Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 1-May-15 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | QTS Realty Trust, Inc. | |
Entity Central Index Key | 1577368 | |
Entity Filer Category | Accelerated Filer | |
Current Fiscal Year End Date | -19 | |
Qualitytech, LP [Member] | ||
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | QualityTech, LP | |
Entity Central Index Key | 1561164 | |
Entity Filer Category | Non-accelerated Filer | |
Current Fiscal Year End Date | -19 | |
Common Class A [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 34,990,367 | |
Common Class B [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 133,000 |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Real Estate Assets | ||
Land | $48,577 | $48,577 |
Buildings and improvements | 954,915 | 914,286 |
Less: Accumulated depreciation | -192,107 | -180,167 |
Total real estate assets | 811,385 | 782,696 |
Construction in progress | 266,234 | 214,719 |
Real Estate Assets, net | 1,077,619 | 997,415 |
Cash and cash equivalents | 5,748 | 10,788 |
Rents and other receivables, net | 16,730 | 15,579 |
Acquired intangibles, net | 17,262 | 18,000 |
Deferred costs, net | 37,902 | 37,058 |
Prepaid expenses | 6,477 | 3,079 |
Other assets, net | 24,252 | 24,640 |
TOTAL ASSETS | 1,185,990 | 1,106,559 |
LIABILITIES | ||
Mortgage notes payable | 86,016 | 86,600 |
Unsecured credit facility | 140,000 | 239,838 |
Senior notes, net of discount | 297,791 | 297,729 |
Capital lease obligations | 13,509 | 13,062 |
Accounts payable and accrued liabilities | 82,230 | 64,607 |
Dividends and distributions payable | 13,381 | 10,705 |
Advance rents, security deposits and other liabilities | 3,439 | 3,302 |
Deferred income | 11,401 | 10,531 |
TOTAL LIABILITIES | 647,767 | 726,374 |
EQUITY | ||
Common stock | 348 | 294 |
Additional paid-in capital | 474,185 | 324,917 |
Accumulated dividends in excess of earnings | -29,563 | -22,503 |
Total stockholders' equity | 444,970 | 302,708 |
Noncontrolling interests | 93,253 | 77,477 |
TOTAL EQUITY | 538,223 | 380,185 |
TOTAL LIABILITIES AND EQUITY | 1,185,990 | 1,106,559 |
Qualitytech, LP [Member] | ||
Real Estate Assets | ||
Land | 48,577 | 48,577 |
Buildings and improvements | 954,915 | 914,286 |
Less: Accumulated depreciation | -192,107 | -180,167 |
Total real estate assets | 811,385 | 782,696 |
Construction in progress | 266,234 | 214,719 |
Real Estate Assets, net | 1,077,619 | 997,415 |
Cash and cash equivalents | 5,748 | 10,788 |
Rents and other receivables, net | 16,730 | 15,579 |
Acquired intangibles, net | 17,262 | 18,000 |
Deferred costs, net | 37,902 | 37,058 |
Prepaid expenses | 6,477 | 3,079 |
Other assets, net | 24,252 | 24,640 |
TOTAL ASSETS | 1,185,990 | 1,106,559 |
LIABILITIES | ||
Mortgage notes payable | 86,016 | 86,600 |
Unsecured credit facility | 140,000 | 239,838 |
Senior notes, net of discount | 297,791 | 297,729 |
Capital lease obligations | 13,509 | 13,062 |
Accounts payable and accrued liabilities | 82,230 | 64,607 |
Dividends and distributions payable | 13,381 | 10,705 |
Advance rents, security deposits and other liabilities | 3,439 | 3,302 |
Deferred income | 11,401 | 10,531 |
TOTAL LIABILITIES | 647,767 | 726,374 |
EQUITY | ||
Partners' capital | 538,223 | 380,185 |
TOTAL LIABILITIES AND EQUITY | $1,185,990 | $1,106,559 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 450,133,000 | 450,133,000 |
Common stock, shares issued | 34,818,437 | 29,408,138 |
Common stock, shares outstanding | 34,818,437 | 29,408,138 |
STATEMENTS_OF_OPERATIONS_AND_C
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME UNAUDITED) (USD $) | 3 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Revenues: | ||||
Rental | $49,333 | $40,579 | ||
Recoveries from customers | 5,664 | 3,691 | ||
Cloud and managed services | 5,795 | 4,231 | ||
Other | 594 | 442 | ||
Total revenues | 61,386 | 48,943 | ||
Operating Expenses: | ||||
Property operating costs | 19,336 | 16,223 | ||
Real estate taxes and insurance | 1,485 | 1,218 | ||
Depreciation and amortization | 16,243 | 13,247 | ||
General and administrative | 13,838 | 10,778 | ||
Transaction costs | 105 | 64 | ||
Total operating expenses | 51,007 | 41,530 | ||
Operating income | 10,379 | 7,413 | ||
Other income and expenses: | ||||
Interest income | 8 | |||
Interest expense | -5,342 | -2,065 | ||
Income (loss) before taxes | 5,037 | 5,356 | ||
Tax expense of taxable REIT subsidiaries | -28 | |||
Net income | 5,037 | 5,328 | ||
Net income attributable to noncontrolling interests | -955 | -1,130 | ||
Net income | 4,082 | 4,198 | ||
Unrealized gain on swap | 105 | |||
Comprehensive income | 4,082 | 4,303 | ||
Net income per share attributable to common shares: | ||||
Basic | $0.13 | $0.14 | ||
Diluted | $0.13 | $0.14 | ||
Weighted average common shares outstanding: | ||||
Basic | 31,294,488 | 29,016,774 | ||
Diluted | 39,209,226 | [1] | 36,889,474 | [1] |
Qualitytech, LP [Member] | ||||
Revenues: | ||||
Rental | 49,333 | 40,579 | ||
Recoveries from customers | 5,664 | 3,691 | ||
Cloud and managed services | 5,795 | 4,231 | ||
Other | 594 | 442 | ||
Total revenues | 61,386 | 48,943 | ||
Operating Expenses: | ||||
Property operating costs | 19,336 | 16,223 | ||
Real estate taxes and insurance | 1,485 | 1,218 | ||
Depreciation and amortization | 16,243 | 13,247 | ||
General and administrative | 13,838 | 10,778 | ||
Transaction costs | 105 | 64 | ||
Total operating expenses | 51,007 | 41,530 | ||
Operating income | 10,379 | 7,413 | ||
Other income and expenses: | ||||
Interest income | 8 | |||
Interest expense | -5,342 | -2,065 | ||
Income (loss) before taxes | 5,037 | 5,356 | ||
Tax expense of taxable REIT subsidiaries | -28 | |||
Net income | 5,037 | 5,328 | ||
Unrealized gain on swap | 105 | |||
Comprehensive income | $5,037 | $5,433 | ||
[1] | Includes 7,317 Class A and Class RS units, 436 bin the moneyb value of Class O units on an bas ifb converted basis and 216 bin the moneyb value options to purchase shares of ClassB A common stock on an bas ifb converted basis as of the three months ended March 31, 2015. As of the three months ended March 31, 2014, this amount includes 7,797 Class A and Class RS units, 24 bin the moneyb value of Class O units on as bas ifb converted basis and 52 bin the moneyb value options to purchase shares of Class A common stock on an bas ifb converted basis. |
CONSOLIDATED_STATEMENTS_OF_EQU
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) (USD $) | Qualitytech, LP [Member] | Qualitytech, LP [Member] | Qualitytech, LP [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Dividends in Excess of Earnings [Member] | Total stockholders' Equity [Member] | Noncontrolling Interest [Member] | Total |
In Thousands, except Share data | Partnership Units [Member] | Partnership Units [Member] | |||||||
General Partner [Member] | Limited Partner [Member] | ||||||||
Beginning balance at Dec. 31, 2014 | $380,185 | $380,185 | |||||||
Beginning balance at Dec. 31, 2014 | 294 | 324,917 | -22,503 | 302,708 | 77,477 | 380,185 | |||
Beginning balance, shares at Dec. 31, 2014 | 1,000 | 36,935,000 | |||||||
Beginning balance, shares at Dec. 31, 2014 | 29,408,000 | ||||||||
Issuance of shares through equity award plan | 2 | -2 | |||||||
Issuance of shares through equity award plan, shares | 180,000 | 180,000 | |||||||
Net proceeds from equity offering | 166,366 | 166,366 | 50 | 166,316 | 166,366 | 166,366 | |||
Net proceeds from equity offering, shares | 5,000,000 | 5,000,000 | 5,000,000 | ||||||
Reclassification of noncontrolling interest to APIC upon conversion of partnership units to common stock | 2 | 2,365 | 2,367 | -2,367 | |||||
Reclassification of noncontrolling interest to APIC upon conversion of partnership units to common stock, shares | 230,000 | ||||||||
Equity-based compensation expense | 1,307 | 1,307 | 1,059 | 1,059 | 248 | 1,307 | |||
Dividend to shareholders | -11,142 | -11,142 | -11,142 | -11,142 | -11,142 | ||||
Distribution to noncontrolling interests | -2,240 | -2,240 | |||||||
Adjustments to noncontrolling interests | -20,470 | -20,470 | 19,180 | -1,290 | |||||
Partnership distribution | -2,240 | -2,240 | |||||||
Adjustments to partnership interests | -1,290 | -1,290 | |||||||
Net income | 5,037 | 5,037 | 4,082 | 4,082 | 955 | 5,037 | |||
Ending balance at Mar. 31, 2015 | 538,223 | 538,223 | |||||||
Ending balance at Mar. 31, 2015 | $348 | $474,185 | ($29,563) | $444,970 | $93,253 | $538,223 | |||
Ending balance, shares at Mar. 31, 2015 | 1,000 | 42,115,000 | |||||||
Ending balance, shares at Mar. 31, 2015 | 34,818,000 |
STATEMENTS_OF_CASH_FLOW_UNAUDI
STATEMENTS OF CASH FLOW (UNAUDITED) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flow from operating activities: | ||
Net income | $5,037 | $5,328 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 15,469 | 12,521 |
Amortization of deferred loan costs | 791 | 582 |
Amortization of senior notes discount | 62 | |
Equity-based compensation expense | 1,307 | 911 |
Bad debt expense | 58 | 148 |
Changes in operating assets and liabilities | ||
Rents and other receivables, net | -1,209 | 2,789 |
Prepaid expenses | -3,398 | -3,007 |
Other assets | 190 | 232 |
Accounts payable and accrued liabilities | -5,376 | -5,853 |
Advance rents, security deposits and other liabilities | 138 | 70 |
Deferred income | 870 | 213 |
Net cash provided by operating activities | 13,939 | 13,934 |
Cash flow from investing activities: | ||
Additions to property and equipment | -73,399 | -59,165 |
Cash used for investing activities | -73,399 | -59,165 |
Cash flow from financing activities: | ||
Credit facility proceeds | 65,162 | 58,000 |
Debt repayment | -165,000 | |
Payment of deferred financing costs | -352 | -367 |
Payment of cash dividend | -8,531 | -6,953 |
Distribution to noncontrolling interest | -2,174 | -2,012 |
Principal payments on capital lease obligation | -467 | -174 |
Scheduled mortgage principal debt repayments | -584 | -545 |
Equity proceeds, net of costs | 166,366 | |
Net cash provided by financing activities | 54,420 | 47,949 |
Net increase (decrease) in cash and cash equivalents | -5,040 | 2,718 |
Cash and cash equivalents, beginning of period | 10,788 | 5,210 |
Cash and cash equivalents, end of period | 5,748 | 7,928 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest (excluding deferred financing costs and amounts capitalized) | 9,439 | 1,374 |
Noncash investing and financing activities: | ||
Accrued capital additions | 61,492 | 36,185 |
Qualitytech, LP [Member] | ||
Cash flow from operating activities: | ||
Net income | 5,037 | 5,328 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 15,469 | 12,521 |
Amortization of deferred loan costs | 791 | 582 |
Amortization of senior notes discount | 62 | |
Equity-based compensation expense | 1,307 | 911 |
Bad debt expense | 58 | 148 |
Changes in operating assets and liabilities | ||
Rents and other receivables, net | -1,209 | 2,789 |
Prepaid expenses | -3,398 | -3,007 |
Other assets | 190 | 232 |
Accounts payable and accrued liabilities | -5,376 | -5,853 |
Advance rents, security deposits and other liabilities | 138 | 70 |
Deferred income | 870 | 213 |
Net cash provided by operating activities | 13,939 | 13,934 |
Cash flow from investing activities: | ||
Additions to property and equipment | -73,399 | -59,165 |
Cash used for investing activities | -73,399 | -59,165 |
Cash flow from financing activities: | ||
Credit facility proceeds | 65,162 | 58,000 |
Debt repayment | -165,000 | |
Payment of deferred financing costs | -352 | -367 |
Payment of cash dividend | -8,531 | -6,953 |
Partnership distributions | -2,174 | -2,012 |
Principal payments on capital lease obligation | -467 | -174 |
Scheduled mortgage principal debt repayments | -584 | -545 |
Equity proceeds, net of costs | 166,366 | |
Net cash provided by financing activities | 54,420 | 47,949 |
Net increase (decrease) in cash and cash equivalents | -5,040 | 2,718 |
Cash and cash equivalents, beginning of period | 10,788 | 5,210 |
Cash and cash equivalents, end of period | 5,748 | 7,928 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest (excluding deferred financing costs and amounts capitalized) | 9,439 | 1,374 |
Noncash investing and financing activities: | ||
Accrued capital additions | $61,492 | $36,185 |
Description_of_Business
Description of Business | 3 Months Ended |
Mar. 31, 2015 | |
Description of Business [Abstract] | |
Description of Business | 1. Description of Business |
QTS Realty Trust, Inc. (“QTS”) through its controlling interest in QualityTech, LP (the “Operating Partnership” and collectively with QTS and their subsidiaries, the “Company”) and the subsidiaries of the Operating Partnership, is engaged in the business of owning, acquiring, redeveloping and managing multi-tenant data centers. The Company’s portfolio consists of 12 properties with data centers located throughout the continental United States. | |
QTS was formed as a Maryland corporation on May 17, 2013. On October 15, 2013, QTS completed its initial public offering of 14,087,500 shares of Class A common stock, $0.01 par value per share (the “IPO”), including shares issued pursuant to the underwriters’ option to purchase additional shares, which was exercised in full, and received net proceeds of approximately $279 million. 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. | |
Concurrently with the completion of the IPO, the Company consummated a series of transactions, including the merger of General Atlantic REIT, Inc. with the Company, pursuant to which the Company became the sole general partner and majority owner of QualityTech, LP, the Operating Partnership. QTS contributed the net proceeds received from the IPO to the Operating Partnership in exchange for partnership units therein. As of March 31, 2015, QTS owned approximately 82.7% 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 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_Account
Summary of Significant Accounting Policies | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Summary of Significant Accounting Policies [Abstract] | |||||||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies | ||||||
Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. | |||||||
The accompanying financial statements are presented for both QTS Realty Trust, Inc. and QualityTech, LP. References to “QTS” mean QTS Realty Trust, Inc. and its controlled subsidiaries; and references to the “Operating Partnership” mean QualityTech, LP and its controlled subsidiaries. | |||||||
