Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 03, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | QTS Realty Trust, Inc. | |
Entity Central Index Key | 1,577,368 | |
Entity Filer Category | Large Accelerated Filer | |
Current Fiscal Year End Date | --12-31 | |
Common Class A [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 47,624,279 | |
Common Class B [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 133,000 | |
Qualitytech, LP [Member] | ||
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | QualityTech, LP | |
Entity Central Index Key | 1,561,164 | |
Entity Filer Category | Non-accelerated Filer | |
Current Fiscal Year End Date | --12-31 |
CONDENSED CONSOLIDATED FINANCIA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Real Estate Assets | ||
Land | $ 57,128 | $ 57,112 |
Buildings, improvements and equipment | 1,241,885 | 1,180,386 |
Less: Accumulated depreciation | (255,344) | (239,936) |
Total real estate assets | 1,043,669 | 997,562 |
Construction in progress | 340,511 | 345,655 |
Real Estate Assets, net | 1,384,180 | 1,343,217 |
Cash and cash equivalents | 9,744 | 8,804 |
Rents and other receivables, net | 30,880 | 28,233 |
Acquired intangibles, net | 125,733 | 115,702 |
Deferred costs, net | 31,367 | 30,042 |
Prepaid expenses | 10,644 | 6,502 |
Goodwill | 171,679 | 181,738 |
Other assets, net | 35,181 | 33,101 |
TOTAL ASSETS | 1,799,408 | 1,747,339 |
LIABILITIES | ||
Unsecured credit facility, net | 607,105 | 520,956 |
Senior notes, net of discount and debt issuance costs | 291,186 | 290,852 |
Capital lease and lease financing obligations | 46,666 | 49,761 |
Accounts payable and accrued liabilities | 69,064 | 95,924 |
Dividends and distributions payable | 17,358 | 15,378 |
Advance rents, security deposits and other liabilities | 20,061 | 18,798 |
Deferred income taxes | 21,049 | 18,813 |
Deferred income | 16,435 | 16,991 |
TOTAL LIABILITIES | 1,088,924 | 1,027,473 |
EQUITY | ||
Common stock, $0.01 par value, 450,133,000 shares authorized, 41,434,961 and 41,225,784 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively | 414 | 412 |
Additional paid-in capital | 671,650 | 670,275 |
Accumulated dividends in excess of earnings | (61,754) | (52,732) |
Total stockholders' equity | 610,310 | 617,955 |
Noncontrolling interests | 100,174 | 101,911 |
TOTAL EQUITY | 710,484 | 719,866 |
TOTAL LIABILITIES AND EQUITY | 1,799,408 | 1,747,339 |
Qualitytech, LP [Member] | ||
Real Estate Assets | ||
Land | 57,128 | 57,112 |
Buildings, improvements and equipment | 1,241,885 | 1,180,386 |
Less: Accumulated depreciation | (255,344) | (239,936) |
Total real estate assets | 1,043,669 | 997,562 |
Construction in progress | 340,511 | 345,655 |
Real Estate Assets, net | 1,384,180 | 1,343,217 |
Cash and cash equivalents | 9,744 | 8,804 |
Rents and other receivables, net | 30,880 | 28,233 |
Acquired intangibles, net | 125,733 | 115,702 |
Deferred costs, net | 31,367 | 30,042 |
Prepaid expenses | 10,644 | 6,502 |
Goodwill | 171,679 | 181,738 |
Other assets, net | 35,181 | 33,101 |
TOTAL ASSETS | 1,799,408 | 1,747,339 |
LIABILITIES | ||
Unsecured credit facility, net | 607,105 | 520,956 |
Senior notes, net of discount and debt issuance costs | 291,186 | 290,852 |
Capital lease and lease financing obligations | 46,666 | 49,761 |
Accounts payable and accrued liabilities | 69,064 | 95,924 |
Dividends and distributions payable | 17,358 | 15,378 |
Advance rents, security deposits and other liabilities | 20,061 | 18,798 |
Deferred income taxes | 21,049 | 18,813 |
Deferred income | 16,435 | 16,991 |
TOTAL LIABILITIES | 1,088,924 | 1,027,473 |
EQUITY | ||
Partners' capital | 710,484 | 719,866 |
TOTAL LIABILITIES AND EQUITY | $ 1,799,408 | $ 1,747,339 |
CONDENSED CONSOLIDATED FINANCI3
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,133,000 | 450,133,000 |
Common stock, shares issued | 41,434,961 | 41,225,784 |
Common stock, shares outstanding | 41,434,961 | 41,225,784 |
CONDENSED CONSOLIDATED FINANCI4
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues: | ||
Rental | $ 68,426 | $ 49,333 |
Recoveries from customers | 5,435 | 5,664 |
Cloud and managed services | 18,890 | 5,795 |
Other | 2,017 | 594 |
Total revenues | 94,768 | 61,386 |
Operating Expenses: | ||
Property operating costs | 31,781 | 19,336 |
Real estate taxes and insurance | 1,740 | 1,485 |
Depreciation and amortization | 28,639 | 16,243 |
General and administrative | 20,286 | 13,838 |
Transaction and integration costs | 2,087 | 105 |
Total operating expenses | 84,533 | 51,007 |
Operating income | 10,235 | 10,379 |
Other income and expenses: | ||
Interest expense | (5,981) | (5,342) |
Income before taxes | 4,254 | 5,037 |
Tax benefit (expense) of taxable REIT subsidiaries | 2,605 | |
Net income | 6,859 | 5,037 |
Net income attributable to noncontrolling interests | (970) | (955) |
Net income attributable to Parent | $ 5,889 | $ 4,082 |
Net income per share attributable to common shares: | ||
Net income per share attributable to common stockholders - basic | $ 0.14 | $ 0.13 |
Net income per share attributable to common stockholders - diluted | $ 0.14 | $ 0.13 |
Weighted average common shares outstanding: | ||
Basic | 41,292,445 | 31,294,488 |
Diluted | 48,973,851 | 39,209,226 |
Qualitytech, LP [Member] | ||
Revenues: | ||
Rental | $ 68,426 | $ 49,333 |
Recoveries from customers | 5,435 | 5,664 |
Cloud and managed services | 18,890 | 5,795 |
Other | 2,017 | 594 |
Total revenues | 94,768 | 61,386 |
Operating Expenses: | ||
Property operating costs | 31,781 | 19,336 |
Real estate taxes and insurance | 1,740 | 1,485 |
Depreciation and amortization | 28,639 | 16,243 |
General and administrative | 20,286 | 13,838 |
Transaction and integration costs | 2,087 | 105 |
Total operating expenses | 84,533 | 51,007 |
Operating income | 10,235 | 10,379 |
Other income and expenses: | ||
Interest expense | (5,981) | (5,342) |
Income before taxes | 4,254 | 5,037 |
Tax benefit (expense) of taxable REIT subsidiaries | 2,605 | |
Net income | $ 6,859 | $ 5,037 |
CONDENSED CONSOLIDATED FINANCI5
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF EQUITY (UNAUDITED) - 3 months ended Mar. 31, 2016 - USD ($) shares in Thousands, $ in Thousands | Qualitytech, LP [Member]General Partner [Member] | Qualitytech, LP [Member]Limited Partner [Member] | Qualitytech, LP [Member] | Total stockholders' Equity [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Dividends in Excess of Earnings [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance at Dec. 31, 2015 | $ 617,955 | $ 412 | $ 670,275 | $ (52,732) | $ 101,911 | $ 719,866 | |||
Beginning balance at Dec. 31, 2015 | $ 719,866 | $ 719,866 | |||||||
Beginning balance, shares at Dec. 31, 2015 | 41,226 | ||||||||
Beginning balance, shares at Dec. 31, 2015 | 1 | 48,023 | |||||||
Issuance of shares through equity award plan | $ (694) | (694) | $ 2 | (2) | (694) | (694) | |||
Issuance of shares through equity award plan, shares | 209 | 209 | |||||||
Net proceeds from equity offering | $ (330) | (330) | (383) | (383) | 53 | (330) | |||
Equity-based compensation expense | 2,050 | 2,050 | 1,760 | 1,760 | 290 | 2,050 | |||
Dividends | (14,911) | (14,911) | (14,911) | (14,911) | (14,911) | ||||
Distributions to noncontrolling interests | (2,356) | (2,356) | |||||||
Partnership distributions | (2,356) | (2,356) | |||||||
Net income | 6,859 | 6,859 | 5,889 | 5,889 | 970 | 6,859 | |||
Ending balance at Mar. 31, 2016 | $ 610,310 | $ 414 | $ 671,650 | $ (61,754) | $ 100,174 | $ 710,484 | |||
Ending balance at Mar. 31, 2016 | $ 710,484 | $ 710,484 | |||||||
Ending balance, shares at Mar. 31, 2016 | 41,435 | ||||||||
Ending balance, shares at Mar. 31, 2016 | 1 | 48,232 |
CONDENSED CONSOLIDATED FINANCI6
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF CASH FLOW (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flow from operating activities: | ||
Net income | $ 6,859 | $ 5,037 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 23,309 | 15,469 |
Amortization of deferred loan costs | 813 | 791 |
Amortization of senior notes discount | 64 | 62 |
Equity-based compensation expense | 2,050 | 1,307 |
Bad debt expense | 527 | 58 |
Deferred tax benefit | (2,605) | |
Changes in operating assets and liabilities | ||
Rents and other receivables, net | (3,173) | (1,209) |
Prepaid expenses | (4,056) | (3,398) |
Other assets | (129) | 190 |
Accounts payable and accrued liabilities | (12,784) | (5,376) |
Advance rents, security deposits and other liabilities | 1,510 | 138 |
Deferred income | (406) | 870 |
Net cash provided by operating activities | $ 11,979 | $ 13,939 |
Cash flow from investing activities: | ||
Acquisitions, net of cash acquired | ||
Additions to property and equipment | $ (78,053) | $ (73,399) |
Net cash used in investing activities | (78,053) | (73,399) |
Cash flow from financing activities: | ||
Credit facility proceeds | 86,000 | 65,162 |
Debt repayment | (165,000) | |
Payment of deferred financing costs | (352) | |
Payment of cash dividend | (13,193) | (8,531) |
Distribution to noncontrolling interest | (2,186) | (2,174) |
Principal payments on capital lease obligations | (3,228) | (467) |
Mortgage principal debt repayments | (584) | |
Equity issuance costs | (379) | |
Equity proceeds, net of costs | 166,366 | |
Net cash provided by financing activities | 67,014 | 54,420 |
Net increase (decrease) in cash and cash equivalents | 940 | (5,040) |
Cash and cash equivalents, beginning of period | 8,804 | 10,788 |
Cash and cash equivalents, end of period | 9,744 | 5,748 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest (excluding deferred financing costs and amounts capitalized) | 9,304 | 9,439 |
Noncash investing and financing activities: | ||
Accrued capital additions | 37,571 | $ 61,492 |
Accrued equity issuance costs | 7 | |
Acquired intangibles | 14,700 | |
Prepaid expenses | 86 | |
Goodwill | (10,060) | |
Accounts payable and accrued liabilities | (5) | |
Deferred income | 149 | |
Deferred income taxes | $ (4,870) | |
Total acquisitions, net of cash acquired | ||
Qualitytech, LP [Member] | ||
Cash flow from operating activities: | ||
Net income | $ 6,859 | $ 5,037 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 23,309 | 15,469 |
Amortization of deferred loan costs | 813 | 791 |
Amortization of senior notes discount | 64 | 62 |
Equity-based compensation expense | 2,050 | 1,307 |
Bad debt expense | 527 | 58 |
Deferred tax benefit | (2,605) | |
Changes in operating assets and liabilities | ||
Rents and other receivables, net | (3,173) | (1,209) |
Prepaid expenses | (4,056) | (3,398) |
Other assets | (129) | 190 |
Accounts payable and accrued liabilities | (12,784) | (5,376) |
Advance rents, security deposits and other liabilities | 1,510 | 138 |
Deferred income | (406) | 870 |
Net cash provided by operating activities | $ 11,979 | $ 13,939 |
Cash flow from investing activities: | ||
Acquisitions, net of cash acquired | ||
Additions to property and equipment | $ (78,053) | $ (73,399) |
Net cash used in investing activities | (78,053) | (73,399) |
Cash flow from financing activities: | ||
Credit facility proceeds | 86,000 | 65,162 |
Debt repayment | (165,000) | |
Payment of deferred financing costs | (352) | |
Payment of cash dividend | (13,193) | (8,531) |
Partnership distributions | (2,186) | (2,174) |
Principal payments on capital lease obligations | (3,228) | (467) |
Mortgage principal debt repayments | (584) | |
Equity issuance costs | $ (379) | |
Equity proceeds, net of costs | 166,366 | |
Net cash provided by financing activities | $ 67,014 | 54,420 |
Net increase (decrease) in cash and cash equivalents | 940 | (5,040) |
Cash and cash equivalents, beginning of period | 8,804 | 10,788 |
Cash and cash equivalents, end of period | 9,744 | 5,748 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest (excluding deferred financing costs and amounts capitalized) | 9,304 | 9,439 |
Noncash investing and financing activities: | ||
Accrued capital additions | 37,571 | $ 61,492 |
Accrued equity issuance costs | 7 | |
Acquired intangibles | 14,700 | |
Prepaid expenses | 86 | |
Goodwill | (10,060) | |
Accounts payable and accrued liabilities | (5) | |
Deferred income | 149 | |
Deferred income taxes | $ (4,870) | |
Total acquisitions, net of cash acquired |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2016 | |
Description of Business [Abstract] | |
Description of Business | 1. Description of Business QTS Realty Trust, Inc. (“QTS”) through its controlling interest in QualityTech, LP (the “Operating Partnership” and collectively with QTS and their subsidiaries, the “Company”) and the subsidiaries of the Operating Partnership, is engaged in the business of owning, acquiring, redeveloping and managing multi-tenant data centers. The Company’s portfolio consists of 24 wholly-owned and leased properties with data centers located throughout the United States, Canada, Europe and the Asia-Pacific region. QTS was formed as a Maryland corporation on May 17, 2013 and completed its initial public offering of 14,087,500 shares of Class A common stock, $0.01 p ar value per share (the “IPO”) on October 15, 2013 . QTS elected to be taxed as a real estate investment trust (“REIT”), for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2013. As a REIT, QTS generally is not required to pay federal corporate income taxes on its taxable income to the extent it is currently distributed to its stockholders. As of March 31, 2016 , QTS owned approximately 85.9% of the interests in the Operating Partnership. Substantially all of QTS’ assets are held by, and QTS’ operations are conducted through, the Operating Partnership. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying financial statements are presented for both QTS Realty Trust, Inc. and QualityTech, LP. References to “QTS” mean QTS Realty Trust, Inc. and its controlled subsidiaries; and references to the “Operating Partnership” mean QualityTech, LP and its controlled subsidiaries. In 2016, the Company adopted ASU 2015-02, Amendments to the Consolidation Analysis. This standard amends certain guidance applicable to the consolidation of various legal entities, including variable interest entities (“VIE”). The Company evaluated the application of the ASU and concluded that no change was required to its accounting for its interest in the Operating Partnership. However, under the new guidance, the Operating Partnership now meets the definition and criteria of a VIE and the Company is the primary beneficiary of the VIE. As discussed below, the Company’s only material asset is its ownership interest in the Operating Partnership, and consequently, all of its assets and liabilities represent those assets and liabilities of the Operating Partnership. The Company’s debt is an obligation of the Operating Partnership where the creditors may have recourse, under certain circumstances, against the credit of the Company. QTS is the sole general partner of the Operating Partnership, and its only material asset consists of its ownership interest in the Operating Partnership. Management operates QTS and the Operating Partnership as one business. The management of QTS consists of the same employees as the management of the Operating Partnership. QTS does not conduct business itself, other than acting as the sole general partner of the Operating Partnership and issuing public equity from time to time. QTS has not issued or guaranteed any indebtedness. Except for net proceeds from public equity issuances by QTS, which are contributed to the Operating Partnership in exchange for units of limited partnership interest of the Operating Partnership, the Operating Partnership generates all remaining capital required by the business through its operations, the direct or indirect incurrence of indebtedness, and the issuance of partnership units. The Company believes, therefore, that providing one set of notes for the financial statements of QTS and the Operating Partnership provides the following benefits: · enhances investors’ understanding of QTS and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; · eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both QTS and the Operating Partnership; and · creates time and cost efficiencies through the preparation of one set of notes instead of two separate sets of notes. In addition, in light of these combined notes, the Company believes it is important for investors to understand the few differences between QTS and the Operating Partnership in the context of how QTS and the Operating Partnership operate as a consolidated company. With respect to balance sheets, the presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated balance sheets of QTS and those of the Operating Partnership. On the Operating Partnership’s consolidated balance sheets, partners’ capital includes partnership units that are owned by QTS and other partners. On QTS’ consolidated balance sheets, stockholders’ equity includes common stock, additional paid in capital, accumulated other comprehensive income (loss) and accumulated dividends in excess of earnings. The remaining equity reflected on QTS’s consolidated balance sheet is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. With respect to statements of operations, the primary difference in QTS' Statements of Operations and Comprehensive Income is that for net income (loss), QTS retains its proportionate share of the net income (loss) based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership. These combined notes refer to actions or holdings as being actions or holdings of “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, management believes that these general references to “the Company” in this context is appropriate because the business is one enterprise operated through the Operating Partnership. As discussed above, QTS owns no operating assets and has no operations independent of the Operating Partnership and its subsidiaries. Also, the Operating Partnership owns no operating assets and has no operations independent of its subsidiaries. Obligations under the 5.875% Senior Notes due 2022 and the unsecured credit facility, both discussed in Note 5, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries, other than 1) 2470 Satellite Boulevard, LLC, a subsidiary formed in December 2015 that acquired an office building in Duluth, Georgia and has de minimis operations, and 2) QTS Finance Corporation, the co-issuer of the 5.875% Senior Notes due 2022. As such, condensed consolidating financial information for the guarantors is not being presented in the notes to the interim condensed consolidated financial statements. However, the indenture governing the 5.875% Senior Notes due 2022 restricts the ability of the Operating Partnership to make distributions to QTS, subject to certain exceptions, including distributions required in order for QTS to maintain its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended. The interim condensed consolidated financial statements of QTS Realty Trust, Inc. for the three months ended March 31, 2016 and 2015 , and as of March 31, 2016 and December 31, 2015 present the accounts of QTS Realty Trust, Inc. and its majority owned subsidiaries. This includes the operating results of the Operating Partnership for all periods presented. Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals. Principles of Consolidation – The consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority-owned subsidiaries. The consolidated financial statements of QualityTech, LP include the accounts of QualityTech, LP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in the financial statements. Reclassifications – The consolidated balance sheet at December 31, 2015 reflects a reclassification of $ 3.1 million from Deferred Costs, net to Unsecured Credit Facility, net, and $ 7.1 million from Deferred Costs, net to Senior Notes, net of discount and debt issuance costs as required by the Company’s adoption of ASU 2015-03, “ Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ” Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended March 31, 2016 , depreciation expense related to real estate assets and non-real estate assets was $17.7 million and $3.0 million, respectively, for a total of $20.7 million. For the three months ended March 31, 2015 , depreciation expense related to real estate assets and non-real estate assets was $10.9 million and $1.9 million, respectively, for a total of $12.8 million. The Company capitalizes certain development costs, including internal costs incurred in connection with development. The capitalization of costs during the construction period (including interest and related loan fees, property taxes and other direct and indirect costs) begins when development efforts commence and ends when the asset is ready for its intended use. Capitalization of such costs, excluding interest, aggregated to $2.4 million and $3.3 million for the three months ended March 31, 2016 and 2015 , respectively. Interest is capitalized during the period of development by first applying the Company’s actual borrowing rate on the related asset and second, to the extent necessary, by applying the Company’s weighted average effective borrowing rate to the actual development and other costs expended during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $2.8 million and $2.0 million for the three months ended March 31, 2016 and 2015 , respectively. Acquisitions – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances. Purchase accounting is applied to the assets and liabilities related to all real estate investments acquired in accordance with the accounting requirements of ASC 805, Business Combinations , which requires the recording of net assets of acquired businesses at fair value. The fair value of the consideration transferred is allocated to the acquired tangible assets, consisting primarily of land, building and improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases, value of customer relationships, trade names, software intangibles and capital leases. The excess of the fair value of liabilities assumed, common stock issued and cash paid over the fair value of identifiable assets acquired is allocated to goodwill, which is not amortized by the Company. 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. Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. Amortization of acquired in place lease costs totaled $0.4 million and $0.4 million for the three months ended March 31, 2016 and 2015 , respectively. This amortization expense is accounted for as real estate amortization expense. Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. Amortization of acquired customer relationships totaled $3.0 million and $0.3 million for the three months ended March 31, 2016 and 2015 , respectively. This amortization expense is accounted for as real estate amortization expense. The current period amortization includes a $1.0 million adjustment related to an increase in the purchase price allocation of the acquired customer relationship intangible recorded in the three months ended March 31, 2016, of which $0.7 million related to prior reporting periods. See Note 3 for further detail. Other acquired intangible assets, which includes platform, above or below market leases, and trade name intangibles, are amortized on a straight-line basis over their respective expected lives. Platform and trade name intangibles are amortized as amortization expense. Platform amortization expense was $0.8 million for the three months ended March 31, 2016. Trade name amortization expense was $0.3 million for the three months March 31, 2016. Above or below market leases are amortized as rent expense, which totaled $0.1 million for the three months ended March 31, 2016. There was no amortization expense or rent expense related to platform , trade name, and above or below market lease intangibles for the three months ended March 31, 2015. The expense associated with trade name intangibles is accounted for as real estate expense, whereas the expense associated with the amortization of platform intangibles is accounted for as non-real estate expense. See Note 3 for discussion of the preliminary purchase price allocation for the acquisition of Carpathia Hosting, Inc. (“Carpathia”) on June 16, 2015. Impairment of Long-Lived and Intangible Assets – The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is generally measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset exceeds the value of the undiscounted cash flows, the fair value of the asset is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three months ended March 31, 2016 and 2015 , respectively. The fair value of goodwill is the consideration transferred which is not allocable to identifiable intangible and tangible assets. Goodwill is subject to at least an annual assessment for impairment. As a result of the Carpathia acquisition, the Company recognized approximately $172 million in goodwill. Cash and Cash Equivalents – The Company considers all demand deposits and money market accounts purchased with a maturity date of three months or less at the date of purchase to be cash equivalents. The Company’s account balances at one or more institutions periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is concentration of credit risk related to amounts on deposit in excess of FDIC coverage. The Company mitigates this risk by depositing a majority of its funds with several major financial institutions. The Company also has not experienced any losses and, therefore, does not believe that the risk is significant. Deferred Costs – Deferred costs, net, on the Company’s balance sheets include both financing costs and leasing costs. As discussed above in Reclassifications , the Company adopted ASU 2015-03 during the three months ended March 31, 2016. Pursuant to this updated guidance, debt issuance costs related to revolving debt arrangements are permitted to be deferred and presented as assets on the balance sheet; however, all other debt issuance costs must be recorded as a direct offse t to the associated liability. As such, deferred financing costs on the Company’s consolidated balance sheets represent costs incurred in connection with obtaining onl y revolving debt arrangements. These costs are amortized over the term of the loan and are included in inter est expense. Amortization of debt issuance costs , including those costs presented as offsets to the associated liability in the consolidated balance sheet, was $0.8 million and $0.8 million for the three months ended March 31, 2016 and 2015 , respectively. Deferred financing costs related to revolving debt arrangements, net of accumulated amortization are as follows: March 31, December 31, (dollars in thousands) 2016 2015 (unaudited) Deferred financing costs $ 6,654 $ 6,652 Accumulated amortization (781) (389) Deferred financing costs, net $ 5,873 $ 6,263 Deferred leasing costs consist of external fees and internal costs incurred in the successful negotiations of leases and are deferred and amortized over the terms of the related leases on a straight-line basis. If an applicable lease terminates prior to the expiration of its initial term, the carrying amount of the costs are written off to amortization expense. Amortization of deferred leasing costs totaled $3.5 million and $2.7 million for the three months ended March 31, 2016 and 2015 , respectively. Deferred leasing costs, net of accumulated amortization are as follows (excluding $2.7 million , net of amortization, related to a leasing arrangement at the Company’s Princeton facility in 2014): March 31, December 31, (dollars in thousands) 2016 2015 (unaudited) Deferred leasing costs $ 36,466 $ 33,458 Accumulated amortization (13,686) (12,476) Deferred leasing costs, net $ 22,780 $ 20,982 Advance Rents and Security Deposits – Advance rents, typically prepayment of the following month’s rent, consist of payments received from customers prior to the time they are earned and are recognized as revenue in subsequent periods when earned. Security deposits are collected from customers at the lease origination and are generally refunded to customers upon lease expiration. Deferred Income – Deferred income generally results from non-refundable charges paid by the customer at lease inception to prepare their space for occupancy. The Company records this initial payment, commonly referred to as set-up fees, as a deferred income liability which amortizes into rental revenue over the term of the related lease on a straight-line basis. Deferred income was $16.4 million and $17.0 million as of March 31, 2016 and December 31, 2015 , respectively. Additionally , $1.9 million and $1.2 million of deferred income was amortized into revenue for the three months ended March 31, 2016 and 2015 , respectively. Equity-based Compensation – All equity-based compensation is measured at fair value on the grant date or date of modification, as applicable, and recognized in earnings over the requisite service period. Depending upon the settlement terms of the awards, all or a portion of the fair value of equity-based awards may be presented as a liability or as equity in the consolidated balance sheets. Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification. Equity-based compensation expense net of forfeited awards was $2.1 million and $1.3 million for the three months ended March 31, 2016 and 2015 , respectively . Rental Revenue – The Company, as a lessor, has retained substantially all of the risks and benefits of ownership and accounts for its leases as operating leases. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net was $11.0 million and $9.1 million as of March 31, 2016 and December 31, 2015 , respectively. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed above. Cloud and Managed Services Revenue – The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. Allowance for Uncollectible Accounts Receivable – Rents receivable are recognized when due and are carried at cost, less an allowance for doubtful accounts. The Company records a provision for losses on rents receivable equal to the estimated uncollectible accounts, which is based on management’s historical experience and a review of the current status of the Company’s receivables. As necessary, the Company also establishes an appropriate allowance for doubtful accounts for receivables arising from the straight-lining of rents. The aggregate allowance for doubtful accounts was $5.2 million and $5.1 million as of March 31, 2016 and December 31, 2015 , respectively. Capital Leases and Lease Financing Obligations – The Company evaluates leased real estate to determine whether the lease should be classified as a capital or operating lease in accordance with U.S . GAAP. The Company periodically enters into capital leases for certain equipment. In addition, through its acquisition of Carpathia Hosting, Inc. on June 16, 2015, the Company is now party to capital leases for property and equipment, as well as financing obligations related to a sale-leaseback transaction. The outstanding liabilities for the capital leases were $24.4 million and $26.9 million as of March 31, 2016 and December 31, 2015 , respectively. The outstanding liabilities for the lease financing obligations were $ 22.3 million and $ 22.8 million as of March 31, 2016 and December 31, 2015 , respectively. The net book value of the assets associated with these leases was approximately $ 48.3 million and $51.0 million as of March 31, 2016 and December 31, 2015 , respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income. See Note 3 for further discussion of the acquisition of Carpathia and Note 5 for further discussion of capital leases and lease financing obligations. Recoveries from Customers – Certain customer leases contain provisions under which the customers reimburse the Company for a portion of the property’s real estate taxes, insurance and other operating expenses, which include certain power and cooling-related charges. The reimbursements are included in revenue as recoveries from customers in the Statements of Operations and Comprehensive Income in the period the applicable expenditures are incurred. Certain customer leases are structured to provide a fixed monthly billing amount that includes an estimate of various operating expenses, with all revenue from such leases included in rental revenues. Segment Information – The Company manages its business as one operating segment and thus one reportable segment consisting of a portfolio of investments in data centers located primarily in the United States with others in Canada, Europe and the Asia-Pacific region. Customer Concentrations – As of March 31, 2016 , one of the Company’s customers represented 11.5% of its total monthly rental revenue. No other customers exceeded 4% of total monthly rental revenue. As of March 31, 2016 , seven of the Company’s customers exceeded 5% of total accounts recei vable. In aggregate, these seven customers accounted for approximately 62% of total accounts receivable . Three of these seven customers individually exceeded 10% of total accounts receivable. Income Taxes – The Company elected for two of its existing subsidiaries to be taxed as taxable REIT subsidiaries pursuant to the REIT rules of the U.S. Internal Revenue Code. For the taxable REIT subsidiaries, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of December 31, 2014, one of the taxable REIT subsidiaries’ deferred tax assets were primarily the result of U.S. net operating loss carryforwards. A valuation allowance was recorded against its gross deferred tax asset balance as of December 31, 2014. As a result of the acquisition of Carpathia, the Company determined that it is more likely than not that pre-existing deferred tax assets will be realized by the combined entity, and the valuation allowance was eliminated. The change in the valuation allowance resulting from the change in circumstances was included in income, recognized in deferred income tax benefit in the year ended December 31, 2015. In addition to the deferred income tax benefit recognized in the prior year in connection with the elimination of the valuation allowance, a deferred tax benefit is being recognized in the three months ended March 31, 2016 in connection with recorded operating losses. The taxable REIT subsidiary consolidated group has a net deferred tax liability position primarily due to the customer-based intangibles acquired as part of the Carpathia acquisition. The Company provides for income taxes during interim periods based on the estimated effective tax rate for the year. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the taxable REIT subsidiary, tax law changes and future business acquisitions. The Company’s effective tax rates were 37.4% and 0% for the three months ended March 31, 2016 and 2015, respectively. The increase in the effective tax rate is primarily due to the elimination of the valuation allowance as a result of the C arpathia acquisition, recorded operating losses of the taxable REIT subsidiary in the current year , and permanent book and tax differences . Fair Value Measurements – ASC Topic 820, Fair Value Measurements , emphasizes that fair-value is a market-based measurement, not an entity-specific measurement. Therefore, a fair-value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, a fair-value hierarchy is established that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the level in the fair-value hierarchy within which the entire fair-value measurement falls is based on the lowest level input that is significant to the fair-value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. As the Company’s previous interest rate swaps matured on September 28, 2014, there are no financial assets or liabilities measured at fair value on a recurring basis on the consolidated balance sheets as of March 31, 2016 and December 31, 2015 . The Company’s purchase price allocation of Carpathia is a fair value estimate that utilized Level 3 inputs and is measured on a non-recurring basis. See Note 3 for further detail. New Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , which supersedes the current revenue recognition requirements in ASC 605, Revenue Recognition . Under this new guidance, entities should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This ASU also requires enhanced disclosures. In April 2016, the FASB finalized amendments to the guidance on identifying performance obligations and accounting for licenses of intellectual property. These amendments are not intended to change the core principles of the standard; however, they are intended to clarify important aspects of the guidance and improve its operability. The amendments have the same effective date and transition requirements as the new revenue standard, which is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted; however, entities are not permitted to adopt the standard earlier than December 15, 2016, the original effective date. Retrospective and modified retrospective application is allowed. The Company is currently assessing the impact of this standard on its consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, and not as a separate deferred charge. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. In June 2015, the Securities and Exchange Commission (“SEC”) stated that given the absence of authoritative guidance within this ASU for debt issuance costs related to revolving debt arrangements, the SEC staff would not object to an entity deferring and presenting such costs as an asset and subsequently amortizing them ratably over the term of the revolving debt arrangement. This announcement confirms that revolver arrangement costs are not within the scope of this ASU. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The amendments are required to be applied on a retrospective basis, and upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. The Company adopted this standard in the three months ended March 31, 2016. See Reclassifications in Note 2 for further detail. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments , that eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2016 | |
