,000,000
Less current maturities		1,250,000

Total long-term debt	$	98,750,000

(A)

Principal payments are due quarterly as specified under the Amended and Restated Credit Agreement and commence on December 31, 2010. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow (as defined under the Amended and Restated Credit Agreement). The Company has the option to pay interest based on either the prime rate or LIBOR, with a LIBOR floor of 2.00 percent, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2009, the Company had this principal balance under a LIBOR loan, plus 5.50 percent or 7.50 percent. The terms of the Amended and Restated Credit Agreement also place certain restrictions on payments to the member and others. This loan is secured by substantially all of the assets of the Company and matures November 20, 2014.

(B)

The DDTL funds available for withdrawal totaled $25,000,000 as calculated under the Amended and Restated Credit Agreement through November 20, 2011. Quarterly principal payments are due starting December 31, 2011, as specified under the Amended and Restated Credit Agreement. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow (as defined under the Amended and Restated Credit Agreement). The Company has the option to pay interest based on either the prime rate or LIBOR, with a LIBOR floor of 2.00 percent, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. The Company had not made any draws against the DDTL funds at December 31, 2009. The terms of the Amended and Restated Credit Agreement also place certain restrictions on payments to the member and others. This loan is secured by substantially all of the assets of the Company and matures November 20, 2014.

Aggregate annual maturities of long-term debt at December 31, 2009, are as follows.


2010	$	1,250,000
2011		6,250,000
2012		11,250,000
2013		16,250,000
2014		65,000,000

	$	100,000,000

Note 6: Other Long-term Obligations

At December 31, 2009, the Company had $28,760,152 of total long-term obligations relating to certain leases, all of which are recorded as long term on the balance sheet. For 2009, the Company recorded $2,024,361 of interest expense related to other long-term obligations.

F-68

Aggregate annual maturities of other long-term obligations related to data center facilities at December 31, 2009, are as follows:


2010	$	1,793,295
2011		2,527,168
2012		2,591,464
2013		2,622,324
2014		2,684,884
Thereafter		21,742,947

		33,962,082
Less amounts representing interest		(29,792,896	)
Add estimated residual values		24,590,966

Present value	$	28,760,152

Note 7: Operating Leases

Future minimum lease payments at December 31, 2009, were:


2010	$	695,714
2011		490,071
2012		30,338
2013		20,130
2014		20,130
Later years		1,031,663

	$	2,288,046

Rental expense for operating leases for the year ended December 31, 2009, was $798,604.

Note 8: Profit Sharing Plan

The Company has a 401(k) profit sharing plan covering substantially all employees. The Company contributes 25 percent of each employee’s contribution up to 6 percent. Contributions to the 401(k) profit sharing plan were $115,561 for the year ended December 31, 2009.

Note 9: Unit Incentive Plan

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aggregate purchase price of $1. For all other cases where the executive employee resigns voluntarily, Holdings may elect to purchase all or any portion of the vested units at fair market value, as defined in the Incentive Share Agreements. For employees other than executives receiving the Class C shares, all vested and non-vested shares forfeit back to Holdings upon termination of employment.

Compensation expense related to the Class C units was not recorded during the year ended December 31, 2009, as the amount was considered immaterial to the financial statements due to the insignificant value of the Class C units at the date of grant.

Note 10: Disclosures About Fair Value of Assets and Liabilities

The following methods were used to estimate the fair value of all financial instruments recognized in the accompanying balance sheet at amounts other than fair value.

Cash

The carrying amount approximates fair value.

Long-term Debt and Other Long-term Obligations

Fair value is estimated based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities.

The following table presents estimated fair values of the Company’s financial instruments at December 31, 2009.


	Carrying Amount		Fair Value
Financial assets:
Cash	$	7,242,904	$	7,242,904
Financial liabilities:
Long-term debt		100,000,000		100,000,000
Other long-term obligations		28,760,152		29,327,909

Note 11: Significant Estimates and Concentrations

Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters are included as follows:

Major Customer

The Company received approximately 20 percent of its revenues from one customer for the year ended December 31, 2009.

Goodwill

As discussed in Note 1, the Company annually tests its goodwill for impairment. At the most recent testing date, the fair value of the Company exceeded its carrying value by approximately 130 percent. Estimated fair value of the Company was based principally on expected future income and cash flows. Due to the volatility of the current economic environment, management estimates of future income and cash flows are subject to significantly more uncertainty than during more stable environments. Management believes it has applied reasonable judgment in developing its estimates; however, unforeseen negative changes in the national, state or local economic environment may negatively impact those estimates in the near term.

F-70

Note 12: Subsequent Events

New Operating Lease

On March 3, 2010, the Company entered into a lease amendment for its S. State Hwy 121 Business (Lewisville) facility. The lease amendment expands the amount of space leased by 27,758 square feet, commences on March 3, 2010, and has an initial term of 13 years and six months with two five-year renewal options. In addition, the lease amendment extended the term on approximately 60,000 square feet of previously leased space at the same location by approximately four years.

Future estimated minimum lease payments related to space leased under this amendment are:


2010	$	55,516
2011		222,064
2012		222,064
2013		222,064
2014		222,064
Thereafter		1,924,538

	$	2,868,310

Definitive Agreement

On May 12, 2010, the Company entered into an Equity Purchase Agreement (the Purchase Agreement) pursuant to which Cincinnati Bell, Inc., and Cincinnati Bell Technology Solutions, Inc. (the Buyer), will acquire the equity interests of the Company for $525,000,000 in cash, less any indebtedness and transaction fees and other amounts, and subject to customary working capital and capital expenditure adjustment, as provided in the Purchase Agreement.

The Purchase Agreement contains customary representations, warranties, indemnities and covenants, including certain customary operating restrictions on the conduct of the business of the Company during the period from the execution of the Purchase Agreement to the closing of the acquisition. The Purchase Agreement requires that the Buyer use commercially reasonable efforts to arrange the financing (as defined in the Purchase Agreement) and, if the financing becomes unavailable, to arrange alternative financing on terms no less favorable to the Buyer. The Company is required to cooperate with the Buyer in connection with the arrangement of the financing.

The foregoing description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the Purchase Agreement.

Note 13: Recently Issued Accounting Standards

In June 2009, new accounting guidance under ASC 860, Transfers and Servicing , was issued. The guidance eliminates the concept of a qualifying special-purpose entity, changes the requirements for derecognizing financial assets, and requires additional disclosures that will provide greater transparency about transfers of

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financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. Such guidance is effective for fiscal years beginning after November 15, 2009. The Company does not expect the impact of this guidance to be material to the Company’s financial statements.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Unitholder

Cyrus Networks, LLC

Houston, Texas

We have audited the accompanying balance sheet of Cyrus Networks, LLC as of December 31, 2008, and the related statements of income, member’s equity and cash flows for the year then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit also included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cyrus Networks, LLC as of December 31, 2008, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ BKD, LLP

Houston, Texas

June 1, 2012

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Cyrus Networks, LLC Balance Sheet December 31, 2008


Assets

Current Assets
Cash	$	1,314,865
Accounts receivable, net of allowance of $328,182		6,261,910
Prepaid expenses and other		2,379,488

Total current assets		9,956,263

Property and Equipment, At Cost
Building and improvements		64,580,169
Construction in progress		2,276,292
Process equipment		3,169,009
Computer hardware		1,264,273
Software		385,361
Leasehold improvements		15,894,366
Office furniture and equipment		358,431

		87,927,901
Less accumulated depreciation and amortization		4,755,744

		83,172,157

Other Assets
Goodwill		62,854,502
Intangible assets, net		27,090,000
Deferred costs, net		3,068,006
Other		91,048

		93,103,556

Total assets	$	186,231,976

Liabilities and Member’s Equity

Current Liabilities
Current maturities of long-term debt	$	614,128
Accounts payable		3,365,670
Accrued expenses		2,768,895
Unearned revenue		2,353,044
Accrued interest		691,465
Deferred installation charges		1,564,355

Total current liabilities		11,357,557

Long-term Debt, Net of Current Portion		93,281,122

Other Long-term Obligations		15,363,199

Deferred Installation Charges, Net of Current Portion		4,336,632

Member’s Equity		61,893,466

Total liabilities and member’s equity	$	186,231,976

See Notes to Financial Statements

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Cyrus Networks, LLC Statement of Income Year Ended December 31, 2008


Net Sales	$	31,411,211
Cost of Sales		10,554,513

Gross Profit		20,856,698

Operating Expenses
General and administrative		3,010,168
Selling and marketing		2,475,057
Depreciation and amortization		7,335,914

		12,821,139

Operating Income		8,035,559

Other Income (Expense)
Interest expense		(7,489,610	)
Rental income		264,758
Other income		112,080

		(7,112,772	)

Income Before Income Taxes		922,787

Provision for Income Taxes
Texas franchise tax		239,094

Net Income	$	683,693

See Notes to Financial Statements

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Cyrus Networks, LLC Statement of Member’s Equity Year Ended December 31, 2008


Balance, January 1, 2008	$	61,159,774
Capital contributions		49,999
Net Income		683,693

Balance, December 31, 2008	$	61,893,466

See Notes to Financial Statements

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Cyrus Networks, LLC Statement of Cash Flows

Year Ended December 31, 2008


Operating Activities
Net income	$	683,693
Items not requiring cash:
Depreciation and amortization		7,335,914
Allowance for bad debts		328,182
Noncash interest expense		353,133
Changes in:
Accounts receivable		(3,864,219	)
Deferred costs		(395,557	)
Unearned revenue		1,060,071
Accounts payable and accrued expenses		(2,293,711	)
Deferred installation charges		4,917,901
Other current assets and liabilities		(901,178	)

Net cash provided by operating activities		7,224,229

Investing Activity
Purchases of property and equipment		(28,489,750	)

Net cash used in investing activity		(28,489,750	)

Financing Activities
Capital contributions		50,000
Net borrowings on first lien revolving facility		1,800,000
Principal payments on CapEx debt		(262,257	)
Proceeds from issuance of CapEx debt		22,650,000
Principal payments on first lien term loan		(1,987,493	)

Net cash provided by financing activities		22,250,250

Increase in Cash		984,729
Cash, Beginning of Year		330,136

Cash, End of Year	$	1,314,865

Supplemental Cash Flows Information
Interest paid	$	6,812,332
Accrued construction in progress costs		1,880,106
Property and equipment acquired by issuance of financing obligations		15,010,066
Goodwill adjustments		67,148

See Notes to Financial Statements

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NOTES TO CYRUS NETWORKS, LLC FINANCIAL STATEMENTS

December 31, 2008

Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Cyrus Networks, LLC (“the Predecessor Company,” the “Company” or “Cyrus Networks”), is a wholly owned subsidiary of Cy-One Holdings LLC (the Parent Company) and is a Delaware limited liability company. The Parent Company is a guarantor for the Company’s debt.

Cyrus Networks, LLC, earns revenues predominately from providing IT infrastructure and colocation services (which are considered one operating segment) for businesses in Houston and Dallas, Texas, and surrounding areas. The Company extends unsecured credit to its customers, with credit extended to four customers exceeding 51 percent of accounts receivable at December 31, 2008.

Use of Estimates

Cash and Cash Equivalents

Cash consists of funds held in bank accounts. The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2008, there were no cash equivalents.

The financial institution holding the Company’s cash accounts is participating in the Federal Deposit Insurance Corporation’s (FDIC) Transaction Account Guarantee Program. Under that program, through December 31, 2009, all noninterest-bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account.

Accounts Receivable

Accounts receivable are stated at the amount billed to customers plus any accrued and unpaid interest. The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Accounts receivable are ordinarily due 30 days after the issuance of the invoice. Accounts past due more than 120 days are considered delinquent. Interest accrues on delinquent accounts until the account is brought current or is written off. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer.

Property and Equipment


Buildings and improvements			3-20 years
Process equipment			2-7 years
Software and hardware			1-5 years
Furniture and fixtures			3-10 years

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Certain property and equipment are leased. Gross property and equipment includes $15,010,066 of assets related to a leased data center facility for which the Company is considered the owner pursuant to accounting standards for lessee’s involvement in asset construction as of December 31, 2008. These assets are primarily included in the caption buildings and improvements. Accumulated amortization on these assets at December 31, 2008, is $61,553.

Goodwill

Intangible Assets

Intangible assets are being amortized on the straight-line basis over periods ranging from 15 to 30 years. Such assets are periodically evaluated as to the recoverability of their carrying value.

Long-lived Asset Impairment

Income Taxes

The Company’s member has elected to have the Company’s income taxed as a partnership under provisions of the Internal Revenue Code and a similar section of the state income tax law. Therefore, taxable income or loss is reported to the individual members for inclusion in their respective tax returns and no provision for federal income taxes is included in these financial statements. The provision for income taxes reflected in these financial statements is for state franchise taxes only.

Uncertain Tax Positions

In accordance with Financial Accounting Standards Board (FASB) Staff Position No. FIN 48-3, the Company has elected to defer the effective date of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), until its fiscal year ended December 31, 2009. The Company has continued to account for any uncertain tax positions in accordance with literature that was authoritative immediately prior to the effective date of FIN 48, such as FASB Statement No. 109, Accounting for Income Taxes , and FASB Statement No. 5, Accounting for Contingencies .

Revenue Recognition

The Company provides services to customers which includes non-recurring charges (such as installation charges at the origination of a contract) and recurring charges (such as ongoing maintenance and service charges through the life of the contract). Non-recurring charges billed at contract origination are recorded as deferred installation charges and amortized to income, on the straight-line basis, over the life of each contract. For certain new customers, the Company performs specific project work, such as planning and physically moving equipment to the data center. This project revenue is recognized as obligations until the project is completed. Recurring charges billed monthly (one month in advance of providing the services) are recorded as unearned revenue and recognized into income the following month (when the service is actually provided).

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Additionally, the implementation and installation costs associated with the origination of the contracts (such as sales commissions and other implementation costs) are recorded as deferred costs and amortized into expense, on the straight-line basis, over the life of each contract. All expenses, including the use of third-party movers, related to project revenues are recognized as incurred during the project.

Taxes Collected From Customers and Remitted to Governmental Authorities

Taxes collected from customers and remitted to governmental authorities are presented in the accompanying statement of income on a net basis.

During 2007, the Predecessor Company was notified by the State of Texas Comptroller of Public Accounts that it would be undergoing a sales and use tax audit covering the period through June 30, 2007. An estimated liability was recorded based on the State’s preliminary assessment of underpaid taxes (including penalties and interest). During 2008, the Company contested certain of the State’s positions and received a final ruling with a lower assessment. As a result, the Company reduced the associated liability with a corresponding reduction to goodwill.

Note 2: Acquired Intangible Assets and Goodwill

The carrying basis and accumulated amortization of recognized intangible assets at December 31, 2008, were as follows.


	December 31, 2008
	Gross Carrying Amount		Accumulated Amortization
Customer relationships	$	24,400,000	$	2,440,000
Trade name		5,400,000		270,000
Non-compete agreements		3,180,000		3,180,000

	$	32,980,000	$	5,890,000

Amortization expense for the year ended December 31, 2008, was $3,926,667. Estimated amortization expense for each of the following five years was:


2009	$	1,806,667
2010		1,806,667
2011		1,806,667
2012		1,806,667
2013		1,806,667

During the year ended December 31, 2008, the carrying amount of goodwill was adjusted for the reduction in the liability related to the underpayment in sales and use taxes of a Predecessor Company, as well as an adjustment for Predecessor Company unearned revenue totaling $118,318.

Note 3: Line of Credit

The Company has a $5,000,000 revolving line of credit expiring in 2013, the available portion of which is determined partially based on the amount of other debt outstanding, as well as a multiple of the previously reported last three months’ earnings before interest, taxes, depreciation and amortization (as defined under the First Lien Credit Agreement). At December 31, 2008, there was $2,500,000 borrowed against this line of credit. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow as defined under the First Lien Credit Agreement. The line of credit is collateralized by a first lien on substantially all the assets of the Company. The Company has the option to

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pay interest based on either the prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2008, the Company had this principal balance under a LIBOR loan plus 4.00 percent or 5.83 percent.

Note 4: Long-term Debt


First lien term loan (A)	$	39,907,507
First lien revolving facility (see Note 3)		2,500,000
First lien capital expenditure facility (B)		14,803,068
Second lien term loan (C)		27,000,000
Second lien capital expenditure facility (D)		9,684,675

		93,895,250
Less current maturities		614,128

Total long-term debt	$	93,281,122

(A)

First lien term loan had an initial balance of $42,000,000 and a maturity date of July 3, 2013. Principal payments are due quarterly as specified under the First Lien Credit Agreement and commenced on December 31, 2007. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow as defined under the First Lien Credit Agreement. The Company has the option to pay interest based on either prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2008, the Company had this principal balance under a LIBOR loan, plus 4.00 percent or 5.83 percent. The terms of the First Lien Credit Agreement also place certain restrictions on payments to shareholders and others. This loan is secured by substantially all of the assets of the Company.

(B)

First lien capital expenditure facility originally totaled $15,217,500 available for draw down as calculated under the First Lien Credit Agreement through July 3, 2010. Quarterly principal payments of 1.875 percent of the outstanding balance at July 3, 2010, are due starting September 30, 2010, as specified under the First Lien Credit Agreement. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow as defined under the First Lien Credit Agreement. The Company has the option to pay interest based on either prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2008, the Company had this principal balance under a LIBOR loan, plus 4.00 percent or 5.83 percent. The terms of the First Lien Credit Agreement also place certain restrictions on payments to shareholders and others. This loan is secured by substantially all of the assets of the Company.

(C)

Second lien term loan has a balance of $27,000,000 and a maturity date of January 3, 2014. To the extent the first lien debt has been paid in full, any outstanding balance on this second lien term loan shall be due and payable in full if a change in control occurs. Also, to the extent the first lien debt has been paid in full, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow as defined under the Second Lien Credit Agreement. The Company has the option to pay interest based on either prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2008, the Company had this principal balance under a LIBOR loan, plus 7.25 percent or 9.08 percent. The terms of the Second Lien Credit Agreement also place certain restrictions on payments to shareholders and others. This loan, subordinate to the first lien debt, is secured by substantially all of the assets of the Company.

(D)

Second lien capital expenditure facility totaling $9,782,500 available for draw down as calculated under the Second Lien Credit Agreement through January 3, 2014, with a maturity date of January 3, 2014. To the extent the first lien debt has been paid in full, any outstanding balance on this second lien

F-81

capital expenditure facility shall be due and payable in full if a change in control occurs. Also, to the extent the first lien debt has been paid in full, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow as defined under the Second Lien Credit Agreement. The Company has the option to pay interest based on either prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2008, the Company had this principal balance under a LIBOR loan, plus 7.25 percent or 9.08 percent. The terms of the Second Lien Credit Agreement also place certain restrictions on payments to shareholders and others. This loan, subordinate to the first lien debt, is secured by substantially all of the assets of the Company.

Aggregate annual maturities of long-term debt at December 31, 2008, are as follows.


2009	$	614,128
2010		2,266,539
2011		4,173,424
2012		4,097,641
2013		46,058,843
Thereafter		36,684,675

	$	93,895,250

Note 5: Other Long-term Obligations

At December 31, 2008, the Company had $15,363,199 of total long-term obligations relating to a lease, all of which is recorded as long term on the balance sheet. For 2008, the Company recorded $459,128 of interest expense related to other long-term obligations.

Aggregate annual maturities of other long-term obligations related to the data center facility at December 31, 2008, are as follows:


2009	$	592,378
2010		1,236,738
2011		1,366,308
2012		1,366,308
2013		1,366,308
Thereafter		10,321,814

		16,249,854
Less amounts representing interest		(14,949,480	)
Add estimated residual values		14,062,825

Present value	$	15,363,199

Note 6: Operating Leases

Noncancellable operating leases for operational facilities, offices and equipment expire in various years through 2023. The facility leases typically contain renewal options for additional five-year terms and require the Company to pay its proportional share of all executory costs (property taxes, maintenance and insurance). In addition, the Company has a noncancellable ground lease for one of its buildings in Houston. This lease expires in 2066.

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Future minimum lease payments at December 31, 2008, were:


2009	$	549,602
2010		565,010
2011		359,367
2012		30,337
2013		19,718
Later years		1,051,793

	$	2,575,827

Rental expense for operating leases for the year ended December 31, 2008, was $560,956.

Note 7: Profit Sharing Plan

Note 8: Unit Incentive Plan

Under the Parent Company Amended and Restated Limited Liability Company Agreement dated July 3, 2007, the Parent Company is authorized to issue an unlimited number of Class C units. These shares are used as incentives for executive management and other employees as part of the Company’s overall compensation plan. The vesting of the Class C units differs by individual; but in all cases one fifth of the units vest in each of the five years following the grant date.

In the event of termination of employment, all non-vested units automatically revert to, and become, the property of the Parent Company. If the employee is an executive and is terminated for cause or resigns voluntarily when the Parent Company can demonstrate cause existed, the vested units will be purchased from the employee for an aggregate purchase price of $1.00. For all other cases where the executive employee resigns voluntarily, the Parent Company may elect to purchase all or any portion of the vested units at fair market value, as defined in the Incentive Share Agreements. All other employees receiving the Class C shares have all vested and non-vested shares forfeited back to company upon termination of employment.

Compensation expense related to the new Class C plans was not recorded during the year ended December 31, 2008, as the amount was considered immaterial to the consolidated financial statements due to the insignificant value of the Class C units at the date of grant.

Note 9: Related-party Transactions

The Company leases a portion of its Houston facility under a long-term operating ground lease with a partnership that had ownership in the Predecessor Company. Certain members of this partnership currently hold a portion of the Company’s Class B units. The lease expires in 2066 and annual lease payments for each year are $18,000.

Note 10: Disclosures About Fair Value of Assets and Liabilities

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheet at amounts other than fair value.

Cash and Cash Equivalents

The carrying amount approximates fair value.

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Long-term Debt and Other Long-term Obligations

Fair value is estimated based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities.

The following table presents estimated fair values of the Company’s financial instruments in accordance with FAS 107 at December 31, 2008.


	December 31, 2008
	Carrying Amount		Fair Value
Financial assets:
Cash	$	1,314,865	$	1,314,865
Financial liabilities:
Long-term debt		93,895,250		93,895,250
Other long-term obligations		15,363,199		15,363,199

Note 11: Significant Estimates and Concentrations

Major Customer

The Company received approximately 14 percent of if its revenues from one customer for the year ended December 31, 2008.

Note 12: Subsequent Event

On March 30, 2009, the Company entered into an agreement for a noncancellable operating lease of property in the Austin, Texas, area, where it is constructing a new data center facility. The lease commences on April 1, 2009, and has an initial term of 10 years and 10 months with two five-year renewal options. The lease covers approximately 50,000 square feet of space.

In April 2009, the Company entered into a non-cancellable operating lease of property in the Houston, Texas, area, where it is constructing a new data center facility through a build-to-suit arrangement. The lease is subject to the landlord obtaining a firm loan commitment from an institutional lender within 20 days of lease execution for purposes of constructing the building shell. The lease is also subject to the Company’s approval of the preliminary building specifications and design, and is subject to the property owner’s approval as to the use and design. The lease commencement date is the later of (i) receipt of a certificate of occupancy by Landlord for the shell building; (ii) landlord’s substantial completion of the shell building; and (iii) seven months following the construction start date estimated to be May 1, 2009. The annual basic rent for this property will be finalized when the final building costs have been determined upon facility completion; however, the estimated amount of rent is included in the table below. The lease has an initial term of 15 years with three five-year renewal options.

Future estimated minimum lease payments for these two leases combined are:


2009	$	36,500
2010		536,553
2011		1,164,007
2012		1,228,354
2013		1,259,267
Thereafter		14,149,010

	$	18,373,691

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Note 13: Recently Issued Accounting Standards

FASB Staff Position (FSP) No. 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets , was issued in December 2008. It expands the disclosures required by SFAS No. 132(R), Employers’ Disclosures about Pensions and Other Postretirement Benefits , to discuss the assumptions and risks used to compute the fair value of each category of plan assets. FSP No. 132(R)-1 becomes effective for fiscal years ending after December 15, 2009. Early adoption is permitted. As this statement relates only to disclosure, it will not have a financial impact on the Company.

In June 2008, the FASB issued FSP No. EITF 08-3, Accounting by Lessees for Maintenance Deposits . This issue applies to deposits made by a lessee to the lessor that are refunded to the lessee only to the extent that the lessee performs specified maintenance on the leased asset. The lessee should expense or capitalize maintenance costs according to its maintenance accounting policy when maintenance of the leased asset is performed. When a lessee determines that it is less than probable that an amount on deposit will be returned, the lessee should recognize that amount as an additional expense. FSP No. EITF 08-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and for interim periods within those years. The Company expects the impact of this statement to be immaterial to the Company’s financial statements.

SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (“U.S. GAAP”) , was issued in May 2008. SFAS No. 162 reorganizes the U.S. GAAP hierarchy to provide a consistent framework for determining the accounting principles that should be used when preparing U.S. GAAP financial statements. SFAS No. 162 is effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles . The adoption of SFAS No. 162 is not expected to have any impact on the Company’s financial statements.

FSP No. 142-3, Determination of the Useful Life of Intangible Assets , was issued in April 2008. It amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets . FSP No. 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. The Company expects the impact of this statement to be immaterial to the Company’s financial statements.

SFAS No. 141(R), Business Combinations , was issued in December 2007. SFAS No. 141(R) requires that, upon initially obtaining control, an acquirer will recognize 100 percent of the fair values of acquired assets, including goodwill, and assumed liabilities, with only limited exceptions, even if the acquirer has not acquired 100 percent of its target. Additionally, contingent consideration arrangements will be presented at fair value at the acquisition date and included on that basis in the purchase price consideration and transaction costs will be expensed as incurred. SFAS No. 141(R) also modifies the recognition for preacquisition contingencies, such as environmental or legal issues, restructuring plans and acquired research and development value in purchase accounting. SFAS No. 141(R) amends SFAS No. 109, Accounting for Income Taxes , to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances. SFAS No. 141(R) is effective for the first fiscal year beginning after December 15, 2008. The Company will apply this standard to business combinations that occur after December 31, 2008.

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and increases and decreases in the noncontrolling ownership interest amount will be accounted for as equity transactions. SFAS No. 160 will be effective for the first fiscal year beginning on or after December 15, 2008, and earlier application is prohibited. SFAS No. 160 is required to be adopted prospectively, except for reclassifying noncontrolling interests to equity, separate from the parent’s shareholders’ equity, in the consolidated statement of financial position and recasting consolidated net income (loss) to include net income (loss) attributable to both the controlling and noncontrolling interests, both of which are required to be adopted retrospectively. The Company expects the impact of this statement to be immaterial to the Company’s financial statements.

SFAS No. 157, Fair Value Measurements , was issued in September 2006. The objective of the Statement is to define fair value, establish a framework for measuring fair value and expand disclosures about fair value measurements. The Company has adopted the provisions of SFAS No. 157 related to financial instruments as of January 1, 2008. Refer to Note 10 to the financial statements for further information. As permitted by FSP 157-2, Effective Date of FASB Statement No. 157 , implementation of SFAS No. 157 to non-financial assets and liabilities has been deferred until interim and annual periods beginning after November 15, 2008. The Company expects the impact of this statement to be immaterial to the Company’s financial statements.

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Report of Independent Registered Public Accounting Firm

Board of Directors

Cyrus Networks, LLC

Houston, Texas

We have audited the accompanying balance sheet of Cyrus Networks, LLC as of December 31, 2007, and the related statements of operations, member’s equity and cash flows for the periods from January 1, 2007 through July 3, 2007, and July 4, 2007 through December 31, 2007. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit also included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cyrus Networks, LLC as of December 31, 2007, and the results of its operations and its cash flows for the periods from January 1, 2007 through July 3, 2007, and July 4, 2007 through December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

/s/ BKD, LLP

Houston, Texas

June 1, 2012

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Cyrus Networks, LLC

Balance Sheet

December 31, 2007


	Successor
Assets

Current Assets
Cash and cash equivalents	$	330,136
Accounts receivable, net of allowance of $28,137		2,725,873
Prepaid expenses and other		1,175,797

Total current assets		4,231,806

Property and Equipment, At Cost
Building and improvements		34,978,474
Construction in progress		4,254,395
Process equipment		1,382,202
Computer hardware		1,062,634
Software		315,577
Leasehold improvements		290,883
Office furniture and equipment		263,814

		42,547,979
Less accumulated depreciation and amortization		1,346,498

		41,201,481

Other Assets
Goodwill and intangibles, net		93,752,850
Deferred costs, net		3,026,133
Other		91,050

		96,870,033

Total assets	$	142,303,320

Liabilities and Member’s Equity

Current Liabilities
Current maturities of long-term debt	$	420,000
Accounts payable		1,939,628
Accrued expenses		4,218,410
Unearned revenue		1,292,973
Accrued interest		1,014,449
Deferred installation charges		401,322

Total current liabilities		9,286,782

Long-term Debt, Net Current Portion		71,275,000

Deferred Installation Charges, Net Current Portion		581,764

Member’s Equity		61,159,774

Total liabilities and member’s equity	$	142,303,320

See Notes to Financial Statements

F-88

Cyrus Networks, LLC

Statements of Operations

Periods From January 1, 2007 Through July 3, 2007

and July 4, 2007 Through December 31, 2007


	Predecessor			Successor
	January 1, 2007 to July 3, 2007			July 4, 2007 to December 31, 2007
Net Sales	$	9,464,981		$	11,094,540

Cost of Sales		3,840,811			3,861,485

Gross Profit		5,624,170			7,233,055

Operating Expenses
General and administrative		1,511,512			1,043,606
Selling and marketing		835,108			988,784
Depreciation and amortization		689,211			3,308,342

		3,035,831			5,340,732

Operating Income		2,588,339			1,892,323

Other Income (Expense)
Interest expense		(937,074	)		(4,164,001	)
Rental income		143,511			132,708
Other expense		(861,847	)		(56,829	)

		(1,655,410	)		(4,088,122	)

Net Income (Loss) Before Income Taxes		932,929			(2,195,799	)

Provision for Income Taxes
Texas franchise tax		—			70,000

Net Income (Loss)	$	932,929		$	(2,265,799	)

See Notes to Financial Statements

F-89

Cyrus Networks, LLC

Statement of Member’s Equity

Periods From January 1, 2007 Through July 3, 2007

and July 4, 2007 Through December 31, 2007


Balance, January 1, 2007, Predecessor	$	(13,747,388	)
Unit-based compensation related to Class B restricted units		113,061
Net income, January 1, 2007 to July 3, 2007		932,929

Balance, July 3, 2007, Predecessor		(12,701,398	)

Elimination of Predecessor Company members’ equity in acquisition		12,701,398
Capital contributions related to acquisition		63,425,573
Net loss, July 4, 2007 to December 31, 2007		(2,265,799	)

Balance, December 31, 2007, Successor	$	61,159,774

See Notes to Financial Statements

F-90

Cyrus Networks, LLC

Statements of Cash Flows

Periods From January 1, 2007 Through July 3, 2007

and July 4, 2007 Through December 31, 2007


	Predecessor			Successor
	January 1, 2007 to July 3, 2007			July 4, 2007 to December 31, 2007
Operating Activities
Net income (loss)	$	932,929		$	(2,265,799	)
Items not requiring cash:
Depreciation and amortization		689,211			3,308,342
United-based compensation		113,061			—
Changes in net of effects of acquisition:
Accounts receivable		(675,712	)		(320,601	)
Deferred costs		(853,064	)		761,390
Unearned revenue		(138,365	)		142,998
Accounts payable and accrued expenses		2,250,208			1,460,781
Deferred installation charges		46,811			30,836
Other current assets and liabilities		375,035			(903,484	)

Net cash provided by operating activities		2,740,114			2,214,463

Investing Activities
Acquisition of Cyrus Networks, LLC		—			(63,425,573	)
Purchases of property and equipment		(10,021,843	)		(4,579,327	)

Net cash used in investing activities		(10,021,843	)		(68,004,900	)

Financing Activities
Capital contributions		—			63,425,573
Net borrowings on first lien revolving facility		—			700,000
Net borrowings on revolving line of credit		640,000			—
Proceeds from issuance of long-term debt		6,269,711			—
Proceeds from issuance of CapEx debt		—			2,100,000
Principal payments on first lien term loan		—			(105,000	)

Net cash provided by financing activities		6,909,711			66,120,573

(Decrease) Increase in Cash and Cash Equivalents		(372,018	)		330,136

Cash and Cash Equivalents, Beginning of Period		372,018			—

Cash and Cash Equivalents, End of Period	$	0		$	330,136

Supplemental Cash Flows Information
Interest paid	$	505,813		$	2,956,278
Accrued construction in progress costs		—			2,081,850
Issuance of long-term debt in exchange for units		—			69,000,000

See Notes to Financial Statements

F-91

NOTES TO CYRUS NETWORKS, LLC FINANCIAL STATEMENTS

December 31, 2007

Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

For the period January 1, 2007 through July 3, 2007, Cyrus Networks a Delaware limited liability company (the “Predecessor Company”, the “Company” or “Cyrus Networks”), operated with ownership through Class A and Class B units. Each of the unitholders (members) had entered into an agreement restricting the transferability of the Company’s Class A units. The Company had also granted Class B units as part of its Unit Incentive Plan. These Class B units had significant restrictions on their transferability.

On July 3, 2007, Cy-One Parent LLC (“Cy-One”), acquired 100 percent of the outstanding units of the Predecessor Company. Cy-One is a wholly owned subsidiary of Cy-One Holdings LLC (the “Parent Company”) and is a Delaware limited liability company. Cy-One is a holding company for Cyrus Networks and is a guarantor for its debt. Subsequent to the acquisition, Cy-One’s ownership was converted to new Class A units. Each of the members entered into an agreement restricting the transferability of Cy-One’s Class A units. The Parent Company also issued Class B units to certain sellers of Cyrus Networks’ Class A and Class B units. In addition, the Parent Company has granted Class C units as part of its Unit Incentive Plan. These Class B and Class C units have significant restrictions on their transferability.

Cyrus Networks earns revenues predominately from providing IT infrastructure and colocation services for businesses in Houston and Dallas, Texas, and surrounding areas. The Company extends unsecured credit to its customers, with credit extended to three customers exceeding 40 percent of accounts receivable at December 31, 2007.

