Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 01, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | QTS Realty Trust, Inc. | |
Entity Central Index Key | 1,577,368 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-31 | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 51,018,919 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 128,408 | |
Qualitytech, LP | ||
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | QualityTech, LP | |
Entity Central Index Key | 1,561,164 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-31 |
INTERIM CONSOLIDATED FINANCIAL
INTERIM CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Real Estate Assets | ||
Land | $ 105,541 | $ 88,216 |
Buildings, improvements and equipment | 1,833,870 | 1,701,287 |
Less: Accumulated depreciation | (434,565) | (394,823) |
Total real estate assets | 1,504,846 | 1,394,680 |
Construction in progress | 649,766 | 567,819 |
Real Estate Assets, net | 2,154,612 | 1,962,499 |
Cash and cash equivalents | 52,468 | 8,243 |
Rents and other receivables, net | 50,090 | 47,046 |
Acquired intangibles, net | 100,202 | 109,451 |
Deferred costs, net | 44,682 | 41,545 |
Prepaid expenses | 10,088 | 6,163 |
Goodwill | 173,843 | 173,843 |
Other assets, net | 68,880 | 66,266 |
TOTAL ASSETS | 2,654,865 | 2,415,056 |
LIABILITIES | ||
Unsecured credit facility, net | 694,751 | 825,186 |
Senior notes, net of debt issuance costs | 394,406 | 394,178 |
Capital lease, lease financing obligations and mortgage notes payable | 6,217 | 10,565 |
Accounts payable and accrued liabilities | 109,355 | 113,430 |
Dividends and distributions payable | 25,648 | 22,222 |
Advance rents, security deposits and other liabilities | 29,640 | 28,903 |
Deferred income taxes | 2,068 | 4,611 |
Deferred income | 32,870 | 25,305 |
TOTAL LIABILITIES | 1,294,955 | 1,424,400 |
EQUITY | ||
Common stock / units | 511 | 507 |
Additional paid-in capital | 1,056,667 | 1,049,176 |
Accumulated other comprehensive income | 8,840 | 1,283 |
Accumulated dividends in excess of earnings | (223,724) | (173,552) |
Total stockholders' equity | 1,249,932 | 877,414 |
Noncontrolling interests | 109,978 | 113,242 |
TOTAL EQUITY | 1,359,910 | 990,656 |
TOTAL LIABILITIES AND EQUITY | 2,654,865 | 2,415,056 |
Qualitytech, LP | ||
Real Estate Assets | ||
Land | 105,541 | 88,216 |
Buildings, improvements and equipment | 1,833,870 | 1,701,287 |
Less: Accumulated depreciation | (434,565) | (394,823) |
Total real estate assets | 1,504,846 | 1,394,680 |
Construction in progress | 649,766 | 567,819 |
Real Estate Assets, net | 2,154,612 | 1,962,499 |
Cash and cash equivalents | 52,468 | 8,243 |
Rents and other receivables, net | 50,090 | 47,046 |
Acquired intangibles, net | 100,202 | 109,451 |
Deferred costs, net | 44,682 | 41,545 |
Prepaid expenses | 10,088 | 6,163 |
Goodwill | 173,843 | 173,843 |
Other assets, net | 68,880 | 66,266 |
TOTAL ASSETS | 2,654,865 | 2,415,056 |
LIABILITIES | ||
Unsecured credit facility, net | 694,751 | 825,186 |
Senior notes, net of debt issuance costs | 394,406 | 394,178 |
Capital lease, lease financing obligations and mortgage notes payable | 6,217 | 10,565 |
Accounts payable and accrued liabilities | 109,355 | 113,430 |
Dividends and distributions payable | 25,648 | 22,222 |
Advance rents, security deposits and other liabilities | 29,640 | 28,903 |
Deferred income taxes | 2,068 | 4,611 |
Deferred income | 32,870 | 25,305 |
TOTAL LIABILITIES | 1,294,955 | 1,424,400 |
EQUITY | ||
Accumulated other comprehensive income | 9,994 | 1,449 |
TOTAL PARTNERS' CAPITAL | 1,359,910 | 990,656 |
TOTAL LIABILITIES AND EQUITY | 2,654,865 | 2,415,056 |
7.125% Series A cumulative redeemable perpetual preferred stock: $0.01 par value (liquidation preference $25.00 per share), 4,600,000 shares authorized, 4,280,000 shares issued and outstanding as of June 30, 2018; zero shares authorized, issued and outstanding as of December 31, 2017 | Qualitytech, LP | ||
EQUITY | ||
Cumulative redeemable perpetual preferred stock / units | 103,212 | |
6.50% Series B cumulative convertible perpetual preferred units: $0.01 par value (liquidation preference $100.00 per share), 3,162,500 units authorized, 3,162,500 units issued and outstanding as of June 30, 2018; zero units authorized, issued and outstanding as of December 31, 2017 | Qualitytech, LP | ||
EQUITY | ||
Cumulative redeemable perpetual preferred stock / units | 304,426 | |
Common units: $0.01 par value, 450,133,000 units authorized, 51,135,691 and 57,245,524 units issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | Qualitytech, LP | ||
EQUITY | ||
Common stock / units | 942,278 | $ 989,207 |
Series A Preferred Stock | ||
EQUITY | ||
Cumulative redeemable perpetual preferred stock / units | 103,212 | |
Series B Preferred Stock | ||
EQUITY | ||
Cumulative redeemable perpetual preferred stock / units | $ 304,426 |
INTERIM CONSOLIDATED FINANCIAL3
INTERIM CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,133,000 | 450,133,000 |
Common stock, shares issued | 51,140,798 | 50,701,795 |
Common stock, shares outstanding | 51,140,798 | 50,701,795 |
Series A Preferred Stock | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, liquidation preference | $ 25 | $ 25 |
Preferred stock, authorized | 4,600,000 | 0 |
Preferred stock, issued | 4,280,000 | 0 |
Preferred stock, outstanding | 4,280,000 | 0 |
Series B Preferred Stock | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, liquidation preference | $ 100 | $ 100 |
Preferred stock, authorized | 3,162,500 | 0 |
Preferred stock, issued | 3,162,500 | 0 |
Preferred stock, outstanding | 3,162,500 | 0 |
7.125% Series A cumulative redeemable perpetual preferred stock: $0.01 par value (liquidation preference $25.00 per share), 4,600,000 shares authorized, 4,280,000 shares issued and outstanding as of June 30, 2018; zero shares authorized, issued and outstanding as of December 31, 2017 | Qualitytech, LP | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, liquidation preference | $ 25 | $ 25 |
Preferred stock, authorized | 4,600,000 | 0 |
Preferred stock, issued | 4,280,000 | 0 |
Preferred stock, outstanding | 4,280,000 | 0 |
6.50% Series B cumulative convertible perpetual preferred units: $0.01 par value (liquidation preference $100.00 per share), 3,162,500 units authorized, 3,162,500 units issued and outstanding as of June 30, 2018; zero units authorized, issued and outstanding as of December 31, 2017 | Qualitytech, LP | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, liquidation preference | $ 100 | $ 100 |
Preferred stock, authorized | 3,162,500 | 0 |
Preferred stock, issued | 3,162,500 | 0 |
Preferred stock, outstanding | 3,162,500 | 0 |
Common units: $0.01 par value, 450,133,000 units authorized, 51,135,691 and 57,245,524 units issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | Qualitytech, LP | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,133,000 | 450,133,000 |
Common stock, shares issued | 57,818,242 | 57,245,524 |
Common stock, shares outstanding | 57,818,242 | 57,245,524 |
INTERIM CONSOLIDATED FINANCIAL4
INTERIM CONSOLIDATED FINANCIAL STATEMENTS STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Rental | $ 89,232 | $ 80,793 | $ 174,945 | $ 159,910 |
Total revenues | 112,277 | 107,868 | 225,974 | 213,832 |
Operating Expenses: | ||||
Property operating costs | 36,558 | 36,846 | 74,298 | 72,267 |
Real estate taxes and insurance | 2,903 | 2,946 | 5,808 | 6,093 |
Depreciation and amortization | 37,820 | 34,527 | 73,733 | 68,475 |
General and administrative | 21,031 | 22,562 | 43,265 | 44,759 |
Transaction, integration and impairment costs | 653 | 161 | 1,573 | 497 |
Restructuring | 11,430 | 19,960 | ||
Total operating expenses | 110,395 | 97,042 | 218,637 | 192,091 |
Operating income | 1,882 | 10,826 | 7,337 | 21,741 |
Other income and expenses: | ||||
Interest income | 25 | 26 | 1 | |
Interest expense | (8,203) | (7,647) | (16,313) | (14,516) |
Income (loss) before taxes | (6,296) | 3,179 | (8,950) | 7,226 |
Tax benefit (expense) of taxable REIT subsidiaries | (137) | 1,429 | 2,265 | 2,950 |
Net income (loss) | (6,433) | 4,608 | (6,685) | 10,176 |
Net (income) loss attributable to noncontrolling interests | 1,002 | (568) | 1,031 | (1,259) |
Net income (loss) attributable to QTS Realty Trust, Inc. | (5,431) | 4,040 | (5,654) | 8,917 |
Preferred stock dividends | (2,248) | (2,576) | ||
Net income (loss) attributable to common stokholders | $ (7,679) | $ 4,040 | $ (8,230) | $ 8,917 |
Net income (loss) per share attributable to common shares: | ||||
Basic | $ (0.16) | $ 0.08 | $ (0.17) | $ 0.18 |
Diluted | $ (0.16) | $ 0.08 | $ (0.17) | $ 0.17 |
Recoveries From Customers | ||||
Revenues: | ||||
Revenue | $ 10,444 | $ 8,774 | $ 21,957 | $ 17,135 |
Cloud and managed services | ||||
Revenues: | ||||
Revenue | 10,974 | 16,856 | 24,155 | 33,821 |
Other | ||||
Revenues: | ||||
Revenue | 1,627 | 1,445 | 4,917 | 2,966 |
Qualitytech, LP | ||||
Revenues: | ||||
Rental | 89,232 | 80,793 | 174,945 | 159,910 |
Total revenues | 112,277 | 107,868 | 225,974 | 213,832 |
Operating Expenses: | ||||
Property operating costs | 36,558 | 36,846 | 74,298 | 72,267 |
Real estate taxes and insurance | 2,903 | 2,946 | 5,808 | 6,093 |
Depreciation and amortization | 37,820 | 34,527 | 73,733 | 68,475 |
General and administrative | 21,031 | 22,562 | 43,265 | 44,759 |
Transaction, integration and impairment costs | 653 | 161 | 1,573 | 497 |
Restructuring | 11,430 | 19,960 | ||
Total operating expenses | 110,395 | 97,042 | 218,637 | 192,091 |
Operating income | 1,882 | 10,826 | 7,337 | 21,741 |
Other income and expenses: | ||||
Interest income | 25 | 26 | 1 | |
Interest expense | (8,203) | (7,647) | (16,313) | (14,516) |
Income (loss) before taxes | (6,296) | 3,179 | (8,950) | 7,226 |
Tax benefit (expense) of taxable REIT subsidiaries | (137) | 1,429 | 2,265 | 2,950 |
Net income (loss) | (6,433) | 4,608 | (6,685) | 10,176 |
Preferred unit distributions | (2,248) | (2,576) | ||
Net income (loss) attributable to common stokholders | (8,681) | 4,608 | (9,261) | 10,176 |
Qualitytech, LP | Recoveries From Customers | ||||
Revenues: | ||||
Revenue | 10,444 | 8,774 | 21,957 | 17,135 |
Qualitytech, LP | Cloud and managed services | ||||
Revenues: | ||||
Revenue | 10,974 | 16,856 | 24,155 | 33,821 |
Qualitytech, LP | Other | ||||
Revenues: | ||||
Revenue | $ 1,627 | $ 1,445 | $ 4,917 | $ 2,966 |
INTERIM CONSOLIDATED FINANCIAL5
INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net income (loss) | $ (6,433) | $ 4,608 | $ (6,685) | $ 10,176 |
Other comprehensive income (loss): | ||||
Increase (decrease) in fair value of interest rate swaps | 2,563 | (1,499) | 8,545 | (1,499) |
Reclassification of other comprehensive income to interest expense | 91 | 493 | ||
Comprehensive income (loss) | (3,779) | 3,109 | 2,353 | 8,677 |
Comprehensive (income) loss attributable to noncontrolling interests | 431 | (385) | (271) | (1,076) |
Comprehensive income (loss) attributable to QTS Realty Trust, Inc. | (3,348) | 2,724 | 2,082 | 7,601 |
Qualitytech, LP | ||||
Net income (loss) | (6,433) | 4,608 | (6,685) | 10,176 |
Other comprehensive income (loss): | ||||
Increase (decrease) in fair value of interest rate swaps | 2,563 | (1,499) | 8,545 | (1,499) |
Reclassification of other comprehensive income to interest expense | 91 | 493 | ||
Comprehensive income (loss) | $ (3,779) | $ 3,109 | $ 2,353 | $ 8,677 |
INTERIM CONSOLIDATED FINANCIAL6
INTERIM CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Thousands | Preferred UnitsQualitytech, LPLimited Partner | 7.125% Series A cumulative redeemable perpetual preferred stock: $0.01 par value (liquidation preference $25.00 per share), 4,600,000 shares authorized, 4,280,000 shares issued and outstanding as of June 30, 2018; zero shares authorized, issued and outstanding as of December 31, 2017Qualitytech, LPLimited Partner | 7.125% Series A cumulative redeemable perpetual preferred stock: $0.01 par value (liquidation preference $25.00 per share), 4,600,000 shares authorized, 4,280,000 shares issued and outstanding as of June 30, 2018; zero shares authorized, issued and outstanding as of December 31, 2017Qualitytech, LP | 6.50% Series B cumulative convertible perpetual preferred units: $0.01 par value (liquidation preference $100.00 per share), 3,162,500 units authorized, 3,162,500 units issued and outstanding as of June 30, 2018; zero units authorized, issued and outstanding as of December 31, 2017Qualitytech, LPLimited Partner | 6.50% Series B cumulative convertible perpetual preferred units: $0.01 par value (liquidation preference $100.00 per share), 3,162,500 units authorized, 3,162,500 units issued and outstanding as of June 30, 2018; zero units authorized, issued and outstanding as of December 31, 2017Qualitytech, LP | Common units: $0.01 par value, 450,133,000 units authorized, 51,135,691 and 57,245,524 units issued and outstanding as of June 30, 2018 and December 31, 2017, respectivelyQualitytech, LPGeneral Partner | Common units: $0.01 par value, 450,133,000 units authorized, 51,135,691 and 57,245,524 units issued and outstanding as of June 30, 2018 and December 31, 2017, respectivelyQualitytech, LPLimited Partner | Series A Preferred StockPreferred stock | Series A Preferred StockAccumulated dividends in excess of earnings | Series A Preferred StockTotal stockholders' Equity | Series A Preferred Stock | Series B Preferred StockPreferred stock | Series B Preferred StockAccumulated dividends in excess of earnings | Series B Preferred StockTotal stockholders' Equity | Series B Preferred Stock | Qualitytech, LPAccumulated other comprehensive income | Qualitytech, LP | Preferred stock | Common stock | Additional paid-in capital | Accumulated other comprehensive income | Accumulated dividends in excess of earnings | Total stockholders' Equity | Noncontrolling interests | Total |
Preferred Stock, Shares Issued | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Beginning balance at Dec. 31, 2017 | $ 1,449 | $ 507 | $ 1,049,176 | $ 1,283 | $ (173,552) | $ 877,414 | $ 113,242 | $ 990,656 | |||||||||||||||||
Beginning balance at Dec. 31, 2017 | $ 989,207 | ||||||||||||||||||||||||
Partners' Capital, Beginning Balance at Dec. 31, 2017 | $ 990,656 | ||||||||||||||||||||||||
Beginning balance, shares at Dec. 31, 2017 | 50,702,000 | ||||||||||||||||||||||||
Beginning balance, shares at Dec. 31, 2017 | 57,246,000 | ||||||||||||||||||||||||
Beginning balance, shares at Dec. 31, 2017 | 1,000 | ||||||||||||||||||||||||
Net share activity through equity award plan | $ (862) | (862) | $ 4 | (1,897) | (1,893) | 1,031 | (862) | ||||||||||||||||||
Net share activity through equity award plan, shares | 572,000 | 439,000 | |||||||||||||||||||||||
Increase (decrease) in fair value of interest rate swaps | 8,545 | 8,545 | 7,557 | 7,557 | 988 | 8,545 | |||||||||||||||||||
Equity-based compensation expense | $ 10,608 | 10,608 | 9,388 | 9,388 | 1,220 | 10,608 | |||||||||||||||||||
Net proceeds from Series Preferred Stock offering | $ 103,212 | $ 103,212 | $ 304,426 | $ 304,426 | $ 103,212 | $ 103,212 | $ 103,212 | $ 304,426 | $ 304,426 | $ 304,426 | |||||||||||||||
Net proceeds from Series Preferred Stock offering (in shares) | 4,280,000 | 3,163,000 | 4,280,000 | 3,163,000 | |||||||||||||||||||||
Dividends declared on Preferred Stock | $ (2,233) | $ (2,233) | (2,233) | $ (343) | $ (343) | (343) | (2,576) | ||||||||||||||||||
Dividends declared on Preferred Units | $ (2,233) | (2,233) | $ (343) | (343) | (2,576) | ||||||||||||||||||||
Dividends to stockholders | (41,942) | (41,942) | (41,942) | (41,942) | (41,942) | ||||||||||||||||||||
Distributions to noncontrolling interests | (5,472) | (5,472) | |||||||||||||||||||||||
Partnership distributions | (5,472) | (5,472) | |||||||||||||||||||||||
Net loss | (6,685) | (6,685) | (5,654) | (5,654) | (1,031) | (6,685) | |||||||||||||||||||
Ending balance at Jun. 30, 2018 | $ 9,994 | $ 407,638 | $ 511 | $ 1,056,667 | $ 8,840 | $ (223,724) | $ 1,249,932 | $ 109,978 | $ 1,359,910 | ||||||||||||||||
Ending balance at Jun. 30, 2018 | $ 407,638 | $ 942,278 | |||||||||||||||||||||||
Partners' Capital, Ending Balance at Jun. 30, 2018 | $ 1,359,910 | ||||||||||||||||||||||||
Ending balance, shares at Jun. 30, 2018 | 7,443,000 | 51,141,000 | |||||||||||||||||||||||
Ending balance, shares at Jun. 30, 2018 | 7,443,000 | 57,818,000 | |||||||||||||||||||||||
Ending balance, shares at Jun. 30, 2018 | 1,000 | ||||||||||||||||||||||||
Preferred Stock, Value, Issued | $ 103,212 | $ 304,426 | $ 103,212 | $ 304,426 | |||||||||||||||||||||
Preferred Stock, Shares Issued | 4,280,000 | 3,162,500 | 4,280,000 | 3,162,500 |
INTERIM CONSOLIDATED FINANCIAL7
INTERIM CONSOLIDATED FINANCIAL STATEMENTS STATEMENTS OF CASH FLOW - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flow from operating activities: | ||
Net income (loss) | $ (6,685) | $ 10,176 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 70,804 | 66,443 |
Amortization of above and below market leases | 270 | 479 |
Amortization of deferred loan costs | 1,923 | 1,815 |
Amortization of senior notes discount | 136 | |
Equity-based compensation expense | 7,480 | 6,815 |
Bad debt expense (recoveries) | (1,230) | 1,105 |
Deferred tax benefit | (2,443) | (2,979) |
Loss on sale of equipment | 2,846 | |
Restructuring costs, net of cash paid | 10,065 | |
Changes in operating assets and liabilities | ||
Proceeds from sale of property | 1,496 | |
Rents and other receivables, net | (1,914) | (3,599) |
Prepaid expenses | (3,925) | (1,957) |
Other assets | 1,867 | (595) |
Accounts payable and accrued liabilities | 3,535 | (7,640) |
Advance rents, security deposits and other liabilities | 1,369 | 5,745 |
Deferred income | 7,564 | 1,440 |
Net cash provided by operating activities | 91,526 | 77,384 |
Cash flow from investing activities: | ||
Acquisitions, net of cash acquired | (24,626) | (5,019) |
Additions to property and equipment | (248,852) | (139,818) |
Net cash used in investing activities | (271,982) | (144,837) |
Cash flow from financing activities: | ||
Credit facility proceeds | 231,000 | 109,000 |
Credit facility repayments | (362,000) | |
Debt proceeds | 1,920 | |
Payment of deferred financing costs | (606) | (38) |
Payment of Preferred Stock dividend | (635) | |
Payment of common stock dividends | (40,641) | (35,958) |
Distribution to noncontrolling interests | (5,289) | (5,087) |
Proceeds from exercise of stock options | 18 | 662 |
Payment of tax withholdings related to equity-based awards | (1,233) | (2,464) |
Principal payments on capital lease obligations | (4,316) | (6,547) |
Mortgage principal debt repayments | (32) | (22) |
Preferred stock issuance proceeds, net of costs | 408,415 | |
Common stock issuance proceeds, net of costs | 39,011 | |
Net cash provided by financing activities | 224,681 | 100,477 |
Net increase in cash and cash equivalents | 44,225 | 33,024 |
Cash and cash equivalents, beginning of period | 8,243 | 9,580 |
Cash and cash equivalents, end of period | 52,468 | 42,604 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest (excluding deferred financing costs and amounts capitalized) | 14,265 | 11,517 |
Noncash investing and financing activities: | ||
Accrued capital additions | 67,708 | 46,894 |
Increase in other assets related to change in fair value of interest rate swaps | 8,545 | 1,499 |
Accrued equity issuance costs | 777 | |
Accrued preferred stock dividend | 2,576 | |
Accrued deferred financing costs | 14 | |
Qualitytech, LP | ||
Cash flow from operating activities: | ||
Net income (loss) | (6,685) | 10,176 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 70,804 | 66,443 |
Amortization of above and below market leases | 270 | 479 |
Amortization of deferred loan costs | 1,923 | 1,815 |
Amortization of senior notes discount | 136 | |
Equity-based compensation expense | 7,480 | 6,815 |
Bad debt expense (recoveries) | (1,230) | 1,105 |
Deferred tax benefit | (2,443) | (2,979) |
Loss on sale of equipment | 2,846 | |
Restructuring costs, net of cash paid | 10,065 | |
Changes in operating assets and liabilities | ||
Proceeds from sale of property | 1,496 | |
Rents and other receivables, net | (1,914) | (3,599) |
Prepaid expenses | (3,925) | (1,957) |
Other assets | 1,867 | (595) |
Accounts payable and accrued liabilities | 3,535 | (7,640) |
Advance rents, security deposits and other liabilities | 1,369 | 5,745 |
Deferred income | 7,564 | 1,440 |
Net cash provided by operating activities | 91,526 | 77,384 |
Cash flow from investing activities: | ||
Acquisitions, net of cash acquired | (24,626) | (5,019) |
Additions to property and equipment | (248,852) | (139,818) |
Net cash used in investing activities | (271,982) | (144,837) |
Cash flow from financing activities: | ||
Credit facility proceeds | 231,000 | 109,000 |
Credit facility repayments | (362,000) | |