Acquisitions [Abstract] | |
Acquisitions | 3. Acquisitions Carpathia Acquisition On June 16, 2015, the Company completed the acquisition of 100% of the outstanding stock of Carp athia Hosting, Inc. , a Virginia-based colocation, cloud and managed services provider for approximately $ 371.4 million (based on the preliminary assessment of the fair value of assets acquired and liabilities assumed). Upon completion of this acquisition, the Company assumed all of the assets and liabilities of Carpathia Acquisition, Inc. Carpathia Acquisition, Inc. and its subsidiaries, including Carpathia, became indirect, wholly-owned subsidiar ies of the Company. Carpathia was a provider of colocation, hybrid cloud and Infrastructure-as-a-Service (IaaS) servicing enterprise customers and federal agencies, with a customer base of approximately 230 customers as of Ju ne 16, 2015. Carpathia utilized eight domestic data centers located in Dulles, Virginia; Phoenix, Arizona; San Jose, California; Harrisonburg, Virginia and Ashburn, Virginia; and five international data centers located in Toronto, Canada; Amsterdam, Netherlands; London, United Kingdom; Hong Kong and Sydney, Australia. The Company accounted for this acquisition in accordance with ASC 805, Business Combinations , as a business combination. The Company is generally valuing the assets acquired and liabilities assumed using Level 3 inputs. The following table summarizes the consideration for the Carpathia acquisition and the preliminary allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (in thousands). This allocation is subject to change pending the final valuation of these assets and liabilities: Adjusted Carpathia Allocation as of March 31, 2016 Original Allocation Reported as of June 30, 2015 Adjusted Fair Value Land $ 1,130 $ 1,130 $ - Buildings and improvements 78,898 79,372 (474) Construction in progress 12,127 12,127 - Acquired intangibles (1) 108,100 89,847 18,253 Net working capital 3,839 2,569 1,270 Total identifiable assets acquired 204,094 185,045 19,049 Capital lease and lease financing obligations 43,832 43,832 - Deferred income taxes 34,804 19,766 15,038 Acquired above market lease 2,453 - 2,453 Total liabilities assumed 81,089 63,598 17,491 Net identifiable assets acquired 123,005 121,447 1,558 Goodwill 171,679 173,237 (1,558) Net assets acquired $ 294,684 $ 294,684 $ - (1) In addition to $3.6 million of prior period fair value adjustments, during the three months ended March 31, 2016, a $14.7 million adjustment was recorded to increase acquired intangible assets following identified purchase price allocation adjustments, with a corresponding decrease to goodwill. An adjustment of $1.0 million to increase amortization expense related to this increase in acquired intangibles was recorded during the three months ended March 31, 2016, of which $0.7 million related to prior reporting periods. Goodwill recognized in the transaction relates primarily to anticipated operating synergies, Carpathia’s in-place workforce a nd access to Carpathia’s customer base. For tax purposes, the Company acquired goodwill with a tax basis of $16.6 million, which is deductible in subsequent periods. Based on the preliminary purchase price allocation, amortization expenses relative to the intangible assets acquired are expected to be approximately $12.2 million, $12.2 million, $10.1 million, $8.0 million and $8.0 million for the years ended December 31, 2016 through December 31, 2020, respectively. The following table represents the pro forma condensed consolidated statements of operations of the combined entities for the three-month period ended March 31, 2015 (in thousands): (Unaudited) Pro Forma Condensed Consolidated Statement of Operations Three Months Ended March 31, 2015 Revenue $ 83,325 Net income $ 3,973 These amounts have been calculated after applying the Company’s accounting policies, and give effect to the Carpathia acquisition. The purchase price allocation for this acquisition has been prepared on a preliminary basis. Accordingly, the purchase accounting adjustments made in connection with the development of the unaudited pro forma consolidated statements of operations are preliminary and subject to change. The unaudited pro forma condensed consolidated financial information is for comparative purposes only and not necessarily indicative of what actual results of operations of the Company would have been had the transactions noted above been consummated on January 1, 2015, nor does it purport to represent the results of operations for future periods. |
Real Estate Assets and Construc
Real Estate Assets and Construction in Progress | 3 Months Ended |
Mar. 31, 2016 | |
Real Estate Assets and Construction in Progress [Abstract] | |
Real Estate Assets and Construction in Progress | 4. Real Estate Assets and Construction in Progress The following is a summary of properties owned or leased by the Company as of March 31, 2016 and December 31, 2015 (in thousands): As of March 31, 2016 (unaudited): Property Location Land Buildings, Improvements and Equipment Construction in Progress Total Cost Owned Properties Suwanee, Georgia (Atlanta-Suwanee) $ 3,521 $ 152,083 $ 15,344 $ 170,948 Atlanta, Georgia (Atlanta-Metro) 15,397 418,313 35,201 468,911 Santa Clara, California* - 95,395 1,403 96,798 Richmond, Virginia 2,180 211,109 86,935 300,224 Sacramento, California 1,481 61,574 37 63,092 Princeton, New Jersey 20,700 32,734 450 53,884 Dallas-Fort Worth, Texas 8,606 117,415 94,475 220,496 Chicago, Illinois - - 96,956 96,956 Miami, Florida 1,777 30,656 263 32,696 Lenexa, Kansas 437 3,511 - 3,948 Duluth, Georgia Office Building 1,899 1,896 41 3,836 55,998 1,124,686 331,105 1,511,789 Leased Properties Leased facilities acquired in 2015 *** 1,130 91,378 7,305 99,813 Jersey City, New Jersey - 24,899 2,078 26,977 Overland Park, Kansas - 922 ** 23 945 1,130 117,199 9,406 127,735 $ 57,128 $ 1,241,885 $ 340,511 $ 1,639,524 * Owned facility subject to long-term ground sublease. ** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers. *** Includes 13 facilities. All facilities are leased, including those subject to capital leases. As of December 31, 2015 : Property Location Land Buildings, Improvements and Equipment Construction in Progress Total Cost Owned Properties Suwanee, Georgia (Atlanta-Suwanee) $ 3,521 $ 150,028 $ 15,330 $ 168,879 Atlanta, Georgia (Atlanta-Metro) 15,397 406,190 41,835 463,422 Santa Clara, California* - 94,437 1,379 95,816 Richmond, Virginia 2,180 208,654 85,771 296,605 Sacramento, California 1,481 61,462 73 63,016 Princeton, New Jersey 20,700 32,708 422 53,830 Dallas-Fort Worth, Texas 8,590 71,783 120,331 200,704 Chicago, Illinois - - 70,749 70,749 Miami, Florida 1,777 30,554 144 32,475 Lenexa, Kansas 437 3,511 - 3,948 Duluth, Georgia Office Building 1,899 1,920 - 3,819 55,982 1,061,247 336,034 1,453,263 Leased Properties Leased facilities acquired in 2015 *** 1,130 89,989 7,196 98,315 Jersey City, New Jersey - 28,228 2,421 30,649 Overland Park, Kansas - 922 ** 4 926 1,130 119,139 9,621 129,890 $ 57,112 $ 1,180,386 $ 345,655 $ 1,583,153 _____________________________ * Owned facility subject to long-term ground sublease. ** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers. *** Includes 13 facilities. All facilities are leased, including those subject to capital leases . |
Debt
Debt | 3 Months Ended |
Mar. 31, 2016 | |
Debt [Abstract] | |
Debt | 5. Debt Below is a listing of the Company’s outstanding debt, including capital leases and lease financing obligations, as of March 31, 2016 and December 31, 2015 (in thousands): Weighted Average Coupon Interest Rate at March 31, December 31, March 31, 2016 Maturities 2016 2015 Unsecured Credit Facility Revolving Credit Facility 1.99% December 17, 2019 $ 310,000 $ 224,002 Term Loan I 1.94% December 17, 2020 150,000 150,000 Term Loan II 1.93% April 27, 2021 150,000 150,000 Senior Notes 5.88% August 1, 2022 300,000 300,000 Capital Lease and Lease Financing Obligations 3.40% 2016 - 2025 46,666 49,761 3.26% 956,666 873,763 Less discount and debt issuance costs (11,709) (12,194) Total outstanding debt, net $ 944,957 $ 861,569 Credit Facility and Senior Notes (a) Unsecured Credit Facility – In October 2015, the Company amended and restated its unsecured credit facility, increasing the total capacity by $250 m illion and extending the term. At the same time, the Company terminated its secured credit facility relating to the Richmond data center. The amended unsecured credit facility has a total capacity of $900 million and includes a $150 million term loan which matures on December 17, 2020 , another $150 million term loan which matures on April 27, 2021 , and a $600 million revolving credit facility which matures on December 17, 2019 , with a one year extension option. Amounts outstanding under the amended unsecured credit facility bear interest at a variable rate equal to, at the Company’s election, LIBOR or a base rate, plus a spread that will vary depending upon the Company’s leverage ratio. For revolving credit loans, the spread ranges from 1.55% to 2.15% for LIBOR loans and 0.55% to 1.15% for base rate loans. For term loans, the spread ranges from 1.50% to 2.10% for LIBOR loans and 0.50% to 1.10% for base rate loans. The amended unsecured credit facility also includes a $200 million accordion feature. Under the amended unsecured credit facility, the capacity may be increased from the current capacity of $900 million to $1.1 billion subject to certain conditions set forth in the credit agreement, including the consent of the administrative agent and obtaining necessary commitments. The Company is also required to pay a commitment fee to the lenders assessed on the unused portion of the unsecured revolving credit facility. At the Company’s election, the Company can prepay amounts outstanding under the unsecured credit facility, in whole or in part, without penalty or premium. The unsecured credit facility requires monthly interest payments and requires the Company to comply with various customary affirmative and negative covenants and quarterly financial covenant requirements relating to the debt service coverage ratio, fixed charge ratio, leverage ratio and tangible net worth and various other operational requirements. In connection with the unsecured credit facility, as of March 31, 2016 , the Company had an additional $2.0 million letter of credit outstanding. As of March 31, 2016 , borrowings under the unsecured credit facility consisted of $ 310.0 million outstanding under the revolving credit facility and $ 300.0 million outstanding under the term loans , exclusive of net debt issuance costs of $2.9 million . As of March 31, 2016 , the weighted average interest rate for amounts outstanding under the unsecured credit facility was 1.96% . (b) Senior Notes – On July 23, 2014 , the Operating Partnership and QTS Finance Corporation, a subsidiary of the Operating Partnership formed solely for the purpose of facilitating the offering of the notes described below (collectively, the “Issuers”), issued $300 million aggregate principal amount of 5.875% Senior Notes due 2022 (the “Senior Notes”). The Senior Notes have an interest rate of 5.875% per annum, were issued at a price equal to 99.211% of their face value and mature on August 1, 2022 . The proceeds from the offering were used to repay amounts outstanding under the unsecured credit facility, including $75 million outstanding under the term loan. As of March 31, 2016, the discount recorded on the Senior Notes was $2.0 million and the outstanding net debt issuance costs associated with the Senior Notes were $6.8 million . The Senior Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Operating Partnership’s existing subsidiaries (oth er than foreign subsidiaries, receivables entities and 2470 Satellite Boulevard, LLC, which is a Delaware limited liability company formed in December 2015 to acquire an office building in Duluth, Georgia ) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Issuers or any other s ubsidiary guarantor. QTS Realty Trust, Inc. does not guarantee the Senior Notes and will not be required to guarantee the Senior Notes except under certain circumstances. The offering was conducted pursuant to Rule 144A of the Securities Act of 1933, as amended, and the Senior Notes were issued pursuant to an indenture, dated as of July 23, 2014, among the Operating Partnership, QTS Finance Corporation, the Company, the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee (the “Indenture”). On March 23, 2015, the SEC declared effective the Operating Partnership and QTS Finance Corporation’s registration statement on Form S-4 pursuant to which th e issuers exchanged the originally issued Senior Notes for $300 million of 5.875% Senior Notes due 2022 (the “Exchange Notes”) that are registered under the Securities Act of 1933, as amended. The exchange offer was completed on April 23, 2015, and all outstanding originally issued Senior Notes were tendered. The Exchange Notes did not provide the Company with any additional proceeds and satisfied its obligations under a registration rights agreement entered into in connection with the issuance of the Senior Notes. The annual remaining principal payment requirements as of March 31, 2016 per the contractual maturities and excluding extension options, capital leases and lease financing obligations, are as follows (in thousands) : 2016 $ - 2017 - 2018 - 2019 310,000 2020 150,000 Thereafter 450,000 Total $ 910,000 As of March 31, 2016 , the Company was in compliance with all of its covenants . Capital Leases The Company has historically entered into capital leases for certain equipment. In addition, through its acquisition of Carpathia on June 16, 2015, the Company acquired capital leases of both equipment and certain properties. Total outstanding liabilities for capital leases were $ 24.4 million as of March 31, 2016 , of which $15.3 million were assumed through the Carpathia acquisition, all of which was related to the lease of real property. Carpathia had entered into capital lease arrangements for datacenter space under two lease agreements expiring in 2018 and 2019 at its Harrisonburg, Virginia and Ashburn, Virginia locations. Total recurring monthly payments range from approximately $0.2 million to $0.5 million during the terms of the leases, in addition to payments made for utilities. Depreciation related to the associated assets for the capital leases is included in depreciation and amortization expense in the Statements of Operation s and Comprehensive Income . Lease Financing Obligations Through the acquisition of Carpathia, the Company acquired lease financing obligations totaling $ 22.3 million at March 31, 2016 , of which $20.2 million related to a sale-leaseback transaction where Carpathia has continuing involvement. On December 23, 2011, Carpathia sold the shell of a building and the associated land to an unrelated third party. Carpathia leases the property back and is a party to an agreement with the same third party to construct a new building on the adjoining property for use as a data center. Carpathia is primarily responsible for financing the improvements and outfitting the building with the necessary equipment. The third party leases back the new building in stages to Carpathia as the various stages are completed. In accordance with ASC 840-40, Leases , Carpathia has continuing involvement with the related leased assets; therefore, the Company will continue to account for the existing building shell and the associated land as fixed assets and will capitalize the construction costs of the new building. The financing obligation related to the building and equipment was $18.6 million at March 31, 2016 . In addition, due to Carpathia’s continuing involvement, it was required to defer a gain on the sale of the assets. The deferred gain was $1.6 million at March 31, 2016 , and is also included in lease financing obligations. The financing obligation is reduced as rental payments are made on the existing build ing, which payments started in January 2012. Rental payments, which includ e amounts attributable to both principal and interest, increased to approximately $0.2 million per month in March 2013, which is when the newly constru cted building was inhabited by Carpathia. Depreciation expense on the related asset is included in depreciation and amortization expense in the Statements of Operation s and Comprehensive Income . The Company , through its acquisition of Carpathia, also has a lease financing agreement in conne ction with a $4.8 million tenant improv ement allowance on one of its data center lease agreements. The f inancing requires monthly payments of principal and interest of less than $0.1 million through February 2019 . The outstanding balance on the financing agreement was $2.1 million as of March 31, 2016 . Depreciation expense on the related leasehold improvements is included in depreciation and amortization expense in the Statements of Operation s and Comprehensive Income . The following table summarizes the Company’s combined future payment obligations, excluding interest, as of March 31, 2016 , on the capital leases and lease financing obligations above (in thousands): 2016 $ 9,463 2017 12,388 2018 8,804 2019 2,461 2020 2,190 Thereafter 11,360 Total $ 46,666 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies The Company is subject to various routine legal proceedings and other matters in the ordinary course of business. One of the Company’s subsidiaries, Carpathia Hosting, LLC (“Carpathia LLC ”), was named as a defendant in a lawsuit filed in state court in New York. Carpathia LLC ’s customer, Portal Healthcare Solutions (“Portal Ascend”) allegedly had a security breach between November 2012 and March 2013. Portal Ascend has agreed to indemnify Carpathia LLC in this litigation and has provided legal counsel to defend Carpathia LLC . The litigation is in the earliest stages, thus this litigation is neither probable nor reasonably estimable . |