Basis of Statement Presentation

The accompanying financial statements are presented under two different (“Predecessor” and “Successor”) bases of accounting.

Use of Estimates

Cash and Cash Equivalents

The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2007, cash equivalents consisted primarily of money market accounts. At December 31, 2007, the Company’s cash accounts exceeded federally insured limits by approximately $265,000.

Accounts Receivable

F-92

Property and Equipment


Buildings and improvements			3-20 years
Process equipment			2-7 years
Software and hardware			1-5 years
Furniture and fixtures			3-10 years

Goodwill

Intangible Assets

Intangible assets recorded as a result of the July 3, 2007, acquisition costs consist of customer relationships, trade name and covenants not to compete. These assets are amortized over their estimated useful lives.

Long-lived Asset Impairment

Income Taxes

No provision for federal income taxes is included in the accompanying financial statements since the partnership is not a tax-paying entity under the provisions of the Internal Revenue Code and all income and expenses are recorded by the individual partners for tax reporting purposes.

Significant changes were made to the Texas franchise tax during the 79 ^th and 80 ^th sessions of the Texas Legislature, whereby the Legislature extended the State franchise tax to partnerships (general, limited and limited liability). In previous years, the Company did not pay franchise taxes since it was organized as a partnership and franchise taxes were not imposed. The revised tax base is based on a taxable entity’s margin. The franchise tax is calculated at a rate of 1 percent on the lesser of three calculations: a) total revenue less costs of goods sold, b) total revenue less compensation, or c) total revenue times 70 percent. For the period July 4, 2007 through December 31, 2007, the Company accrued $70,000 in franchise tax.

Revenue Recognition

The Company provides services to customers which includes non-recurring charges (such as installation charges at the origination of a contract) and recurring charges (such as ongoing maintenance and service charges through the life of the contract). Non-recurring charges billed at contract origination are recorded as deferred installation charges and amortized to income over the life of each contract. For certain new customers, the Company performs specific project work, such as planning and physically moving equipment to the data center. This project revenue is recognized when all obligations under the project are complete. Recurring charges billed monthly (one month in advance of providing the services) are recorded as unearned revenue and recognized into income the following month (when the service is actually provided).

F-93

Additionally, the implementation and installation costs associated with the origination of the contracts (such as sales commissions and other implementation costs) are recorded as deferred costs and amortized into expense over the life of each contract. All expenses, including the use of third-party movers, related to project revenues are recognized as incurred during the project.

Unit Incentive Plan

For the period January 1, 2007 through July 3, 2007, the Predecessor Company had a unit-based compensation plan related to its Class B units. The Predecessor Company accounted for this plan under the recognition and measurement principles of Statement of Financial Accounting Standards (SFAS) No. 123R (FAS 123R), Share-Based Payment . As part of the acquisition on July 3, 2007, these unit-based compensation plans for the Predecessor Company were terminated and new unit-based compensation plans related to the Class C shares were established. These new plans are accounted for under FAS 123R. These plans are described more fully in Note 8.

Taxes Collected From Customers and Remitted to Governmental Authorities

Taxes collected from customers and remitted to governmental authorities are presented in the accompanying statement of operations on a net basis.

During 2007, the Predecessor Company was notified by the Texas Department of Revenue that it would be undergoing a sales and use tax audit covering the period through June 30, 2007. A liability in the amount of $1,000,000 for the State’s preliminary assessment of underpaid taxes (including penalties and interest) has been recorded as a liability in the Company’s balance sheet.

Note 2: Business Acquisitions

On July 3, 2007, Cy-One acquired 100 percent of the outstanding units of the Predecessor Company. For purposes of these financial statements, the statements of operations, member’s equity and cash flows of the Predecessor Company have been shown separately.

The aggregate cash purchase price was $132,425,573. This amount consisted of $69,000,000 of new debt and $63,425,473 of additional capital. Under the terms of the Purchase Agreement, a portion of the purchase price remains in escrow for potential pre-acquisition claims. This balance, after any claims, will be released to the sellers during 2008. Any amounts attributed to claims and not released to the sellers will result in the reduction of goodwill.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. The Company obtained third-party valuations of certain tangible and intangible assets, the results of which were utilized in establishing the value of assets acquired.


Current assets	$	3,373,670
Property, plant and equipment		35,873,137
Other long-term assets		3,159,546
Intangible assets		32,980,000
Goodwill		62,736,184

Total assets acquired		138,122,537

Current liabilities		5,115,449
Long-term liabilities		581,515

Total liabilities assumed		5,696,964

Net assets acquired	$	132,425,573

F-94

The acquired intangible assets are subject to amortization and have a weighted-average useful life of approximately 16 years. Of the $32,980,000 of acquired intangible assets, $24,400,000 was assigned to customer relationships, being amortized over 15 years, $5,400,000 for the Company’s trade name, being amortized over 30 years and $3,180,000 for management non-compete agreements, being amortized over 18 months.

Note 3: Acquired Intangible Assets and Goodwill

The carrying basis and accumulated amortization of recognized intangible assets at December 31, 2007, were as shown below.


	December 31, 2007
	Gross Carrying Amount		Accumulated Amortization
Customer relationships	$	24,400,000	$	813,333
Trade name		5,400,000		90,000
Non-compete agreements		3,180,000		1,060,000

	$	32,980,000	$	1,963,333

Amortization expense for the period July 4, 2007 through December 31, 2007, was $1,963,333. Estimated amortization expense for each of the following five years:


2008	$	3,926,667
2009		1,806,667
2010		1,806,667
2011		1,806,667
2012		1,806,667

There were no changes in the carrying amount of goodwill for the period July 4, 2007 through December 31, 2007.

Note 4: Line of Credit

The Company has a $5,000,000 revolving line of credit expiring in 2013, the available portion of which is determined partially based on the amount of other debt outstanding, as well as a multiple of the previously reported last three months’ earnings before interest, taxes, depreciation and amortization (as defined under the First Lien Credit Agreement). At December 31, 2007, there was $700,000 borrowed against this line of credit. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow as defined under the First Lien Credit Agreement. The line of credit is collateralized by a first lien on substantially all the assets of the Company. The Company has the option to pay interest based on either the prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2007, the Company had this principal balance under a LIBOR loan plus 4.00 percent or 9.25 percent.

F-95

Note 5: Long-term Debt

All long-term debt outstanding for the Predecessor Company on July 3, 2007, was paid in full as part of the acquisition. In connection with the acquisition, the Company established various term notes and revolving credit facilities, which had the following balances as of December 31, 2007:


First lien term loan (A)	$	41,895,000
First lien revolving facility (see Note 4)		700,000
First lien capital expenditure facility (B)		1,278,270
Second lien term loan (C)		27,000,000
Second lien capital expenditure facility (D)		821,730

		71,695,000
Less current maturities		420,000

Total long-term debt	$	71,275,000

(A)

First lien term loan had an initial balance of $42,000,000 and a maturity date of July 3, 2013. Principal payments are due quarterly as specified under the First Lien Credit Agreement and commenced on December 31, 2007. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow as defined under the First Lien Credit Agreement. The Company has the option to pay interest based on either prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2007, the Company had this principal balance under a LIBOR loan plus 4.00 percent or 9.25 percent. The terms of the First Lien Credit Agreement also place certain restrictions on payments to shareholders and others. This loan is secured by substantially all of the assets of the Company.

(B)

First lien capital expenditure facility totaling $15,217,500 available for draw down as calculated under the First Lien Credit Agreement through July 3, 2010. Quarterly principal payments of 1.875 percent of the outstanding balance at July 3, 2010, are due starting September 30, 2010, as specified under the First Lien Credit Agreement. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow as defined under the First Lien Credit Agreement. The Company has the option to pay interest based on either prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2007, the Company had this principal balance under a LIBOR loan plus 4.00 percent or 9.25 percent. The terms of the First Lien Credit Agreement also place certain restrictions on payments to shareholders and others. This loan is secured by substantially all of the assets of the Company.

(C)

Second lien term loan has a balance of $27,000,000 and a maturity date of January 3, 2014. To the extent the first lien debt has been paid in full, any outstanding balance on this second lien term loan shall be due and payable in full if a change in control occurs. Also, to the extent the first lien debt has been paid in full, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow as defined under the Second Lien Credit Agreement. The Company has the option to pay interest based on either prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2007, the Company had this principal balance under a LIBOR loan plus 7.25 percent, or 12.50 percent. The terms of the Second Lien Credit Agreement also place certain restrictions on payments to shareholders and others. This loan, subordinate to the first lien debt, is secured by substantially all of the assets of the Company.

(D)

F-96

extent the first lien debt has been paid in full, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow as defined under the Second Lien Credit Agreement. The Company has the option to pay interest based on either prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2007, the Company had this principal balance under a LIBOR loan plus 7.25 percent, or 12.50 percent. The terms of the Second Lien Credit Agreement also place certain restrictions on payments to shareholders and others. This loan, subordinate to the first lien debt, is secured by substantially all of the assets of the Company.

Aggregate annual maturities of long-term debt at December 31, 2007, are as follows.


2008	$	420,000
2009		630,000
2010		1,780,435
2011		3,245,870
2012		3,245,870
Thereafter		62,372,825

	$	71,695,000

Note 6: Operating Leases

On July 3, 2007, related to the acquisition, the Company acquired some of the buildings which it was previously leasing from the sellers. All leases associated with these buildings were terminated on July 3, 2007, and the buildings were recorded as property and equipment of the Company in the balance sheet.

Noncancellable operating leases for operational facilities, offices and equipment expire in various years through 2012. The facility leases contain a renewal option for an additional five years and require the Company to pay all executory costs (property taxes, maintenance and insurance). In addition, the Company has a noncancellable ground lease for one of its buildings in Houston. This lease expires in 2066. Leasehold improvements are depreciated using an estimated life of 10 years, which is the shorter of the useful life (determined by management) and the lease term.

Future minimum lease payments at December 31, 2007, were:


2008	$	534,638
2009		549,602
2010		565,010
2011		359,367
2012		30,337
Thereafter		1,071,923

	$	3,110,877

Rental expense for operating leases for the year ended December 31, 2007, was $1,132,382.

Note 7: Profit Sharing Plan

Note 8: Unit Incentive Plan

Prior to the acquisition, the Predecessor Company had a Unit Incentive Plan under which the Company granted Class B restricted units that vested over four years from grant date. The Company made 3,000,000 units available for issuance under the Unit Incentive Plan. The 2,931,500 units outstanding at December 31,

F-97

2006, with a weighted-average grant date fair value of $0.13, and units issued from January 1, 2007 through July 3, 2007, were purchased through the acquisition. Total compensation expense for the period January 1, 2007 through July 3, 2007, in the amount of $113,000, related to these Class B units.

In the event of termination of employment, all non-vested units automatically revert to, and become, the property of the Parent Company. If the employee is terminated for cause or resigns voluntarily when the Parent Company can demonstrate cause existed, the vested units will be purchased from the employee for an aggregate purchase price of $1.00. For all other cases where the employee resigns voluntarily, the Parent Company may elect to purchase all or any portion of the vested units at fair market value, as defined in the Incentive Share Agreements.

A summary of the status of the Company’s non-vested units as of December 31, 2007, and changes during the year then ended, is presented below:


	Shares			Weighted-average Grant Date Fair Value
Outstanding, beginning of the year, Predecessor		2,931,500		$	0.13
Class B plans terminated, Predecessor		(2,931,500	)		(0.13	)
Granted, Successor		10,073,474			—

Outstanding, end of year		10,073,474		$	0.00

Compensation expense related to the new Class C plans was not recorded during the period July 4, 2007 through December 31, 2007, as the amount was considered immaterial to the financial statements due to the insignificant value of the Class C units at the date of grant.

Note 9: Related-party Transactions

Note 10: Subsequent Event

On February 19, 2008, the Company entered into an agreement for a non-cancellable operating lease of property in the Dallas, Texas area, where it is constructing a new data center facility. The lease commences on August 25, 2008, and has an initial term of 15 years with two 5-year renewal options. The lease initially includes the lease of approximately 20,000 square feet of space, with an additional 20,000 square feet being leased starting on August 25, 2009. Future minimum lease payments are:


2008	$	50,129
2009		601,545
2010		601,545
2011		601,545
2012		601,545
Thereafter		6,746,866

	$	9,203,175

F-98

Note 11: Recently Issued Accounting Standards

SFAS No. 157, Fair Value Measurements , was issued in September 2006. The objective of the Statement is to define fair value, establish a framework for measuring fair value and expand disclosures about fair value measurements. As it relates to financial assets and liabilities, SFAS No. 157 will be effective for interim and annual reporting periods beginning after November 15, 2007. Per FASB Staff Position 157-2, Effective Date of FASB Statement No. 157 , implementation of SFAS No. 157 to non-financial assets and liabilities will be effective for interim and annual reporting periods beginning after November 15, 2008. The Company expects the impact of SFAS No. 157 on financial assets and liabilities will be immaterial to its financial statements. The Company has not yet assessed the impact of this Statement related to non-financial assets and liabilities on its financial statements.

SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities , was issued in February 2007. The Statement permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 will be effective for the first fiscal year that begins after November 15, 2007. The Company does not expect to implement the alternative treatment afforded by SFAS No. 159.

SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 , was issued in December 2007. SFAS No. 160 clarifies the classification of noncontrolling interests in consolidated statements of financial position and the accounting for and reporting of transactions between the reporting entity and holders of such noncontrolling interests. Under SFAS No. 160, noncontrolling interests are considered equity and should be reported as an element of consolidated equity, net income will encompass the total income of all consolidated subsidiaries, and there will be separate disclosure on the face of the income statement of the attribution of income between the controlling and noncontrolling interests, and increases and decreases in the noncontrolling ownership interest amount will be accounted for as equity transactions. SFAS No. 160 will be effective for the first fiscal year beginning on or after December 15, 2008, and earlier application is prohibited. SFAS No. 160 is required to be adopted prospectively, except for reclassifying noncontrolling interests to equity, separate from the parent’s shareholders’ equity, in the consolidated statement of financial position and recasting consolidated net income (loss) to include net income (loss) attributable to both the controlling and noncontrolling interests, both of which are required to be adopted retrospectively. The Company has not yet assessed the impact of this Statement on the Company’s financial statements.

SFAS No. 141(R), Business Combinations , was issued in December 2007. SFAS No. 141(R) requires that upon initially obtaining control, an acquirer will recognize 100 percent of the fair values of acquired assets, including goodwill, and assumed liabilities, with only limited exceptions, even if the acquirer has not acquired 100 percent of its target. Additionally, contingent consideration arrangements will be presented at fair value at the acquisition date and included on that basis in the purchase price consideration and transaction costs will be expensed as incurred. SFAS No. 141(R) also modifies the recognition for preacquisition contingencies, such as environmental or legal issues, restructuring plans and acquired research and development value in purchase accounting. SFAS No. 141(R) amends SFAS No. 109, Accounting for Income Taxes , to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances. SFAS No. 141(R) is effective for the first fiscal year beginning after December 15, 2008. The Company has not yet assessed the impact of this statement on the Company’s financial statements.

F-99

LOGO

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 31.

Other Expenses of Issuance and Distribution.

The following table itemizes the expenses incurred by us in connection with the issuance and registration of the securities being registered hereunder. All amounts shown are estimates except the SEC registration fee and the Financial Industry Regulatory Authority (“FINRA”) filing fee.


SEC Registration Fee	$	34,380
NASDAQ Listing Fee		*
FINRA Filing Fee		45,500
Printing and Engraving Expenses		600,000
Legal Fees (other than Blue Sky Expenses)		*
Blue Sky Expenses		*
Accounting Fees and Expenses		1,700,000
Transfer Tax and Title Insurances		*
Consulting Fees and Expenses		450,000
Other Fees and Expenses		*

Total	$	*

*	To be filed by amendment.

We will pay all of the costs identified above.

Item 32.

Sales to Special Parties.

None

Item 33.

Recent Sales of Unregistered Securities.

As part of the formation transactions, we will issue 9.8% of the outstanding shares of our common stock and of the outstanding operating partnership units to CBI. We have a pre-existing relationship with CBI, and the sale of our common stock and the operating partnership units will be effected under an exemption from registration provided by Section 4(a)(2) of the Securities Act.

Item 34.

Indemnification of Directors and Officers.

•

the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty;

II-1

•

the director or officer actually received an improper personal benefit in money, property or services; or

•

in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

In addition, the MGCL permits us to advance reasonable expenses to a director or officer upon our receipt of:

•

a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation; and

•

any present or former director or officer who is made or threatened to be made a party to a proceeding by reason of his or her service in that capacity; or

•

We expect to enter into indemnification agreements with each of our directors and executive officers that provide for indemnification to the maximum extent permitted by Maryland law.

In addition, the partnership agreement of CyrusOne LP provides that we, our directors, officers and employees, the general partner and its trustees, officers and employees, employees of our operating partnership and any other persons whom the general partner may designate are indemnified to the fullest extent permitted by law.

Item 35.

Treatment of Proceeds from Stock Being Registered.

None of the proceeds will be contributed to an account other than the appropriate capital account.

II-2

Item 36.

Financial Statements and Exhibits.

(A)

Financial Statements. See Index to Combined Financial Statements and the related notes thereto.

(B)

Exhibits . The following exhibits are filed as part of, or incorporated by reference into, this registration statement on Form S-11:


Exhibit

1.1*		Form of Underwriting Agreement among CyrusOne Inc. and the underwriters named therein

3.1*		Form of Articles of Amendment and Restatement of CyrusOne Inc.

3.2*		Form of Amended and Restated Bylaws of CyrusOne Inc.

4.1		Form of Certificate for Common Stock of CyrusOne Inc.

4.2**		Indenture by and among CyrusOne LP and CyrusOne Finance Corp., as co-Issuers, the Guarantor parties thereto, and Wells Fargo Bank, N.A., as Trustee, relating to the Issuers’ 6.375% Senior Notes due 2022

5.1***		Opinion of Venable LLP

8.1***		Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to tax matters

10.1		Form of Amended and Restated Agreement of Limited Partnership of CyrusOne LP

10.2*		Form of Contribution Agreement among CyrusOne LP and Data Centers South Inc.

10.3*		Form of Contribution Agreement among CyrusOne LP and Data Center Investments Inc.

10.4*		Form of Registration Rights Agreement among CyrusOne Inc. and the persons named therein

10.5		Form of Indemnification Agreement between CyrusOne Inc. and its directors and executive officers

10.6**		Credit Agreement among CyrusOne Inc., as the Parent, CyrusOne LP, as the Borrower, the Lenders party thereto and Deutsche Bank Trust Company Americas, as Administrative Agent

10.7*		CyrusOne 2012 Long Term Incentive Plan

10.8*		CyrusOne 2013 Short Term Incentive Plan

21.1*		List of Subsidiaries of Registrant

23.1***		Consent of Venable LLP (included in Exhibit 5.1)

23.2***		Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 8.1)

23.3		Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm

23.4		Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm

23.5		Consent of BKD, LLP, Independent Registered Public Accounting Firm

23.6****		Consent of International Data Corporation

24.1****		Power of Attorney (included on signature page to the Registration Statement)

99.1****		Consent of William Sullivan to be named as a director nominee

99.2**		Consent of Roger Staubach to be named as a director nominee

99.3**		Consent of Tod Nielsen to be named as a director nominee

99.4**		Consent of Alex Shumate to be named as a director nominee

99.5**		Consent of Melissa Hathaway to be named as a director nominee

99.6**		Consent of David Ferdman to be named as a director nominee

*	Previously filed with Amendment No. 3 to the Registration Statement on Form S-11 by the Registrant with the Securities and Exchange Commission on November 15, 2012.

**	Previously filed with Amendment No. 4 to the Registration Statement on Form S-11 by the Registrant with the Securities and Exchange Commission on November 26, 2012.

***	To be filed by amendment.

****	Previously filed with the Registration Statement on Form S-11 by the Registrant with the Securities and Exchange Commission on August 8, 2012.

II-3

Item 37.

Undertakings.

(a) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification of liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance under Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that the registrant meets all of the requirements for filing on Form S-11 and has duly caused this Amendment No. 5 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Carrollton, State of Texas, on this 12 ^th day of December, 2012.


CYRUSONE INC.

By:		/s/ Gary J. Wojtaszek
		Gary J. Wojtaszek
		President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 5 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.


Signature	Title	Date

/s/ Gary J. Wojtaszek Gary J. Wojtaszek	President, Chief Executive Officer and Director (Principal Executive Officer)	December 12, 2012

/s/ Kimberly H. Sheehy Kimberly H. Sheehy	Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)	December 12, 2012

* John F. Cassidy	Director	December 12, 2012



* By:		/s/ Kimberly H. Sheehy
		Attorney-in-Fact

II-5

Exhibit 4.1


Number 0		Shares 0

SEE REVERSE FOR IMPORTANT

NOTICE ON TRANSFER RESTRICTIONS

AND OTHER INFORMATION

CYRUSONE INC.

a Corporation Formed Under the Laws of the State of Maryland

THIS CERTIFIES THAT **Specimen** is the owner of **Zero (0)** fully paid and nonassessable shares of Common Stock, $0.01 par value per share, of

CyrusOne Inc.

(the “Corporation”) transferable on the books of the Corporation by the holder hereof in person or by its duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the charter of the Corporation and the Bylaws of the Corporation and any amendments thereto.

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be executed on its behalf by its duly authorized officers this day of , 20 .


				(SEAL)
Kimberly Sheehy				Gary Wojtaszek
Chief Financial Officer and Treasurer				Chief Executive Officer and President

IMPORTANT NOTICE

The Corporation will furnish to any stockholder, on request and without charge, a full statement of the information required by Section 2-211(b) of the Corporations and Associations Article of the Annotated Code of Maryland with respect to the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation has authority to issue and, if the Corporation is authorized to issue any preferred or special class in series, (i) the differences in the relative rights and preferences between the shares of each series to the extent set, and (ii) the authority of the Board of Directors to set such rights and preferences of subsequent series. The foregoing summary does not purport to be complete and is subject to and qualified in its entirety by reference to the charter of the Corporation, a copy of which will be sent without charge to each stockholder who so requests. Such request must be made to the Secretary of the Corporation at its principal office.

The shares represented by this certificate are subject to restrictions on Beneficial Ownership and Constructive Ownership and Transfer for the purpose, among others, of the Corporation’s maintenance of its status as a Real Estate Investment Trust under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to certain further restrictions and except as expressly provided in the Corporation’s Charter, (i) no Person may Beneficially Own or Constructively Own shares of the Corporation’s Common Stock in excess of the Common Stock Ownership Limit, unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (ii) no Person may Beneficially Own or Constructively Own shares of Capital Stock of the Corporation in excess of the Aggregate Stock Ownership Limit, unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (iii) no Person may Beneficially Own or Constructively Own Capital Stock that would result in the Corporation being “closely held” under Section 856(h) of the Code or otherwise cause the Corporation to fail to qualify as a REIT; (iv) no Person may Transfer shares of Capital Stock if such Transfer would result in the Capital Stock of the Corporation being owned by fewer than 100 Persons; and (v) no Person may Beneficially Own or Constructively Own shares of Capital Stock that could result in the Corporation failing to qualify as a “domestically controlled qualified investment entity” under Section 897(h)(4)(B) of the Code. Any Person who Beneficially Owns or Constructively Owns or attempts or intends to Beneficially Own or Constructively Own shares of Capital Stock which cause or will cause a Person to Beneficially Own or Constructively Own shares of Capital Stock in excess or in violation of the above limitations must immediately notify the Corporation. If any of the restrictions on transfer or ownership provided in (i), (ii), (iii) or (v) above are violated, the shares of Capital Stock in excess or in violation of the above limitations will be automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries. In addition, the Corporation may redeem shares upon the terms and conditions specified by the Board of Directors in its sole discretion if the Board of Directors determines that ownership or a Transfer or other event may violate the restrictions described above. Furthermore, if the ownership restriction provided in (iv) above would be violated, or upon the occurrence of certain events, attempted Transfers in violation of the restrictions described above may be void ab initio . All capitalized terms in this legend have the meanings given to them in the Charter of the Corporation, as the same may be amended from time to time, a copy of which, including the restrictions on transfer and ownership, will be furnished to each holder of shares of Capital Stock of the Corporation on request and without charge. Requests for such a copy may be directed to the Secretary of the Corporation at its principal office.

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, DESTROYED, STOLEN OR MUTILATED, THE CORPORATION

WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.

The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM

as tenants in common

UNIF GIFT MIN ACT Custodian

TEN ENT

as tenants by the entireties

(Custodian) (Minor)

JT TEN

as joint tenants with right of

survivorship and not as tenants

in common

under Uniform Gifts to Minors Act of

(State)

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, HEREBY SELLS, ASSIGNS AND TRANSFERS UNTO

(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)

(Please Insert Social Security or other Identifying Number of Assignee)

( ) shares of Common Stock of the Corporation represented by this Certificate and does hereby irrevocably constitute and appoint attorney to transfer the said shares of Common Stock on the books of the Corporation, with full power of substitution in the premises.


Dated
		NOTICE: The Signature To This Assignment Must Correspond With The Name As Written Upon The Face Of The Certificate In Every Particular, Without Alteration Or Enlargement Or Any Change Whatsoever.

EXHIBIT 10.1

AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

CYRUSONE LP

a Maryland limited partnership

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED

UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES

LAWS OF ANY STATE AND MAY NOT BE SOLD,

TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH

REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP

AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT

THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE

EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER

APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.

dated as of [ ], 2012

TABLE OF CONTENTS


			Page
ARTICLE 1 DEFINED TERMS				1

ARTICLE 2 ORGANIZATIONAL MATTERS				16
	Section 2.1	Formation		16
	Section 2.2	Name		16
	Section 2.3	Principal Office and Resident Agent		16
	Section 2.4	Power of Attorney		17
	Section 2.5	Term		17

ARTICLE 3 PURPOSE				18
	Section 3.1	Purpose and Business		18
	Section 3.2	Powers		18
	Section 3.3	Partnership Only for Purposes Specified		18
	Section 3.4	Representations and Warranties by the Partners		18

ARTICLE 4 CAPITAL CONTRIBUTIONS				20
	Section 4.1	Capital Contributions of the Partners		20
	Section 4.2	Issuances of Additional Partnership Interests		20
	Section 4.3	Additional Funds and Capital Contributions		21
	Section 4.4	Stock Option Plans		22
	Section 4.5	Dividend Reinvestment Plan, Stock Incentive Plan or Other Plan		24
	Section 4.6	No Interest; No Return		24
	Section 4.7	Conversion or Redemption of Preferred Shares; Redemption of REIT Shares		24
	Section 4.8	Other Contribution Provisions		25
	Section 4.9	Excluded Properties		25

ARTICLE 5 DISTRIBUTIONS				25
	Section 5.1	Requirement and Characterization of Distributions		25
	Section 5.2	Distributions in Kind		26
	Section 5.3	Amounts Withheld		26
	Section 5.4	Distributions upon Liquidation		26
	Section 5.5	Distributions to Reflect Additional Partnership Units		26
	Section 5.6	Restricted Distributions		26

ARTICLE 6 ALLOCATIONS				26
	Section 6.1	Timing and Amount of Allocations of Net Income and Net Loss		26
	Section 6.2	General Allocations		26
	Section 6.3	Additional Allocation Provisions		27
	Section 6.4	Tax Allocations		29

ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS				29
	Section 7.1	Management		29
	Section 7.2	Certificate of Limited Partnership		30
	Section 7.3	Restrictions on General Partner’s Authority		31
	Section 7.4	Reimbursement of the General Partner and the Special Limited Partner		33
	Section 7.5	Outside Activities of the General Partner and the Special Limited Partner		33
	Section 7.6	Transactions with Affiliates		34
	Section 7.7	Indemnification		35
	Section 7.8	Liability of the General Partner and the Special Limited Partner		36
	Section 7.9	Title to Partnership Assets		38
	Section 7.10	Reliance by Third Parties		38


ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS			38
	Section 8.1	Limitation of Liability	38
	Section 8.2	Management of Business	38
	Section 8.3	Outside Activities of Limited Partners	39
	Section 8.4	Return of Capital	39
	Section 8.5	Rights of Limited Partners Relating to the Partnership	39
	Section 8.6	Partnership Right to Call Partnership Interests	39
	Section 8.7	No Rights as Objecting Partner	40
	Section 8.8	No Right to Certificate Evidencing Units	40
	Section 8.9	Board Nomination Rights	40

ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS			42
	Section 9.1	Records and Accounting	42
	Section 9.2	Partnership Year	42
	Section 9.3	Reports	42

ARTICLE 10 TAX MATTERS			42
	Section 10.1	Preparation of Tax Returns	42
	Section 10.2	Tax Elections	42
	Section 10.3	Tax Matters Partner	43
	Section 10.4	Withholding	44
	Section 10.5	Organizational Expenses	44

ARTICLE 11 PARTNER TRANSFERS AND WITHDRAWALS			44
	Section 11.1	Transfer	44
	Section 11.2	Transfer of General Partner’s Partnership Interest	44
	Section 11.3	Limited Partners’ Rights to Transfer	45
	Section 11.4	Substituted Limited Partners	47
	Section 11.5	Assignees	47
	Section 11.6	General Provisions	47
	Section 11.7	Restrictions on Termination Transactions	49

ARTICLE 12 ADMISSION OF PARTNERS			50
	Section 12.1	Admission of Successor General Partner	50
	Section 12.2	Admission of Additional Limited Partners	50
	Section 12.3	Amendment of Agreement and Certificate of Limited Partnership	51
	Section 12.4	Limit on Number of Partners	51
	Section 12.5	Admission	51

ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION			51
	Section 13.1	Dissolution	51
	Section 13.2	Winding Up	52
	Section 13.3	Deemed Contribution and Distribution	53
	Section 13.4	Rights of Holders	53
	Section 13.5	Notice of Dissolution	53
	Section 13.6	Cancellation of Certificate of Limited Partnership	53
	Section 13.7	Reasonable Time for Winding-Up	54

ARTICLE 14 PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS			54
	Section 14.1	Actions and Consents of Partners	54
	Section 14.2	Amendments	54
	Section 14.3	Procedures for Meetings and Actions of the Partners	54


ARTICLE 15 GENERAL PROVISIONS			55
	Section 15.1	Redemption Rights of Qualifying Parties	55
	Section 15.2	Addresses and Notice	60
	Section 15.3	Titles and Captions	60
	Section 15.4	Pronouns and Plurals	60
	Section 15.5	Further Action	60
	Section 15.6	Binding Effect	61
	Section 15.7	Waiver	61
	Section 15.8	Counterparts	61
	Section 15.9	Applicable Law; Consent to Jurisdiction; Jury Trial	61
	Section 15.10	Entire Agreement	61
	Section 15.11	Invalidity of Provisions	62
	Section 15.12	Limitation to Preserve REIT Status	62
	Section 15.13	REIT Restrictions	62
	Section 15.14	No Partition	63
	Section 15.15	No Third-Party Rights Created Hereby	63
	Section 15.16	No Rights as Stockholders	63

	Exhibit A	EXAMPLES REGARDING ADJUSTMENT FACTOR	A-1

	Exhibit B	NOTICE OF REDEMPTION	B-1

iii

AMENDED AND RESTATED AGREEMENT OF

LIMITED PARTNERSHIP OF CYRUSONE LP

THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF CYRUSONE LP, dated as of [ ], 2012, is entered into by and among CYRUSONE GP, a Maryland statutory trust, (the “ Initial General Partner ”), CyrusOne Inc., a Maryland corporation (the “ Special Limited Partner ”), Cincinnati Bell Inc., an Ohio corporation (“ CBI ”), Data Center Investments Holdco LLC, a Delaware limited liability company (“ Investments Holdco ”), as a Limited Partner, Data Centers South Holdings LLC, a Delaware limited liability company (“ South Holdings ”), as a Limited Partner, and any additional partner that is admitted from time to time to the Partnership, and

WHEREAS, a Certificate of Limited Partnership of the Partnership was accepted for record by the State Department of Assessments and Taxation of Maryland on July 31, 2012 (the “ Formation Date ”):

WHEREAS, the Initial General Partner and the Special Limited Partner entered into an original Agreement of Limited Partnership of the Partnership effective as of July 31, 2012 and an Amended and Restated Agreement of Limited Partnership on September 27, 2012, and the General Partner, Data Center Investments Inc., a Delaware corporation (“ Data Investments ”), Data Centers South Inc., a Delaware corporation (“ Data South ”), and the Special Limited Partner entered into an Amended and Restated Agreement of Limited Partnership on [DATE], which was amended by the Amendment One thereto, among the Initial General Partner, the Special Limited Partner, Investments Holdco, South Holdings, Data Investments and Data South (as amended, the “ Current Amended and Restated Partnership Agreement ”); and

WHEREAS, the Initial General Partner, the Special Limited Partner, the Original Limited Partners (as defined herein) and CBI now desire to amend and restate the Current Amended and Restated Partnership Agreement to read in its entirety as set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

DEFINED TERMS

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement:

“ Act ” means the Maryland Revised Uniform Limited Partnership Act, Title 10 of the Corporations and Associations Article of the Annotated Code of Maryland, as it may be amended from time to time, and any successor to such statute.

“ Actions ” has the meaning set forth in Section 7.7 hereof.

“ Additional Funds ” has the meaning set forth in Section 4.3.A hereof.

“ Additional Limited Partner ” means a Person who is admitted to the Partnership as a Limited Partner pursuant to the Act and Section 12.2 hereof, who is shown as such on the books and records of the Partnership, and who has not ceased to be a Limited Partner pursuant to the Act and this Agreement.

“ Adjusted Available Cash ” means, as of any date of determination, the sum of Available Cash and REIT Available Cash.

