Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | QTS Realty Trust, Inc. | |
Entity Central Index Key | 1,577,368 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-31 | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 50,300,171 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 128,408 | |
Qualitytech, LP | ||
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | QualityTech, LP | |
Entity Central Index Key | 1,561,164 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-31 |
INTERIM CONSOLIDATED FINANCIAL
INTERIM CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Real Estate Assets | ||
Land | $ 86,192 | $ 74,130 |
Buildings, improvements and equipment | 1,668,503 | 1,524,767 |
Less: Accumulated depreciation | (378,883) | (317,834) |
Total real estate assets | 1,375,812 | 1,281,063 |
Construction in progress | 429,390 | 365,960 |
Real Estate Assets, net | 1,805,202 | 1,647,023 |
Cash and cash equivalents | 9,271 | 9,580 |
Rents and other receivables, net | 47,307 | 41,540 |
Acquired intangibles, net | 114,286 | 129,754 |
Deferred costs, net | 38,172 | 38,507 |
Prepaid expenses | 7,209 | 6,918 |
Goodwill | 173,843 | 173,843 |
Other assets, net | 63,156 | 39,305 |
TOTAL ASSETS | 2,258,446 | 2,086,470 |
LIABILITIES | ||
Unsecured credit facility, net | 775,398 | 634,939 |
Senior notes, net of discount and debt issuance costs | 293,192 | 292,179 |
Capital lease, lease financing obligations and mortgage notes payable | 30,725 | 38,708 |
Accounts payable and accrued liabilities | 67,232 | 86,129 |
Dividends and distributions payable | 22,230 | 19,634 |
Advance rents, security deposits and other liabilities | 29,210 | 24,893 |
Deferred income taxes | 9,814 | 15,185 |
Deferred income | 22,540 | 21,993 |
TOTAL LIABILITIES | 1,250,341 | 1,133,660 |
EQUITY | ||
Common stock, $0.01 par value, 450,133,000 shares authorized, 50,424,244 and 47,831,250 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 504 | 478 |
Additional paid-in capital | 1,032,912 | 931,783 |
Accumulated other comprehensive loss | (1,565) | |
Accumulated dividends in excess of earnings | (139,740) | (97,793) |
Total stockholders' equity | 892,111 | 834,468 |
Noncontrolling interests | 115,994 | 118,342 |
TOTAL EQUITY | 1,008,105 | 952,810 |
TOTAL LIABILITIES AND EQUITY | 2,258,446 | 2,086,470 |
Qualitytech, LP | ||
Real Estate Assets | ||
Land | 86,192 | 74,130 |
Buildings, improvements and equipment | 1,668,503 | 1,524,767 |
Less: Accumulated depreciation | (378,883) | (317,834) |
Total real estate assets | 1,375,812 | 1,281,063 |
Construction in progress | 429,390 | 365,960 |
Real Estate Assets, net | 1,805,202 | 1,647,023 |
Cash and cash equivalents | 9,271 | 9,580 |
Rents and other receivables, net | 47,307 | 41,540 |
Acquired intangibles, net | 114,286 | 129,754 |
Deferred costs, net | 38,172 | 38,507 |
Prepaid expenses | 7,209 | 6,918 |
Goodwill | 173,843 | 173,843 |
Other assets, net | 63,156 | 39,305 |
TOTAL ASSETS | 2,258,446 | 2,086,470 |
LIABILITIES | ||
Unsecured credit facility, net | 775,398 | 634,939 |
Senior notes, net of discount and debt issuance costs | 293,192 | 292,179 |
Capital lease, lease financing obligations and mortgage notes payable | 30,725 | 38,708 |
Accounts payable and accrued liabilities | 67,232 | 86,129 |
Dividends and distributions payable | 22,230 | 19,634 |
Advance rents, security deposits and other liabilities | 29,210 | 24,893 |
Deferred income taxes | 9,814 | 15,185 |
Deferred income | 22,540 | 21,993 |
TOTAL LIABILITIES | 1,250,341 | 1,133,660 |
EQUITY | ||
Accumulated other comprehensive loss | (1,785) | |
TOTAL PARTNERS' CAPITAL | 1,008,105 | 952,810 |
TOTAL LIABILITIES AND EQUITY | 2,258,446 | 2,086,470 |
Limited Partner | Qualitytech, LP | ||
EQUITY | ||
TOTAL PARTNERS' CAPITAL | $ 1,009,890 | $ 952,810 |
INTERIM CONSOLIDATED FINANCIAL3
INTERIM CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
INTERIM CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEETS | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,133,000 | 450,133,000 |
Common stock, shares issued | 50,424,244 | 47,831,250 |
Common stock, shares outstanding | 50,424,244 | 47,831,250 |
INTERIM CONSOLIDATED FINANCIAL4
INTERIM CONSOLIDATED FINANCIAL STATEMENTS STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Rental | $ 85,831 | $ 77,005 | $ 245,741 | $ 217,101 |
Recoveries from customers | 9,698 | 8,703 | 26,833 | 20,306 |
Cloud and managed services | 16,224 | 16,243 | 50,045 | 52,148 |
Other | 2,014 | 1,514 | 4,980 | 7,365 |
Total revenues | 113,767 | 103,465 | 327,599 | 296,920 |
Operating Expenses: | ||||
Property operating costs | 39,743 | 36,288 | 112,010 | 100,715 |
Real estate taxes and insurance | 3,116 | 2,566 | 9,209 | 6,326 |
Depreciation and amortization | 35,309 | 32,699 | 103,784 | 91,693 |
General and administrative | 21,652 | 19,942 | 66,411 | 61,836 |
Transaction, integration and other costs | 1,114 | 3,465 | 1,611 | 9,385 |
Total operating expenses | 100,934 | 94,960 | 293,025 | 269,955 |
Operating income | 12,833 | 8,505 | 34,574 | 26,965 |
Other income and expenses: | ||||
Interest income | 65 | 1 | 66 | 3 |
Interest expense | (7,958) | (6,179) | (22,474) | (17,034) |
Other income/(expense), net | 1 | 1 | ||
Income before taxes | 4,940 | 2,328 | 12,166 | 9,935 |
Tax benefit of taxable REIT subsidiaries | 2,454 | 4,210 | 5,404 | 9,269 |
Net income | 7,394 | 6,538 | 17,570 | 19,204 |
Net income attributable to noncontrolling interests | (887) | (808) | (2,146) | (2,485) |
Net income attributable to QTS Realty Trust, Inc. | $ 6,507 | $ 5,730 | $ 15,424 | $ 16,719 |
Net income per share attributable to common shares: | ||||
Basic | $ 0.13 | $ 0.12 | $ 0.31 | $ 0.37 |
Diluted | $ 0.13 | $ 0.12 | $ 0.31 | $ 0.36 |
Qualitytech, LP | ||||
Revenues: | ||||
Rental | $ 85,831 | $ 77,005 | $ 245,741 | $ 217,101 |
Recoveries from customers | 9,698 | 8,703 | 26,833 | 20,306 |
Cloud and managed services | 16,224 | 16,243 | 50,045 | 52,148 |
Other | 2,014 | 1,514 | 4,980 | 7,365 |
Total revenues | 113,767 | 103,465 | 327,599 | 296,920 |
Operating Expenses: | ||||
Property operating costs | 39,743 | 36,288 | 112,010 | 100,715 |
Real estate taxes and insurance | 3,116 | 2,566 | 9,209 | 6,326 |
Depreciation and amortization | 35,309 | 32,699 | 103,784 | 91,693 |
General and administrative | 21,652 | 19,942 | 66,411 | 61,836 |
Transaction, integration and other costs | 1,114 | 3,465 | 1,611 | 9,385 |
Total operating expenses | 100,934 | 94,960 | 293,025 | 269,955 |
Operating income | 12,833 | 8,505 | 34,574 | 26,965 |
Other income and expenses: | ||||
Interest income | 65 | 1 | 66 | 3 |
Interest expense | (7,958) | (6,179) | (22,474) | (17,034) |
Other income/(expense), net | 1 | 1 | ||
Income before taxes | 4,940 | 2,328 | 12,166 | 9,935 |
Tax benefit of taxable REIT subsidiaries | 2,454 | 4,210 | 5,404 | 9,269 |
Net income | $ 7,394 | $ 6,538 | $ 17,570 | $ 19,204 |
INTERIM CONSOLIDATED FINANCIAL5
INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net income | $ 7,394 | $ 6,538 | $ 17,570 | $ 19,204 |
Other comprehensive loss: | ||||
Decrease in fair value of interest rate swaps | (286) | (1,785) | ||
Comprehensive income | 7,108 | 6,538 | 15,785 | 19,204 |
Comprehensive income attributable to noncontrolling interests | (850) | (808) | (1,926) | (2,485) |
Comprehensive income attributable to QTS Realty Trust, Inc. | 6,258 | 5,730 | 13,859 | 16,719 |
Qualitytech, LP | ||||
Net income | 7,394 | 6,538 | 17,570 | 19,204 |
Other comprehensive loss: | ||||
Decrease in fair value of interest rate swaps | (286) | (1,785) | ||
Comprehensive income | $ 7,108 | $ 6,538 | $ 15,785 | $ 19,204 |
INTERIM CONSOLIDATED FINANCIAL6
INTERIM CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF EQUITY - 9 months ended Sep. 30, 2017 - USD ($) shares in Thousands, $ in Thousands | Qualitytech, LPAccumulated Other Comprehensive Income (Loss) | Qualitytech, LPGeneral Partner | Qualitytech, LPLimited Partner | Qualitytech, LP | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Dividends in Excess of Earnings | Total stockholders' Equity | Noncontrolling Interest | Total |
Beginning balance at Dec. 31, 2016 | $ 478 | $ 931,783 | $ (97,793) | $ 834,468 | $ 118,342 | $ 952,810 | |||||
Beginning balance at Dec. 31, 2016 | $ 952,810 | ||||||||||
Partners' Capital, Beginning Balance at Dec. 31, 2016 | $ 952,810 | $ 952,810 | |||||||||
Beginning balance, shares at Dec. 31, 2016 | 47,831 | ||||||||||
Beginning balance, shares at Dec. 31, 2016 | 54,628 | ||||||||||
Beginning balance, shares at Dec. 31, 2016 | 1 | ||||||||||
Net share activity through equity award plan | $ (1,634) | (1,634) | $ (6) | (1,428) | (1,434) | (200) | (1,634) | ||||
Issuance of shares through equity award plan, shares | 590 | 590 | |||||||||
Other comprehensive loss | $ (1,785) | (1,785) | $ (1,565) | (1,565) | (220) | (1,785) | |||||