Partners' Capital, Equity and I
Partners' Capital, Equity and Incentive Compensation Plans | 3 Months Ended |
Mar. 31, 2016 | |
Partners' Capital, Equity and Incentive Compensation Plans [Abstract] | |
Partners' Capital, Equity and Incentive Compensation Plans | 7. Partners’ Capital, Equity and Incentive Compensation Plans QualityTech, LP QTS has the full power and authority to do all the things necessary to conduct the business of the Operating Partnership. As of March 31, 2016 , the Operating Partnership had three classes of limited partnership units outstanding: Class A units of limited partnership interest (“Class A units”), Class RS LTIP units of limited partnership interest (“Class RS units”) and Class O LTIP units of limited partnership units (“Class O units”). The Class A Units are now redeemable at any time. The Company may in its sole discretion elect to assume and satisfy the redemption amount with cash or its shares. Class RS units or Class O units were issued upon grants made under the QualityTech, LP 2010 Equity Incentive Plan (the “2010 Equity Incentive Plan”). Class RS units and Class O units may be subject to vesting and are pari passu with Class A units. Each Class RS unit and Class O unit is convertible into Class A units by the Operating Partnership at any time or by the holder at any time following full vesting (if such unit is subject to vesting) based on formulas contained in the partnership agreement. In addition, upon certain circumstances set forth in the partnership agreement, vested Class RS units automatically convert into Class A units of the Operating Partnership. QTS Realty Trust, Inc. In connection with its IPO, QTS issued Class A common stock and Class B common stock. Class B common stock entitles the holder to 50 votes per share and was issued to enable the Company’s Chief Executive Officer to exchange 2% of his Operating Partnership units so he may have a vote proportionate to his economic interest in the Company. Also in connection with its IPO, QTS adopted the QTS Realty Trust, Inc. 2013 Equity Incentive plan (the “2013 Equity Incentive Plan”), which authorized 1.75 million shares of Class A common stock to be issued under the plan, including options to purchase Class A common stock, restricted Class A common stock, Class O uni ts, and Class RS units. In May 2015, the total number of shares available for issuance under the 2013 Equity Incentive Plan was increased to 4,750,000 . The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the three months ended March 31, 2016 : 2010 Equity Incentive Plan 2013 Equity Incentive Plan Number of Class O units Weighted average exercise price Weighted average fair value Number of Class RS units Weighted average grant date value Options Weighted average exercise price Weighted average fair value Restricted Stock Weighted average grant date value Outstanding at December 31, 2015 1,292,899 $23.76 $3.68 39,875 $22.18 867,882 $27.80 $5.56 394,908 $33.82 Granted — — — — — 229,693 45.78 9.91 205,508 45.89 Exercised/Vested (21,925) 23.15 3.36 — — (5,063) 26.00 5.21 (45,890) (1) 33.93 Released from restriction (2) — — — (31,187) 21.39 — — — — — Cancelled/Expired (3) — — — — — (1,250) 28.82 5.98 (21,335) 35.44 Outstanding at March 31, 2016 1,270,974 $23.77 $3.68 8,688 $25.00 1,091,262 $31.59 $6.47 533,191 $38.40 (1) This represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock . (2) This represents Class RS units that upon vesting have converted to Operating Partnership units . (3) Includes 21,335 restricted Class A common stock surrendered by certain employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock . The assumptions and fair values for restricted stock and options to purchase shares of Class A common stock granted for the three months ended March 31, 2016 are included in the following table on a per unit basis. Class O units and options to purchase shares of Class A common stock were valued using the Black-Scholes model. Three Months Ended March 31, 2016 Fair value of restricted stock granted $45.78 - $47.38 Fair value of options granted $9.57 - $9.97 Expected term (years) 5.5 - 5.9 Expected volatility 30.7 - 31.3 % Expected dividend yield 3.14% Expected risk-free interest rates 1.42 - 1.48% The following table summarizes information about awards outstanding as of March 31, 2016 . Operating Partnership Awards Outstanding Exercise prices Awards outstanding Weighted average remaining vesting period (years) Class RS Units $ - 8,688 0.3 Class O Units $ 20.00 - 25.00 1,270,974 0.4 Total Operating Partnership awards outstanding 1,279,662 QTS Realty Trust, Inc. Awards Outstanding Exercise prices Awards outstanding Weighted average remaining vesting period (years) Restricted stock $ - 533,191 2.5 Options to purchase Class A common stock $ 21.00 - 45.78 1,091,262 1.3 Total QTS Realty Trust, Inc. awards outstanding 1,624,453 All nonvested LTIP unit awards are valued as of the grant date and generally vest ratably over a defined service period. Certain nonvested LTIP unit awards vest on the earlier of achievement by the Company of various performance goals or specified dates in 2015 and 2016. As of March 31, 2016 there were 0.2 million, 0.5 million and 0.5 million nonvested Class O units, restricted Class A common stock and options to purchase Class A common stock outstanding, respectively. As of March 31, 2016 , there was an immaterial amount of Class RS units outstanding. As of March 31, 2016 the Company had $24.6 million of unrecognized equity-based compensation expense which will be recognized over the remaining vesting period of up to 4 years. The total intrinsic value of the awards outstanding at March 31, 2016 was $69.5 million . Dividends and Distributions The following tables present quarterly cash dividends and distributions paid to QTS’ common stockholders and the Operating Partnership’s unit holders for the three months ended March 31, 2016 and 2015 : Three Months Ended March 31, 2016 Record Date Payment Date Per Common Share and Per Unit Rate Aggregate Dividend/Distribution Amount (in millions) December 17, 2015 January 6, 2016 $ 0.32 $ 15.4 $ 0.32 $ 15.4 Three Months Ended March 31, 2015 Record Date Payment Date Per Common Share and Per Unit Rate Aggregate Dividend/Distribution Amount (in millions) December 19, 2014 January 7, 2015 $ 0.29 $ 10.7 $ 0.29 $ 10.7 Additionally, on April 5, 2016 , the Company paid its regular quarterly cash dividend of $0.36 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on March 18, 2016 . Equity Issuances In March 2016, QTS filed an automatic shelf registration statement on Form S-3 with the SEC. Effective upon filing, the shelf provides for the potential sale of an unspecified amount of QTS’ Class A common stock, preferred stock, depositary shares representing preferred stock, warrants and rights to purchase QTS common stock or any combination thereof, subject to the ability of QTS to effect offerings on satisfactory terms based on prevailing conditions. Pursuant to this shelf registration, on April 1, 2016, the Company issued 6,325,000 shares of QTS’ Class A common stock at a price of $45.50 per share in an underwritten public offering , including the exercise in full of the underwriters’ option to purchase an additional 825,000 shares. The Company used substantially all of the net proceeds of approximately $276 million to repay amounts outstanding under its unsecured revolving credit facility. QTS Realty Trust, Inc. Employee Stock Purchase Plan In June 2015, the Company established the QTS Realty Trust, Inc. Employee Stock Purchase Plan (the “Plan”) to give eligible employees the opportunity to purchase, through payroll deductions, shares of the Company’s Class A common stock in the open market by an independent broker selected by the Company’s Board of Directors (the “Board”) or the plan’s administrator. Eligible employees include employees of the Company and its majority-owned subsidiaries (excluding executives) who have been employed for at least thirty days and who perform at least thirty hours of service per week for the Company. The Plan became effective July 1, 2015 and is administered by the Board or by a committee of one or more persons appointed by the Board. The Company has reserved 250,000 shares for purchase under the Plan and has also agreed to pay the brokerage commissions and fees associated with a Plan participant's purchase of shares. An eligible employee may deduct a minimum of $40 per month and a maximum of $2,000 per month towards the purchase of shares. On June 17, 2015, the Company filed a registration statement on Form S-8 to register the 250,000 shares of the Company’s Class A common stock related to the Plan. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 8. Related Party Transactions The Company periodically executes transactions with entities affiliated with its Chairman and Chief Executive Officer. Such transactions include automobile, furniture and equipment purchases as well as building operating lease payments and receipts, and reimbursement for the use of a private aircraft service by the Company’s officers and directors. The transactions which occurred during the three months ended March 31, 2016 and 2015 are outlined below (in thousands): Three Months Ended March 31, (dollars in thousands) 2016 2015 Tax, utility, insurance and other reimbursement $ 180 $ 80 Rent expense 253 253 Capital assets acquired 80 99 Total $ 513 $ 432 |
Noncontrolling Interest
Noncontrolling Interest | 3 Months Ended |
Mar. 31, 2016 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | 9. Noncontrolling Interest Concurrently with the completion of the IPO, QTS consummated a series of transactions pursuant to which QTS became the sole general partner and majority owner of QualityTech, LP, which then became its operating partnership. The previous owners of QualityTech, LP retained 21.2% ownership of the Operating Partnership. Commencing at any time beginning November 1, 2014, at the election of the holders of the noncontrolling interest, the Class A units are redeemable for cash or, at the election of the Company, common stock of the Company on a one -for-one basis. As a result of these redemptions of Class A units into common stock and the issuance of common stock, the noncontrolling ownership interest of QualityTech, LP, was 14.1% at March 31, 2016 . |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings per Share [Abstract] | |
Earnings per Share | 10. Earnings per share of QTS Realty Trust, Inc. Basic income (loss) per share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share adjusts basic income (loss) per share for the effects of potentially dilutive common shares. The computation of basic and diluted net income per share is as follows (in thousands, except per share data): Three Months Ended March 31, 2016 2015 Numerator: Net income available to common stockholders -- basic $ 5,889 $ 4,082 Effect of net income attributable to noncontrolling interests 970 955 Net income available to common stockholders -- diluted $ 6,859 $ 5,037 Denominator: Weighted average shares outstanding -- basic 41,292 31,294 Effect of Class A and Class RS partnership units * 6,801 7,317 Effect of Class O units and options to purchase Class A common stock on an "as if" converted basis * 881 598 Weighted average shares outstanding -- diluted 48,974 39,209 Net income per share attributable to common stockholders -- basic $ 0.14 $ 0.13 Net income per share attributable to common stockholders -- diluted $ 0.14 $ 0.13 * The Class A units, Class RS units and Class O units represent limited partnership interests in the Operating Partnership, and are described in more detail in Note 7. The computation of diluted net income per share for the three months ended March 31, 2016 does not include 229,693 options with an exercise price of $45.78 as their inclusion would have been antidilutive for that period. The computation of diluted net income per share for the three months ended March 31, 2015 does not include 139,747 options w ith an exercise price of $36.54 as their inclusion would have been antidilutive for that period. |
Customer Leases, as Lessor
Customer Leases, as Lessor | 3 Months Ended |
Mar. 31, 2016 | |
Customer Leases, as Lessor [Abstract] | |
Customer Leases, as Lessor | 11. Customer Leases, as Lessor Future minimum lease payments to be received under non-cancelable operating customer leases (inclusive of payments for contracts which have not yet commenced, and exclusive of recoveries of operating costs from customers) are as follows for the years ending December 31 (in thousands): 2016 (April - December) $ 235,197 2017 238,773 2018 173,655 2019 103,090 2020 85,836 Thereafter 195,958 Total $ 1,032,509 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | 12. Fair Value of Financial Instruments ASC Topic 825 requires disclosure of fair value information about financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows based upon market yields or by using other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts. Short-term instruments: The carrying amounts of cash and cash equivalents and restricted cash approximate fair value. Credit faci lity and Senior Notes: The Company’s unsecured credit facility did not have interest rates which were materially different than current market conditions and therefore, the fair value approximated the carrying value. The fair value of the Company’s Senior Notes was estimated using Level 2 “significant other observable inputs,” primarily based on quoted market prices for the same or similar issuances. At March 31, 2016 , the fair value of the Senior Notes was approximately $304.7 million. Other debt instruments: The fair value of the Company’s other debt instruments (including capital leases and lease financing obligations) were estimated in the same manner as the unsecured credit facility above. Similarly, each of these instruments did not have interest rates which were materially different than current market conditions and therefore, the fair value of each instrument approximated the respective carrying values. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events On April 1, 2016, the Company issued 6,325,000 shares of QTS’ Class A common stock at a price of $45.50 per share in an underwritten public offering , including the exercise in full of the underwriter’s option to purchase an additional 825,000 shares . The Company used substantially all of the net proceeds of approximately $276 m illion to repay amounts outstanding under its unsecured revolving credit facility. On April 5, 2016 , the Company paid its regular quarterly cash dividend of $0.36 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on March 18, 2016 . |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying financial statements are presented for both QTS Realty Trust, Inc. and QualityTech, LP. References to “QTS” mean QTS Realty Trust, Inc. and its controlled subsidiaries; and references to the “Operating Partnership” mean QualityTech, LP and its controlled subsidiaries. In 2016, the Company adopted ASU 2015-02, Amendments to the Consolidation Analysis. This standard amends certain guidance applicable to the consolidation of various legal entities, including variable interest entities (“VIE”). The Company evaluated the application of the ASU and concluded that no change was required to its accounting for its interest in the Operating Partnership. However, under the new guidance, the Operating Partnership now meets the definition and criteria of a VIE and the Company is the primary beneficiary of the VIE. As discussed below, the Company’s only material asset is its ownership interest in the Operating Partnership, and consequently, all of its assets and liabilities represent those assets and liabilities of the Operating Partnership. The Company’s debt is an obligation of the Operating Partnership where the creditors may have recourse, under certain circumstances, against the credit of the Company. QTS is the sole general partner of the Operating Partnership, and its only material asset consists of its ownership interest in the Operating Partnership. Management operates QTS and the Operating Partnership as one business. The management of QTS consists of the same employees as the management of the Operating Partnership. QTS does not conduct business itself, other than acting as the sole general partner of the Operating Partnership and issuing public equity from time to time. QTS has not issued or guaranteed any indebtedness. Except for net proceeds from public equity issuances by QTS, which are contributed to the Operating Partnership in exchange for units of limited partnership interest of the Operating Partnership, the Operating Partnership generates all remaining capital required by the business through its operations, the direct or indirect incurrence of indebtedness, and the issuance of partnership units. The Company believes, therefore, that providing one set of notes for the financial statements of QTS and the Operating Partnership provides the following benefits: · enhances investors’ understanding of QTS and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; · eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both QTS and the Operating Partnership; and · creates time and cost efficiencies through the preparation of one set of notes instead of two separate sets of notes. In addition, in light of these combined notes, the Company believes it is important for investors to understand the few differences between QTS and the Operating Partnership in the context of how QTS and the Operating Partnership operate as a consolidated company. With respect to balance sheets, the presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated balance sheets of QTS and those of the Operating Partnership. On the Operating Partnership’s consolidated balance sheets, partners’ capital includes partnership units that are owned by QTS and other partners. On QTS’ consolidated balance sheets, stockholders’ equity includes common stock, additional paid in capital, accumulated other comprehensive income (loss) and accumulated dividends in excess of earnings. The remaining equity reflected on QTS’s consolidated balance sheet is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. With respect to statements of operations, the primary difference in QTS' Statements of Operations and Comprehensive Income is that for net income (loss), QTS retains its proportionate share of the net income (loss) based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership. These combined notes refer to actions or holdings as being actions or holdings of “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, management believes that these general references to “the Company” in this context is appropriate because the business is one enterprise operated through the Operating Partnership. As discussed above, QTS owns no operating assets and has no operations independent of the Operating Partnership and its subsidiaries. Also, the Operating Partnership owns no operating assets and has no operations independent of its subsidiaries. Obligations under the 5.875% Senior Notes due 2022 and the unsecured credit facility, both discussed in Note 5, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries, other than 1) 2470 Satellite Boulevard, LLC, a subsidiary formed in December 2015 that acquired an office building in Duluth, Georgia and has de minimis operations, and 2) QTS Finance Corporation, the co-issuer of the 5.875% Senior Notes due 2022. As such, condensed consolidating financial information for the guarantors is not being presented in the notes to the interim condensed consolidated financial statements. However, the indenture governing the 5.875% Senior Notes due 2022 restricts the ability of the Operating Partnership to make distributions to QTS, subject to certain exceptions, including distributions required in order for QTS to maintain its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended. The interim condensed consolidated financial statements of QTS Realty Trust, Inc. for the three months ended March 31, 2016 and 2015 , and as of March 31, 2016 and December 31, 2015 present the accounts of QTS Realty Trust, Inc. and its majority owned subsidiaries. This includes the operating results of the Operating Partnership for all periods presented. |