“ Adjusted Capital Account Deficit ” means, with respect to any Partner, the deficit balance, if any, in such Partner’s Capital Account as of the end of the relevant Partnership Year, after giving effect to the following adjustments:

(i) decrease such deficit by any amounts that such Partner is obligated to restore pursuant to this Agreement or by operation of law upon liquidation of such Partner’s Partnership Interest or that such Partner is deemed to be obligated to restore pursuant to the penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(ii) increase such deficit by the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of “Adjusted Capital Account Deficit” is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“ Adjustment Factor ” means 1.0; provided , however , that in the event that:

(i) the Special Limited Partner (a) declares or pays a dividend on its outstanding REIT Shares wholly or partly in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares wholly or partly in REIT Shares, (b) splits or subdivides its outstanding REIT Shares or (c) effects a reverse stock split or otherwise combines its outstanding REIT Shares into a smaller number of REIT Shares, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction, (i) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination (assuming for such purposes that such dividend, distribution, split, subdivision, reverse split or combination has occurred as of such time) and (ii) the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination;

(ii) the Special Limited Partner distributes any rights, options or warrants to all holders of its REIT Shares to subscribe for or to purchase or to otherwise acquire REIT Shares, or other securities or rights convertible into, exchangeable for or exercisable for REIT Shares (other than REIT Shares issuable pursuant to a Qualified DRIP), at a price per share less than the Value of a REIT Share on the record date for such distribution (each a “ Distributed Right ”), then, as of the distribution date of such Distributed Rights or, if later, the time such Distributed Rights become exercisable, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction (a) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date (or, if later, the date such Distributed Rights become exercisable) plus the maximum number of REIT Shares purchasable under such Distributed Rights and (b) the denominator of which shall be the number of REIT Shares issued and outstanding on the record date (or, if later, the date such Distributed Rights become exercisable) plus a fraction (1) the numerator of which is the maximum number of REIT Shares purchasable under such Distributed Rights, multiplied by the minimum purchase price per REIT Share under such Distributed Rights and (2) the denominator of which is the Value of a REIT Share as of the record date (or, if later, the date such Distributed Rights become exercisable); provided , however , that, if any such Distributed Rights expire or become no longer exercisable, then the Adjustment Factor shall be adjusted, effective retroactive to the date of distribution (or, if later, the time the Distributed Rights become exercisable) of the Distributed Rights, to reflect a reduced maximum number of REIT Shares or any change in the minimum purchase price for the purposes of the above fraction; and

(iii) the Special Limited Partner shall, by dividend or otherwise, distribute to all holders of its REIT Shares evidences of its indebtedness or assets (including securities, but excluding any dividend or distribution referred to in subsection (i) or (ii) above), which evidences of indebtedness or assets relate to assets not received by the General Partner and/or any Special Limited Partner pursuant to a pro rata distribution by the Partnership, then the Adjustment Factor shall be adjusted to equal the amount determined by multiplying the Adjustment Factor in effect immediately prior to the close of business as of the record date fixed for the determination of stockholders entitled to receive such distribution by a fraction (a) the numerator of which shall be such Value of a REIT Share on such record date and (b) the denominator of which shall be the Value of a REIT Share as of such record date less the then fair market value (as determined by the General Partner, whose determination shall be conclusive) of the portion of the evidences of indebtedness or assets so distributed applicable to one REIT Share.

Notwithstanding the foregoing, no adjustments to the Adjustment Factor will be made for any class or series of Partnership Interests to the extent that the Partnership makes or effects any correlative distribution or payment to all of the Partners holding Partnership Interests of such class or series, or effects any correlative split or reverse split in respect of the Partnership Interests of such class or series. Any adjustments to the Adjustment Factor shall become effective immediately after such event, retroactive to the record date, if any, for such event. For illustrative purposes, examples of adjustments to the Adjustment Factor are set forth on Exhibit A attached hereto.

“ Affiliate ” means, with respect to any Person, any Person directly or indirectly controlling or controlled by or under common control with such Person. For the purposes of this definition, “ control ” when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Affiliated REIT ” means the Special Limited Partner and any Affiliate of the Special Limited Partner that has elected to be taxed as a REIT under the Code.

“ Agreement ” means this Amended and Restated Limited Partnership Agreement of CyrusOne LP, as now or hereafter amended, restated, modified, supplemented or replaced.

“ Applicable Percentage ” has the meaning set forth in Section 15.1B hereof.

“ Appraisal ” means, with respect to any assets, the written opinion of an independent third party experienced in the valuation of similar assets, selected by the General Partner. Such opinion may be in the form of an opinion by such independent third party that the value for such property or asset as set by the General Partner is fair, from a financial point of view, to the Partnership.

“ Assignee ” means a Person to whom a Partnership Interest has been Transferred but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.5 hereof.

“ Available Cash ” means, with respect to any period for which such calculation is being made,

(i) the sum, without duplication, of:

(1) the Partnership’s Net Income or Net Loss (as the case may be) for such period,

(2) Depreciation and all other noncash charges to the extent deducted in determining Net Income or Net Loss for such period,

(3) the amount of any reduction in reserves of the Partnership established by the General Partner (including, without limitation, reductions resulting because the General Partner determines such amounts are no longer necessary),

(4) the excess, if any, of the net cash proceeds from the sale, exchange, disposition, financing or refinancing of Partnership property for such period over the gain (or loss, as the case may be) recognized from such sale, exchange, disposition, financing or refinancing during such period, and

(5) all other cash received (including amounts previously accrued as Net Income and amounts of deferred income) or any net amounts borrowed by the Partnership for such period that was not included in determining Net Income or Net Loss for such period;

(ii) less the sum, without duplication, of:

(1) all principal debt payments made during such period by the Partnership,

(2) capital expenditures made by the Partnership during such period,

(3) investments in any entity (including loans made thereto) to the extent that such investments are not otherwise described in clause (ii)(1) or clause (ii)(2) above,

(4) all other expenditures and payments not deducted in determining Net Income or Net Loss for such period (including amounts paid in respect of expenses previously accrued),

(5) any amount included in determining Net Income or Net Loss for such period that was not received by the Partnership during such period,

(6) the amount of any increase in reserves (including, without limitation, working capital reserves) established by the General Partner during such period, and

(7) any amount distributed or paid in redemption of any Limited Partner’s Partnership Interest or Partnership Units, including, without limitation, any Cash Amount paid.

Notwithstanding the foregoing, Available Cash shall not include (a) any cash received or reductions in reserves, or take into account any disbursements made, or reserves established, after dissolution and the commencement of the liquidation and winding up of the Partnership or (b) any Capital Contributions, whenever received or any payments, expenditures or investments made with such Capital Contributions.

“ Board of Directors ” means the Board of Directors of the Special Limited Partner.

“ Business Day ” means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

“ Bylaws ” means the bylaws of the Special Limited Partner, as in effect from time to time.

“ Capital Account ” means, with respect to any Partner, the Capital Account maintained by the General Partner for such Partner on the Partnership’s books and records in accordance with the following provisions:

(a) To each Partner’s Capital Account, there shall be added such Partner’s Capital Contributions, such Partner’s distributive share of Net Income and any items in the nature of income or gain that are specially allocated pursuant to Section 6.3 hereof, and the amount of any Partnership liabilities assumed by such Partner or that are secured by any property distributed to such Partner.

(b) From each Partner’s Capital Account, there shall be subtracted the amount of cash and the Gross Asset Value of any property distributed to such Partner pursuant to any provision of this Agreement, such Partner’s distributive share of Net Losses and any items in the nature of expenses or losses that are specially allocated pursuant to Section 6.3 hereof, and the amount of any liabilities of such Partner assumed by the Partnership or that are secured by any property contributed by such Partner to the Partnership (except to the extent already reflected in the amount of such Partner’s Capital Contribution).

(c) In the event any interest in the Partnership is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Partner’s Capital Account of the transferor to the extent that it relates to the Transferred interest.

(d) In determining the amount of any liability for purposes of subsections (a) and (b) hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

(e) The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations promulgated under Section 704 of the Code, and shall be interpreted and applied in a manner consistent with such Regulations. The General Partner may modify the manner in which the Capital Accounts are maintained in order to comply with such Regulations, provided that the General Partner determines that such modification is not reasonably likely to have a material effect on the amounts distributable to any Partner without such Person’s consent. The General Partner also may (i) make any adjustments to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event that unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2; provided , however , that the General Partner determines that such changes are not reasonably likely to materially reduce amounts otherwise distributable to the Partner as current cash distributions or as distributions on termination of the Partnership.

“ Capital Contribution ” means, with respect to any Partner, the amount of money and the initial Gross Asset Value of any Contributed Property that such Partner contributes to the Partnership or is deemed to contribute pursuant to Article 4 hereof.

“ Capital Share ” means a share of any class or series of stock of the Special Limited Partner now or hereafter authorized, other than a REIT Share.

“ Cash Amount ” means an amount of cash equal to the product of (i) the Value of a REIT Share and (ii) the REIT Shares Amount determined as of the applicable Valuation Date.

“ CBI ” means Cincinnati Bell Inc., an Ohio corporation.

“ CBI Nominee ” means (i) any person designated as a nominee to the Board of Directors by CBI in accordance with Section 8.9.A, and (ii) any person designated to fill a vacancy on the Board of Directors pursuant to Section 8.9.C.

“ Certificate ” means the Certificate of Limited Partnership of the Partnership filed with the SDAT, as amended from time to time in accordance with the terms hereof and the Act.

“ Charity ” means an entity described in Section 501(c)(3) of the Code, or any trust all the beneficiaries of which are such entities.

“ Charter ” means the charter of the Special Limited Partner, within the meaning of Section 1-101(e) of the Maryland General Corporation Law.

“ Code ” means the Internal Revenue Code of 1986, as amended and in effect from time to time or any successor statute thereto, as interpreted by the applicable Regulations thereunder. Any reference herein to a specific Section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.

“ Consent ” means the consent to, approval of, or vote in favor of a proposed action by a Partner given in accordance with Article 14 hereof.

“ Consent of the Limited Partners ” means the Consent of a Majority in Interest of the Limited Partners, which Consent shall be obtained before the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by Partners in their discretion.

“ Consent of the Partners ” means the Consent of a Majority in Interest of the Partners, which Consent shall be obtained before the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by Partners in their discretion.

“ Contributed Property ” means each Property or other asset, in such form as may be permitted by the Act, but excluding cash, contributed or deemed contributed to the Partnership (or deemed contributed by the Partnership to a “new” partnership pursuant to Code Section 708).

“ Controlled Entity ” means, as to any Person, (a) any corporation more than fifty percent (50%) of the outstanding voting stock of which is owned by such Person or such Person’s Family Members or Affiliates, (b) any trust, whether or not revocable, of which such Person or such Person’s Family Members or Affiliates are the sole beneficiaries, (c) any partnership of which such Person or an Affiliate of such Person is the managing partner and in which such Person or such Person’s Family Members or Affiliates hold partnership interests representing at least twenty-five percent (25%) of such partnership’s capital and profits and (d) any limited liability company of which such Person or an Affiliate of such Person is the manager or managing member and in which such Person or such Person’s Family Members or Affiliates hold membership interests representing at least twenty-five percent (25%) of such limited liability company’s capital and profits.

“ Cut-Off Date ” means the fifth (5th) Business Day after the General Partner’s receipt of a Notice of Redemption.

“ Debt ” means, as to any Person, as of any date of determination, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person; (iii) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Person’s interest in such property, even though such Person has not assumed or become liable for the payment thereof; and (iv) lease obligations of such Person that, in accordance with generally accepted accounting principles, should be capitalized.

“ Declination ” has the meaning set forth in Section 15.1.A hereof.

“ Depreciation ” means, for each Partnership Year or other applicable period, an amount equal to the Federal income tax depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for Federal income tax purposes at the beginning of such year or period, Depreciation shall be in an amount that bears the same ratio to such beginning Gross Asset Value as the Federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided , however , that if the Federal income tax depreciation, amortization or other cost recovery deduction for such year or period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.

“ Designated Partners ” means, collectively, (i) the Special Limited Partner and each of its wholly-owned Subsidiaries that owns Partnership Common Units, (ii) any Controlled Entities of CBI that own Partnership Common Units or (iii) CBI if it acquires and owns Partnership Common Units.

“ Distributed Right ” has the meaning set forth in the definition of “Adjustment Factor.”

“ Equity Plan ” means any stock or equity purchase plan, restricted stock or equity plan or other similar equity compensation plan now or hereafter adopted by the Partnership, the General Partner or the Special Limited Partner.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and any successor statute thereto, and the rules and regulations of the SEC promulgated thereunder.

“ Excess Units ” means Tendered Units, the issuance of REIT Shares in exchange for which would result in a violation of the Ownership Limit.

“ Excluded Property ” means any asset now or hereafter held directly by the Special Limited Partner or any direct or indirect wholly-owned Subsidiary of the Special Limited Partner (other than the equity of any direct or indirect wholly-owned Subsidiary of the Partnership and interests in the Partnership).

“ Family Members ” means, as to a Person that is an individual, such Person’s spouse, ancestors, descendants (whether by blood or by adoption), brothers and sisters and inter vivos or testamentary trusts of which only such Person and his spouse, ancestors, descendants (whether by blood or by adoption), brothers and sisters are beneficiaries.

“ Funding Debt ” means any Debt incurred by or on behalf of the General Partner or the Special Limited Partner for the purpose of providing funds to the Partnership.

“ General Partner ” means the Initial General Partner or any other Person that is, from time to time, admitted to the Partnership as a general partner pursuant to the Act and this Agreement, and, in each case, that has not ceased to be a general partner pursuant to the Act and this Agreement, in such Person’s capacity as a general partner of the Partnership.

“ General Partner Loan ” has the meaning set forth in Section 4.3.D hereof.

“ Gross Asset Value ” means, with respect to any asset, the asset’s adjusted basis for Federal income tax purposes, except as follows:

(i) The initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset as determined by the General Partner using such reasonable method of valuation as it may adopt.

(ii) The Gross Asset Values of all Partnership assets immediately prior to the occurrence of any event described below shall be adjusted to equal their respective gross fair market values, as determined by the General Partner using such reasonable method of valuation as it may adopt, as of the following times:

(1) the acquisition of an additional interest in the Partnership (other than in connection with the execution of this Agreement but including, without limitation, acquisitions pursuant to Section 4.2 hereof or contributions or deemed contributions by the General Partner pursuant to Section 4.2 hereof) by a new or existing Partner in exchange for more than a de minimis Capital Contribution, if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;

(2) the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for an interest in the Partnership if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;

(3) the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);

(4) upon the admission of a successor General Partner pursuant to Section 12.1 hereof; and

(5) at such other times as the General Partner shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2.

(iii) The Gross Asset Value of any Partnership asset distributed to a Partner shall be the gross fair market value of such asset on the date of distribution as determined by the General Partner using such reasonable method of valuation as it may adopt.

(iv) The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided , however , that Gross Asset Values shall not be adjusted pursuant to this subsection (iv) to the extent that the General Partner reasonably determines that an adjustment pursuant to subsection (ii) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (iv).

(v) If the Gross Asset Value of a Partnership asset has been determined or adjusted pursuant to subsection (i), subsection (ii) or subsection (iv) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Losses.

“ Holder ” means either (a) a Partner or (b) an Assignee that owns a Partnership Unit.

“ Incapacity ” or “ Incapacitated ” means, (i) as to any Partner who is an individual, death, total physical disability or entry by a court of competent jurisdiction adjudicating such Partner incompetent to manage his or her person or his or her estate; (ii) as to any Partner that is a corporation or limited liability company, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as to any Partner that is a partnership, the dissolution and commencement of winding up of the partnership; (iv) as to any Partner that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Partnership; (v) as to any trustee of a trust that is a Partner, the termination of the trust (but not the substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences a voluntary proceeding seeking liquidation, reorganization or other relief of or against such Partner under any bankruptcy, insolvency or other similar law now or hereafter in effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner, (c) the Partner executes and delivers a general assignment for the benefit of the Partner’s creditors, (d) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Partner in any proceeding of the nature described in clause (b) above, (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for the Partner or for all or any substantial part of the Partner’s properties, (f) any proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within one hundred twenty (120) days after the commencement thereof, (g) the appointment without the Partner’s consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within ninety (90) days of such appointment, or (h) an appointment referred to in clause (g) above is not vacated within ninety (90) days after the expiration of any such stay.

“ Indemnitee ” means (i) any Person made, or threatened to be made, a party to a proceeding by reason of its status as (A) the General Partner or the Special Limited Partner or (B) a trustee, officer or employee of the General Partner, a director, officer or employee of the Special Limited Partner or an employee of the Partnership and (ii) such other Persons (including Affiliates, employees or agents of the General Partner, the Special Limited Partner or the Partnership) as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability).

“ IRS ” means the United States Internal Revenue Service.

“ Lead Tendering Party ” has the meaning set forth in Section 15.1.H hereof.

“ Limited Partner ” means the Special Limited Partner, Investments Holdco, South Holdings, and any other Person that is, from time to time, admitted to the Partnership as a limited partner pursuant to the Act and this Agreement, and any Substituted Limited Partner or Additional Limited Partner, each shown as such in the books and records of the Partnership, in each case, that has not ceased to be a limited partner of the Partnership pursuant to the Act and this Agreement, in such Person’s capacity as a limited partner of the Partnership.

“ Liquidating Event ” has the meaning set forth in Section 13.1 hereof.

“ Liquidator ” has the meaning set forth in Section 13.2.A hereof.

“ Majority in Interest of the Limited Partners ” means Partners (excluding the General Partner, the Special Limited Partner and any Controlled Entity of either of them) entitled to vote on or consent to any matter holding more than fifty percent (50%) of all outstanding Partnership Units held by all Partners (excluding the General Partner, the Special Limited Partner and any Controlled Entity of either of them) entitled to vote on or consent to such matter.

“ Majority in Interest of the Partners ” means Partners (including the General Partner, the Special Limited Partner and any Controlled Entity of either of them) entitled to vote on or consent to any matter holding more than fifty percent (50%) of all outstanding Partnership Units held by all Partners (including the General Partner, the Special Limited Partner and any Controlled Entity of either of them) entitled to vote on or consent to such matter.

“ Net Income ” or “ Net Loss ” means, for each Partnership Year of the Partnership, an amount equal to the Partnership’s taxable income or loss for such year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

(i) Any income of the Partnership that is exempt from Federal income tax and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of “Net Income” or “Net Loss” shall be added to (or subtracted from, as the case may be) such taxable income (or loss);

(ii) Any expenditure of the Partnership described in Code Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of “Net Income” or “Net Loss,” shall be subtracted from (or added to, as the case may be) such taxable income (or loss);

(iii) In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subsection (ii) or subsection (iii) of the definition of “Gross Asset Value,” the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;

(iv) Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for Federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(v) In lieu of the depreciation, amortization and other cost recovery deductions that would otherwise be taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Partnership Year;

(vi) To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner’s interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and

(vii) Notwithstanding any other provision of this definition of “Net Income” or “Net Loss,” any item that is specially allocated pursuant to Section 6.3 hereof shall not be taken into account in computing Net Income or Net Loss. The amounts of the items of Partnership income, gain, loss or deduction available to be specially allocated pursuant to Section 6.3 hereof shall be determined by applying rules analogous to those set forth in this definition of “Net Income” or “Net Loss.”

“ Net Proceeds ” has the meaning set forth in Section 15.1.H hereof.

“ New Securities ” means (i) any rights, options, warrants or convertible or exchangeable securities that entitle the holder thereof to subscribe for or purchase, convert such securities into or exchange such securities for, REIT Shares or Preferred Shares, excluding Preferred Shares and grants under the Stock Option Plans, or (ii) any Debt issued by the Special Limited Partner that provides any of the rights described in clause (i).

“ Nonrecourse Deductions ” has the meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(c).

“ Nonrecourse Liability ” has the meaning set forth in Regulations Section 1.752-1(a)(2).

“ Notice of Redemption ” means the Notice of Redemption substantially in the form of Exhibit B attached to this Agreement.

“ Offered Shares ” has the meaning set forth in Section 15.1.H hereof

“ Offering Units ” has the meaning set forth in Section 15.1.H hereof.

“ Optionee ” means a Person to whom a stock option is granted under any Stock Option Plan.

“ Original Limited Partner ” means any Person that is a Limited Partner as of the close of business on the date of the closing of the issuance of REIT Shares pursuant to the initial public offering of REIT Shares, and does not include any Assignee or other transferee, including, without limitation, any Substituted Limited Partner succeeding to all or any part of the Partnership Interest of any such Person.

“ Ownership Limit ” means the restrictions on ownership and transfer of stock of the Special Limited Partner imposed under the Charter.

“ Partner ” means the General Partner or a Limited Partner, and “Partners” means the General Partner and the Limited Partners.

“ Partner Minimum Gain ” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

“ Partner Nonrecourse Debt ” has the meaning set forth in Regulations Section 1.704-2(b)(4).

“ Partner Nonrecourse Deductions ” has the meaning set forth in Regulations Section 1.704-2(i)(1), and the amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(i)(1).

“ Partnership ” means CyrusOne, LP, the limited partnership formed and continued under the Act and pursuant to this Agreement, and any successor thereto.

“ Partnership Common Unit ” means a fractional share of the Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2 hereof, but does not include any Partnership Junior Unit, Partnership Preferred Unit or any other Partnership Unit specified in a Partnership Unit Designation as being other than a Partnership Common Unit.

“ Partnership Employee ” means an employee of the Partnership or an employee of a Subsidiary of the Partnership, if any.

“ Partnership Equivalent Units ” means, with respect to any class or series of Capital Shares, Partnership Units with preferences, conversion and other rights (other than voting rights), restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption that are substantially the same as (or correspond to) the preferences, conversion and other rights, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption of such Capital Shares as appropriate to reflect the relative rights and preferences of such Capital Shares as to the REIT Shares and the other classes and series of Capital Shares as such Partnership Equivalent Units would have as to Partnership Common Units and the other classes and series of Partnership Units corresponding to the other classes of Capital Shares, but not as to matters such as voting for members of the Board of Directors that are not applicable to the Partnership. For the avoidance of doubt, the voting rights, redemption rights and rights to Transfer Partnership Equivalent Units need not be similar to the rights of the corresponding class or series of Capital Shares, provided, however , with respect to redemption rights, the terms of Partnership Equivalent Units must be such so that the Partnership complies with Section 4.7.B of this Agreement.

“ Partnership Interest ” means an ownership interest in the Partnership held by either a Limited Partner or the General Partner and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. There may be one or more classes or series of Partnership Interests; however, notwithstanding that the General Partner, the Special Limited Partner and any other Limited Partner may have different rights and privileges as specified in this Agreement (including differences in rights and privileges with respect to their Partnership Interests), the Partnership Interest held by the General Partner, the Special Limited Partner or any other Partner and designated as being of a particular class or series shall not be deemed to be a separate class or series of Partnership Interest from a Partnership Interest having the same designation as to class and series that is held by any other Partner solely because such Partnership Interest is held by the General Partner, the Special Limited Partner or any other Partner having different rights and privileges as specified under this Agreement. A Partnership Interest may be expressed as a number of Partnership Common Units, Partnership Preferred Units or other Partnership Units.

“ Partnership Junior Unit ” means a fractional share of the Partnership Interests of a particular class or series that the General Partner has authorized pursuant to Section 4.2 hereof that has distribution rights, or rights upon liquidation, winding up and dissolution, that are inferior or junior to the Partnership Common Units.

“ Partnership Minimum Gain ” has the meaning set forth in Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase or decrease in Partnership Minimum Gain, for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(d).

“ Partnership Preferred Unit ” means a fractional share of the Partnership Interests of a particular class or series that the General Partner has authorized pursuant to Section 4.1 or Section 4.2 or Section 4.3 hereof that has distribution rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the Partnership Common Units.

“ Partnership Record Date ” means the record date established by the General Partner for the purpose of determining the Partners entitled to notice of or to vote at any meeting of Partners or to consent to any matter, or to receive any distribution or the allotment of any other rights, or in order to make a determination of Partners for any other proper purpose, which, in the case of a record date fixed for the determination of Partners entitled to receive any distribution, shall (unless otherwise determined by the General Partner) generally be the same as the record date established by the Special Limited Partner for a distribution to its stockholders of some or all of its portion of such distribution.

“ Partnership Unit ” means a Partnership Common Unit, a Partnership Preferred Unit, a Partnership Junior Unit or any other fractional share of the Partnership Interests that the General Partner has authorized pursuant to Section 4.1 or Section 4.2 or Section 4.3 hereof.

“ Partnership Unit Designation ” has the meaning set forth in Section 4.2 hereof.

“ Partnership Vote ” has the meaning set forth in Section 11.7.B hereof.

“ Partnership Year ” means the fiscal year of the Partnership, which shall be the calendar year.

“ Percentage Interest ” means, with respect to each Partner, as to any class or series of Partnership Interests, the fraction, expressed as a percentage, the numerator of which is the aggregate number of Partnership Units of such class or series held by such Partner and the denominator of which is the total number of Partnership Units of such class or series held by all Partners. If not otherwise specified, “ Percentage Interest ” shall be deemed to refer to Partnership Common Units.

“ Permitted Lender Transferee ” has the meaning set forth in the definition of Permitted Transferee.

“ Permitted Transfer ” means (i) a Transfer by a Limited Partner of all or part of its Partnership Interest to any Family Member, Controlled Entity or Affiliate of such Partner, or to a Charity, or (ii) a Pledge and any Transfer of a Partnership Interest to a Permitted Transferee pursuant to the exercise of remedies under a Pledge.

“ Permitted Transferee ” means (i) any lender or lenders secured by a Pledge, or agents acting on their behalf, to whom any Partnership Interest is transferred pursuant to the exercise of remedies under a Pledge and any special purpose entities owned and used by such lenders or agents for the purpose of holding any such Partnership Interest (each a “ Permitted Lender Transferee ”) and (ii) any Person, including any Third-Party Pledge Transferee designated by any lender or lenders secured by a Pledge, or agents acting on their behalf, to whom a Partnership Interest is transferred pursuant to the exercise of remedies under a Pledge, whether before or after one or more Permitted Lender Transferees take title to such Partnership Interest.

“ Person ” means an individual or a corporation, partnership, trust, unincorporated organization, association, limited liability company or other entity.

“ Pledge ” means a pledge by a Limited Partner of all or any portion of its Partnership Interest to one or more banks or lending institutions, or agents acting on their behalf, which are not Affiliates of such Limited Partner, as collateral or security for a bona fide loan or other extension of credit.

“ Preferred Share ” means a share of stock of the Special Limited Partner now or hereafter authorized or reclassified that has dividend rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the REIT Shares.

“ Pricing Agreements ” has the meaning set forth in Section 15.1.H hereof.

“ Properties ” means any assets and property of the Partnership such as, but not limited to, interests in real property and personal property, including, without limitation, fee interests, interests in ground leases, easements and rights of way, interests in limited liability companies, joint ventures or partnerships, interests in mortgages, and Debt instruments as the Partnership may hold from time to time and “ Property ” means any one such asset or property.

“ Publicly Traded ” means having common equity securities listed or admitted to trading on any U.S. national securities exchange.

“ Qualified DRIP ” means a dividend reinvestment plan of the Special Limited Partner that permits participants to acquire REIT Shares using the proceeds of dividends paid by the Special Limited Partner; provided , however , that if such shares are offered at a discount, such discount must (i) be designed to pass along to the stockholders of the Special Limited Partner the savings enjoyed by the Special Limited Partner in connection with the avoidance of stock issuance costs, and (ii) not exceed 5% of the value of a REIT Share as computed under the terms of such dividend reinvestment plan.

“ Qualified Transferee ” means an “accredited investor,” as defined in Rule 501 promulgated under the Securities Act.

“ Qualifying Party ” means (a) a Limited Partner, (b) an Additional Limited Partner, (c) an Assignee who is the transferee of a Limited Partner’s Partnership Interest in a Permitted Transfer, or (d) a Person, including a lending institution as the pledgee of a Pledge, who is the transferee of a Limited Partner’s Partnership Interest in a Permitted Transfer; provided , however , that a Qualifying Party shall not include the General Partner or the Special Limited Partner.

“ Redemption ” has the meaning set forth in Section 15.1.A hereof.

“ Register ” has the meaning set forth in Section 4.1 hereof.

“ Regulations ” means the income tax regulations under the Code, whether such regulations are in proposed, temporary or final form, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

“ Regulatory Allocations ” has the meaning set forth in Section 6.3B(viii) hereof.

“ REIT ” means a real estate investment trust qualifying under Code Section 856.

“ REIT Available Cash ” means, as of any date of determination, all amounts which would be available for distribution to the holders of REIT Shares (calculated in a manner substantially similar to the manner in which the Partnership calculates Available Cash and without regard to any distributions from the Partnership to be made, or which have been made, to the General Partner and the Special Limited Partner hereunder and without regard to any restriction on distribution imposed on the General Partner by any third party).

“ REIT Partner ” means (a) the Special Limited Partner or any Affiliate of the Special Limited Partner to the extent such Person has in place an election to qualify as a REIT and (b) any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)) of any such Person.

“ REIT Payment ” has the meaning set forth in Section 15.12 hereof.

“ REIT Requirements ” means the requirements for qualifying as a REIT under the Code and Regulations (the “ REIT Requirements ”).

“ REIT Share ” means a share of common stock of the Special Limited Partner, $0.01 par value per share (but shall not include any additional series or class of the Special Limited Partner’s common stock created after the date of this Agreement).

“ REIT Shares Amount ” means a number of REIT Shares equal to the product of (a) the number of Tendered Units and (b) the Adjustment Factor; provided , however , that, in the event that the Special Limited Partner issues to all holders of REIT Shares as of a certain record date rights, options, warrants or convertible or exchangeable securities entitling the Special Limited Partner’s stockholders to subscribe for or purchase REIT Shares, or any other securities or property (collectively, the “ Rights ”), with the record date for such Rights issuance falling within the period starting on the date of the Notice of Redemption and ending on the day immediately preceding the Specified Redemption Date, which Rights will not be distributed before the relevant Specified Redemption Date, then the REIT Shares Amount shall also include such Rights that a holder of that number of REIT Shares would be entitled to receive, expressed, where relevant hereunder, as a number of REIT Shares determined by the General Partner.

“ Related Party ” means, with respect to any Person, any other Person to whom ownership of shares of the Special Limited Partner’s stock would be attributed by the first such Person under Code Section 544 (as modified by Code Section 856(h)(1)(B)).

“ Rights ” has the meaning set forth in the definition of “REIT Shares Amount.”

“ SDAT ” means the State Department of Assessments and Taxation of Maryland.

“ SEC ” means the Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“ Single Funding Notice ” has the meaning set forth in Section 15.1.H hereof.

“ Special Redemption ” has the meaning set forth in Section 15.1.A hereof.

“ Specified Partnership Units ” means with respect to each Excluded Property, the amount of Partnership Common Units and/or Partnership Preferred Units (as the case may be) which would have been issued to the Special Limited Partner, pursuant to Section 4.3.B and 4.2 hereof, if the Special Limited Partner had contributed such Excluded Property on the date that such asset was acquired by the Special Limited Partner or a wholly-owned Subsidiary of the Special Limited Partner, in exchange for Partnership Units equal in value to the fair market value of such Excluded Property as of such date.

“ Specified Redemption Date ” means the tenth (10th) Business Day after the receipt by the General Partner of a Notice of Redemption; provided , however , that no Specified Redemption Date with respect to any Partnership Common Units shall occur during the Twelve-Month Period applicable to such Partnership Common Units (except pursuant to a Special Redemption); and provided , further , that, if the General Partner and the Special Limited Partner elect a Stock Offering Funding pursuant to Section 15.1.H, such Specified Redemption Date shall be deferred until the next Business Day following the date of the closing of the Stock Offering Funding.

“ Stock Offering Funding ” has the meaning set forth in Section 15.1.H hereof

“ Stock Offering Funding Amount ” has the meaning set forth in Section 15.1.H hereof.

“ Stock Option Plans ” means any stock option plan now or hereafter adopted by the Partnership or the Special Limited Partner.

“ Stockholder Vote ” has the meaning set forth in Section 11.7.B hereof.

“ Subsidiary ” means, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.

“ Substituted Limited Partner ” means a Person who is admitted as a Limited Partner to the Partnership pursuant to Section 11.4 hereof.

“ Successor Shares Amount ” has the meaning set forth in Section 11.7 hereof.

“ Surviving Partnership ” has the meaning set forth in Section 11.7 hereof.

“ Tax Items ” has the meaning set forth in Section 6.4.A hereof.

“ Tendered Units ” has the meaning set forth in Section 15.1.A hereof.

“ Tendering Party ” has the meaning set forth in Section 15.1.A hereof.

“ Termination Transaction ” means any direct or indirect Transfer of all or any portion of the Special Limited Partner’s Partnership Interest or its interest in the General Partner in connection with, or the other occurrence of, (a) a merger, consolidation or other combination involving the Special Limited Partner or the General Partner, on the one hand, and any other Person, on the other, (b) a sale, lease, exchange or other transfer of all or substantially all of the assets of the Special Limited Partner not in the ordinary course of its business, whether in a single transaction or a series of related transactions, (c) a reclassification, recapitalization or change of the outstanding REIT Shares (other than a change in par value, or from par value to no par value, or as a result of a stock split, stock dividend or similar subdivision), (d) the adoption of any plan of liquidation or dissolution of the Special Limited Partner or the General Partner, or (e) a direct or indirect Transfer of all or any portion of the Special Limited Partner’s Partnership Interest or its interest in the General Partner, other than a Transfer effected in accordance with Section 11.2.B.

“ Third-Party Pledge Transferee ” means a Qualified Transferee, other than a Permitted Lender Transferee, that acquires a Partnership Interest pursuant to the exercise of remedies by Permitted Lender Transferees under a Pledge and that agrees to be bound by the terms and conditions of this Agreement.

“ Transaction Consideration ” has the meaning set forth in Section 11.7 hereof.

“ Transfer ” means any sale, assignment, bequest, conveyance, devise, gift (outright or in trust), Pledge, encumbrance, hypothecation, mortgage, exchange, transfer or other disposition or act of alienation, whether voluntary or involuntary or by operation of law; provided , however , that when the term is used in Article 11 and Section 13.7 hereof, “ Transfer ” does not include (a) any Redemption of Partnership Common Units by the Partnership, or acquisition of Tendered Units by the Special Limited Partner, pursuant to Section 15.1 hereof or (b) any redemption of Partnership Units pursuant to any Partnership Unit Designation. The terms “Transferred” and “Transferring” have correlative meanings.