Debt proceeds | 1,920 | |
Payment of deferred financing costs | (606) | (38) |
Payment of Preferred Stock dividend | (635) | |
Payment of cash dividends | (40,641) | (35,958) |
Proceeds from exercise of stock options | 18 | 662 |
Payment of tax withholdings related to equity-based awards | (1,233) | (2,464) |
Principal payments on capital lease obligations | (4,316) | (6,547) |
Mortgage principal debt repayments | (32) | (22) |
Preferred stock issuance proceeds, net of costs | 408,415 | |
Common stock issuance proceeds, net of costs | 39,011 | |
Partnership distributions | (5,289) | (5,087) |
Net cash provided by financing activities | 224,681 | 100,477 |
Net increase in cash and cash equivalents | 44,225 | 33,024 |
Cash and cash equivalents, beginning of period | 8,243 | 9,580 |
Cash and cash equivalents, end of period | 52,468 | 42,604 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest (excluding deferred financing costs and amounts capitalized) | 14,265 | 11,517 |
Noncash investing and financing activities: | ||
Accrued capital additions | 67,708 | 46,894 |
Increase in other assets related to change in fair value of interest rate swaps | 8,545 | $ 1,499 |
Accrued equity issuance costs | 777 | |
Accrued preferred stock dividend | 2,576 | |
Accrued deferred financing costs | $ 14 |
Description of Business
Description of Business | 6 Months Ended |
Jun. 30, 2018 | |
Description of Business [Abstract] | |
Description of Business | 1. Description of Business QTS Realty Trust, Inc., a Maryland corporation, (“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, constructing, redeveloping and managing multi-tenant data centers. The Company’s portfolio consists of 26 wholly-owned and leased properties with data centers located throughout the United States, Canada, Europe and Asia. 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. The Operating Partnership is a Delaware limited partnership formed on August 5, 2009 and is QTS’ historical predecessor. As of June 30, 2018, QTS owned approximately 88.5% of the interests in the Operating Partnership. Substantially all of QTS’ assets are held by, and QTS’ operations are conducted through, the Operating Partnership. QTS’ interest in the Operating Partnership entitles QTS to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to QTS’ percentage ownership. As the sole general partner of the Operating Partnership, QTS generally has the exclusive power under the partnership agreement of the Operating Partnership to manage and conduct the Operating Partnership’s business and affairs, subject to certain limited approval and voting rights of the limited partners. QTS’ board of directors manages the Company’s business and affairs. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
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”) for interim financial information and in compliance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes and management’s discussion and analysis included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 28, 2018. The consolidated balance sheet data included herein as of December 31, 2017 was derived from audited financial statements, but does not include all disclosures required by 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. The Operating Partnership meets the definition and criteria of a variable interest entity (“VIE”) in accordance with ASC 810, Consolidation , 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. Therefore, as general partner with control of the Operating Partnership, QTS consolidates the Operating Partnership for financial reporting purposes. 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 preferred partnership units and common partnership units that are owned by QTS and other partners as well as accumulated other comprehensive income (loss). On QTS’ consolidated balance sheets, stockholders’ equity includes preferred stock, 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 Statements of Comprehensive Income (Loss) 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 4.75% Senior Notes due 2025 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 foreign subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Issuers or any other subsidiary guarantor, other than QTS Finance Corporation, the co-issuer of the 4.75% Senior Notes due 2025. The indenture governing the 4.75% Senior Notes due 2025 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 “Code”). The interim consolidated financial statements of QTS Realty Trust, Inc. include 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. 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 for real estate assets 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 June 30, 2018, depreciation expense related to real estate assets and non-real estate assets was $25.0 million and $3.1 million, respectively, for a total of $28.1 million. For the three months ended June 30, 2017, depreciation expense related to real estate assets and non-real estate assets was $22.0 million and $3.5 million, respectively, for a total of $25.5 million. For the six months ended June 30, 2018, depreciation expense related to real estate assets and non-real estate assets was $48.6 million and $6.4 million, respectively, for a total of $55.0 million. For the six months ended June 30, 2017, depreciation expense related to real estate assets and non-real estate assets was $43.4 million and $7.1 million, respectively, for a total of $50.5 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 $3.7 million and $3.4 million for the three months ended June 30, 2018 and 2017, respectively, and $7.2 million and $5.9 million for the six months ended June 30, 2018 and 2017, 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 $6.0 million and $3.2 million for the three months ended June 30, 2018 and 2017, respectively, and $11.4 million and $6.3 million for the six months ended June 30, 2018 and 2017, respectively. Acquisitions and Sales – 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 assigned to the acquired tangible assets, consisting primarily of land, construction in progress, 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. 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. This amortization expense is accounted for as real estate amortization expense. 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. Above or below market leases are amortized as a reduction to or increase in rental revenue when the Company is a lessor as well as a reduction or increase to rent expense over the remaining lease terms in the case of the Company as lessee. 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. In March 2018, the Company completed the acquisition of approximately 61 acres of land in Manassas, Virginia for approximately $24.6 million to be used for future development. The acquisition was accounted for as an asset acquisition. The land acquired in the Manassas purchase is included within the “Construction in Progress” line item of the consolidated balance sheets. The Company accounts for the sale of assets under Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20), which provides for recognition or derecognition based on transfer of ownership. During the three months ended June 30, 2018, the Company recognized a $2.8 million loss on sale of equipment associated with the Company’s strategic growth plan. The loss is included within the “Restructuring” line item of the consolidated statements of operations. No gains or losses were recorded on the sale of assets for the three and six months ended June 30, 2017. Impairment of Long-Lived Assets, Intangible Assets and Goodwill – The Company reviews its long-lived assets and intangible 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 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. The Company recognized $0.2 million and $4.3 million of impairment losses related to certain product-related assets in the three and six months ended June 30, 2018. No impairment losses were recorded for the three and six months ended June 30, 2017. The fair value of goodwill is the consideration transferred in a business combination which is not allocable to identifiable intangible and tangible assets. Goodwill is subject to at least an annual assessment for impairment. In connection with the goodwill impairment evaluation that the Company performed on October 1, 2017, the Company determined qualitatively that it is not more likely than not that the fair value of the Company’s one reporting unit was less than the carrying amount, thus it did not perform a quantitative analysis. As the Company continues to operate and assess its goodwill at the corporate level and its market capitalization exceeds its net asset value, further analysis was not deemed necessary as of June 30, 2018. 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. Deferred financing costs represent fees and other costs incurred in connection with obtaining debt and are amortized over the term of the loan and are included in interest expense. Debt issuance costs related to revolving debt arrangements are deferred and presented as assets on the balance sheet; however, all other debt issuance costs are recorded as a direct offset to the associated liability. Amortization of debt issuance costs, including those costs presented as offsets to the associated liability in the consolidated balance sheet, was $1.0 million and $0.9 million for the three months ended June 30, 2018 and 2017, respectively, and $1.9 million and $1.8 million for the six months ended June 30, 2018 and 2017, respectively. Deferred financing costs presented as assets on the balance sheets related to revolving debt arrangements, net of accumulated amortization, are as follows: June 30, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 9,757 $ 9,775 Accumulated amortization (2,887) (1,908) Deferred financing costs, net $ 6,870 $ 7,867 Deferred financing costs presented as offsets to the associated liabilities on the balance sheet related to fixed debt arrangements, net of accumulated amortization, are as follows: June 30, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 12,826 $ 12,675 Accumulated amortization (1,039) Deferred financing costs, net $ 10,843 $ 11,636 Initial direct costs, or deferred leasing costs, include commissions paid to third parties, including brokers, leasing and referral agents, and internal sales commissions paid to employees for successful execution of lease agreements. These costs are incurred when the Company executes lease agreements and represent only incremental costs that would not have been incurred if the lease agreement had not been executed. The Company incurs the same incremental costs to obtain managed services and cloud contracts with customers that are accounted for pursuant to ASC 606, Revenue from Contracts with Customers. These costs are accounted for under ASC 340-40, Other Assets and Deferred Costs, which includes the same framework for capitalization that is applied to the Company’s leasing contracts as only the direct and incremental costs of obtaining a revenue contract are capitalized. Because the framework of accounting for these costs and the underlying nature of the costs are the same for the Company’s revenue and lease contracts, the costs are presented on a combined basis within the Company’s financial statements and within the below table. Both revenue and leasing commissions are capitalized and generally amortized over the term of the related leases or the expected term of the contract using the straight-line method. If a customer lease terminates prior to the expiration of its initial term, any unamortized initial direct costs related to the lease are written off to amortization expense. Amortization of deferred leasing costs totaled $5.3 million and $4.5 million for the three months ended June 30, 2018 and 2017, respectively, and $10.2 million and $8.7 million for the six months ended June 30, 2018 and 2017, respectively. Deferred leasing costs, net of accumulated amortization, are as follows: June 30, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred leasing costs $ 60,624 $ 54,868 Accumulated amortization (22,812) (20,956) Deferred leasing costs, net $ 37,812 $ 33,912 Revenue Recognition – In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance codified in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , which supersedes the current revenue recognition requirements in ASC Topic 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 standard also requires enhanced disclosures. The standard is effective for annual and interim periods beginning after December 15, 2017. Retrospective and modified retrospective application is allowed. The Company adopted ASC Topic 606 effective January 1, 2018, and elected the modified retrospective transition approach. The adoption did not result in a cumulative catch-up adjustment to opening equity and does not change the recognition pattern of the Company’s operating revenues. Under the standard, disclosures are required to provide information on the nature, amount, timing, and uncertainty of revenue, certain costs, and cash flows arising from contracts with customers. The Company derives its revenues from leases with customers for data center space which include lease rental revenue components and nonlease revenue components, such as power, connectivity, cloud and managed services. A description of each of the Company’s disaggregated revenue streams is as follows: Rental Revenue The Company’s leases with customers are classified as operating leases and rental revenue is recognized on a straight-line basis over the customer lease term. Occasionally, customer leases include options to extend or terminate the lease agreements. The Company does not include any of these extension or termination options in a customer’s lease term for lease classification purposes or recognizing rental revenue unless it is reasonably certain the customer will exercise these extension or termination options. Rental revenue also includes revenue from power delivery on fixed power arrangements, whereby customers are billed and pay a fixed monthly fee per committed available amount of connected power. These fixed power arrangements require the Company to provide a series of distinct services of standing ready to deliver the power over the contracted term which is co-terminus with the lease. The Company recognizes revenue from these nonlease fixed power components over time on a straight-line basis in the same manner as the lease components of the contract as the customer simultaneously receives and consumes the power benefits provided over the lease term. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed below. Recoveries from Customers Certain customer leases contain provisions under which customers reimburse the Company for power and cooling-related charges as well as a portion of the property’s real estate taxes, insurance and other operating expenses. Recoveries of power and cooling-related expenses are nonlease components and relate specifically to the Company’s variable power arrangements, whereby customers pay variable monthly fees for the specific amount of power utilized at the current utility rates. The Company’s performance obligation is to stand ready to deliver power over the life of the customer contract up to a contracted power capacity. Customers have the flexibility to increase or decrease the amount of power consumed, and therefore sub-metered power revenue is constrained at contract inception. The reimbursements are included in revenue as recoveries from customers and are recognized each month as the uncertainty related to the consideration is resolved (i.e. the Company provides power to its customers) and customers utilize the power. Reimbursement of real estate taxes, insurance, common area maintenance, or other operating expenses are accounted for as executory costs under lease guidance and are recognized as revenue in the period that the associated expenses are recognized. Cloud and Managed Services The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. In both its cloud and managed services offerings the Company’s performance obligation is to provide services (e.g. cloud hosting, data backup, data storage or data center personnel labor hours) to facilitate a fully integrated IT outsourcing environment over a contracted term. Although underlying services may vary, over the contracted term monthly service offerings are substantially the same and the Company accounts for the services as a series of distinct services. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. As the Company has the right to consideration from customers in an amount that corresponds directly with the value to the customer of the Company’s performance of providing continuous services, the Company recognizes monthly revenue for the amount invoiced. With respect to the transaction price allocated to remaining performance obligations within the Company’s cloud and managed service contracts, the Company has elected to use the optional exemption provided by the standard whereby the Company is not required to estimate the total transaction price allocated to remaining performance obligations as the Company applies the “right-to-invoice” practical expedient. As described above, the nature of our performance obligation in these contracts is to provide monthly services that are substantially the same and accounted for as a series of distinct services. These contracts generally have a remaining term ranging from month-to-month to three years. Other Other revenue primarily consists of straight line rent. Straight line rent represents the difference in rents recognized versus amounts contractually due pursuant to the underlying leases and is recorded as deferred rent receivable/payable in the consolidated balance sheets. 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 $26.5 million and $23.4 million as of June 30, 2018 and December 31, 2017, respectively. 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 $32.9 million and $25.3 million as of June 30, 2018 and December 31, 2017, respectively. Additionally, $3.2 million and $2.4 million of deferred income was amortized into revenue for the three months ended June 30, 2018 and 2017, respectively, and $6.1 million and $5.1 million for the six months ended June 30, 2018 and 2017, respectively. Equity-based Compensation – Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification and amortized ratably over their respective vesting periods. We have elected to account for forfeitures as they occur. Equity-based compensation expense net of forfeited and repurchased awards was $4.0 million and $3.7 million for the three months ended June 30, 2018 and 2017, respectively, and $7.5 million and $6.8 million for the six months ended June 30, 2018 and 2017, respectively. Equity-based compensation expense for the three and six months ended June 30, 2018 excludes $1.7 million and $3.1 million, respectively, of equity-based compensation expense associated with the acceleration of equity awards related to certain employees impacted by the Company’s strategic growth plan. The aforementioned equity-based compensation expense is included in the “Restructuring” expense line item on the consolidated statements of operations. 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 $4.4 million and $11.5 million as of June 30, 2018 and December 31, 2017, 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 on June 16, 2015, the Company is party to capital leases for property and equipment, as well as certain financing obligations. The outstanding liabilities for the capital leases were $3.9 million and $7.8 million as of June 30, 2018 and December 31, 2017, respectively. The outstanding liabilities for the lease financing obligations were $0.5 million and $0.9 million as of June 30, 2018 and December 31, 2017, respectively. The net book value of the assets associated with these leases was approximately $10.9 million and $14.7 million as of June 30, 2018 and December 31, 2017, respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations. See Note 5 for further discussion of capital leases and lease financing obligations. 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. Customer Concentrations – As of June 30, 2018, one of the Company’s customers represented 12.1% of its total monthly rental revenue. No other customers exceeded 5% of total monthly rental revenue. As of June 30, 2018, four of the Company’s customers exceeded 5% of total accounts receivable. In aggregate, these four customers accounted for approximately 31% of total accounts receivable. One of these four customers exceeded 10% of total accounts receivable. Income Taxes – The Company has 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. A deferred tax benefit has been recognized in t |