Use of Estimates | Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals. |
Principles of Consolidation | Principles of Consolidation – The consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority-owned subsidiaries. The consolidated financial statements of QualityTech, LP include the accounts of QualityTech, LP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in the financial statements. |
Reclassifications | Reclassifications – The consolidated balance sheet at December 31, 2015 reflects a reclassification of $ 3.1 million from Deferred Costs, net to Unsecured Credit Facility, net, and $ 7.1 million from Deferred Costs, net to Senior Notes, net of discount and debt issuance costs as required by the Company’s adoption of ASU 2015-03, “ Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ” |
Real Estate Assets | Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended March 31, 2016 , depreciation expense related to real estate assets and non-real estate assets was $17.7 million and $3.0 million, respectively, for a total of $20.7 million. For the three months ended March 31, 2015 , depreciation expense related to real estate assets and non-real estate assets was $10.9 million and $1.9 million, respectively, for a total of $12.8 million. The Company capitalizes certain development costs, including internal costs incurred in connection with development. The capitalization of costs during the construction period (including interest and related loan fees, property taxes and other direct and indirect costs) begins when development efforts commence and ends when the asset is ready for its intended use. Capitalization of such costs, excluding interest, aggregated to $2.4 million and $3.3 million for the three months ended March 31, 2016 and 2015 , respectively. Interest is capitalized during the period of development by first applying the Company’s actual borrowing rate on the related asset and second, to the extent necessary, by applying the Company’s weighted average effective borrowing rate to the actual development and other costs expended during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $2.8 million and $2.0 million for the three months ended March 31, 2016 and 2015 , respectively. |
Acquisitions | Acquisitions – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances. Purchase accounting is applied to the assets and liabilities related to all real estate investments acquired in accordance with the accounting requirements of ASC 805, Business Combinations , which requires the recording of net assets of acquired businesses at fair value. The fair value of the consideration transferred is allocated to the acquired tangible assets, consisting primarily of land, building and improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases, value of customer relationships, trade names, software intangibles and capital leases. The excess of the fair value of liabilities assumed, common stock issued and cash paid over the fair value of identifiable assets acquired is allocated to goodwill, which is not amortized by the Company. 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. Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. Amortization of acquired in place lease costs totaled $0.4 million and $0.4 million for the three months ended March 31, 2016 and 2015 , respectively. This amortization expense is accounted for as real estate amortization expense. Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. Amortization of acquired customer relationships totaled $3.0 million and $0.3 million for the three months ended March 31, 2016 and 2015 , respectively. This amortization expense is accounted for as real estate amortization expense. The current period amortization includes a $1.0 million adjustment related to an increase in the purchase price allocation of the acquired customer relationship intangible recorded in the three months ended March 31, 2016, of which $0.7 million related to prior reporting periods. See Note 3 for further detail. Other acquired intangible assets, which includes platform, above or below market leases, and trade name intangibles, are amortized on a straight-line basis over their respective expected lives. Platform and trade name intangibles are amortized as amortization expense. Platform amortization expense was $0.8 million for the three months ended March 31, 2016. Trade name amortization expense was $0.3 million for the three months March 31, 2016. Above or below market leases are amortized as rent expense, which totaled $0.1 million for the three months ended March 31, 2016. There was no amortization expense or rent expense related to platform , trade name, and above or below market lease intangibles for the three months ended March 31, 2015. The expense associated with trade name intangibles is accounted for as real estate expense, whereas the expense associated with the amortization of platform intangibles is accounted for as non-real estate expense. See Note 3 for discussion of the preliminary purchase price allocation for the acquisition of Carpathia Hosting, Inc. (“Carpathia”) on June 16, 2015. |
Impairment of Long-Lived and Intangible Assets | Impairment of Long-Lived and Intangible Assets – The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is generally measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset exceeds the value of the undiscounted cash flows, the fair value of the asset is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three months ended March 31, 2016 and 2015 , respectively. The fair value of goodwill is the consideration transferred which is not allocable to identifiable intangible and tangible assets. Goodwill is subject to at least an annual assessment for impairment. As a result of the Carpathia acquisition, the Company recognized approximately $172 million in goodwill. |
Cash and Cash Equivalents | Cash and Cash Equivalents – The Company considers all demand deposits and money market accounts purchased with a maturity date of three months or less at the date of purchase to be cash equivalents. The Company’s account balances at one or more institutions periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is concentration of credit risk related to amounts on deposit in excess of FDIC coverage. The Company mitigates this risk by depositing a majority of its funds with several major financial institutions. The Company also has not experienced any losses and, therefore, does not believe that the risk is significant. |
Deferred Costs | Deferred Costs – Deferred costs, net, on the Company’s balance sheets include both financing costs and leasing costs. As discussed above in Reclassifications , the Company adopted ASU 2015-03 during the three months ended March 31, 2016. Pursuant to this updated guidance, debt issuance costs related to revolving debt arrangements are permitted to be deferred and presented as assets on the balance sheet; however, all other debt issuance costs must be recorded as a direct offse t to the associated liability. As such, deferred financing costs on the Company’s consolidated balance sheets represent costs incurred in connection with obtaining onl y revolving debt arrangements. These costs are amortized over the term of the loan and are included in inter est expense. Amortization of debt issuance costs , including those costs presented as offsets to the associated liability in the consolidated balance sheet, was $0.8 million and $0.8 million for the three months ended March 31, 2016 and 2015 , respectively. Deferred financing costs related to revolving debt arrangements, net of accumulated amortization are as follows: March 31, December 31, (dollars in thousands) 2016 2015 (unaudited) Deferred financing costs $ 6,654 $ 6,652 Accumulated amortization (781) (389) Deferred financing costs, net $ 5,873 $ 6,263 Deferred leasing costs consist of external fees and internal costs incurred in the successful negotiations of leases and are deferred and amortized over the terms of the related leases on a straight-line basis. If an applicable lease terminates prior to the expiration of its initial term, the carrying amount of the costs are written off to amortization expense. Amortization of deferred leasing costs totaled $3.5 million and $2.7 million for the three months ended March 31, 2016 and 2015 , respectively. Deferred leasing costs, net of accumulated amortization are as follows (excluding $2.7 million , net of amortization, related to a leasing arrangement at the Company’s Princeton facility in 2014): March 31, December 31, (dollars in thousands) 2016 2015 (unaudited) Deferred leasing costs $ 36,466 $ 33,458 Accumulated amortization (13,686) (12,476) Deferred leasing costs, net $ 22,780 $ 20,982 |
Advance Rents and Security Deposits | Advance Rents and Security Deposits – Advance rents, typically prepayment of the following month’s rent, consist of payments received from customers prior to the time they are earned and are recognized as revenue in subsequent periods when earned. Security deposits are collected from customers at the lease origination and are generally refunded to customers upon lease expiration. |
Deferred Income | Deferred Income – Deferred income generally results from non-refundable charges paid by the customer at lease inception to prepare their space for occupancy. The Company records this initial payment, commonly referred to as set-up fees, as a deferred income liability which amortizes into rental revenue over the term of the related lease on a straight-line basis. Deferred income was $16.4 million and $17.0 million as of March 31, 2016 and December 31, 2015 , respectively. Additionally , $1.9 million and $1.2 million of deferred income was amortized into revenue for the three months ended March 31, 2016 and 2015 , respectively. |
Equity-based Compensation | Equity-based Compensation – All equity-based compensation is measured at fair value on the grant date or date of modification, as applicable, and recognized in earnings over the requisite service period. Depending upon the settlement terms of the awards, all or a portion of the fair value of equity-based awards may be presented as a liability or as equity in the consolidated balance sheets. Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification. Equity-based compensation expense net of forfeited awards was $2.1 million and $1.3 million for the three months ended March 31, 2016 and 2015 , respectively |
Rental Revenue | Rental Revenue – The Company, as a lessor, has retained substantially all of the risks and benefits of ownership and accounts for its leases as operating leases. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net was $11.0 million and $9.1 million as of March 31, 2016 and December 31, 2015 , respectively. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed above. |
Cloud and Managed Services Revenue | Cloud and Managed Services Revenue – The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. |
Allowance for Uncollectible Accounts Receivable | Allowance for Uncollectible Accounts Receivable – Rents receivable are recognized when due and are carried at cost, less an allowance for doubtful accounts. The Company records a provision for losses on rents receivable equal to the estimated uncollectible accounts, which is based on management’s historical experience and a review of the current status of the Company’s receivables. As necessary, the Company also establishes an appropriate allowance for doubtful accounts for receivables arising from the straight-lining of rents. The aggregate allowance for doubtful accounts was $5.2 million and $5.1 million as of March 31, 2016 and December 31, 2015 , respectively. |
Capital Leases and Lease Financing Obligations | Capital Leases and Lease Financing Obligations – The Company evaluates leased real estate to determine whether the lease should be classified as a capital or operating lease in accordance with U.S . GAAP. The Company periodically enters into capital leases for certain equipment. In addition, through its acquisition of Carpathia Hosting, Inc. on June 16, 2015, the Company is now party to capital leases for property and equipment, as well as financing obligations related to a sale-leaseback transaction. The outstanding liabilities for the capital leases were $24.4 million and $26.9 million as of March 31, 2016 and December 31, 2015 , respectively. The outstanding liabilities for the lease financing obligations were $ 22.3 million and $ 22.8 million as of March 31, 2016 and December 31, 2015 , respectively. The net book value of the assets associated with these leases was approximately $ 48.3 million and $51.0 million as of March 31, 2016 and December 31, 2015 , respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income. See Note 3 for further discussion of the acquisition of Carpathia and Note 5 for further discussion of capital leases and lease financing obligations. |
Recoveries from Customers | Recoveries from Customers – Certain customer leases contain provisions under which the customers reimburse the Company for a portion of the property’s real estate taxes, insurance and other operating expenses, which include certain power and cooling-related charges. The reimbursements are included in revenue as recoveries from customers in the Statements of Operations and Comprehensive Income in the period the applicable expenditures are incurred. Certain customer leases are structured to provide a fixed monthly billing amount that includes an estimate of various operating expenses, with all revenue from such leases included in rental revenues. |
Segment Information | Segment Information – The Company manages its business as one operating segment and thus one reportable segment consisting of a portfolio of investments in data centers located primarily in the United States with others in Canada, Europe and the Asia-Pacific region. |
Customer Concentrations | Customer Concentrations – As of March 31, 2016 , one of the Company’s customers represented 11.5% of its total monthly rental revenue. No other customers exceeded 4% of total monthly rental revenue. As of March 31, 2016 , seven of the Company’s customers exceeded 5% of total accounts recei vable. In aggregate, these seven customers accounted for approximately 62% of total accounts receivable . Three of these seven customers individually exceeded 10% of total accounts receivable. |
Income Taxes | Income Taxes – The Company elected for two of its existing subsidiaries to be taxed as taxable REIT subsidiaries pursuant to the REIT rules of the U.S. Internal Revenue Code. For the taxable REIT subsidiaries, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of December 31, 2014, one of the taxable REIT subsidiaries’ deferred tax assets were primarily the result of U.S. net operating loss carryforwards. A valuation allowance was recorded against its gross deferred tax asset balance as of December 31, 2014. As a result of the acquisition of Carpathia, the Company determined that it is more likely than not that pre-existing deferred tax assets will be realized by the combined entity, and the valuation allowance was eliminated. The change in the valuation allowance resulting from the change in circumstances was included in income, recognized in deferred income tax benefit in the year ended December 31, 2015. In addition to the deferred income tax benefit recognized in the prior year in connection with the elimination of the valuation allowance, a deferred tax benefit is being recognized in the three months ended March 31, 2016 in connection with recorded operating losses. The taxable REIT subsidiary consolidated group has a net deferred tax liability position primarily due to the customer-based intangibles acquired as part of the Carpathia acquisition. The Company provides for income taxes during interim periods based on the estimated effective tax rate for the year. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the taxable REIT subsidiary, tax law changes and future business acquisitions. The Company’s effective tax rates were 37.4% and 0% for the three months ended March 31, 2016 and 2015, respectively. The increase in the effective tax rate is primarily due to the elimination of the valuation allowance as a result of the C arpathia acquisition, recorded operating losses of the taxable REIT subsidiary in the current year , and permanent book and tax differences . |