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 is the sole general partner of the Operating Partnership, and its only material asset consisted of its ownership interest in 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. 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. The Operating Partnership’s capital includes general and limited common units that are owned by QTS and the other partners. QTS' stockholders’ equity includes common stock, additional paid in capital, accumulated other comprehensive income (loss) and accumulated dividends in excess of earnings. The remaining equity is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. The primary difference in QTS' Statements of Operations and Comprehensive Income is that for net income (loss), QTS retains its proportionate share of the net income (loss) based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership. These combined notes refer to actions or holdings as being actions or holdings of “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, management believes that these general references to “the Company” in this context is appropriate because the business is one enterprise operated through the Operating Partnership. | |||||||
As discussed above, QTS owns no operating assets and has no operations independent of the Operating Partnership and its subsidiaries. Obligations under the 5.875% Senior Notes due 2022 and the unsecured credit facility, both discussed in Note 5, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries, other than QTS Finance Corporation, the co-issuer of the 5.875% Senior Notes due 2022. As such, condensed consolidating financial information for the guarantors is not being presented in the notes to the interim condensed consolidated financial statements. However, the indenture governing the 5.875% Senior Notes due 2022 restricts the ability of the Operating Partnership to make distributions to QTS, subject to certain exceptions, including distributions required in order for QTS to maintain its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended. | |||||||
The interim condensed consolidated financial statements of QTS Realty Trust, Inc. for the three months ended March 31, 2015 and 2014, and as of March 31, 2015 and December 31, 2014 present the accounts of QTS Realty Trust, Inc. and its majority owned subsidiaries. This includes the operating results of the Operating Partnership for all periods presented. | |||||||
Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals. | |||||||
Principles of Consolidation – The consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority-owned subsidiaries. The consolidated financial statements of QualityTech, LP include the accounts of QualityTech, LP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in the financial statements. | |||||||
Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended March 31, 2015, depreciation expense related to real estate assets and non-real estate assets was $10.9 million and $1.9 million, respectively, for a total of $12.8 million. For the three months ended March 31, 2014, depreciation expense related to real estate assets and non-real estate assets was $8.8 million and $1.4 million, respectively, for a total of $10.2 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 $3.3 million and $2.2 million for the three months ended March 31, 2015 and 2014, respectively. Interest is capitalized during the period of development by first applying the Company’s actual borrowing rate on the related asset and second, to the extent necessary, by applying the Company’s weighted average effective borrowing rate to the actual development and other costs expended during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $2.0 million and $1.6 million for the three months ended March 31, 2015 and 2014, respectively. | |||||||
Acquisition of Real Estate – Acquisitions of real estate 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 real estate acquired is allocated to the acquired tangible assets, consisting primarily of land, building and improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases and value of customer relationships. | |||||||
In developing estimates of fair value of acquired assets and assumed liabilities, management analyzed a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets. | |||||||
Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. Amortization of acquired in place lease costs totaled $0.4 million and $0.6 million for the three months ended March 31, 2015 and 2014, respectively. | |||||||
Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. Amortization of acquired customer relationships totaled $0.3 million and $0.3 million for the three months ended March 31, 2015 and 2014, respectively. | |||||||
See Note 3 for discussion of the preliminary purchase price allocation for the Princeton facility that the Company acquired on June 30, 2014. | |||||||
Impairment of Long-Lived and Intangible Assets – The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is generally measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset exceeds the value of the undiscounted cash flows, the fair value of the asset is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three months ended March 31, 2015 and 2014, respectively. | |||||||
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. Amortization of the deferred financing costs was $0.8 million and $0.6 million for the three months ended March 31, 2015 and 2014, respectively. Deferred financing costs, net of accumulated amortization are as follows: | |||||||
March 31, | December 31, | ||||||
(dollars in thousands) | 2015 | 2014 | |||||
(unaudited) | |||||||
Deferred financing costs | $ | 18,540 | $ | 18,152 | |||
Accumulated amortization | -2,510 | -1,683 | |||||
Deferred financing costs, net | $ | 16,030 | $ | 16,469 | |||
Deferred leasing costs consist of external fees and internal costs incurred in the successful negotiations of leases and are deferred and amortized over the terms of the related leases on a straight-line basis. If an applicable lease terminates prior to the expiration of its initial term, the carrying amount of the costs are written off to amortization expense. Amortization of deferred leasing costs totaled $2.7 million and $2.1 million for the three months ended March 31, 2015 and 2014, respectively. Deferred leasing costs, net of accumulated amortization are as follows (excluding $3.1 million, net of amortization, related to a leasing arrangement at the Company’s Princeton facility in 2014): | |||||||
March 31, | December 31, | ||||||
(dollars in thousands) | 2015 | 2014 | |||||
(unaudited) | |||||||
Deferred leasing costs | $ | 30,745 | $ | 26,799 | |||
Accumulated amortization | -11,958 | -9,378 | |||||
Deferred leasing costs, net | $ | 18,787 | $ | 17,421 | |||
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 $11.4 million and $10.5 million as of March 31, 2015 and December 31, 2014, respectively. Additionally, $1.2 million and $1.2 million of deferred income was amortized into revenue for the three months ended March 31, 2015 and 2014, respectively. | |||||||
Interest Rate Derivative Instruments – The Company utilizes derivatives to manage its interest rate exposure. During February 2012, the Company entered into interest rate swaps with a notional amount of $150 million which were cash flow hedges and qualified for hedge accounting. For these hedges, the effective portion of the change in fair value was recognized through other comprehensive income or loss. Amounts were reclassified out of other comprehensive income (loss) as the hedged item was recognized in earnings, either for ineffectiveness or for amounts paid relating to the hedge. The Company reflected all changes in the fair value of the swaps in other comprehensive income (loss) during the three months ended March 31, 2014, as there was no ineffectiveness recorded in that period. The Company had no interest rate swaps outstanding at March 31, 2015 and December 31, 2014. | |||||||
Equity-based Compensation – All equity-based compensation is measured at fair value on the grant date or date of modification, as applicable, and recognized in earnings over the requisite service period. Depending upon the settlement terms of the awards, all or a portion of the fair value of equity-based awards may be presented as a liability or as equity in the consolidated balance sheets. Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification. Equity-based compensation expense net of forfeited and repurchased awards was $1.3 million and $0.9 million for the three months ended March 31, 2015 and 2014, respectively. | |||||||
Rental Revenue – The Company, as a lessor, has retained substantially all of the risks and benefits of ownership and accounts for its leases as operating leases. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net was $4.4 million and $4.0 million as of March 31, 2015 and December 31, 2014, respectively. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed above. | |||||||
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 $3.8 million and $3.7 million as of March 31, 2015 and December 31, 2014, respectively. | |||||||
Capital Leases – 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. The outstanding liabilities for the capital leases were $13.5 million and $13.1 million as of March 31, 2015 and December 31, 2014, respectively. The value of the assets associated with these leases approximates the outstanding obligations as of March 31, 2015 and December 31, 2014, respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income. | |||||||
Recoveries from Customers – Certain customer leases contain provisions under which the customers reimburse the Company for a portion of the property’s real estate taxes, insurance and other operating expenses, which include certain power and cooling-related charges. The reimbursements are included in revenue as recoveries from customers in the Statements of Operations and Comprehensive Income in the period the applicable expenditures are incurred. Certain customer leases are structured to provide a fixed monthly billing amount that includes an estimate of various operating expenses, with all revenue from such leases included in rental revenues. | |||||||
Cloud and Managed Services Revenue – The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. | |||||||
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 in the United States. | |||||||
Customer Concentrations – As of March 31, 2015, one of the Company’s customers represented 8.8% of its total monthly rental revenue. No other customers exceeded 5% of total monthly rental revenue. | |||||||
As of March 31, 2015, five of the Company’s customers exceeded 5% of total accounts receivable. In aggregate, these five customers accounted for 67% of total accounts receivable. Two of these five customers individually exceeded 10% of total accounts receivable. | |||||||
Income Taxes – The Company elected for one of its existing subsidiaries to be taxed as a taxable REIT subsidiary under the Internal Revenue Service real estate investment trust (the “IRS REIT”) tax regulations. The taxable REIT subsidiary is allocated income and expense based on IRS REIT tax regulations. | |||||||
For the taxable REIT subsidiary, 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. | |||||||
The Company’s tax provision has not changed materially subsequent to December 31, 2014. The Company is not currently under examination by the Internal Revenue Service. | |||||||
Fair Value Measurements – ASC Topic 820, Fair Value Measurements and Disclosures, emphasizes that fair-value is a market-based measurement, not an entity-specific measurement. Therefore, a fair-value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, a fair-value hierarchy is established that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). | |||||||
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the level in the fair-value hierarchy within which the entire fair-value measurement falls is based on the lowest level input that is significant to the fair-value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. | |||||||
As the Company’s previous interest rate swaps matured on September 28, 2014, there are no financial assets or liabilities measured at fair value on the consolidated balance sheets as of March 31, 2015 and December 31, 2014. | |||||||
New Accounting Pronouncements | |||||||
In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. The new guidance narrows the definition of discontinued operations to disposals that represent a strategic shift in operations and requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in the ASU are effective for annual and interim reporting periods beginning on and after December 15, 2014. Early adoption is permitted. Adoption of this standard did not have any effect on the Company’s consolidated financial statements. | |||||||
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the current revenue recognition requirements in ASC 606, Revenue Recognition. Under this new guidance, entities should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This ASU also requires enhanced disclosures. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. Retrospective and modified retrospective application is allowed. The Company is currently assessing the impact of this amendment on its consolidated financial statements. | |||||||
In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, and not as a separate deferred charge. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The amendments are required to be applied on a retrospective basis, and upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. Adoption of this standard will affect the Company’s Consolidated Balance Sheets. | |||||||
Acquisition_of_Real_Estate
Acquisition of Real Estate | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Acquisition of Real Estate [Abstract] | |||||
Acquisition of Real Estate | 3. Acquisition of Real Estate | ||||
(All references to square footage, acres and megawatts are unaudited) | |||||
On June 30, 2014, the Company completed the acquisition of a data center facility in New Jersey (the “Princeton facility”), from McGraw Hill Financial, Inc., for an aggregate cost of approximately $73.3 million. This facility is located on approximately 194 acres and consists of approximately 560,000 gross square feet, including approximately 58,000 square feet of raised floor, and 12 MW of gross power. This acquisition was funded with a draw on the unsecured revolving credit facility. Concurrently with acquiring this data center the Company entered into a 10 year lease for the facility’s 58,000 square feet of raised floor with Atos, an international information technology services company headquartered in Bezos, France. The lease includes, at the option of Atos, the ability to renew for up to 15 years. | |||||