Acquired Intangibles Assets and
Acquired Intangibles Assets and Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Acquired Intangible Assets and Liabilities [Abstract] | |
Acquired Intangibles Assets and Liabilities | 3. Acquired Intangible Assets and Liabilities Summarized below are the carrying values for the major classes of intangible assets and liabilities (unaudited and in thousands): June 30, 2018 December 31, 2017 Gross Gross Carrying Accumulated Net Carrying Carrying Accumulated Net Carrying Useful Lives Value Amortization Value Value Amortization Value Customer Relationships 1 to 12 years $ 95,705 $ (24,486) $ 71,219 $ 95,705 $ (20,512) $ 75,193 In-Place Leases 0.5 to 10 years 32,066 (15,419) 16,647 32,066 (12,987) 19,079 Solar Power Agreement (1) 17 years 13,747 (3,235) 10,512 13,747 (2,830) 10,917 Platform Intangible 3 years 9,600 (9,600) — 9,600 (8,133) 1,467 Acquired Favorable Leases 0.5 to 8 years 4,649 (2,825) 1,824 4,649 (2,328) 2,321 Tradenames 3 years 3,100 (3,100) — 3,100 (2,626) 474 Total Intangible Assets $ 158,867 $ (58,665) $ 100,202 $ 158,867 $ (49,416) $ 109,451 Solar Power Agreement (1) 17 years 13,747 (3,235) 10,512 13,747 (2,830) 10,917 Acquired Unfavorable Leases Acquired below market leases - as Lessor 3 to 4 years 809 (493) 316 809 (375) 434 Acquired above market leases - as Lessee 11 to 12 years 2,453 (658) 1,795 2,453 (550) 1,903 Total Intangible Liabilities (2) $ 17,009 $ (4,386) $ 12,623 $ 17,009 $ (3,755) $ 13,254 (1) Amortization related to the Solar Power Agreement asset and liability is recorded at the same rate and therefore has no net impact on the statement of operations. (2) Intangible liabilities are included within the “Advance rents, security deposits and other liabilities” line item of the consolidated balance sheets. Above or below market leases are amortized as a reduction to or increase in rental revenue as well as a reduction to rent expense in the case of the Company as lessee over the remaining lease terms. The net effect of amortization of acquired above‑market and below‑market leases resulted in a net decrease in rental revenue of $0.1 million and $0.2 million for the three months ended June 30, 2018 and 2017, respectively. The net effect of amortization of acquired above‑market and below‑market leases resulted in a net decrease in rental revenue of $0.3 million and $0.5 million for the six months ended June 30, 2018 and 2017, respectively. The estimated amortization of acquired favorable and unfavorable leases for each of the five succeeding fiscal years ending December 31 is as follows (unaudited and in thousands): Net Rental Revenue Rental Expense Decreases Decreases 2018 (July - December) $ 302 $ 108 2019 479 216 2020 647 216 2021 46 216 2022 17 216 Thereafter 17 823 Total $ 1,508 $ 1,795 Net amortization of all other identified intangible assets and liabilities was $4.3 million and $4.6 million for the three months ended June 30, 2018 and 2017, respectively. Net amortization of all other identified intangible assets and liabilities was $8.3 million and $9.3 million for the six months ended June 30, 2018 and 2017, respectively. The estimated net amortization of all other identified intangible assets and liabilities for each of the five succeeding fiscal years ending December 31 is as follows (unaudited and in thousands): 2018 (July - December) $ 6,226 2019 11,965 2020 11,379 2021 10,137 2022 9,910 Thereafter 38,249 Total $ 87,866 |
Real Estate Assets and Construc
Real Estate Assets and Construction in Progress | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 (in thousands): As of June 30, 2018 (unaudited): Buildings, Improvements Construction Property Location Land and Equipment in Progress Total Cost Atlanta, Georgia (Atlanta-Metro) $ 20,416 $ 463,246 $ 30,336 $ 513,998 Irving, Texas 8,606 325,474 94,348 428,428 Richmond, Virginia 2,180 253,122 65,797 321,099 Chicago, Illinois 9,400 98,366 134,579 242,345 Suwanee, Georgia (Atlanta-Suwanee) 3,521 168,813 3,834 176,168 Ashburn, Virginia (1) 17,326 57,822 122,651 197,799 Piscataway, New Jersey 7,466 84,745 39,411 131,622 Santa Clara, California (2) — 97,610 7,112 104,722 Dulles, Virginia 3,154 76,521 4,143 83,818 Sacramento, California 1,481 64,476 77 66,034 Leased Facilities (3) — 56,372 8,478 64,850 Fort Worth, Texas 9,078 18,394 36,094 63,566 Princeton, New Jersey 20,700 33,367 428 54,495 Phoenix, Arizona (1) — — 28,691 28,691 Hillsboro, Oregon (1) — — 34,420 34,420 Manassas, Virginia (1) — — 39,151 39,151 Other (4) 2,213 35,542 216 37,971 $ 105,541 $ 1,833,870 $ 649,766 $ 2,589,177 (1) Represent land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use. (2) Owned facility subject to long-term ground sublease. (3) Includes 11 facilities. All facilities are leased, including those subject to capital leases. (4) Consists of Miami, FL; Lenexa, KS; and Overland Park, KS facilities. As of December 31, 2017: Buildings, Improvements Construction Property Location Land and Equipment in Progress Total Cost Atlanta, Georgia (Atlanta-Metro) $ 20,416 $ 452,836 $ 28,614 $ 501,866 Irving, Texas 8,606 276,894 86,320 371,820 Richmond, Virginia 2,180 254,603 61,888 318,671 Chicago, Illinois 9,400 81,463 135,479 226,342 Suwanee, Georgia (Atlanta-Suwanee) 3,521 165,915 3,620 173,056 Ashburn, Virginia (1) — — 106,952 106,952 Piscataway, New Jersey 7,466 83,251 37,807 128,524 Santa Clara, California (2) — 100,028 6,989 107,017 Dulles, Virginia 3,154 76,239 3,565 82,958 Sacramento, California 1,481 64,251 58 65,790 Leased Facilities (3) — 59,460 5,534 64,994 Fort Worth, Texas 9,079 17,894 33,774 60,747 Princeton, New Jersey 20,700 32,948 451 54,099 Phoenix, Arizona (1) — — 27,402 27,402 Hillsboro, Oregon (1) — — 29,278 29,278 Other (4) 2,213 35,505 88 37,806 $ 88,216 $ 1,701,287 $ 567,819 $ 2,357,322 (1) Represent land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use. (2) Owned facility subject to long-term ground sublease. (3) Includes 11 facilities. All facilities are leased, including those subject to capital leases. (4) Consists of Miami, FL; Lenexa, KS; Overland Park, KS; and Duluth, GA facilities. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt [Abstract] | |
Debt | 5. Debt Below is a listing of the Company’s outstanding debt, including capital leases and lease financing obligations, as of June 30, 2018 and December 31, 2017 (in thousands): Weighted Average Coupon Interest Rate at June 30, December 31, June 30, 2018 Maturities 2018 2017 (unaudited) (unaudited) Unsecured Credit Facility Revolving Credit Facility 3.60% December 17, 2021 $ — $ 131,000 Term Loan I 3.49% December 17, 2022 350,000 350,000 Term Loan II 3.51% April 27, 2023 350,000 350,000 Senior Notes 4.75% November 15, 2025 400,000 400,000 Lenexa Mortgage 4.10% May 1, 2022 1,834 1,866 Capital Lease and Lease Financing Obligations 1.96% 2019 4,383 8,699 3.95% 1,106,217 1,241,565 Less net debt issuance costs (10,843) (11,636) Total outstanding debt, net $ 1,095,374 $ 1,229,929 Credit Facilities, Senior Notes and Mortgage Notes Payable (a) Unsecured Credit Facility – In December 2017, the Company executed an amendment to its amended and restated unsecured credit facility (the “unsecured credit facility”), increasing the total capacity to $1.52 billion and extending the term. The unsecured credit facility includes a $350 million term loan which matures on December 17, 2022, a $350 million term loan which matures on April 27, 2023, and an $820 million revolving credit facility which matures on December 17, 2021, 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 unsecured credit facility also includes a $400 million accordion feature. Under the unsecured credit facility, the capacity may be increased from the current capacity of $1.52 billion to $1.92 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, it can prepay amounts outstanding under the unsecured credit facility, in whole or in part, without penalty or premium. The Company’s ability to borrow under the amended unsecured credit facility is subject to ongoing compliance with a number of customary affirmative and negative covenants, including limitations on liens, mergers, consolidations, investments, distributions, asset sales and affiliate transactions, as well as the following financial covenants: (i) the Operating Partnership's and its subsidiaries' consolidated total unsecured debt plus any capitalized lease obligations with respect to the unencumbered asset pool properties may not exceed 60% of the unencumbered asset pool value (or 65% of the unencumbered asset pool value for up to two consecutive fiscal quarters immediately following a material acquisition for which the Operating Partnership has provided written notice to the Agent; provided the two fiscal quarter period includes the quarter in which the material acquisition was consummated); (ii) the unencumbered asset pool debt yield cannot be less than 14% (or 12.5% for the two consecutive fiscal quarters immediately following a material acquisition for which the Operating Partnership has provided written notice to the Agent; provided the two fiscal quarter period includes the quarter in which the material acquisition was consummated); (iii) QTS must maintain a minimum fixed charge coverage ratio (defined as the ratio of consolidated EBITDA, subject to certain adjustments, to consolidated fixed charges) for the prior two most recently-ended calendar quarters of 1.70 to 1.00; (iv) QTS must maintain a maximum debt to gross asset value (as defined in the amended and restated agreement) ratio of 60% (or 65% for the two consecutive fiscal quarters immediately following a material acquisition for which the Operating Partnership has provided written notice to the Agent; provided the two fiscal quarter period includes the quarter in which the material acquisition was consummated); (v) QTS must maintain tangible net worth (as defined in the amended and restated agreement) cannot be less than the sum of $1,209,000,000 plus 75% of the net proceeds from any subsequent equity offerings; and (vi) a maximum distribution payout ratio of the greater of (i) 95% of the Company’s Funds from Operations (as defined in the amended and restated agreement) and (ii) the amount required for the Company to qualify as a REIT under the Code. The availability under the revolving credit facility is the lesser of (i) $820 million, (ii) 60% of the unencumbered asset pool capitalized value (or 65% of the unencumbered asset pool capitalized value for the two consecutive fiscal quarters immediately following a material acquisition for which the Operating Partnership has provided written notice to the Agent; provided the two fiscal quarter period includes the quarter in which the material acquisition was consummated) and (iii) the amount resulting in an unencumbered asset pool debt yield of 14% (or 12.5% for the two consecutive fiscal quarters immediately following a material acquisition for which the Operating Partnership has provided written notice to the Agent; provided the two fiscal quarter period includes the quarter in which the material acquisition was consummated). In the case of clauses (ii) and (iii) of the preceding sentence, the amount available under the revolving credit facility is adjusted to take into account any other unsecured debt and certain capitalized leases. A material acquisition is an acquisition of properties or assets with a gross purchase price equal to or in excess of 15% of the Operating Partnership's gross asset value (as defined in the amended and restated agreement) as of the end of the most recently ended quarter for which financial statements are publicly available. The availability of funds under the unsecured credit facility depends on compliance with certain covenants. As of June 30, 2018, the Company had outstanding $700 million of indebtedness under the unsecured credit facility, all of which was outstanding under the term loans, exclusive of net debt issuance costs of $5.2 million. There were no outstanding borrowings on the Company’s unsecured revolving credit facility as of June 30, 2018. In connection with the unsecured credit facility, as of June 30, 2018, the Company had letters of credit outstanding aggregating to $4.1 million. As of June 30, 2018, the weighted average interest rate for amounts outstanding under the unsecured credit facility, including the effects of interest rate swaps, was 3.50%. The Company has entered into interest rate swap agreements with an aggregate notional amount of $400 million. See Note 6 – ‘Interest Rate Swaps’ for additional details. (b) Senior Notes – On November 8, 2017, the Operating Partnership and QTS Finance Corporation, a subsidiary of the Operating Partnership formed solely for the purpose of facilitating the offering of the 5.875% Senior Notes due 2022 (collectively, the “Issuers”), the Company and certain of its other subsidiaries entered into a purchase agreement pursuant to which the Issuers issued $400 million aggregate principal amount of 4.75% Senior Notes due November 15, 2025 (the “Senior Notes”) in a private offering. The Senior Notes have an interest rate of 4.750% per annum and were issued at a price equal to 100% of their face value. The net proceeds from the offering were used to fund the redemption of, and satisfy and discharge the indenture pursuant to which the Issuers issued, all of their outstanding 5.875% Senior Notes due 2022 and to repay a portion of the amount outstanding under the Company’s unsecured revolving credit facility. As of June 30, 2018, the outstanding net debt issuance costs associated with the Senior Notes were $5.6 million. The Senior Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Operating Partnership’s existing subsidiaries (other than foreign subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Issuers or any other subsidiary guarantor, other than QTS Finance Corporation, the co-issuer of the Senior Notes. QTS 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 November 8, 2017, among QTS, the Issuers, the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee. The annual remaining principal payment requirements as of June 30, 2018 per the contractual maturities and excluding extension options, capital leases and lease financing obligations, are as follows (unaudited and in thousands): 2018 $ 28 2019 68 2020 71 2021 74 2022 350,077 Thereafter 751,516 Total $ 1,101,834 As of June 30, 2018, 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 $3.9 million as of June 30, 2018, of which $2.9 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 data center 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 Operations and Statements of Comprehensive Income. Lease Financing Obligations The Company, through its acquisition of Carpathia has a lease financing agreement in connection with a $4.8 million tenant improvement allowance on one of its data center lease agreements. The financing requires monthly payments of principal and interest of less than $0.1 million through February 2019. The outstanding balance on the financing agreement was $0.5 million as of June 30, 2018. Depreciation expense on the related leasehold improvements is included in depreciation and amortization expense in the Statements of Operations. The following table summarizes the Company’s combined future payment obligations, excluding interest, as of June 30, 2018, on the capital leases and lease financing obligations above (unaudited and in thousands): 2018 $ 3,301 2019 956 2020 117 2021 9 2022 — Thereafter — Total $ 4,383 |
Interest Rate Swaps
Interest Rate Swaps | 6 Months Ended |
Jun. 30, 2018 | |
Interest Rate Derivative Instruments [Abstract] | |
Interest Rate Swaps | 6. Interest Rate Swaps The Company’s objectives in using interest rate swaps are to reduce variability in interest expense and to manage exposure to adverse interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. On April 5, 2017, the Company entered into forward interest rate swap agreements with an aggregate notional amount of $400 million. The forward swap agreements effectively fix the interest rate on $400 million of term loan borrowings, $200 million of swaps allocated to each term loan, from January 2, 2018 through December 17, 2021 and April 27, 2022, respectively. The Company reflects its forward interest rate swap agreements, which are designated as cash flow hedges, at fair value as either assets or liabilities on the consolidated balance sheets within the “Other assets, net” or “Advance rents, security deposits and other liabilities” line items, as applicable. As of June 30, 2018, the fair value of interest rate swaps was $10.0 million, which was recorded within the “Other assets, net” line item of the consolidated balance sheet. The forward interest rate swap agreements are derivatives that currently qualify for hedge accounting whereby the Company records the effective portion of changes in fair value of the interest rate swaps in accumulated other comprehensive income or loss on the consolidated balance sheets and statement of comprehensive income which is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Any ineffective portion of a derivative's change in fair value is immediately recognized within net income. The amount reclassified from other comprehensive income to interest expense on the consolidated statements of operations was $0.1 million and $0.5 million for the three and six months ended June 30, 2018. There was no ineffectiveness recognized for the three and six months ended June 30, 2018. No amounts were recorded in other comprehensive income or loss on the consolidated financial statements as of and for the three and six months ended June 30, 2017. During the subsequent twelve months, beginning July 1, 2018, we estimate that $1.5 million will be reclassified from other comprehensive income as a reduction to interest expense. Interest rate derivatives and their fair values as of June 30, 2018 and December 31, 2017 were as follows (unaudited and in thousands): Fixed One Month Notional Amount LIBOR rate per Fair Value June 30, 2018 December 31, 2017 annum Effective Date Expiration Date June 30, 2018 December 31, 2017 $ 25,000 $ 25,000 January 2, 2018 December 17, 2021 $ 606 $ 100 100,000 100,000 January 2, 2018 December 17, 2021 2,436 401 75,000 75,000 January 2, 2018 December 17, 2021 1,826 298 50,000 50,000 January 2, 2018 April 27, 2022 1,272 158 100,000 100,000 January 2, 2018 April 27, 2022 2,575 337 50,000 50,000 January 2, 2018 April 27, 2022 1,279 155 $ 400,000 $ 400,000 $ 9,994 $ 1,449 |
Restructuring
Restructuring | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring [Abstract] | |
Restructuring | 7. Restructuring On February 20, 2018, the Company announced a strategic growth plan to realign its product offerings around its hyperscale and hybrid colocation product offerings, along with technology and services from the Company’s cloud and managed services business that support hyperscale and hybrid colocation customers. As part of the strategic growth plan, the Company is narrowing its focus around certain of its cloud and managed services offerings and on April 24, 2018, the Company entered into definitive agreements with General Datatech, L.P. (“GDT”), an international provider of managed IT solutions, pursuant to which QTS agreed to assign to GDT certain assets, contracts and liabilities associated with QTS’ cloud and managed services products. These assets primarily consist of customer contracts and certain physical equipment. As of June 30, 2018, QTS had transitioned a portion of the assets, contracts and liabilities to GDT, and expects to complete the transfer of the remaining assets, contracts and liabilities by the end of 2018. In connection with the definitive agreements, the Company and GDT also agreed to an ongoing relationship where the Company will lease data center space to GDT as well as provide ongoing services to GDT to support the transitioned customers. The Company has incurred and will continue to incur various expenses associated with the strategic growth plan through 2018, with such costs included in the “Restructuring” line item on the consolidated income statement. Restructuring expenses incurred during the six months ended June 30, 2018 are as follows (unaudited and in thousands): Equity-Based Compensation and Product-Related Severance Professional Fees and Other Total Restructuring expense $ 5,287 (1) $ 7,071 (2) $ 7,602 (3) $ 19,960 (1) (2) (3) In addition to the expenses incurred to date, the Company expects to incur a total of approximately $5 million to $10 million in expenses associated with this strategic growth plan through December 31, 2018. This does not include any charges that may be taken in future periods on remaining assets that are being transitioned to the Company’s strategic partner, as those specific assets have not yet been identified. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies The Company is subject to various routine legal proceedings and other matters in the ordinary course of business. The Company currently does not have any litigation that would have material adverse impact on the Company’s financial statements. |