“ Twelve-Month Period ” means (a) as to any Partnership Interest held by an Original Limited Partner as of the close of business on the date of the closing of the issuance of REIT Shares pursuant to the initial public offering of the REIT Shares (or any successor-in-interest that is a Qualifying Party), a twelve-month period ending on the day before the first (1st) anniversary of the date of this Agreement and (b) as to any other Partnership Interest, a twelve-month period ending on the day before the first (1st) anniversary of a Qualifying Party’s first becoming a Holder of such Partnership Interest; provided , however , that the General Partner may, by written agreement with a Qualifying Party, shorten or lengthen the first Twelve-Month Period to a period that is shorter or longer than twelve (12) months with respect to a Qualifying Party other than an Original Limited Partner or successor-in-interest.

“ Valuation Date ” means the date of receipt by the General Partner of a Notice of Redemption pursuant to Section 15.1 herein, or such other date as specified herein, or, if such date is not a Business Day, the immediately preceding Business Day.

“ Value ” means, on any Valuation Date with respect to a REIT Share, the average of the daily Market Prices for ten (10) consecutive trading days immediately preceding the Valuation Date (except that the Market Price for the trading day immediately preceding the date of exercise of a stock option under any Stock Option Plans shall be substituted for such average of daily market prices for purposes of Section 4.4 hereof). The term “Market Price” on any date means, with respect to any class or series of outstanding REIT Shares, the last sale price for such REIT Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such REIT Shares, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on The NASDAQ Stock Market or, if such REIT Shares are not listed or admitted to trading on The NASDAQ Stock Market, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such REIT Shares are listed or admitted to trading or, if such REIT Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the principal automated quotation system that may then be in use or, if such REIT Shares are not quoted by any such system, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such REIT Shares selected by the General Partner or, in the event that no trading price is available for such REIT Shares, the fair market value of the REIT Shares, as determined in good faith by the General Partner. In the event that the REIT Shares Amount includes Rights (as defined in the definition of “REIT Shares Amount”) that a holder of REIT Shares would be entitled to receive, then the Value of such Rights shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate. “ Vesting Date ” has the meaning set forth in Section 4.4 hereof.

“ Withdrawing Partners ” has the meaning set forth in Section 15.1.H hereof.

ARTICLE 2

ORGANIZATIONAL MATTERS

Section 2.1 Formation . The Partnership is a limited partnership heretofore formed and continued pursuant to the provisions of the Act and upon the terms and subject to the conditions set forth in this Agreement. Except as expressly provided herein to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. The Partnership Interest of each Partner shall be personal property for all purposes.

Section 2.2 Name . The name of the Partnership is “CyrusOne LP.” The Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof. The words “Limited Partnership,” “LP,” “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner may change the name of the Partnership at any time and from time.

Section 2.3 Principal Office and Resident Agent . The address of the principal office of the Partnership in the State of Maryland is located at c/o CSC-Lawyer’s Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202 and the name and address of the resident agent of the Partnership in the State of Maryland are CSC-Lawyer’s Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202, or such other principal office and resident agent as the General Partner may from time to time designate. The Partnership may maintain offices at such other place or places within or outside the State of Maryland as the General Partner may approve.

Section 2.4 Power of Attorney .

A. Each Limited Partner and Assignee hereby irrevocably constitutes and appoints the General Partner, any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead to:

(1) execute, swear to, seal, acknowledge, deliver, file and record in the appropriate public offices (a) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments, supplements or restatements thereof) that the General Partner or the Liquidator deems appropriate or necessary to form, qualify or continue the existence or qualification of the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability to the extent provided by applicable law) in the State of Delaware and in all other jurisdictions in which the Partnership may conduct business or own property; (b) all instruments that the General Partner or any Liquidator deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (c) all conveyances and other instruments or documents that the General Partner or the Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (d) all conveyances and other instruments or documents that the General Partner or the Liquidator deems appropriate or necessary to reflect the distribution or exchange of assets of the Partnership pursuant to the terms of this Agreement; (e) all instruments relating to the admission, acceptance, withdrawal, removal or substitution of any Partner pursuant to the terms of this Agreement or the Capital Contribution of any Partner; and (f) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges relating to Partnership Interests; and

(2) execute, swear to, acknowledge and file all ballots, consents, approvals, waivers, certificates and other instruments the General Partner or any Liquidator determines are necessary or desirable to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action that is made or given by the Partners hereunder or is consistent with the terms of this Agreement.

Nothing contained herein shall be construed as authorizing the General Partner or any Liquidator to amend this Agreement except in accordance with Section 14.2 hereof or as may be otherwise expressly provided for in this Agreement.

B. The foregoing power of attorney is hereby declared to be irrevocable and a special power coupled with an interest, in recognition of the fact that each of the Limited Partners and Assignees will be relying upon the power of the General Partner or the Liquidator to act as contemplated by this Agreement in any filing or other action by it on behalf of the Partnership, and it shall survive and not be affected by the subsequent Incapacity of any Limited Partner or Assignee and the Transfer of all or any portion of such Person’s Partnership Units or Partnership Interest (as the case may be) and shall extend to such Person’s heirs, successors, assigns and personal representatives. Each such Limited Partner and Assignee hereby agrees to be bound by any representation made by the General Partner or the Liquidator, acting in good faith pursuant to such power of attorney; and each such Limited Partner and Assignee hereby waives any and all defenses that may be available to contest, negate or disaffirm the action of the General Partner or the Liquidator, taken in good faith under such power of attorney. Each Limited Partner and Assignee shall execute and deliver to the General Partner or the Liquidator, within fifteen (15) days after receipt of the General Partner’s or the Liquidator’s request therefor, such further designation, powers of attorney and other instruments as the General Partner or the Liquidator (as the case may be) deems necessary to effectuate this Agreement and the purposes of the Partnership. Notwithstanding anything else set forth in this Section 2.4.B, no Limited Partner shall incur any personal liability for any action of the General Partner or the Liquidator taken under such power of attorney.

Section 2.5 Term . The term of the Partnership commenced on July 31, 2012, the date that the original Certificate was accepted for record by the SDAT in accordance with the Act, and shall continue indefinitely unless the Partnership is dissolved sooner pursuant to the provisions of Article 13 hereof or as otherwise provided by law.

ARTICLE 3

PURPOSE

Section 3.1 Purpose and Business . The purpose and nature of the Partnership is to conduct any business, enterprise or activity permitted by or under the Act, including, but not limited to, (i) to conduct the business of ownership, construction, reconstruction, development, redevelopment, alteration, improvement, maintenance, operation, sale, leasing, transfer, encumbrance, conveyance and exchange of the Properties, (ii) to acquire and invest in any securities and/or loans relating to the Properties, (iii) to enter into any partnership, joint venture, business trust arrangement, limited liability company or other similar arrangement to engage in any business permitted by or under the Act, or to own interests in any entity engaged in any business permitted by or under the Act, (iv) to conduct the business of providing property and asset management and brokerage services, whether directly or through one or more partnerships, joint ventures, Subsidiaries, business trusts, limited liability companies or similar arrangements, and (v) to do anything necessary or incidental to the foregoing. The Partnership shall have all powers necessary or desirable to accomplish the purposes enumerated. In connection with the foregoing, the Partnership shall have full power and authority to enter into, perform and carry out contracts of any kind, to borrow and lend money and to issue evidence of indebtedness, whether or not secured by mortgage, deed of trust, pledge or other lien and, directly or indirectly, to acquire and construct additional Properties necessary, useful or desirable in connection with its business.

Section 3.2 Powers . The Partnership shall have the power to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described herein and for the protection and benefit of the Partnership, including, without limitation, full power and authority, directly or through its ownership interest in other entities, to enter into, perform and carry out contracts of any kind, to borrow and lend money and to issue evidence of indebtedness, whether or not secured by mortgage, deed of trust, pledge or other lien, to acquire, own, manage, improve and develop real property and lease, sell, transfer and dispose of real property.

Section 3.3 Partnership Only for Purposes Specified . The Partnership is a limited partnership formed pursuant to the Act, and this Agreement shall not be deemed to create a company, venture or partnership between or among the Partners or any other Persons with respect to any activities whatsoever other than the activities specified in Section 3.1 hereof; however, to the extent applicable, the Partnership is a partnership “at will” (and is not a partnership formed for a definite term or a particular undertaking) within the meaning of the Maryland Revised Uniform Partnership Act. Except as otherwise provided in this Agreement, no Partner shall have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of the Partnership, its properties or any other Partner. No Partner, in its capacity as a Partner under this Agreement, shall be responsible or liable for any indebtedness or obligation of another Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of any Partner, incurred either before or after the execution and delivery of this Agreement by such Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and the Act.

Section 3.4 Representations and Warranties by the Partners .

A. Each Partner that is an individual (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner) represents and warrants to, and covenants with, each other Partner that (i) the consummation of the transactions contemplated by this Agreement to be performed by such Partner will not result in a breach or violation of, or a default under, any material agreement by which such Partner or any of such Partner’s property is bound, or any statute, regulation, order or other law to which such Partner is subject, (ii) such Partner is neither a “foreign person” within the meaning of Code Section 1445(f) nor a “foreign partner” within the meaning of Code Section 1446(e), (iii) such Partner does not, and for so long as it is a Partner will not, own, directly or indirectly, (a) five percent (5%) or more of the total combined voting power of all classes of stock entitled to vote, or five percent (5%) or more of the total number of shares of all classes of stock, of any corporation that is a tenant of either (I) the Special Limited Partner or any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), (II) the Partnership or (III) any partnership, venture or limited liability company of which the Special Limited Partner, any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), with respect to the Special Limited Partner, or the Partnership is a member or (b) an interest of five percent (5%) or more in the assets or net profits of any tenant of either (I) the Special Limited Partner or any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), (II) the Partnership or (III) any partnership, venture, or limited liability company of which the Special Limited Partner, any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), with respect to the Special Limited Partner, or the Partnership is a member and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms. Notwithstanding the foregoing, each Partner may exceed any of the five percent limits (5%) set forth in clause (iii) of the immediately preceding sentence; provided that the Partner obtains the written consent of the General Partner prior to exceeding any such limits; provided , further , that in no event shall the Partner own, directly or indirectly, more than ten percent (10%) of the stock described in clause (iii)(a) of the immediately preceding sentence or more than ten percent (10%) of the assets described in clause (iii)(b) of the immediately preceding sentence.

B. Each Partner that is not an individual (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner) represents and warrants to, and covenants with, each other Partner that (i) all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including, without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries, directors and/or stockholder(s) (as the case may be) as required, (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its partnership or operating agreement, trust agreement, charter or bylaws (as the case may be) any material agreement by which such Partner or any of such Partner’s properties or any of its partners, members, beneficiaries, trustees or stockholders (as the case may be) is or are bound, or any statute, regulation, order or other law to which such Partner or any of its partners, members, trustees, beneficiaries or stockholders (as the case may be) is or are subject, (iii) such Partner is neither a “foreign person” within the meaning of Code Section 1445(f) nor a “foreign partner” within the meaning of Code Section 1446(e), (iv) such Partner does not, and for so long as it is a Partner will not, own, directly or indirectly, (a) five percent (5%) or more of the total combined voting power of all classes of stock entitled to vote, or five percent (5%) or more of the total number of shares of all classes of stock, of any corporation that is a tenant of either (I) the Special Limited Partner or any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), with respect to the Special Limited Partner, (II) the Partnership or (III) any partnership, venture or limited liability company of which the Special Limited Partner, any Special Limited Partner, any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), with respect to the Special Limited Partner, or the Partnership is a member or (b) an interest of five percent (5%) or more in the assets or net profits of any tenant of either (I) the Special Limited Partner, or any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)) with respect to the Special Limited Partner, (II) the Partnership or (III) any partnership, venture or limited liability company for which the Special Limited Partner, any Special Limited Partner, any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), with respect to the Special Limited Partner, or the Partnership is a member and (v) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms. Notwithstanding the foregoing, each Partner may exceed any of the five percent limits (5%) set forth in clause (iv) of the immediately preceding sentence; provided that any Partner other than a Permitted Transferee obtains the written consent of the General Partner prior to exceeding any such limits; provided , further , that in no event shall any Partner (including any Permitted Transferee) own, directly or indirectly, more than ten percent (10%) of the stock described in clause (iv) (a) of the immediately preceding sentence or more than ten percent (10%) of the assets described in clause (iv) (b) of the immediately preceding sentence.

C. Each Partner (including, without limitation, each Substituted Limited Partner, as a condition to becoming a Substituted Limited Partner) represents and warrants that it is an “accredited investor” as defined in Rule 501 promulgated under the Securities Act and represents, warrants and agrees that it has acquired and continues to hold its interest in the Partnership for its own account for investment purposes only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof, and not with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances. Each Partner further represents and warrants that it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, particularly real estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds that it has invested in the Partnership in what it understands to be a highly speculative and illiquid investment. Notwithstanding the foregoing, the representations and warranties contained in the first sentence of this Section 3.4.C shall not apply to any Permitted Lender Transferee, it being understood that a Permitted Lender Transferee may be subject to a legal obligation to sell, distribute or otherwise dispose of any Partnership Interest acquired pursuant to the exercise of remedies under a Pledge; provided , however , that such Permitted Lender Transferee must be a Qualified Transferee.

D. The representations and warranties contained in Sections 3.4.A, 3.4.B and 3.4.C hereof shall survive the execution and delivery of this Agreement by each Partner (and, in the case of an Additional Limited Partner or a Substituted Limited Partner, the admission of such Additional Limited Partner or Substituted Limited Partner as a Limited Partner in the Partnership) and the dissolution, liquidation and termination of the Partnership.

E. Each Partner (including, without limitation, each Substituted Limited Partner as a condition to becoming a Substituted Limited Partner) hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Partnership or the General Partner have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, that may have been in any manner submitted to such Partner shall not constitute any representation or warranty of any kind or nature, express or implied.

F. Notwithstanding the foregoing, the General Partner may permit the modification of any of the representations and warranties contained in Sections 3.4.A, 3.4.B and 3.4.C above as applicable to any Partner (including, without limitation any Additional Limited Partner or Substituted Limited Partner or any transferee of either) provided that such representations and warranties, as modified, shall be set forth in either (i) a Partnership Unit Designation applicable to the Partnership Units held by such Partner or (ii) a separate writing addressed to the Partnership and the General Partner.

ARTICLE 4

CAPITAL CONTRIBUTIONS

Section 4.1 Capital Contributions of the Partners . The Original Limited Partners have heretofore made Capital Contributions to the Partnership. Except as provided by law or in Section 4.2, 4.3, or 10.4 hereof, the Partners shall have no obligation or, except with the prior written consent of the General Partner, right to make any Capital Contributions or loans to the Partnership. The General Partner shall cause to be maintained in the principal business office of the Partnership, or such other place as may be determined by the General Partner, the books and records of the Partnership, which shall include, among other things, a register containing the name, address, and number of Partnership Units of each Partner, and such other information as the General Partner may deem necessary or desirable (the “Register”). The Register shall not be deemed part of this Agreement. The General Partner shall from time to time update the Register as necessary to accurately reflect the information therein, including as a result of any sales, exchanges or other Transfers, or any redemptions, issuances or similar events involving Partnership Units. Any reference in this Agreement to the Register shall be deemed a reference to the Register as in effect from time to time. Subject to the terms of this Agreement, the General Partner may take any action authorized hereunder in respect of the Register without any need to obtain the consent of any other Partner. No action of any Limited Partner shall be required to amend or update the Register. Except as required by law, no Limited Partner shall be entitled to receive a copy of the information set forth in the Register relating to any Partner other than itself.

Section 4.2 Issuances of Additional Partnership Interests . Subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation:

A. General . The General Partner is hereby authorized to cause the Partnership to issue additional Partnership Interests, in the form of Partnership Units, for any Partnership purpose, at any time or from time to time, to the Partners (including the General Partner and the Special Limited Partner) or to other Persons, and to admit such Persons as Additional Limited Partners, for such consideration and on such terms and conditions as shall be established by the General Partner, all without the approval of any Limited Partner or any other Person. Without limiting the foregoing, the General Partner is expressly authorized to cause the Partnership to issue Partnership Units (i) upon the conversion, redemption or exchange of any Debt, Partnership Units, or other securities issued by the Partnership, (ii) for less than fair market value, (iii) for no consideration, (iv) in connection with any merger of any other Person into the Partnership, or (v) upon the contribution of property or assets to the Partnership. Any additional Partnership Interests may be issued in one or more classes, or one or more series of any of such classes, with such designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption (including, without limitation, rights that may be senior or otherwise entitled to preference over existing Partnership Interests) as shall be determined by the General Partner, without the approval of any Limited Partner or any other Person, and set forth in a written document thereafter attached to and made an exhibit to this Agreement, which exhibit shall be an amendment to this Agreement and shall be incorporated herein by this reference (each, a “ Partnership Unit Designation ”). Without limiting the generality of the foregoing, the General Partner shall have authority to specify the allocations of items of Partnership income, gain, loss, deduction and credit to each such class or series of Partnership Interests. Except to the extent specifically set forth in any Partnership Unit Designation, a Partnership Interest of any class or series other than a Partnership Common Unit shall not entitle the holder thereof to vote on, or consent to, any matter. Upon the issuance of any additional Partnership Interest, the General Partner shall amend t he Register and the books and records of the Partnership as appropriate to reflect such issuance.

B. Issuances to the General Partner or Special Limited Partner . No additional Partnership Units shall be issued to the General Partner or the Special Limited Partner unless (i) the additional Partnership Units are issued to all Partners holding Partnership Common Units in proportion to their respective Percentage Interests in the Partnership Common Units, (ii) (a) the additional Partnership Units are (x) Partnership Common Units issued in connection with an issuance of REIT Shares, or (y) Partnership Equivalent Units (other than Partnership Common Units) issued in connection with an issuance of Preferred Shares, New Securities or other interests in the Special Limited Partner (other than REIT Shares), and (b) the General Partner or the Special Limited Partner (as the case may be) contributes to the Partnership the cash proceeds or other consideration received in connection with the issuance of such REIT Shares, Preferred Shares, New Securities or other interests in the Special Limited Partner, (iii) the additional Partnership Units are issued upon the conversion, redemption or exchange of Debt, Partnership Units or other securities issued by the Partnership, or (iv) the additional Partnership Units are issued pursuant to Section 4.3.B, Section 4.3.E, Section 4.4, Section 4.5 or Section 4.9.

C. No Preemptive Rights . Except as expressly provided in this Agreement or in any Partnership Unit Designation, no Person, including, without limitation, any Partner or Assignee, shall have any preemptive, preferential, participation or similar right or rights to subscribe for or acquire any Partnership Interest.

Section 4.3 Additional Funds and Capital Contributions .

A. General . The General Partner may, at any time and from time to time, determine that the Partnership requires additional funds (“ Additional Funds ”) for the acquisition or development of additional Properties, for the redemption of Partnership Units or for such other purposes as the General Partner may determine. Additional Funds may be obtained by the Partnership, at the election of the General Partner, in any manner provided in, and in accordance with, the terms of this Section 4.3 without the approval of any Limited Partner or any other Person.

B. Additional Capital Contributions . The General Partner, on behalf of the Partnership, may obtain any Additional Funds by accepting Capital Contributions from any Partners or other Persons. In connection with any such Capital Contribution (of cash or property), the General Partner is hereby authorized to cause the Partnership from time to time to issue additional Partnership Units (as set forth in Section 4.2 above) in consideration therefor and the Percentage Interests of the General Partner, the Limited Partners shall be adjusted to reflect the issuance of such additional Partnership Units.

C. Loans by Third Parties . The General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt to any Person (other than, except as contemplated in, Section 4.3.D the General Partner or the Special Limited Partner) upon such terms as the General Partner determines appropriate, including making such Debt convertible, redeemable or exchangeable for Partnership Units; provided, however, that the Partnership shall not incur any such Debt if any Partner would be personally liable for the repayment of such Debt (unless such Partner otherwise agrees).

D. General Partner and Special Limited Partner Loans . The General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt with the General Partner and/or the Special Limited Partner (each, a “ General Partner Loan ”) if (i) such Debt is, to the extent permitted by law, on substantially the same terms and conditions (including interest rate, repayment schedule, and conversion, redemption, repurchase and exchange rights) as Funding Debt incurred by the General Partner or the Special Limited Partner, as applicable, the net proceeds of which are loaned to the Partnership to provide such Additional Funds, or (ii) such Debt is on terms and conditions no less favorable to the Partnership than would be available to the Partnership from any third party; provided , however , that the Partnership shall not incur any such Debt if any Limited Partner would be personally liable for the repayment of such Debt (unless such Partner otherwise agrees).

E. Issuance of Securities by the Special Limited Partner . The Special Limited Partner shall not issue any additional REIT Shares, Preferred Shares or New Securities unless the Special Limited Partner contributes the cash proceeds or other consideration received from the issuance of such additional REIT Shares, Preferred Shares or New Securities (as the case may be) and from the exercise of the rights contained in any such additional New Securities to the Partnership in exchange for (x) in the case of an issuance of REIT Shares, Partnership Common Units, or (y) in the case of an issuance of Preferred Shares or New Securities, Partnership Equivalent Units; provided , however , that notwithstanding the foregoing, the Special Limited Partner may issue REIT Shares, Preferred Shares or New Securities (a) pursuant to Section 4.4 or Section 15.1.B hereof, (b) pursuant to a dividend or distribution (including any stock split) of REIT Shares, Preferred Shares or New Securities to all of the holders of REIT Shares, Preferred Shares or New Securities (as the case may be), (c) upon a conversion, redemption or exchange of Preferred Shares, (d) upon a conversion, redemption, exchange or exercise of New Securities, or (e) in connection with an acquisition of Partnership Units or a property or other asset to be owned, directly or indirectly, by the Special Limited Partner. In the event of any issuance of additional REIT Shares, Preferred Shares or New Securities by the Special Limited Partner, and the contribution to the Partnership, by the Special Limited Partner, of the cash proceeds or other consideration received from such issuance, the Partnership shall pay the Special Limited Partner’s expenses associated with such issuance, including any underwriting discounts or commissions. In the event that the Special Limited Partner issues any additional REIT Shares, Capital Shares or New Securities and contributes the cash proceeds or other consideration received from the issuance thereof to the Partnership, the Partnership is authorized to issue a number of Partnership Common Units or Partnership Equivalent Units to the Special Limited Partner equal to the number of REIT Shares, Capital Shares or New Securities so issued, divided by the Adjustment Factor then in effect, in accordance with this Section 4.3.E without any further act, approval or vote of any Partner or any other Persons.

Section 4.4 Stock Option Plans .

A. Options Granted to Persons other than Partnership Employees . If at any time or from time to time, in connection with any Stock Option Plan, an option to purchase REIT Shares granted to a Person other than a Partnership Employee is duly exercised:

(1) The Special Limited Partner, shall, as soon as practicable after such exercise, make a Capital Contribution to the Partnership in an amount equal to the exercise price paid to the Special Limited Partner by such exercising party in connection with the exercise of such stock option.

(2) Notwithstanding the amount of the Capital Contribution actually made pursuant to Section 4.4.A(1) hereof, the Special Limited Partner shall be deemed to have contributed to the Partnership as a Capital Contribution an amount equal to the Value of a REIT Share as of the date of exercise multiplied by the number of REIT Shares then being issued in connection with the exercise of such stock option. In exchange for such Capital Contribution, the Partnership shall issue a number of Partnership Common Units to the Special Limited Partner equal to the quotient of (a) the number of REIT Shares issued in connection with the exercise of such stock option, divided by (b) the Adjustment Factor then in effect.

B. Options Granted to Partnership Employees . If at any time or from time to time, in connection with any Stock Option Plan, an option to purchase REIT Shares granted to a Partnership Employee is duly exercised:

(1) The Special Limited Partner shall sell to the Partnership, and the Partnership shall purchase from the Special Limited Partner, the number of REIT Shares as to which such stock option is being exercised. The purchase price per REIT Share for such sale of REIT Shares to the Partnership shall be the Value of a REIT Share as of the date of exercise of such stock option.

(2) The Partnership shall sell to the Optionee (or if the Optionee is an employee of a Partnership Subsidiary, the Partnership shall sell to such Partnership Subsidiary, which in turn shall sell to the Optionee), for a cash price per share equal to the Value of a REIT Share at the time of the exercise, the number of REIT Shares equal to (a) the exercise price paid to the Special Limited Partner by the exercising party in connection with the exercise of such stock option divided by (b) the Value of a REIT Share at the time of such exercise.

(3) The Partnership shall transfer to the Optionee (or if the Optionee is an employee of a Partnership Subsidiary, the Partnership shall transfer to such Partnership Subsidiary, which in turn shall transfer to the Optionee) at no additional cost, as additional compensation, the number of REIT Shares equal to the number of REIT Shares described in Section 4.4.B(1) hereof less the number of REIT Shares described in Section 4.4.B(2) hereof.

(4) The Special Limited Partner shall, as soon as practicable after such exercise, make a Capital Contribution to the Partnership of an amount equal to all proceeds received (from whatever source, but excluding any payment in respect of payroll taxes or other withholdings) by the Special Limited Partner in connection with the exercise of such stock option. In exchange for such Capital Contribution, the Partnership shall issue a number of Partnership Common Units to the Special Limited Partner equal to the quotient of (a) the number of REIT Shares issued in connection with the exercise of such stock option, divided by (b) the Adjustment Factor then in effect.

C. Restricted Stock Granted to Partnership Employees . If at any time or from time to time, in connection with any Equity Plan (other than a stock option plan), any REIT Shares are issued to a Partnership Employee (including any REIT Shares that are subject to forfeiture in the event such Partnership Employee terminates his employment by the Partnership or a Partnership Subsidiary) in consideration for services performed for the Partnership or a Partnership Subsidiary:

(1) The Special Limited Partner shall issue such number of REIT Shares as are to be issued to the Partnership Employee in accordance with the Equity Plan;

(2) The following events will be deemed to have occurred: (a) the Special Limited Partner shall be deemed to have sold such shares to the Partnership (or if the Partnership Employee is an employee or other service provider of a Partnership Subsidiary, to such Partnership Subsidiary) for a purchase price equal to the Value of such shares, (b) the Partnership (or such Partnership Subsidiary) shall be deemed to have delivered the shares to the Partnership Employee, (c) the Special Limited Partner shall be deemed to have contributed the purchase price to the Partnership as a Capital Contribution, and (d) in the case where the Partnership Employee is an employee of a Partnership Subsidiary, the Partnership shall be deemed to have contributed such amount to the capital of the Partnership Subsidiary; and

(3) The Partnership shall issue to the Special Limited Partner a number of Partnership Common Units equal to the number of newly issued REIT Shares divided by the Adjustment Factor then in effect in consideration for a deemed Capital Contribution in an amount equal to (x) the number of newly issued Partnership Common Units, multiplied by (y) a fraction the numerator of which is the Value of a REIT Share, and the denominator of which is the Adjustment Factor then in effect.

D. Restricted Stock Granted to Persons other than Partnership Employees . If at any time or from time to time, in connection with any Equity Plan (other than a stock option plan), any REIT shares are issued to a Person other than a Partnership Employee in consideration for services performed for the Special Limited Partner, the General Partner, the Partnership or a Partnership Subsidiary:

(1) The Special Limited Partner shall issue such number of REIT Shares as are to be issued to such Person in accordance with the Equity Plan; and

(2) The Special Limited Partner shall be deemed to have contributed the Value of such REIT Shares to the Partnership as a Capital Contribution, and the Partnership shall issue to the Special Limited Partner a number of newly issued Partnership Common Units equal to the number of newly issued REIT Shares divided by the Adjustment Factor then in effect.

E. Future Stock Incentive Plans . Nothing in this Agreement shall be construed or applied to preclude or restrain the General Partner or the Special Limited Partner from adopting, modifying or terminating stock incentive plans for the benefit of employees, directors or other business associates of the General Partner, the Special Limited Partner, the Partnership or any of their Affiliates. The Partners acknowledge and agree that, in the event that any such plan is adopted, modified or terminated by the General Partner or the Special Limited Partner, amendments to this Section 4.4 may become necessary or advisable and that any approval or Consent to any such amendments requested by the General Partner or the Special Limited Partner shall be deemed granted.

F. Issuance of Partnership Common Units . The Partnership is expressly authorized to issue Partnership Common Units in the numbers specified in this Section 4.4 without any further act, approval or vote of any Partner or any other Persons.

Section 4.5 Dividend Reinvestment Plan, Stock Incentive Plan or Other Plan . Except as may otherwise be provided in this Article 4, all amounts received by the Special Limited Partner in respect of any dividend reinvestment plan, stock incentive or other stock or subscription plan or agreement, either (a) shall be utilized by the Special Limited Partner to effect open market purchases of REIT Shares, or (b) if the Special Limited Partner elects instead to issue new REIT Shares with respect to such amounts, shall be contributed by the Special Limited Partner to the Partnership in exchange for additional Partnership Common Units. Upon such contribution, the Partnership will issue to the Special Limited Partner a number of Partnership Common Units equal to the number of newly issued REIT Shares divided by the Adjustment Factor then in effect.

Section 4.6 No Interest; No Return . No Partner shall be entitled to interest on its Capital Contribution or on such Partner’s Capital Account. Except as provided herein or by law, no Partner shall have any right to demand or receive the return of its Capital Contribution from the Partnership.

Section 4.7 Conversion or Redemption of Preferred Shares; Redemption of REIT Shares .

A. Conversion of Preferred Shares . If, at any time, any Preferred Shares are converted into REIT Shares, in whole or in part, then an equal number of Partnership Equivalent Units held by the Special Limited Partner that correspond to the class or series of Preferred Shares so converted shall automatically be converted into a number of Partnership Common Units equal to the quotient of (i) the number of REIT Shares issued upon such conversion divided by (ii) the Adjustment Factor then in effect.

B. Redemption of Preferred Shares . If, at any time, any Preferred Shares are redeemed, repurchased or otherwise acquired (whether by exercise of a put or call, automatically or by means of another arrangement) by the Special Limited Partner for cash, then, immediately prior to such redemption of Preferred Shares, the Partnership shall redeem an equal number of Partnership Equivalent Units held by the Special Limited Partner that correspond to the class or series of Preferred Shares so redeemed, repurchased or acquired upon the same terms and for the same price per Partnership Equivalent Unit, as such Preferred Shares are redeemed, repurchased or acquired.

C. Redemption, Repurchase or Forfeiture of REIT Shares . If, at any time, any REIT Shares are redeemed, repurchased or otherwise acquired (whether by exercise of a put or call, upon forfeiture of any award granted under any Equity Plan, automatically or by means of another arrangement) by the Special Limited Partner, then, immediately prior to such redemption, repurchase or acquisition of REIT Shares, the Partnership shall redeem a number of Partnership Common Units held by the Special Limited Partner equal to the quotient of (i) the number of REIT Shares so redeemed, repurchased or acquired, divided by (ii) the Adjustment Factor then in effect, such redemption, repurchase or acquisition to be upon the same terms and for the same price per Partnership Common Unit (after giving effect to application of the Adjustment Factor) as such REIT Shares are redeemed, repurchased or acquired.

Section 4.8 Other Contribution Provisions . In the event that any Partner is admitted to the Partnership and is given a Capital Account in exchange for services rendered to the Partnership, such transaction shall be treated by the Partnership and the affected Partner as if the Partnership had compensated such Partner in cash and such Partner had contributed the cash to the capital of the Partnership. In addition, with the consent of the General Partner, one or more Partners (including the Special Limited Partner) may enter into contribution agreements with the Partnership which have the effect of providing a guarantee of certain obligations of the Partnership.

Section 4.9 Excluded Properties . The Special Limited Partner shall contribute each Excluded Property (or, if applicable, the net proceeds (after payment of all transfer taxes and other transaction costs) received by the Special Limited Partner from the sale, transfer or other disposition of an Excluded Property to a Person who is not a direct or indirect wholly-owned Subsidiary of the Special Limited Partner) to the Partnership upon the earlier of (i) such time as it is commercially practicable to contribute such property to the Partnership without adverse tax or other economic consequence to the Special Limited Partner and (ii) any sale, transfer or other disposition of an Excluded Property to a Person who is not a direct or indirect wholly-owned Subsidiary of the Special Limited Partner. Upon any such contribution of an Excluded Property or the proceeds therefrom, the Special Limited Partner shall receive in exchange for such contribution, notwithstanding the actual value of such Excluded Property or the amount of such proceeds (as the case may be), the Specified Partnership Units applicable to such Excluded Property. The Partnership is expressly authorized to issue the Specified Partnership Units in the numbers specified in this Section 4.9 without any further act, approval or vote of any Partner or any other Persons.

ARTICLE 5

DISTRIBUTIONS

Section 5.1 Requirement and Characterization of Distributions . Subject to the terms of any Partnership Unit Designation that provides for a class or series of Partnership Preferred Units with a preference with respect to the payment of distributions, the General Partner shall cause the Partnership to distribute quarterly all, or such portion as the General Partner may determine, of the Available Cash generated by the Partnership during such quarter to the Holders of Partnership Common Units in accordance with their respective Percentage Interests of Partnership Common Units on such Partnership Record Date. Distributions payable with respect to any Partnership Units that were not outstanding during the entire quarterly period in respect of which any distribution is made (other than any Partnership Units issued to the Special Limited Partner in connection with the issuance of REIT Shares or Capital Shares by the Special Limited Partner) shall be prorated based on the portion of the period that such Partnership Units were outstanding. Notwithstanding the foregoing, the General Partner, in its sole and absolute discretion, may cause the Partnership to distribute Available Cash to the Holders on a more or less frequent basis than quarterly. The General Partner shall make reasonable efforts to cause the Partnership to distribute sufficient amounts to enable the Special Limited Partner, for so long as the Special Limited Partner has determined to qualify as a REIT, to pay stockholder dividends that will (a) satisfy the REIT Requirements and (b) eliminate any U.S. federal income or excise tax liability of the Special Limited Partner.

Notwithstanding the foregoing, in the event any Excluded Property (or the proceeds therefrom) has not been contributed to the Partnership pursuant to Section 4.9, the distributions provided for above shall be calculated, to the extent possible, based on Adjusted Available Cash as if each Excluded Property had been contributed to the Partnership in exchange for Partnership Common Units pursuant to Section 4.9; provided , however , that in the event any Excluded Property (or the proceeds therefrom) has not been contributed to the Partnership pursuant to Section 4.9, any distributions to be made with respect to the Special Limited Partner’s Partnership Units shall in the aggregate be reduced to the extent of any REIT Available Cash.