The Company accounted for this acquisition in accordance with ASC 805, Business Combinations, as a business combination. The preliminary purchase price allocation was based on an assessment of the fair value of the assets acquired, and excludes acquisition-related costs which in accordance with ASC 805 were expensed as incurred. The Company acquired the Princeton facility on June 30, 2014. The Company is valuing the assets acquired using Level 3 inputs. | |||||
The following table summarizes the consideration for the Princeton facility and the preliminary allocation of the fair value of assets acquired as of March 31, 2015 (in thousands): | |||||
Princeton facility as of March 31, 2015 | Weighted average useful life | ||||
Buildings | $ 35,574 | 40 | |||
Land | 17,976 | N/A | |||
Acquired Intangibles | 16,114 | 10 | |||
Deferred Costs | 3,335 | 10 | |||
Other | 301 | 10 | |||
Total purchase price | $ 73,300 | ||||
The purchase price allocation remains provisional pending completion of further valuation analysis. Any further revisions will be recorded as adjustments to the final purchase price allocation. | |||||
Real_Estate_Assets_and_Constru
Real Estate Assets and Construction in Progress | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Real Estate Assets and Construction in Progress [Abstract] | |||||||||||||
Real Estate Assets and Construction in Progress | 4. Real Estate Assets and Construction in Progress | ||||||||||||
The following is a summary of properties owned or leased by the Company as of March 31, 2015 and December 31, 2014 (in thousands): | |||||||||||||
As of March 31, 2015 (unaudited): | |||||||||||||
Property Location | Land | Buildings and Improvements | Construction in Progress | Total Cost | |||||||||
Owned Properties | |||||||||||||
Suwanee, Georgia (Atlanta-Suwanee) | $ | 3,521 | $ | 142,056 | $ | 9,162 | $ | 154,739 | |||||
Atlanta, Georgia (Atlanta-Metro) | 15,397 | 374,147 | 18,668 | 408,212 | |||||||||
Santa Clara, California* | - | 91,151 | 742 | 91,893 | |||||||||
Richmond, Virginia | 2,180 | 127,843 | 112,981 | 243,004 | |||||||||
Sacramento, California | 1,481 | 60,158 | 386 | 62,025 | |||||||||
Princeton, New Jersey | 17,976 | 35,977 | 220 | 54,173 | |||||||||
Dallas-Fort Worth, Texas | 5,808 | 61,551 | 96,134 | 163,493 | |||||||||
Chicago, Illinois | - | - | 26,766 | 26,766 | |||||||||
Miami, Florida | 1,777 | 28,850 | 205 | 30,832 | |||||||||
Lenexa, Kansas | 437 | 3,466 | 17 | 3,920 | |||||||||
Wichita, Kansas | - | 1,409 | - | 1,409 | |||||||||
48,577 | 926,608 | 265,281 | 1,240,466 | ||||||||||
Leased Properties | |||||||||||||
Jersey City, New Jersey | - | 27,450 | 923 | 28,373 | |||||||||
Overland Park, Kansas | - | 857 | ** | 30 | 887 | ||||||||
- | 28,307 | 953 | 29,260 | ||||||||||
$ | 48,577 | $ | 954,915 | $ | 266,234 | $ | 1,269,726 | ||||||
* Owned facility subject to long-term ground sublease. | |||||||||||||
** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers. | |||||||||||||
As of December 31, 2014: | |||||||||||||
Property Location | Land | Buildings and Improvements | Construction in Progress | Total Cost | |||||||||
Owned Properties | |||||||||||||
Suwanee, Georgia (Atlanta-Suwanee) | $ | 3,521 | $ | 138,991 | $ | 6,345 | $ | 148,857 | |||||
Atlanta, Georgia (Atlanta-Metro) | 15,397 | 356,122 | 22,693 | 394,212 | |||||||||
Santa Clara, California* | - | 90,332 | 650 | 90,982 | |||||||||
Richmond, Virginia | 2,180 | 127,080 | 71,794 | 201,054 | |||||||||
Sacramento, California | 1,481 | 60,094 | 278 | 61,853 | |||||||||
Princeton, New Jersey | 17,976 | 35,951 | 90 | 54,017 | |||||||||
Dallas-Fort Worth, Texas | 5,808 | 44,053 | 89,982 | 139,843 | |||||||||
Chicago, Illinois | - | - | 21,786 | 21,786 | |||||||||
Miami, Florida | 1,777 | 28,786 | 129 | 30,692 | |||||||||
Lenexa, Kansas | 437 | 3,298 | 25 | 3,760 | |||||||||
Wichita, Kansas | - | 1,409 | - | 1,409 | |||||||||
48,577 | 886,116 | 213,772 | 1,148,465 | ||||||||||
Leased Properties | |||||||||||||
Jersey City, New Jersey | - | 27,318 | 920 | 28,238 | |||||||||
Overland Park, Kansas | - | 852 | ** | 27 | 879 | ||||||||
- | 28,170 | 947 | 29,117 | ||||||||||
$ | 48,577 | $ | 914,286 | $ | 214,719 | $ | 1,177,582 | ||||||
_____________________________ | |||||||||||||
* Owned facility subject to long-term ground sublease. | |||||||||||||
** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers. | |||||||||||||
Credit_Facilities_Senior_Notes
Credit Facilities Senior Notes and Mortgage Notes Payable | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
Credit Facilities Senior Notes and Mortgage Notes Payable [Abstract] | ||||||
Credit Facilities Senior Notes and Mortgage Notes Payable | ||||||
5. Credit Facilities, Senior Notes and Mortgage Notes Payable | ||||||
Below is a listing of the Company’s outstanding debt, excluding capital leases, as of March 31, 2015 and December 31, 2014 (in thousands): | ||||||
March 31, | December 31, | |||||
2015 | 2014 | |||||
(Unaudited) | ||||||
Unsecured Credit Facility | $ | 140,000 | $ | 239,838 | ||
Senior Notes, net of discount | 297,791 | 297,729 | ||||
Richmond Credit Facility | 70,000 | 70,000 | ||||
Atlanta-Metro Equipment Loan | 16,016 | 16,600 | ||||
Total | $ | 523,807 | $ | 624,167 | ||
(a) Unsecured Credit Facility – On May 1, 2013, the Company entered into a $575 million unsecured credit facility comprised of a five-year $225 million term loan and a four-year $350 million revolving credit facility with a one year extension, subject to satisfaction of certain conditions, and had the ability to expand the total credit facility by an additional $100 million subject to certain conditions set forth in the credit agreement. In July 2014, the Company’s term loan was reduced by $75 million to $150 million in connection with the issuance of the Senior Notes. On December 17, 2014, the Company amended and restated its unsecured credit facility to provide for a $650 million unsecured credit facility comprised of a five-year $100 million term loan maturing December 17, 2019 and a four-year $550 million revolving credit facility maturing December 17, 2018, with the option to extend one year until December 17, 2019, subject to the satisfaction of certain conditions. The lenders under the unsecured credit facility may issue up to $30 million in letters of credit subject to the satisfaction of certain conditions. The total unsecured credit facility may be increased from the current capacity of $650 million to up to $850 million subject to certain conditions set forth in the credit agreement, including the consent of the administrative agent and obtaining necessary commitments. | ||||||
The unsecured credit facility requires monthly interest payments and requires the Company to comply with various customary affirmative and negative covenants and quarterly financial covenant requirements relating to the debt service coverage ratio, fixed charge ratio, leverage ratio and tangible net worth and various other operational requirements. In connection with the unsecured credit facility, as of March 31, 2015, the Company had an additional $2.5 million letter of credit outstanding. | ||||||
Amounts outstanding under the 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 1.70% to 2.25% for LIBOR loans and 0.70% to 1.25% for base rate loans. For term loans, the spread ranges from 1.65% to 2.20% for LIBOR loans and 0.65% to 1.20% for base rate loans. As of March 31, 2015, the interest rate for amounts outstanding under the unsecured credit facility was 1.84%. | ||||||
(b) Senior Notes – On July 23, 2014, the Operating Partnership and QTS Finance Corporation, a subsidiary of the Operating Partnership formed solely for the purpose of facilitating the offering of the notes described below (collectively, the “Issuers”), issued $300 million aggregate principal amount of 5.875% Senior Notes due 2022 (the “Senior Notes”). The Senior Notes have an interest rate of 5.875% per annum, were issued at a price equal to 99.211% of their face value and mature on August 1, 2022. The proceeds from the offering were used to repay amounts outstanding under the unsecured credit facility, including $75 million outstanding under the term loan. 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. The Company will not initially guarantee the Senior Notes and will not be required to guarantee the Senior Notes except under certain circumstances. The offering was conducted pursuant to Rule 144A of the Securities Act of 1933, as amended, and the Senior Notes were issued pursuant to an indenture, dated as of July 23, 2014, among the Operating Partnership, QTS Finance Corporation, the Company, the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee (the “Indenture”). | ||||||
On March 23, 2015, the Securities and Exchange Commission declared effective the Operating Partnership and QTS Finance Corporation’s registration statement on Form S-4 pursuant to which the issuers exchanged the existing Senior Notes for $300 million of 5.875% Senior Notes due 2022 (the “Exchange Notes”) that are registered under the Securities Act of 1933, as amended. The exchange offer was completed on April 23, 2015, and all outstanding existing Senior Notes were tendered. The Exchange Notes did not provide the Company with any additional proceeds and satisfied its obligations under a registration rights agreement entered into in connection with the issuance of the Senior Notes. | ||||||
(c) Richmond Credit Facility – In December 2012, the Company entered into a credit facility secured by the Company’s Richmond data center (the “Richmond Credit Facility”). As of March 31, 2015, the Richmond Credit Facility had capacity of $120 million and includes an accordion feature that allows the Company to increase the size of the credit facility up to $200 million. The Richmond Credit Facility matures June 30, 2019. The Richmond Credit Facility requires the Company to comply with covenants similar to the unsecured credit facility. | ||||||
Amounts outstanding under the Richmond 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 range, depending upon the Company’s leverage ratio, from 2.10% to 2.85% for LIBOR loans or 1.10% to 1.85% for base rate loans. As of March 31, 2015, the interest rate for amounts outstanding under the Richmond Credit Facility was 2.28%. | ||||||
On December 17, 2014, the Company further amended the Richmond Credit Facility to, among other things, conform certain terms of the Richmond Credit Facility to the unsecured credit facility and allow two subsidiaries of the Operating Partnership that were parties to the Richmond Credit Facility to guarantee unsecured obligations of the Operating Partnership and its subsidiaries, including the unsecured credit facility and the Senior Notes. | ||||||
(d) Atlanta-Metro Equipment Loan – On April 9, 2010, the Company entered into a $25 million loan to finance equipment related to an expansion project at the Company’s Atlanta-Metro data center (the “Atlanta-Metro Equipment Loan”). The loan originally featured monthly interest-only payments but now requires monthly interest and principal payments. The loan bears interest at 6.85%, amortizes over ten years and matures on June 1, 2020. | ||||||
The annual remaining principal payment requirements as of March 31, 2015 per the contractual maturities and excluding extension options are as follows (in thousands): | ||||||
2015 | $ | 1,813 | ||||
2016 | 2,567 | |||||
2017 | 2,748 | |||||
2018 | 42,942 | |||||
2019 | 173,151 | |||||
Thereafter | 302,795 | |||||
Total | $ | 526,016 | ||||
As of March 31, 2015, the Company was in compliance with all of its covenants. | ||||||
Interest_Rate_Derivative_Instr
Interest Rate Derivative Instruments | 3 Months Ended |
Mar. 31, 2015 | |
Interest Rate Derivative Instruments [Abstract] | |
Interest Rate Derivative Instruments | 6. Interest Rate Derivative Instruments |
The Company entered into interest rate swap agreements with a notional amount of $150 million on February 8, 2012, which were designated as cash flow hedges for hedge accounting, and matured on September 28, 2014. For derivative instruments that are accounted for as hedges, the change in fair value for the effective portions of qualifying hedges is recorded through other comprehensive income (loss). The total amount of unrealized gains recorded in other comprehensive income (loss) for the three months ended March 31, 2014 was $0.1 million, with no unrealized gains or losses recorded for the three months ended March 31, 2015. Interest expense related to payments on interest rate swaps for the three months ended March 31, 2014 was $0.2 million, with no interest expense recorded for the three months ended March 31, 2015. | |
As the interest rate swaps matured in September 2014, there were no amounts outstanding on the consolidated balance sheets relating to interest rate swaps as of March 31, 2015 and December 31, 2014. | |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 7. Commitments and Contingencies |
The Company is subject to various routine legal proceedings and other matters in the ordinary course of business. The Company does not currently have any litigation that would have a material adverse impact on the Company’s financial statements. | |
Partners_Capital_Equity_and_In
Partners' Capital, Equity and Incentive Compensation Plans | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Partners' Capital, Equity and Incentive Compensation Plans [Abstract] | ||||||||||||||||||||
Partners' Capital, Equity and Incentive Compensation Plans | 8. Partners’ Capital, Equity and Incentive Compensation Plans | |||||||||||||||||||
QualityTech, LP | ||||||||||||||||||||
QTS has the full power and authority to do all the things necessary to conduct the business of the Operating Partnership. | ||||||||||||||||||||
As of March 31, 2015, the Operating Partnership had three classes of limited partnership units outstanding: Class A units of limited partnership interest (“Class A units”), Class RS LTIP units of limited partnership interest (“Class RS units”) and Class O LTIP units of limited partnership units (“Class O units”). The Class A Units are redeemable at any time on or after one year following the later of November 1, 2013 (which is the beginning of the first full calendar month following the completion of the IPO) or the date of initial issuance. The Company may in its sole discretion elect to assume and satisfy the redemption amount with cash or its shares. Class RS units or Class O units were issued upon grants made under the QualityTech, LP 2010 Equity Incentive Plan (the “2010 Equity Incentive Plan”). Class RS units and Class O units may be subject to vesting and are pari passu with Class A units. Each Class RS unit and Class O unit is convertible into Class A units by the Operating Partnership at any time or by the holder at any time following full vesting (if such unit is subject to vesting) based on formulas contained in the partnership agreement. In addition, upon certain circumstances set forth in the partnership agreement, vested Class RS units automatically convert into Class A units of the Operating Partnership. | ||||||||||||||||||||