Fair Value Measurements | Fair Value Measurements – ASC Topic 820, Fair Value Measurements , emphasizes that fair-value is a market-based measurement, not an entity-specific measurement. Therefore, a fair-value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, a fair-value hierarchy is established that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the level in the fair-value hierarchy within which the entire fair-value measurement falls is based on the lowest level input that is significant to the fair-value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. As the Company’s previous interest rate swaps matured on September 28, 2014, there are no financial assets or liabilities measured at fair value on a recurring basis on the consolidated balance sheets as of March 31, 2016 and December 31, 2015 . The Company’s purchase price allocation of Carpathia is a fair value estimate that utilized Level 3 inputs and is measured on a non-recurring basis. See Note 3 for further detail. |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , which supersedes the current revenue recognition requirements in ASC 605, Revenue Recognition . Under this new guidance, entities should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This ASU also requires enhanced disclosures. In April 2016, the FASB finalized amendments to the guidance on identifying performance obligations and accounting for licenses of intellectual property. These amendments are not intended to change the core principles of the standard; however, they are intended to clarify important aspects of the guidance and improve its operability. The amendments have the same effective date and transition requirements as the new revenue standard, which is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted; however, entities are not permitted to adopt the standard earlier than December 15, 2016, the original effective date. Retrospective and modified retrospective application is allowed. The Company is currently assessing the impact of this standard on its consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, and not as a separate deferred charge. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. In June 2015, the Securities and Exchange Commission (“SEC”) stated that given the absence of authoritative guidance within this ASU for debt issuance costs related to revolving debt arrangements, the SEC staff would not object to an entity deferring and presenting such costs as an asset and subsequently amortizing them ratably over the term of the revolving debt arrangement. This announcement confirms that revolver arrangement costs are not within the scope of this ASU. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The amendments are required to be applied on a retrospective basis, and upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. The Company adopted this standard in the three months ended March 31, 2016. See Reclassifications in Note 2 for further detail. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments , that eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The amendments in this ASU are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, and should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The Company adopted this standard in the three months ended March 31, 2016. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which supersedes the current lease guidance in ASC 840, Lease s. The core principle of Topic 842 requires lessees to recognize the assets and liabilities that arise from nearly all leases in the statement of financial position. Accounting applied by lessors will remain largely consistent with previous guidance, with additional changes set to align lessor accounting with the revised lessee model and the FASB’s revenue recognition guidance in Topic 606. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this standard on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which amends ASC 718, Compensation – Stock Compensation . The ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements, including simplified income tax accounting for stock-based compensation, enhanced tax withholding rules, accounting policy options with regard to forfeitures and clarified guidance on statement of cash flow presentation. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this standard on its consolidated financial statements. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Deferred Financing Costs, Net of Accumulated Amortization | Deferred financing costs related to revolving debt arrangements, net of accumulated amortization are as follows: March 31, December 31, (dollars in thousands) 2016 2015 (unaudited) Deferred financing costs $ 6,654 $ 6,652 Accumulated amortization (781) (389) Deferred financing costs, net $ 5,873 $ 6,263 |
Deferred Leasing Costs, Net of Accumulated Amortization | Deferred leasing costs, net of accumulated amortization are as follows (excluding $2.7 million , net of amortization, related to a leasing arrangement at the Company’s Princeton facility in 2014): March 31, December 31, (dollars in thousands) 2016 2015 (unaudited) Deferred leasing costs $ 36,466 $ 33,458 Accumulated amortization (13,686) (12,476) Deferred leasing costs, net $ 22,780 $ 20,982 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Acquisitions [Abstract] | |
Schedule of the Preliminary Allocation of the Fair Value of Assets Acquired and Liabilities Assumed in Acquisition | The following table summarizes the consideration for the Carpathia acquisition and the preliminary allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (in thousands). This allocation is subject to change pending the final valuation of these assets and liabilities: Adjusted Carpathia Allocation as of March 31, 2016 Original Allocation Reported as of June 30, 2015 Adjusted Fair Value Land $ 1,130 $ 1,130 $ - Buildings and improvements 78,898 79,372 (474) Construction in progress 12,127 12,127 - Acquired intangibles (1) 108,100 89,847 18,253 Net working capital 3,839 2,569 1,270 Total identifiable assets acquired 204,094 185,045 19,049 Capital lease and lease financing obligations 43,832 43,832 - Deferred income taxes 34,804 19,766 15,038 Acquired above market lease 2,453 - 2,453 Total liabilities assumed 81,089 63,598 17,491 Net identifiable assets acquired 123,005 121,447 1,558 Goodwill 171,679 173,237 (1,558) Net assets acquired $ 294,684 $ 294,684 $ - |
Pro Forma Consolidated Statements of Operations Including Acquisition | The following table represents the pro forma condensed consolidated statements of operations of the combined entities for the three-month period ended March 31, 2015 (in thousands): (Unaudited) Pro Forma Condensed Consolidated Statement of Operations Three Months Ended March 31, 2015 Revenue $ 83,325 Net income $ 3,973 |
Real Estate Assets and Constr23
Real Estate Assets and Construction in Progress (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Real Estate Assets and Construction in Progress [Abstract] | |
Summary of Properties Owned or Leased by the Company | The following is a summary of properties owned or leased by the Company as of March 31, 2016 and December 31, 2015 (in thousands): As of March 31, 2016 (unaudited): Property Location Land Buildings, Improvements and Equipment Construction in Progress Total Cost Owned Properties Suwanee, Georgia (Atlanta-Suwanee) $ 3,521 $ 152,083 $ 15,344 $ 170,948 Atlanta, Georgia (Atlanta-Metro) 15,397 418,313 35,201 468,911 Santa Clara, California* - 95,395 1,403 96,798 Richmond, Virginia 2,180 211,109 86,935 300,224 Sacramento, California 1,481 61,574 37 63,092 Princeton, New Jersey 20,700 32,734 450 53,884 Dallas-Fort Worth, Texas 8,606 117,415 94,475 220,496 Chicago, Illinois - - 96,956 96,956 Miami, Florida 1,777 30,656 263 32,696 Lenexa, Kansas 437 3,511 - 3,948 Duluth, Georgia Office Building 1,899 1,896 41 3,836 55,998 1,124,686 331,105 1,511,789 Leased Properties Leased facilities acquired in 2015 *** 1,130 91,378 7,305 99,813 Jersey City, New Jersey - 24,899 2,078 26,977 Overland Park, Kansas - 922 ** 23 945 1,130 117,199 9,406 127,735 $ 57,128 $ 1,241,885 $ 340,511 $ 1,639,524 * Owned facility subject to long-term ground sublease. ** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers. *** Includes 13 facilities. All facilities are leased, including those subject to capital leases. As of December 31, 2015 : Property Location Land Buildings, Improvements and Equipment Construction in Progress Total Cost Owned Properties Suwanee, Georgia (Atlanta-Suwanee) $ 3,521 $ 150,028 $ 15,330 $ 168,879 Atlanta, Georgia (Atlanta-Metro) 15,397 406,190 41,835 463,422 Santa Clara, California* - 94,437 1,379 95,816 Richmond, Virginia 2,180 208,654 85,771 296,605 Sacramento, California 1,481 61,462 73 63,016 Princeton, New Jersey 20,700 32,708 422 53,830 Dallas-Fort Worth, Texas 8,590 71,783 120,331 200,704 Chicago, Illinois - - 70,749 70,749 Miami, Florida 1,777 30,554 144 32,475 Lenexa, Kansas 437 3,511 - 3,948 Duluth, Georgia Office Building 1,899 1,920 - 3,819 55,982 1,061,247 336,034 1,453,263 Leased Properties Leased facilities acquired in 2015 *** 1,130 89,989 7,196 98,315 Jersey City, New Jersey - 28,228 2,421 30,649 Overland Park, Kansas - 922 ** 4 926 1,130 119,139 9,621 129,890 $ 57,112 $ 1,180,386 $ 345,655 $ 1,583,153 _____________________________ * Owned facility subject to long-term ground sublease. ** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers. *** Includes 13 facilities. All facilities are leased, including those subject to capital leases |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt [Abstract] | |
Outstanding Debt Including Capital Leases | Below is a listing of the Company’s outstanding debt, including capital leases and lease financing obligations, as of March 31, 2016 and December 31, 2015 (in thousands): Weighted Average Coupon Interest Rate at March 31, December 31, March 31, 2016 Maturities 2016 2015 Unsecured Credit Facility Revolving Credit Facility 1.99% December 17, 2019 $ 310,000 $ 224,002 Term Loan I 1.94% December 17, 2020 150,000 150,000 Term Loan II 1.93% April 27, 2021 150,000 150,000 Senior Notes 5.88% August 1, 2022 300,000 300,000 Capital Lease and Lease Financing Obligations 3.40% 2016 - 2025 46,666 49,761 3.26% 956,666 873,763 Less discount and debt issuance costs (11,709) (12,194) Total outstanding debt, net $ 944,957 $ 861,569 |
Annual Remaining Principal Payment | The annual remaining principal payment requirements as of March 31, 2016 per the contractual maturities and excluding extension options, capital leases and lease financing obligations, are as follows (in thousands) : 2016 $ - 2017 - 2018 - 2019 310,000 2020 150,000 Thereafter 450,000 Total $ 910,000 |
Schedule of Combined Future Payment Obligations, Excluding Interest | The following table summarizes the Company’s combined future payment obligations, excluding interest, as of March 31, 2016 , on the capital leases and lease financing obligations above (in thousands): 2016 $ 9,463 2017 12,388 2018 8,804 2019 2,461 2020 2,190 Thereafter 11,360 Total $ 46,666 |
Partners' Capital, Equity and25
Partners' Capital, Equity and Incentive Compensation Plans (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Partners' Capital, Equity and Incentive Compensation Plans [Abstract] | |
Summary of Award Activity Under 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and Related Information | The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the three months ended March 31, 2016 : 2010 Equity Incentive Plan 2013 Equity Incentive Plan Number of Class O units Weighted average exercise price Weighted average fair value Number of Class RS units Weighted average grant date value Options Weighted average exercise price Weighted average fair value Restricted Stock Weighted average grant date value Outstanding at December 31, 2015 1,292,899 $23.76 $3.68 39,875 $22.18 867,882 $27.80 $5.56 394,908 $33.82 Granted — — — — — 229,693 45.78 9.91 205,508 45.89 Exercised/Vested (21,925) 23.15 3.36 — — (5,063) 26.00 5.21 (45,890) (1) 33.93 Released from restriction (2) — — — (31,187) 21.39 — — — — — Cancelled/Expired (3) — — — — — (1,250) 28.82 5.98 (21,335) 35.44 Outstanding at March 31, 2016 1,270,974 $23.77 $3.68 8,688 $25.00 1,091,262 $31.59 $6.47 533,191 $38.40 (1) This represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock . (2) This represents Class RS units that upon vesting have converted to Operating Partnership units . (3) Includes 21,335 restricted Class A common stock surrendered by certain employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock . |
Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted | Class O units and options to purchase shares of Class A common stock were valued using the Black-Scholes model. Three Months Ended March 31, 2016 Fair value of restricted stock granted $45.78 - $47.38 Fair value of options granted $9.57 - $9.97 Expected term (years) 5.5 - 5.9 Expected volatility 30.7 - 31.3 % Expected dividend yield 3.14% Expected risk-free interest rates 1.42 - 1.48% |
Summary of Information About Awards Outstanding | The following table summarizes information about awards outstanding as of March 31, 2016 . Operating Partnership Awards Outstanding Exercise prices Awards outstanding Weighted average remaining vesting period (years) Class RS Units $ - 8,688 0.3 Class O Units $ 20.00 - 25.00 1,270,974 0.4 Total Operating Partnership awards outstanding 1,279,662 QTS Realty Trust, Inc. Awards Outstanding Exercise prices Awards outstanding Weighted average remaining vesting period (years) Restricted stock $ - 533,191 2.5 Options to purchase Class A common stock $ 21.00 - 45.78 1,091,262 1.3 Total QTS Realty Trust, Inc. awards outstanding 1,624,453 |
Schedule of Quarterly Cash Dividends | The following tables present quarterly cash dividends and distributions paid to QTS’ common stockholders and the Operating Partnership’s unit holders for the three months ended March 31, 2016 and 2015 : Three Months Ended March 31, 2016 Record Date Payment Date Per Common Share and Per Unit Rate Aggregate Dividend/Distribution Amount (in millions) December 17, 2015 January 6, 2016 $ 0.32 $ 15.4 $ 0.32 $ 15.4 Three Months Ended March 31, 2015 Record Date Payment Date Per Common Share and Per Unit Rate Aggregate Dividend/Distribution Amount (in millions) December 19, 2014 January 7, 2015 $ 0.29 $ 10.7 $ 0.29 $ 10.7 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Summary of Related Party Transactions | The transactions which occurred during the three months ended March 31, 2016 and 2015 are outlined below (in thousands): Three Months Ended March 31, (dollars in thousands) 2016 2015 Tax, utility, insurance and other reimbursement $ 180 $ 80 Rent expense 253 253 Capital assets acquired 80 99 Total $ 513 $ 432 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings per Share [Abstract] | |
Summary of Basic and Diluted Earnings Per Share | The computation of basic and diluted net income per share is as follows (in thousands, except per share data): Three Months Ended March 31, 2016 2015 Numerator: Net income available to common stockholders -- basic $ 5,889 $ 4,082 Effect of net income attributable to noncontrolling interests 970 955 Net income available to common stockholders -- diluted $ 6,859 $ 5,037 Denominator: Weighted average shares outstanding -- basic 41,292 31,294 Effect of Class A and Class RS partnership units * 6,801 7,317 Effect of Class O units and options to purchase Class A common stock on an "as if" converted basis * 881 598 Weighted average shares outstanding -- diluted 48,974 39,209 Net income per share attributable to common stockholders -- basic $ 0.14 $ 0.13 Net income per share attributable to common stockholders -- diluted $ 0.14 $ 0.13 * The Class A units, Class RS units and Class O units represent limited partnership interests in the Operating Partnership, and are described in more detail in Note 7. |
Customer Leases, as Lessor (Tab
Customer Leases, as Lessor (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Customer Leases, as Lessor [Abstract] | |
Future Minimum Lease Payments to be Received Under Non-Cancelable Operating Customer Leases | Future minimum lease payments to be received under non-cancelable operating customer leases (inclusive of payments for contracts which have not yet commenced, and exclusive of recoveries of operating costs from customers) are as follows for the years ending December 31 (in thousands): 2016 (April - December) $ 235,197 2017 238,773 2018 173,655 2019 103,090 2020 85,836 Thereafter 195,958 Total $ 1,032,509 |
Description of Business (Narrat
Description of Business (Narrative) (Details) $ / shares in Units, $ in Millions | 1 Months Ended | ||
Mar. 31, 2016USD ($)property$ / sharesshares | Dec. 31, 2015$ / sharesshares | Oct. 15, 2013$ / sharesshares | |
Organization And Description Of Business [Line Items] | |||
Number of properties | property | 24 | ||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | |
Common stock, shares issued | shares | 41,434,961 | 41,225,784 | |
Carpathia Hosting, Inc. [Member] | |||
Organization And Description Of Business [Line Items] | |||
Ownership interest | 85.90% | ||
Common Class A [Member] | |||
Organization And Description Of Business [Line Items] | |||
Common stock, par value | $ / shares | $ 0.01 | ||
Common stock, shares issued | shares | 14,087,500 | ||
Net proceeds from issuance of shares | $ | $ 276 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Deferred costs, net | $ 31,367 | $ 30,042 | ||
Unsecured credit facility, net | 607,105 | 520,956 | ||
Senior notes, net of discount and debt issuance costs | $ 291,186 | 290,852 | ||
Useful life of property | 40 years | |||
Depreciation expense from operation | $ 20,700 | $ 12,800 | ||
Real estate cost capitalized excluding interest cost | 2,400 | 3,300 | ||
Real estate interest cost capitalized incurred | 2,800 | 2,000 | ||
Amortization of below market lease | 100 | 0 | ||
Annual amortization for intangible assets for 2015 | 10,100 | |||
Annual amortization for intangible assets for 2016 | 12,200 | |||
Amortization of the deferred financing costs | 813 | 791 | ||
Deferred leasing costs, net | 5,873 | 6,263 | ||
In Place Leases [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Amortization of lease costs | 400 | 400 | ||