Section 5.2 Distributions in Kind . No Holder may demand to receive property other than cash as provided in this Agreement. The General Partner may cause the Partnership to make a distribution in kind of Partnership assets to the Holders, and such assets shall be distributed in such a fashion as to ensure that the fair market value is distributed and allocated in accordance with Articles 5, 6 and 10 hereof.

Section 5.3 Amounts Withheld . All amounts withheld pursuant to the Code or any provisions of any state or local tax law and Section 10.4 hereof with respect to any allocation, payment or distribution to any Holder shall be treated as amounts paid or distributed to such Holder pursuant to Section 5.1 hereof for all purposes under this Agreement.

Section 5.4 Distributions upon Liquidation . Notwithstanding the other provisions of this Article 5, upon the occurrence of a Liquidating Event, the assets of the Partnership shall be distributed to the Holders in accordance with Section 13.2 hereof.

Section 5.5 Distributions to Reflect Additional Partnership Units . In the event that the Partnership issues additional Partnership Units pursuant to the provisions of Article 4 hereof, subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, the General Partner is hereby authorized to make such revisions to this Article 5 and to Article 6 as it determines are necessary or desirable to reflect the issuance of such additional Partnership Units, including, without limitation, making preferential distributions to certain classes of Partnership Units.

Section 5.6 Restricted Distributions . Notwithstanding any provision to the contrary contained in this Agreement, neither the Partnership nor the General Partner, on behalf of the Partnership, shall make a distribution to any Holder if such distribution would violate the Act or other applicable law.

ARTICLE 6

ALLOCATIONS

Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss . Net Income and Net Loss of the Partnership shall be determined and allocated with respect to each Partnership Year as of the end of each such year. Except as otherwise provided in this Article 6, and subject to Section 11.6.C hereof, an allocation to a Holder of a share of Net Income or Net Loss shall be treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Income or Net Loss.

Section 6.2 General Allocations .

A. In General . Subject to Section 11.6.C hereof, Net Income and Net Loss shall be allocated to each of the Holders as follows:

(i) Net Income will be allocated to Holders of Partnership Preferred Units in accordance with and subject to the terms of the Partnership Unit Designation applicable to such Partnership Preferred Units;

(ii) remaining Net Income will be allocated to the Holders of Partnership Common Units in accordance with their respective Percentage Interests at the end of each Partnership Year;

(iii) subject to the terms of any Partnership Unit Designation, Net Loss will be allocated to the Holders of Partnership Common Units in accordance with their respective Percentage Interests at the end of each Partnership Year; and

(iv) for purposes of this Section 6.2.A, the Percentage Interests of the Holders of Partnership Common Units shall be calculated based on a denominator equal to the aggregate Partnership Common Units outstanding as of the date of determination.

Section 6.3 Additional Allocation Provisions . Notwithstanding the foregoing provisions of this Article 6:

A. Special Allocations Regarding Partnership Preferred Units . If any Partnership Preferred Units are redeemed pursuant to Section 4.7.B hereof (treating a full liquidation of the General Partner’s Partnership Interest or of such Special Limited Partner’s Partnership Interest for purposes of this Section 6.3.A as including a redemption of any then outstanding Partnership Preferred Units pursuant to Section 4.7.B hereof), for the Partnership Year that includes such redemption (and, if necessary, for subsequent Partnership Years) (a) gross income and gain (in such relative proportions as the General Partner shall determine) shall be allocated to the holder(s) of such Partnership Preferred Units to the extent that the Redemption Amounts paid or payable with respect to the Partnership Preferred Units so redeemed (or treated as redeemed) exceeds the aggregate Capital Account Balances (net of liabilities assumed or taken subject to by the Partnership) per Partnership Preferred Unit allocable to the Partnership Preferred Units so redeemed (or treated as redeemed) and (b) deductions and losses (in such relative proportions as the General Partner shall determine) shall be allocated to the holder(s) of such Partnership Preferred Units to the extent that the aggregate Capital Account Balances (net of liabilities assumed or taken subject to by the Partnership) per Partnership Preferred Unit allocable to the Partnership Preferred Units so redeemed (or treated as redeemed) exceeds the Redemption Amount paid or payable with respect to the Partnership Preferred Units so redeemed (or treated as redeemed).

B. Regulatory Allocations .

(i) Minimum Gain Chargeback . Except as otherwise provided in Regulations Section 1.704-2(f), notwithstanding the provisions of Section 6.2 hereof, or any other provision of this Article 6, if there is a net decrease in Partnership Minimum Gain during any Partnership Year, each Holder shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Holder’s share of the net decrease in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.B(i) is intended to qualify as a “minimum gain chargeback” within the meaning of Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

(ii) Partner Minimum Gain Chargeback . Except as otherwise provided in Regulations Section 1.704-2(i)(4) or in Section 6.3.B(i) hereof, if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership Year, each Holder who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Holder’s respective share of the net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3.B(ii) is intended to qualify as a “chargeback of partner nonrecourse debt minimum gain” within the meaning of Regulations Section 1.704-2(i) and shall be interpreted consistently therewith.

(iii) Nonrecourse Deductions and Partner Nonrecourse Deductions . Any Nonrecourse Deductions for any Partnership Year shall be specially allocated to the Holders in accordance with their respective Percentage Interests. Any Partner Nonrecourse Deductions for any Partnership Year shall be specially allocated to the Holder(s) who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable, in accordance with Regulations Section 1.704-2(i).

(iv) Qualified Income Offset . If any Holder unexpectedly receives an adjustment, allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be allocated, in accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to such Holder in an amount and manner sufficient to eliminate, to the extent required by such Regulations, the Adjusted Capital Account Deficit of such Holder as quickly as possible, provided that an allocation pursuant to this Section 6.3.B(iv) shall be made if and only to the extent that such Holder would have an Adjusted Capital Account Deficit after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.3.B(iv) were not in the Agreement. It is intended that this Section 6.3.B(iv) qualify and be construed as a “qualified income offset” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

(v) Gross Income Allocation . In the event that any Holder has a deficit Capital Account at the end of any Partnership Year that is in excess of the sum of (1) the amount (if any) that such Holder is obligated to restore to the Partnership upon complete liquidation of such Holder’s Partnership Interest (including, the Holder’s interest in outstanding Partnership Preferred Units and other Partnership Units) and (2) the amount that such Holder is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder shall be specially allocated items of Partnership income and gain in the amount of such excess to eliminate such deficit as quickly as possible, provided that an allocation pursuant to this Section 6.3.B(v) shall be made if and only to the extent that such Holder would have a deficit Capital Account in excess of such sum after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.3.B(v) and Section 6.3.B(iv) hereof were not in the Agreement.

(vi) Limitation on Allocation of Net Loss . To the extent that any allocation of Net Loss would cause or increase an Adjusted Capital Account Deficit as to any Holder, such allocation of Net Loss shall be reallocated (x) first, among the other Holders of Partnership Common Units in accordance with their respective Percentage Interests, and (y) thereafter, among the Holders of other Partnership Units, as determined by the General Partner, subject to the limitations of this Section 6.3.B(vi).

(vii) Section 754 Adjustment . To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Holder of Partnership Common Units in complete liquidation of its interest in the Partnership, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Holders of Partnership Common Units in accordance with their respective Percentage Interests in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Holder(s) to whom such distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

(viii) Curative Allocations . The allocations set forth in Sections 6.3.B(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (the “ Regulatory Allocations ”) are intended to comply with certain regulatory requirements, including the requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of Section 6.1 hereof, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Holders of Partnership Common Units so that to the extent possible without violating the requirements giving rise to the Regulatory Allocations, the net amount of such allocations of other items and the Regulatory Allocations to each Holder of a Partnership Common Unit shall be equal to the net amount that would have been allocated to each such Holder if the Regulatory Allocations had not occurred.

C. Special Allocations Upon Liquidation . Notwithstanding any provision in this Article 6 to the contrary, in the event that the Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Partnership pursuant to Article 13 hereof, then any Net Income or Net Loss realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such Partnership Year (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding Partnership Year) among the Holders as required so as to cause liquidating distributions pursuant to Section 13.2.A(4) hereof to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article 5 hereof.

D. Allocation of Excess Nonrecourse Liabilities . For purposes of determining a Holder’s proportional share of the “excess nonrecourse liabilities” of the Partnership within the meaning of Regulations Section 1.752-3(a)(3), each Holder’s respective interest in Partnership profits shall be equal to such Holder’s Percentage Interest with respect to Partnership Common Units.

E. Special Allocation of Certain Employee Compensation Deductions . To the extent the Partnership is entitled to an item of loss or deduction with respect to any employee compensation funded by CBI or any of its Affiliates (including any payments made pursuant to employee incentive plans of the Special Limited Partner), such item shall be allocated only to Controlled Entities of CBI.

Section 6.4 Tax Allocations .

A. In General . Except as otherwise provided in this Section 6.4, for income tax purposes under the Code and the Regulations each Partnership item of income, gain, loss and deduction (collectively, “ Tax Items ”) shall be allocated among the Holders in the same manner as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to Sections 6.2 and 6.3 hereof.

B. Section 704(c) Allocations . Notwithstanding Section 6.4.A hereof, Tax Items with respect to Property that is contributed to the Partnership with a Gross Asset Value that varies from its basis in the hands of the contributing Partner immediately preceding the date of contribution shall be allocated among the Holders for income tax purposes pursuant to Regulations promulgated under Code Section 704(c) so as to take into account such variation. The Partnership shall account for such variation under any method approved under Code Section 704(c) and the applicable Regulations as chosen by the General Partner. In the event that the Gross Asset Value of any partnership asset is adjusted pursuant to subsection (b) of the definition of “Gross Asset Value” (provided in Article 1 hereof), subsequent allocations of Tax Items with respect to such asset shall take account of the variation, if any, between the adjusted basis of such asset and its Gross Asset Value in the same manner as under Code Section 704(c) and the applicable Regulations and using the method chosen by the General Partner.

ARTICLE 7

MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1 Management .

A. Except as otherwise expressly provided in this Agreement, including any Partnership Unit Designation, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. No General Partner may be removed by the Partners, with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof, including Section 7.3 and the terms of any Partnership Unit Designation, shall have full and exclusive power and authority, without the consent of any Limited Partner, to conduct or authorize the conduct of the business of the Partnership, to exercise or direct the exercise of all powers of the Partnership and the General Partner under the Act and this Agreement and to effectuate the purposes of the Partnership, including, without limitation, to cause the Partnership to enter into agreements or engage in transactions with affiliates of the Partnership or the General Partner, issue additional Partnership Interests, make distributions, sell, pledge, lease, mortgage or otherwise dispose of its assets, form and conduct all or any portion of its business and affairs through subsidiaries or joint ventures of any form, incur or guarantee debt for any purpose and obtain and maintain casualty, liability and other insurance on the Properties and liability insurance for the Indemnitees hereunder.

B. Except as provided in Section 7.3 hereof and subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, the General Partner is authorized to execute and deliver any affidavit, agreement, certificate, consent, instrument, notice, power of attorney, waiver or other writing or document in the name and on behalf of the Partnership and to otherwise exercise any power of the General Partner under this Agreement and the Act without any further act, approval or vote of the Partners or any other Persons and, in the absence of any specific trust action on the part of the General Partner to the contrary, the taking of any action or the execution of any such document or writing by an officer or trustee of the General Partner, in the name and on behalf of the General Partner, in its capacity as the general partner of the Partnership, shall conclusively evidence (1) the approval thereof by the General Partner, in its capacity as the general partner of the Partnership, (2) the General Partner’s determination that such action, document or writing is necessary or desirable to conduct the business and affairs of the Partnership, exercise the powers of the Partnership under the Act and this Agreement or effectuate the purposes of the Partnership, or any other determination by the General Partner required by this Agreement in connection with the taking of such action or execution of such document or writing, and (3) the authority of such trustee or officer with respect thereto.

C. The determination as to any of the following matters, made by or at the direction of the General Partner consistent with the Act and this Agreement, shall be final and conclusive and shall be binding upon the Partnership and every Limited Partner: the amount of assets at any time available for distribution or the redemption of Common Units or Preferred Units; the amount and timing of any distribution; any determination to redeem Tendered Units; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Partnership; any matter relating to the acquisition, holding and disposition of any assets by the Partnership; or any other matter relating to the business and affairs of the Partnership or required or permitted by applicable law, this Agreement or otherwise to be determined by the General Partner.

D. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time.

E. Notwithstanding any other provision of this Agreement or the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the belief that such action or omission is necessary or advisable in order (i) to protect the ability of the Special Limited Partner to continue to qualify as a REIT, (ii) for the Special Limited Partner otherwise to satisfy the REIT Requirements, (iii) for the Special Limited Partner to avoid incurring any taxes under Code Section 857 or Code Section 4981, or (iv) for any wholly-owned Subsidiary of the Special Limited Partner to continue to qualify as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners.

Section 7.2 Certificate of Limited Partnership . To the extent that such action is determined by the General Partner to be reasonable and necessary or appropriate, the General Partner shall file amendments to and restatements of the Certificate and do all the things to maintain the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability) under the laws of the State of Maryland and each other state, the District of Columbia or any other jurisdiction, in which the Partnership may elect to do business or own property. Subject to the terms of Section 8.5.A hereof, the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto to any Limited Partner. The General Partner shall use all reasonable efforts to cause to be filed such other certificates or documents as may be reasonable and necessary or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership in which the limited partners have limited liability to the extent provided by applicable law) in the State of Maryland and any other state, or the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property.

Section 7.3 Restrictions on General Partner’s Authority .

A. The General Partner may not take any action in contravention of this Agreement, including, without limitation:

(1) any action that would make it impossible to carry on the ordinary business of the Partnership, except as otherwise provided in this Agreement;

(2) admitting a Person as a Partner, except as otherwise provided in this Agreement;

(3) performing any act that would subject a Limited Partner to liability, except as provided herein or under the Act;

(4) entering into any contract, mortgage, loan or other agreement that expressly prohibits or restricts (a) the Special Limited Partner or the Partnership from performing its specific obligations under Section 15.1 hereof or (b) a Limited Partner from exercising its rights under Section 15.1 hereof to effect a Redemption, except, in either case, with the written consent of such Limited Partner affected by the prohibition or restriction.

B. The General Partner shall not, without the Consent of the Partners, undertake on behalf of the Partnership, or enter into any transaction that would have the effect of, any of the following actions:

(1) except as provided in Section 7.3.C hereof, amend, modify or terminate this Agreement ;

(2) except as otherwise permitted by this Agreement, or in connection with a Termination Transaction effected in accordance with Section 11.7, Transfer any portion of the Partnership Interest of the General Partner or admit into the Partnership any additional or successor General Partner;

(3) except as otherwise permitted by this Agreement, or in connection with a Termination Transaction effected in accordance with Section 11.7, voluntarily withdraw as a general partner of the Partnership;

(4) make a general assignment for the benefit of creditors or appoint or acquiesce in the appointment of a custodian, receiver or trustee for all or any part of the assets of the Partnership;

(5) institute any proceeding for bankruptcy on behalf of the Partnership;

(6) a merger or consolidation of the Partnership with or into any other Person, or a conversion of the Partnership into any other entity, other than in connection with a Termination Transaction effected in accordance with Section 11.7; or

(7) a sale, lease, exchange or other transfer of all or substantially all of the assets of the Partnership not in the ordinary course of business, whether in a single transaction or a series of related transactions, other than in connection with a Termination Transaction effected in accordance with Section 11.7;

provided , however , with respect to items B(1), B(2), B(3), B(6) and B(7), for so long as CBI, together with its Controlled Entities, holds at least 20% of the outstanding Partnership Common Units held by all Partners, the Consent of CBI shall also be required.

C. Notwithstanding Section 7.3.B hereof but subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation and Section 7.3.D, the General Partner shall have the power, without the Consent of the Partners or the consent or approval of any Limited Partner, to amend this Agreement as may be required to facilitate or implement any of the following purposes:

(1) to add to the obligations of the General Partner or surrender any right or power granted to the General Partner or any Affiliate of the General Partner for the benefit of the Limited Partners;

(2) to reflect the admission, substitution or withdrawal of Partners, the Transfer of any Partnership Interest or the termination of the Partnership in accordance with this Agreement, and to amend the Register in connection with such admission, substitution, withdrawal or Transfer;

(3) to reflect a change that is of an inconsequential nature or does not adversely affect the Limited Partners in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with law or with the provisions of this Agreement;

(4) to satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or regulation of a Federal or state agency or contained in Federal or state law;

(5) to reflect such changes as are reasonably necessary for the Special Limited Partner to maintain its status as a REIT or to satisfy the REIT Requirements;

(6) to modify either or both of the manner in which items of Net Income or Net Loss are allocated pursuant to Article 6 or the manner in which Capital Accounts are adjusted, computed, or maintained (but in each case only to the extent set forth in the definition of “Capital Account” or Section 5.5 or as contemplated by the Code or the Regulations);

(7) to reflect the issuance of additional Partnership Interests in accordance with Article 4;

(8) to set forth or amend the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of any additional Partnership Units issued pursuant to Article 4;

(9) if the Partnership is the Surviving Partnership in any Termination Transaction, to modify Section 15.1 or any related definitions to provide the holders of interests in such Surviving Partnership rights that are consistent with Section 11.7.A(ii)(v); and

(10) to reflect any other modification to this Agreement as is reasonably necessary for the business or operations of the Partnership or the Special Limited Partner and which does not violate Section 7.3.D.

D. Notwithstanding Sections 7.3.B, 7.3.C and Article 14 hereof, this Agreement shall not be amended, and no action may be taken by the General Partner, without the consent of each Partner, if any, adversely affected thereby, if such amendment or action would (i) convert a Limited Partner into a general partner of the Partnership (except as a result of the Limited Partner becoming the General Partner pursuant to Section 12.1 or 13.1. A of this Agreement), (ii) modify the limited liability of a Limited Partner, (iii) adversely alter the rights of any Partner to receive the distributions to which such Partner is entitled pursuant to Article 5 or Section 13.2.A(4) hereof, or alter the allocations specified in Article 6 hereof (except, in any case, as permitted pursuant to Sections 4.2, 5.5 and 7.3.C hereof), (iv) alter or modify in a manner that adversely affects any Partner the Redemption rights, Cash Amount or REIT Shares Amount as set forth in Section 15.1 hereof, or amend or modify any related definitions (except for amendments to this Agreement or other actions that provide rights consistent with Section 11.7.A(ii)(v)), or (v) amend this Section 7.3.D; provided , however , that the consent of any individual Partner adversely affected shall not be required for any amendment or action that affects all Partners holding the same class or series of Partnership Units on a uniform or pro rata basis, if approved by a Majority in Interest of the Partners of such class or series. Except as provided in Section 8.9.E, no amendment to Section 8.9 of this Agreement, and no amendment to this Agreement that is inconsistent with the provisions of Section 8.9, shall be made without the prior written consent of CBI. Further, no amendment may alter the restrictions on the General Partner’s authority set forth elsewhere in this Section 7.3 without the consent specified therein. Any such amendment or action consented to by any Partner shall be effective as to that Partner, notwithstanding the absence of such consent by any other Partner.

E. Notwithstanding any provision in this Agreement to the contrary, for so long as CBI or any of its Controlled Entities owns any Partnership Interest, Section 8.8 of this Agreement shall not be amended or waived without the prior written consent of CBI, nor shall this Agreement be modified in any manner that would have the effect of eliminating the consent rights of this Section 7.3.E.

Section 7.4 Reimbursement of the General Partner and the Special Limited Partner .

A. The General Partner shall not be compensated for its services as general partner of the Partnership except as provided in this Agreement (including the provisions of Articles 5 and 6 hereof regarding distributions, payments and allocations to which it may be entitled in its capacity as the General Partner).

B. Subject to Section 7.4.C and Section 15.12, the Partnership shall be liable for, and shall reimburse the General Partner and the Special Limited Partner, as applicable, on a monthly basis, or such other basis as the General Partner may determine, for all sums expended in connection with the Partnership’s business, including, without limitation, (i) expenses relating to the ownership of interests in and management and operation of, or for the benefit of, the Partnership, (ii) compensation of officers and employees, including, without limitation, payments under future compensation plans of the Special Limited Partner, the General Partner, or the Partnership that may provide for stock units, or phantom stock, pursuant to which employees of the Special Limited Partner, the General Partner, or the Partnership will receive payments based upon dividends on or the value of REIT Shares, (iii) director fees and expenses and (iv) all costs and expenses of the Special Limited Partner being a public company, including costs of filings with the SEC, reports and other distributions to its stockholders; provided , however , that the amount of any reimbursement shall be reduced by any interest earned by the General Partner or the Special Limited Partner with respect to bank accounts or other instruments or accounts held by it on behalf of the Partnership as permitted pursuant to Section 7.5. Such reimbursements shall be in addition to any reimbursement of the General Partner and the Special Limited Partner as a result of indemnification pursuant to Section 7.7 hereof.

C. To the extent practicable, Partnership expenses shall be billed directly to and paid by the Partnership and, subject to Section 15.12 hereof, reimbursements to the General Partner, the Special Limited Partner or any of their respective Affiliates by the Partnership pursuant to this Section 7.4 shall be treated as “guaranteed payments” within the meaning of Code Section 707(c) (unless otherwise required by the Code and the Regulations).

Section 7.5 Outside Activities of the General Partner and the Special Limited Partner . Neither the General Partner nor the Special Limited Partner shall directly or indirectly enter into or conduct any business, other than in connection with, (a) with respect to the General Partner, the ownership, acquisition and disposition of Partnership Interests, (b) with respect to the General Partner, the management of the business of the Partnership, (c) with respect to the Special Limited Partner, its operation as a reporting company with a class (or classes) of securities registered under the Exchange Act, (d) with respect to the Special Limited Partner, its operations as a REIT, (e) with respect to the Special Limited Partner, the offering, sale, syndication, private placement or public offering of stock, bonds, securities or other interests, (f) financing or refinancing of any type related to the Partnership or its assets or activities, and (g) such activities as are incidental thereto; provided, however, that each of the General Partner and the Special Limited Partner may from time to time hold or acquire assets in its own name or otherwise other than through the Partnership so long as each of the General Partner and the Special Limited Partner takes commercially reasonable measures to insure that the economic benefits and burdens of such Property are otherwise vested in the Partnership, whether by electing to treat such asset as an “Excluded Property” hereunder, through assignment, mortgage loan or otherwise or, if it is not commercially reasonable to vest such economic interests in the Partnership, the Partners shall negotiate in good faith to amend this Agreement, including, without limitation, the definition of “Adjustment Factor,” to reflect such activities and the direct ownership of assets by the General Partner or the Special Limited Partner, as applicable. Nothing contained herein shall be deemed to prohibit the General Partner from executing guarantees of Partnership debt for which it would otherwise be liable in its capacity as General Partner. Subject to Section 7.3.B hereof, the General Partner, the Special Limited Partner and all “qualified REIT subsidiaries” (within the meaning of Code Section 856(i)(2)), taken as a group, shall not own any assets or take title to assets (other than temporarily in connection with an acquisition prior to contributing such assets to the Partnership) other than (i) Excluded Properties, (ii) interests in “qualified REIT subsidiaries” (within the meaning of Code Section 856(i)(2)), (iii) Partnership Interests as the General Partner or Special Limited Partner and (iv) such cash and cash equivalents, bank accounts or similar instruments or accounts as such group deems reasonably necessary, taking into account Section 7.1.D hereof and the requirements necessary for the Special Limited Partner to qualify as a REIT and for the General Partner and the Special Limited Partner to carry out their respective responsibilities contemplated under this Agreement and the Charter. The General Partner and any Affiliates of the General Partner may acquire Partnership Interests and shall be entitled to exercise all rights of a Limited Partner relating to such Partnership Interests.

Section 7.6 Transactions with Affiliates .

A. The Partnership may lend or contribute funds or other assets to the Special Limited Partner and its Subsidiaries or other Persons in which the Special Limited Partner has an equity investment, and such Persons may borrow funds from the Partnership, on terms and conditions no less favorable to the Partnership in the aggregate than would be available from unaffiliated third parties as determined by the General Partner. The foregoing authority shall not create any right or benefit in favor of any Subsidiary or any other Person. It is expressly acknowledged and agreed by each Partner that the Special Limited Partner may (i) borrow funds from the Partnership in order to redeem, at any time or from time to time, options or warrants previously or hereafter issued by the Special Limited Partner, (ii) put to the Partnership, for cash, any rights, options, warrants or convertible or exchangeable securities that the Special Limited Partner may desire or be required to purchase or redeem or (iii) borrow funds from the Partnership to acquire assets that become Excluded Properties or will be contributed to the Partnership for Partnership Units. If the Special Limited Partner acquires a corporation in which the Partnership does not hold an interest, in whole or in part, with the proceeds (whether comprised of cash or other assets) of a loan from the Partnership to the Special Limited Partner, the Partnership shall issue to such corporation an interest in the Partnership that (i) entitles the holder thereof to receive distributions in amounts and at the same times as interest payments on such loan (with appropriate reductions in such distributions if any portion of the loan is repaid), (ii) entitles the holder thereof to receive, if and to the extent that any portion of such loan is repaid, a number of Partnership Units equal to the quotient obtained by dividing the principal amount of the loan repaid by the Value of REIT Shares at the date of repayment (it being understood and agreed that if the loan is repaid with funds contributed to such corporation by the Special Limited Partner from the proceeds of a sale of REIT Shares, the Value of REIT Shares at the date of repayment shall be deemed to be the net price per share at which such shares were sold), and (iii) is automatically redeemed for no consideration upon the repayment in full of such loan.

B. Except as provided in Section 7.5 hereof and subject to Section 3.1 hereof, the Partnership may transfer assets to joint ventures, limited liability companies, partnerships, corporations, business trusts or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and applicable law.

C. The General Partner, the Special Limited Partner and their respective Affiliates may sell, transfer or convey any property to the Partnership, directly or indirectly, on terms and conditions no less favorable to the Partnership in the aggregate than would be available from unaffiliated third parties as determined by the General Partner.

D. The General Partner or the Special Limited Partner, without the approval of the Partners or any of them or any other Persons, may propose and adopt on behalf of the Partnership employee benefit plans funded by the Partnership for the benefit of employees of the General Partner, the Partnership, the Special Limited Partner, Subsidiaries of the Partnership or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the General Partner, the Special Limited Partner, the Partnership or any of the Partnership’s Subsidiaries.

Section 7.7 Indemnification .

A. To the fullest extent permitted by applicable law, the Partnership shall indemnify each Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including, without limitation, attorney’s fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership (“ Actions ”) as set forth in this Agreement in which such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise; provided , however , that the Partnership shall not indemnify an Indemnitee (i) arising from actions or omissions by the Indemnitee that are material to the matter giving rise to the action and are established by a final judgment of a court of competent jurisdiction to constitute fraud, intentional harm or gross negligence on the part of the Indemnitee, (ii) arising from an action or proceeding initiated by the Indemnitee (other than an action to enforce such Indemnitee’s rights to indemnification or advance of expenses under this Section 7.7) or (iii) with respect to any claim as to which the Indemnitee is established by a final judgment of a court of competent jurisdiction to be liable to the Partnership. Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary of the Partnership (including, without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or potentially having liability for any such indebtedness. It is the intention of this Section 7.7.A that the Partnership indemnify each Indemnitee to the fullest extent permitted by law. The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7.A. The termination of any proceeding by conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an entry of an order of probation against an Indemnitee prior to judgment, does not create a presumption that such Indemnitee acted in a manner contrary to that specified in this Section 7.7.A with respect to the subject matter of such proceeding. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, and neither the General Partner nor any other Holder shall have any obligation to contribute to the capital of the Partnership or otherwise provide funds to enable the Partnership to fund its obligations under this Section 7.7.

B. To the fullest extent permitted by law, expenses incurred by an Indemnitee who is a party to a proceeding or otherwise subject to or the focus of or is involved in any Action shall be paid or reimbursed by the Partnership as incurred by the Indemnitee in advance of the final disposition of the Action upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in Section 7.7.A has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met, provided that such undertaking need not be secured and shall be without reference to the financial ability for repayment.

C. The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee unless otherwise provided in a written agreement with such Indemnitee or in the writing pursuant to which such Indemnitee is indemnified.

D. The Partnership may, but shall not be obligated to, purchase and maintain insurance, on behalf of any of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership’s activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.

E. Any liabilities which an Indemnitee incurs as a result of acting on behalf of the Partnership, the General Partner or the Special Limited Partner (whether as a fiduciary or otherwise) in connection with the operation, administration or maintenance of an employee benefit plan or any related trust or funding mechanism (whether such liabilities are in the form of excise taxes assessed by the IRS, penalties assessed by the Department of Labor, restitutions to such a plan or trust or other funding mechanism or to a participant or beneficiary of such plan, trust or other funding mechanism, or otherwise) shall be treated as liabilities or judgments or fines under this Section 7.7, unless such liabilities arise as a result of such Indemnitee’s fraud, intentional harm or gross negligence on the part of the Indemnitee.

F. In no event may an Indemnitee subject any of the Holders to personal liability by reason of the indemnification provisions set forth in this Agreement.

G. An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

H. The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Partnership’s liability to any Indemnitee under this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

I. It is the intent of the parties that any amounts paid by the Partnership to the General Partner pursuant to this Section 7.7 shall be treated as “guaranteed payments” within the meaning of Code Section 707(c).

Section 7.8 Liability of the General Partner and the Special Limited Partner .

A. To the maximum extent permitted under the Act, the only duties that the General Partner owes to the Partnership, any Partner or any other Person (including any creditor of any Partner or assignee of any Partnership Interest), fiduciary or otherwise, are to perform its contractual obligations as expressly set forth in this Agreement consistently with the implied contractual covenant of good faith and fair dealing, and to act with the fiduciary duties of care and loyalty which have been, in accordance with the Act, modified as set forth in this Section 7.8. The General Partner, in its capacity as such, shall have no other duty, fiduciary or otherwise, to the Partnership, any Partner or any other Person (including any creditor of any Partner or any assignee of Partnership Interest). The provisions of this Agreement other than this Section 7.8 shall create contractual obligations of the General Partner only, and no such provision shall be interpreted to expand or modify the fiduciary duties of the General Partner under the Act.

B. The Limited Partners agree that: (i) the General Partner (and the Special Limited Partner, as the trustee of the General Partner) is acting for the benefit of the Partnership, the Limited Partners and the Special Limited Partner’s stockholders collectively; and (ii) in the event of a conflict between the interests of the Partnership or any Partner, on the one hand, and the separate interests of the Special Limited Partner or its stockholders, on the other hand, the General Partner may give priority to the separate interests of the Special Limited Partner and its stockholders (including, without limitation, with respect to the tax consequences to Limited Partners, Assignees or the Special Limited Partner’s stockholders) and, in the event of such a conflict, any action or failure to act on the part of the General Partner (or the Special Limited Partner, in its capacity as the sole trustee of the General Partner, or the Special Limited Partner’s directors, officers and agents) that gives priority to the separate interests of the Special Limited Partner or its stockholders that does not result in a violation of the contract rights of the Limited Partners under this Agreement does not violate the duty of loyalty or any other duty owed by the General Partner to the Partnership and the Partners or any duty of the Special Limited Partner.

C. In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to take into account the tax consequences to any Partner of any action taken (or not taken) by it. Except as otherwise agreed by the Partnership, the General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of any income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner or the Partnership pursuant to the General Partner’s authority under this Agreement.

D. Subject to its obligations and duties as General Partner set forth in this Agreement and applicable law, the General Partner may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its employees or agents, including through the Special Limited Partner and its employees and agents. The General Partner shall not be responsible to the Partnership or any Partner for any misconduct or negligence on the part of any such employee or agent appointed by it in good faith.

E. In performing its duties under this Agreement and the Act, the General Partner shall be entitled to rely on the provisions of this Agreement and on any information, opinion, report or statement, including any financial statement or other financial data or the records or books of account of the Partnership or any subsidiary of the Partnership, prepared or presented by an officer, employee or agent of the General Partner or the Special Limited Partner, or any agent of the Partnership or any such subsidiary, or by a lawyer, certified public accountant, appraiser or other person engaged by the Partnership as to any matter within such person’s professional or expert competence, and any act taken or omitted to be taken in reliance upon any such information, opinion, report or statement as to matters that the General Partner reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion. The General Partner may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties.

F. Notwithstanding any other provision of this Agreement or the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the Special Limited Partner to continue to qualify as a REIT, (ii) for the Special Limited Partner otherwise to satisfy the REIT Requirements, (iii) to avoid the Special Limited Partner incurring any taxes under Code Section 857 or Code Section 4981 or (iv) for any wholly-owned Subsidiary of the Special Limited Partner to continue to qualify as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), is expressly authorized under this Agreement, is deemed approved by all of the Limited Partners and does not violate any duty, fiduciary or otherwise, of the General Partner to the Partnership or any other Partner.

G. Notwithstanding anything herein to the contrary, except for fraud, willful misconduct or gross negligence, or pursuant to any express indemnities given to the Partnership by the General Partner pursuant to any other written instrument, the General Partner shall not have any personal liability whatsoever, to the Partnership or to the other Partners, for any action or omission taken in its capacity as the General Partner or for the debts or liabilities of the Partnership or the Partnership’s obligations hereunder except pursuant to Section 15.1 hereof. Without limitation of the foregoing, and except for fraud, willful misconduct or gross negligence, or pursuant Section 15.1 hereof or any such express indemnity, no property or assets of the General Partner, other than its interest in the Partnership, shall be subject to levy, execution or other enforcement procedures for the satisfaction of any judgment (or other judicial process) in favor of any other Partner(s) and arising out of, or in connection with, this Agreement.

H. No trustee, officer or agent of the General Partner (including the Special Limited Partner, in its capacity as the trustee of the General Partner), and no director, officer or agent of the Special Limited Partner shall have any duties directly to the Partnership or any Partner. No officer, trustee or agent of the General Partner or any officer, director, stockholder or agent of the Special Limited Partner shall be directly liable to the Partnership for money damages by reason of their service as such.

I. Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the General Partner’s, the Special Limited Partner’s and their respective trustees’, directors’ officers’ and agents’, liability to the Partnership and the Limited Partners under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

Section 7.9 Title to Partnership Assets . Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively with other Partners or Persons, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner, the Special Limited Partner or one or more nominees, as the General Partner or the Special Limited Partner may determine, including Affiliates of the General Partner or the Special Limited Partner. The General Partner and the Special Limited Partner hereby declare and warrant that any Partnership assets for which legal title is held in the name of the General Partner or the Special Limited Partner, as applicable, or any nominee or Affiliate of the General Partner or the Special Limited Partner shall be held by the General Partner or the Special Limited Partner, as applicable, for the use and benefit of the Partnership in accordance with the provisions of this Agreement. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.

Section 7.10 Reliance by Third Parties . Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority, without the consent or approval of any other Partner, or Person, to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and take any and all actions on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner as if it were the Partnership’s sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the General Partner in connection with any such dealing. In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expediency of any act or action of the General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (i) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (ii) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (iii) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.

ARTICLE 8

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1 Limitation of Liability . No Limited Partner, in its capacity as such, shall have any duties or liability under this Agreement except as expressly provided in this Agreement (including, without limitation, Section 10.4 hereof) or under the Act. To the maximum extent permitted by law, no Limited Partner, including the Special Limited Partner, in its capacity as such, shall have any personal liability whatsoever, to the Partnership or to the other Partners, for any action or omission taken in its capacity as a limited partner or for the debts or liabilities of the Partnership or the Partnership’s obligations hereunder except pursuant to any express indemnities given to the Partnership by such Limited Partner pursuant to any other written instrument and except for liabilities of the Special Limited Partner pursuant to Section 15.1 hereof. Without limitation of the foregoing, and except pursuant to any such express indemnity (and, in the case of the Special Limited Partner, pursuant to Section 15.1 hereof), no property or assets of a Limited Partner, other than its interest in the Partnership, shall be subject to levy, execution or other enforcement procedures for the satisfaction of any judgment (or other judicial process) in favor of any other Partner(s) and arising out of, or in connection with, this Agreement.

Section 8.2 Management of Business . No Limited Partner or Assignee (other than in its separate capacity as the General Partner, any of its Affiliates or any officer, director, member, employee, partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such) shall take part in the operations, management or control (within the meaning of the Act) of the Partnership’s business, transact any business in the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership. The transaction of any such business by the General Partner, any of its Affiliates or any officer, director, member, employee, partner, agent, representative, or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Limited Partners or Assignees under this Agreement.

Section 8.3 Outside Activities of Limited Partners . Subject to any agreements entered into pursuant to Section 7.6 hereof and any other agreements entered into by a Limited Partner or any of its Affiliates with the General Partner, the Partnership or a Subsidiary (including, without limitation, any employment agreement), any Limited Partner and any Assignee, officer, director, employee, agent, trustee, Affiliate, member or stockholder of any Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities that are in direct or indirect competition with the Partnership or that are enhanced by the activities of the Partnership. Neither the Partnership nor any Partner shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner or Assignee. Subject to such agreements, none of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any business ventures of any other Person (other than the General Partner or the Special Limited Partner, to the extent expressly provided herein), and such Person shall have no obligation pursuant to this Agreement, subject to Section 7.6 hereof and any other agreements entered into by a Limited Partner or its Affiliates with the General Partner, the Partnership or a Subsidiary, to offer any interest in any such business ventures to the Partnership, any Limited Partner, or any such other Person, even if such opportunity is of a character that, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such Person.

Section 8.4 Return of Capital . Except pursuant to the rights of Redemption set forth in Section 15.1 hereof or in any Partnership Unit Designation, no Limited Partner shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent of distributions made pursuant to this Agreement or upon dissolution of the Partnership as provided herein. Except to the extent provided in Article 5 or Article 6 hereof or otherwise expressly provided in this Agreement or in any Partnership Unit Designation, no Limited Partner or Assignee shall have priority over any other Limited Partner or Assignee either as to the return of Capital Contributions or as to profits, losses or distributions.

Section 8.5 Rights of Limited Partners Relating to the Partnership .

A. In addition to other rights provided by this Agreement or by the Act, the General Partner shall deliver to each Limited Partner a copy of any information mailed to all of the common stockholders of the Special Limited Partner as soon as practicable after such mailing.

B. The Partnership shall notify any Limited Partner that is a Qualifying Party, on request, of the then current Adjustment Factor or any change made to the Adjustment Factor.

C. Notwithstanding any other provision of this Section 8.5, the General Partner may keep confidential from the Limited Partners (or any of them), for such period of time as the General Partner determines to be reasonable, any information that (i) the General Partner believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interests of the Partnership or the Special Limited Partner or (ii) the Partnership or the General Partner is required by law or by agreement to keep confidential.

Section 8.6 Partnership Right to Call Partnership Interests . Notwithstanding any other provision of this Agreement, on and after the date on which the aggregate Percentage Interests of the Limited Partners (other than the Special Limited Partner) are less than one percent (1%), the Partnership shall have the right, but not the obligation, from time to time and at any time to redeem any and all outstanding Partnership Common Units (other than Partnership Common Units held by the General Partner or the Special Limited Partner) by treating any Limited Partner as a Tendering Party who has delivered a Notice of Redemption pursuant to Section 15.1 hereof for the amount of Partnership Common Units to be specified by the General Partner by notice to such Limited Partner that the Partnership has elected to exercise its rights under this Section 8.6. Such notice given by the General Partner to a Limited Partner pursuant to this Section 8.6 shall be treated as if it were a Notice of Redemption delivered to the General Partner by such Limited Partner. For purposes of this Section 8.6, (a) any Limited Partner (whether or not otherwise a Qualifying Party) may be treated as a Qualifying Party that is a Tendering Party and (b) the provisions of Sections 15.1.D(1), 15.1.F(1) and 15.1.F(2) hereof shall not apply, but the remainder of Section 15.1 hereof shall apply, mutatis mutandis .

Section 8.7 No Rights as Objecting Partner . No Limited Partner and no Holder of a Partnership Interest shall be entitled to exercise any of the rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the Maryland General Corporation Law or any successor statute in connection with a merger, consolidation or conversion of the Partnership.

Section 8.8 No Right to Certificate Evidencing Units ; Article 8 Securities. Partnership Units shall not be certificated. No Limited Partner shall be entitled to a certificate evidencing the Partnership Units held by such Limited Partner. Any certificate evidencing Partnership Units issued prior to the date hereof shall no longer evidence Partnership Units. The Partnership shall not elect to treat any Partnership Unit as a “security” governed by (x) Title 8 of the Maryland Uniform Commercial Code or (y) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction.

Section 8.9 Board Nomination Rights .

A. Board Nominees .

(1) It shall be a qualification of such number of the members of the board of directors of the Special Limited Partner (the “ REIT Directors ”), calculated as contemplated in this Section 8.9.A, that they be nominated by CBI. So long as CBI, together with its Controlled Entities, owns (a) fifty percent (50%) or more of the outstanding REIT Shares (assuming all outstanding Partnership Common Units not held by the General Partner or the Special Limited Partner or any of their Controlled Entities are tendered for Redemption and exchanged for REIT Shares, regardless of whether such Partnership Common Units are then eligible for Redemption), such number of directors to which CBI is entitled to nominate shall equal (i) if there is an even number of REIT directors, 50% of the number of REIT Directors minus one; or (ii) if there is an odd number of REIT Directors, 50% of the number of REIT Directors minus 0.5, provided that in either case, at least one director must meet the Independence Standard (as defined below); or (b) less than fifty percent (50%) but at least ten percent (10%) of the outstanding REIT Shares (assuming all outstanding Partnership Common Units not held by the General Partner or the Special Limited Partner or any of their Controlled Entities are tendered for Redemption and exchanged for REIT Shares, regardless of whether such Partnership Common Units are then eligible for Redemption), such number of directors to which CBI is entitled to nominate shall equal 20% of the number of REIT Directors (rounded down, if necessary, to the nearest whole number); provided , however , in either the case of (a) or (b), such number of directors shall not be less than one. If CBI, together with its Controlled Entities, owns less than ten percent (10%) of the outstanding REIT Shares (assuming all outstanding Partnership Common Units not held by the General Partner or the Special Limited Partner or any of their Controlled Entities are tendered for Redemption and exchanged for REIT Shares, regardless of whether such Partnership Common Units are then eligible for Redemption), it shall not be a qualification of any REIT Director that he or she be nominated by CBI. The Special Limited Partner, acting through its Board of Directors, will recommend and use all reasonable efforts to cause the election of each CBI Nominee nominated in accordance with the foregoing. The Special Limited Partner agrees to use all reasonable efforts to solicit proxies for such CBI Nominees from all holders of REIT Shares and/or other voting stock entitled to vote thereon.

(2) To facilitate the nomination rights set forth above, the Special Limited Partner will notify CBI in writing a reasonable period of time in advance of any action to be taken by the Special Limited Partner or the Board of Directors for the purpose of nominating, electing or designating directors, which, in the case of a proxy statement, information statement or registration statement in which nominees for director would be named, shall be delivered by the Special Limited Partner to CBI no later than 30 days prior to the anticipated mailing or filing date, as applicable. Such notice shall set forth in reasonable detail the nature of the action to be taken by the Special Limited Partner or the Board of Directors, and the anticipated date thereof. Upon receipt of such notice, CBI will designate any CBI Nominees by written consent (in accordance with Article 14) of CBI as soon as reasonably practicable thereafter; provided, however, that if CBI shall have failed to designate CBI Nominees in a timely manner, CBI shall be deemed to have designated any incumbent CBI Nominees in a timely manner unless there are no remaining incumbent CBI Nominees or the incumbent CBI Nominee declines to serve, in which case the Special Limited Partner or the Board of Directors may nominate another Person.

(3) CBI will provide the Special Limited Partner with such information about each CBI Nominee as is reasonably requested by the Special Limited Partner in order to comply with applicable disclosure rules, including without limitation, any information that a stockholder of the Special Limited Partner must provide to the Special Limited Partner in order to nominate a director under the Bylaws.

(4) To the extent required by law or the rules of the principal securities exchange on which the REIT Shares are listed or admitted to trading, the Special Limited Partner will take such actions as necessary to ensure that a sufficient number of those members of the Board of Directors that are not CBI Nominees or members of the Special Limited Partner’s senior management shall at all times satisfy the standard of independence necessary for a director to qualify as an “Independent Director,” as such term (or any replacement term) is used under the rules and listing standards of such principal securities exchange, as such rules and listing standards may be amended from time to time (the “ Independence Standard ”) in order to maintain such listing.

B. Committee Membership . Unless prohibited by law or the rules of the principal securities exchange on which the REIT Shares are listed or admitted to trading and so long as CBI is entitled to nominate at least one member of the Board of Directors under Section 8.9.A(1), at least one CBI Nominee then serving as a director shall be appointed to each committee of the Board of Directors (provided that such CBI Nominee meets the rules or listing standards of such securities exchange, as such rules and listing standards may be amended from time to time, for service on such committee), other than any committee formed for the purpose of evaluating or negotiating any transaction with CBI.

C. Vacancies; Removal . If a vacancy on the Board of Directors arises as a result of the death, disability or retirement, resignation or removal (with or without cause) of a CBI Nominee and such vacancy results in the number of CBI Nominees then serving on the Board of Directors being less than the number that CBI is then entitled to nominate to the Board of Directors, it will be a qualification of a director that fills such a vacancy that he or she was approved by a majority of the votes of the CBI Nominees then serving on the Board of Directors.

D. Charter and Bylaws to Be Consistent . The Special Limited Partner, acting through the Board of Directors, shall take or cause to be taken all lawful action necessary or appropriate to ensure that none of the Charter or Bylaws contain any provisions inconsistent with this Agreement or which would in any way nullify or impair the terms of this Agreement or the rights of CBI hereunder.

E. Termination of Nomination Rights . The nomination and other rights of CBI set forth in this Section 8.9 shall automatically terminate at such time as CBI, together with its Controlled Entities, ceases to own Partnership Units that represent a Percentage Interest of at least 10%. Upon any such termination, and notwithstanding anything to the contrary in this Agreement, the Special Limited Partner shall be entitled to amend this Agreement to delete this Section 8.9 and correlative provisions elsewhere in this Agreement in their entirety.

F. Amendment . Except as provided in Section 8.9.E, this Section 8.9 may not be amended without the prior written Consent of CBI.

ARTICLE 9

BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1 Records and Accounting .

A. The General Partner shall keep or cause to be kept at the principal business office of the Partnership those records and documents, if any, required to be maintained by the Act and other books and records deemed by the General Partner to be appropriate with respect to the Partnership’s business, including, without limitation, all books and records necessary to provide to the Limited Partners any information, lists and copies of documents required to be provided pursuant to Section 8.5.A, Section 9.3 or Article 13 hereof. Any records maintained by or on behalf of the Partnership in the regular course of its business may be kept on any information storage device, provided that the records so maintained are convertible into clearly legible written form within a reasonable period of time.

B. The books of the Partnership shall be maintained, for financial and tax reporting purposes, on an accrual basis in accordance with generally accepted accounting principles, or on such other basis as the General Partner determines to be necessary or appropriate. To the extent permitted by sound accounting practices and principles, the Partnership and the General Partner may operate with integrated or consolidated accounting records, operations and principles.

Section 9.2 Partnership Year . The Partnership Year of the Partnership shall be the calendar year.

Section 9.3 Reports .

A. As soon as practicable, but in no event later than one hundred five (105) days after the close of each Partnership Year, the General Partner shall cause to be mailed to each Limited Partner of record as of the close of the Partnership Year, financial statements of the Partnership, or of the Special Limited Partner if such statements are prepared solely on a consolidated basis with the Special Limited Partner, for such Partnership Year, presented in accordance with generally accepted accounting principles, such statements to be audited by a nationally recognized firm of independent public accountants selected by the General Partner.

B. As soon as practicable, but in no event later than sixty (60) days after the close of each calendar quarter (except the last calendar quarter of each year), the General Partner shall cause to be mailed to each Limited Partner of record as of the last day of the calendar quarter, a report containing unaudited financial statements of the Partnership, or of the Special Limited Partner if such statements are prepared solely on a consolidated basis with the Special Limited Partner, for such calendar quarter, and such other information as may be required by applicable law or regulation or as the General Partner determines to be appropriate.

C. The General Partner may satisfy its obligations under Section 9.3.A and Section 9.3.B by posting or making available the reports specified in such sections on a website maintained by the General Partner or the Special Limited Partner.

ARTICLE 10

TAX MATTERS

Section 10.1 Preparation of Tax Returns . The General Partner shall arrange for the preparation and timely filing of all returns with respect to Partnership income, gains, deductions, losses and other items required of the Partnership for Federal and state income tax purposes and shall use all reasonable effort to furnish, within ninety (90) days of the close of each taxable year, the tax information reasonably required by Limited Partners and for Federal and state income tax and any other tax reporting purposes. The Limited Partners shall promptly provide the General Partner with such information relating to the Contributed Properties, including tax basis and other relevant information, as may be reasonably requested by the General Partner from time to time.

Section 10.2 Tax Elections . Except as otherwise provided herein, the General Partner shall determine whether to make any available election pursuant to the Code, including, but not limited to, the election under Code Section 754 and the election to use the “recurring item” method of accounting provided under Code Section 461(h) with respect to property taxes imposed on the Partnership’s Properties; provided , however , that, if the “recurring item” method of accounting is elected with respect to such property taxes, the Partnership shall pay the applicable property taxes prior to the date provided in Code Section 461(h) for purposes of determining economic performance. The General Partner shall have the right to seek to revoke any such election (including, without limitation, any election under Code Sections 461(h) and 754).

Section 10.3 Tax Matters Partner .

A. The General Partner shall be the “tax matters partner” of the Partnership for Federal income tax purposes. The tax matters partner shall receive no compensation for its services. All third-party costs and expenses incurred by the tax matters partner in performing its duties as such (including legal and accounting fees and expenses) shall be borne by the Partnership in addition to any reimbursement pursuant to Section 7.4 hereof. Nothing herein shall be construed to restrict the Partnership from engaging an accounting firm to assist the tax matters partner in discharging its duties hereunder. At the request of any Limited Partner, the General Partner agrees to inform such Limited Partner regarding the preparation and filing of any returns and with respect to any subsequent audit or litigation relating to such returns; provided , however , that the General Partner shall have the exclusive power to determine whether to file, and the content of, such returns.

B. The tax matters partner is authorized, but not required:

(1) to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Partnership items required to be taken into account by a Partner for income tax purposes (such administrative proceedings being referred to as a “ tax audit ” and such judicial proceedings being referred to as “ judicial review ”), and in the settlement agreement the tax matters partner may expressly state that such agreement shall bind all Partners, except that such settlement agreement shall not bind any Partner (i) who (within the time prescribed pursuant to the Code and Regulations) files a statement with the IRS providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such Partner (as the case may be) or (ii) who is a “notice partner” (as defined in Code Section 6231) or a member of a “notice group” (as defined in Code Section 6223(b)(2));

(2) in the event that a notice of a final administrative adjustment at the Partnership level of any item required to be taken into account by a Partner for tax purposes (a “ final adjustment ”) is mailed to the tax matters partner, to seek judicial review of such final adjustment, including the filing of a petition for readjustment with the United States Tax Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Partnership’s principal place of business is located;

(3) to intervene in any action brought by any other Partner for judicial review of a final adjustment;

(4) to file a request for an administrative adjustment with the IRS at any time and, if any part of such request is not allowed by the IRS, to file an appropriate pleading (petition or complaint) for judicial review with respect to such request;

(5) to enter into an agreement with the IRS to extend the period for assessing any tax that is attributable to any item required to be taken into account by a Partner for tax purposes, or an item affected by such item; and

(6) to take any other action on behalf of the Partners or any of them in connection with any tax audit or judicial review proceeding to the extent permitted by applicable law or regulations.

The taking of any action and the incurring of any expense by the tax matters partner in connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the tax matters partner and the provisions relating to indemnification of the General Partner set forth in Section 7.7 hereof shall be fully applicable to the tax matters partner in its capacity as such.

Section 10.4 Withholding . Each Limited Partner hereby authorizes the Partnership to withhold from or pay on behalf of or with respect to such Limited Partner any amount of Federal, state, local or foreign taxes that the General Partner determines that the Partnership is required to withhold or pay with respect to any amount distributable or allocable to such Limited Partner pursuant to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Partnership pursuant to Code Section 1441, Code Section 1442, Code Section 1445 or Code Section 1446. Any amount paid on behalf of or with respect to a Limited Partner shall constitute a loan by the Partnership to such Limited Partner, which loan shall be repaid by such Limited Partner within fifteen (15) days after notice from the General Partner that such payment must be made unless (i) the Partnership withholds such payment from a distribution that would otherwise be made to the Limited Partner or (ii) the General Partner determines that such payment may be satisfied out of the Available Cash of the Partnership that would, but for such payment, be distributed to the Limited Partner. Each Limited Partner hereby unconditionally and irrevocably grants to the Partnership a security interest in such Limited Partner’s Partnership Interest to secure such Limited Partner’s obligation to pay to the Partnership any amounts required to be paid pursuant to this Section 10.4. In the event that a Limited Partner fails to pay any amounts owed to the Partnership pursuant to this Section 10.4 when due, the General Partner may elect to make the payment to the Partnership on behalf of such defaulting Limited Partner, and in such event shall be deemed to have loaned such amount to such defaulting Limited Partner and shall succeed to all rights and remedies of the Partnership as against such defaulting Limited Partner (including, without limitation, the right to receive distributions). Any amounts payable by a Limited Partner hereunder shall bear interest at the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal , plus four (4) percentage points (but not higher than the maximum lawful rate) from the date such amount is due (i.e., fifteen (15) days after demand) until such amount is paid in full. Each Limited Partner shall take such actions as the Partnership or the General Partner shall request in order to perfect or enforce the security interest created hereunder.

Section 10.5 Organizational Expenses . The General Partner may cause the Partnership to elect to deduct expenses, if any, incurred by it in organizing the Partnership ratably over a 180-month period as provided in Section 709 of the Code.

ARTICLE 11

PARTNER TRANSFERS AND WITHDRAWALS

Section 11.1 Transfer .

A. No part of the interest of a Partner shall be subject to the claims of any creditor, to any spouse for alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement.

B. No Partnership Interest shall be Transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article 11. Any Transfer or purported Transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void ab initio .

C. No Transfer of any Partnership Interest may be made to a lender to the Partnership or any Person who is related (within the meaning of Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose loan constitutes a Nonrecourse Liability, without the consent of the General Partner; provided that as a condition to such consent, the lender will be required to enter into an arrangement with the Partnership and the General Partner to redeem or exchange for the REIT Shares Amount any Partnership Units in which a security interest is held by such lender simultaneously with the time at which such lender would be deemed to be a partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code.

Section 11.2 Transfer of General Partner’s Partnership Interest .

A. Except as provided in Section 11.2.B, and subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, the General Partner may not Transfer all or any portion of its Partnership Interest without the Consent of the Partners and, for so long as CBI, together with its Controlled Entities, holds more than 20% of the outstanding Partnership Common Units held by all Partners, the Consent of CBI.

B. Subject to compliance with the other provisions of this Article 11, the General Partner may Transfer all of its Partnership Interest at any time to the Special Limited Partner or any Person that is, at the time of such Transfer, a direct or indirect wholly-owned Subsidiary of the Special Limited Partner, including any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), without the Consent of any Partner, and may designate the transferee to become the new General Partner under Section 12.1.

C. The General Partner may not voluntarily withdraw as a general partner of the Partnership without the Consent of the Limited Partners, except in connection with a Transfer of the General Partner’s entire Partnership Interest permitted in this Article 11 and the admission of the Transferee as a successor General Partner of the Partnership pursuant to the Act and this Agreement.

D. It is a condition to any Transfer of the entire Partnership Interest of a sole General Partner otherwise permitted hereunder that (i) coincident or prior to such Transfer, the transferee is admitted as a General Partner pursuant to the Act and this Agreement; (ii) the transferee assumes by operation of law or express agreement all of the obligations of the transferor General Partner under this Agreement with respect to such Transferred Partnership Interest; and (iii) the transferee has executed such instruments are may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement applicable to the General Partner and the admission of such transferee as a General Partner.

Section 11.3 Limited Partners’ Rights to Transfer .

A. General . Prior to the end of the Twelve-Month Period applicable to any Partnership Interest and except as provided below and in Section 11.1.C hereof, no Limited Partner shall Transfer all or any portion of such Partnership Interest to any transferee without the consent of the General Partner. After the expiration of the Twelve-Month Period applicable to any Partnership Interest, each Limited Partner, and each transferee of such Partnership Interest or Assignee pursuant to a Permitted Transfer, shall have the right to Transfer all or any portion of such Partnership Interest to any Person. Notwithstanding the foregoing, any Limited Partner may, at any time, without the consent of the General Partner, Transfer all or any portion of its Partnership Interest pursuant to a Permitted Transfer (including, in the case of a Limited Partner that is a Permitted Lender Transferee, any Transfer of a Partnership Interest to a Third-Party Pledge Transferee). Any Transfer of a Partnership Interest by a Limited Partner or an Assignee is subject to Section 11.4 and to satisfaction of the following conditions:

(1) Special Limited Partner Right of First Refusal . The transferring Partner (or the Partner’s estate in the event of the Partner’s death) shall give written notice of the proposed Transfer to the General Partner and the Special Limited Partner, which notice shall state (i) the identity and address of the proposed transferee and (ii) the amount and type of consideration proposed to be received for the Transferred Partnership Units. The Special Limited Partner shall have ten (10) Business Days upon which to give the Transferring Partner notice of its election to acquire the Partnership Units on the terms set forth in such notice. If it so elects, it shall purchase the Partnership Units on such terms within ten (10) Business Days after giving notice of such election; provided , however , that in the event that the proposed terms involve a purchase for cash, the Special Limited Partner may at its election deliver in lieu of all or any portion of such cash a note from the Special Limited Partner payable to the Transferring Partner at a date as soon as reasonably practicable, but in no event later than one hundred eighty (180) days after such purchase, and bearing interest at an annual rate equal to the total dividends declared with respect to one (1) REIT Share for the four (4) preceding fiscal quarters of the Special Limited Partner, divided by the Value as of the closing of such purchase; provided , further , that such closing may be deferred to the extent necessary to effect compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, if applicable, and any other applicable requirements of law. If it does not so elect, the Transferring Partner may Transfer such Partnership Units to a third party, on terms no more favorable to the transferee than the proposed terms, subject to the other conditions of this Section 11.3.

(2) Qualified Transferee . Any Transfer of a Partnership Interest shall be made only to a single Qualified Transferee; provided , however , that, for such purposes, all Qualified Transferees that are Affiliates, or that comprise investment accounts or funds managed by a single Qualified Transferee and its Affiliates, shall be considered together to be a single Qualified Transferee; provided , further , that each Transfer meeting the minimum Transfer restriction of Section 11.3A(4) hereof may be to a separate Qualified Transferee.

(3) Opinion of Counsel . The Transferor shall deliver or cause to be delivered to the General Partner an opinion of counsel reasonably satisfactory to it to the effect that the proposed Transfer may be effected without registration under the Securities Act and will not otherwise violate the registration provisions of the Securities Act and the regulations promulgated thereunder or violate any state securities laws or regulations applicable to the Partnership or the Partnership Interests Transferred; provided , however , that the General Partner may waive this condition upon the request of the Transferor. If, in the opinion of such counsel, such Transfer would require the filing of a registration statement under the Securities Act or would otherwise violate any Federal or state securities laws or regulations applicable to the Partnership or the Partnership Units, the General Partner may prohibit any Transfer otherwise permitted under this Section 11.3 by a Limited Partner of Partnership Interests.

(4) Minimum Transfer Restriction . Any Transferring Partner must Transfer not less than the lesser of (i) five hundred (500) Partnership Units or (ii) all of the remaining Partnership Units owned by such Transferring Partner; provided , however , that, for purposes of determining compliance with the foregoing restriction, all Partnership Units owned by Affiliates of a Limited Partner shall be considered to be owned by such Limited Partner.

(5) No Further Transfers . The transferee shall not be permitted to effect any further Transfer of the Partnership Units, other than to the Special Limited Partner.

(6) Exception for Permitted Transfers . The conditions of Section 11.3A(1) and Section 11.3A(3) through Section 11.3A(5) hereof shall not apply in the case of a Permitted Transfer.

It is a condition to any Transfer otherwise permitted hereunder (whether or not such Transfer is effected during or after the applicable Twelve-Month Period) that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Limited Partner under this Agreement with respect to such Transferred Partnership Interest, and no such Transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Partner are assumed by a successor corporation by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the approval of the General Partner. Notwithstanding the foregoing, any transferee of any Transferred Partnership Interest shall be subject to any and all ownership limitations (including, without limitation, the Ownership Limit) contained in the Charter that may limit or restrict such transferee’s ability to exercise its Redemption rights, including, without limitation, the Ownership Limit. Any transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the obligations of the transferor hereunder. Unless admitted as a Substituted Limited Partner, no transferee, whether by a voluntary Transfer, by operation of law or otherwise, shall have any rights hereunder, other than the rights of an Assignee as provided in Section 11.5 hereof.

B. Incapacity . If a Limited Partner is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator or receiver of such Limited Partner’s estate shall have all the rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for the purpose of settling or managing the estate, and such power as the Incapacitated Limited Partner possessed to Transfer all or any part of its interest in the Partnership. The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.

C. Adverse Tax Consequences . No Transfer by a Limited Partner of its Partnership Interests (including any Redemption, any other acquisition of Partnership Units by the General Partner or any acquisition of Partnership Units by the Partnership and including any Permitted Transfer) may be made to or by any Person if in the opinion of legal counsel for the Partnership, (i) such Transfer would create a material risk of the Partnership being treated as an association taxable as a corporation or would result in a termination of the Partnership under Code Section 708, or (ii) there would be a material risk that such Transfer would be treated as effectuated through an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Code Section 7704.

Section 11.4 Substituted Limited Partners .

A. No Limited Partner shall have the right to substitute a transferee other than a Permitted Transferee as a Limited Partner in its place. A transferee of the interest of a Limited Partner may be admitted as a Substituted Limited Partner only with the consent of the General Partner; provided , however , that a Permitted Transferee may be admitted as a Substituted Limited Partner pursuant to a Permitted Transfer without the consent of the General Partner. The failure or refusal by the General Partner to permit a transferee of any such interests to become a Substituted Limited Partner shall not give rise to any cause of action against the Partnership or the General Partner. Subject to the foregoing, an Assignee shall not be admitted as a Substituted Limited Partner until and unless it furnishes to the General Partner (i) evidence of acceptance, in form and substance satisfactory to the General Partner, of all the terms, conditions and applicable obligations of this Agreement, (ii) a counterpart signature page to this Agreement executed by such Assignee and (iii) such other documents and instruments as the General Partner may require to effect such Assignee’s admission as a Substituted Limited Partner.

B. Concurrently with, and as evidence of, the admission of a Substituted Limited Partner, the General Partner shall amend the Register and the books and records of the Partnership to reflect the name, address and number of Partnership Units of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address and number of Partnership Units of the predecessor of such Substituted Limited Partner.

C. A transferee who has been admitted as a Substituted Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Limited Partner under this Agreement.

Section 11.5 Assignees . If the General Partner’s consent is required for the admission of any transferee under Section 11.3 hereof as a Substituted Limited Partner, as described in Section 11.4 hereof, and the General Partner withholds such consent, such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited partnership interest under the Act, including the right to receive distributions from the Partnership and the share of Net Income, Net Losses and other items of income, gain, loss, deduction and credit of the Partnership attributable to the Partnership Units assigned to such transferee and the rights to Transfer the Partnership Units provided in this Article 11, but shall not be deemed to be a holder of Partnership Units for any other purpose under this Agreement (other than as expressly provided in Section 15.1 hereof with respect to a Qualifying Party that becomes a Tendering Party), and shall not be entitled to effect a Consent or vote with respect to such Partnership Units on any matter presented to the Limited Partners for approval (such right to Consent or vote, to the extent provided in this Agreement or under the Act, fully remaining with the transferor Limited Partner). In the event that any such transferee desires to make a further assignment of any such Partnership Units, such transferee shall be subject to all the provisions of this Article 11 to the same extent and in the same manner as any Limited Partner desiring to make an assignment of Partnership Units.

Section 11.6 General Provisions .

A. No Limited Partner may withdraw from the Partnership other than: (i) as a result of a permitted Transfer of all of such Limited Partner’s Partnership Interest in accordance with this Article 11 with respect to which the transferee becomes a Substituted Limited Partner; (ii) pursuant to a redemption (or acquisition by the General Partner or the Special Limited Partner) of all of its Partnership Interest pursuant to a Redemption under Section 15.1 hereof and/or pursuant to any Partnership Unit Designation; or (iii) as a result of the acquisition by the General Partner or the Special Limited Partner of all of such Limited Partner’s Partnership Interest, whether or not pursuant to Section 15.1.B hereof.

B. Any Limited Partner who shall Transfer all of its Partnership Units in a Transfer (i) permitted pursuant to this Article 11 where such transferee was admitted as a Substituted Limited Partner, (ii) pursuant to the exercise of its rights to effect a redemption of all of its Partnership Units pursuant to a Redemption under Section 15.1 hereof and/or pursuant to any Partnership Unit Designation or (iii) to the Special Limited Partner, whether or not pursuant to Section 15.1.B hereof, shall cease to be a Limited Partner.

C. If any Partnership Unit is Transferred in compliance with the provisions of this Article 11, or is redeemed by the Partnership, or acquired by the Special Limited Partner pursuant to Section 15.1 hereof, on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit attributable to such Partnership Unit for such Partnership Year shall be allocated to the transferor Partner or the Tendering Party (as the case may be) and, in the case of a Transfer or assignment other than a Redemption, to the transferee Partner, by taking into account their varying interests during the Partnership Year in accordance with Code Section 706(d), using the “interim closing of the books” method or another permissible method selected by the General Partner. Solely for purposes of making such allocations, each of such items for the calendar month in which a Transfer occurs shall be allocated to the transferee Partner and none of such items for the calendar month in which a Transfer or a Redemption occurs shall be allocated to the transferor Partner, or the Tendering Party (as the case may be) if such Transfer occurs on or before the fifteenth (15th) day of the month, otherwise such items shall be allocated to the transferor. All distributions of Available Cash attributable to such Partnership Unit with respect to which the Partnership Record Date is before the date of such Transfer, assignment or Redemption shall be made to the transferor Partner or the Tendering Party (as the case may be) and, in the case of a Transfer other than a Redemption, all distributions of Available Cash thereafter attributable to such Partnership Unit shall be made to the transferee Partner.

D. In addition to any other restrictions on Transfer herein contained, in no event may any Transfer or assignment of a Partnership Interest by any Partner (including any Redemption, any acquisition of Partnership Units by the Special Limited Partner or any other acquisition of Partnership Units by the Partnership) be made (i) to any person or entity who lacks the legal right, power or capacity to own a Partnership Interest; (ii) in violation of applicable law; (iii) of any component portion of a Partnership Interest, such as the Capital Account, or rights to distributions, separate and apart from all other components of a Partnership Interest; (iv) in the event that such Transfer would cause either the Special Limited Partner to cease to comply with the REIT Requirements or any wholly-owned Subsidiary of the Special Limited Partner to cease to qualify as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)); (v) if such Transfer would, in the opinion of counsel to the Partnership or the General Partner, cause a termination of the Partnership for Federal or state income tax purposes (except as a result of the Redemption (or acquisition by the Special Limited Partner) of all Partnership Units held by all Limited Partners); (vi) if such Transfer would, in the opinion of legal counsel to the Partnership, cause the Partnership to cease to be classified as a partnership for Federal income tax purposes (except as a result of the Redemption (or acquisition by the Special Limited Partner) of all Partnership Units held by all Limited Partners (other than the Special Limited Partner)); (vii) if such Transfer would cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in ERISA Section 3(14)) or a “disqualified person” (as defined in Code Section 4975(c)); (viii) if such Transfer would, in the opinion of legal counsel to the Partnership, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to Department of Labor Regulations Section 2510.2-101; (ix) if such Transfer requires the registration of such Partnership Interest pursuant to any applicable Federal or state securities laws; (x) if such Transfer would create a material risk that the Partnership would become a “publicly traded partnership,” as such term is defined in Code Section 469(k)(2) or Code 7704(b); (xi) if such Transfer would cause the Partnership to have more than one hundred (100) partners for tax purposes (including as partners those persons indirectly owning an interest in the Partnership through a partnership, limited liability company, subchapter S corporation or grantor trust); (xii) if such Transfer causes the Partnership to become a reporting company under the Exchange Act; or (xiii) if such Transfer subjects the Partnership to regulation under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each as amended.