QTS Realty Trust, Inc. | ||||||||||||||||||||
In connection with its IPO, QTS issued Class A common stock and Class B common stock. Class B common stock entitles the holder to 50 votes per share and was issued to enable the Company’s Chief Executive Officer to exchange 2% of his Operating Partnership units so he may have a vote proportionate to his economic interest in the Company. Also in connection with its IPO, QTS adopted the QTS Realty Trust, Inc. 2013 Equity Incentive plan (the “2013 Equity Incentive Plan”), which authorized 1.75 million shares of Class A common stock to be issued under the plan, including options to purchase Class A common stock, restricted Class A common stock, Class O units, and Class RS units. In March 2015, the Board of Directors approved an amendment to the 2013 Equity Incentive Plan to, among other things, increase the number of shares available for issuance under the plan by 3,000,000, subject to stockholder approval. The stockholders voted on the amendment to the 2013 Equity Incentive Plan at the annual meeting of stockholders held on May 4, 2015. | ||||||||||||||||||||
The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the three months ended March 31, 2015: | ||||||||||||||||||||
2010 Equity Incentive Plan | 2013 Equity Incentive Plan | |||||||||||||||||||
Number of Class O units | Weighted average exercise price | Weighted average fair value | Number of Class RS units | Weighted average grant date value | Options | Weighted average exercise price | Weighted average fair value | Restricted Stock | Weighted average grant date value | |||||||||||
Outstanding at December 31, 2014 | 1,518,717 | $ | $ | 74,625 | $ | 584,949 | $ | $ | 246,785 | $ | ||||||||||
23.49 | 3.75 | 23.49 | 22.87 | 4.10 | 29.13 | |||||||||||||||
Granted | — | — | — | — | — | 312,997 | 36.14 | 8.02 | 170,696 | 35.88 | ||||||||||
Exercised/Vested (2) | -23,939 | 21.71 | 3.97 | — | — | -5,406 | 21.00 | 3.52 | -13,448 | 23.76 | ||||||||||
Released from restriction (1) | — | — | — | -8,687 | 25.00 | — | — | — | — | — | ||||||||||
Cancelled/Expired (3) | — | — | — | — | — | -8,594 | 21.00 | 3.52 | -7,091 | 24.36 | ||||||||||
Outstanding at March 31, 2015 | 1,494,778 | $ | $ | 65,938 | $ | 883,946 | $ | $ | 396,942 | $ | ||||||||||
23.52 | 3.75 | 23.29 | 27.60 | 5.49 | 32.30 | |||||||||||||||
-1 | This represents Class RS units that upon vesting have converted to Operating Partnership units. | |||||||||||||||||||
-2 | 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. | |||||||||||||||||||
-3 | Includes 7,091 of restricted Class A common stock surrendered by certain employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock. | |||||||||||||||||||
The assumptions and fair values for restricted stock and options to purchase shares of Class A common stock granted for the three months ended March 31, 2015 are included in the following table on a per unit basis. Class O units and options to purchase shares of Class A common stock were valued using the Black-Scholes model. | ||||||||||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||||||||
Fair value of restricted stock granted | $35.81-$37.64 | |||||||||||||||||||
Fair value of options granted | $8.00-$8.05 | |||||||||||||||||||
Expected term (years) | 5.5-6.1 | |||||||||||||||||||
Expected volatility | 33% | |||||||||||||||||||
Expected dividend yield | 3.50-3.57% | |||||||||||||||||||
Expected risk-free interest rates | 1.67-1.69% | |||||||||||||||||||
The following table summarizes information about awards outstanding as of March 31, 2015. | ||||||||||||||||||||
Operating Partnership Awards Outstanding | ||||||||||||||||||||
Exercise prices | Awards outstanding | Weighted average remaining vesting period (years) | ||||||||||||||||||
Class RS Units | $ | - | 65,938 | 2 | ||||||||||||||||
Class O Units | $ | 20-25 | 1,494,778 | 1 | ||||||||||||||||
Total Operating Partnership awards outstanding | 1,560,716 | |||||||||||||||||||
QTS Realty Trust, Inc. Awards Outstanding | ||||||||||||||||||||
Exercise prices | Awards outstanding | Weighted average remaining vesting period (years) | ||||||||||||||||||
Restricted stock | $ | - | 396,942 | 3 | ||||||||||||||||
Options to purchase Class A common stock | $ | 21-36.54 | 883,946 | 2 | ||||||||||||||||
Total QTS Realty Trust, Inc awards outstanding | 1,280,888 | |||||||||||||||||||
All nonvested LTIP unit awards are valued as of the grant date and generally vest ratably over a defined service period. Certain nonvested LTIP unit awards vest on the earlier of achievement by the Company of various performance goals or specified dates in 2015 and 2016. As of March 31, 2015 there were 0.7 million, 0.1 million, 0.4 million and 0.4 million nonvested Class O units, Class RS units, restricted Class A common stock and options to purchase Class A common stock outstanding, respectively. As of March 31, 2015 the Company had $18.0 million of unrecognized equity-based compensation expense which will be recognized over the remaining vesting period of up to 4 years. The total intrinsic value of the awards outstanding at March 31, 2015 was $42.2 million. | ||||||||||||||||||||
On January 7, 2014, the Company paid its first and prorated dividend to common stockholders of $0.24 per common share and the Operating Partnership made a distribution to its partners of $0.24 per unit in an aggregate amount of $9.0 million. On January 7, 2015, the Company paid its regular quarterly cash dividend of $0.29 per common share and the Operating Partnership made a distribution to its partners of $0.29 per unit in an aggregate amount of $10.7 million. | ||||||||||||||||||||
On March 2, 2015, the Company issued 5,000,000 shares of QTS’ Class A common stock and GA QTS Interholdco, LLC, a selling stockholder and an affiliate of General Atlantic LLC, sold 4,350,000 shares of QTS’ Class A common stock at a price of $34.75 per share. The selling stockholder granted the underwriters a 30-day option to purchase an aggregate of up to an additional 1,402,500 shares of QTS’ Class A common stock at the public offering price, which the underwriters exercised. The Company used the net proceeds of approximately $166.4 million to repay amounts outstanding under its unsecured revolving credit facility. The Company did not receive any proceeds from the offering of shares by the selling stockholder. | ||||||||||||||||||||
Related_Party_Transactions
Related Party Transactions | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Related Party Transactions [Abstract] | |||||||
Related Party Transactions | 9. 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 an allocation of insurance expense and reimbursement at the related party’s cost for the use of a private aircraft service by the Company’s officers and directors. | |||||||
The transactions which occurred during the three months ended March 31, 2015 and 2014 are outlined below (in thousands): | |||||||
Three Months Ended | |||||||
March 31, | |||||||
(dollars in thousands) | 2015 | 2014 | |||||
Tax, utility, insurance and other reimbursement | $ | 80 | $ | 51 | |||
Rent expense | 253 | 262 | |||||
Capital assets acquired | 99 | 47 | |||||
Total | $ | 432 | $ | 360 | |||
Noncontrolling_Interest
Noncontrolling Interest | 3 Months Ended |
Mar. 31, 2015 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | 10. Noncontrolling Interest |
Concurrently with the completion of the IPO, QTS consummated a series of transactions pursuant to which QTS became the sole general partner and majority owner of QualityTech, LP, which then became its operating partnership. The previous owners of QualityTech, LP retained 21.2% ownership of the Operating Partnership. | |
Commencing at any time beginning November 1, 2014, at the election of the holders of the noncontrolling interest, the Class A units are redeemable for cash or, at the election of the Company, common stock of the Company on a one-for-one basis. During the first quarter of 2015, approximately 230,000 Class A units were redeemed for the Company’s Class A common stock. As a result, the noncontrolling ownership interest of QualityTech, LP, after taking into account the Class A units redeemed, the grant of equity awards and the issuance of 5,000,000 shares of common stock in March 2015, was 17.3% at March 31, 2015. | |
Earnings_per_Share
Earnings per Share | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Earnings per Share [Abstract] | |||||
Earnings per Share | 11. Earnings per share of QTS Realty Trust, Inc. | ||||
Basic income (loss) per share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share adjusts basic income (loss) per share for the effects of potentially dilutive common shares. | |||||
Three Months Ended March 31, | |||||
(in thousands, except per share data) | 2015 | 2014 | |||
Net income available to common stockholders | $ 4,082 | $ 4,198 | |||
Weighted average shares outstanding—basic | 31,294 | 29,017 | |||
Net income per share—basic | $ 0.13 | $ 0.14 | |||
Net income | $ 5,037 | $ 5,328 | |||
Weighted average shares outstanding—diluted (1) | 39,209 | 36,889 | |||
Net income per share—diluted | $ 0.13 | $ 0.14 | |||
-1 | Includes 7,317 Class A and Class RS units, 436 “in the money” value of Class O units on an “as if” converted basis and 216 “in the money” value options to purchase shares of Class A common stock on an “as if” converted basis as of the three months ended March 31, 2015. As of the three months ended March 31, 2014, this amount includes 7,797 Class A and Class RS units, 24 “in the money” value of Class O units on as “as if” converted basis and 52 “in the money” value options to purchase shares of Class A common stock on an “as if” converted basis. | ||||
Customer_Leases_as_Lessor
Customer Leases, as Lessor | 3 Months Ended | ||
Mar. 31, 2015 | |||
Customer Leases, as Lessor [Abstract] | |||
Customer Leases, as Lessor | 12. Customer Leases, as Lessor | ||
Future minimum lease payments to be received under non-cancelable operating customer leases (exclusive of recoveries of operating costs from customers) are as follows for the years ending December 31 (in thousands): | |||
Period Ending December 31, | |||
2015 (April - December) | $ | 155,963 | |
2016 | 196,247 | ||
2017 | 163,066 | ||
2018 | 119,846 | ||
2019 | 77,743 | ||
Thereafter | 242,314 | ||
Total | $ | 955,179 | |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2015 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | 13. Fair Value of Financial Instruments |
ASC Topic 825 requires disclosure of fair value information about financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows based upon market yields or by using other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts. | |
Short-term instruments: The carrying amounts of cash and cash equivalents, restricted cash approximate fair value. | |
Credit facilities, Senior Notes and mortgage notes payable: The fair value of the Company’s floating rate mortgage loans was estimated using Level 2 “significant other observable inputs” such as available market information based on borrowing rates that the Company believes it could obtain with similar terms and maturities. At March 31, 2015, the fair value of Atlanta-Metro Equipment Loan, based on current market rates, was approximately $16.5 million. The Company’s unsecured credit facility and Richmond Credit Facility did not have interest rates which were materially different than current market conditions and therefore, the fair value of each of the credit facilities approximated the carrying value of each note. The fair value of the Company’s Senior Notes was estimated using Level 2 “significant other observable inputs,” primarily based on quoted market prices for the same or similar issuances. At March 31, 2015, the fair value of the Senior Notes was approximately $308.2 million. | |
Other debt instruments: The fair value of the Company’s other debt instruments (including capital leases) were estimated in the same manner as the credit facilities and mortgage notes payable above. Similarly, because each of these instruments did not have interest rates which were materially different than current market conditions and therefore, the fair value of each instrument approximated the respective carrying values. | |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events |
On April 7, 2015, the Company paid its regular quarterly cash dividend of $0.32 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on March 20, 2015. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Summary of Significant Accounting Policies [Abstract] | |||||||
Basis of Presentation | Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. | ||||||
The accompanying financial statements are presented for both QTS Realty Trust, Inc. and QualityTech, LP. References to “QTS” mean QTS Realty Trust, Inc. and its controlled subsidiaries; and references to the “Operating Partnership” mean QualityTech, LP and its controlled subsidiaries. | |||||||
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 is the sole general partner of the Operating Partnership, and its only material asset consisted of its ownership interest in 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. 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. The Operating Partnership’s capital includes general and limited common units that are owned by QTS and the other partners. QTS' stockholders’ equity includes common stock, additional paid in capital, accumulated other comprehensive income (loss) and accumulated dividends in excess of earnings. The remaining equity is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. The primary difference in QTS' Statements of Operations and Comprehensive Income is that for net income (loss), QTS retains its proportionate share of the net income (loss) based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership. These combined notes refer to actions or holdings as being actions or holdings of “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, management believes that these general references to “the Company” in this context is appropriate because the business is one enterprise operated through the Operating Partnership. | |||||||