Tenant Relationship [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Amoritzation of intangible assets | 3,000 | 300 | ||
Amortization adjustment | (1,000) | (700) | ||
Platform [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Amoritzation of intangible assets | 800 | 0 | ||
Trade Names [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Amoritzation of intangible assets | 300 | 0 | ||
Qualitytech, LP [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Deferred costs, net | 31,367 | 30,042 | ||
Unsecured credit facility, net | 607,105 | 520,956 | ||
Senior notes, net of discount and debt issuance costs | 291,186 | 290,852 | ||
Amortization of the deferred financing costs | 813 | 791 | ||
Real Estate Assets [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Depreciation expense from operation | 17,700 | 10,900 | ||
Non-Real Estate Assets [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Depreciation expense from operation | $ 3,000 | $ 1,900 | ||
Minimum [Member] | Real Property [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Useful life of property | 20 years | |||
Maximum [Member] | Real Property [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Useful life of property | 40 years | |||
Maximum [Member] | Leasehold Improvements [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Useful life of property | 20 years | |||
Unsecured Credit Facility [Member] | Accounting Standards Update 201503 [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Deferred costs, net | (3,100) | |||
Unsecured credit facility, net | 3,100 | |||
Senior Note [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Interest rate | 5.875% | |||
Senior notes due | 2,022 | |||
Deferred leasing costs, net | $ 6,800 | |||
Senior Note [Member] | Accounting Standards Update 201503 [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Deferred costs, net | (7,100) | |||
Senior notes, net of discount and debt issuance costs | 7,100 | |||
Princeton Facility [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Deferred leasing costs, net | $ 2,700 | |||
Carpathia Hosting, Inc. [Member] | Tenant Relationship [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Amortization adjustment | $ (1,000) | $ (700) |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Additional Information 1) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Impairment losses | $ 0 | $ 0 | |||
Goodwill | 171,679 | $ 181,738 | $ 173,237 | ||
Amortization of the deferred financing costs | 813 | 791 | |||
Amortization of deferred leasing costs totaled | 3,500 | 2,700 | |||
Deferred income | 16,435 | 16,991 | |||
Amortization of deferred revenue | 1,900 | 1,200 | |||
Deferred leasing costs, net | 5,873 | 6,263 | |||
Company recorded equity-based compensation expense net of repurchased awards and forfeits | 2,100 | 1,300 | |||
Amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net | 11,000 | $ 9,100 | |||
Unsecured Revolving Credit Facility [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Amortization of the deferred financing costs | 800 | $ 800 | |||
Carpathia Hosting, Inc. [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Goodwill | 171,679 | ||||
Princeton Facility [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Deferred leasing costs, net | $ 2,700 | ||||
Senior Note [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Deferred leasing costs, net | $ 6,800 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Deferred Financing Costs, Net of Accumulated Amortization) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Summary of Significant Accounting Policies [Abstract] | ||
Deferred financing costs | $ 6,654 | $ 6,652 |
Accumulated amortization | (781) | (389) |
Deferred financing costs, net | $ 5,873 | $ 6,263 |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Deferred Leasing Costs, Net of Accumulated Amortization) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Summary of Significant Accounting Policies [Abstract] | ||
Deferred leasing costs | $ 36,466 | $ 33,458 |
Accumulated amortization | (13,686) | (12,476) |
Deferred leasing costs, net | $ 22,780 | $ 20,982 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Additional Information 2) (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016USD ($)segment | Mar. 31, 2015 | Dec. 31, 2015USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||
Capital lease obligations | $ 24,400 | $ 26,900 | |
Lease financing obligations | 22,300 | 22,800 | |
Net book value of assets associated with leases | $ 48,300 | 51,000 | |
Number of operating segments | segment | 1 | ||
Number of reportable segments | segment | 1 | ||
Financial assets | $ 0 | 0 | |
Financial liability | $ 0 | 0 | |
Effective tax rate | 37.40% | 0.00% | |
Accounts Receivable [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Aggregate allowance for doubtful accounts | $ 5,200 | $ 5,100 | |
Customer One [Member] | Rental Revenue [Member] | Maximum [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of total revenue | 11.50% | ||
Three Customers [Member] | Accounts Receivable [Member] | Minimum [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of total accounts receivable | 10.00% | ||
Other Customers [Member] | Rental Revenue [Member] | Maximum [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of total revenue | 4.00% | ||
Seven Customers [Member] | Accounts Receivable [Member] | Minimum [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of total accounts receivable | 5.00% | ||
Seven Customers [Member] | Accounts Receivable [Member] | Maximum [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of total accounts receivable | 62.00% |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) $ in Thousands | Jun. 16, 2015USD ($)propertycustomer | Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) |
Business Acquisition [Line Items] | |||
Amoritization of intangible assets in the remainder of the year | $ 12,200 | ||
Amoritization of intangible assets in 2017 | 12,200 | ||
Amoritization of intangible assets in 2018 | 10,100 | ||
Amoritization of intangible assets in 2019 | 8,000 | ||
Amoritization of intangible assets in 2020 | 8,000 | ||
Cash consideration paid for acquisition | $ 78,053 | $ 73,399 | |
Carpathia Hosting, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Acquisition costs | $ 371,400 | ||
Number of customers of acquired entity | customer | 230 | ||
Number of domestic data centers acquired | property | 8 | ||
Number of international data centers acquired | property | 5 | ||
Tax basis of deductible amount of goodwill acquired | $ 16,600 | ||
Carpathia Hosting, Inc. [Member] | Carpathia Hosting, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Ownership interest | 100.00% |
Acquisitions (Allocation of the
Acquisitions (Allocation of the Fair Value of Assets Acquired and Liabilities Assumed as of the Acquisition Date) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | ||
Business Acquisition [Line Items] | ||||
Land | $ 1,130 | |||
Buildings and improvements | 79,372 | |||
Construction in process | 12,127 | |||
Acquired intangibles, net | [1] | 89,847 | ||
Net working capital | 2,569 | |||
Total identifiable assets acquired | 185,045 | |||
Capital lease and lease financing obligations | 43,832 | |||
Deferred income taxes | 19,766 | |||
Total liabilities assumed | 63,598 | |||
Net identifiable assets acquired | 121,447 | |||
Goodwill | $ 171,679 | $ 181,738 | 173,237 | |
Net assets acquired | $ 294,684 | |||
Acquired intangible asset adjustment | 14,700 | |||
Adjustment [Member] | ||||
Business Acquisition [Line Items] | ||||
Buildings and improvements | (474) | |||
Acquired intangibles, net | [1] | 18,253 | ||
Net working capital | 1,270 | |||
Total identifiable assets acquired | 19,049 | |||
Deferred income taxes | 15,038 | |||
Aquired above market lease | 2,453 | |||
Total liabilities assumed | 17,491 | |||
Net identifiable assets acquired | 1,558 | |||
Goodwill | (1,558) | |||
Carpathia Hosting, Inc. [Member] | ||||
Business Acquisition [Line Items] | ||||
Land | 1,130 | |||
Buildings and improvements | 78,898 | |||
Construction in process | 12,127 | |||
Acquired intangibles, net | [1] | 108,100 | ||
Net working capital | 3,839 | |||
Total identifiable assets acquired | 204,094 | |||
Capital lease and lease financing obligations | 43,832 | |||
Deferred income taxes | 34,804 | |||
Aquired above market lease | 2,453 | |||
Total liabilities assumed | 81,089 | |||
Net identifiable assets acquired | 123,005 | |||
Goodwill | 171,679 | |||
Net assets acquired | 294,684 | |||
Fair value adjustment | 3,600 | |||
Acquired intangible asset adjustment | 14,700 | |||
Tenant Relationship [Member] | ||||
Business Acquisition [Line Items] | ||||
Amortization adjustment | (1,000) | (700) | ||
Tenant Relationship [Member] | Carpathia Hosting, Inc. [Member] | ||||
Business Acquisition [Line Items] | ||||
Amortization adjustment | $ (1,000) | $ (700) | ||
[1] | In addition to $3.6 million of prior period fair value adjustments, during the three months ended March 31, 2016, a $14.7 million adjustment was recorded to increase acquired intangible assets following identified purchase price allocation adjustments, with a corresponding decrease to goodwill. An adjustment of $1.0 million to increase amortization expense related to this increase in acquired intangibles was recorded during the three months ended March 31, 2016, of which $0.7 million related to prior reporting periods. |
Acquisitions (Schedule of Pro F
Acquisitions (Schedule of Pro Forma Information Related to Acquisition) (Details) - Carpathia Hosting, Inc. [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2015USD ($) | |
Pro forma revenue | $ 83,325 |
Pro forma net income (loss) | $ 3,973 |
Real Estate Assets and Constr38
Real Estate Assets and Construction in Progress (Summary of Properties Owned or Leased by the Company) (Details) $ in Thousands | Mar. 31, 2016USD ($)property | Dec. 31, 2015USD ($)property | |
Real Estate Properties [Line Items] | |||
Land | $ 57,128 | $ 57,112 | |
Buildings, improvements and equipment | 1,241,885 | 1,180,386 | |
Construction in progress | 340,511 | 345,655 | |
Total cost | 1,639,524 | 1,583,153 | |
Owned Properties [Member] | |||
Real Estate Properties [Line Items] | |||
Land | 55,998 | 55,982 | |
Buildings, improvements and equipment | 1,124,686 | 1,061,247 | |
Construction in progress | 331,105 | 336,034 | |
Total cost | 1,511,789 | 1,453,263 | |
Owned Properties [Member] | Suwanee, Georgia (Atlanta-Suwanee) [Member] | |||
Real Estate Properties [Line Items] | |||
Land | 3,521 | 3,521 | |
Buildings, improvements and equipment | 152,083 | 150,028 | |
Construction in progress | 15,344 | 15,330 | |
Total cost | 170,948 | 168,879 | |
Owned Properties [Member] | Atlanta, Georgia (Atlanta-Metro) [Member] | |||
Real Estate Properties [Line Items] | |||
Land | 15,397 | 15,397 | |
Buildings, improvements and equipment | 418,313 | 406,190 | |
Construction in progress | 35,201 | 41,835 | |
Total cost | $ 468,911 | $ 463,422 | |
Owned Properties [Member] | Santa Clara, California [Member] | |||
Real Estate Properties [Line Items] | |||
Land | [1] | ||
Buildings, improvements and equipment | [1] | $ 95,395 | $ 94,437 |
Construction in progress | [1] | 1,403 | 1,379 |
Total cost | [1] | 96,798 | 95,816 |
Owned Properties [Member] | Richmond, Virginia [Member] | |||
Real Estate Properties [Line Items] | |||
Land | 2,180 | 2,180 | |
Buildings, improvements and equipment | 211,109 | 208,654 | |
Construction in progress | 86,935 | 85,771 | |
Total cost | 300,224 | 296,605 | |
Owned Properties [Member] | Sacramento, California [Member] | |||
Real Estate Properties [Line Items] | |||
Land | 1,481 | 1,481 | |
Buildings, improvements and equipment | 61,574 | 61,462 | |
Construction in progress | 37 | 73 | |
Total cost | 63,092 | 63,016 | |
Owned Properties [Member] | Princeton, New Jersey [Member] | |||
Real Estate Properties [Line Items] | |||
Land | 20,700 | 20,700 | |
Buildings, improvements and equipment | 32,734 | 32,708 | |
Construction in progress | 450 | 422 | |
Total cost | 53,884 | 53,830 | |
Owned Properties [Member] | Dallas-Fort Worth, Texas [Member] | |||
Real Estate Properties [Line Items] | |||
Land | 8,606 | 8,590 | |
Buildings, improvements and equipment | 117,415 | 71,783 | |
Construction in progress | 94,475 | 120,331 | |
Total cost | $ 220,496 | $ 200,704 | |
Owned Properties [Member] | Chicago, Illinois [Member] | |||
Real Estate Properties [Line Items] | |||
Land | |||
Buildings, improvements and equipment | |||
Construction in progress | $ 96,956 | $ 70,749 | |
Total cost | 96,956 | 70,749 | |
Owned Properties [Member] | Miami, Florida [Member] | |||
Real Estate Properties [Line Items] | |||
Land | 1,777 | 1,777 | |
Buildings, improvements and equipment | 30,656 | 30,554 | |
Construction in progress | 263 | 144 | |
Total cost | 32,696 | 32,475 | |
Owned Properties [Member] | Lenexa, Kansas [Member] | |||
Real Estate Properties [Line Items] | |||
Land | 437 | 437 | |
Buildings, improvements and equipment | $ 3,511 | $ 3,511 | |
Construction in progress | |||
Total cost | $ 3,948 | $ 3,948 | |
Owned Properties [Member] | Deluth, Georgia [Member] | |||
Real Estate Properties [Line Items] | |||
Land | 1,899 | 1,899 | |
Buildings, improvements and equipment | 1,896 | $ 1,920 | |
Construction in progress | 41 | ||
Total cost | 3,836 | $ 3,819 | |
Leased Properties [Member] | |||
Real Estate Properties [Line Items] | |||
Land | 1,130 | 1,130 | |
Buildings, improvements and equipment | 117,199 | 119,139 | |
Construction in progress | 9,406 | 9,621 | |
Total cost | $ 127,735 | $ 129,890 | |
Leased Properties [Member] | Jersey City, New Jersey [Member] | |||
Real Estate Properties [Line Items] | |||
Land | |||
Buildings, improvements and equipment | $ 24,899 | $ 28,228 | |
Construction in progress | 2,078 | 2,421 | |
Total cost | $ 26,977 | $ 30,649 | |
Leased Properties [Member] | Overland Park, Kansas [Member] | |||
Real Estate Properties [Line Items] | |||
Land | |||
Buildings, improvements and equipment | [2] | $ 922 | $ 922 |
Construction in progress | 23 | 4 | |
Total cost | 945 | 926 | |
Leased Properties [Member] | Carpathia Properties [Member] | |||
Real Estate Properties [Line Items] | |||
Land | [3] | 1,130 | 1,130 |
Buildings, improvements and equipment | [3] | 91,378 | 89,989 |
Construction in progress | [3] | 7,305 | 7,196 |
Total cost | [3] | $ 99,813 | $ 98,315 |
Number of facilities leased | property | 13 | 13 | |
[1] | Owned facility subject to long-term ground sublease. | ||
[2] | This does not include the portion of the business that is used for QTS office space or other real estate not used by customers. | ||
[3] | Includes 13 facilities. All facilities are leased, including those subject to capital leases. |
Debt (Unsecured Credit Facility
Debt (Unsecured Credit Facility Narrative) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2015 | Oct. 31, 2015 | |
Debt Instrument [Line Items] | |||
Outstanding debt | |||
Debt issuance costs, net | $ 5,873,000 | $ 6,263,000 | |
Debt instrument, discount | 11,709,000 | 12,194,000 | |
Term Loan [Member] | |||
Debt Instrument [Line Items] | |||
Outstanding debt | 300,000,000 | ||
Debt issuance costs, net | $ 2,900,000 | ||
Term Loan Maturing April 27, 2021 [Member] | |||
Debt Instrument [Line Items] | |||
Maturity date | Apr. 27, 2021 | ||
Term Loan Maturing December 20, 2020 [Member] | |||
Debt Instrument [Line Items] | |||
Maturity date | Dec. 17, 2020 | ||
Letter of Credit [Member] | |||
Debt Instrument [Line Items] | |||
Letter of credit outstanding | $ 2,000,000 | ||
Line of credit facility weighted average interest rate outstanding percentage | 1.96% | ||
Unsecured Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Line of credit facility accordion feature | $ 200,000,000 | ||
Maximum the credit facility may be increased up until | $ 1,100,000,000 | ||
Minimum [Member] | Term Loan [Member] | LIBOR [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.50% | ||
Minimum [Member] | Term Loan [Member] | Base Rate [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.50% | ||
Minimum [Member] | Revolving Credit Facility [Member] | LIBOR [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.55% | ||
Minimum [Member] | Revolving Credit Facility [Member] | Base Rate [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.55% | ||
Maximum [Member] | Term Loan [Member] | LIBOR [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 2.10% | ||
Maximum [Member] | Term Loan [Member] | Base Rate [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.10% | ||
Maximum [Member] | Revolving Credit Facility [Member] | LIBOR [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 2.15% | ||
Maximum [Member] | Revolving Credit Facility [Member] | Base Rate [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.15% | ||
Unsecured Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | $ 900,000,000 | ||
Increase the amount of line of credit facility | 250,000,000 | ||
Debt Instrument, Covenant Compliance | the Company was in compliance with all of its covenants | ||
Unsecured Credit Facility [Member] | Term Loan Maturing April 27, 2021 [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | 150,000,000 | ||
Unsecured Credit Facility [Member] | Term Loan Maturing December 20, 2020 [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | 150,000,000 | ||
Unsecured Credit Facility [Member] | Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | $ 600,000,000 | ||
Maturity date | Dec. 17, 2019 | ||
Outstanding debt | $ 310,000,000 | $ 224,002,000 | |
Senior Note [Member] | |||
Debt Instrument [Line Items] | |||
Maturity date | Aug. 1, 2022 | ||
Senior notes due | 2,022 | ||
Interest rate | 5.875% | ||
Debt issuance costs, net | $ 6,800,000 | ||
Debt instrument, discount | $ 2,000,000 |
Debt (Senior Notes) (Details)
Debt (Senior Notes) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2015 | Jul. 23, 2014 | |
Debt Instrument [Line Items] | |||
Debt issuance costs, net | $ 5,873,000 | $ 6,263,000 | |
Term Loan [Member] | |||
Debt Instrument [Line Items] | |||
Debt issuance costs, net | 2,900,000 | ||
Unsecured Credit Facility [Member] | Term Loan [Member] | |||
Debt Instrument [Line Items] | |||
Unsecured term loan outstanding | $ 75,000,000 | ||
Senior Note [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount | $ 300,000,000 | ||
Interest rate | 5.875% | ||
Senior notes due | 2,022 | ||
Maturity date | Aug. 1, 2022 | ||
Debt issuance costs, net | $ 6,800,000 | ||
Percentage of issued price equal to face value | 99.211% | ||