Reclassification of noncontrolling interest upon conversion of partnership units to common stock | $ 2 | 8,352 | 8,354 | (8,354) | |||||||
Reclassification of noncontrolling interest upon conversion of partnership units to common stock, shares | 241 | ||||||||||
Net proceeds from equity offering | $ 92,587 | 92,587 | $ 18 | 82,125 | 82,143 | 10,444 | 92,587 | ||||
Shares issued | 1,762 | 1,762 | |||||||||
Equity-based compensation expense | $ 10,507 | 10,507 | 9,224 | 9,224 | 1,283 | 10,507 | |||||
Dividend to shareholder | (57,371) | (57,371) | (57,371) | (57,371) | (57,371) | ||||||
Distributions to noncontrolling interests | (7,847) | (7,847) | |||||||||
Partnership distributions | (7,847) | (7,847) | |||||||||
Net income | 17,570 | 17,570 | 15,424 | 15,424 | 2,146 | 17,570 | |||||
Ending balance at Sep. 30, 2017 | $ 504 | $ 1,032,912 | $ (1,565) | $ (139,740) | $ 892,111 | $ 115,994 | $ 1,008,105 | ||||
Ending balance at Sep. 30, 2017 | $ (1,785) | 1,009,890 | |||||||||
Partners' Capital, Ending Balance at Sep. 30, 2017 | $ 1,009,890 | $ 1,008,105 | |||||||||
Ending balance, shares at Sep. 30, 2017 | 50,424 | ||||||||||
Ending balance, shares at Sep. 30, 2017 | 56,980 | ||||||||||
Ending balance, shares at Sep. 30, 2017 | 1 |
INTERIM CONSOLIDATED FINANCIAL7
INTERIM CONSOLIDATED FINANCIAL STATEMENTS STATEMENTS OF CASH FLOW $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | |
Cash flow from operating activities: | |||
Net income | $ 6,538 | $ 17,570 | $ 19,204 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 100,455 | 88,767 | |
Amortization of above and below market leases | 300 | 699 | 337 |
Amortization of deferred loan costs | 2,737 | 2,424 | |
Amortization of senior notes discount | 206 | 194 | |
Equity-based compensation expense | 10,507 | 7,887 | |
Bad debt expense | 1,750 | 1,201 | |
Deferred tax benefit | (5,371) | (9,298) | |
Changes in operating assets and liabilities | |||
Rents and other receivables, net | (7,518) | (9,191) | |
Prepaid expenses | (291) | (2,854) | |
Other assets | (367) | (967) | |
Accounts payable and accrued liabilities | (4,145) | 3,359 | |
Advance rents, security deposits and other liabilities | 3,480 | 984 | |
Deferred income | 547 | 1,448 | |
Net cash provided by operating activities | 120,259 | 103,495 | |
Cash flow from investing activities: | |||
Acquisitions, net of cash acquired | 47,013 | 122,981 | |
Additions to property and equipment | (236,971) | (197,751) | |
Net cash used in investing activities | (283,984) | (320,732) | |
Cash flow from financing activities: | |||
Credit facility proceeds | 221,000 | 267,000 | |
Debt repayment | (81,000) | (259,002) | |
Debt proceeds | 1,920 | ||
Payment of deferred financing costs | (200) | (35) | |
Payment of cash dividends | (54,919) | (45,371) | |
Distribution to noncontrolling interests | (7,732) | (7,189) | |
Proceeds from exercise of stock options | 4,948 | 859 | |
Payment of tax withholdings related to equity based awards | (3,310) | (2,111) | |
Principal payments on capital lease obligations | (9,865) | (9,612) | |
Mortgage principal debt repayments | (38) | ||
Equity proceeds, net of issuance costs | 92,612 | 275,663 | |
Net cash provided by financing activities | 163,416 | 220,202 | |
Net increase/(decrease) in cash and cash equivalents | (309) | 2,965 | |
Cash and cash equivalents, beginning of period | 9,580 | 8,804 | |
Cash and cash equivalents, end of period | 11,769 | 9,271 | 11,769 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||
Cash paid for interest (excluding deferred financing costs and amounts capitalized) | 22,759 | 18,659 | |
Noncash investing and financing activities: | |||
Accrued capital additions | 28,368 | 40,344 | |
Accrued deferred financing costs | 8 | ||
Increase in other liabilities related to change in fair value of interest rate swaps | 1,785 | ||
Accrued equity issuance costs | 26 | ||
Acquisitions, net of cash acquired: | |||
Land | 7,440 | 5,019 | 7,440 |
Buildings, improvements and equipment | 80,390 | 80,390 | |
Construction in Progress | 13,900 | 41,994 | 13,900 |
Rents and other receivables, net | (2,033) | (2,033) | |
Acquired intangibles | 34,281 | 34,281 | |
Deferred costs | 4,391 | 4,391 | |
Prepaid expenses | 479 | 479 | |
Goodwill | (7,895) | ||
Other assets | 303 | 303 | |
Accounts payable and accrued liabilities | (922) | (922) | |
Advance rents, security deposits and other liabilities | (1,343) | (1,343) | |
Deferred income | 35 | 35 | |
Deferred income taxes | (6,045) | (6,045) | |
Total acquisitions, net of cash acquired | 47,013 | 122,981 | |
Qualitytech, LP | |||
Cash flow from operating activities: | |||
Net income | 6,538 | 17,570 | 19,204 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 100,455 | 88,767 | |
Amortization of above and below market leases | 699 | 337 | |
Amortization of deferred loan costs | 2,737 | 2,424 | |
Amortization of senior notes discount | 206 | 194 | |
Equity-based compensation expense | 10,507 | 7,887 | |
Bad debt expense | 1,750 | 1,201 | |
Deferred tax benefit | (5,371) | (9,298) | |
Changes in operating assets and liabilities | |||
Rents and other receivables, net | (7,518) | (9,191) | |
Prepaid expenses | (291) | (2,854) | |
Other assets | (367) | (967) | |
Accounts payable and accrued liabilities | (4,145) | 3,359 | |
Advance rents, security deposits and other liabilities | 3,480 | 984 | |
Deferred income | 547 | 1,448 | |
Net cash provided by operating activities | 120,259 | 103,495 | |
Cash flow from investing activities: | |||
Acquisitions, net of cash acquired | 47,013 | 122,981 | |
Additions to property and equipment | (236,971) | (197,751) | |
Net cash used in investing activities | (283,984) | (320,732) | |
Cash flow from financing activities: | |||
Credit facility proceeds | 221,000 | 267,000 | |
Debt repayment | (81,000) | (259,002) | |
Debt proceeds | 1,920 | ||
Payment of deferred financing costs | (200) | (35) | |
Payment of cash dividends | (54,919) | (45,371) | |
Partnership distributions | (7,732) | (7,189) | |
Proceeds from exercise of stock options | 4,948 | 859 | |
Payment of tax withholdings related to equity based awards | (3,310) | (2,111) | |
Principal payments on capital lease obligations | (9,865) | (9,612) | |
Mortgage principal debt repayments | (38) | ||
Equity proceeds, net of issuance costs | 92,612 | 275,663 | |
Net cash provided by financing activities | 163,416 | 220,202 | |
Net increase/(decrease) in cash and cash equivalents | (309) | 2,965 | |
Cash and cash equivalents, beginning of period | 9,580 | 8,804 | |
Cash and cash equivalents, end of period | 11,769 | 9,271 | 11,769 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||
Cash paid for interest (excluding deferred financing costs and amounts capitalized) | 22,759 | 18,659 | |
Noncash investing and financing activities: | |||
Accrued capital additions | 28,368 | 40,344 | |
Accrued deferred financing costs | 8 | ||
Increase in other liabilities related to change in fair value of interest rate swaps | 1,785 | ||
Accrued equity issuance costs | 26 | ||
Acquisitions, net of cash acquired: | |||
Land | 7,440 | 5,019 | 7,440 |
Buildings, improvements and equipment | 80,390 | 80,390 | |
Construction in Progress | 13,900 | 41,994 | 13,900 |
Rents and other receivables, net | (2,033) | (2,033) | |
Acquired intangibles | 34,281 | 34,281 | |
Deferred costs | 4,391 | 4,391 | |
Prepaid expenses | 479 | 479 | |
Goodwill | (7,895) | ||
Other assets | 303 | 303 | |
Accounts payable and accrued liabilities | (922) | (922) | |
Advance rents, security deposits and other liabilities | (1,343) | (1,343) | |
Deferred income | 35 | 35 | |
Deferred income taxes | $ (6,045) | (6,045) | |
Total acquisitions, net of cash acquired | $ 47,013 | $ 122,981 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2017 | |