As discussed above, QTS owns no operating assets and has no operations independent of the Operating Partnership and its subsidiaries. Obligations under the 5.875% Senior Notes due 2022 and the unsecured credit facility, both discussed in Note 5, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries, other than QTS Finance Corporation, the co-issuer of the 5.875% Senior Notes due 2022. As such, condensed consolidating financial information for the guarantors is not being presented in the notes to the interim condensed consolidated financial statements. However, the indenture governing the 5.875% Senior Notes due 2022 restricts the ability of the Operating Partnership to make distributions to QTS, subject to certain exceptions, including distributions required in order for QTS to maintain its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended. | |||||||
The interim condensed consolidated financial statements of QTS Realty Trust, Inc. for the three months ended March 31, 2015 and 2014, and as of March 31, 2015 and December 31, 2014 present the accounts of QTS Realty Trust, Inc. and its majority owned subsidiaries. This includes the operating results of the Operating Partnership for all periods presented. | |||||||
Use of Estimates | |||||||
Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals. | |||||||
Principles of Consolidation | Principles of Consolidation – The consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority-owned subsidiaries. The consolidated financial statements of QualityTech, LP include the accounts of QualityTech, LP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in the financial statements. | ||||||
Real Estate Assets | Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended March 31, 2015, depreciation expense related to real estate assets and non-real estate assets was $10.9 million and $1.9 million, respectively, for a total of $12.8 million. For the three months ended March 31, 2014, depreciation expense related to real estate assets and non-real estate assets was $8.8 million and $1.4 million, respectively, for a total of $10.2 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 $3.3 million and $2.2 million for the three months ended March 31, 2015 and 2014, respectively. Interest is capitalized during the period of development by first applying the Company’s actual borrowing rate on the related asset and second, to the extent necessary, by applying the Company’s weighted average effective borrowing rate to the actual development and other costs expended during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $2.0 million and $1.6 million for the three months ended March 31, 2015 and 2014, respectively. | ||||||
Acquisition of Real Estate | Acquisition of Real Estate – Acquisitions of real estate 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 real estate acquired is allocated to the acquired tangible assets, consisting primarily of land, building and improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases and value of customer relationships. | ||||||
In developing estimates of fair value of acquired assets and assumed liabilities, management analyzed a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets. | |||||||
Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. Amortization of acquired in place lease costs totaled $0.4 million and $0.6 million for the three months ended March 31, 2015 and 2014, respectively. | |||||||
Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. Amortization of acquired customer relationships totaled $0.3 million and $0.3 million for the three months ended March 31, 2015 and 2014, respectively. | |||||||
See Note 3 for discussion of the preliminary purchase price allocation for the Princeton facility that the Company acquired on June 30, 2014. | |||||||
Impairment of Long-Lived and Intangible Assets | Impairment of Long-Lived and Intangible Assets – The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is generally measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset exceeds the value of the undiscounted cash flows, the fair value of the asset is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three months ended March 31, 2015 and 2014, respectively. | ||||||
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. Amortization of the deferred financing costs was $0.8 million and $0.6 million for the three months ended March 31, 2015 and 2014, respectively. Deferred financing costs, net of accumulated amortization are as follows: | |||||||
March 31, | December 31, | ||||||
(dollars in thousands) | 2015 | 2014 | |||||
(unaudited) | |||||||
Deferred financing costs | $ | 18,540 | $ | 18,152 | |||
Accumulated amortization | -2,510 | -1,683 | |||||
Deferred financing costs, net | $ | 16,030 | $ | 16,469 | |||
Deferred leasing costs consist of external fees and internal costs incurred in the successful negotiations of leases and are deferred and amortized over the terms of the related leases on a straight-line basis. If an applicable lease terminates prior to the expiration of its initial term, the carrying amount of the costs are written off to amortization expense. Amortization of deferred leasing costs totaled $2.7 million and $2.1 million for the three months ended March 31, 2015 and 2014, respectively. Deferred leasing costs, net of accumulated amortization are as follows (excluding $3.1 million, net of amortization, related to a leasing arrangement at the Company’s Princeton facility in 2014): | |||||||
March 31, | December 31, | ||||||
(dollars in thousands) | 2015 | 2014 | |||||
(unaudited) | |||||||
Deferred leasing costs | $ | 30,745 | $ | 26,799 | |||
Accumulated amortization | -11,958 | -9,378 | |||||
Deferred leasing costs, net | $ | 18,787 | $ | 17,421 | |||
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 $11.4 million and $10.5 million as of March 31, 2015 and December 31, 2014, respectively. Additionally, $1.2 million and $1.2 million of deferred income was amortized into revenue for the three months ended March 31, 2015 and 2014, respectively. | ||||||
Interest Rate Derivative Instruments | Interest Rate Derivative Instruments – The Company utilizes derivatives to manage its interest rate exposure. During February 2012, the Company entered into interest rate swaps with a notional amount of $150 million which were cash flow hedges and qualified for hedge accounting. For these hedges, the effective portion of the change in fair value was recognized through other comprehensive income or loss. Amounts were reclassified out of other comprehensive income (loss) as the hedged item was recognized in earnings, either for ineffectiveness or for amounts paid relating to the hedge. The Company reflected all changes in the fair value of the swaps in other comprehensive income (loss) during the three months ended March 31, 2014, as there was no ineffectiveness recorded in that period. The Company had no interest rate swaps outstanding at March 31, 2015 and December 31, 2014. | ||||||
Equity-based Compensation | Equity-based Compensation – All equity-based compensation is measured at fair value on the grant date or date of modification, as applicable, and recognized in earnings over the requisite service period. Depending upon the settlement terms of the awards, all or a portion of the fair value of equity-based awards may be presented as a liability or as equity in the consolidated balance sheets. Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification. Equity-based compensation expense net of forfeited and repurchased awards was $1.3 million and $0.9 million for the three months ended March 31, 2015 and 2014, respectively. | ||||||
Rental Revenue | Rental Revenue – The Company, as a lessor, has retained substantially all of the risks and benefits of ownership and accounts for its leases as operating leases. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net was $4.4 million and $4.0 million as of March 31, 2015 and December 31, 2014, respectively. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed above. | ||||||
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 $3.8 million and $3.7 million as of March 31, 2015 and December 31, 2014, respectively. | ||||||
Capital Leases | Capital Leases – 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. The outstanding liabilities for the capital leases were $13.5 million and $13.1 million as of March 31, 2015 and December 31, 2014, respectively. The value of the assets associated with these leases approximates the outstanding obligations as of March 31, 2015 and December 31, 2014, respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income. | |||||||
Recoveries from Customers | Recoveries from Customers – Certain customer leases contain provisions under which the customers reimburse the Company for a portion of the property’s real estate taxes, insurance and other operating expenses, which include certain power and cooling-related charges. The reimbursements are included in revenue as recoveries from customers in the Statements of Operations and Comprehensive Income in the period the applicable expenditures are incurred. Certain customer leases are structured to provide a fixed monthly billing amount that includes an estimate of various operating expenses, with all revenue from such leases included in rental revenues. | ||||||
Cloud and Managed Services Revenue | Cloud and Managed Services Revenue – The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. | ||||||
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 in the United States. | ||||||
Customer Concentrations | Customer Concentrations – As of March 31, 2015, one of the Company’s customers represented 8.8% of its total monthly rental revenue. No other customers exceeded 5% of total monthly rental revenue. | ||||||
As of March 31, 2015, five of the Company’s customers exceeded 5% of total accounts receivable. In aggregate, these five customers accounted for 67% of total accounts receivable. Two of these five customers individually exceeded 10% of total accounts receivable. | |||||||
Income Taxes | Income Taxes – The Company elected for one of its existing subsidiaries to be taxed as a taxable REIT subsidiary under the Internal Revenue Service real estate investment trust (the “IRS REIT”) tax regulations. The taxable REIT subsidiary is allocated income and expense based on IRS REIT tax regulations. | ||||||
For the taxable REIT subsidiary, 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. | |||||||
The Company’s tax provision has not changed materially subsequent to December 31, 2014. The Company is not currently under examination by the Internal Revenue Service. | |||||||
Fair Value Measurements | Fair Value Measurements – ASC Topic 820, Fair Value Measurements and Disclosures, emphasizes that fair-value is a market-based measurement, not an entity-specific measurement. Therefore, a fair-value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, a fair-value hierarchy is established that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). | ||||||
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the level in the fair-value hierarchy within which the entire fair-value measurement falls is based on the lowest level input that is significant to the fair-value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. | |||||||
As the Company’s previous interest rate swaps matured on September 28, 2014, there are no financial assets or liabilities measured at fair value on the consolidated balance sheets as of March 31, 2015 and December 31, 2014. | |||||||
New Accounting Pronouncements | New Accounting Pronouncements | ||||||
In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. The new guidance narrows the definition of discontinued operations to disposals that represent a strategic shift in operations and requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in the ASU are effective for annual and interim reporting periods beginning on and after December 15, 2014. Early adoption is permitted. Adoption of this standard did not have any effect on the Company’s consolidated financial statements. | |||||||
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the current revenue recognition requirements in ASC 606, Revenue Recognition. Under this new guidance, entities should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This ASU also requires enhanced disclosures. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. Retrospective and modified retrospective application is allowed. The Company is currently assessing the impact of this amendment on its consolidated financial statements. | |||||||
In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, and not as a separate deferred charge. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The amendments are required to be applied on a retrospective basis, and upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. Adoption of this standard will affect the Company’s Consolidated Balance Sheets. | |||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Summary of Significant Accounting Policies [Abstract] | |||||||
Deferred Financing Costs, Net of Accumulated Amortization | Deferred financing costs, net of accumulated amortization are as follows: | ||||||
March 31, | December 31, | ||||||
(dollars in thousands) | 2015 | 2014 | |||||
(unaudited) | |||||||
Deferred financing costs | $ | 18,540 | $ | 18,152 | |||
Accumulated amortization | -2,510 | -1,683 | |||||
Deferred financing costs, net | $ | 16,030 | $ | 16,469 | |||
Deferred Leasing Costs, Net of Accumulated Amortization | Deferred leasing costs, net of accumulated amortization are as follows (excluding $3.1 million, net of amortization, related to a leasing arrangement at the Company’s Princeton facility in 2014): | ||||||
March 31, | December 31, | ||||||
(dollars in thousands) | 2015 | 2014 | |||||
(unaudited) | |||||||
Deferred leasing costs | $ | 30,745 | $ | 26,799 | |||
Accumulated amortization | -11,958 | -9,378 | |||||
Deferred leasing costs, net | $ | 18,787 | $ | 17,421 | |||
Acquisition_of_Real_Estate_Tab
Acquisition of Real Estate (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Acquisition of Real Estate [Abstract] | |||||
Consideration for the New Jersey Facility and the Preliminary Allocation of the Fair Value of Assets Acquired | The following table summarizes the consideration for the Princeton facility and the preliminary allocation of the fair value of assets acquired as of March 31, 2015 (in thousands): | ||||
Princeton facility as of March 31, 2015 | Weighted average useful life | ||||