Notes issuance date | Jul. 23, 2014 |
Debt (Outstanding Debt Includin
Debt (Outstanding Debt Including Capital Leases) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Outstanding debt | ||
Capital lease and lease financing obligations | $ 46,666 | $ 49,761 |
Total debt and lease obligations | 956,666 | 873,763 |
Less discount and debt issuance costs | (11,709) | (12,194) |
Total outstanding debt, net | $ 944,957 | 861,569 |
Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 5.88% | |
Maturity date | Aug. 1, 2022 | |
Outstanding debt | $ 300,000 | 300,000 |
Capital Lease and Lease Financing Obligations [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.40% | |
Maturity date decription | 2016 - 2025 | |
Capital lease and lease financing obligations | $ 46,666 | 49,761 |
Unsecured Credit Facility [Member] | Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 1.99% | |
Maturity date | Dec. 17, 2019 | |
Outstanding debt | $ 310,000 | 224,002 |
Unsecured Credit Facility [Member] | Term Loan I [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 1.94% | |
Maturity date | Dec. 17, 2020 | |
Outstanding debt | $ 150,000 | 150,000 |
Unsecured Credit Facility [Member] | Term Loan II [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 1.93% | |
Maturity date | Apr. 27, 2021 | |
Outstanding debt | $ 150,000 | $ 150,000 |
Unsecured Credit Facility, Senior Notes, Capital Lease and Lease Financing Obligations [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.26% |
Debt (Annual Remaining Principa
Debt (Annual Remaining Principal Payment) (Details) $ in Thousands | Mar. 31, 2016USD ($) |
Debt [Abstract] | |
2,016 | |
2,017 | |
2,018 | |
2,019 | $ 310,000 |
2,020 | 150,000 |
Thereafter | 450,000 |
Total | $ 910,000 |
Debt (Lease Narrative) (Details
Debt (Lease Narrative) (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 37 Months Ended | ||
Jun. 30, 2015USD ($)agreement | Mar. 31, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jun. 16, 2015USD ($) | |
Capital Leased Assets [Line Items] | |||||
Capital lease and lease financing obligations | $ 46,666 | $ 46,666 | $ 49,761 | ||
Capital lease and lease financing obligations | $ 43,832 | ||||
Lease financing obligations | 22,300 | 22,300 | $ 22,800 | ||
Carpathia Hosting, Inc. [Member] | |||||
Capital Leased Assets [Line Items] | |||||
Capital lease and lease financing obligations | 24,400 | 24,400 | |||
Capital lease and lease financing obligations | 43,832 | 43,832 | |||
Capital lease and lease financing obligations assumed | 15,300 | ||||
Number of lease agreements | agreement | 2 | ||||
Outstandind financing agreement | 2,100 | 2,100 | |||
Deferred gain of lease financing obligations | $ 1,600 | ||||
Lease financing monthly principal and interest payment | 200 | ||||
Lease financing expiration date | Feb. 28, 2019 | ||||
Carpathia Hosting, Inc. [Member] | Sale-Leaseback Transaction [Member] | |||||
Capital Leased Assets [Line Items] | |||||
Capital lease and lease financing obligations assumed | $ 20,200 | ||||
Outstandind financing agreement | 18,600 | $ 18,600 | |||
Carpathia Hosting, Inc. [Member] | Tenant Improvement Allowance [Member] | |||||
Capital Leased Assets [Line Items] | |||||
Lease financing obligations | $ 4,800 | ||||
Minimum [Member] | Carpathia Hosting, Inc. [Member] | |||||
Capital Leased Assets [Line Items] | |||||
Lease expiration year | 2,018 | ||||
Monthly lease payment | $ 200 | ||||
Maximum [Member] | Carpathia Hosting, Inc. [Member] | |||||
Capital Leased Assets [Line Items] | |||||
Lease expiration year | 2,019 | ||||
Monthly lease payment | $ 500 | ||||
Lease financing monthly principal and interest payment | $ 100 |
Debt (Future Payment Obligation
Debt (Future Payment Obligations) (Details) $ in Thousands | Mar. 31, 2016USD ($) |
Debt [Abstract] | |
2,016 | $ 9,463 |
2,017 | 12,388 |
2,018 | 8,804 |
2,019 | 2,461 |
2,020 | 2,190 |
Thereafter | 11,360 |
Total lease obligations | $ 46,666 |
Partners' Capital, Equity and45
Partners' Capital, Equity and Incentive Compensation Plans (Narrative) (Details) | Apr. 05, 2016$ / shares | Apr. 01, 2016$ / sharesshares | Mar. 31, 2016USD ($)itemshares | Jun. 30, 2015USD ($)shares | Mar. 31, 2016USD ($)itemsecurity$ / sharesshares | Mar. 31, 2015$ / shares | Jun. 17, 2015shares | May. 03, 2015shares |
Partners Capital And Distributions [Line Items] | ||||||||
Number of classes of partnership units outstanding | security | 3 | |||||||
Equity based compensation expense unrecognized | $ | $ 24,600,000 | $ 24,600,000 | ||||||
Equity based compensation expense vesting period | 4 years | |||||||
Equity based compensation awards intrinsic value | $ | $ 69,500,000 | $ 69,500,000 | ||||||
Dividend paid to common stockholders | $ / shares | $ 0.32 | $ 0.29 | ||||||
Dividends payable, date payable | Jan. 6, 2016 | Jan. 7, 2015 | ||||||
Dividends payable, date of record | Mar. 18, 2016 | Dec. 17, 2015 | Dec. 19, 2014 | |||||
QTS Realty Trust, Inc. Employee Stock Purchase Plan [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Shares reserved for purchase under plan | 250,000 | |||||||
Subsequent Event [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Dividend paid to common stockholders | $ / shares | $ 0.36 | |||||||
Partnership distribution per unit | $ / shares | $ 0.36 | |||||||
Dividends payable, date payable | Apr. 5, 2016 | |||||||
Dividends payable, date of record | Mar. 18, 2016 | |||||||
Class O Units [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Nonvested awards outstanding | 200,000 | 200,000 | ||||||
Common Class B [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Number of votes per share | item | 50 | 50 | ||||||
Common Class A [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Shares issued | 6,325,000 | |||||||
Net proceeds from issuance of shares | $ | $ 276,000,000 | |||||||
Shares reserved for purchase under plan | 250,000 | |||||||
Common Class A [Member] | Underwriters [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Shares issued | 825,000 | |||||||
Common Class A [Member] | Subsequent Event [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Shares issued | 6,325,000 | |||||||
Shares issued, price per share | $ / shares | $ 45.50 | |||||||
Common Class A [Member] | Subsequent Event [Member] | Underwriters [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Shares issued | 825,000 | |||||||
Chief Executive Officer [Member] | Common Class B [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Percentage of operating partnership unit exchanged | 2.00% | |||||||
Minimum [Member] | QTS Realty Trust, Inc. Employee Stock Purchase Plan [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Monthly deduction from eligible employees for plan | $ | $ 40 | |||||||
Maximum [Member] | QTS Realty Trust, Inc. Employee Stock Purchase Plan [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Monthly deduction from eligible employees for plan | $ | $ 2,000 | |||||||
Restricted Class A Common Stock [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Nonvested awards outstanding | 500,000 | 500,000 | ||||||
Options to purchase Class A common stock [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Nonvested awards outstanding | 500,000 | 500,000 | ||||||
2013 Equity Incentive Plan [Member] | ||||||||
Partners Capital And Distributions [Line Items] | ||||||||
Authorized shares to be issued under the plan | 4,750,000 | 4,750,000 | 1,750,000 |
Partners' Capital, Equity and46
Partners' Capital, Equity and Incentive Compensation Plans (Summary of Award Activity Under 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and Related Information) (Details) | 3 Months Ended | |
Mar. 31, 2016$ / sharesshares | ||
2013 Equity Incentive Plan [Member] | Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance, Options Outstanding | shares | 867,882 | |
Options, Granted | shares | 229,693 | |
Options, Exercised | shares | (5,063) | |
Options, Released from restriction | shares | [1] | |
Options, Cancelled/Expired | shares | (1,250) | [2] |
Ending balance, Options Outstanding | shares | 1,091,262 | |
Beginning balance, Weighted average exercise price options outstanding | $ 27.80 | |
Weighted average exercise price options outstanding, Granted | 45.78 | |
Weighted average exercise price options outstanding, Exercised | $ 26 | |
Weighted average exercise price options outstanding, Released from restriction | [1] | |
Weighted average exercise price options outstanding, Cancelled/Expired | $ 28.82 | [2] |
Ending balance, Weighted average exercise price options outstanding | 31.59 | |
Beginning balance, weighted average fair value, options | 5.56 | |
Weighted average fair value, granted, options | 9.91 | |
Weighted average fair value, vested, options | $ 5.21 | |
Weighted average fair value, released from restriction, options | [1] | |
Weighted average fair value, cancelled/expired, options | $ 5.98 | [2] |
Ending balance, weighted average fair value, options | $ 6.47 | |
2013 Equity Incentive Plan [Member] | Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance, Number of units | shares | 394,908 | |
Number of units, Granted | shares | 205,508 | |
Number of units, Exercised | shares | (45,890) | [3] |
Number of units, Released from restriction | shares | [1] | |
Number of units, Cancelled/Expired | shares | (21,335) | [2] |
Ending balance, Number of units | shares | 533,191 | |
Beginning balance, Weighted average fair value | $ 33.82 | |
Weighted average fair value, Granted | 45.89 | |
Weighted average fair value, Exercised | $ 33.93 | |
Weighted average fair value, Released from restriction | [1] | |
Weighted average fair value, Cancelled/Expired | $ 35.44 | [2] |
Ending balance, Weighted average fair value | $ 38.40 | |
Restricted Class A Common Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Units surrendered | shares | 21,335 | |
Class O Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Ending balance, Number of units | shares | 200,000 | |
Class O Units [Member] | 2010 Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance, Number of units | shares | 1,292,899 | |
Number of units, Granted | shares | ||
Number of units, Exercised | shares | (21,925) | |
Number of units, Released from restriction | shares | [1] | |
Number of units, Cancelled/Expired | shares | [2] | |
Ending balance, Number of units | shares | 1,270,974 | |
Beginning balance, Weighted average exercise price units | $ 23.76 | |
Weighted average exercise price units, Granted | ||
Weighted average exercise price units, Exercised | $ 23.15 | |
Weighted average exercise price units, Released from restriction | [1] | |
Weighted average exercise price units, Cancelled/Expired | [2] | |
Ending balance, Weighted average exercise price units | $ 23.77 | |
Beginning balance, Weighted average fair value | $ 3.68 | |
Weighted average fair value, Granted | ||
Weighted average fair value, Exercised | $ 3.36 | |
Weighted average fair value, Released from restriction | [1] | |
Weighted average fair value, Cancelled/Expired | [2] | |
Ending balance, Weighted average fair value | $ 3.68 | |
Class RS Units [Member] | 2010 Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance, Number of units | shares | 39,875 | |
Number of units, Granted | shares | ||
Number of units, Exercised | shares | ||
Number of units, Released from restriction | shares | (31,187) | [1] |
Number of units, Cancelled/Expired | shares | [2] | |
Ending balance, Number of units | shares | 8,688 | |
Beginning balance, Weighted average fair value | $ 22.18 | |
Weighted average fair value, Granted | ||
Weighted average fair value, Exercised | ||
Weighted average fair value, Released from restriction | $ 21.39 | [1] |
Weighted average fair value, Cancelled/Expired | [2] | |
Ending balance, Weighted average fair value | $ 25 | |
[1] | This represents Class RS units that upon vesting have converted to Operating Partnership units | |
[2] | Includes 21,335 restricted Class A common stock surrendered by certain employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock. | |
[3] | This represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock |
Partners' Capital, Equity and47
Partners' Capital, Equity and Incentive Compensation Plans (Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted) (Details) | 3 Months Ended |
Mar. 31, 2016$ / shares | |
Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of restricted stock granted | $ 45.78 |
Fair value of options granted | $ 9.57 |
Expected term (years) | 5 years 6 months |
Expected volatility | 30.70% |
Expected dividend yield | 3.14% |
Expected risk-free interest rates | 1.42% |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of restricted stock granted | $ 47.38 |
Fair value of options granted | $ 9.97 |
Expected term (years) | 5 years 10 months 24 days |
Expected volatility | 31.30% |
Expected risk-free interest rates | 1.48% |
Partners' Capital, Equity and48
Partners' Capital, Equity and Incentive Compensation Plans (Summary of Information About Awards Outstanding) (Details) | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Operating Partnership [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 1,279,662 |
QTS Realty Trust, Inc Awards Outstanding [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 1,624,453 |
QTS Realty Trust, Inc Awards Outstanding [Member] | Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 533,191 |
Remaining term of awards | 2 years 6 months |
QTS Realty Trust, Inc Awards Outstanding [Member] | Options to purchase Class A common stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Lower limit of exercise price | $ / shares | $ 21 |
Upper limit of exercise price | $ / shares | $ 45.78 |
Awards Outstanding | 1,091,262 |
Remaining term of awards | 1 year 3 months 18 days |
Class O Units [Member] | Operating Partnership [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Lower limit of exercise price | $ / shares | $ 20 |
Upper limit of exercise price | $ / shares | $ 25 |
Awards Outstanding | 1,270,974 |
Remaining term of awards | 4 months 24 days |
Class RS Units [Member] | Operating Partnership [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 8,688 |
Remaining term of awards | 3 months 18 days |
Partners' Capital, Equity and49
Partners' Capital, Equity and Incentive Compensation Plans (Schedule of Quarterly Cash Dividends) (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 05, 2016 | Mar. 31, 2016 | Mar. 31, 2015 |
Partners' Capital, Equity and Incentive Compensation Plans [Abstract] | |||
Record Date | Mar. 18, 2016 | Dec. 17, 2015 | Dec. 19, 2014 |
Payment Date | Jan. 6, 2016 | Jan. 7, 2015 | |
Per Common Share and Per Unit Rate | $ 0.32 | $ 0.29 | |
Dividend/Distribution Amount | $ 15.4 | $ 10.7 |
Related Party Transactions (Sum
Related Party Transactions (Summary of Related Party Transactions) (Details) - Affiliated Entity [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Related Party Transaction [Line Items] | ||
Tax, utility, insurance and other reimbursement | $ 180 | $ 80 |
Rent expense | 253 | 253 |
Capital assets acquired | 80 | 99 |
Total | $ 513 | $ 432 |
Noncontrolling Interest (Narrat
Noncontrolling Interest (Narrative) (Details) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 31, 2016 | Oct. 31, 2014 | |
Quality Tech LP ownership percentage in operating partnership | 21.20% | ||
Stock conversion ratio | 1 | ||
Qualitytech, LP [Member] | |||
Quality Tech LP ownership percentage in operating partnership | 14.10% |
Earnings per Share (Narrative)
Earnings per Share (Narrative) (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings per Share [Abstract] | ||
Antidilutive shares excluded from the computation of diluted net earning per share | 229,693 | 139,747 |
Antidilutive shares excluded from the computation of diluted net earning per share, amount per share | $ 45.78 | $ 36.54 |
Earnings per Share (Computation
Earnings per Share (Computation of Basic and Diluted Net Income per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings per Share [Abstract] | ||
Net income available to common stockholders - basic | $ 5,889 | $ 4,082 |
Effect of net income attributable to noncontrolling interests | 970 | 955 |
Net income available to common stockholders - diluted | $ 6,859 | $ 5,037 |
Weighted average shares outstanding-basic | 41,292,445 | 31,294,488 |
Effect of Class A and Class RS partnership units | 6,801,000 | 7,317,000 |
Effect of Class O units and options to purchase Class A common stock on an "as if" converted basis | 881,000 | 598,000 |
Weighted average shares outstanding-diluted | 48,973,851 | 39,209,226 |
Net income per share attributable to common stockholders - basic | $ 0.14 | $ 0.13 |
Net income per share attributable to common stockholders - diluted | $ 0.14 | $ 0.13 |
Customer Leases, as Lessor (Fut
Customer Leases, as Lessor (Future Minimum Lease Payments to be Received Under Non-Cancelable Operating Customer Leases) (Details) $ in Thousands | Mar. 31, 2016USD ($) |
Customer Leases, as Lessor [Abstract] | |
2016 (April - December) | $ 235,197 |
2,017 | 238,773 |
2,018 | 173,655 |
2,019 | 103,090 |
2,020 | 85,836 |
Thereafter | 195,958 |
Total | $ 1,032,509 |
Fair Value of Financial Instr55
Fair Value of Financial Instruments (Narrative) (Details) $ in Millions | Mar. 31, 2016USD ($) |
Senior Note [Member] | Fair Value Measurements, Level 2 [Member] | |
Fair Value Of Financial Instruments [Line Items] | |
Fair value of loan based on current market rates | $ 304.7 |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 05, 2016 | Apr. 01, 2016 | Mar. 31, 2016 | Mar. 31, 2016 | Mar. 31, 2015 |
Subsequent Event [Line Items] | |||||
Dividend paid to common stockholders | $ 0.32 | $ 0.29 | |||
Dividends payable, date of record | Mar. 18, 2016 | Dec. 17, 2015 | Dec. 19, 2014 | ||
Dividends payable, date payable | Jan. 6, 2016 | Jan. 7, 2015 | |||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividend paid to common stockholders | $ 0.36 | ||||
Dividends payable, date of record | Mar. 18, 2016 | ||||
Dividends payable, date payable | Apr. 5, 2016 | ||||
Common Class A [Member] | |||||
Subsequent Event [Line Items] | |||||
Shares issued | 6,325,000 | ||||
Net proceeds from issuance of shares | $ 276 | ||||
Common Class A [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Shares issued | 6,325,000 | ||||
Shares issued, price per share | $ 45.50 | ||||
Common Class A [Member] | Underwriters [Member] | |||||
Subsequent Event [Line Items] | |||||
Shares issued | 825,000 | ||||
Common Class A [Member] | Underwriters [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Shares issued | 825,000 |