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 25 wholly-owned and leased properties with data centers located throughout the United States, Canada, Europe and Asia. QTS has elected to be taxed as a real estate investment trust (“REIT”), for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2013. As a REIT, QTS generally is not required to pay federal corporate income taxes on its taxable income to the extent it is currently distributed to its stockholders. The Operating Partnership is a Delaware limited partnership formed on August 5, 2009 and is QTS’ historical predecessor. As of September 30, 2017, QTS owned approximately 88.5% of the interests in the Operating Partnership. Substantially all of QTS’ assets are held by, and QTS’ operations are conducted through, the Operating Partnership. QTS’ interest in the Operating Partnership entitles QTS to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to QTS’ percentage ownership. As the sole general partner of the Operating Partnership, QTS generally has the exclusive power under the partnership agreement of the Operating Partnership to manage and conduct the Operating Partnership’s business and affairs, subject to certain limited approval and voting rights of the limited partners. QTS’ board of directors manages the Company’s business and affairs. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in compliance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes and management’s discussion and analysis included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 1, 2017. The consolidated balance sheet data included herein as of December 31, 2016 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying financial statements are presented for both QTS Realty Trust, Inc. and QualityTech, LP. References to “QTS” mean QTS Realty Trust, Inc. and its controlled subsidiaries and references to the “Operating Partnership” mean QualityTech, LP and its controlled subsidiaries. In 2016, the Company adopted ASU 2015-02, Amendments to the Consolidation Analysis. This standard amends certain guidance applicable to the consolidation of various legal entities, including variable interest entities (“VIE”). The Company evaluated the application of the ASU and concluded that no change was required to its accounting for its interest in the Operating Partnership. However, under the new guidance, the Operating Partnership now meets the definition and criteria of a VIE and the Company is the primary beneficiary of the VIE. As discussed below, QTS’ only material asset is its ownership interest in the Operating Partnership, and consequently, all of its assets and liabilities represent those assets and liabilities of the Operating Partnership. QTS’ debt is an obligation of the Operating Partnership where the creditors may have recourse, under certain circumstances, against the credit of QTS. QTS is the sole general partner of the Operating Partnership, and its only material asset consists of its ownership interest in the Operating Partnership. Management operates QTS and the Operating Partnership as one business. The management of QTS consists of the same employees as the management of the Operating Partnership. QTS does not conduct business itself, other than acting as the sole general partner of the Operating Partnership and issuing public equity from time to time. QTS has not issued or guaranteed any indebtedness. Except for net proceeds from public equity issuances by QTS, which are contributed to the Operating Partnership in exchange for units of limited partnership interest of the Operating Partnership, the Operating Partnership generates all remaining capital required by the business through its operations, the direct or indirect incurrence of indebtedness, and the issuance of partnership units. Therefore, as general partner with control of the Operating Partnership, QTS consolidates the Operating Partnership for financial reporting purposes. The Company believes, therefore, that providing one set of notes for the financial statements of QTS and the Operating Partnership provides the following benefits: · enhances investors’ understanding of QTS and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; · eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both QTS and the Operating Partnership; and · creates time and cost efficiencies through the preparation of one set of notes instead of two separate sets of notes. In addition, in light of these combined notes, the Company believes it is important for investors to understand the few differences between QTS and the Operating Partnership in the context of how QTS and the Operating Partnership operate as a consolidated company. With respect to balance sheets, the presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated balance sheets of QTS and those of the Operating Partnership. On the Operating Partnership’s consolidated balance sheets, partners’ capital includes partnership units that are owned by QTS and other partners. On QTS’ consolidated balance sheets, stockholders’ equity includes common stock, additional paid in capital, and accumulated dividends in excess of earnings. The remaining equity reflected on QTS’s consolidated balance sheet is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. With respect to statements of operations, the primary difference in QTS' Statements of Operations is that for net income, QTS retains its proportionate share of the net income based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership. These combined notes refer to actions or holdings as being actions or holdings of “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, management believes that these general references to “the Company” in this context is appropriate because the business is one enterprise operated through the Operating Partnership. As discussed above, QTS owns no operating assets and has no operations independent of the Operating Partnership and its subsidiaries. Also, the Operating Partnership owns no operating assets and has no operations independent of its subsidiaries. Obligations under the 5.875% Senior Notes due 2022 and the unsecured credit facility, both discussed in Note 6, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries, other than 1) 2470 Satellite Boulevard, LLC, a subsidiary formed in December 2015 that acquired an office building in Duluth, Georgia and has de minimis assets and operations, 2) seven other subsidiaries that own vacant land purchased during or subsequent to the three months ended September 30, 2017, or were formed in connection with such land purchases, and have de minimis assets and operations and 3) with respect to the 5.875% Senior Notes due 2022 only, QTS Finance Corporation, the co-issuer of the 5.875% Senior Notes due 2022. As such, consolidating financial information for the guarantors is not being presented in the notes to the interim 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 “Code”). The interim consolidated financial statements of QTS Realty Trust, Inc. for the three and nine months ended September 30, 2017 and 2016, and as of September 30, 2017 and December 31, 2016 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 consolidated financial statements. Reclassifications – The consolidated statement of cash flows for the nine months ended September 30, 2016 reflects a reclassification of $0.9 million from “ Payment of Tax Withholdings related to Equity Based Awards” to “Proceeds from Exercise of Stock Options” in accordance with the Company’s adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting as of January 1, 2017 with retrospective application of this provision. Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation for real estate assets is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended September 30, 2017, depreciation expense related to real estate assets and non-real estate assets was $22.6 million and $3.3 million, respectively, for a total of $25.9 million. For the three months ended September 30, 2016, depreciation expense related to real estate assets and non-real estate assets was $20.4 million and $3.4 million, respectively, for a total of $23.8 million. For the nine months ended September 30, 2017, depreciation expense related to real estate assets and non-real estate assets was $66.1 million and $10.3 million, respectively, for a total of $76.4 million. For the nine months ended September 30, 2016, depreciation expense related to real estate assets and non-real estate assets was $57.6 million and $9.5 million, respectively, for a total of $67.1 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 $3.6 million and $2.8 million for the three months ended September 30, 2017 and 2016, respectively, and $9.5 million and $9.1 million for the nine months ended September 30, 2017 and 2016, 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 $3.6 million and $2.5 million for the three months ended September 30, 2017 and 2016, respectively, and $9.9 million and $8.4 million for the nine months ended September 30, 2017 and 2016, respectively. Acquisitions – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances. Purchase accounting is applied to the assets and liabilities related to all real estate investments acquired in accordance with the accounting requirements of ASC 805, Business Combinations , which requires the recording of net assets of acquired businesses at fair value. The fair value of the consideration transferred is allocated to the acquired tangible assets, consisting primarily of land, construction in progress, building and improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases, value of customer relationships, trade names, software intangibles and capital leases. The excess of the fair value of liabilities assumed, common stock issued and cash paid over the fair value of identifiable assets acquired is allocated to goodwill, which is not amortized by the Company. In developing estimates of fair value of acquired assets and assumed liabilities, management analyzes a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets. Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. This amortization expense is accounted for as real estate amortization expense. Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. This amortization expense is accounted for as real estate amortization expense. Other acquired intangible assets, which includes platform, above or below market leases, and trade name intangibles, are amortized on a straight-line basis over their respective expected lives. Above or below market leases are amortized as a reduction to or increase in rental revenue as well as a reduction to rent expense over the remaining lease terms in the case of the Company as lessor. The expense associated with above and below market leases and trade name intangibles is accounted for as real estate expense, whereas the expense associated with the amortization of platform intangibles is accounted for as non-real estate expense. See Note 3 for discussion of the final purchase price allocation for the Piscataway, New Jersey facility (the “Piscataway facility”) that the Company acquired on June 6, 2016 as well as the preliminary purchase price allocation for the Fort Worth, Texas facility (the “Fort Worth facility”) that the Company acquired on December 16, 2016. Impairment of Long-Lived Assets, Intangible Assets and Goodwill – The Company reviews its long-lived assets and intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset exceeds the value of the undiscounted cash flows, the fair value of the asset is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three and nine months ended September 30, 2017 and 2016, respectively. The fair value of goodwill is the consideration transferred which is not allocable to identifiable intangible and tangible assets. Goodwill is subject to at least an annual assessment for impairment. As a result of the Carpathia Hosting, Inc. (“Carpathia”) acquisition, the Company recognized approximately $173.8 million in goodwill. In connection with the goodwill impairment evaluation that the Company performed on October 1, 2016, the Company determined qualitatively that there were no indicators of impairment, thus it did not perform a quantitative analysis. 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 does not believe that the risk is significant. Deferred Costs – Deferred costs, net, on the Company’s balance sheets include both financing costs and leasing costs. Deferred financing costs represent fees and other costs incurred in connection with obtaining debt and are amortized over the term of the loan and are included in interest expense. Debt issuance costs related to revolving debt arrangements are deferred and presented as assets on the balance sheet; however, all other debt issuance costs are recorded as a direct offset to the associated liability. Amortization of debt issuance costs, including those costs presented as offsets to the associated liability in the consolidated balance sheet, was $0.9 million and $0.8 million for the three months ended September 30, 2017 and 2016, respectively, and $2.7 million and $2.4 million for the nine months ended September 30, 2017 and 2016, respectively. Deferred financing costs presented as assets on the balance sheet related to revolving debt arrangements, net of accumulated amortization, are as follows: September 30, December 31, (dollars in thousands) 2017 2016 (unaudited) Deferred financing costs $ 7,132 $ 7,128 Accumulated amortization (1,453) (145) Deferred financing costs, net $ 5,679 $ 6,983 Deferred financing costs presented as offsets to the associated liabilities on the balance sheet related to fixed debt arrangements, net of accumulated amortization, are as follows: September 30, December 31, (dollars in thousands) 2017 2016 (unaudited) Deferred financing costs $ 12,943 $ 12,779 Accumulated amortization (4,089) (2,660) Deferred financing costs, net $ 8,854 $ 10,119 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 $4.8 million and $3.7 million for the three months ended September 30, 2017 and 2016, respectively, and $13.5 million and $10.8 million for the nine months ended September 30, 2017 and 2016, respectively. Deferred leasing costs, net of accumulated amortization, are as follows: September 30, December 31, (dollars in thousands) 2017 2016 (unaudited) Deferred leasing costs $ 54,411 $ 50,026 Accumulated amortization (21,918) (18,502) Deferred leasing costs, net $ 32,493 $ 31,524 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 $22.5 million and $22.0 million as of September 30, 2017 and December 31, 2016, respectively. Additionally, $2.7 million and $2.4 million of deferred income was amortized into revenue for the three months ended September 30, 2017 and 2016, respectively, and $7.7 million and $6.5 million for the nine months ended September 30, 2017 and 2016, respectively. Equity-based Compensation – All equity-based compensation is measured at fair value on the grant date, 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 was $3.7 million and $2.6 million for the three months ended September 30, 2017 and 2016, respectively, and $10.5 million and $7.9 million for the nine months ended September 30, 2017 and 2016, 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 $21.1 million and $17.3 million as of September 30, 2017 and December 31, 2016, respectively. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed above. Cloud and Managed Services Revenue – The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. Allowance for Uncollectible Accounts Receivable – Rents receivable are recognized when due and are carried at cost, less an allowance for doubtful accounts. The Company records a provision for losses on rents receivable equal to the estimated uncollectible accounts, which is based on management’s historical experience and a review of the current status of the Company’s receivables. As necessary, the Company also establishes an appropriate allowance for doubtful accounts for receivables arising from the straight-lining of rents. The aggregate allowance for doubtful accounts was $5.7 million and $4.2 million as of September 30, 2017 and December 31, 2016, respectively. Capital Leases and Lease Financing Obligations – The Company evaluates leased real estate to determine whether the lease should be classified as a capital or operating lease in accordance with U.S. GAAP. The Company periodically enters into capital leases for certain equipment. In addition, through its acquisition of Carpathia Hosting, Inc. on June 16, 2015, the Company is party to capital leases for property and equipment, as well as financing obligations related to a sale-leaseback transaction. The outstanding liabilities for the capital leases were $10.0 million and $18.1 million as of September 30, 2017 and December 31, 2016, respectively. The outstanding liabilities for the lease financing obligations were $18.8 million and $20.6 million as of September 30, 2017 and December 31, 2016, respectively. The net book value of the assets associated with these leases was approximately $33.2 million and $41.5 million as of September 30, 2017 and December 31, 2016, respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations. See Note 6 for further discussion of capital leases and lease financing obligations. Recoveries from Customers – Certain customer leases contain provisions under which the customers reimburse the Company for a portion of the property’s real estate taxes, insurance and other operating expenses, which include certain power and cooling-related charges. The reimbursements are included in revenue as recoveries from customers in the Statements of Operations in the period the applicable expenditures are incurred. Certain customer leases are structured to provide a fixed monthly billing amount that includes an estimate of various operating expenses, with all revenue from such leases included in rental revenues. Segment Information – The Company manages its business as one operating segment and thus one reportable segment consisting of a portfolio of investments in data centers located primarily in the United States with others in Canada, Europe and Asia. Customer Concentrations – As of September 30, 2017, one of the Company’s customers represented 12.5% of its total monthly rental revenue. No other customers exceeded 5% of total monthly rental revenue. As of September 30, 2017, five of the Company’s customers exceeded 5% of total accounts receivable. In