Buildings | $ 35,574 | 40 | |||
Land | 17,976 | N/A | |||
Acquired Intangibles | 16,114 | 10 | |||
Deferred Costs | 3,335 | 10 | |||
Other | 301 | 10 | |||
Total purchase price | $ 73,300 | ||||
Real_Estate_Assets_and_Constru1
Real Estate Assets and Construction in Progress (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Real Estate Assets and Construction in Progress [Abstract] | |||||||||||||
Summary of Properties Owned or Leased by the Company | The following is a summary of properties owned or leased by the Company as of March 31, 2015 and December 31, 2014 (in thousands): | ||||||||||||
As of March 31, 2015 (unaudited): | |||||||||||||
Property Location | Land | Buildings and Improvements | Construction in Progress | Total Cost | |||||||||
Owned Properties | |||||||||||||
Suwanee, Georgia (Atlanta-Suwanee) | $ | 3,521 | $ | 142,056 | $ | 9,162 | $ | 154,739 | |||||
Atlanta, Georgia (Atlanta-Metro) | 15,397 | 374,147 | 18,668 | 408,212 | |||||||||
Santa Clara, California* | - | 91,151 | 742 | 91,893 | |||||||||
Richmond, Virginia | 2,180 | 127,843 | 112,981 | 243,004 | |||||||||
Sacramento, California | 1,481 | 60,158 | 386 | 62,025 | |||||||||
Princeton, New Jersey | 17,976 | 35,977 | 220 | 54,173 | |||||||||
Dallas-Fort Worth, Texas | 5,808 | 61,551 | 96,134 | 163,493 | |||||||||
Chicago, Illinois | - | - | 26,766 | 26,766 | |||||||||
Miami, Florida | 1,777 | 28,850 | 205 | 30,832 | |||||||||
Lenexa, Kansas | 437 | 3,466 | 17 | 3,920 | |||||||||
Wichita, Kansas | - | 1,409 | - | 1,409 | |||||||||
48,577 | 926,608 | 265,281 | 1,240,466 | ||||||||||
Leased Properties | |||||||||||||
Jersey City, New Jersey | - | 27,450 | 923 | 28,373 | |||||||||
Overland Park, Kansas | - | 857 | ** | 30 | 887 | ||||||||
- | 28,307 | 953 | 29,260 | ||||||||||
$ | 48,577 | $ | 954,915 | $ | 266,234 | $ | 1,269,726 | ||||||
* Owned facility subject to long-term ground sublease. | |||||||||||||
** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers. | |||||||||||||
As of December 31, 2014: | |||||||||||||
Property Location | Land | Buildings and Improvements | Construction in Progress | Total Cost | |||||||||
Owned Properties | |||||||||||||
Suwanee, Georgia (Atlanta-Suwanee) | $ | 3,521 | $ | 138,991 | $ | 6,345 | $ | 148,857 | |||||
Atlanta, Georgia (Atlanta-Metro) | 15,397 | 356,122 | 22,693 | 394,212 | |||||||||
Santa Clara, California* | - | 90,332 | 650 | 90,982 | |||||||||
Richmond, Virginia | 2,180 | 127,080 | 71,794 | 201,054 | |||||||||
Sacramento, California | 1,481 | 60,094 | 278 | 61,853 | |||||||||
Princeton, New Jersey | 17,976 | 35,951 | 90 | 54,017 | |||||||||
Dallas-Fort Worth, Texas | 5,808 | 44,053 | 89,982 | 139,843 | |||||||||
Chicago, Illinois | - | - | 21,786 | 21,786 | |||||||||
Miami, Florida | 1,777 | 28,786 | 129 | 30,692 | |||||||||
Lenexa, Kansas | 437 | 3,298 | 25 | 3,760 | |||||||||
Wichita, Kansas | - | 1,409 | - | 1,409 | |||||||||
48,577 | 886,116 | 213,772 | 1,148,465 | ||||||||||
Leased Properties | |||||||||||||
Jersey City, New Jersey | - | 27,318 | 920 | 28,238 | |||||||||
Overland Park, Kansas | - | 852 | ** | 27 | 879 | ||||||||
- | 28,170 | 947 | 29,117 | ||||||||||
$ | 48,577 | $ | 914,286 | $ | 214,719 | $ | 1,177,582 | ||||||
_____________________________ | |||||||||||||
* Owned facility subject to long-term ground sublease. | |||||||||||||
** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers. | |||||||||||||
Credit_Facilities_Senior_Notes1
Credit Facilities Senior Notes and Mortgage Notes Payable (Tables) | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
Credit Facilities Senior Notes and Mortgage Notes Payable [Abstract] | ||||||
Outstanding Debt Excluding Capital Leases | Below is a listing of the Company’s outstanding debt, excluding capital leases, as of March 31, 2015 and December 31, 2014 (in thousands): | |||||
March 31, | December 31, | |||||
2015 | 2014 | |||||
(Unaudited) | ||||||
Unsecured Credit Facility | $ | 140,000 | $ | 239,838 | ||
Senior Notes, net of discount | 297,791 | 297,729 | ||||
Richmond Credit Facility | 70,000 | 70,000 | ||||
Atlanta-Metro Equipment Loan | 16,016 | 16,600 | ||||
Total | $ | 523,807 | $ | 624,167 | ||
Annual Remaining Principal Payment | The annual remaining principal payment requirements as of March 31, 2015 per the contractual maturities and excluding extension options are as follows (in thousands): | |||||
2015 | $ | 1,813 | ||||
2016 | 2,567 | |||||
2017 | 2,748 | |||||
2018 | 42,942 | |||||
2019 | 173,151 | |||||
Thereafter | 302,795 | |||||
Total | $ | 526,016 | ||||
Partners_Capital_Equity_and_In1
Partners' Capital, Equity and Incentive Compensation Plans (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Partners' Capital, Equity and Incentive Compensation Plans [Abstract] | ||||||||||||||||||||
Summary of Award Activity Under 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and Related Information | The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the three months ended March 31, 2015: | |||||||||||||||||||
2010 Equity Incentive Plan | 2013 Equity Incentive Plan | |||||||||||||||||||
Number of Class O units | Weighted average exercise price | Weighted average fair value | Number of Class RS units | Weighted average grant date value | Options | Weighted average exercise price | Weighted average fair value | Restricted Stock | Weighted average grant date value | |||||||||||
Outstanding at December 31, 2014 | 1,518,717 | $ | $ | 74,625 | $ | 584,949 | $ | $ | 246,785 | $ | ||||||||||
23.49 | 3.75 | 23.49 | 22.87 | 4.10 | 29.13 | |||||||||||||||
Granted | — | — | — | — | — | 312,997 | 36.14 | 8.02 | 170,696 | 35.88 | ||||||||||
Exercised/Vested (2) | -23,939 | 21.71 | 3.97 | — | — | -5,406 | 21.00 | 3.52 | -13,448 | 23.76 | ||||||||||
Released from restriction (1) | — | — | — | -8,687 | 25.00 | — | — | — | — | — | ||||||||||
Cancelled/Expired (3) | — | — | — | — | — | -8,594 | 21.00 | 3.52 | -7,091 | 24.36 | ||||||||||
Outstanding at March 31, 2015 | 1,494,778 | $ | $ | 65,938 | $ | 883,946 | $ | $ | 396,942 | $ | ||||||||||
23.52 | 3.75 | 23.29 | 27.60 | 5.49 | 32.30 | |||||||||||||||
-1 | This represents Class RS units that upon vesting have converted to Operating Partnership units. | |||||||||||||||||||
-2 | 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. | |||||||||||||||||||
-3 | Includes 7,091 of restricted Class A common stock surrendered by certain employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock. | |||||||||||||||||||
Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted | Class O units and options to purchase shares of Class A common stock were valued using the Black-Scholes model. | |||||||||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||||||||
Fair value of restricted stock granted | $35.81-$37.64 | |||||||||||||||||||
Fair value of options granted | $8.00-$8.05 | |||||||||||||||||||
Expected term (years) | 5.5-6.1 | |||||||||||||||||||
Expected volatility | 33% | |||||||||||||||||||
Expected dividend yield | 3.50-3.57% | |||||||||||||||||||
Expected risk-free interest rates | 1.67-1.69% | |||||||||||||||||||
Summary of Information About Awards Outstanding | The following table summarizes information about awards outstanding as of March 31, 2015. | |||||||||||||||||||
Operating Partnership Awards Outstanding | ||||||||||||||||||||
Exercise prices | Awards outstanding | Weighted average remaining vesting period (years) | ||||||||||||||||||
Class RS Units | $ | - | 65,938 | 2 | ||||||||||||||||
Class O Units | $ | 20-25 | 1,494,778 | 1 | ||||||||||||||||
Total Operating Partnership awards outstanding | 1,560,716 | |||||||||||||||||||
QTS Realty Trust, Inc. Awards Outstanding | ||||||||||||||||||||
Exercise prices | Awards outstanding | Weighted average remaining vesting period (years) | ||||||||||||||||||
Restricted stock | $ | - | 396,942 | 3 | ||||||||||||||||
Options to purchase Class A common stock | $ | 21-36.54 | 883,946 | 2 | ||||||||||||||||
Total QTS Realty Trust, Inc awards outstanding | 1,280,888 | |||||||||||||||||||
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Related Party Transactions [Abstract] | |||||||
Summary of Related Party Transactions | The transactions which occurred during the three months ended March 31, 2015 and 2014 are outlined below (in thousands): | ||||||
Three Months Ended | |||||||
March 31, | |||||||
(dollars in thousands) | 2015 | 2014 | |||||
Tax, utility, insurance and other reimbursement | $ | 80 | $ | 51 | |||
Rent expense | 253 | 262 | |||||
Capital assets acquired | 99 | 47 | |||||
Total | $ | 432 | $ | 360 | |||
Earnings_per_Share_Tables
Earnings per Share (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Earnings per Share [Abstract] | |||||
Summary of Basic and Diluted Earnings Per Share | Diluted income (loss) per share adjusts basic income (loss) per share for the effects of potentially dilutive common shares. | ||||
Three Months Ended March 31, | |||||
(in thousands, except per share data) | 2015 | 2014 | |||
Net income available to common stockholders | $ 4,082 | $ 4,198 | |||
Weighted average shares outstanding—basic | 31,294 | 29,017 | |||
Net income per share—basic | $ 0.13 | $ 0.14 | |||
Net income | $ 5,037 | $ 5,328 | |||
Weighted average shares outstanding—diluted (1) | 39,209 | 36,889 | |||
Net income per share—diluted | $ 0.13 | $ 0.14 | |||
-1 | Includes 7,317 Class A and Class RS units, 436 “in the money” value of Class O units on an “as if” converted basis and 216 “in the money” value options to purchase shares of Class A common stock on an “as if” converted basis as of the three months ended March 31, 2015. As of the three months ended March 31, 2014, this amount includes 7,797 Class A and Class RS units, 24 “in the money” value of Class O units on as “as if” converted basis and 52 “in the money” value options to purchase shares of Class A common stock on an “as if” converted basis. | ||||
Customer_Leases_as_Lessor_Tabl
Customer Leases, as Lessor (Tables) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Customer Leases, as Lessor [Abstract] | |||
Future Minimum Lease Payments to be Received Under Non-Cancelable Operating Customer Leases | Future minimum lease payments to be received under non-cancelable operating customer leases (exclusive of recoveries of operating costs from customers) are as follows for the years ending December 31 (in thousands): | ||
Period Ending December 31, | |||
2015 (April - December) | $ | 155,963 | |
2016 | 196,247 | ||
2017 | 163,066 | ||
2018 | 119,846 | ||
2019 | 77,743 | ||
Thereafter | 242,314 | ||
Total | $ | 955,179 | |
Description_of_Business_Narrat
Description of Business (Narrative) (Details) (USD $) | 3 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Mar. 31, 2015 | Dec. 31, 2014 | Oct. 15, 2013 |
property | ||||
Organization And Description Of Business [Line Items] | ||||
Number of properties | 12 | |||
Common stock, par value | $0.01 | $0.01 | ||
Common stock, shares issued | 34,818,437 | 29,408,138 | ||
Net proceeds from issuance of shares | $279 | |||
Ownership interest | 82.70% | |||
Common Class A [Member] | ||||
Organization And Description Of Business [Line Items] | ||||
Common stock, par value | $0.01 | |||
Common stock, shares issued | 14,087,500 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Narrative) (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Summary Of Significant Accounting Policies [Line Items] | |||
Useful life of property | 40 years | ||
Depreciation expense from operation | $12,800,000 | $10,200,000 | |
Real estate cost capitalized excluding interest cost | 3,300,000 | 2,200,000 | |
Real estate interest cost capitalized incurred | 2,000,000 | 1,600,000 | |
Amortization of the deferred financing costs | 791,000 | 582,000 | |
Deferred leasing costs, net | 16,030,000 | 16,469,000 | |
In Place Leases [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Amortization of lease costs | 400,000 | 600,000 | |
Tenant Relationship [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Amortization of lease costs | 300,000 | 300,000 | |
Qualitytech, LP [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Amortization of the deferred financing costs | 791,000 | 582,000 | |
Real Estate Assets [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Depreciation expense from operation | 10,900,000 | 8,800,000 | |
Non-Real Estate Assets [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Depreciation expense from operation | 1,900,000 | 1,400,000 | |
Minimum [Member] | Land, Buildings and Improvements [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Useful life of property | 20 years | ||
Maximum [Member] | Land, Buildings and Improvements [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Useful life of property | 40 years | ||
Maximum [Member] | Leasehold Improvements [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Useful life of property | 20 years | ||
Senior Notes [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Interest rate | 5.88% | ||
Senior notes due | 2022 | ||
Princeton Facility [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Deferred leasing costs, net | $3,100,000 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Additional Information 1) (Details) (USD $) | 3 Months Ended | ||||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Feb. 29, 2012 | Feb. 08, 2012 | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Impairment losses | $0 | $0 | |||
Amortization of the deferred financing costs | 791,000 | 582,000 | |||
Amortization of deferred leasing costs totaled | 2,700,000 | 2,100,000 | |||
Deferred income | 11,401,000 | 10,531,000 | |||
Amortization of deferred revenue | 1,200,000 | 1,200,000 | |||
Company recorded equity-based compensation expense net of repurchased awards and forfeits | 1,300,000 | 900,000 | |||
Amount of the straight-line rent receivable on the balance sheets included in rents and other receivables | 4,400,000 | 4,000,000 | |||
Unsecured Revolving Credit Facility [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Amortization of the deferred financing costs | 800,000 | 600,000 | |||
Interest Rate Swap [Member] | Cash Flow Hedging [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Notional amount of derivative | $150,000,000 | $150,000,000 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Deferred Financing Costs, Net of Accumulated Amortization) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Summary of Significant Accounting Policies [Abstract] | ||
Deferred financing costs | $18,540 | $18,152 |
Accumulated amortization | -2,510 | -1,683 |