Partners' Capital, Equity and I
Partners' Capital, Equity and Incentive Compensation Plans | 6 Months Ended |
Jun. 30, 2018 | |
Partners' Capital, Equity and Incentive Compensation Plans [Abstract] | |
Partners' Capital, Equity and Incentive Compensation Plans | 9. 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 June 30, 2018, the Operating Partnership had four classes of limited partnership units outstanding: Series A Preferred Stock Units, Series B Convertible Preferred Stock Units, Class A units of limited partnership interest (“Class A units”) and Class O LTIP units of limited partnership units (“Class O units”). The Class A units are now redeemable at any time for cash or shares of Class A common stock of QTS. The Company may in its sole discretion elect to assume and satisfy the redemption amount with cash or its shares. Class O units were issued upon grants made under the QualityTech, LP 2010 Equity Incentive Plan (the “2010 Equity Incentive Plan”). Class O units are pari passu with Class A units. Each 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. 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 upon exercise of options to purchase Class A common stock. 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 six months ended June 30, 2018 (unaudited) : 2010 Equity Incentive Plan 2013 Equity Incentive Plan Weighted Weighted Weighted Weighted average Weighted average average Number of average fair average fair Restricted grant date Class O units exercise price value Options exercise price value Stock value Outstanding at December 31, 2017 568,040 $ 23.52 $ 5.00 1,369,270 $ $ 381,864 $ 46.37 Granted — — — 672,549 347,444 Exercised/Vested (1) (461,136) 23.30 (813) 22.74 4.06 47.85 Cancelled/Expired — — — — — — (2) 46.53 Outstanding at June 30, 2018 106,904 $ 24.47 $ 6.16 2,041,006 $ 36.82 $ 7.08 543,800 $ 38.88 (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. This also represents Class O units which were converted to Class A units and Options to purchase Class A common stock which were exercised for their respective columns. (2) Includes restricted Class A common stock surrendered by certain employees to satisfy their 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 six months ended June 30, 2018 are included in the following table on a per unit basis (unaudited). Options to purchase shares of Class A common stock were valued using the Black-Scholes model. Six Months Ended June 30, 2018 Fair value of restricted stock granted $34.03 - $54.01 Fair value of options granted $5.55 - $5.64 Expected term (years) 5.5 - 6.0 Expected volatility Expected dividend yield Expected risk-free interest rates 2.69% - 2.73% The following tables summarize information about awards outstanding as of June 30, 2018 (unaudited). Operating Partnership Awards Outstanding Weighted average Awards remaining Exercise prices outstanding vesting period (years) Class O Units $ 20.00 - 25.00 106,904 — Total Operating Partnership awards outstanding 106,904 QTS Realty Trust, Inc. Awards Outstanding Weighted average Awards remaining Exercise prices outstanding vesting period (years) Restricted stock $ — 1.8 Options to purchase Class A common stock $ 21.00 - 50.66 1.2 Total QTS Realty Trust, Inc. awards outstanding As of June 30, 2018, there were no Class RS units outstanding. Any remaining nonvested awards are valued as of the grant date and generally vest ratably over a defined service period. As of June 30, 2018 there were approximately 0.5 million and 0.9 million nonvested restricted Class A common stock and options to purchase Class A common stock outstanding, respectively. As of June 30, 2018 the Company had $21.7 million of unrecognized equity-based compensation expense which will be recognized over a remaining weighted-average vesting period of 1.3 years. The total intrinsic value of the awards outstanding at June 30, 2018 was $35.0 million. Dividends and Distributions The following table presents quarterly cash dividends and distributions paid to QTS’ common and preferred stockholders and the Operating Partnership’s unit holders for the six months ended June 30, 2018 (unaudited): Six Months Ended June 30, 2018 Aggregate Per Share and Dividend/Distribution Record Date Payment Date Per Unit Rate Amount (in millions) Common Stock December 5, 2017 January 5, 2018 $ 0.39 $ 22.2 March 22, 2018 April 5, 2018 $ 0.41 $ 23.7 $ 45.9 Series A Preferred Stock April 5, 2018 April 16, 2018 $ 0.15 $ 0.6 Additionally, on July 6, 2018, the Company paid its regular quarterly cash dividend of $0.41 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on June 20, 2018. Additionally, on July 16, 2018, the Company paid a quarterly cash dividend of approximately $0.45 per share on its Series A Preferred Stock. Equity Issuances In March 2017, QTS established an “at-the-market” equity offering program (the “ATM Program”) pursuant to which the Company may issue, from time to time, up to $300 million of its Class A common stock. The Company issued no shares under the ATM Program during the six months ended June 30, 2018. On March 15, 2018, QTS issued 4,280,000 shares of 7.125% Series A Cumulative Redeemable Perpetual Preferred Stock (“Series A Preferred Stock”) with a liquidation preference of $25.00 per share, which included 280,000 shares of the underwriters’ partial exercise of their option to purchase additional shares. The Company used the net proceeds of approximately $103.2 million to repay amounts outstanding under its unsecured revolving credit facility. In connection with the issuance of the Series A Preferred Stock, on March 15, 2018 the Operating Partnership issued to the Company 4,280,000 Series A Preferred Units, which have economic terms that are substantially similar to the Company’s Series A Preferred Stock. The Series A Preferred Units were issued in exchange for the Company’s contribution of the net offering proceeds of the offering of the Series A Preferred Stock to the Operating Partnership. Dividends on the Series A Preferred Stock are payable quarterly in arrears on or about the 15th day of each January, April, July and October. The first dividend on the Series A Preferred Stock was paid on April 16, 2018, in the amount of $0.14844 per share. The Series A Preferred Stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, the Series A Preferred Stock will rank senior to common stock and pari passu with the Series B Preferred Stock with respect to the payment of distributions and other amounts. Except in instances relating to preservation of QTS’s qualification as a REIT or pursuant to the Company’s special optional redemption right, the Series A Preferred Stock is not redeemable prior to March 15, 2023. On and after March 15, 2023, the Company may, at its option, redeem the Series A Preferred Stock, in whole, at any time, or in part, from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but not including, the date of redemption. Upon the occurrence of a change of control, the Company has a special optional redemption right that enables it to redeem the Series A Preferred Stock, in whole, at any time, or in part, from time to time, within 120 days after the first date on which a change of control has occurred resulting in neither QTS nor the surviving entity having a class of common shares listed on the NYSE, NYSE Amex, or NASDAQ or the acquisition of beneficial ownership of its stock entitling a person to exercise more than 50% of the total voting power of all our stock entitled to vote generally in election of directors. The special optional redemption price is $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but not including, the date of redemption. Upon the occurrence of a change of control, holders will have the right (unless the Company has elected to exercise its special optional redemption right to redeem their Series A Preferred Stock) to convert some or all of such holder’s Series A Preferred Stock into a number of shares of Class A common stock, par value $0.01 per share, equal to the lesser of: · the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any accrued and unpaid dividends (whether or not declared) to, but not including, the change of control conversion date (unless the change of control conversion date is after a record date for a Series A Preferred Stock dividend payment and prior to the corresponding Series A Preferred Stock dividend payment date, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Stock Price; and · 1.46929 (i.e., the Share Cap); subject, in each case, to certain adjustments and provisions for the receipt of alternative consideration of equivalent value as described in the prospectus supplement for the Series A Preferred Stock. On June 20, 2018, QTS issued 3,162,500 shares of 6.50% Series B Cumulative Convertible Perpetual Preferred Stock (“Series B Preferred Stock”) with a liquidation preference of $100.00 per share, which included 412,500 shares the underwriters purchased pursuant to the exercise of their overallotment option in full. The Company used the net proceeds of approximately $304 million to repay amounts outstanding under its unsecured revolving credit facility. In connection with the issuance of the Series B Preferred Stock, on June 25, 2018 the Operating Partnership issued to the Company 3,162,500 Series B Preferred Units, which have economic terms that are substantially similar to the Company’s Series B Preferred Stock. The Series B Preferred Units were issued in exchange for the Company’s contribution of the net offering proceeds of the offering of the Series B Preferred Stock to the Operating Partnership. Dividends on the Series B Preferred Stock are payable quarterly in arrears on or about the 15th day of each January, April, July and October. The first dividend on the Series B Preferred Stock will be paid on October 15, 2018. The Series B Preferred Stock is convertible by holders into shares of Class A common stock at any time at the then-prevailing conversion rate. The initial conversion rate is 2.1264 shares of the Company’s Class A common stock per share of Series B Preferred Stock. The Series B Preferred Stock does not have a stated maturity date. Upon liquidation, dissolution or winding up, the Series B Preferred Stock will rank senior to common stock and pari passu with the Series A Preferred Stock with respect to the payment of distributions and other amounts. The Series B Preferred Stock will not be redeemable by the Company. At any time on or after July 20, 2023, the Company may at its option cause all (but not less than all) outstanding shares of the Series B Preferred Stock to be automatically converted into the Company’s Class A common stock at the then-prevailing conversion rate if the closing sale price of the Company’s Class A common stock is equal to or exceeds 150% of the then-prevailing conversion price for at least 20 trading days in a period of 30 consecutive trading days, including the last trading day of such 30-day period, ending on the trading day prior to the issuance of a press release announcing the mandatory conversion. If a holder converts its shares of Series B Preferred Stock at any time beginning at the opening of business on the trading day immediately following the effective date of a fundamental change (as described in the prospectus supplement) and ending at the close of business on the 30th trading day immediately following such effective date, the holder will automatically receive a number of shares of the Company’s Class A common stock equal to the greater of: · the sum of (i) a number of shares of the Company’s Class A common stock, as may be adjusted, as described in the Articles Supplementary for the 6.50% Series B Cumulative Convertible Perpetual Preferred Stock filed with the State Department of Assessments and Taxation of Maryland on June 22, 2018 (the “Articles Supplementary”) and (ii) the make-whole premium described in the Articles Supplementary; and · a number of shares of the Company’s Class A common stock equal to the lesser of (i) the liquidation preference divided by the average of the daily volume weighted average prices of the Company’s Class A common stock for ten days preceding the effective date of a fundamental change and (ii) 5.1020 (subject to adjustment). QTS Realty Trust, Inc. Employee Stock Purchase Plan In June 2015, the Company established the QTS Realty Trust, Inc. Employee Stock Purchase Plan (the “2015 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 with the Company paying the brokerage commissions and fees associated with such share purchases. The 2015 Plan became effective July 1, 2015. The Company reserved 250,000 shares of its Class A common stock for purchase under the 2015 Plan, which were registered pursuant to a registration statement on Form S-8 filed on June 17, 2015. On May 4, 2017, the stockholders of the Company approved an amendment and restatement of the Plan (the “2017 Plan”). The 2017 Plan became effective July 1, 2017 and is administered by the Compensation Committee of the board of directors (or by a committee of one or more persons appointed by it or the board of directors). The 2017 Plan permits participants to purchase the Company’s Class A common stock at a discount of up to 10% (as determined by the Compensation Committee). Employees of the Company and its majority-owned subsidiaries who have been employed for at least thirty days and who perform at least thirty hours of service per week for the Company are eligible to participate in the 2017 Plan, excluding any employee who, at any time during which the payroll deductions are made on behalf of the participating employees to purchase stocks, owns shares representing five percent or more of the total combined voting power or value of all classes of shares of the Company, or who is a Section 16 officer. Under the 2017 Plan, there are four purchase periods per year, and participants may deduct a minimum of $20 per paycheck and a maximum of $1,000 per paycheck towards the purchase of shares. Shares purchased under the 2017 Plan are subject to a one-year holding period following the purchase date, during which they may not be sold or transferred. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 10. 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 and six months ended June 30, 2018 and 2017 are outlined below (unaudited and in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Tax, utility, insurance and other reimbursement $ 135 $ 206 $ 396 $ 349 Rent expense 253 254 507 508 Capital assets acquired 46 119 204 352 Total $ 434 $ 579 $ 1,107 $ 1,209 |
Noncontrolling Interest
Noncontrolling Interest | 6 Months Ended |
Jun. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | 11. 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 as of the date of the IPO. Commencing at any time beginning November 1, 2014, at the election of the holders of the noncontrolling interest, the Class A units of the Operating Partnership are redeemable for cash or, at the election of the Company, Class A common stock of the Company on a one-for-one basis. As of June 30, 2018, the noncontrolling ownership interest percentage of QualityTech, LP was approximately 11.5%. |
Earnings per share of QTS Realt
Earnings per share of QTS Realty Trust, Inc. | 6 Months Ended |
Jun. 30, 2018 | |
Earnings per Share [Abstract] | |
Earnings per Share | 12. Earnings per share of QTS Realty Trust, Inc. Basic income per share is calculated by dividing the net income attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted income per share adjusts basic income per share for the effects of potentially dilutive common shares. Unvested restricted stock awards contain non-forfeitable rights to dividends and thus are participating securities and are included in the computation of earnings per share pursuant to the two-class method for all periods presented. The two-class method is an earnings allocation formula that treats a participating security as having rights to undistributed earnings that would otherwise have been available to common stockholders. Accordingly, service-based restricted stock awards were included in the calculation of earnings per share using the two-class method for all periods presented. The computation of basic and diluted net income per share is as follows (in thousands, except per share data, and unaudited): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Numerator: Net income (loss) $ (6,433) $ 4,608 $ (6,685) $ 10,176 Loss (income) attributable to noncontrolling interests 1,002 (568) 1,031 (1,259) Preferred stock dividends (2,248) — (2,576) Earnings attributable to participating securities (227) 356 (485) 814 Net income (loss) available to common stockholders after allocation of participating securities $ (7,906) $ 4,396 $ (8,715) $ 9,731 Denominator: Weighted average shares outstanding - basic 50,452 47,666 50,366 47,562 Effect of Class A and Class RS partnership units — 6,783 — 6,783 Effect of Class O units and options to purchase Class A common stock on an "as if" converted basis — 1,009 — 991 Weighted average shares outstanding - diluted 50,452 55,458 50,366 55,336 Basic net income (loss) per share $ $ $ $ Diluted net income (loss) per share $ $ $ $ Note: The table above does not include Class A partnership units of 6.7 million and 6.8 million for the three months ended June 30, 2018 and 2017, respectively, 0.2 million reflecting the effects of Class O units and options to purchase common stock on an "as if" converted basis for the three months ended June 30, 2018, and 0.4 million reflecting the effects of Series B Convertible preferred stock on an “as if” converted basis for the three months ended June 30, 2018, as their respective inclusion would have been antidilutive. Does not include Class A partnership units of 6.6 million and 6.8 million for the six months ended June 30, 2018 and 2017, respectively, 0.4 million reflecting the effects of Class O units and options to purchase common stock on an "as if" converted basis for the six months ended June 30, 2018, and 0.2 million reflecting the effects of Series B Convertible preferred stock on an “as if” converted basis for the six months ended June 30, 2018, as their respective inclusion would have been antidilutive. |
Contracts with Customers
Contracts with Customers | 6 Months Ended |
Jun. 30, 2018 | |
Contracts with Customers [Abstract] | |
Contracts with Customers | 13. Contracts with Customers Future minimum payments to be received under non-cancelable customer contracts (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 (unaudited and in thousands): 2018 (July - December) $ 173,924 2019 304,475 2020 234,246 2021 185,569 2022 117,924 Thereafter 137,210 Total $ 1,153,348 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | 14. Fair Value of Financial Instruments ASC Topic 825, Financial Instruments , 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. Interest rate swaps: Currently, the Company uses interest rate swaps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of fair value accounting guidance, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of June 30, 2018, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The Company does not have any fair value measurements on a recurring basis using significant unobservable inputs (Level 3) as of June 30, 2018 or December 31, 2017. Credit facility 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 June 30, 2018, the fair value of the Senior Notes was approximately $374.5 million. Other debt instruments: The fair value of the Company’s other debt instruments (including capital leases, lease financing obligations and mortgage notes payable) 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 | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events On July 6, 2018, the Company paid its regular quarterly cash dividend of $0.41 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on June 20, 2018. On July 16, 2018, the Company paid a quarterly cash dividend of approximately $0.45 per share on its 7.125% Series A Preferred Stock to holders of Series A Preferred Stock of record as of the close of business on June 29, 2018. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