aggregate, these five customers accounted for approximately 44% of total accounts receivable. Two of these five customers exceeded 10% of total accounts receivable. Income Taxes – The Company has elected for two of its existing subsidiaries, Quality Technology Services Holdings, LLC and QTS Finance Corporation, to be taxed as taxable REIT subsidiaries pursuant to the REIT rules of the U.S. Internal Revenue Code. For the taxable REIT subsidiaries, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of December 31, 2014, one of the Company’s taxable REIT subsidiaries’ deferred tax assets were primarily the result of U.S. net operating loss carryforwards. A valuation allowance was recorded against its gross deferred tax asset balance as of December 31, 2014. As a result of the acquisition of Carpathia, the Company determined that it is more likely than not that pre-existing deferred tax assets would be realized by the Company, and the valuation allowance was eliminated. The change in the valuation allowance resulting from the change in circumstances was included in income, and recognized as a deferred income tax benefit in the year ended December 31, 2015. A deferred tax benefit has been recognized in subsequent periods, including in the nine months ended September 30, 2017, in connection with recorded operating losses. As of September 30, 2017, this taxable REIT subsidiary has a net deferred tax liability position primarily due to customer-based intangibles acquired as part of the Carpathia acquisition. The Company provides for income taxes during interim periods based on the estimated effective tax rate for the year. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the taxable REIT subsidiary, tax law changes and future business acquisitions. The taxable REIT subsidiary’s effective tax rates were 46.4% and 48.9% for the nine months ended September 30, 2017 and 2016, respectively. Interest Rate Swaps – On April 2017, the Company entered into forward interest rate swap agreements with an aggregate notional amount of $400 million. The forward swap agreements effectively will fix the interest rate on $400 million of term loan borrowings from January 2, 2018 through the current maturity dates, which are December 17, 2021 and April 27, 2022 ($200 million of swaps allocated to each term loan). The Company reflects its forward interest rate swap agreements, which are designated as cash flow hedges, at fair value as either assets or liabilities on the consolidated balance sheets. The forward interest rate swap agreements currently qualify for hedge accounting whereby the Company records the effective portion of the gain or loss on the hedging instruments as a component of accumulated other comprehensive income or loss. Any ineffective portion of a derivative's change in fair value is immediately recognized within net income. Fair Value Measurements – ASC Topic 820, Fair Value Measurement , emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy is established that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. As of September 30, 2017, the Company valued its interest rate swaps which were entered into in April 2017 utilizing Level 2 and Level 3 inputs. There were no financial assets or liabilities measured at fair value on a recurring basis on the consolidated balance sheets as of December 31, 2016. The Company’s purchase price allocations of Piscataway and Fort Worth are fair value estimates that utilized Level 3 inputs and are measured on a non-recurring basis. See Note 3 for further detail on these acquisitions. New Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , which supersedes the current revenue recognition requirements in ASC 605, Revenue Recognition . Under this new guidance, entities should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This ASU also requires enhanced disclosures. In April 2016, the FASB finalized amendments to the guidance on identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB finalized amendments to the guidance related to the assessment of collectability, the definition of completed contracts at transition, and the measurement of the fair value of non-cash consideration at contract inception. The FASB also added new practical expedients for the presentation of sales taxes collected from customers and the accounting for |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2017 | |
Acquisitions [Abstract] | |
Acquisitions | 3. Acquisitions Fort Worth Acquisition On December 16, 2016, the Company completed the acquisition of the Fort Worth facility for approximately $50.1 million. This facility is located in Fort Worth, Texas, and consists of 53 acres and approximately 262,000 gross square feet. This facility has a basis of design of 80,000 square feet, 8 gross MW of current available power with an additional 8 gross MW available for further expansion. This acquisition was funded with a draw on the unsecured revolving credit facility. The Company accounted for this acquisition in accordance with ASC 805, Business Combinations, as a business combination. The Company is generally valuing the assets acquired and liabilities assumed using Level 3 inputs. The following table summarizes the consideration for the Fort Worth facility and the preliminary allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (unaudited and in thousands). This allocation is subject to change pending the final valuation of these assets and liabilities: Fort Worth Allocation as of September 30, 2017 Original Allocation Reported as of December 31, 2016 Adjusted Fair Value Land $ 136 $ 136 $ — Buildings and improvements 610 610 — Construction in progress 48,987 48,984 3 Acquired intangibles 237 240 (3) Deferred costs 23 23 — Other assets 7 7 — Net Working Capital 86 86 — Total identifiable assets acquired $ 50,086 $ 50,086 $ — No changes were recorded to the preliminary allocation of the fair value of assets acquired and liabilities assumed during the three months ended September 30, 2017. Piscataway Acquisition On June 6, 2016, the Company completed the acquisition of the Piscataway facility. This facility is located in the New York metro area on 38 acres and consists of 360,000 gross square feet, including approximately 89,000 square feet of raised floor, and approximately 18 MW of critical power. The Piscataway facility supports future growth with space for an additional approximately 87,000 square feet of raised floor in the existing structure, as well as capacity for over 8 MW of additional critical power. This acquisition was funded with a draw on the unsecured revolving credit facility. The Company accounted for this acquisition in accordance with ASC 805, Business Combinations , as a business combination. The Company is generally valuing the assets acquired and liabilities assumed using Level 3 inputs. In June 2017, the Company finalized the Piscataway purchase price allocation. The following table summarizes the Piscataway acquisition and the final allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (unaudited and in thousands): Final Piscataway Allocation as of June 30, 2017 Original Allocation Reported as of June 30, 2016 Adjusted Fair Value Land $ 7,466 $ 7,440 $ 26 Buildings and improvements 80,366 78,370 1,996 Construction in progress 13,900 13,900 — Acquired intangibles 19,581 21,668 (2,087) Deferred costs 4,390 4,084 306 Other assets 106 106 — Total identifiable assets acquired 125,809 125,568 241 Acquired below market lease 809 568 241 Net working capital 2,019 2,019 — Total liabilities assumed 2,828 2,587 241 Net identifiable assets acquired $ 122,981 $ 122,981 $ — Land Acquisitions In August, the Company completed the acquisition of approximately 24 acres of land in Ashburn, Virginia for approximately $17 million. As of September 30, 2017, the Company has commenced development of a mega data center facility on the acquired land parcel. This acquisition was accounted for as an asset acquisition. In July, the Company also completed the acquisition of approximately 84 acres of land in Phoenix, Arizona for $25 million to be used for future development. This acquisition was accounted for as an asset acquisition. The fair value of the land acquired in both the aforementioned Ashburn and Phoenix purchases, aggregating $42 million, is included within the “Construction in Progress” line item of the consolidated balance sheets. |
Acquired Intangibles Assets and
Acquired Intangibles Assets and Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Acquired Intangible Assets and Liabilities | |