Deferred financing costs, net | $16,030 | $16,469 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Deferred Leasing Costs, Net of Accumulated Amortization) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Summary of Significant Accounting Policies [Abstract] | ||
Deferred leasing costs | $30,745 | $26,799 |
Accumulated amortization | -11,958 | -9,378 |
Deferred leasing costs, net | $18,787 | $17,421 |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Additional Information 2) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
entity | ||
segment | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Outstanding liabilities for the capital leases | $13,509,000 | $13,062,000 |
Number of operating segments | 1 | |
Number of reportable segments | 1 | |
Number of subsidiaries taxed as taxable REIT | 1 | |
Qualitytech, LP [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Outstanding liabilities for the capital leases | 13,509,000 | 13,062,000 |
Accounts Receivable [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Aggregate allowance for doubtful accounts | $3,800,000 | $3,700,000 |
Customer One [Member] | Rental Revenue [Member] | Maximum [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Percentage of total revenue | 8.80% | |
Customer Two [Member] | Accounts Receivable [Member] | Minimum [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Percentage of total accounts receivable | 10.00% | |
Other Customers [Member] | Rental Revenue [Member] | Maximum [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Percentage of total revenue | 5.00% | |
Five Customers [Member] | Accounts Receivable [Member] | Minimum [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Percentage of total accounts receivable | 5.00% | |
Five Customers [Member] | Accounts Receivable [Member] | Maximum [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Percentage of total accounts receivable | 67.00% |
Acquisition_of_Real_Estate_Nar
Acquisition of Real Estate (Narrative) (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Jun. 30, 2014 | |
sqft | |||
acre | |||
Business Acquisition [Line Items] | |||
Cash consideration paid for acquisition | $73,399,000 | $59,165,000 | |
Princeton Facility [Member] | |||
Business Acquisition [Line Items] | |||
Aggregate costs related to acquisition | $73,300,000 | ||
Acres of real estate property | 194 | ||
Area of facility | 560,000 | ||
Lease period | 10 years | ||
Renewal of lease period | 15 years | ||
Princeton Facility [Member] | Raised Floor With Twelve MW Gross Power [Member] | |||
Business Acquisition [Line Items] | |||
Area of facility | 58,000 | ||
Capacity of the plant | 12 |
Acquisition_of_Real_Estate_Con
Acquisition of Real Estate (Consideration for the New Jersey Facility and the Preliminary Allocation of the Fair Value of Assets Acquired) (Details) (Princeton Facility [Member], USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Business Acquisition [Line Items] | |
Buildings | $35,574 |
Land | 17,976 |
Intangible assets | 16,114 |
Other | 301 |
Total purchase price | 73,300 |
Buildings, Weighted average useful life | 40 years |
Deferred Costs [Member] | |
Business Acquisition [Line Items] | |
Intangible assets | $3,335 |
Intangible assets, Weighted average useful life | 10 years |
Other [Member] | |
Business Acquisition [Line Items] | |
Intangible assets, Weighted average useful life | 10 years |
Acquisition Related Intangibles [Member] | |
Business Acquisition [Line Items] | |
Intangible assets, Weighted average useful life | 10 years |
Real_Estate_Assets_and_Constru2
Real Estate Assets and Construction in Progress (Summary of Properties Owned or Leased by the Company) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
In Thousands, unless otherwise specified | ||||
Real Estate Properties [Line Items] | ||||
Land | $48,577 | $48,577 | ||
Buildings and improvements | 954,915 | 914,286 | ||
Construction in progress | 266,234 | 214,719 | ||
Total cost | 1,269,726 | 1,177,582 | ||
Owned Properties [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | 48,577 | 48,577 | ||
Buildings and improvements | 926,608 | 886,116 | ||
Construction in progress | 265,281 | 213,772 | ||
Total cost | 1,240,466 | 1,148,465 | ||
Owned Properties [Member] | Suwanee, Georgia (Atlanta-Suwanee) [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | 3,521 | 3,521 | ||
Buildings and improvements | 142,056 | 138,991 | ||
Construction in progress | 9,162 | 6,345 | ||
Total cost | 154,739 | 148,857 | ||
Owned Properties [Member] | Atlanta, Georgia (Atlanta-Metro) [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | 15,397 | 15,397 | ||
Buildings and improvements | 374,147 | 356,122 | ||
Construction in progress | 18,668 | 22,693 | ||
Total cost | 408,212 | 394,212 | ||
Owned Properties [Member] | Santa Clara, California [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | [1] | [1] | ||
Buildings and improvements | 91,151 | [1] | 90,332 | [1] |
Construction in progress | 742 | [1] | 650 | [1] |
Total cost | 91,893 | [1] | 90,982 | [1] |
Owned Properties [Member] | Richmond, Virginia [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | 2,180 | 2,180 | ||
Buildings and improvements | 127,843 | 127,080 | ||
Construction in progress | 112,981 | 71,794 | ||
Total cost | 243,004 | 201,054 | ||
Owned Properties [Member] | Sacramento, California [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | 1,481 | 1,481 | ||
Buildings and improvements | 60,158 | 60,094 | ||
Construction in progress | 386 | 278 | ||
Total cost | 62,025 | 61,853 | ||
Owned Properties [Member] | Princeton New Jersey [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | 17,976 | 17,976 | ||
Buildings and improvements | 35,977 | 35,951 | ||
Construction in progress | 220 | 90 | ||
Total cost | 54,173 | 54,017 | ||
Owned Properties [Member] | Dallas, Texas [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | 5,808 | 5,808 | ||
Buildings and improvements | 61,551 | 44,053 | ||
Construction in progress | 96,134 | 89,982 | ||
Total cost | 163,493 | 139,843 | ||
Owned Properties [Member] | Chicago, Illinois [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | ||||
Buildings and improvements | ||||
Construction in progress | 26,766 | 21,786 | ||
Total cost | 26,766 | 21,786 | ||
Owned Properties [Member] | Miami, Florida [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | 1,777 | 1,777 | ||
Buildings and improvements | 28,850 | 28,786 | ||
Construction in progress | 205 | 129 | ||
Total cost | 30,832 | 30,692 | ||
Owned Properties [Member] | Lenexa, Kansas [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | 437 | 437 | ||
Buildings and improvements | 3,466 | 3,298 | ||
Construction in progress | 17 | 25 | ||
Total cost | 3,920 | 3,760 | ||
Owned Properties [Member] | Wichita, Kansas [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | ||||
Buildings and improvements | 1,409 | 1,409 | ||
Construction in progress | ||||
Total cost | 1,409 | 1,409 | ||
Leased Properties [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | ||||
Buildings and improvements | 28,307 | 28,170 | ||
Construction in progress | 953 | 947 | ||
Total cost | 29,260 | 29,117 | ||
Leased Properties [Member] | Jersey City, New Jersey [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | ||||
Buildings and improvements | 27,450 | 27,318 | ||
Construction in progress | 923 | 920 | ||
Total cost | 28,373 | 28,238 | ||
Leased Properties [Member] | Overland Park, Kansas [Member] | ||||
Real Estate Properties [Line Items] | ||||
Land | ||||
Buildings and improvements | 857 | [2] | 852 | [2] |
Construction in progress | 30 | 27 | ||
Total cost | $887 | $879 | ||
[1] | Owned facility subject to long-term ground sublease. | |||
[2] | This does not include the portion of the business that is used for QTS office space or other real estate not used by customers. |
Credit_Facilities_Senior_Notes2
Credit Facilities Senior Notes and Mortgage Notes Payable (Unsecured Credit Facility Narrative) (Details) (USD $) | 1 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | |
In Millions, unless otherwise specified | Jul. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2015 |
Term Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Credit facility maximum borrowing capacity | $150 | ||||
Repayment of term loan | 75 | ||||
Letter of Credit [Member] | |||||
Debt Instrument [Line Items] | |||||
Letter of credit outstanding | 2.5 | 2.5 | |||
Unsecured Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Credit facility agreement date | 1-May-13 | ||||
Credit facility maximum borrowing capacity | 575 | 650 | 650 | ||
Maximum the credit facility may be increased up until | 850 | 850 | |||
Line of credit facility weighted average interest rate outstanding percentage | 1.84% | 1.84% | |||
Unsecured Credit Facility [Member] | Term Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Credit facility maximum borrowing capacity | 225 | 100 | 100 | ||
Unsecured credit facility term | 5 years | 5 years | 5 years | ||
Maturity date | 17-Dec-19 | ||||
Unsecured Credit Facility [Member] | Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Credit facility maximum borrowing capacity | 350 | 550 | 550 | ||
Unsecured credit facility term | 4 years | 4 years | 4 years | ||
Debt extension period | 1 year | 1 year | 1 year | ||
Line of credit facility accordion feature | 100 | ||||
Maturity date | 17-Dec-18 | ||||
Unsecured Credit Facility [Member] | Letter of Credit [Member] | |||||
Debt Instrument [Line Items] | |||||
Credit facility maximum borrowing capacity | $30 | $30 | |||
Unsecured Credit Facility [Member] | Minimum [Member] | Term Loan [Member] | LIBOR [Member] | |||||
Debt Instrument [Line Items] | |||||
Leverage ratio | 1.65% | 1.65% | |||
Unsecured Credit Facility [Member] | Minimum [Member] | Term Loan [Member] | Base Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Leverage ratio | 0.65% | 0.65% | |||
Unsecured Credit Facility [Member] | Minimum [Member] | Revolving Credit Facility [Member] | LIBOR [Member] | |||||
Debt Instrument [Line Items] | |||||
Leverage ratio | 1.70% | 1.70% | |||
Unsecured Credit Facility [Member] | Minimum [Member] | Revolving Credit Facility [Member] | Base Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Leverage ratio | 0.70% | 0.70% | |||
Unsecured Credit Facility [Member] | Maximum [Member] | Term Loan [Member] | LIBOR [Member] | |||||
Debt Instrument [Line Items] | |||||
Leverage ratio | 2.20% | 2.20% | |||
Unsecured Credit Facility [Member] | Maximum [Member] | Term Loan [Member] | Base Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Leverage ratio | 1.20% | 1.20% | |||
Unsecured Credit Facility [Member] | Maximum [Member] | Revolving Credit Facility [Member] | LIBOR [Member] | |||||
Debt Instrument [Line Items] | |||||
Leverage ratio | 2.25% | 2.25% | |||
Unsecured Credit Facility [Member] | Maximum [Member] | Revolving Credit Facility [Member] | Base Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Leverage ratio | 1.25% | 1.25% | |||
Senior Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 1-Aug-22 | ||||
Senior notes due | 2022 | ||||
Interest rate | 5.88% | 5.88% |
Credit_Facilities_Senior_Notes3
Credit Facilities Senior Notes and Mortgage Notes Payable (Senior Notes) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | Jul. 23, 2014 | |
Unsecured Credit Facility [Member] | Term Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 17-Dec-19 | ||||
Unsecured term loan outstanding | $75,000,000 | ||||
Senior Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $300,000,000 | ||||
Interest rate | 5.88% | 5.88% | 5.88% | ||
Senior notes due | 2022 | ||||
Maturity date | 1-Aug-22 | ||||
Percentage of issued price equal to face value | 99.21% | 99.21% | 99.21% | ||
Notes issuance date | 23-Jul-14 |
Credit_Facilities_Senior_Notes4
Credit Facilities Senior Notes and Mortgage Notes Payable (Richmond Credit Facility Narrative) (Details) (Richmond Credit Facility [Member], USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2015 |
Debt Instrument [Line Items] | |
Credit facility, maturity date | 30-Jun-19 |
Current revolving credit facility | $120 |
Line of credit facility weighted average interest rate outstanding percentage | 2.28% |
Maximum [Member] | |
Debt Instrument [Line Items] | |
Increased borrowing capacity after considering accordion feature | $200 |
Maximum [Member] | Libor Rate [Member] | |
Debt Instrument [Line Items] | |
Leverage ratio | 2.85% |
Maximum [Member] | Base Rate [Member] | |
Debt Instrument [Line Items] | |
Leverage ratio | 1.85% |
Minimum [Member] | Libor Rate [Member] | |
Debt Instrument [Line Items] | |
Leverage ratio | 2.10% |
Minimum [Member] | Base Rate [Member] | |
Debt Instrument [Line Items] | |
Leverage ratio | 1.10% |
Credit_Facilities_Senior_Notes5
Credit Facilities Senior Notes and Mortgage Notes Payable (Atlanta-Metro Equipment Loan Narrative) (Details) (Atlanta-Metro Equipment Loan [Member], USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Apr. 09, 2010 |
Atlanta-Metro Equipment Loan [Member] | ||
Debt Instrument [Line Items] | ||
Loan agreement amount of loan | $25 | |
Loan agreement interest rate | 6.85% | |
Atlanta Metro equipment loan agreement aggregate term of loan | 10 years | |
Member advances, maturity date | 1-Jun-20 |
Credit_Facilities_Senior_Notes6
Credit Facilities Senior Notes and Mortgage Notes Payable (Outstanding Debt Excluding Capital Leases) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Debt Instrument [Line Items] | ||
Outstanding debt | $523,807 | $624,167 |
Unsecured Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Outstanding debt | 140,000 | 239,838 |
Senior Notes Net of Discount [Member] | ||
Debt Instrument [Line Items] | ||
Outstanding debt | 297,791 | 297,729 |
Richmond Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Outstanding debt | 70,000 | 70,000 |
Atlanta-Metro Equipment Loan [Member] | ||
Debt Instrument [Line Items] | ||
Outstanding debt | $16,016 | $16,600 |
Credit_Facilities_Senior_Notes7
Credit Facilities Senior Notes and Mortgage Notes Payable (Annual Remaining Principal Payment) (Details) (USD $) | Mar. 31, 2015 |
In Thousands, unless otherwise specified | |
Credit Facilities Senior Notes and Mortgage Notes Payable [Abstract] | |
2015 | $1,813 |
2016 | 2,567 |
2017 | 2,748 |
2018 | 42,942 |
2019 | 173,151 |
Thereafter | 302,795 |
Total | $526,016 |
Interest_Rate_Derivative_Instr1
Interest Rate Derivative Instruments (Narrative) (Details) (USD $) | 3 Months Ended | ||||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Feb. 29, 2012 | Feb. 08, 2012 | |
Derivative [Line Items] | |||||
Unrealized gains or losses on cash flow hedge derivative effective portion | $0 | $100,000 | |||
Interest expense related to payments on interest rate swaps | 5,342,000 | 2,065,000 | |||