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”) for interim financial information and in compliance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes and management’s discussion and analysis included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 28, 2018. The consolidated balance sheet data included herein as of December 31, 2017 was derived from audited financial statements, but does not include all disclosures required by 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. The Operating Partnership meets the definition and criteria of a variable interest entity (“VIE”) in accordance with ASC 810, Consolidation , 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. Therefore, as general partner with control of the Operating Partnership, QTS consolidates the Operating Partnership for financial reporting purposes. 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 preferred partnership units and common partnership units that are owned by QTS and other partners as well as accumulated other comprehensive income (loss). On QTS’ consolidated balance sheets, stockholders’ equity includes preferred stock, 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 Statements of Comprehensive Income (Loss) 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 4.75% Senior Notes due 2025 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 foreign subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Issuers or any other subsidiary guarantor, other than QTS Finance Corporation, the co-issuer of the 4.75% Senior Notes due 2025. The indenture governing the 4.75% Senior Notes due 2025 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 “Code”). The interim consolidated financial statements of QTS Realty Trust, Inc. include 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. |
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 for real estate assets 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 June 30, 2018, depreciation expense related to real estate assets and non-real estate assets was $25.0 million and $3.1 million, respectively, for a total of $28.1 million. For the three months ended June 30, 2017, depreciation expense related to real estate assets and non-real estate assets was $22.0 million and $3.5 million, respectively, for a total of $25.5 million. For the six months ended June 30, 2018, depreciation expense related to real estate assets and non-real estate assets was $48.6 million and $6.4 million, respectively, for a total of $55.0 million. For the six months ended June 30, 2017, depreciation expense related to real estate assets and non-real estate assets was $43.4 million and $7.1 million, respectively, for a total of $50.5 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 $3.7 million and $3.4 million for the three months ended June 30, 2018 and 2017, respectively, and $7.2 million and $5.9 million for the six months ended June 30, 2018 and 2017, 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 $6.0 million and $3.2 million for the three months ended June 30, 2018 and 2017, respectively, and $11.4 million and $6.3 million for the six months ended June 30, 2018 and 2017, respectively. |
Acquisitions | Acquisitions and Sales – 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 assigned to the acquired tangible assets, consisting primarily of land, construction in progress, 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. 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. This amortization expense is accounted for as real estate amortization expense. 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. Above or below market leases are amortized as a reduction to or increase in rental revenue when the Company is a lessor as well as a reduction or increase to rent expense over the remaining lease terms in the case of the Company as lessee. 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. In March 2018, the Company completed the acquisition of approximately 61 acres of land in Manassas, Virginia for approximately $24.6 million to be used for future development. The acquisition was accounted for as an asset acquisition. The land acquired in the Manassas purchase is included within the “Construction in Progress” line item of the consolidated balance sheets. |
Impairment of Long-Lived and Intangible Assets | Impairment of Long-Lived Assets, Intangible Assets and Goodwill – The Company reviews its long-lived assets and intangible 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 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. The Company recognized $0.2 million and $4.3 million of impairment losses related to certain product-related assets in the three and six months ended June 30, 2018. No impairment losses were recorded for the three and six months ended June 30, 2017. The fair value of goodwill is the consideration transferred in a business combination which is not allocable to identifiable intangible and tangible assets. Goodwill is subject to at least an annual assessment for impairment. In connection with the goodwill impairment evaluation that the Company performed on October 1, 2017, the Company determined qualitatively that it is not more likely than not that the fair value of the Company’s one reporting unit was less than the carrying amount, thus it did not perform a quantitative analysis. As the Company continues to operate and assess its goodwill at the corporate level and its market capitalization exceeds its net asset value, further analysis was not deemed necessary as of June 30, 2018. |
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. Deferred financing costs represent fees and other costs incurred in connection with obtaining debt and are amortized over the term of the loan and are included in interest expense. Debt issuance costs related to revolving debt arrangements are deferred and presented as assets on the balance sheet; however, all other debt issuance costs are recorded as a direct offset to the associated liability. Amortization of debt issuance costs, including those costs presented as offsets to the associated liability in the consolidated balance sheet, was $1.0 million and $0.9 million for the three months ended June 30, 2018 and 2017, respectively, and $1.9 million and $1.8 million for the six months ended June 30, 2018 and 2017, respectively. Deferred financing costs presented as assets on the balance sheets related to revolving debt arrangements, net of accumulated amortization, are as follows: June 30, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 9,757 $ 9,775 Accumulated amortization (2,887) (1,908) Deferred financing costs, net $ 6,870 $ 7,867 Deferred financing costs presented as offsets to the associated liabilities on the balance sheet related to fixed debt arrangements, net of accumulated amortization, are as follows: June 30, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 12,826 $ 12,675 Accumulated amortization (1,039) Deferred financing costs, net $ 10,843 $ 11,636 Initial direct costs, or deferred leasing costs, include commissions paid to third parties, including brokers, leasing and referral agents, and internal sales commissions paid to employees for successful execution of lease agreements. These costs are incurred when the Company executes lease agreements and represent only incremental costs that would not have been incurred if the lease agreement had not been executed. The Company incurs the same incremental costs to obtain managed services and cloud contracts with customers that are accounted for pursuant to ASC 606, Revenue from Contracts with Customers. These costs are accounted for under ASC 340-40, Other Assets and Deferred Costs, which includes the same framework for capitalization that is applied to the Company’s leasing contracts as only the direct and incremental costs of obtaining a revenue contract are capitalized. Because the framework of accounting for these costs and the underlying nature of the costs are the same for the Company’s revenue and lease contracts, the costs are presented on a combined basis within the Company’s financial statements and within the below table. Both revenue and leasing commissions are capitalized and generally amortized over the term of the related leases or the expected term of the contract using the straight-line method. If a customer lease terminates prior to the expiration of its initial term, any unamortized initial direct costs related to the lease are written off to amortization expense. Amortization of deferred leasing costs totaled $5.3 million and $4.5 million for the three months ended June 30, 2018 and 2017, respectively, and $10.2 million and $8.7 million for the six months ended June 30, 2018 and 2017, respectively. Deferred leasing costs, net of accumulated amortization, are as follows: June 30, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred leasing costs $ 60,624 $ 54,868 Accumulated amortization (22,812) (20,956) Deferred leasing costs, net $ 37,812 $ 33,912 |
Revenue Recognition | Revenue Recognition – In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance codified in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , which supersedes the current revenue recognition requirements in ASC Topic 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 standard also requires enhanced disclosures. The standard is effective for annual and interim periods beginning after December 15, 2017. Retrospective and modified retrospective application is allowed. The Company adopted ASC Topic 606 effective January 1, 2018, and elected the modified retrospective transition approach. The adoption did not result in a cumulative catch-up adjustment to opening equity and does not change the recognition pattern of the Company’s operating revenues. Under the standard, disclosures are required to provide information on the nature, amount, timing, and uncertainty of revenue, certain costs, and cash flows arising from contracts with customers. The Company derives its revenues from leases with customers for data center space which include lease rental revenue components and nonlease revenue components, such as power, connectivity, cloud and managed services. A description of each of the Company’s disaggregated revenue streams is as follows: Rental Revenue The Company’s leases with customers are classified as operating leases and rental revenue is recognized on a straight-line basis over the customer lease term. Occasionally, customer leases include options to extend or terminate the lease agreements. The Company does not include any of these extension or termination options in a customer’s lease term for lease classification purposes or recognizing rental revenue unless it is reasonably certain the customer will exercise these extension or termination options. Rental revenue also includes revenue from power delivery on fixed power arrangements, whereby customers are billed and pay a fixed monthly fee per committed available amount of connected power. These fixed power arrangements require the Company to provide a series of distinct services of standing ready to deliver the power over the contracted term which is co-terminus with the lease. The Company recognizes revenue from these nonlease fixed power components over time on a straight-line basis in the same manner as the lease components of the contract as the customer simultaneously receives and consumes the power benefits provided over the lease term. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed below. Recoveries from Customers Certain customer leases contain provisions under which customers reimburse the Company for power and cooling-related charges as well as a portion of the property’s real estate taxes, insurance and other operating expenses. Recoveries of power and cooling-related expenses are nonlease components and relate specifically to the Company’s variable power arrangements, whereby customers pay variable monthly fees for the specific amount of power utilized at the current utility rates. The Company’s performance obligation is to stand ready to deliver power over the life of the customer contract up to a contracted power capacity. Customers have the flexibility to increase or decrease the amount of power consumed, and therefore sub-metered power revenue is constrained at contract inception. The reimbursements are included in revenue as recoveries from customers and are recognized each month as the uncertainty related to the consideration is resolved (i.e. the Company provides power to its customers) and customers utilize the power. Reimbursement of real estate taxes, insurance, common area maintenance, or other operating expenses are accounted for as executory costs under lease guidance and are recognized as revenue in the period that the associated expenses are recognized. Cloud and Managed Services The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. In both its cloud and managed services offerings the Company’s performance obligation is to provide services (e.g. cloud hosting, data backup, data storage or data center personnel labor hours) to facilitate a fully integrated IT outsourcing environment over a contracted term. Although underlying services may vary, over the contracted term monthly service offerings are substantially the same and the Company accounts for the services as a series of distinct services. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. As the Company has the right to consideration from customers in an amount that corresponds directly with the value to the customer of the Company’s performance of providing continuous services, the Company recognizes monthly revenue for the amount invoiced. With respect to the transaction price allocated to remaining performance obligations within the Company’s cloud and managed service contracts, the Company has elected to use the optional exemption provided by the standard whereby the Company is not required to estimate the total transaction price allocated to remaining performance obligations as the Company applies the “right-to-invoice” practical expedient. As described above, the nature of our performance obligation in these contracts is to provide monthly services that are substantially the same and accounted for as a series of distinct services. These contracts generally have a remaining term ranging from month-to-month to three years. Other Other revenue primarily consists of straight line rent. Straight line rent represents the difference in rents recognized versus amounts contractually due pursuant to the underlying leases and is recorded as deferred rent receivable/payable in the consolidated balance sheets. 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 $26.5 million and $23.4 million as of June 30, 2018 and December 31, 2017, respectively. |
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 $32.9 million and $25.3 million as of June 30, 2018 and December 31, 2017, respectively. Additionally, $3.2 million and $2.4 million of deferred income was amortized into revenue for the three months ended June 30, 2018 and 2017, respectively, and $6.1 million and $5.1 million for the six months ended June 30, 2018 and 2017, respectively. |
Equity-based Compensation | Equity-based Compensation – Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification and amortized ratably over their respective vesting periods. We have elected to account for forfeitures as they occur. Equity-based compensation expense net of forfeited and repurchased awards was $4.0 million and $3.7 million for the three months ended June 30, 2018 and 2017, respectively, and $7.5 million and $6.8 million for the six months ended June 30, 2018 and 2017, respectively. Equity-based compensation expense for the three and six months ended June 30, 2018 excludes $1.7 million and $3.1 million, respectively, of equity-based compensation expense associated with the acceleration of equity awards related to certain employees impacted by the Company’s strategic growth plan. The aforementioned equity-based compensation expense is included in the “Restructuring” expense line item on the consolidated statements of operations. |
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 $4.4 million and $11.5 million as of June 30, 2018 and December 31, 2017, 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 on June 16, 2015, the Company is party to capital leases for property and equipment, as well as certain financing obligations. The outstanding liabilities for the capital leases were $3.9 million and $7.8 million as of June 30, 2018 and December 31, 2017, respectively. The outstanding liabilities for the lease financing obligations were $0.5 million and $0.9 million as of June 30, 2018 and December 31, 2017, respectively. The net book value of the assets associated with these leases was approximately $10.9 million and $14.7 million as of June 30, 2018 and December 31, 2017, respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations. See Note 5 for further discussion of capital leases and lease financing obligations. |
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. |
Customer Concentrations | Customer Concentrations – As of June 30, 2018, one of the Company’s customers represented 12.1% of its total monthly rental revenue. No other customers exceeded 5% of total monthly rental revenue. As of June 30, 2018, four of the Company’s customers exceeded 5% of total accounts receivable. In aggregate, these four customers accounted for approximately 31% of total accounts receivable. One of these four customers exceeded 10% of total accounts receivable. |
Income Taxes | Income Taxes – The Company has 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. A deferred tax benefit has been recognized in the three months ended March 31, 2018, in connection with recorded operating losses. As of June 30, 2018, one of the Company’s taxable REIT subsidiaries is in a net deferred tax liability position primarily due to customer-based intangibles acquired as part of the acquisition of Carpathia on June 16, 2015. However, it is expected that the forecasted annual activity will drive this taxable REIT subsidiary into a net deferred tax asset position by the end of 2018. The impact of the 2018 forecasted annual activity will more-likely-than-not result in the need for a federal and state valuation allowance during the balance of 2018, and therefore, the expectation of a valuation allowance has been built into the Company’s estimated annual effective tax rate for the quarter. 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 subsidiaries, tax law changes and future business acquisitions. The taxable REIT subsidiaries’ effective tax rates were 10.8% and 39.1% for the six months ended June 30, 2018 and 2017, respectively. On December 22, 2017, the Tax Cuts and Jobs Act ("the Act"), was signed into law by President Trump. The Act contains several provisions, including the lowering of the U.S. corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. The Company is following the guidance in SEC Staff Accounting Bulletin 118 (“SAB 118”), which provides additional clarification regarding the application of ASC Topic 740, Income Taxes, in situations where the Company may not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act for the reporting period in which the Act was enacted. SAB 118 provides for a measurement period beginning in the reporting period that includes the Act’s enactment date and ending when the Company has obtained, prepared, and analyzed the information needed in order to complete the accounting requirements but in no circumstances should the measurement period extend beyond one year from the enactment date. Upon completion of the Company’s 2017 federal income tax return in 2018, additional re-measurement adjustments may be identified with respect to the recorded deferred tax assets (liabilities). The Company will continue to assess the provision for income taxes as future guidance is issued, but does not currently anticipate that significant revisions will be necessary. Any such revisions will be treated in accordance with the measurement period guidance outlined in SAB 118. |
Fair Value Measurements | Fair Value Measurements – ASC Topic 820, Fair Value Measurement , 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 of June 30, 2018, the Company valued its interest rate swaps which were entered into in April 2017 primarily utilizing Level 2 inputs. See Note 14 – ‘Fair Value of Financial Instruments’ for additional details. |