Acquired Intangibles Assets and Liabilities | 4. Acquired Intangible Assets and Liabilities Summarized below are the carrying values for the major classes of intangible assets and liabilities (unaudited and in thousands): September 30, 2017 December 31, 2016 Useful Lives Gross Accumulated Net Carrying Gross Accumulated Net Carrying Customer Relationships 1 to 12 years $ 95,705 $ (18,524) $ 77,181 $ 95,705 $ (12,358) $ 83,347 In-Place Leases 0.5 to 10 years 32,066 (11,679) 20,387 32,066 (7,197) 24,869 Solar Power Agreement (1) 17 years 13,747 (2,628) 11,119 13,747 (2,022) 11,725 Platform Intangible 3 years 9,600 (7,333) 2,267 9,600 (4,933) 4,667 Acquired Favorable Leases 0.5 to 8 years 4,649 (2,049) 2,600 4,652 (1,013) 3,639 Tradenames 3 years 3,100 (2,368) 732 3,100 (1,593) 1,507 Total Intangible Assets $ 158,867 $ (44,581) $ 114,286 $ 158,870 $ (29,116) $ 129,754 Solar Power Agreement (1) 17 years 13,747 (2,628) 11,119 13,747 (2,022) 11,725 Acquired Unfavorable Leases Acquired below market leases - as Lessor 3 to 4 years 809 (316) 493 809 (138) 671 Acquired above market leases - as Lessee 11 to 12 years 2,453 (496) 1,957 2,453 (334) 2,119 Total Intangible Liabilities (2) $ 17,009 $ (3,440) $ 13,569 $ 17,009 $ (2,494) $ 14,515 (1) Amortization related to the Solar Power Agreement asset and liability is recorded at the same rate and therefore has no net impact on the statement of operations. (2) Intangible liabilities are included within the “Advance rents, security deposits and other liabilities” line item of the consolidated balance sheets. Above or below market leases are amortized as a reduction to or increase in rental revenue as well as a reduction to rent expense in the case of the Company as lessee over the remaining lease terms. The net effect of amortization of acquired above‑market and below‑market leases resulted in a net decrease in rental revenue of $0.2 million and $0.3 million for the three months ended September 30, 2017 and 2016, respectively. The net effect of amortization of acquired above‑market and below‑market leases resulted in a net decrease in rental revenue of $0.7 million and $0.3 million for the nine months ended September 30, 2017 and 2016, respectively. The estimated amortization of acquired favorable and unfavorable leases for each of the five succeeding fiscal years ending December 31 is as follows (unaudited and in thousands): Net Rental Revenue Decreases Rental Expense 2017 (October - December) $ 220 $ 54 2018 682 216 2019 479 216 2020 647 216 2021 46 216 Thereafter 33 1,039 Total $ 2,107 $ 1,957 Net amortization of all other identified intangible assets and liabilities was $4.6 million and $5.2 million for the three months ended September 30, 2017 and 2016, respectively. Net amortization of all other identified intangible assets and liabilities was $13.8 million and $13.8 million for the nine months ended September 30, 2017 and 2016, respectively. The estimated net amortization of all other identified intangible assets and liabilities for each of the five succeeding fiscal years ending December 31 is as follows (unaudited and in thousands): 2017 (October - December) $ 4,353 2018 14,574 2019 11,965 2020 11,379 2021 10,137 Thereafter 48,159 Total $ 100,567 |
Real Estate Assets and Construc
Real Estate Assets and Construction in Progress | 9 Months Ended |
Sep. 30, 2017 | |
Real Estate Assets and Construction in Progress [Abstract] | |
Real Estate Assets and Construction in Progress | 5. Real Estate Assets and Construction in Progress The following is a summary of properties owned or leased by the Company as of September 30, 2017 and December 31, 2016 (in thousands): As of September 30, 2017 (unaudited): Property Location Land Buildings, Construction Total Cost Atlanta, Georgia (Atlanta-Metro) $ 20,416 $ 450,128 $ 24,269 $ 494,813 Richmond, Virginia 2,180 253,346 61,257 316,783 Irving, Texas 8,606 259,999 68,478 337,083 Suwanee, Georgia (Atlanta-Suwanee) 3,521 169,625 2,876 176,022 Chicago, Illinois 9,400 80,737 125,350 215,487 Leased Facilities * 1,130 123,052 11,000 135,182 Piscataway, New Jersey 7,466 82,571 36,250 126,287 Santa Clara, California ** — 100,565 6,909 107,474 Sacramento, California 1,481 62,529 1,868 65,878 Princeton, New Jersey 20,700 32,823 469 53,992 Fort Worth, Texas 9,079 17,587 32,611 59,277 Ashburn, Virginia — — 32,829 32,829 Phoenix, Arizona — — 25,091 25,091 Other *** 2,213 35,541 133 37,887 $ 86,192 $ 1,668,503 $ 429,390 $ 2,184,085 * Includes 13 facilities. All facilities are leased, including those subject to capital leases. During the quarter ended March 31, 2017, the Company moved its Jersey City, NJ facility to the “Leased facilities” line item. In October 2017, the Company finalized the buyout of the Vault facility in Dulles, VA that was previously subject to a capital lease agreement. As the purchase occurred subsequent to September 30, 2017, the Vault facility is included within the “Leased Facilities” line item herein. ** Owned facility subject to long-term ground sublease. *** Consists of Miami, FL; Lenexa, KS and Overland Park, KS facilities. During the quarter ended June 30, 2017, fixed assets and the associated accumulated depreciation related to the Duluth, GA facility (comprised of $1.9 million of land, $8.7 million of buildings, improvements, and equipment, and $0.1 million of construction in progress) were moved from Real Estate Assets, net to Other assets, net on the Consolidated Balance Sheet as the facility was transitioned to corporate office space. As of December 31, 2016: Property Location Land Buildings, Construction Total Cost Atlanta, Georgia (Atlanta-Metro) $ 15,397 $ 434,965 $ 32,422 $ 482,784 Richmond, Virginia 2,180 237,347 70,580 310,107 Irving, Texas 8,606 204,713 69,653 282,972 Suwanee, Georgia (Atlanta-Suwanee) 3,521 171,376 2,013 176,910 Chicago, Illinois 9,400 45,848 100,623 155,871 Leased Facilities * 1,130 116,290 10,003 127,423 Piscataway, New Jersey 7,466 82,210 17,261 106,937 Santa Clara, California ** — 98,708 7,078 105,786 Sacramento, California 1,481 62,102 390 63,973 Princeton, New Jersey 20,700 32,788 538 54,026 Fort Worth, Texas 136 610 49,116 49,862 Other *** 4,113 37,810 6,283 48,206 $ 74,130 $ 1,524,767 $ 365,960 $ 1,964,857 * Includes 13 facilities. All facilities are leased, including those subject to capital leases. During the quarter ended March 31, 2017, the Company moved its Jersey City, NJ facility to the “Leased facilities” line item, therefore has conformed December 31, 2016 information to comparable categories. In October 2017, the Company finalized the buyout of the Vault facility in Dulles, VA that was previously subject to a capital lease agreement. As the purchase occurred subsequent to September 30, 2017, the Vault facility is included within the “Leased Facilities” line item herein. ** Owned facility subject to long-term ground sublease. *** Consists of Miami, FL; Lenexa, KS; Overland Park, KS; and Duluth, GA facilities. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt [Abstract] | |
Debt | 6. Debt Below is a listing of the Company’s outstanding debt, including capital leases and lease financing obligations, as of September 30, 2017 and December 31, 2016 (in thousands): Weighted Average Coupon Interest Rate at September 30, December 31, September 30, 2017 Maturities 2017 2016 (unaudited) (unaudited) Unsecured Credit Facility Revolving Credit Facility 2.78% December 17, 2020 $ 279,000 $ 139,000 Term Loan I 2.74% December 17, 2021 300,000 300,000 Term Loan II 2.74% April 27, 2022 200,000 200,000 Senior Notes 5.88% August 1, 2022 300,000 300,000 Lenexa Mortgage 4.10% May 1, 2022 1,882 — Capital Lease and Lease Financing Obligations 3.87% 2017 - 2025 28,843 38,708 3.63% 1,109,725 977,708 Less discount and net debt issuance costs (10,410) (11,882) Total outstanding debt, net $ 1,099,315 $ 965,826 Credit Facility, Senior Notes and Mortgage Notes Payable (a) Unsecured Credit Facility – In December 2016, the Company amended and restated its unsecured credit facility, increasing the total capacity to $1.2 billion and extending the term. The unsecured credit facility includes a $300 million term loan which matures on December 17, 2021, a $200 million term loan which matures on April 27, 2022, and a $700 million revolving credit facility which matures on December 17, 2020, with a one year extension option. Amounts outstanding under the amended unsecured credit facility bear interest at a variable rate equal to, at the Company’s election, LIBOR or a base rate, plus a spread that will vary depending upon the Company’s leverage ratio. For revolving credit loans, the spread ranges from 1.55% to 2.15% for LIBOR loans and 0.55% to 1.15% for base rate loans. For term loans, the spread ranges from 1.50% to 2.10% for LIBOR loans and 0.50% to 1.10% for base rate loans. The unsecured credit facility also includes a $300 million accordion feature. Under the unsecured credit facility, the capacity may be increased from the current capacity of $1.2 billion to $1.5 billion subject to certain conditions