Interest Rate Swap [Member] | |||||
Derivative [Line Items] | |||||
Interest expense related to payments on interest rate swaps | 0 | 200,000 | |||
Interest Rate Swap [Member] | Fair Value Measurements, Level 2 [Member] | |||||
Derivative [Line Items] | |||||
Interest rate swap liability recorded at fair value | 0 | 0 | |||
Cash Flow Hedging [Member] | Interest Rate Swap [Member] | |||||
Derivative [Line Items] | |||||
Derivative inception date | 8-Feb-12 | ||||
Derivative maturity date | 28-Sep-14 | ||||
Derivative instruments, notional amount | $150,000,000 | $150,000,000 |
Partners_Capital_Equity_and_In2
Partners' Capital, Equity and Incentive Compensation Plans (Narrative) (Details) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Jan. 07, 2015 | Jan. 07, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Apr. 07, 2015 | Mar. 02, 2015 |
security | ||||||
item | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Number of classes of partnership units outstanding | 3 | |||||
Stock transaction date | 2-Mar-15 | |||||
Number of units issued | 5,000,000 | |||||
Proceeds from sale of stock | $166.40 | |||||
Capital contributions | 166.4 | |||||
Number of votes per share | 50 | |||||
Equity based compensation expense unrecognized | 18 | |||||
Equity based compensation expense vesting period | 4 years | |||||
Equity based compensation awards intrinsic value | 42.2 | |||||
Aggregate distribution made to stockholders and partners | $10.70 | $9 | ||||
Dividend paid to common stockholders | $0.29 | $0.24 | ||||
Partnership distribution per unit | $0.29 | $0.24 | ||||
Dividends payable, date payable | 7-Jan-15 | 7-Jan-14 | ||||
Dividends payable, date of record | 20-Mar-15 | |||||
General Atlantic REIT, Inc. [Member] | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Shares sold | 4,350,000 | |||||
Sale of stock, price per share | 34.75 | |||||
Subsequent Event [Member] | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Dividends payable, date payable | 7-Apr-15 | |||||
Cash dividend per common share | $0.32 | |||||
Class O Units [Member] | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Nonvested awards outstanding | 700,000 | |||||
Class RS Units [Member] | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Nonvested awards outstanding | 100,000 | |||||
Chief Executive Officer [Member] | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Percentage of operating partnership unit exchanged | 2.00% | |||||
Underwriters [Member] | General Atlantic REIT, Inc. [Member] | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Option to purchase share of common stock | 1,402,500 | |||||
Restricted Class A Common Stock [Member] | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Nonvested awards outstanding | 400,000 | |||||
Options to purchase Class A common stock [Member] | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Nonvested awards outstanding | 400,000 | |||||
2013 Equity Incentive Plan [Member] | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Authorized shares to be issued under the plan | 1,750,000 | |||||
Additional shares available for issuance under plan approved by Board of Directors | 3,000,000 |
Partners_Capital_Equity_and_In3
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) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | ||
2013 Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance, Weighted average exercise price units | $22.87 | |
Weighted average exercise price units, Granted | $36.14 | |
Weighted average exercise price units, Exercised | $21 | [1] |
Weighted average exercise price units, Released from restriction | [2] | |
Weighted average exercise price units, Cancelled/Expired | $21 | [3] |
Ending balance, Weighted average exercise price units | $27.60 | |
Beginning balance, Weighted average fair value | $4.10 | |
Weighted average fair value, Granted | $8.02 | |
Weighted average fair value, Exercised | $3.52 | [1] |
Weighted average fair value, Released from restriction | [2] | |
Weighted average fair value, Cancelled/Expired | $3.52 | [3] |
Ending balance, Weighted average fair value | $5.49 | |
Beginning balance, Weighted average exercise price options outstanding | $29.13 | |
Weighted average exercise price options outstanding, Granted | $35.88 | |
Weighted average exercise price options outstanding, Exercised | $23.76 | [1] |
Weighted average exercise price options outstanding, Released from restriction | [2] | |
Weighted average exercise price options outstanding, Cancelled/Expired | $24.36 | [3] |
Ending balance, Weighted average exercise price options outstanding | $32.30 | |
2013 Equity Incentive Plan [Member] | Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance, Number of units | 584,949 | |
Number of units, granted | 312,997 | |
Number of units, Exercised | -5,406 | [1] |
Number of units, Released from restriction | [2] | |
Number of units, Cancelled/Expired | -8,594 | [3] |
Ending balance, Number of units | 883,946 | |
2013 Equity Incentive Plan [Member] | Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance, Options Outstanding | 246,785 | |
Options, Granted | 170,696 | |
Options, Exercised | -13,448 | [1] |
Options, Released from restriction | [2] | |
Options, Cancelled/Expired | -7,091 | [3] |
Ending balance, Options Outstanding | 396,942 | |
2010 Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance, Weighted average exercise price units | $23.49 | |
Weighted average exercise price units, Granted | ||
Weighted average exercise price units, Exercised | $21.71 | [1] |
Weighted average exercise price units, Released from restriction | [2] | |
Weighted average exercise price units, Cancelled/Expired | [3] | |
Ending balance, Weighted average exercise price units | $23.52 | |
Beginning balance, Weighted average fair value | $3.75 | |
Weighted average fair value, Granted | ||
Weighted average fair value, Exercised | $3.97 | [1] |
Weighted average fair value, Released from restriction | [2] | |
Weighted average fair value, Cancelled/Expired | [3] | |
Ending balance, Weighted average fair value | $3.75 | |
Beginning balance, Weighted average exercise price options outstanding | $23.49 | |
Weighted average exercise price options outstanding, Granted | ||
Weighted average exercise price options outstanding, Exercised | [1] | |
Weighted average exercise price options outstanding, Released from restriction | $25 | [2] |
Weighted average exercise price options outstanding, Cancelled/Expired | [3] | |
Ending balance, Weighted average exercise price options outstanding | $23.29 | |
Restricted Class A Common Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Units surrendered | 7,091 | |
Class O Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Ending balance, Number of units | 700,000 | |
Class O Units [Member] | 2010 Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance, Number of units | 1,518,717 | |
Number of units, granted | ||
Number of units, Exercised | -23,939 | [1] |
Number of units, Released from restriction | [2] | |
Number of units, Cancelled/Expired | [3] | |
Ending balance, Number of units | 1,494,778 | |
Class RS Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Ending balance, Number of units | 100,000 | |
Class RS Units [Member] | 2010 Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Beginning balance, Options Outstanding | 74,625 | |
Options, Granted | ||
Options, Exercised | [1] | |
Options, Released from restriction | -8,687 | [2] |
Options, Cancelled/Expired | [3] | |
Ending balance, Options Outstanding | 65,938 | |
[1] | This represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock. | |
[2] | This represents Class RS units that upon vesting have converted to Operating Partnership units. | |
[3] | Includes 7,091 of restricted Class A common stock surrendered by certain employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock. |
Partners_Capital_Equity_and_In4
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) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 33.00% |
Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of restricted stock granted | 35.81 |
Fair value of options granted | 8 |
Expected term (years) | 5 years 6 months |
Expected dividend yield | 3.50% |
Expected risk-free interest rates | 1.67% |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of restricted stock granted | 37.64 |
Fair value of options granted | 8.05 |
Expected term (years) | 6 years 1 month 6 days |
Expected dividend yield | 3.57% |
Expected risk-free interest rates | 1.69% |
Partners_Capital_Equity_and_In5
Partners' Capital, Equity and Incentive Compensation Plans (Summary of Information About Awards Outstanding) (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Operating Partnership [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 1,560,716 |
QTS Realty Trust, Inc Awards Outstanding [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 1,280,888 |
QTS Realty Trust, Inc Awards Outstanding [Member] | Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 396,942 |
Remaining term of awards | 3 years |
QTS Realty Trust, Inc Awards Outstanding [Member] | Options to purchase Class A common stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Lower limit of exercise price | 21 |
Upper limit of exercise price | 35.81 |
Awards Outstanding | 883,946 |
Remaining term of awards | 1 year |
Class O Units [Member] | Operating Partnership [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Lower limit of exercise price | 20 |
Upper limit of exercise price | 25 |
Awards Outstanding | 1,494,778 |
Remaining term of awards | 1 year |
Class RS Units [Member] | Operating Partnership [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 65,938 |
Remaining term of awards | 2 years |
Related_Party_Transactions_Sum
Related Party Transactions (Summary of Related Party Transactions) (Details) (Affiliated Entity [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Affiliated Entity [Member] | ||
Related Party Transaction [Line Items] | ||
Tax, utility, insurance and other reimbursement | $80 | $51 |
Rent expense | 253 | 262 |
Capital assets acquired | 99 | 47 |
Total | $432 | $360 |
Noncontrolling_Interest_Narrat
Noncontrolling Interest (Narrative) (Details) | 3 Months Ended | |
Mar. 31, 2015 | Oct. 31, 2014 | |
Quality Tech LP ownership percentage in operating partnership | 21.20% | |
Stock conversion ratio | 1 | |
Qualitytech, LP [Member] | ||
Quality Tech LP ownership percentage in operating partnership | 17.30% | |
Shares issued | 5,000,000 | |
Class A Units [Member] | ||
Units redeemed for common stock | 230,000 |
Earnings_per_Share_Summary_of_
Earnings per Share (Summary of Basic and Diluted Earnings per Share) (Details) (USD $) | 3 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Earnings per Share [Abstract] | ||||
Net income (loss) available to common stockholders | $4,082 | $4,198 | ||
Weighted average shares outstanding-basic | 31,294,488 | 29,016,774 | ||
Net income per share-basic | $0.13 | $0.14 | ||
Net income | $5,037 | $5,328 | ||
Weighted average shares outstanding-diluted | 39,209,226 | [1] | 36,889,474 | [1] |
Net income per share-diluted | $0.13 | $0.14 | ||
[1] | Includes 7,317 Class A and Class RS units, 436 bin the moneyb value of Class O units on an bas ifb converted basis and 216 bin the moneyb value options to purchase shares of ClassB A common stock on an bas ifb converted basis as of the three months ended March 31, 2015. As of the three months ended March 31, 2014, this amount includes 7,797 Class A and Class RS units, 24 bin the moneyb value of Class O units on as bas ifb converted basis and 52 bin the moneyb value options to purchase shares of Class A common stock on an bas ifb converted basis. |
Earnings_per_Share_Summary_of_1
Earnings per Share (Summary of Basic and Diluted Earnings per Share Footnote) (Details) | 3 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | |||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Weighted average shares outstanding-diluted | 39,209,226 | [1] | 36,889,474 | [1] |
Class A Units [Member] | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Weighted average shares outstanding-diluted | 7,317,000 | 7,797,000 | ||
Class O Units [Member] | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Weighted average shares outstanding-diluted | 436,000 | 24,000 | ||
Class RS Units [Member] | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Weighted average shares outstanding-diluted | 7,317,000 | 7,797,000 | ||
Options to purchase Class A common stock [Member] | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Weighted average shares outstanding-diluted | 216,000 | 52,000 | ||
[1] | Includes 7,317 Class A and Class RS units, 436 bin the moneyb value of Class O units on an bas ifb converted basis and 216 bin the moneyb value options to purchase shares of ClassB A common stock on an bas ifb converted basis as of the three months ended March 31, 2015. As of the three months ended March 31, 2014, this amount includes 7,797 Class A and Class RS units, 24 bin the moneyb value of Class O units on as bas ifb converted basis and 52 bin the moneyb value options to purchase shares of Class A common stock on an bas ifb converted basis. |
Customer_Leases_as_Lessor_Futu
Customer Leases, as Lessor (Future Minimum Lease Payments to be Received Under Non-Cancelable Operating Customer Leases) (Details) (USD $) | Mar. 31, 2015 |
In Thousands, unless otherwise specified | |
Customer Leases, as Lessor [Abstract] | |
2015 (April - December) | $155,963 |
2016 | 196,247 |
2017 | 163,066 |
2018 | 119,846 |
2019 | 77,743 |
Thereafter | 242,314 |
Total | $955,179 |
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Narrative) (Details) (Fair Value Measurements, Level 2 [Member], USD $) | Mar. 31, 2015 |
In Millions, unless otherwise specified | |
Atlanta-Metro Equipment Loan [Member] | |
Fair Value Of Financial Instruments [Line Items] | |
Fair value of loan based on current market rates | $16.50 |
Senior Notes [Member] | |
Fair Value Of Financial Instruments [Line Items] | |
Fair value of loan based on current market rates | $308.20 |
Subsequent_Events_Narrative_De
Subsequent Events (Narrative) (Details) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | ||
Jan. 07, 2015 | Jan. 07, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Apr. 07, 2015 | |
Subsequent Event [Line Items] | |||||
Dividend paid to common stockholders | $0.29 | $0.24 | |||
Dividends payable, date of record | 20-Mar-15 | ||||
Dividends payable, date payable | 7-Jan-15 | 7-Jan-14 | |||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Cash dividend per common share | $0.32 | ||||
Dividends payable, date payable | 7-Apr-15 |