New Accounting Pronouncements | New Accounting Pronouncements 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 standard requires a modified retrospective transition approach. In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements (Topic 842) , which updated the lease standard to include practical expedients that remove the requirement to restate prior period financial statements upon adoption of the standard as well as a practical expedient which allows lessors not to separate non-lease components from the related lease components if both the timing and pattern of transfer are the same for the non-lease component(s) and related lease component and the combined single lease component would be classified as an operating lease. The Company plans to adopt ASC 842 effective January 1, 2019, and will apply the transition relief under the new lease standard as of January 1, 2019. As lessee, the Company does not anticipate the classification of its leases to change but will recognize a new initial lease liability and right-of-use asset on the consolidated balance sheet for all operating leases which is expected to be material to our consolidated balance sheet. As lessor, accounting for our leases will remain largely unchanged, apart from the narrower definition of initial direct costs that can be capitalized. The new lease standard more narrowly defines initial direct costs as only costs that are incremental at the signing of a lease. As the Company does not currently capitalize material non-incremental costs, it expects the impact of this change to be immaterial to the financial statements. Upon adoption of the standard on January 1, 2019, including the transition relief provided in ASU 2018-11, the Company will not be required to restate prior period comparative financial statements to include a right of use asset and liability from the Company’s operating leases as lessee. Additionally, from a lessor perspective, the transition relief will alleviate the Company’s need to separate lease from non-lease components within its rental revenue contracts. The Company will disclose any changes to this analysis as identified. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . The standard changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The Company adopted this standard as of January 1, 2018, and as a result of this new guidance, acquisitions may now be more likely to result in a transaction being classified as an asset purchase rather than a business combination. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The new guidance eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The guidance will be applied prospectively and is effective for calendar year-end public companies in 2020, with early adoption permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company does not expect the provisions of the standard will have a material impact on its consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in ASU 2017-12 change the recognition and presentation requirements of hedge accounting, including the elimination of the requirement to separately measure and report hedge ineffectiveness and the addition of a requirement to present all items that affect earnings in the same income statement line item as the hedged item. ASU 2017-12 also provides new alternatives for: applying hedge accounting to additional hedging strategies; measuring the hedged item in fair value hedges of interest rate risk; reducing the cost and complexity of applying hedge accounting by easing the requirements for effectiveness testing, hedge documentation and application of the critical terms match method; and reducing the risk of material error correction if a company applies the shortcut method inappropriately. The guidance is effective for public entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted. The Company does not expect the provisions of the standard will have a material impact on its consolidated financial statements. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Financing Costs, Net of Accumulated Amortization | June 30, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 9,757 $ 9,775 Accumulated amortization (2,887) (1,908) Deferred financing costs, net $ 6,870 $ 7,867 |
Deferred Leasing Costs, Net of Accumulated Amortization | June 30, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred leasing costs $ 60,624 $ 54,868 Accumulated amortization (22,812) (20,956) Deferred leasing costs, net $ 37,812 $ 33,912 |
Fixed debt arrangements | |
Deferred Financing Costs, Net of Accumulated Amortization | June 30, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 12,826 $ 12,675 Accumulated amortization (1,039) Deferred financing costs, net $ 10,843 $ 11,636 |
Acquired Intangibles Assets a25
Acquired Intangibles Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Acquired Intangible Assets and Liabilities [Abstract] | |
Schedule of carrying values for the major classes of intangible assets and liabilities | Summarized below are the carrying values for the major classes of intangible assets and liabilities (unaudited and in thousands): June 30, 2018 December 31, 2017 Gross Gross Carrying Accumulated Net Carrying Carrying Accumulated Net Carrying Useful Lives Value Amortization Value Value Amortization Value Customer Relationships 1 to 12 years $ 95,705 $ (24,486) $ 71,219 $ 95,705 $ (20,512) $ 75,193 In-Place Leases 0.5 to 10 years 32,066 (15,419) 16,647 32,066 (12,987) 19,079 Solar Power Agreement (1) 17 years 13,747 (3,235) 10,512 13,747 (2,830) 10,917 Platform Intangible 3 years 9,600 (9,600) — 9,600 (8,133) 1,467 Acquired Favorable Leases 0.5 to 8 years 4,649 (2,825) 1,824 4,649 (2,328) 2,321 Tradenames 3 years 3,100 (3,100) — 3,100 (2,626) 474 Total Intangible Assets $ 158,867 $ (58,665) $ 100,202 $ 158,867 $ (49,416) $ 109,451 Solar Power Agreement (1) 17 years 13,747 (3,235) 10,512 13,747 (2,830) 10,917 Acquired Unfavorable Leases Acquired below market leases - as Lessor 3 to 4 years 809 (493) 316 809 (375) 434 Acquired above market leases - as Lessee 11 to 12 years 2,453 (658) 1,795 2,453 (550) 1,903 Total Intangible Liabilities (2) $ 17,009 $ (4,386) $ 12,623 $ 17,009 $ (3,755) $ 13,254 (1) Amortization related to the Solar Power Agreement asset and liability is recorded at the same rate and therefore has no net impact on the statement of operations. (2) Intangible liabilities are included within the “Advance rents, security deposits and other liabilities” line item of the consolidated balance sheets. |
Schedule of estimated amortization of acquired favorable and unfavorable leases | The net effect of amortization of acquired above‑market and below‑market leases resulted in a net decrease in rental revenue of $0.3 million and $0.5 million for the six months ended June 30, 2018 and 2017, respectively. The estimated amortization of acquired favorable and unfavorable leases for each of the five succeeding fiscal years ending December 31 is as follows (unaudited and in thousands): Net Rental Revenue Rental Expense Decreases Decreases 2018 (July - December) $ 302 $ 108 2019 479 216 2020 647 216 2021 46 216 2022 17 216 Thereafter 17 823 Total $ 1,508 $ 1,795 |
Schedule of estimated amortization of all other identified intangible assets | Net amortization of all other identified intangible assets and liabilities was $8.3 million and $9.3 million for the six months ended June 30, 2018 and 2017, respectively. The estimated net amortization of all other identified intangible assets and liabilities for each of the five succeeding fiscal years ending December 31 is as follows (unaudited and in thousands): 2018 (July - December) $ 6,226 2019 11,965 2020 11,379 2021 10,137 2022 9,910 Thereafter 38,249 Total $ 87,866 |
Real Estate Assets and Constr26
Real Estate Assets and Construction in Progress (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 (in thousands): As of June 30, 2018 (unaudited): Buildings, Improvements Construction Property Location Land and Equipment in Progress Total Cost Atlanta, Georgia (Atlanta-Metro) $ 20,416 $ 463,246 $ 30,336 $ 513,998 Irving, Texas 8,606 325,474 94,348 428,428 Richmond, Virginia 2,180 253,122 65,797 321,099 Chicago, Illinois 9,400 98,366 134,579 242,345 Suwanee, Georgia (Atlanta-Suwanee) 3,521 168,813 3,834 176,168 Ashburn, Virginia (1) 17,326 57,822 122,651 197,799 Piscataway, New Jersey 7,466 84,745 39,411 131,622 Santa Clara, California (2) — 97,610 7,112 104,722 Dulles, Virginia 3,154 76,521 4,143 83,818 Sacramento, California 1,481 64,476 77 66,034 Leased Facilities (3) — 56,372 8,478 64,850 Fort Worth, Texas 9,078 18,394 36,094 63,566 Princeton, New Jersey 20,700 33,367 428 54,495 Phoenix, Arizona (1) — — 28,691 28,691 Hillsboro, Oregon (1) — — 34,420 34,420 Manassas, Virginia (1) — — 39,151 39,151 Other (4) 2,213 35,542 216 37,971 $ 105,541 $ 1,833,870 $ 649,766 $ 2,589,177 (1) Represent land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use. (2) Owned facility subject to long-term ground sublease. (3) Includes 11 facilities. All facilities are leased, including those subject to capital leases. (4) Consists of Miami, FL; Lenexa, KS; and Overland Park, KS facilities. As of December 31, 2017: Buildings, Improvements Construction Property Location Land and Equipment in Progress Total Cost Atlanta, Georgia (Atlanta-Metro) $ 20,416 $ 452,836 $ 28,614 $ 501,866 Irving, Texas 8,606 276,894 86,320 371,820 Richmond, Virginia 2,180 254,603 61,888 318,671 Chicago, Illinois 9,400 81,463 135,479 226,342 Suwanee, Georgia (Atlanta-Suwanee) 3,521 165,915 3,620 173,056 Ashburn, Virginia (1) — — 106,952 106,952 Piscataway, New Jersey 7,466 83,251 37,807 128,524 Santa Clara, California (2) — 100,028 6,989 107,017 Dulles, Virginia 3,154 76,239 3,565 82,958 Sacramento, California 1,481 64,251 58 65,790 Leased Facilities (3) — 59,460 5,534 64,994 Fort Worth, Texas 9,079 17,894 33,774 60,747 Princeton, New Jersey 20,700 32,948 451 54,099 Phoenix, Arizona (1) — — 27,402 27,402 Hillsboro, Oregon (1) — — 29,278 29,278 Other (4) 2,213 35,505 88 37,806 $ 88,216 $ 1,701,287 $ 567,819 $ 2,357,322 (1) Represent land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use. (2) Owned facility subject to long-term ground sublease. (3) Includes 11 facilities. All facilities are leased, including those subject to capital leases. Consists of Miami, FL; Lenexa, KS; Overland Park, KS; and Duluth, GA facilities. |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt [Abstract] | |
Outstanding Debt Including Capital Leases and Lease Financing Obligations | Below is a listing of the Company’s outstanding debt, including capital leases and lease financing obligations, as of June 30, 2018 and December 31, 2017 (in thousands): Weighted Average Coupon Interest Rate at June 30, December 31, June 30, 2018 Maturities 2018 2017 (unaudited) (unaudited) Unsecured Credit Facility Revolving Credit Facility 3.60% December 17, 2021 $ — $ 131,000 Term Loan I 3.49% December 17, 2022 350,000 350,000 Term Loan II 3.51% April 27, 2023 350,000 350,000 Senior Notes 4.75% November 15, 2025 400,000 400,000 Lenexa Mortgage 4.10% May 1, 2022 1,834 1,866 Capital Lease and Lease Financing Obligations 1.96% 2019 4,383 8,699 3.95% 1,106,217 1,241,565 Less net debt issuance costs (10,843) (11,636) Total outstanding debt, net $ 1,095,374 $ 1,229,929 |
Annual Remaining Principal Payment | The annual remaining principal payment requirements as of June 30, 2018 per the contractual maturities and excluding extension options, capital leases and lease financing obligations, are as follows (unaudited and in thousands): 2018 $ 28 2019 68 2020 71 2021 74 2022 350,077 Thereafter 751,516 Total $ 1,101,834 |
Schedule of Combined Future Payment Obligations, Excluding Interest | The following table summarizes the Company’s combined future payment obligations, excluding interest, as of June 30, 2018, on the capital leases and lease financing obligations above (unaudited and in thousands): 2018 $ 3,301 2019 956 2020 117 2021 9 2022 — Thereafter — Total $ 4,383 |
Interest Rate Swaps (Tables)
Interest Rate Swaps (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Interest Rate Derivative Instruments [Abstract] | |
Schedule of interest rate derivatives and their fair values | Interest rate derivatives and their fair values as of June 30, 2018 and December 31, 2017 were as follows (unaudited and in thousands): Fixed One Month Notional Amount LIBOR rate per Fair Value June 30, 2018 December 31, 2017 annum Effective Date Expiration Date June 30, 2018 December 31, 2017 $ 25,000 $ 25,000 January 2, 2018 December 17, 2021 $ 606 $ 100 100,000 100,000 January 2, 2018 December 17, 2021 2,436 401 75,000 75,000 January 2, 2018 December 17, 2021 1,826 298 50,000 50,000 January 2, 2018 April 27, 2022 1,272 158 100,000 100,000 January 2, 2018 April 27, 2022 2,575 337 50,000 50,000 January 2, 2018 April 27, 2022 1,279 155 $ 400,000 $ 400,000 $ 9,994 $ 1,449 |
Restructuring (Tables)
Restructuring (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring [Abstract] | |
Schedule of changes in the restructuring liability | Equity-Based Compensation and Product-Related Severance Professional Fees and Other Total Restructuring expense $ 5,287 (1) $ 7,071 (2) $ 7,602 (3) $ 19,960 (1) (2) (3) |
Partners' Capital, Equity and30
Partners' Capital, Equity and Incentive Compensation Plans (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 | 2010 Equity Incentive Plan 2013 Equity Incentive Plan Weighted Weighted Weighted Weighted average Weighted average average Number of average fair average fair Restricted grant date Class O units exercise price value Options exercise price value Stock value Outstanding at December 31, 2017 568,040 $ 23.52 $ 5.00 1,369,270 $ $ 381,864 $ 46.37 Granted — — — 672,549 347,444 Exercised/Vested (1) (461,136) 23.30 (813) 22.74 4.06 47.85 Cancelled/Expired — — — — — — (2) 46.53 Outstanding at June 30, 2018 106,904 $ 24.47 $ 6.16 2,041,006 $ 36.82 $ 7.08 543,800 $ 38.88 (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. This also represents Class O units which were converted to Class A units and Options to purchase Class A common stock which were exercised for their respective columns. (2) Includes restricted Class A common stock surrendered by certain employees to satisfy their 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 | Six Months Ended June 30, 2018 Fair value of restricted stock granted $34.03 - $54.01 Fair value of options granted $5.55 - $5.64 Expected term (years) 5.5 - 6.0 Expected volatility Expected dividend yield Expected risk-free interest rates 2.69% - 2.73% |
Summary of Information About Awards Outstanding | The following tables summarize information about awards outstanding as of June 30, 2018 (unaudited). Operating Partnership Awards Outstanding Weighted average Awards remaining Exercise prices outstanding vesting period (years) Class O Units $ 20.00 - 25.00 106,904 — Total Operating Partnership awards outstanding 106,904 QTS Realty Trust, Inc. Awards Outstanding Weighted average Awards remaining Exercise prices outstanding vesting period (years) Restricted stock $ — 1.8 Options to purchase Class A common stock $ 21.00 - 50.66 1.2 Total QTS Realty Trust, Inc. awards outstanding |
Schedule of Quarterly Cash Dividends | The following table presents quarterly cash dividends and distributions paid to QTS’ common and preferred stockholders and the Operating Partnership’s unit holders for the six months ended June 30, 2018 (unaudited): Six Months Ended June 30, 2018 Aggregate Per Share and Dividend/Distribution Record Date Payment Date Per Unit Rate Amount (in millions) Common Stock December 5, 2017 January 5, 2018 $ 0.39 $ 22.2 March 22, 2018 April 5, 2018 $ 0.41 $ 23.7 $ 45.9 Series A Preferred Stock April 5, 2018 April 16, 2018 $ 0.15 $ 0.6 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Summary of Related Party Transactions | The transactions which occurred during the three and six months ended June 30, 2018 and 2017 are outlined below (unaudited and in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Tax, utility, insurance and other reimbursement $ 135 $ 206 $ 396 $ 349 Rent expense 253 254 507 508 Capital assets acquired 46 119 204 352 Total $ 434 $ 579 $ 1,107 $ 1,209 |
Earnings per share of QTS Rea32
Earnings per share of QTS Realty Trust, Inc. (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings per Share [Abstract] | |
Summary of Basic and Diluted Earnings Per Share | Basic income per share is calculated by dividing the net income attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted income per share adjusts basic income per share for the effects of potentially dilutive common shares. Unvested restricted stock awards contain non-forfeitable rights to dividends and thus are participating securities and are included in the computation of earnings per share pursuant to the two-class method for all periods presented. The two-class method is an earnings allocation formula that treats a participating security as having rights to undistributed earnings that would otherwise have been available to common stockholders. Accordingly, service-based restricted stock awards were included in the calculation of earnings per share using the two-class method for all periods presented. The computation of basic and diluted net income per share is as follows (in thousands, except per share data, and unaudited): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Numerator: Net income (loss) $ (6,433) $ 4,608 $ (6,685) $ 10,176 Loss (income) attributable to noncontrolling interests 1,002 (568) 1,031 (1,259) Preferred stock dividends (2,248) — (2,576) Earnings attributable to participating securities (227) 356 (485) 814 Net income (loss) available to common stockholders after allocation of participating securities $ (7,906) $ 4,396 $ (8,715) $ 9,731 Denominator: Weighted average shares outstanding - basic 50,452 47,666 50,366 47,562 Effect of Class A and Class RS partnership units — 6,783 — 6,783 Effect of Class O units and options to purchase Class A common stock on an "as if" converted basis — 1,009 — 991 Weighted average shares outstanding - diluted 50,452 55,458 50,366 55,336 Basic net income (loss) per share $ $ $ $ Diluted net income (loss) per share $ $ $ $ Note: The table above does not include Class A partnership units of 6.7 million and 6.8 million for the three months ended June 30, 2018 and 2017, respectively, 0.2 million reflecting the effects of Class O units and options to purchase common stock on an "as if" converted basis for the three months ended June 30, 2018, and 0.4 million reflecting the effects of Series B Convertible preferred stock on an “as if” converted basis for the three months ended June 30, 2018, as their respective inclusion would have been antidilutive. Does not include Class A partnership units of 6.6 million and 6.8 million for the six months ended June 30, 2018 and 2017, respectively, 0.4 million reflecting the effects of Class O units and options to purchase common stock on an "as if" converted basis for the six months ended June 30, 2018, and 0.2 million reflecting the effects of Series B Convertible preferred stock on an “as if” converted basis for the six months ended June 30, 2018, as their respective inclusion would have been antidilutive. |
Contracts with Customers (Table
Contracts with Customers (Table) | 6 Months Ended |
Jun. 30, 2018 | |
Contracts with Customers [Abstract] | |
Schedule of Future minimum payments to be received under non-cancelable customer contracts | Future minimum payments to be received under non-cancelable customer contracts (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 (unaudited and in thousands): 2018 (July - December) $ 173,924 2019 304,475 2020 234,246 2021 185,569 2022 117,924 Thereafter 137,210 Total $ 1,153,348 |
Description of Business (Detail
Description of Business (Details) | 6 Months Ended |
Jun. 30, 2018property | |
Organization And Description Of Business [Line Items] | |
Number of properties | 26 |
QualityTech LP | |
Organization And Description Of Business [Line Items] | |
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest | 88.50% |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Narrative) (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2018USD ($)a | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Jun. 30, 2018USD ($)item | Jun. 30, 2017USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | ||||||
Operating assets independent of the Operating Partnership | $ 0 | $ 0 | ||||
Useful life of property | 40 years | |||||
Depreciation expense from operation | 28,100,000 | $ 25,500,000 | $ 55,000,000 | $ 50,500,000 | ||
Real estate cost capitalized excluding interest cost | 3,700,000 | 3,400,000 | 7,200,000 | 5,900,000 | ||
Real estate interest cost capitalized incurred | 6,000,000 | 3,200,000 | 11,400,000 | 6,300,000 | ||
Impairment losses | $ 200,000 | 0 | $ 4,300,000 | 0 | ||
Number of reporting units | item | 1 | |||||