set forth in the credit agreement, including the consent of the administrative agent and obtaining necessary commitments. The Company is also required to pay a commitment fee to the lenders assessed on the unused portion of the unsecured revolving credit facility. At the Company’s election, it can prepay amounts outstanding under the unsecured credit facility, in whole or in part, without penalty or premium. The 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. As of September 30, 2017, the Company had outstanding $779 million of indebtedness under the unsecured credit facility, consisting of $279 million of outstanding borrowings under the unsecured revolving credit facility and $500 million outstanding under the term loans, exclusive of net debt issuance costs of $3.6 million. In connection with the unsecured credit facility, as of September 30, 2017, the Company had additional letters of credit outstanding aggregating to $2.1 million. As of September 30, 2017, the weighted average interest rate for amounts outstanding under the unsecured credit facility was 2.75%. On April 5, 2017, the Company entered into forward interest rate swap agreements with an aggregate notional amount of $400 million. The forward swap agreements effectively will fix the interest rate on $400 million of term loan borrowings from January 2, 2018 through the current maturity dates, which are December 17, 2021 and April 27, 2022 ($200 million of swaps allocated to each term loan). The weighted average effective fixed interest rate on the $400 million notional amount of term loan financing, following the execution of these swap agreements, will approximate 3.5%, commencing on January 2, 2018, assuming the current LIBOR spread of 1.5%. (b) Senior Notes – On July 23, 2014, the Operating Partnership and QTS Finance Corporation, a subsidiary of the Operating Partnership formed solely for the purpose of facilitating the offering of the notes described below (collectively, the “Issuers”), issued $300 million aggregate principal amount of 5.875% Senior Notes due 2022 (the “Senior Notes”). The Senior Notes have an interest rate of 5.875% per annum, were issued at a price equal to 99.211% of their face value and mature on August 1, 2022. The proceeds from the offering were used to repay amounts outstanding under the unsecured credit facility, including $75 million outstanding under the term loan. As of September 30, 2017, the discount recorded on the Senior Notes was $1.6 million and the outstanding net debt issuance costs associated with the Senior Notes were $5.3 million. The Senior Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Operating Partnership’s existing subsidiaries (other than foreign subsidiaries, receivables entities, 2470 Satellite Boulevard, LLC, which is a Delaware limited liability company formed in December 2015 that acquired an office building in Duluth, Georgia and has de minimis assets and operations and seven other subsidiaries that own vacant land purchased during or subsequent to the three months ended September 30, 2017, or were formed in connection with such land purchases, and have de minimis assets and operations) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Issuers or any other subsidiary guarantor. QTS Realty Trust, Inc. does not guarantee the Senior Notes and will not be required to guarantee the Senior Notes except under certain circumstances. The offering was conducted pursuant to Rule 144A of the Securities Act of 1933, as amended, and on April 23, 2015, all of the outstanding originally issued Senior Notes were tendered in an exchange offer for 5.875% Senior Notes due 2022 registered under the Securities Act of 1933, as amended (the “Exchange Notes”). 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. As described in the Note 14 - Subsequent Events, the Company expects to redeem the Senior Notes with a portion of the net proceeds from the pending issuance of $400 million of 4.75% senior notes due in 2025 that is expected to close on November 8, 2017. (c) Lenexa Mortgage – On March 8, 2017, the Company entered into a $1.9 million mortgage loan secured by its Lenexa facility. This mortgage has a fixed rate of 4.1%, with periodic principal payments due monthly and a balloon payment of $1.6 million in May 2022. As of September 30, 2017, the outstanding balance under the Lenexa mortgage was $1.9 million. The annual remaining principal payment requirements as of September 30, 2017 per the contractual maturities and excluding extension options, capital leases and lease financing obligations, are as follows (unaudited and in thousands): 2017 (October - December) $ 11 2018 65 2019 68 2020 279,071 2021 300,074 Thereafter 501,593 Total $ 1,080,882 As of September 30, 2017, the Company was in compliance with all of its covenants. Capital Leases The Company has historically entered into capital leases for certain equipment. In addition, through its acquisition of Carpathia on June 16, 2015, the Company acquired capital leases of both equipment and certain properties. Total outstanding liabilities for capital leases were $10.0 million as of September 30, 2017, of which $7.1 million were assumed through the Carpathia acquisition, all of which was related to the lease of real property. Carpathia had entered into capital lease arrangements for datacenter space under two lease agreements expiring in 2018 and 2019 at its Harrisonburg, Virginia and Ashburn, Virginia locations. Total recurring monthly payments range from approximately $0.2 million to $0.5 million during the terms of the leases, in addition to payments made for utilities. Depreciation related to the associated assets for the capital leases is included in depreciation and amortization expense in the Statements of Operations. Lease Financing Obligations Through the acquisition of Carpathia, the Company assumed lease financing obligations totaling $18.8 million at September 30, 2017, of which $17.8 million related to a sale-leaseback transaction where Carpathia has continuing involvement. On December 23, 2011, Carpathia sold the shell of a building and the associated land to an unrelated third party. Carpathia leases the property back and is a party to an agreement with the same third party that constructed a new building on the adjoining property for use as a data center. Carpathia is primarily responsible for financing the improvements and outfitting the building with the necessary equipment. The third party leases back the new building in stages to Carpathia as the various stages are completed. In accordance with ASC 840-40, Leases , Carpathia has continuing involvement with the related leased assets; therefore, the Company will continue to account for the existing building shell and the associated land as fixed assets and will capitalize the construction costs of the new building. The financing obligation related to the building and equipment was $16.4 million at September 30, 2017. In addition, due to Carpathia’s continuing involvement, it was required to defer a gain on the sale of the assets. The deferred gain was $1.4 million at September 30, 2017, and is also included in lease financing obligations. The Company purchased the asset related to this financing obligation in October 2017 as described in Note 14 - Subsequent Events. The financing obligation is reduced as rental payments are made on the existing building, which include amounts attributable to both principal and interest. Depreciation expense on the related asset is included in depreciation and amortization expense in the Statements of Operations. The Company, through its acquisition of Carpathia, also has a lease financing agreement in connection with a $4.8 million tenant improvement allowance on one of its data center lease agreements. The financing requires monthly payments of principal and interest of less than $0.1 million through February 2019. The outstanding balance on the financing agreement was $1.0 million as of September 30, 2017. Depreciation expense on the related leasehold improvements is included in depreciation and amortization expense in the Statements of Operations. The following table summarizes the Company’s combined future payment obligations, excluding interest, as of September 30, 2017, on the capital leases and lease financing obligations above (unaudited and in thousands): 2017 (October - December) $ 3,078 2018 9,370 2019 2,844 2020 2,190 2021 2,388 Thereafter 8,973 Total $ 28,843 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
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. One of the Company’s subsidiaries, Carpathia Hosting, LLC (“Carpathia”), was named as a defendant in a lawsuit filed in state court in New York. Carpathia’s customer, Portal Healthcare Solutions (“Portal Ascend”) allegedly had a security breach between November 2012 and March 2013. Portal Ascend has agreed to indemnify Carpathia in this litigation and has provided legal counsel to defend Carpathia. The court denied plaintiffs motion to certify the case as a class action. |