E. Transfers pursuant to this Article 11, other than a Permitted Transfer to a Permitted Transferee pursuant to the exercise of remedies under a Pledge, may only be made on the first day of a fiscal quarter of the Partnership, unless the General Partner otherwise agrees.

Section 11.7 Restrictions on Termination Transactions .

A. Neither the Special Limited Partner nor the General Partner shall engage in, or cause or permit, a Termination Transaction, other than (i) with the Consent of the Limited Partners, or (ii) (a) if the requirements of Section 11.7.B or 11.7.C are satisfied, if and as applicable, and (b) either:

(i) in connection with any such Termination Transaction, each holder of Partnership Common Units (other than the Special Limited Partner and its wholly owned Subsidiaries) will receive, or will have the right to elect to receive, for each Partnership Common Unit an amount of cash, securities or other property equal to the product of the Adjustment Factor and the greatest amount of cash, securities or other property paid to a holder of one REIT Share in consideration of one REIT Share pursuant to the terms of such Termination Transaction; provided, that if, in connection with such Termination Transaction, a purchase, tender or exchange offer shall have been made to and accepted by the holders of a majority of the outstanding REIT Shares, each holder of Partnership Common Units (other than the Special Limited Partner and its wholly owned subsidiaries) will receive, or will have the right to elect to receive, the greatest amount of cash, securities or other property which such holder of Partnership Common Units would have received had it exercised its right to Redemption pursuant to Article 15 hereof and received REIT Shares in exchange for its Partnership Common Units immediately prior to the expiration of such purchase, tender or exchange offer and had thereupon accepted such purchase, tender or exchange offer and then such Termination Transaction shall have been consummated (the fair market value, at the time of the Termination Transaction, of the amount specified herein with respect to each Partnership Common Unit is referred to as the “ Transaction Consideration ”); or

(ii) all of the following conditions are met: (i) substantially all of the assets directly or indirectly owned by the Partnership prior to the announcement of the Termination Transaction are, immediately after the Termination Transaction, owned directly or indirectly by the Partnership or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets with the Partnership (in each case, the “ Surviving Partnership ”); (ii) the Surviving Partnership is classified as a partnership for U.S. Federal income tax purposes; (iii) the Limited Partners (other than the Special Limited Partner) that held Partnership Common Units immediately prior to the consummation of such Termination Transaction own a percentage interest of the Surviving Partnership based on the relative fair market value of the net assets of the Partnership and the other net assets of the Surviving Partnership immediately prior to the consummation of such transaction; (iv) the rights of such Limited Partners with respect to the Surviving Partnership are at least as favorable as those of Limited Partners holding Partnership Common Units immediately prior to the consummation of such transaction (except to the extent that any such rights are consistent with clause (v) below) and as those applicable to any other limited partners or non-managing members of the Surviving Partnership; and (v) such rights include: (a) if the Special Limited Partner or its successor is a REIT with a single class of Publicly Traded common equity securities, the right to redeem their interests in the Surviving Partnership at any time for either: (1) a number of such REIT’s Publicly Traded common equity securities with a fair market value, as of the date of consummation of such Termination Transaction, equal to the Transaction Consideration, subject to antidilution adjustments comparable to those set forth in the definition of “Adjustment Factor” herein (the “ Successor Shares Amount ”); or (2) cash in an amount equal to the fair market value of the Successor Shares Amount at the time of such redemption, determined in a manner consistent with the definition of “Value” herein; or (b) if the Special Limited Partner or its successor is not a REIT with a single class of Publicly Traded common equity securities, the right to redeem their interests in the Surviving Partnership at any time for cash in an amount equal to the fair market value of such interest at the time of redemption, as determined at least once every calendar quarter by an independent appraisal firm of recognized national standing retained by the Surviving Partnership.

B. If the Consent of the Limited Partners has not been obtained, and CBI, together with its Controlled Entities, holds at least 20% of the outstanding Partnership Common Units held by all Partners, then neither the Special Limited Partner nor the General Partner may engage in, or cause or permit, a Termination Transaction in connection with which the Special Limited Partner has or will seek the approval of its common stockholders (a “ Stockholder Vote ”) unless (i) the General Partner first provides the Designated Partners with advance notice at least equal in time to the advance notice given in the case of the Stockholder Vote, (ii) in connection with such advance notice, the General Partner provides the Designated Partners (other than the Special Limited Partner and its wholly-owned Subsidiaries) with written materials describing the proposed Termination Transaction as well as the tax effect of the consummation thereof on such Designated Partners and (iii) such Termination Transaction is approved (the “ Partnership Vote ”) by a number of affirmative votes cast, or deemed to have been cast, by the Designated Partners as would be sufficient (measured as a percentage of the total number of votes cast or entitled to be cast (or deemed to be cast)) to approve the Termination Transaction if such approval was to be given by the holders of REIT Shares. For purposes of the Partnership Vote, each Designated Partner holding Partnership Common Units shall be entitled to cast a number of votes equal to the total votes such Designated Partner would have been entitled to cast at the Stockholder Meeting had such Designated Partner presented its Partnership Common Units for redemption and such Partnership Common Units had been acquired by the Special Limited Partner for the REIT Shares Amount as of the record date for the Stockholder Meeting; provided, however , that the Special Limited Partner, the General Partner and all of their Subsidiaries shall not be entitled to vote with respect to any Partnership Vote and shall instead be deemed to have cast all votes that would otherwise have been entitled to be cast by them, in the aggregate, in proportion to the manner in which all outstanding REIT Shares were voted in the Stockholder Vote (such votes to be “For,” “Against,” “Abstain” and “Not Present”).

C. As long as CBI, together with its Controlled Entities, holds at least 20% of the outstanding Partnership Common Units held by all Partners, the Special Limited Partner shall not engage in a Termination Transaction effected as a short-form merger without a Stockholder Vote pursuant to Section 3-106 of the Maryland General Corporation Law, unless the Special Limited Partner has previously obtained either the consent of CBI or the Consent of Limited Partners with respect to such transaction.

ARTICLE 12

ADMISSION OF PARTNERS

Section 12.1 Admission of Successor General Partner . A successor to all or a portion of the General Partner’s Partnership Interest pursuant to Section 11.2.B hereof who the General Partner has designated to become a successor General Partner shall be admitted to the Partnership as the General Partner, effective immediately upon the Transfer of such Partnership Interest to it. Upon any such Transfer and the admission of any such transferee as a successor General Partner in accordance with this Section 12.1, the transferor General Partner shall be relieved of its obligations under this Agreement and shall cease to be a general partner of the Partnership without any separate Consent of the Partners or the consent or approval of any Partner. Any such successor shall carry on the business of the Partnership without dissolution. In each case, the admission shall be subject to the successor General Partner executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission. In the event that the General Partner withdraws from the Partnership, or transfers its entire Partnership Interest, in violation of this Agreement, or otherwise dissolves or terminates or ceases to be the general partner of the Partnership, a Majority in Interest of the Partners may elect to continue the Partnership by selecting a successor General Partner in accordance with Section 13.1.A hereof.

Section 12.2 Admission of Additional Limited Partners .

A. After the admission to the Partnership of an Original Limited Partner, a Person (other than an existing Partner) who makes a Capital Contribution to the Partnership in exchange for Partnership Units and in accordance with this Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon furnishing to the General Partner (i) evidence of acceptance, in form and substance satisfactory to the General Partner, of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 hereof, (ii) a counterpart signature page to this Agreement executed by such Person and (iii) such other documents or instruments as may be required by the General Partner in order to effect such Person’s admission as an Additional Limited Partner. Concurrently with, and as evidence of, the admission of an Additional Limited Partner, the General Partner shall amend the Register and the books and records of the Partnership to reflect the name, address, number and type of Partnership Units of such Additional Limited Partner.

B. Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted as an Additional Limited Partner without the consent of the General Partner. The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the consent of the General Partner to such admission and the satisfaction of all the conditions set forth in Section 12.2.A.

C. If any Additional Limited Partner is admitted to the Partnership on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit allocable among Holders for such Partnership Year shall be allocated among such Additional Limited Partner and all other Holders by taking into account their varying interests during the Partnership Year in accordance with Code Section 706(d), using the “interim closing of the books” method or another permissible method selected by the General Partner. Solely for purposes of making such allocations, each of such items for the calendar month in which an admission of any Additional Limited Partner occurs shall be allocated among all the Holders including such Additional Limited Partner, in accordance with the principles described in Section 11.6.C hereof. All distributions of Available Cash with respect to which the Partnership Record Date is before the date of such admission shall be made solely to Partners and Assignees other than the Additional Limited Partner, and all distributions of Available Cash thereafter shall be made to all the Partners and Assignees including such Additional Limited Partner.

Section 12.3 Amendment of Agreement and Certificate of Limited Partnership . For the admission to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate under the Act to amend the Register and the books and records of the Partnership and, if necessary, to prepare as soon as practical an amendment of this Agreement and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Section 2.4 hereof.

Section 12.4 Limit on Number of Partners . Unless otherwise permitted by the General Partner, no Person shall be admitted to the Partnership as an Additional Limited Partner if the effect of such admission would be to cause the Partnership to have a number of Partners (including as Partners for this purpose those Persons indirectly owning an interest in the Partnership through another partnership, a limited liability company, a subchapter S corporation or a grantor trust) that would cause the Partnership to become a reporting company under the Exchange Act.

Section 12.5 Admission . A Person shall be admitted to the Partnership as a limited partner of the Partnership or a general partner of the Partnership only upon strict compliance, and not upon substantial compliance, with the requirements set forth in this Agreement for admission to the Partnership as a Limited Partner or a General Partner.

ARTICLE 13

DISSOLUTION, LIQUIDATION AND TERMINATION

Section 13.1 Dissolution . The Partnership shall not be dissolved by the admission of Substituted Limited Partners or Additional Limited Partners, or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General Partner shall continue the business of the Partnership without dissolution. However, the Partnership shall dissolve, and its affairs shall be wound up, upon the first to occur of any of the following (each a “ Liquidating Event ”):

A. an event of withdrawal, as defined in Section 10-402(2) – (9) of the Act (including, without limitation, bankruptcy), or the withdrawal in violation of this Agreement of the last remaining General Partner unless, within ninety (90) days after the withdrawal, a Majority in Interest of the Partners agree in writing to continue the Partnership and to the appointment, effective as of the date of withdrawal, of a successor General Partner;

B. an election to dissolve the Partnership made by the General Partner, with or without the Consent of the Partners, and, if CBI, together with its Controlled Entities, holds at least 20% of the outstanding Partnership Common Units held by all Partners, the Consent of CBI; or

C. entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act.

Section 13.2 Winding Up .

A. Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets and satisfying the claims of its creditors and the Holders. After the occurrence of a Liquidating Event, no Holder shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Partnership’s business and affairs. The General Partner (or, in the event that there is no remaining General Partner or the General Partner has dissolved, become bankrupt within the meaning of the Act or ceased to operate, any Person elected by a Majority in Interest of the Partners (the General Partner or such other Person being referred to herein as the “ Liquidator ”)) shall be responsible for overseeing the winding up and dissolution of the Partnership and shall take full account of the Partnership’s liabilities and property, and the Partnership property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the General Partner, include shares of stock in the Special Limited Partner) shall be applied and distributed in the following order:

(1) First, to the satisfaction of all of the Partnership’s debts and liabilities to creditors other than the Holders (whether by payment or the making of reasonable provision for payment thereof);

(2) Second, to the satisfaction of all of the Partnership’s debts and liabilities to the General Partner and the Special Limited Partner (whether by payment or the making of reasonable provision for payment thereof), including, but not limited to, amounts due as reimbursements under Section 7.4 hereof;

(3) Third, to the satisfaction of all of the Partnership’s debts and liabilities to the other Holders (whether by payment or the making of reasonable provision for payment thereof); and

(4) Subject to the terms of any Partnership Unit Designation, the balance, if any, to the Holders in accordance with and in proportion to their positive Capital Account balances, after giving effect to all contributions, distributions and allocations for all periods.

The General Partner shall not receive any additional compensation for any services performed pursuant to this Article 13.

B. Notwithstanding the provisions of Section 13.2.A hereof that require liquidation of the assets of the Partnership, but subject to the order of priorities set forth therein, if prior to or upon dissolution of the Partnership, the Liquidator determines that an immediate sale of part or all of the Partnership’s assets would be impractical or would cause undue loss to the Holders, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership (including to those Holders as creditors) and/or distribute to the Holders, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2.A hereof, undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best interest of the Holders, and shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt.

C. In the event that the Partnership is “liquidated,” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article 13 to the Holders that have positive Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2) to the extent of, and in proportion to, positive Capital Account balances. If any Holder has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), such Holder shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit shall not be considered a debt owed to the Partnership or to any other Person for any purpose whatsoever. In the sole and absolute discretion of the General Partner or the Liquidator, a pro rata portion of the distributions that would otherwise be made to the Holders pursuant to this Article 13 may be:

(1) distributed to a trust established for the benefit of the General Partner and the Holders for the purpose of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership or of the General Partner arising out of or in connection with the Partnership and/or Partnership activities. The assets of any such trust shall be distributed to the Holders, from time to time, in the reasonable discretion of the General Partner, in the same proportions and amounts as would otherwise have been distributed to the Holders pursuant to this Agreement; or

(2) withheld or escrowed to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership, provided that such withheld or escrowed amounts shall be distributed to the Holders in the manner and order of priority set forth in Section 13.2.A hereof as soon as practicable.

Section 13.3 Deemed Contribution and Distribution . Notwithstanding any other provision of this Article 13, in the event that the Partnership is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Partnership’s Property shall not be liquidated, the Partnership’s liabilities shall not be paid or discharged and the Partnership’s affairs shall not be wound up. Instead, for Federal income tax purposes the Partnership shall be deemed to have contributed all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership; and immediately thereafter, distributed Partnership Units to the Partners in the new partnership in accordance with their respective Capital Accounts in liquidation of the Partnership, and the new partnership is deemed to continue the business of the Partnership. Nothing in this Section 13.3 shall be deemed to have constituted any Assignee as a Substituted Limited Partner without compliance with the provisions of Section 11.4 hereof.

Section 13.4 Rights of Holders . Except as otherwise provided in this Agreement and subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, (a) each Holder shall look solely to the assets of the Partnership for the return of its Capital Contribution, (b) no Holder shall have the right or power to demand or receive property other than cash from the Partnership and (c) no Holder shall have priority over any other Holder as to the return of its Capital Contributions, distributions or allocations.

Section 13.5 Notice of Dissolution . In the event that a Liquidating Event occurs or an event occurs that would, but for an election or objection by one or more Partners pursuant to Section 13.1 hereof, result in a dissolution of the Partnership, the General Partner or Liquidator shall, within thirty (30) days thereafter, provide written notice thereof to each of the Holders and, in the sole and absolute discretion of the General Partner or the Liquidator, or as required by the Act, to all other parties with whom the Partnership regularly conducts business (as determined in the sole and absolute discretion of the General Partner or Liquidator), and the General Partner or Liquidator may, or, if required by the Act, shall, publish notice thereof in a newspaper of general circulation in each place in which the Partnership regularly conducts business (as determined in the sole and absolute discretion of the General Partner or Liquidator).

Section 13.6 Cancellation of Certificate of Limited Partnership . Upon the completion of the liquidation of the Partnership cash and property as provided in Section 13.2 hereof, the Partnership shall be terminated, a certificate of cancellation shall be filed with the State of Maryland, all qualifications of the Partnership as a foreign limited partnership or association in jurisdictions other than the State of Maryland shall be cancelled, and such other actions as may be necessary to terminate the Partnership shall be taken.

Section 13.7 Reasonable Time for Winding-Up . A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 13.2 hereof, in order to minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall remain in effect between and among the Partners during the period of liquidation.

ARTICLE 14

PROCEDURES FOR ACTIONS AND CONSENTS

OF PARTNERS; AMENDMENTS; MEETINGS

Section 14.1 Actions and Consents of Partners . The actions requiring Consent of any Partner pursuant to this Agreement, including Section 7.3 hereof, or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article 14.

Section 14.2 Amendments . Except as otherwise required or permitted by this Agreement (including Section 7.3), amendments to this Agreement must be approved by the Consent of the General Partner and the Consent of the Partners, and may be proposed only by (a) the General Partner, or (b) Limited Partners holding a majority of the Partnership Common Units then held by Limited Partners (excluding the Special Limited Partner and any Controlled Entity of the Special Limited Partner). Following such proposal, the General Partner shall submit to the Partners any proposed amendment that, pursuant to the terms of this Agreement, requires the Consent of the Partners. The General Partner shall seek the Consent of the Partners entitled to vote thereon on any such proposed amendment in accordance with Section 14.3 hereof. Upon obtaining any such Consent, or any other Consent required by this Agreement, and without further action or execution by any other Person, including any Limited Partner, (i) any amendment to this Agreement may be implemented and reflected in a writing executed solely by the General Partner, and (ii) the Limited Partners shall be deemed a party to and bound by such amendment of this Agreement. Within thirty days after the effectiveness of any amendment to this Agreement that does not receive the Consent of all Partners, the General Partner shall deliver a copy of such amendment to all Partners that did not Consent to such amendment. For the avoidance of doubt, notwithstanding anything to the contrary in this Agreement, this Agreement may not be amended without the Consent of the General Partner.

Section 14.3 Procedures for Meetings and Actions of the Partners .

A. Meetings of the Partners may be called only by the General Partner. The call shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Partners entitled to act at the meeting not less than ten (10) days nor more than ninety (90) days prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Unless approval by a different number or proportion of the Partners is required by this Agreement, or any Partnership Unit Designation, the affirmative vote of a Majority in Interest of the Partners shall be sufficient to approve such proposal at a meeting of the Partners. Whenever the Consent of any Partners is permitted or required under this Agreement, such Consent may be given at a meeting of Partners or in accordance with the procedure prescribed in Section 14.3.B hereof.

B. Any action requiring the Consent of any Partner or a group of Partners pursuant to this Agreement, or that is required or permitted to be taken at a meeting of the Partners may be taken without a meeting if a Consent in writing or by electronic transmission setting forth the action so taken or consented to is given by Partners whose affirmative vote would be sufficient to approve such action or provide such Consent at a meeting of the Partners. Such Consent may be in one instrument or in several instruments, and shall have the same force and effect as the affirmative vote of such Partners at a meeting of the Partners. Such Consent shall be filed with the General Partner. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified. For purposes of obtaining a Consent in writing or by electronic transmission, the General Partner may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period shall constitute a Consent that is consistent with the General Partner’s recommendation with respect to the proposal; provided , however , that an action shall become effective at such time as requisite Consents are received even if prior to such specified time.

C. Each Partner entitled to act at a meeting of Partners may authorize any Person or Persons to act for it by proxy on all matters in which a Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Partner or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy (or there is receipt of a proxy authorizing a later date). Every proxy shall be revocable at the pleasure of the Partner executing it, such revocation to be effective upon the Partnership’s receipt of written notice of such revocation from the Partner executing such proxy, unless such proxy states that it is irrevocable and is coupled with an interest.

D. The General Partner may set, in advance, a record date for the purpose of determining the Partners (i) entitled to Consent to any action, (ii) entitled to receive notice of or vote at any meeting of the Partners or (iii) in order to make a determination of Partners for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of the Partners, not less than ten (10) days, before the date on which the meeting is to be held. If no record date is fixed, the record date for the determination of Partners entitled to notice of or to vote at a meeting of the Partners shall be at the close of business on the day on which the notice of the meeting is sent, and the record date for any other determination of Partners shall be the effective date of such Partner action, distribution or other event. When a determination of the Partners entitled to vote at any meeting of the Partners has been made as provided in this section, such determination shall apply to any adjournment thereof.

E. Each meeting of Partners shall be conducted by the General Partner or such other Person as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the General Partner or such other Person deems appropriate in its sole and absolute discretion. Without limitation, meetings of Partners may be conducted in the same manner as meetings of the Special Limited Partner’s stockholders and may be held at the same time as, and as part of, the meetings of the Special Limited Partner’s stockholders.

ARTICLE 15

GENERAL PROVISIONS

Section 15.1 Redemption Rights of Qualifying Parties .

A. After the Twelve-Month Period applicable to such Partnership Common Units, a Qualifying Party shall have the right (subject to the terms and conditions set forth herein) to require the Partnership to redeem all or a portion of the Partnership Common Units held by such Tendering Party (Partnership Common Units that have in fact been tendered for redemption being hereafter referred to as “ Tendered Units ”) in exchange (a “ Redemption ”) for the Cash Amount payable on the Specified Redemption Date. The Partnership may, in the General Partner’s sole and absolute discretion, redeem Tendered Units at the request of the Holder thereof prior to the end of the applicable Twelve-Month Period (subject to the terms and conditions set forth herein) (a “ Special Redemption ”); provided that the General Partner first receives a legal opinion to the same effect as the legal opinion described in Section 15.1G(4) of this Agreement. Any Redemption shall be exercised pursuant to a Notice of Redemption delivered to the General Partner by the Qualifying Party when exercising the Redemption right (the “ Tendering Party ”). The Partnership’s obligation to effect a Redemption, however, shall not arise or be binding against the Partnership (i) until and unless the Special Limited Partner declines or fails to exercise its purchase rights pursuant to Section 15.1.B hereof following receipt of a Notice of Redemption (a “ Declination ”) and (ii) until the Business Day following the Cut-Off Date. In the event of a Redemption, the Cash Amount shall be delivered as a certified or bank check payable to the Tendering Party or, in the General Partner’s sole and absolute discretion, in immediately available funds on or before the Specified Redemption Date.

B. Notwithstanding the provisions of Section 15.1.A hereof, on or before the close of business on the Cut-Off Date, the Special Limited Partner may, in its sole and absolute discretion, elect to acquire some or all (such percentage being referred to as the “ Applicable Percentage ”) of the Tendered Units from the Tendering Party in exchange for the REIT Shares Amount calculated based on the portion of Tendered Units it elects to acquire in exchange for REIT Shares. If the Special Limited Partner so elects, on the Specified Redemption Date the Tendering Party shall sell such number of the Tendered Units to the Special Limited Partner in exchange for a number of REIT Shares equal to the product of the REIT Shares Amount and the Applicable Percentage. The Tendering Party shall submit (i) such information, certification or affidavit as the Special Limited Partner may reasonably require in connection with the application of the Ownership Limit to any such acquisition and (ii) such written representations, investment letters, legal opinions or other instruments necessary, in the Special Limited Partner’s view, to effect compliance with the Securities Act. In the event of a purchase of the Tendered Units by the Special Limited Partner pursuant to this Section 15.1.B, the Tendering Party shall no longer have the right to cause the Partnership to effect a Redemption of such Tendered Units, and, upon notice to the Tendering Party by the Special Limited Partner, given on or before the close of business on the Cut-Off Date, that the Special Limited Partner has elected to acquire some or all of the Tendered Units pursuant to this Section 15.1.B, the obligation of the Partnership to effect a Redemption of the Tendered Units as to which the Special Limited Partner’s notice relates shall not accrue or arise. A number of REIT Shares equal to the product of the Applicable Percentage and the REIT Shares Amount, if applicable, shall be delivered by the Special Limited Partner as duly authorized, validly issued, fully paid and non-assessable REIT Shares and, if applicable, Rights, free of any pledge, lien, encumbrance or restriction, other than the Ownership Limit and other restrictions provided in the Charter, the Securities Act and relevant state securities or “blue sky” laws. Neither any Tendering Party whose Tendered Units are acquired by the Special Limited Partner pursuant to this Section 15.1.B, any Partner, any Assignee nor any other interested Person shall have any right to require or cause the Special Limited Partner to register, qualify or list any REIT Shares owned or held by such Person, whether or not such REIT Shares are issued pursuant to this Section 15.1.B, with the SEC, with any state securities commissioner, department or agency, under the Securities Act or the Exchange Act or with any stock exchange; provided, however, that this limitation shall not be in derogation of any registration or similar rights granted pursuant to any other written agreement between the Special Limited Partner and any such Person. Notwithstanding any delay in such delivery, the Tendering Party shall be deemed the owner of such REIT Shares and Rights for all purposes, including, without limitation, rights to vote or consent, receive dividends, and exercise rights, as of the Specified Redemption Date. REIT Shares issued upon an acquisition of the Tendered Units by the Special Limited Partner pursuant to this Section 15.1.B may contain such legends regarding restrictions under the Securities Act and applicable state securities laws as the Special Limited Partner in good faith determines to be necessary or advisable in order to ensure compliance with such laws.

C. Notwithstanding the provisions of Sections 15.1.A and 15.1.B hereof, (i) no Person shall be entitled to effect a Redemption for cash or an exchange for REIT Shares to the extent the ownership or right to acquire REIT Shares pursuant to such exchange on the Specified Redemption Date could cause such Person (or any other Person) to violate the restrictions on ownership and transfer of REIT Shares set forth in the Charter, after giving effect to any waivers or modifications of such restrictions by the Board of Directors, and (ii) no Person shall have any rights under this Agreement to acquire REIT Shares which would otherwise be prohibited under the Charter, after giving effect to any waivers or modifications of such restrictions by the Board of Directors. To the extent that any attempted Redemption or acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof would be in violation of this Section 15.1.C, it shall be null and void ab initio , and the Tendering Party shall not acquire any rights or economic interests in the Cash Amount otherwise payable upon such Redemption or the REIT Shares otherwise issuable by the Special Limited Partner under Section 15.1.B hereof.

D. In the event of a Declination:

(1) The Special Limited Partner shall give notice of such Declination to the Tendering Party on or before the close of business on the Cut-Off Date. The failure of the Special Limited Partner to give notice of such Declination by the close of business on the Cut-Off Date shall be deemed to be an election by the Special Limited Partner to acquire the Tendered Units in exchange for REIT Shares.

(2) The Partnership may elect to raise funds for the payment of the Cash Amount either (a) by requiring that the Special Limited Partner contribute to the Partnership funds from the proceeds of a registered public offering by the Special Limited Partner of REIT Shares sufficient to purchase the Tendered Units or (b) from any other sources (including, but not limited to, the sale of any Property and the incurrence of additional Debt) available to the Partnership.

(3) If the Cash Amount is not paid on or before the Specified Redemption Date, interest shall accrue with respect to the Cash Amount from the day after the Specified Redemption Date to and including the date on which the Cash Amount is paid at a rate equal to the Applicable Federal Short-Term Rate as published monthly by the IRS.

E. Notwithstanding the provisions of Section 15.1.B hereof or Section 15.1.H hereof, if the Special Limited Partner’s acquisition of Tendered Units in exchange for the REIT Shares Amount would be prohibited under the Charter, then (i) the Special Limited Partner shall not elect to acquire such Tendered Units, and (ii) the Partnership shall not be obligated to effect a Redemption of such Tendered Units.

F. Notwithstanding anything herein to the contrary (but subject to Section 15.1.C hereof), with respect to any Redemption (or any tender of Partnership Common Units for Redemption if the Tendered Units are acquired by the Special Limited Partner pursuant to Section 15.1.B hereof) pursuant to this Section 15.1:

(1) Without the consent of the General Partner, no Tendering Party may effect a Redemption for less than two thousand (2,000) Partnership Common Units or, if such Tendering Party holds less than two thousand (2,000) Partnership Common Units, all of the Partnership Common Units held by such Tendering Party.

(2) If (i) a Tendering Party surrenders Tendered Units during the period after the Partnership Record Date with respect to a distribution payable to Holders of Partnership Common Units, and before the record date established by the Special Limited Partner for a dividend to its stockholders of some or all of its portion of such Partnership distribution, and (ii) the Special Limited Partner elects to acquire any of such Tendered Units in exchange for REIT Shares pursuant to Section 15.1.B, then such Tendering Party shall pay to the Special Limited Partner on the Specified Redemption Date an amount in cash equal to the Partnership distribution paid or payable in respect of such Tendered Units.

(3) The consummation of such Redemption (or an acquisition of Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof, as the case may be) shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

(4) The Tendering Party shall continue to own (subject, in the case of an Assignee, to the provisions of Section 11.5 hereof) all Partnership Common Units subject to any Redemption, and be treated as a Limited Partner or an Assignee, as applicable, with respect to such Partnership Common Units for all purposes of this Agreement, until the Specified Redemption Date and until such Tendered Units are either paid for by the Partnership pursuant to Section 15.1.A hereof or transferred to the Special Limited Partner and paid for, by the issuance of REIT Shares, pursuant to Section 15.1.B. Until a Specified Redemption Date and an acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof, the Tendering Party shall have no rights as a stockholder of the Special Limited Partner with respect to the REIT Shares issuable in connection with such acquisition.

G. In connection with an exercise of Redemption rights pursuant to this Section 15.1, unless waived by the Special Limited Partner, the Tendering Party shall submit the following to the Special Limited Partner, in addition to the Notice of Redemption:

(1) A written affidavit, dated the same date as the Notice of Redemption, (a) disclosing the actual and constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares by (i) such Tendering Party and (ii) to the best of such Tendering Party’s knowledge, any Related Party, and (b) representing that, after giving effect to an acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof, neither the Tendering Party nor, to the best of such Tendering Party’s knowledge, any Related Party, will own REIT Shares in excess of the Ownership Limit;

(2) A written representation that neither the Tendering Party nor, to the best of such Tendering Party’s knowledge, any Related Party, has any intention to acquire any additional REIT Shares prior to the Specified Redemption Date; and

(3) An undertaking to certify, at and as a condition to the closing of (i) the Redemption or (ii) the acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof on the Specified Redemption Date, that either (a) the actual and constructive ownership of REIT Shares by the Tendering Party and, to the best of such Tendering Party’s knowledge, any Related Party, remain unchanged from that disclosed in the affidavit required by Section 15.1G(1), or (b) after giving effect to the Redemption or an acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof, neither the Tendering Party nor, to the best of such Tendering Party’s knowledge, any Related Party, shall own REIT Shares in violation of the Ownership Limit.

(4) In connection with any Special Redemption, the Special Limited Partner shall have the right to receive an opinion of counsel reasonably satisfactory to it to the effect that the proposed Special Redemption will not cause the Partnership, the General Partner or the Special Limited Partner to violate any Federal or state securities laws or regulations applicable to the Special Redemption or the issuance and sale of REIT Shares to the Tendering Party pursuant to Section 15.1.B of this Agreement.

H. Stock Offering Funding Option

(1) (a) Notwithstanding Sections 15.1.A or 15.1.B hereof (but subject to Section 15.1.E hereof), if (i) a Limited Partner has delivered to the General Partner a Notice of Redemption with respect to a number of Excess Units that, together with any other Tendered Units that such Limited Partner agrees to treat as Excess Units (collectively, the “ Offering Units ”), exceeds $50,000,000 gross value, based on a Partnership Common Unit price equal to the Value of a REIT Share, and (ii) the Special Limited Partner is eligible to file a registration statement under Form S-3 (or any successor form similar thereto), then either: (x) the General Partner and the Special Limited Partner may cause the Partnership to redeem the Offering Units with the proceeds of an offering, whether registered under the Securities Act or exempt from such registration, underwritten, offered and sold directly to investors or through agents or other intermediaries, or otherwise distributed (a “ Stock Offering Funding ”) of a number of REIT Shares (“ Offered Shares ”) equal to the REIT Shares Amount with respect to the Offering Units pursuant to the terms of this Section 15.1.H; (y) the Partnership shall pay the Cash Amount with respect to the Excess Units pursuant to the terms of Section 15.1.A; or (z) the Special Limited Partner shall acquire the Excess Units in exchange for the REIT Shares Amount pursuant to the terms of Section 15.1.B, but only if the Tendering Party provides the General Partner with any representations or undertakings which the Special Limited Partner has determined, in its sole and absolute discretion, are sufficient to prevent a violation of the Charter. The General Partner and the Special Limited Partner must provide notice of their exercise of the election described in clause (x) above to purchase the Tendered Units through a Stock Offering Funding on or before the Cut-Off Date.

(b) If the General Partner and the Special Limited Partner elect a Stock Offering Funding with respect to a Notice of Redemption, the General Partner may give notice (a “ Single Funding Notice ”) of such election to all Limited Partners and require that all Limited Partners elect whether or not to effect a Redemption to be funded through such Stock Offering Funding. If a Limited Partner elects to effect such a Redemption, it shall give notice thereof and of the number of Common Units to be made subject thereto in writing to the General Partner within 10 Business Days after receipt of the Single Funding Notice, and such Limited Partner shall be treated as a Tendering Party for all purposes of this Section 15.1.H.

(2) If the General Partner and the Special Limited Partner elect a Stock Offering Funding, on the Specified Redemption Date, the Partnership shall redeem each Offering Unit that is still a Tendered Unit on such date for cash in immediately available funds in an amount (the “ Stock Offering Funding Amount ”) equal to the net proceeds per Offered Share received by the Special Limited Partner from the Stock Offering Funding, determined after deduction of underwriting discounts and commissions but no other expenses of the Special Limited Partner or any other Limited Partner related thereto, including without limitation, legal and accounting fees and expenses, Securities and Exchange Commission registration fees, state blue sky and securities laws fees and expenses, printing expenses, FINRA filing fees, exchange listing fees and other out of pocket expenses (the “ Net Proceeds ”).

(3) If the General Partner and the Special Limited Partner elect a Stock Offering Funding, the following additional terms and conditions shall apply:

(a) As soon as practicable after the General Partner and the Special Limited Partner elect to effect a Stock Offering Funding, the Special Limited Partner shall use its reasonable efforts to effect as promptly as possible a registration, qualification or compliance (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as would permit or facilitate the sale and distribution of the Offered Shares; provided , that , if the Special Limited Partner shall deliver a certificate to the Tendering Party stating that the Special Limited Partner has determined in the good faith judgment of the Board of Directors of the Special Limited Partner that such filing, registration or qualification would require disclosure of material non-public information, the disclosure of which would have a material adverse effect on the Special Limited Partner, then the Special Limited Partner may delay making any filing or delay the effectiveness of any registration or qualification for the shorter of (a) the period ending on the date upon which such information is disclosed to the public or ceases to be material or (b) an aggregate period of ninety (90) days in connection with any Stock Offering Funding.