Term Loan Maturing 2025 | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Interest rate | 4.75% | 4.75% | ||||
Real Estate Assets | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Depreciation expense from operation | $ 25,000,000 | 22,000,000 | $ 48,600,000 | 43,400,000 | ||
Non-Real Estate Assets | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Depreciation expense from operation | 3,100,000 | $ 3,500,000 | $ 6,400,000 | 7,100,000 | ||
Land in Manassas, Virginia | Construction in Progress | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Acres of land | a | 61 | |||||
Payments to Acquire Land | $ 24,600,000 | |||||
Minimum | Real Property | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Useful life of property | 20 years | |||||
Maximum | Real Property | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Useful life of property | 40 years | |||||
Maximum | Leasehold Improvements | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Useful life of property | 20 years | |||||
Restructuring Charges [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Loss on sale of equipment | $ 2,800,000 | $ 0 | $ 0 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Additional Information 1) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |||||
Amortization of the deferred financing costs | $ 1,000 | $ 900 | $ 1,923 | $ 1,815 | |
Amortization of deferred leasing costs totaled | 5,300 | 4,500 | 10,200 | 8,700 | |
Deferred income | 32,870 | 32,870 | $ 25,305 | ||
Amortization of deferred revenue | 3,200 | 2,400 | 6,100 | 5,100 | |
Company recorded equity-based compensation expense net of repurchased awards and forfeits | 4,000 | $ 3,700 | 7,500 | $ 6,800 | |
Equity based compensation associated with the acceleration of equity awards | 1,700 | $ 3,100 | |||
Practical Expedient, remaining term | true | ||||
Amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net | $ 26,500 | $ 26,500 | $ 23,400 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Deferred Financing Costs, Net of Accumulated Amortization) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Deferred financing costs | $ 9,757 | $ 9,775 |
Accumulated amortization | (2,887) | (1,908) |
Deferred financing costs, net | 6,870 | 7,867 |
Fixed debt arrangements | ||
Deferred financing costs | 12,826 | 12,675 |
Accumulated amortization | (1,983) | (1,039) |
Deferred financing costs, net | $ 10,843 | $ 11,636 |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Deferred Leasing Costs, Net of Accumulated Amortization) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Summary of Significant Accounting Policies [Abstract] | ||
Deferred leasing costs | $ 60,624 | $ 54,868 |
Accumulated amortization | (22,812) | (20,956) |
Deferred leasing costs, net | $ 37,812 | $ 33,912 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Additional Information 2) (Details) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018USD ($)segmentsubsidiary | Jun. 30, 2017 | Dec. 31, 2017USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||
Aggregate allowance for doubtful accounts | $ 4.4 | $ 11.5 | |
Capital lease obligations | 3.9 | 7.8 | |
Lease financing obligations | 0.5 | 0.9 | |
Net book value of assets associated with leases | $ 10.9 | $ 14.7 | |
Number of operating segments | segment | 1 | ||
Number of reportable segments | segment | 1 | ||
Number of subsidiaries taxed as taxable REIT | subsidiary | 2 | ||
Effective tax rate | 10.80% | 39.10% | |
Statutory rate | 21.00% | 35.00% | |
Customer One | Rental Revenue | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of total revenue | 12.10% | ||
No Other Customers | Rental Revenue | Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of total revenue | 5.00% | ||
Four Customers [Member] | Accounts Receivable | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of total accounts receivable | 31.00% | ||
Four Customers [Member] | Accounts Receivable | Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of total accounts receivable | 5.00% | ||
One Customer | Accounts Receivable | Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Percentage of total accounts receivable | 10.00% |
Acquired Intangibles Assets a40
Acquired Intangibles Assets and Liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Finite-lived intangible assets | ||
Gross Carrying Value | $ 158,867 | $ 158,867 |
Accumulated Amortization | (58,665) | (49,416) |
Net Carrying Value | 100,202 | 109,451 |
Acquired below market leases - as Lessor | ||
Gross Carrying Value | 809 | 809 |
Accumulated Amortization | (493) | (375) |
Net Carrying Value | 316 | 434 |
Acquired Intangible Liabilities | ||
Acquired intangible liabilities | 17,009 | 17,009 |
Accumulated Amortization | (4,386) | (3,755) |
New Carrying Value | $ 12,623 | $ 13,254 |
Minimum | ||
Acquired below market leases - as Lessor | ||
Useful Lives | 3 years | 3 years |
Acquired above market leases - as Lessee | ||
Useful Lives | 11 years | 11 years |
Maximum | ||
Acquired below market leases - as Lessor | ||
Useful Lives | 4 years | 4 years |
Acquired above market leases - as Lessee | ||
Useful Lives | 12 years | 12 years |
Customer Relationships | ||
Finite-lived intangible assets | ||
Gross Carrying Value | $ 95,705 | $ 95,705 |
Accumulated Amortization | (24,486) | (20,512) |
Net Carrying Value | $ 71,219 | $ 75,193 |
Customer Relationships | Minimum | ||
Finite-lived intangible assets | ||
Useful Lives | 1 year | 1 year |
Customer Relationships | Maximum | ||
Finite-lived intangible assets | ||
Useful Lives | 12 years | 12 years |
In Place Leases | ||
Finite-lived intangible assets | ||
Gross Carrying Value | $ 32,066 | $ 32,066 |
Accumulated Amortization | (15,419) | (12,987) |
Net Carrying Value | $ 16,647 | $ 19,079 |
In Place Leases | Minimum | ||
Finite-lived intangible assets | ||
Useful Lives | 6 months | 6 months |
In Place Leases | Maximum | ||
Finite-lived intangible assets | ||
Useful Lives | 10 years | 10 years |
Solar Power Agreement | ||
Finite-lived intangible assets | ||
Useful Lives | 17 years | 17 years |
Gross Carrying Value | $ 13,747 | $ 13,747 |
Accumulated Amortization | (3,235) | (2,830) |
Net Carrying Value | 10,512 | 10,917 |
Acquired Intangible Liabilities | ||
Acquired intangible liabilities | 13,747 | 13,747 |
Accumulated Amortization | (3,235) | (2,830) |
New Carrying Value | $ 10,512 | $ 10,917 |
Platform Intangible | ||
Finite-lived intangible assets | ||
Useful Lives | 3 years | 3 years |
Gross Carrying Value | $ 9,600 | $ 9,600 |
Accumulated Amortization | (9,600) | (8,133) |
Net Carrying Value | 1,467 | |
Acquired favorable leases | ||
Finite-lived intangible assets | ||
Gross Carrying Value | 4,649 | 4,649 |
Accumulated Amortization | (2,825) | (2,328) |
Net Carrying Value | $ 1,824 | $ 2,321 |
Acquired favorable leases | Minimum | ||
Finite-lived intangible assets | ||
Useful Lives | 6 months | 6 months |
Acquired favorable leases | Maximum | ||
Finite-lived intangible assets | ||
Useful Lives | 8 years | 8 years |
Tradenames | ||
Finite-lived intangible assets | ||
Useful Lives | 3 years | 3 years |
Gross Carrying Value | $ 3,100 | $ 3,100 |
Accumulated Amortization | (3,100) | (2,626) |
Net Carrying Value | 474 | |
Above Market Leases | ||
Acquired Intangible Liabilities | ||
Acquired intangible liabilities | 2,453 | 2,453 |
Accumulated Amortization | (658) | (550) |
New Carrying Value | $ 1,795 | $ 1,903 |
Acquired Intangibles Assets a41
Acquired Intangibles Assets and Liabilities - Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Acquired Intangible Assets and Liabilities | |||||
Amortization of acquired above and below-market leases, net | $ 100 | $ 200 | $ 270 | $ 479 | |
Amortization of all other identified intangible assets | 4,300 | $ 4,600 | 8,300 | $ 9,300 | |
Estimated amortization of all other identified intangible assets | |||||
Net Carrying Value | 100,202 | 100,202 | $ 109,451 | ||
Acquired favorable and unfavorable leases | |||||
Estimated amortization of acquired favorable and unfavorable leases Rental Revenue | |||||
2018 (July - December) | 302 | 302 | |||
2,019 | 479 | 479 | |||
2,020 | 647 | 647 | |||
2,021 | 46 | 46 | |||
2,022 | 17 | 17 | |||
Thereafter | 17 | 17 | |||
Total | 1,508 | 1,508 | |||
Estimated amortization of acquired favorable and unfavorable leases Rental Expense | |||||
2018 (July - December) | 108 | 108 | |||
2,019 | 216 | 216 | |||
2,020 | 216 | 216 | |||
2,021 | 216 | 216 | |||
2,022 | 216 | 216 | |||
Thereafter | 823 | 823 | |||
Total | 1,795 | 1,795 | |||
All other identified intangible assets | |||||
Estimated amortization of all other identified intangible assets | |||||
2018 (July - December) | 6,226 | 6,226 | |||
2,019 | 11,965 | 11,965 | |||
2,020 | 11,379 | 11,379 | |||
2,021 | 10,137 | 10,137 | |||
2,022 | 9,910 | 9,910 | |||
Thereafter | 38,249 | 38,249 | |||
Net Carrying Value | $ 87,866 | $ 87,866 |
Real Estate Assets and Constr42
Real Estate Assets and Construction in Progress (Summary of Properties Owned or Leased by the Company) (Details) $ in Thousands | Jun. 30, 2018USD ($)property | Dec. 31, 2017USD ($)property |
Real Estate Properties [Line Items] | ||
Land | $ 105,541 | $ 88,216 |
Buildings, Improvements and Equipment | 1,833,870 | 1,701,287 |
Construction in progress | 649,766 | 567,819 |
Total cost | $ 2,589,177 | $ 2,357,322 |
Number of facilities leased | property | 11 | 11 |
Owned Properties | Atlanta, Georgia (Atlanta-Metro) | ||
Real Estate Properties [Line Items] | ||
Land | $ 20,416 | $ 20,416 |
Buildings, Improvements and Equipment | 463,246 | 452,836 |
Construction in progress | 30,336 | 28,614 |
Total cost | 513,998 | 501,866 |
Owned Properties | Irving Texas | ||
Real Estate Properties [Line Items] | ||
Land | 8,606 | 8,606 |
Buildings, Improvements and Equipment | 325,474 | 276,894 |
Construction in progress | 94,348 | 86,320 |
Total cost | 428,428 | 371,820 |
Owned Properties | Richmond, Virginia | ||
Real Estate Properties [Line Items] | ||
Land | 2,180 | 2,180 |
Buildings, Improvements and Equipment | 253,122 | 254,603 |
Construction in progress | 65,797 | 61,888 |
Total cost | 321,099 | 318,671 |
Owned Properties | Chicago, Illinois | ||
Real Estate Properties [Line Items] | ||
Land | 9,400 | 9,400 |
Buildings, Improvements and Equipment | 98,366 | 81,463 |
Construction in progress | 134,579 | 135,479 |
Total cost | 242,345 | 226,342 |
Owned Properties | Suwanee, Georgia (Atlanta-Suwanee) | ||
Real Estate Properties [Line Items] | ||
Land | 3,521 | 3,521 |
Buildings, Improvements and Equipment | 168,813 | 165,915 |
Construction in progress | 3,834 | 3,620 |
Total cost | 176,168 | 173,056 |
Owned Properties | Ashburn, Virginia | ||
Real Estate Properties [Line Items] | ||
Land | 17,326 | |
Buildings, Improvements and Equipment | 57,822 | |
Construction in progress | 122,651 | 106,952 |
Total cost | 197,799 | 106,952 |
Owned Properties | Piscataway New Jersey | ||
Real Estate Properties [Line Items] | ||
Land | 7,466 | 7,466 |
Buildings, Improvements and Equipment | 84,745 | 83,251 |
Construction in progress | 39,411 | 37,807 |
Total cost | 131,622 | 128,524 |
Owned Properties | Santa Clara, California | ||
Real Estate Properties [Line Items] | ||
Buildings, Improvements and Equipment | 97,610 | 100,028 |
Construction in progress | 7,112 | 6,989 |
Total cost | 104,722 | 107,017 |
Owned Properties | Dulles, Virginia | ||
Real Estate Properties [Line Items] | ||
Land | 3,154 | 3,154 |
Buildings, Improvements and Equipment | 76,521 | 76,239 |
Construction in progress | 4,143 | 3,565 |
Total cost | 83,818 | 82,958 |
Owned Properties | Sacramento, California | ||
Real Estate Properties [Line Items] | ||
Land | 1,481 | 1,481 |
Buildings, Improvements and Equipment | 64,476 | 64,251 |
Construction in progress | 77 | 58 |
Total cost | 66,034 | 65,790 |
Owned Properties | Fort Worth, Texas | ||
Real Estate Properties [Line Items] | ||
Land | 9,078 | 9,079 |
Buildings, Improvements and Equipment | 18,394 | 17,894 |
Construction in progress | 36,094 | 33,774 |
Total cost | 63,566 | 60,747 |
Owned Properties | Princeton, New Jersey | ||
Real Estate Properties [Line Items] | ||
Land | 20,700 | 20,700 |
Buildings, Improvements and Equipment | 33,367 | 32,948 |
Construction in progress | 428 | 451 |
Total cost | 54,495 | 54,099 |
Owned Properties | Phoenix, Arizona | ||
Real Estate Properties [Line Items] | ||
Construction in progress | 28,691 | 27,402 |
Total cost | 28,691 | 27,402 |
Owned Properties | Hillsboro, Oregon | ||
Real Estate Properties [Line Items] | ||
Construction in progress | 34,420 | 29,278 |
Total cost | 34,420 | 29,278 |
Owned Properties | Manassas, Virginia | ||
Real Estate Properties [Line Items] | ||
Construction in progress | 39,151 | |
Total cost | 39,151 | |
Owned Properties | Other | ||
Real Estate Properties [Line Items] | ||
Land | 2,213 | 2,213 |
Buildings, Improvements and Equipment | 35,542 | 35,505 |
Construction in progress | 216 | 88 |
Total cost | 37,971 | 37,806 |
Leased Properties | Owned Properties | ||
Real Estate Properties [Line Items] | ||
Buildings, Improvements and Equipment | 56,372 | 59,460 |
Construction in progress | 8,478 | 5,534 |
Total cost | $ 64,850 | $ 64,994 |
Debt (Outstanding Debt Includin
Debt (Outstanding Debt Including Capital Leases) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.95% | |
Capital Lease and Lease Financing Obligations | $ 3,900 | |
Total debt and lease obligations | 1,106,217 | $ 1,241,565 |
Less discount and net debt issuance costs | 10,843 | 11,636 |
Total outstanding debt, net | $ 1,095,374 | 1,229,929 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.60% | |
Maturity date | Dec. 17, 2021 | |
Outstanding debt | 131,000 | |
Term Loan I [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.49% | |
Maturity date | Dec. 17, 2022 | |
Outstanding debt | $ 350,000 | 350,000 |
Term Loan II [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.51% | |
Maturity date | Apr. 27, 2023 | |
Outstanding debt | $ 350,000 | 350,000 |
Lenexa Mortgage | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 4.10% | |
Maturity date | May 1, 2022 | |
Outstanding debt | $ 1,834 | 1,866 |
Capital Lease and Lease Financing Obligations [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 1.96% | |
Maturity date description | 2,019 | |
Capital Lease and Lease Financing Obligations | $ 4,383 | 8,699 |
Operating Partnership Quality Tech LP And QTS Finance Corporation | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 4.75% | |
Maturity date | Nov. 15, 2025 | |
Outstanding debt | $ 400,000 | $ 400,000 |
Debt (Unsecured Credit Facility
Debt (Unsecured Credit Facility Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||
Unencumbered asset pool debt yield limit | 14.00% | 14.00% | |
Unencumbered asset pool debt yield limit for two consecutive quarters | 12.50% | ||
Percentage of operating partnerships gross asset value | 15.00% | ||
Term Loan Maturing April 27, 2021 | |||
Debt Instrument [Line Items] | |||
Maturity date | Apr. 27, 2023 | ||
Term Loan Maturing December 17, 2020 | |||
Debt Instrument [Line Items] | |||
Maturity date | Dec. 17, 2022 | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Maturity date | Dec. 17, 2021 | ||
Debt Instrument Carrying Amount | $ 131,000,000 | ||
Outstanding debt | 131,000,000 | ||
Credit facility availability | $ 820,000,000 | $ 820,000,000 | |
Maximum percentage of unencumbered asset pool capitalized value | 60.00% | 60.00% | |
Maximum percentage of unencumbered asset pool capitalized value for two consecutive quarters | 65.00% | ||
Unsecured Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Debt Instrument Carrying Amount | $ 0 | $ 0 | |
Outstanding debt | 0 | 0 | |
Letter of Credit [Member] | |||
Debt Instrument [Line Items] | |||
Letter of credit outstanding | $ 4,100,000 | $ 4,100,000 | |
Line of credit facility weighted average interest rate outstanding percentage | 3.50% | 3.50% | |
Unsecured Credit Facility | |||
Debt Instrument [Line Items] | |||
Line of credit facility accordion feature | $ 400,000,000 | ||
Maximum percentage of unencumbered asset pool capitalized value | 60.00% | 60.00% | |
Maximum percentage of unencumbered asset pool capitalized value for two consecutive quarters | 65.00% | ||
Unencumbered asset pool debt yield limit | 14.00% | 14.00% | |
Unencumbered asset pool debt yield limit for two consecutive quarters | 12.50% | ||
Leverage ratio | 1.70% | 1.70% | |
Minimum | Term Loan | LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.50% | ||
Minimum | Term Loan | Base Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.50% | ||
Minimum | Revolving Credit Facility | LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.55% | ||
Minimum | Revolving Credit Facility | Base Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.55% | ||
Maximum | Term Loan | LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 2.10% | ||
Maximum | Term Loan | Base Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.10% | ||
Maximum | Revolving Credit Facility | LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 2.15% | ||
Maximum | Revolving Credit Facility | Base Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.15% | ||
Unsecured Credit Facility | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | 1,520,000,000 | ||
Debt extension period | 1 year | ||
Credit facility maximum borrowing capacity after increase which is contingent on certain conditions | $ 1,920,000,000 | $ 1,920,000,000 | |
Debt Instrument Carrying Amount | 700,000,000 | 700,000,000 | |
Outstanding debt | 700,000,000 | 700,000,000 | |
Minimum tangible net worth | $ 1,209,000,000 | $ 1,209,000,000 | |
Credit facility covenant, percentage ownership requirements in addition to minimum tangible net worth | 75.00% | 75.00% | |
Credit facility covenant, maximum distribution payout ratio of funds from operations | 95.00% | 95.00% | |
Maximum percentage on gross asset value | 60.00% | ||
Maximum percentage to gross asset value for the next two quarters | 65.00% | ||
Debt Instrument, Covenant Compliance | the Company was in compliance with all of its covenants | ||
Unsecured Credit Facility | Term Loan Maturing April 27, 2021 | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | 350,000,000 | ||
Unsecured Credit Facility | Term Loan Maturing December 17, 2020 | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | 350,000,000 | ||
Unsecured Credit Facility | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | $ 820,000,000 | ||
Maturity date | Dec. 17, 2021 |
Debt (Senior Notes) (Details)
Debt (Senior Notes) (Details) - USD ($) $ in Thousands | Nov. 08, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | Apr. 05, 2017 | Jul. 23, 2014 |
Debt Instrument [Line Items] | |||||
Debt issuance costs, net | $ 6,870 | $ 7,867 | |||
Operating Partnership And QTS Finance Corporation | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 5.875% | ||||
Operating Partnership Quality Tech LP And QTS Finance Corporation | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 400,000 | ||||
Interest rate | 4.75% | ||||
Senior notes due | 2,025 | ||||
Maturity date | Nov. 15, 2025 | ||||
Debt issuance costs, net | $ 5,600 | ||||
Percentage of issued price equal to face value | 100.00% | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs, net | $ 5,200 | ||||
Term Loan | Interest Rate Swap | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 400,000 | ||||
Term Loan Maturing April 27, 2021 | |||||
Debt Instrument [Line Items] | |||||
Maturity date | Apr. 27, 2023 | ||||
Term Loan Maturing December 17, 2020 | |||||
Debt Instrument [Line Items] | |||||
Maturity date | Dec. 17, 2022 | ||||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maturity date | Dec. 17, 2021 | ||||
Revolving Credit Facility | Unsecured Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maturity date | Dec. 17, 2021 |
Debt (Annual Remaining Principa
Debt (Annual Remaining Principal Payment) (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Debt [Abstract] | |
2,018 | $ 28 |
2,019 | 68 |
2,020 | 71 |
2,021 | 74 |
2,022 | 350,077 |
Thereafter | 751,516 |
Total | $ 1,101,834 |
Debt (Lease Narrative) (Details
Debt (Lease Narrative) (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018USD ($)agreementfacility | Jun. 30, 2018USD ($)agreementfacility | Dec. 31, 2017USD ($) | |
Capital Leased Assets [Line Items] | |||
Capital lease, lease financing obligations and mortgage notes payable | $ 3.9 | $ 3.9 | |
Lease financing obligations | $ 0.5 | 0.5 | $ 0.9 |
Carpathia Hosting, Inc. | |||
Capital Leased Assets [Line Items] | |||
Capital lease and lease financing obligations assumed | $ 2.9 | ||
Number of lease agreements | agreement | 2 | 2 | |
The number of data centers with lease agreements and lease financing agreements | facility | 1 | 1 | |
Outstanding financing agreement | $ 0.5 | $ 0.5 | |
Lease financing expiration date | Feb. 1, 2019 | ||
Carpathia Hosting, Inc. | Tenant Improvement Allowance [Member] | |||
Capital Leased Assets [Line Items] | |||
Lease financing obligations | 4.8 | $ 4.8 | |
Minimum | Carpathia Hosting, Inc. | |||
Capital Leased Assets [Line Items] | |||
Lease expiration year | 2,018 | ||
Monthly lease payment | 0.2 | ||
Maximum | Carpathia Hosting, Inc. | |||
Capital Leased Assets [Line Items] | |||
Lease expiration year | 2,019 | ||
Monthly lease payment | $ 0.5 | ||
Lease financing monthly principal and interest payment | $ 0.1 |
Debt (Future Payment Obligation
Debt (Future Payment Obligations) (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Debt [Abstract] | |
2,018 | $ 3,301 |
2,019 | 956 |
2,020 | 117 |
2,021 | 9 |
Total lease obligations | $ 4,383 |
Interest Rate Swaps (Details)
Interest Rate Swaps (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Apr. 05, 2017 | |
Derivative [Line Items] | ||||||
Interest expense related to payments on interest rate swaps | $ 8,203 | $ 7,647 | $ 16,313 | $ 14,516 | ||
Increase (decrease) in fair value of interest rate swaps | 2,563 | (1,499) | 8,545 | (1,499) | ||
Other Assets. | ||||||
Derivative [Line Items] | ||||||
Derivative, Fair Value, Net | 10,000 | 10,000 | ||||
Interest Rate Swap | ||||||
Derivative [Line Items] | ||||||
Derivative instruments, notional amount | $ 400,000 | |||||
Ineffectiveness recognized | 0 | 0 | ||||
Increase (decrease) in fair value of interest rate swaps | $ 0 | $ 0 | ||||
Interest Rate Swap | Term Loan Maturing April 27, 2022 | ||||||
Derivative [Line Items] | ||||||
Derivative instruments, notional amount | 200,000 | |||||
Interest Rate Swap | Term Loan Maturing December 17,2021 | ||||||
Derivative [Line Items] | ||||||
Derivative instruments, notional amount | $ 200,000 | |||||
Cash flow hedging | Interest Rate Swap | ||||||
Derivative [Line Items] | ||||||
Derivative instruments, notional amount | 400,000 | 400,000 | $ 400,000 | |||
Derivative, Fair Value, Net | $ 9,994 | $ 9,994 | $ 1,449 |
Interest Rate Swaps - Interest
Interest Rate Swaps - Interest rate derivatives and their fair values (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2019 | Dec. 31, 2017 | Apr. 05, 2017 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Reclassification of other comprehensive income to interest expense | $ 91 | $ 493 | |||
Forecast | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Reclassification of other comprehensive income to interest expense | $ 1,500 | ||||
Interest Rate Swap | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Notional amount of derivative | $ 400,000 | ||||
Interest Rate Swap | Cash flow hedging | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Notional amount of derivative | 400,000 | 400,000 | $ 400,000 | ||
Fair value | 9,994 | 9,994 | 1,449 | ||
Swap instrument one matures on December 17, 2021 | Cash flow hedging | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Notional amount of derivative | $ 25,000 | $ 25,000 | $ 25,000 | ||
Fixed Rate Per annum | 1.989% | 1.989% | 1.989% | ||
Expiration Date | Dec. 17, 2021 | Dec. 17, 2021 | |||
Fair value | $ 606 | $ 606 | $ 100 | ||
Swap instrument two matures on December 17, 2021 | Cash flow hedging | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Notional amount of derivative | $ 100,000 | $ 100,000 | $ 100,000 | ||
Fixed Rate Per annum | 1.989% | 1.989% | 1.989% | ||
Expiration Date | Dec. 17, 2021 | Dec. 17, 2021 | |||
Fair value | $ 2,436 | $ 2,436 | $ 401 | ||
Swap instrument three matures on December 17, 2021 | Cash flow hedging | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Notional amount of derivative | $ 75,000 | $ 75,000 | $ 75,000 | ||
Fixed Rate Per annum | 1.989% | 1.989% | 1.989% | ||
Expiration Date | Dec. 17, 2021 | Dec. 17, 2021 | |||
Fair value | $ 1,826 | $ 1,826 | $ 298 | ||
Swap instrument one matures on April 27, 2022 | Cash flow hedging | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Notional amount of derivative | $ 50,000 | $ 50,000 | $ 50,000 | ||
Fixed Rate Per annum | 2.033% | 2.033% | 2.033% | ||
Expiration Date | Apr. 27, 2022 | Apr. 27, 2022 | |||
Fair value | $ 1,272 | $ 1,272 | $ 158 | ||
Swap instrument two matures on April 27, 2022 | Cash flow hedging | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Notional amount of derivative | $ 100,000 | $ 100,000 | $ 100,000 | ||
Fixed Rate Per annum | 2.029% | 2.029% | 2.029% | ||
Expiration Date | Apr. 27, 2022 | Apr. 27, 2022 | |||
Fair value | $ 2,575 | $ 2,575 | $ 337 | ||
Swap instrument three matures on April 27, 2022 | Cash flow hedging | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Notional amount of derivative | $ 50,000 | $ 50,000 | $ 50,000 | ||
Fixed Rate Per annum | 2.033% | 2.033% | 2.033% | ||
Expiration Date | Apr. 27, 2022 | Apr. 27, 2022 | |||
Fair value | $ 1,279 | $ 1,279 | $ 155 |
Restructuring (Details)
Restructuring (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expense | $ 19,960 | |
Severance | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expense | 5,287 | |
Outstanding liability | $ 2,863 | 2,863 |
Restructuring expenses | 3,039 | |
Equity Based Compensation and Professional Fees | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expense | 7,071 | |
Outstanding liability | 0 | 0 |
Restructuring expenses | 5,135 | |
Product Related and Other | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expense | 7,602 | |
Outstanding liability | 0 | 0 |
Restructuring expenses | 3,256 | |
Minimum | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses incurred | 5,000 | 5,000 |
Maximum | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses incurred | $ 10,000 | $ 10,000 |
Partners' Capital, Equity and52
Partners' Capital, Equity and Incentive Compensation Plans (Narrative) (Details) $ / shares in Units, $ in Millions | Jul. 16, 2018$ / shares | May 04, 2017item$ / shares | Jun. 30, 2018USD ($)itemshares | Mar. 31, 2017USD ($) | May 31, 2015shares |
Partners Capital And Distributions [Line Items] | |||||
Number of classes of partnership units outstanding | item | 4 | ||||
Equity based compensation expense unrecognized | $ | $ 21.7 | ||||
Equity based compensation expense vesting period | 1 year 3 months 18 days | ||||
Equity based compensation awards intrinsic value | $ | $ 35 | ||||
QTS Realty Trust, Inc. Employee Stock Purchase Plan | |||||
Partners Capital And Distributions [Line Items] | |||||
Shares reserved for purchase under plan | 250,000 | ||||
2017 Plan | |||||
Partners Capital And Distributions [Line Items] | |||||
Minimum period of service | 30 days | ||||
Minimum hours per week of service | item | 30 | ||||
Purchase period per year | item | 4 | ||||
Class RS Units | |||||
Partners Capital And Distributions [Line Items] | |||||
Number of units outstanding | 0 | ||||
Class B Common Stock | |||||
Partners Capital And Distributions [Line Items] | |||||
Number of votes per share | item | 50 | ||||
Class A Common Stock | At Market | |||||
Partners Capital And Distributions [Line Items] | |||||
Maximum value of stock which may be issued | $ | $ 300 | ||||
Shares issued | 0 | ||||
Class A Common Stock | 2017 Plan | |||||
Partners Capital And Distributions [Line Items] | |||||
Discount rate of purchase price of common stock | 10.00% | ||||
Preferred Class A [Member] | |||||
Partners Capital And Distributions [Line Items] | |||||
Preferred Stock, Dividends, Per Share, Cash Paid | $ / shares | $ 0.45 | ||||
Chief Executive Officer | Class B Common Stock | |||||
Partners Capital And Distributions [Line Items] | |||||
Percentage of operating partnership unit exchanged | 2.00% | ||||
Minimum | 2017 Plan | |||||
Partners Capital And Distributions [Line Items] | |||||
Minimum percentage of combined voting power | 5.00% | ||||
Deductions per paycheck for purchase of share | $ / shares | $ 20 | ||||
Holding period after purchase of share | 1 year | ||||
Maximum | 2017 Plan | |||||
Partners Capital And Distributions [Line Items] | |||||
Deductions per paycheck for purchase of share | $ / shares | $ 1,000 | ||||
Restricted Class A Common Stock | |||||
Partners Capital And Distributions [Line Items] | |||||
Nonvested awards outstanding | 500,000 | ||||
Options to purchase Class A common stock | |||||
Partners Capital And Distributions [Line Items] | |||||
Nonvested awards outstanding | 900,000 | ||||
2013 Equity Incentive Plan | |||||
Partners Capital And Distributions [Line Items] | |||||
Authorized shares to be issued under the plan | 1,750,000 | 4,750,000 |
Partners' Capital, Equity and53
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) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
2013 Equity Incentive Plan | Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning balance, Options Outstanding (in shares) | shares | 1,369,270 |
Options, Granted (in shares) | shares | 672,549 |
Options, Exercised (in shares) | shares | (813) |
Ending balance, Options Outstanding (in shares) | shares | 2,041,006 |
Beginning balance, Weighted average exercise price options outstanding | $ 38.18 |
Weighted average exercise price options outstanding, Granted | 34.03 |
Weighted average exercise price options outstanding, Exercised | 22.74 |
Ending balance, Weighted average exercise price options outstanding | 36.82 |
Beginning balance, weighted average fair value, options | 7.80 |
Weighted average fair value, granted, options | 5.63 |
Weighted average fair value, vested, options | 4.06 |
Ending balance, weighted average fair value, options | $ 7.08 |
2013 Equity Incentive Plan | Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning balance, Options Outstanding (in shares) | shares | 381,864 |
Options, Granted (in shares) | shares | 347,444 |
Options, Exercised (in shares) | shares | (141,631) |
Options, Cancelled/Expired (in shares) | shares | (43,877) |
Ending balance, Options Outstanding (in shares) | shares | 543,800 |
Beginning balance, weighted average fair value, options | $ 46.37 |
Weighted average fair value, granted, options | 35.27 |
Weighted average fair value, vested, options | 47.85 |
Weighted average fair value, cancelled/expired, options | 46.53 |
Ending balance, weighted average fair value, options | $ 38.88 |
Class O Units | 2010 Equity Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning balance, Number of units (in shares) | shares | 568,040 |
Number of units, Exercised | shares | (461,136) |
Ending balance, Number of units (in shares) | shares | 106,904 |
Beginning balance, Weighted average exercise price units | $ 23.52 |
Weighted average exercise price units, Exercised | 23.30 |
Ending balance, Weighted average exercise price units | 24.47 |
Beginning balance, Weighted average fair value | 5 |
Weighted average fair value, Exercised | 4.73 |
Ending balance, Weighted average fair value | $ 6.16 |
Partners' Capital, Equity and54
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) | 6 Months Ended |
Jun. 30, 2018$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 28.00% |
Expected dividend yield | 4.82% |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of restricted stock granted | $ 34.03 |
Fair value of options granted | $ 5.55 |
Expected term (years) | 5 years 6 months |
Expected risk-free interest rates | 2.69% |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of restricted stock granted | $ 54.01 |
Fair value of options granted | $ 5.64 |
Expected term (years) | 6 years |
Expected risk-free interest rates | 2.73% |
Partners' Capital, Equity and55
Partners' Capital, Equity and Incentive Compensation Plans (Summary of Information About Awards Outstanding) (Details) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
QualityTech LP | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 106,904 |
QTS Realty Trust, Inc Awards Outstanding | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 2,584,806 |
QTS Realty Trust, Inc Awards Outstanding | Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 543,800 |
Remaining term of awards | 1 year 9 months 18 days |
QTS Realty Trust, Inc Awards Outstanding | Options to purchase Class A common stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Lower limit of exercise price | $ / shares | $ 21 |
Upper limit of exercise price | $ / shares | $ 50.66 |
Awards Outstanding | 2,041,006 |
Remaining term of awards | 1 year 2 months 12 days |
Class O Units | QualityTech LP | |
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 | 106,904 |
Remaining term of awards | 0 years |
Partners' Capital, Equity and56
Partners' Capital, Equity and Incentive Compensation Plans (Schedule of Quarterly Cash Dividends) (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 16, 2018 | Jul. 06, 2018 | Jun. 20, 2018 | Apr. 16, 2018 | Mar. 15, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Jun. 25, 2018 | Dec. 31, 2017 |
Record Date | Jun. 20, 2018 | |||||||||
Preferred stock issuance proceeds, net of costs | $ 408,415 | |||||||||
7.125% Series A cumulative redeemable perpetual preferred stock: $0.01 par value (liquidation preference $25.00 per share), 4,600,000 shares authorized, 4,280,000 shares issued and outstanding as of June 30, 2018; zero shares authorized, issued and outstanding as of December 31, 2017 | ||||||||||
Preferred stock, issued | 4,280,000 | |||||||||
6.50% Series B cumulative convertible perpetual preferred units: $0.01 par value (liquidation preference $100.00 per share), 3,162,500 units authorized, 3,162,500 units issued and outstanding as of June 30, 2018; zero units authorized, issued and outstanding as of December 31, 2017 | ||||||||||
Preferred stock, issued | 3,162,500 | |||||||||
Series A Preferred Stock | ||||||||||
Dividend rate (as a percent) | 7.125% | |||||||||
Preferred stock, issued | 4,280,000 | 4,280,000 | 4,280,000 | 0 | ||||||
Preferred stock issuance proceeds, net of costs | $ 103,200 | |||||||||
Preferred stock dividends per share cash paid | $ 0.14844 | |||||||||
Preferred stock redemption price per share | $ 25 | $ 25 | ||||||||
Threshold period of redemption of preferred stock | 120 days | |||||||||
Ownership interest | 50.00% | 50.00% | ||||||||
Convertible preferred stock par value | $ 0.01 | $ 0.01 | ||||||||
Preferred stock, liquidation preference | $ 25 | 25 | 25 | $ 25 | ||||||
Share cap price | $ 1.46929 | $ 1.46929 | ||||||||
Series B Preferred Stock | ||||||||||
Dividend rate (as a percent) | 6.50% | |||||||||
Preferred stock, issued | 3,162,500 | 3,162,500 | 3,162,500 | 0 | ||||||
Preferred stock issuance proceeds, net of costs | $ 304,000 | |||||||||
Number of shares of the company's common stock issued upon initial conversion (in shares) | 2.1264 | 2.1264 | ||||||||
Minimum percentage of closing sale price of common stock under preferred stock conversion (as a percent) | 150.00% | |||||||||
Minimum trading days of closing sale price of common stock under preferred stock conversion (in days) | 20 days | |||||||||
Maximum trading days of closing sale price of common stock under preferred stock conversion including the last trading day (in days) | 30 days | |||||||||
Preferred stock, liquidation preference | $ 100 | $ 100 | $ 100 | $ 100 | ||||||
Share cap price | $ 5.1020 | $ 5.1020 | ||||||||
Underwriter's Option | Series A Preferred Stock | ||||||||||
Preferred stock, issued | 280,000 | |||||||||
Underwriter's Option | Series B Preferred Stock | ||||||||||
Preferred stock, issued | 412,500 | |||||||||
Common stock | ||||||||||
Record Date | Mar. 22, 2018 | Dec. 5, 2017 | ||||||||
Payment Date | Apr. 5, 2018 | Jan. 5, 2018 | ||||||||
Per Common Share and Per Unit Rate | $ 0.41 | $ 0.39 | ||||||||
Dividend/Distribution Amount | $ 23,700 | $ 22,200 | $ 45,900 | |||||||
Partnership distribution per unit | $ 0.41 | $ 0.39 | ||||||||
Common stock | Subsequent Event | ||||||||||
Payment Date | Jul. 6, 2018 | |||||||||
Per Common Share and Per Unit Rate | $ 0.41 | |||||||||
Partnership distribution per unit | $ 0.41 | |||||||||
Preferred stock | ||||||||||
Record Date | Apr. 5, 2018 | |||||||||
Payment Date | Apr. 16, 2018 | |||||||||
Per Common Share and Per Unit Rate | $ 0.15 | |||||||||
Dividend/Distribution Amount | $ 600 | |||||||||
Partnership distribution per unit | $ 0.15 | |||||||||
Preferred stock | Subsequent Event | ||||||||||
Payment Date | Jul. 16, 2018 | |||||||||
Per Common Share and Per Unit Rate | $ 0.45 | |||||||||
Dividend rate (as a percent) | 7.125% |
Related Party Transactions (Sum
Related Party Transactions (Summary of Related Party Transactions) (Details) - Affiliated Entity - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Related Party Transaction [Line Items] | ||||
Tax, utility, insurance and other reimbursement | $ 135 | $ 206 | $ 396 | $ 349 |
Rent expense | 253 | 254 | 507 | 508 |
Capital assets acquired | 46 | 119 | 204 | 352 |
Total | $ 434 | $ 579 | $ 1,107 | $ 1,209 |
Noncontrolling Interest (Narrat
Noncontrolling Interest (Narrative) (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Quality Tech LP ownership percentage in operating partnership | 21.20% |
Stock conversion ratio | 1 |
Qualitytech, LP | |
Quality Tech LP ownership percentage in operating partnership | 11.50% |
Earnings per share of QTS Rea59
Earnings per share of QTS Realty Trust, Inc. (Computation of Basic and Diluted Net Income per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings per Share [Abstract] | ||||
Net income (loss) | $ (6,433) | $ 4,608 | $ (6,685) | $ 10,176 |
Loss (Income) attributable to noncontrolling interests | 1,002 | (568) | 1,031 | (1,259) |
Preferred stock dividends | (2,248) | (2,576) | ||
Earnings attributable to participating securities | (227) | 356 | (485) | 814 |
Net income (loss) available to common stockholders after allocation of participating securities | $ (7,906) | $ 4,396 | $ (8,715) | $ 9,731 |
Weighted average shares outstanding-basic | 50,452 | 47,666 | 50,366 | 47,562 |
Effect of Class A and Class RS partnership units | 6,783 | 6,783 | ||
Effect of Class O units and options to purchase Class A common stock and restricted Class A common stock on an "as if" converted basis | 1,009 | 991 | ||
Weighted average shares outstanding-diluted | 50,452 | 55,458 | 50,366 | 55,336 |
Basic net income (loss) per share | $ (0.16) | $ 0.08 | $ (0.17) | $ 0.18 |
Diluted net income (loss) per share | $ (0.16) | $ 0.08 | $ (0.17) | $ 0.17 |
Earnings per share of QTS Rea60
Earnings per share of QTS Realty Trust, Inc.(Narrative) (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Class A Common Stock | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Antidilutive shares excluded from the computation of diluted net earning per share | 6.7 | 6.8 | 6.6 | 6.8 |
Class O Units | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Antidilutive shares excluded from the computation of diluted net earning per share | 0.2 | 0.4 | ||
Series B Convertible preferred stock | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Antidilutive shares excluded from the computation of diluted net earning per share | 0.4 | 0.2 |
Contracts with Customers (Detai
Contracts with Customers (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Contracts with Customers [Abstract] | |
2018 (July - December) | $ 173,924 |
2,019 | 304,475 |
2,020 | 234,246 |
2,021 | 185,569 |
2,022 | 117,924 |
Thereafter | 137,210 |
Total | $ 1,153,348 |
Fair Value of Financial Instr62
Fair Value of Financial Instruments (Narrative) (Details) $ in Millions | Jun. 30, 2018USD ($) |
Senior Notes. | Fair Value Measurements, Level 2 | |
Fair Value Of Financial Instruments [Line Items] | |
Fair value of loan based on current market rates | $ 374.5 |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) - $ / shares | Jul. 16, 2018 | Jul. 06, 2018 | Jun. 20, 2018 | Jun. 30, 2018 | Mar. 31, 2018 |
Subsequent Event [Line Items] | |||||
Dividends payable, date of record | Jun. 20, 2018 | ||||
Common stock | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, date payable | Apr. 5, 2018 | Jan. 5, 2018 | |||
Dividend paid to common stockholders | $ 0.41 | $ 0.39 | |||
Partnership distribution per unit | $ 0.41 | $ 0.39 | |||
Dividends payable, date of record | Mar. 22, 2018 | Dec. 5, 2017 | |||
Common stock | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, date payable | Jul. 6, 2018 | ||||
Dividend paid to common stockholders | $ 0.41 | ||||
Partnership distribution per unit | $ 0.41 | ||||
Preferred stock | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, date payable | Apr. 16, 2018 | ||||
Dividend paid to common stockholders | $ 0.15 | ||||
Partnership distribution per unit | $ 0.15 | ||||
Dividends payable, date of record | Apr. 5, 2018 | ||||
Preferred stock | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, date payable | Jul. 16, 2018 | ||||
Dividend paid to common stockholders | $ 0.45 | ||||
Dividend rate (as a percent) | 7.125% |