(b) The Special Limited Partner shall advise each Tendering Party, regularly and promptly upon any request, of the status of the Stock Offering Funding process, including the timing of all filings, the selection of and understandings with underwriters, agents, dealers and brokers, the nature and contents of all communications with the Securities and Exchange Commission and other governmental bodies, the expenses related to the Stock Offering Funding as they are being incurred, the nature of marketing activities, and any other matters reasonably related to the timing, price and expenses relating to the Stock Offering Funding and the compliance by the Special Limited Partner with its obligations with respect thereto. The Special Limited Partner will have reasonable procedures whereby the Tendering Party with the largest number of Offered Units (the “ Lead Tendering Party ”) may represent all the Tendering Parties in connection with the Stock Offering Funding by allowing it to participate in meetings with the underwriters of the Stock Offering Funding. In addition, the Special Limited Partner and each Tendering Party may, but shall be under no obligation to, enter into understandings in writing (“ Pricing Agreements ”) whereby the Tendering Party will agree in advance as to the acceptability of a Net Proceeds amount at or below a specified amount. Furthermore, the Special Limited Partner shall establish pricing notification procedures with each such Tendering Party, such that the Tendering Partner will have the maximum opportunity practicable to determine whether to become a Withdrawing Partner pursuant to Section 15.1.H(3)(c) below.

(c) The Special Limited Partner will permit the Lead Tendering Party to participate in the pricing discussions for the Stock Offering Funding and, upon notification of the price per REIT Share in the Stock Offering Funding from the managing underwriter(s), in the case of a registered public offering, or lead placement agent(s), in the event of an unregistered offering, engaged by the Special Limited Party in order to sell the Offered Shares, shall immediately use its reasonable efforts to notify each Tendering Party of the price per REIT Share in the Stock Offering Funding and resulting Net Proceeds. Each Tendering Party shall have one hour from the receipt of such written notice (as such time may be extended by the Special Limited Partner) to elect to withdraw its Redemption (a Tendering Party making such an election being a “ Withdrawing Partner ”), and Partnership Common Units with a REIT Shares Amount equal to such excluded Offered Shares shall be considered to be withdrawn from the related Redemption; provided , however , that the Special Limited Partner shall keep each of the Tendering Parties reasonably informed as to the likely timing of delivery of its notice. If a Tendering Party, within such time period, does not notify the Special Limited Partner of such Tendering Party’s election not to become a Withdrawing Partner, then such Tendering Party shall, except as otherwise provided in a Pricing Agreement, be deemed not to have withdrawn from the Redemption, without liability to the Special Limited Partner. To the extent that the Special Limited Partner is unable to notify any Tendering Party, such unnotified Tendering Party shall, except as otherwise provided in any Pricing Agreement, be deemed not to have elected to become a Withdrawing Partner. Each Tendering Party whose Redemption is being funded through the Stock Offering Funding who does not become a Withdrawing Partner shall have the right, subject to the approval of the managing underwriter(s) or placement agent(s) and restrictions of any applicable securities laws, to submit for Redemption additional Partnership Common Units in a number no greater than the number of Partnership Common Units withdrawn. If more than one Tendering Party so elects to redeem additional Partnership Common Units, then such Partnership Common Units shall be redeemed on a pro rata basis, based on the number of additional Partnership Common Units sought to be so redeemed.

(d) The Special Limited Partner shall take all reasonable action in order to effectuate the sale of the Offered Shares including, but not limited to, the entering into of an underwriting or placement agreement in customary form with the managing underwriter(s) or placement agent(s) selected for such underwriting. Notwithstanding any other provision of this Agreement, if the managing underwriter(s) or placement agent(s) advises the Special Limited Partner in writing that marketing factors require a limitation of the number of shares to be offered, then the Special Limited Partner shall so advise all Tendering Parties and the number of Partnership Common Units to be sold to the Special Limited Partner pursuant to the Redemption shall be allocated among all Tendering Parties in proportion, as nearly as practicable, to the respective number of Partnership Common Units as to which each Tendering Party elected to effect a Redemption. Notwithstanding anything to the contrary in this Agreement, if the Special Limited Partner is also offering to sell shares for purposes other than to fund the redemption of Offering Units and to pay related expenses, then those other shares may in the Special Limited Partner’s sole discretion be given priority over any shares to be sold in the Stock Offering Funding, and any shares to be sold in the Stock Offering Funding shall be removed from the offering prior to removing shares the proceeds of which would be used for other purposes of the Special Limited Partners. No Offered Shares excluded from the underwriting by reason of the managing underwriter’s or placement agent’s marketing limitation shall be included in such offering.

Section 15.2 Addresses and Notice . Any notice, demand, request or report required or permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United States mail or by other means of written or electronic communication (including by telecopy, facsimile, electronic mail or commercial courier service) to the Partner, or Assignee at the address for such Partner set forth in the Register, or such other address of which the Partner shall notify the General Partner in accordance with this Section 15.2.

Section 15.3 Titles and Captions . All article or Section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to “Articles” or “Sections” are to Articles and Sections of this Agreement.

Section 15.4 Pronouns and Plurals . Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

Section 15.5 Further Action . The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

Section 15.6 Binding Effect . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

Section 15.7 Waiver .

A. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.

B. The restrictions, conditions and other limitations on the rights and benefits of the Limited Partners contained in this Agreement, and the duties, covenants and other requirements of performance or notice by the Limited Partners, are for the benefit of the Partnership and, except for an obligation to pay money to the Partnership, may be waived or relinquished by the General Partner, in its sole and absolute discretion, on behalf of the Partnership in one or more instances from time to time and at any time; provided , however , that any such waiver or relinquishment may not be made if it would have the effect of (i) creating liability for any other Limited Partner, (ii) causing the Partnership to cease to qualify as a limited partnership, (iii) reducing the amount of cash otherwise distributable to the Limited Partners (other than any such reduction that affects all of the Limited Partners holding the same class or series of Partnership Units on a uniform or pro rata basis, if approved by a Majority in Interest of the Limited Partners holding such class or series of Partnership Units), (iv) resulting in the classification of the Partnership as an association or publicly traded partnership taxable as a corporation or (v) violating the Securities Act, the Exchange Act or any state “blue sky” or other securities laws; provided , further , that any waiver relating to compliance with the Ownership Limit or other restrictions in the Charter shall be made and shall be effective only as provided in the Charter.

Section 15.8 Counterparts . This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto.

Section 15.9 Applicable Law; Consent to Jurisdiction; Jury Trial .

A. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Maryland, without regard to the principles of conflicts of law. In the event of a conflict between any provision of this Agreement and any non-mandatory provision of the Act, the provisions of this Agreement shall control and take precedence.

B. Each Partner hereby (i) submits to the non-exclusive jurisdiction of any state or federal court sitting in the State of Maryland (collectively, the “ Maryland Courts ”), with respect to any dispute arising out of this Agreement or any transaction contemplated hereby to the extent such courts would have subject matter jurisdiction with respect to such dispute, (ii) irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of any of the Maryland Courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper, (iii) agrees that notice or the service of process in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby shall be properly served or delivered if delivered to such Partner at such Partner’s last known address as set forth in the Partnership’s books and records, and (iv) IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 15.10 Entire Agreement . This Agreement contains all of the understandings and agreements between and among the Partners with respect to the subject matter of this Agreement and the rights, interests and obligations of the Partners with respect to the Partnership. Notwithstanding any provision in this Agreement or any Partnership Unit Designation to the contrary, including any provisions relating to amending this Agreement, the Partners hereby acknowledge and agree that the General Partner, without the approval of any Limited Partner, may enter into side letters or similar written agreements with Limited Partners that are not

Affiliates of the General Partner or the Special Limited Partner, executed contemporaneously with the admission of such Limited Partner to the Partnership, which may have the effect of establishing rights under, or altering or supplementing the terms of, this Agreement or any Partnership Unit Designation, as negotiated with such Limited Partner and which the General Partner in its sole discretion deems necessary, desirable or appropriate. The parties hereto agree that any terms, conditions or provisions contained in such side letters or similar written agreements with a Limited Partner shall govern with respect to such Limited Partner notwithstanding the provisions of this Agreement.

Section 15.11 Invalidity of Provisions . If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

Section 15.12 Limitation to Preserve REIT Status . Notwithstanding anything else in this Agreement, with respect to any period in which the Special Limited Partner has elected to be treated as a REIT for Federal income tax purposes, to the extent that the amount paid, credited, distributed or reimbursed by the Partnership to any REIT Partner or its officers, directors, employees or agents, whether as a reimbursement, fee, expense or indemnity (a “ REIT Payment ”), would constitute gross income to the REIT Partner for purposes of Code Section 856(c)(2) or Code Section 856(c)(3), then, notwithstanding any other provision of this Agreement, the amount of such REIT Payments, as selected by the General Partner in its discretion from among items of potential distribution, reimbursement, fees, expenses and indemnities, shall be reduced for any Partnership Year so that the REIT Payments, as so reduced, for or with respect to such REIT Partner shall not exceed the lesser of:

(i) an amount equal to the excess, if any, of (a) four and nine-tenths percent (4.9%) of the REIT Partner’s total gross income (but excluding the amount of any REIT Payments) for the Partnership Year that is described in subsections (A) through (I) of Code Section 856(c)(2) over (b) the amount of gross income (within the meaning of Code Section 856(c)(2)) derived by the REIT Partner from sources other than those described in subsections (A) through (I) of Code Section 856(c)(2) (but not including the amount of any REIT Payments); or

(ii) an amount equal to the excess, if any, of (a) twenty-four percent (24%) of the REIT Partner’s total gross income (but excluding the amount of any REIT Payments) for the Partnership Year that is described in subsections (A) through (I) of Code Section 856(c)(3) over (b) the amount of gross income (within the meaning of Code Section 856(c)(3)) derived by the REIT Partner from sources other than those described in subsections (A) through (I) of Code Section 856(c)(3) (but not including the amount of any REIT Payments);

provided , however , that REIT Payments in excess of the amounts set forth in clauses (i) and (ii) above may be made if the General Partner, as a condition precedent, obtains an opinion of tax counsel that the receipt of such excess amounts should not adversely affect the REIT Partner’s ability to qualify as a REIT. To the extent that REIT Payments may not be made in a Partnership Year as a consequence of the limitations set forth in this Section 15.12, such REIT Payments shall carry over and shall be treated as arising in the following Partnership Year if such carry over does not adversely affect the REIT Partner’s ability to qualify as a REIT, provided, however, that any such REIT Payment shall not be carried over more than three Partnership Years, and any such remaining payments shall no longer be due and payable. The purpose of the limitations contained in this Section 15.12 is to prevent any REIT Partner from failing to qualify as a REIT under the Code by reason of such REIT Partner’s share of items, including distributions, reimbursements, fees, expenses or indemnities, receivable directly or indirectly from the Partnership, and this Section 15.12 shall be interpreted and applied to effectuate such purpose.

Section 15.13 REIT Restrictions . Each Affiliated REIT is a REIT and is subject to the provisions of Sections 856 through and including 860 of the Code. So long as an Affiliated REIT owns, directly or indirectly, any interest in the Partnership, then notwithstanding any other provision of this Agreement:

(i) any services that would otherwise cause any rents from a lease to be excluded from treatment as rents from real property pursuant to Section 856(d)(2)(C) of the Code shall be provided by either (1) an independent contractor (as described in Section 856(d)(3) of the Code) with respect to such Affiliated REIT and from whom neither the Partnership nor such Affiliated REIT derives or receives any income or (2) a taxable REIT subsidiary of such Affiliated REIT as described in Section 856(l) of the Code;

(ii) except for a taxable REIT subsidiary of an Affiliated REIT, the Partnership shall not own, directly or indirectly or by attribution (in accordance with attribution rules referred to in Section 856(d)(5) of the Code), in the aggregate more than 10% of the total value of all classes of stock or more than 10% of the total voting power (or, with respect to any such person which is not a corporation, an interest of 10% or more in the assets or net profits of such person) of a lessee or sublessee of all or any part of the Property or of any other assets of the Partnership except in each case with the specific written approval of each Affiliated REIT;

(iii) except for securities of a taxable REIT subsidiary of an Affiliated REIT, the Partnership shall not own or acquire, directly or indirectly or by attribution, more than 10% of the total value or the total voting power of the outstanding securities of any issuer or own any other asset (including a security) which would cause the Affiliated REIT to fail the asset test of Section 856(c)(4)(B) of the Code; and

(iv) leases entered into by the Partnership or any of its Subsidiary partnerships, limited partnerships, and limited liability companies shall provide for rents that qualify as “rents from real property” within the meaning of Section 856(d) of the Code with respect to each Affiliated REIT.

Section 15.14 No Partition . No Partner nor any successor-in-interest to a Partner shall have the right while this Agreement remains in effect to have any property of the Partnership partitioned, or to file a complaint or institute any proceeding at law or in equity to have such property of the Partnership partitioned, and each Partner, on behalf of itself and its successors and assigns hereby waives any such right. It is the intention of the Partners that the rights of the parties hereto and their successors-in-interest to Partnership property, as among themselves, shall be governed by the terms of this Agreement, and that the rights of the Partners and their respective successors-in-interest shall be subject to the limitations and restrictions as set forth in this Agreement.

Section 15.15 No Third-Party Rights Created Hereby . The provisions of this Agreement are solely for the purpose of defining the interests of the Holders, inter se ; and no other person, firm or entity ( i.e. , a party who is not a signatory hereto or a permitted successor to such signatory hereto) shall have any right, power, title or interest by way of subrogation or otherwise, in and to the rights, powers, title and provisions of this Agreement. For clarity, CBI, although not a Partner as of the date hereof, is a party to this Agreement and shall have the right, power, title and interest in and to all rights, powers, title and provisions of this Agreement. No creditor or other third party having dealings with the Partnership (other than as expressly set forth herein with respect to Indemnitees) shall have the right to enforce the right or obligation of any Partner to make Capital Contributions or loans to the Partnership or to pursue any other right or remedy hereunder or at law or in equity. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may any such rights or obligations be sold, Transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or any of the Partners.

Section 15.16 No Rights as Stockholders . Nothing contained in this Agreement shall be construed as conferring upon the Holders of Partnership Units any rights whatsoever as stockholders of the Special Limited Partner, including without limitation any right to receive dividends or other distributions made to stockholders of the Special Limited Partner or to vote or to consent or receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Special Limited Partner or any other matter.

IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.


GENERAL PARTNER: CYRUSONE GP

By:		CYRUSONE INC., trustee



By:
		Name: Title:


SPECIAL LIMITED PARTNER: CYRUSONE INC.

By:
		Name: Title:


CBI: Cincinnati Bell Inc., an Ohio corporation

By:
		Name: Title:


LIMITED PARTNERS: Data Center Investments Holdco LLC, a Delaware limited liability company

By:
		Name: Title:


Data Center South Holdings LLC, a Delaware limited liability company

By:
		Name: Title:

EXHIBIT A: EXAMPLES REGARDING ADJUSTMENT FACTOR

For purposes of the following examples, it is assumed that (a) the Adjustment Factor in effect on December 31, 2012 is 1.0 and (b) on January 1, 2013 (the “ Partnership Record Date ” for purposes of these examples), prior to the events described in the examples, there are 100 REIT Shares issued and outstanding.

Example 1

On the Partnership Record Date, the Special Limited Partner declares a dividend on its outstanding REIT Shares in REIT Shares. The amount of the dividend is one REIT Share paid in respect of each REIT Share owned. Pursuant to Paragraph (i) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the stock dividend is declared, as follows:

1.0 * 200/100 = 2.0

Accordingly, the Adjustment Factor after the stock dividend is declared is 2.0.

Example 2

On the Partnership Record Date, the Special Limited Partner distributes options to purchase REIT Shares to all holders of its REIT Shares. The amount of the distribution is one option to acquire one REIT Share in respect of each REIT Share owned. The strike price is $4.00 a share. The Value of a REIT Share on the Partnership Record Date is $5.00 per share. Pursuant to Paragraph (ii) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the options are distributed, as follows:

1.0 * (100 + 100)/(100 + [100 * $4.00/$5.00]) = 1.1111

Accordingly, the Adjustment Factor after the options are distributed is 1.1111. If the options expire or become no longer exercisable, then the retroactive adjustment specified in Paragraph (ii) of the definition of “Adjustment Factor” shall apply.

Example 3

On the Partnership Record Date, the Special Limited Partner distributes assets to all holders of its REIT Shares. The amount of the distribution is one asset with a fair market value (as determined by the General Partner) of $1.00 in respect of each REIT Share owned. It is also assumed that the assets do not relate to assets received by the General Partner pursuant to a pro rata distribution by the Partnership. The Value of a REIT Share on the Partnership Record Date is $5.00 a share. Pursuant to Paragraph (iii) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the assets are distributed, as follows:

1.0 * $5.00/($5.00 – $1.00) = 1.25

Accordingly, the Adjustment Factor after the assets are distributed is 1.25.

EXHIBIT B: NOTICE OF REDEMPTION

CyrusOne GP

1649 West Frankford Road

Carrollton, Texas 75007

The undersigned Limited Partner or Assignee hereby irrevocably tenders for Redemption Partnership Common Units in CyrusOne, LP in accordance with the terms of the Amended and Restated Agreement of Limited Partnership of CyrusOne, LP, dated as of , 2012 as amended (the “ Agreement ”), and the Redemption rights referred to therein. All capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Agreement. The undersigned Limited Partner or Assignee:

(a) undertakes (i) to surrender such Partnership Common Units at the closing of the Redemption and (ii) to furnish to the Special Limited Partner, prior to the Specified Redemption Date, the documentation, instruments and information required under Section 15.1.G of the Agreement;

(b) directs that the certified check representing the Cash Amount, or the REIT Shares Amount, as applicable, deliverable upon the closing of such Redemption be delivered to the address specified below;

(c) represents, warrants, certifies and agrees that: (i) the undersigned Limited Partner or Assignee is a Qualifying Party; (ii) the undersigned Limited Partner or Assignee has, and at the closing of the Redemption will have, good, marketable and unencumbered title to such Partnership Common Units, free and clear of the rights or interests of any other person or entity; (iii) the undersigned Limited Partner or Assignee has, and at the closing of the Redemption will have, the full right, power and authority to tender and surrender such Common Units as provided herein; (iv) the undersigned Limited Partner or Assignee, and the tender and surrender of such Common Units for Redemption as provided herein complies with all conditions and requirements for redemption of Partnership Common Units set forth in the Agreement; and (v) the undersigned Limited Partner or Assignee has obtained the consent or approval of all persons and entities, if any, having the right to consent to or approve such tender and surrender; and

(d) acknowledges that the undersigned will continue to own such Partnership Common Units unless and until either (1) such Partnership Common Units are acquired by the Special Limited Partner pursuant to Section 15.1.B of the Agreement or (2) such redemption transaction closes.

Dated:

Name of Limited Partner or Assignee:

Signature of Limited Partner or Assignee

Street Address

City, State and Zip Code

Social security or identifying number

Signature Medallion Guaranteed by:

Issue Check Payable to (or shares in the name of):

Exhibit 10.5

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made and entered into as of the day of , 20 , by and between CyrusOne Inc., a Maryland corporation (the “Company”), and (“Indemnitee”).

WHEREAS, at the request of the Company, Indemnitee currently serves as [a director] [and] [an officer] of the Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of such service; and

WHEREAS, as an inducement to Indemnitee to serve or continue to serve in such capacity, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law; and

WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses and to supersede any prior agreement to which the Company and Indemnitee are parties regarding the same; provided that this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the charter or Bylaws of the Company, any agreement entered into after the date hereof or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise.

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1. Definitions . For purposes of this Agreement:

(a) “Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if, after the Effective Date (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of all of the Company’s then-outstanding securities entitled to vote generally in the election of directors without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person’s attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) at any time, a majority of the members of the Board of Directors are not individuals (A) who were directors as of the Effective Date or (B) whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by the affirmative vote of at least two-thirds of the directors then in office who were directors as of the Effective Date or whose election or nomination for election was previously so approved. Notwithstanding the foregoing and for clarity, the redemption of partnership interests in CyrusOne LP, a Maryland limited partnership (the “OP”) held by Cincinnati Bell Inc., an Ohio corporation (“CBI”), or its Controlled Entities (as defined in the Amended and Restated Agreement of Limited Partnership of the OP) or the sale by CBI or its Controlled Entities of such partnership interests or shares of stock of the Company received in exchange for such partnership interest shall not be a Change in Control, unless (i) such sale results in a Person owning 15% or more of the combined voting power of all of the Company’s then-outstanding securities entitled to vote generally in the election of directors and (ii) occurred without the prior approval of at least two-thirds of the members of the Board of Directors in office.

(b) “Corporate Status” means the status of a person as a present or former director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company. As a clarification and without limiting the circumstances in which Indemnitee may be serving at the request of the Company, service by Indemnitee shall be deemed to be at the request of the Company: (i) if Indemnitee serves or served as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any corporation, partnership, limited liability company, joint venture, trust or other enterprise (1) of which a majority of the voting power or equity interest is owned directly or indirectly by the Company or (2) the management of which is controlled directly or indirectly by the Company and (ii) if, as a result of Indemnitee’s service to the Company or any of its affiliated entities, Indemnitee is subject to duties by, or required to perform services for, an employee benefit plan or its participants or beneficiaries, including as deemed fiduciary thereof.

(c) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification and/or advance of Expenses is sought by Indemnitee.

(d) “Effective Date” means the date set forth in the first paragraph of this Agreement.

(e) “Expenses” means any and all reasonable and out-of-pocket attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties and any other disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in a Proceeding. Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding including, without limitation, the premium, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent.

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(f) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement or of other indemnitees under similar indemnification agreements), or (ii) any other party to or participant or witness in the Proceeding giving rise to a claim for indemnification or advance of Expenses hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

(g) “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative (formal or informal) nature, including any appeal therefrom, except one pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee. If Indemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.

Section 2. Services by Indemnitee . Indemnitee will serve in the capacity or capacities setforth in the first WHEREAS clause above. However, this Agreement shall not impose any independent obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company. This Agreement shall not be deemed an employment contract between the Company (or any other entity) and Indemnitee.

Section 3. General . The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date. The rights of Indemnitee provided in this Section 3 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the Maryland General Corporation Law (the “MGCL”).

Section 4. Standard for Indemnification . If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall indemnify and hold harmless Indemnitee against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any such Proceeding or any action, discovery event, claim, issue or matter therein or related thereto unless it is established that (a) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) Indemnitee actually received an improper personal benefit in money, property or services or (c) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

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Section 5. Certain Limits on Indemnification . Notwithstanding any other provision of this Agreement (other than Section 6), Indemnitee shall not be entitled to:

(a) indemnification hereunder if the Proceeding was one by or in the right of the Company and Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable to the Company;

(b) indemnification hereunder if Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable on the basis that personal benefit was improperly received in any Proceeding charging improper personal benefit to Indemnitee, whether or not involving action in the Indemnitee’s Corporate Status; or

(c) indemnification or advance of Expenses hereunder if the Proceeding was brought by Indemnitee, unless: (i) the Proceeding was brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Section 12 of this Agreement, or (ii) the Company’s charter or Bylaws, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise.

Section 6. Court-Ordered Indemnification . Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:

(a) if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or

(b) if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper without regard to any limitation on such court-ordered indemnification contemplated by Section 2-418(d)(2)(ii) of the MGCL.

Section 7. Indemnification for Expenses of an Indemnitee Who is Wholly or Partially Successful . Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee was or is, by reason of Indemnitee’s Corporate Status, made a party to (or otherwise becomes a participant in) any Proceeding and is successful, on the merits or otherwise, in the defense of such Proceeding, the Company shall indemnify Indemnitee for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 7 for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each such claim, issue or matter, allocated on a reasonable and proportionate basis. For purposes of this Section 7 and, without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

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Section 8. Advance of Expenses for Indemnitee . If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, advance all Expenses incurred by or on behalf of Indemnitee in connection with such Proceeding. The Company shall make such advance or advances within ten days after the receipt by the Company of a statement or statements requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding and may be in the form of, in the reasonable discretion of the Indemnitee (but without duplication) (a) payment of such Expenses directly to third parties on behalf of Indemnitee, (b) advance of funds to Indemnitee in an amount sufficient to pay such Expenses or (c) reimbursement to Indemnitee for Indemnitee’s payment of such Expenses. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written affirmation by Indemnitee and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the execution thereof. To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis. The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.

Section 9. Indemnification and Advance of Expenses as a Witness or Other Participant . Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is or may be, by reason of Indemnitee’s Corporate Status, made a witness or otherwise asked to participate in any Proceeding, whether instituted by the Company or any other party, and to which Indemnitee is not a party, Indemnitee shall be advanced and indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith within ten days after the receipt by the Company of a statement or statements requesting any such advance or indemnification from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee. In connection with any such advance of Expenses, the Company may require Indemnitee to provide an undertaking and affirmation substantially in the form attached hereto as Exhibit A.

Section 10. Procedure for Determination of Entitlement to Indemnification .

(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. Indemnitee may submit one or more such requests from time to time and at such time(s) as Indemnitee deems appropriate in Indemnitee’s sole discretion. The officer of the Company receiving any such request from Indemnitee shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.

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(b) Upon written request by Indemnitee for indemnification pursuant to Section 10(a) above, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control has occurred, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, which Independent Counsel shall be selected by the Indemnitee and approved by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL, which approval shall not be unreasonably withheld; or (ii) if a Change in Control has not occurred, (A) by a majority vote of the Disinterested Directors or, by the majority vote of a group of Disinterested Directors designated by the Disinterested Directors to make the determination, (B) if Independent Counsel has been selected by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL and approved by the Indemnitee, which approval shall not be unreasonably withheld or delayed, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) if so directed by the Board of Directors, by the stockholders of the Company, provided, however, that shares held by directors or officers who are parties to the Proceeding shall not be voted. If it is so determined that Indemnitee is entitled to indemnification, the Company shall make payment to Indemnitee within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary or appropriate to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 10(b). Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.

Section 11. Presumptions and Effect of Certain Proceedings .

(a) In making any determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of overcoming that presumption in connection with the making of any determination contrary to that presumption.

(b) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, upon a plea of nolo contendere or its equivalent, or entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.

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(c) The knowledge and/or actions, or failure to act, of any other director, officer, employee or agent of the Company or any other director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise shall not be imputed to Indemnitee for purposes of determining any other right to indemnification under this Agreement.

Section 12. Remedies of Indemnitee .

(a) If (i) a determination is made pursuant to Section 10(b) of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Sections 8 or 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(b) of this Agreement within 60 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 7 or 9 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to any other section of this Agreement or the charter or Bylaws of the Company is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, or arbitration, conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association, of Indemnitee’s entitlement to indemnification or advance of Expenses. The judicial proceeding or arbitration commenced pursuant to this Section shall be conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of the prior adverse determination. Indemnitee shall commence a proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 7 of this Agreement. Except as set forth herein, the provisions of Maryland law (without regard to its conflicts of laws rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

(b) In any judicial proceeding or arbitration commenced pursuant to this Section 12, Indemnitee shall be presumed to be entitled to indemnification or advance of Expenses, as the case may be, under this Agreement and the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 12, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 8 of this Agreement until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed). The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.

(c) If a determination shall have been made pursuant to Section 10(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification that was not introduced into evidence in connection with the determination.

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(d) In the event that Indemnitee is successful in seeking, pursuant to this Section 12, a judicial adjudication of or an award in arbitration to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses actually and reasonably incurred by him in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

(e) Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth day after the date on which the Company was requested to advance Expenses in accordance with Sections 8 or 9 of this Agreement or the 60 ^th day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 10(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.

Section 13. Defense of the Underlying Proceeding .

(a) Indemnitee shall notify the Company promptly in writing upon being served with any summons, citation, subpoena, complaint, indictment, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder and shall include with such notice a description of the nature of the Proceeding and a summary of the facts underlying the Proceeding. The failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

(b) Subject to the provisions of the last sentence of this Section 13(b) and of Section 13(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 13(a) above. The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee or (iii) would impose any Expense, judgment, fine, penalty or limitation on Indemnitee. This Section 13(b) shall not apply to a Proceeding brought by Indemnitee under Section 12 of this Agreement.

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(c) Notwithstanding the provisions of Section 13(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company (subject to Section 12(d) of this Agreement), to represent Indemnitee in connection with any such matter.

Section 14. Non-Exclusivity; Survival of Rights; Subrogation .

(a) The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the charter or Bylaws of the Company, any agreement entered into after the date hereof or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise. Unless consented to in writing by Indemnitee, no amendment, alteration or repeal of the Company’s Charter, the Company’s Bylaws, this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal, regardless of whether a claim with respect to such action or inaction is raised prior or subsequent to such amendment, alteration or repeal. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion of any right or remedy hereunder, or otherwise, shall not prohibit the concurrent assertion or employment of any other right or remedy.

(b) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

Section 15. Insurance .

(a) The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors, covering Indemnitee for claims made against Indemnitee by reason of Indemnitee’s Corporate Status and covering the Company for any indemnification or advance of Expenses made by the Company to Indemnitee for any claims made against Indemnitee by reason of Indemnitee’s Corporate Status. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any other person with a similar title or role with Company.

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(b) Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee which would otherwise be indemnifiable hereunder arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and Expenses incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in Section 15(a). The purchase, establishment and maintenance of any such insurance shall not in any way limit or affect the rights or obligations of the Company or Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and the Indemnitee shall not in any way limit or affect the rights or obligations of the Company under any such insurance policies. If, at the time the Company receives notice from any source of a Proceeding to which Indemnitee is a party or a participant (as a witness or otherwise) the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

(c) The Indemnitee shall cooperate with the Company or any insurance carrier of the Company with respect to any investigation or Proceeding.

Section 16. Coordination of Payments . The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

Section 17. Contribution . If the indemnification provided in this Agreement is unavailable in whole or in part and may not be paid to Indemnitee for any reason, other than for failure to satisfy the standard of conduct set forth in Section 4 or due to the provisions of Section 5, then, in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permissible under applicable law, the Company, in lieu or indemnifying and holding harmless Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, penalties, and/or amounts paid or to be paid in settlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

Section 18. Reports to Stockholders . To the extent required by the MGCL, the Company shall report in writing to its stockholders the payment of any amounts for indemnification of, or advance of Expenses to, Indemnitee under this Agreement arising out of a Proceeding by or in the right of the Company with the notice of the meeting of stockholders of the Company next following the date of the payment of any such indemnification or advance of Expenses or prior to such meeting.

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Section 19. Duration of Agreement; Binding Effect .

(a) This Agreement shall continue until and terminate on the later of (i) the date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company and (ii) the date that Indemnitee is no longer subject to any actual or possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement).

(b) The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

(c) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

(d) The Company and Indemnitee agree that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled. Indemnitee shall further be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertakings in connection therewith. The Company acknowledges that, in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a court, and the Company hereby waives any such requirement of such a bond or undertaking.

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Section 20. Severability . If any provision or provisions of this Agreement shall be held to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 21. Counterparts . This Agreement may be executed in two (2) or more counterparts (delivery of which may be by facsimile, or via email as a portable document format (.pdf), each of which will be deemed an original, and it will not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one (1) of such counterparts.

Section 22. Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

Section 23. Modification and Waiver . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 24. Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, on the day of such delivery, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(a) If to Indemnitee, to the address set forth on the signature page hereto.

(b) If to the Company, to:

CyrusOne Inc.

1649 West Frankford Road

Carrollton, TX 75007

Attn: General Counsel

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or to such other address as may have been furnished in writing to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

Section 25. Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.


COMPANY:

CyrusOne Inc.

By:
Name:
Title:

INDEMNITEE:


Name:
Address:

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EXHIBIT A

AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED

To: The Board of Directors of CyrusOne Inc.

Re: Affirmation and Undertaking

Ladies and Gentlemen:

This Affirmation and Undertaking is being provided pursuant to that certain Indemnification Agreement dated the day of , 20 , by and between CyrusOne Inc., a Maryland corporation (the “Company”), and the undersigned Indemnitee (the “Indemnification Agreement”), pursuant to which I am entitled to advance of Expenses in connection with [Description of Proceeding] (the “Proceeding”).

Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.

I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity. I hereby affirm my good faith belief that at all times, insofar as I was involved as [a director] [an officer] of the Company, in any of the facts or events giving rise to the Proceeding, I (1) did not act with bad faith or active or deliberate dishonesty, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.

In consideration of the advance by the Company for Expenses incurred by me in connection with the Proceeding (the “Advanced Expenses”), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established.

IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this day of , 20 .

Name:

Exhibit 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Amendment No. 5 to Registration Statement No. 333-183132 of our report dated August 7, 2012 relating to the financial statement of CyrusOne Inc. appearing in the Prospectus, which is part of this Registration Statement. We also consent to the reference to us under the headings “Experts” in such Prospectus.

/s/ Deloitte & Touche LLP

Cincinnati, Ohio

December 12, 2012

Exhibit 23.4

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Amendment No. 5 to Registration Statement No. 333-183132 of our report dated August 7, 2012 relating to the financial statements of the Data Center Predecessor (which report expresses an unqualified opinion and includes an explanatory paragraph regarding the allocation of certain corporate overhead expenses from Cincinnati Bell Inc.) appearing in the Prospectus, which is part of this Registration Statement, and of our report dated August 7, 2012, relating to the financial statement schedule appearing elsewhere in this Registration Statement. We also consent to the reference to us under the headings “Experts” in such Prospectus.

/s/ Deloitte & Touche LLP

Cincinnati, Ohio

December 12, 2012

Exhibit 23.5

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the inclusion in this Amendment No. 5 to registration statement on Form S-11 of our reports dated October 7, 2010, and June 1, 2012, on our audits of the financial statements of Cyrus Networks, LLC, for the years ended December 31, 2009, 2008 and 2007. We also consent to the references made to our firm under the caption “Experts”.

/s/ BKD, LLP

Houston, Texas

December 12, 2012