Partners' Capital, Equity and I
Partners' Capital, Equity and Incentive Compensation Plans | 9 Months Ended |
Sep. 30, 2017 | |
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 September 30, 2017, the Operating Partnership had two classes of limited partnership units outstanding: Class A units of limited partnership interest (“Class A units”) and Class O LTIP units of limited partnership units (“Class O units”). The Class A units are now redeemable at any time for cash or shares of Class A common stock of QTS. The Company may in its sole discretion elect to assume and satisfy the redemption amount with cash or its shares. Class O units were issued upon grants made under the QualityTech, LP 2010 Equity Incentive Plan (the “2010 Equity Incentive Plan”). Class O units are pari passu with Class A units. Each Class O unit is convertible into Class A units by the Operating Partnership at any time or by the holder at any time following full vesting (if such unit is subject to vesting) based on formulas contained in the partnership agreement. QTS Realty Trust, Inc. In connection with its initial public offering (“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 1,750,000 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 LTIP units of limited partnership interest. In May 2015, the total number of shares available for issuance under the 2013 Equity Incentive Plan was increased to 4,750,000. The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the nine months ended September 30, 2017 (unaudited) : 2010 Equity Incentive Plan 2013 Equity Incentive Plan Number of Weighted Weighted Options Weighted Weighted Restricted Weighted Outstanding at December 31, 2016 1,134,811 $ 24.06 $ 3.62 1,058,297 $ $ 414,691 $ 40.67 Granted — — — 468,875 50.25 Exercised/Vested (1) (552,146) 24.66 2.14 (154,965) 31.93 6.61 41.22 Cancelled/Expired — — — (2,000) (2) 40.49 Outstanding at September 30, 2017 582,665 $ 23.49 $ 5.03 1,370,207 $ 38.17 $ 7.80 442,996 $ 45.48 (1) This represents Class O units which were converted to Class A units and options to purchase Class A common stock which were exercised for their respective columns. This also represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy the holder’s federal and state tax obligations associated with the vesting of restricted common stock. (2) Includes restricted Class A common stock surrendered by certain employees to satisfy their federal and state tax obligations associated with the vesting of restricted common stock. The assumptions and fair values for restricted stock and options to purchase shares of Class A common stock granted for the nine months ended September 30, 2017 are included in the following table on a per unit basis (unaudited). Options to purchase shares of Class A common stock were valued using the Black-Scholes model. Nine Months Ended September 30, 2017 Fair value of restricted stock granted $48.63 - $51.88 Fair value of options granted $10.11 - $10.36 Expected term (years) 5.5 - 5.9 Expected volatility Expected dividend yield Expected risk-free interest rates 2.12% - 2.18% The following table summarizes information about awards outstanding as of September 30, 2017 (unaudited). Operating Partnership Awards Outstanding Exercise prices Awards Weighted average Class O Units $ 20.00 - 25.00 582,665 — Total Operating Partnership awards outstanding 582,665 QTS Realty Trust, Inc. Awards Outstanding Exercise prices Awards Weighted average Restricted stock $ — 1.8 Options to purchase Class A common stock $ 21.00 - 50.66 0.9 Total QTS Realty Trust, Inc. awards outstanding As of September 30, 2017, there were no Class RS units outstanding. Any remaining nonvested awards are valued as of the grant date and generally vest ratably over a defined service period. As of September 30, 2017 there were approximately 0.4 million and 0.6 million nonvested restricted Class A common stock and options to purchase Class A common stock outstanding, respectively. As of September 30, 2017 the Company had $21.7 million of unrecognized equity-based compensation expense which will be recognized over a remaining weighted-average vesting period of 1.1 years. The total intrinsic value of the awards outstanding at September 30, 2017 was $59.6 million. Dividends and Distributions The following tables present quarterly cash dividends and distributions paid to QTS’ common stockholders and the Operating Partnership’s unit holders for the nine months ended September 30, 2017 and 2016 (unaudited): Nine Months Ended September 30, 2017 Record Date Payment Date Per Common Share and Aggregate Dividend/Distribution Amount (in millions) June 16, 2017 July 6, 2017 $ 0.39 $ 21.6 March 16, 2017 April 5, 2017 $ 0.39 21.4 December 16, 2016 January 5, 2017 $ 0.36 19.7 $ 62.7 Nine Months Ended September 30, 2016 Record Date Payment Date Per Common Share and Aggregate Dividend/Distribution Amount (in millions) June 17, 2016 July 6, 2016 $ 0.36 $ 19.7 March 18, 2016 April 5, 2016 $ 0.36 17.4 December 17, 2015 January 6, 2016 $ 0.32 15.4 $ 52.5 Additionally, on October 5, 2017, the Company paid its regular quarterly cash dividend of $0.39 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on September 22, 2017. Equity Issuances In March 2017, the Company established an “at-the-market” equity offering program (the “ATM Program”) pursuant to which the Company may issue, from time to time, up to $300 million of its Class A common stock. During the three months ended September 30, 2017, the Company issued 1,015,332 shares of QTS’ Class A common stock under the ATM Program at a weighted average price of $53.65 per share which generated net proceeds of approximately $54 million. During the nine months ended September 30, 2017, the Company issued 1,761,681 shares of QTS’ Class A common stock under the ATM Program at a weighted average price of $53.63 per share which generated net proceeds of approximately $93 million. QTS Realty Trust, Inc. Employee Stock Purchase Plan In June 2015, the Company established the QTS Realty Trust, Inc. Employee Stock Purchase Plan (the “2015 Plan”) to give eligible employees the opportunity to purchase, through payroll deductions, shares of the Company’s Class A common stock in the open market by an independent broker with the Company paying the brokerage commissions and fees associated with such share purchases. The 2015 Plan became effective July 1, 2015. The Company reserved 250,000 shares of its Class A common stock for purchase under the 2015 Plan, which were registered pursuant to a registration statement on Form S-8 filed on June 17, 2015. On May 4, 2017, the stockholders of the Company approved an amendment and restatement of the Plan (the “2017 Plan”). The 2017 Plan became effective July 1, 2017 and is administered by the Compensation Committee of the board of directors (or by a committee of one or more persons appointed by it or the board of directors). The 2017 Plan permits participants to purchase the Company’s Class A common stock at a discount of up to 10% (as determined by the Compensation Committee). Employees of the Company and its majority-owned subsidiaries who have been employed for at least thirty days and who perform at least thirty hours of service per week for the Company are eligible to participate in the 2017 Plan, excluding any employee who, after exercising his or her rights to purchase shares under the 2017 Plan, would own shares representing five percent or more of the total combined voting power or value of all classes of shares of the Company, or who is a Section 16 officer. Under the 2017 Plan, there are four purchase periods per year, and participants may deduct a minimum of $20 per paycheck and a maximum of $1,000 per paycheck towards the purchase of shares. Shares purchased under the 2017 Plan are subject to a one-year holding period following the purchase date, during which they may not be sold or transferred. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
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 reimbursement for the use of a private aircraft service by the Company’s officers and directors. The transactions which occurred during the three and nine months ended September 30, 2017 and 2016 are outlined below (unaudited and in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Tax, utility, insurance and other reimbursement $ 118 $ 155 $ 467 $ 527 Rent expense 254 254 762 761 Capital assets acquired 32 24 384 191 Total $ 404 $ 433 $ 1,613 $ 1,479 |
Noncontrolling Interest
Noncontrolling Interest | 9 Months Ended |
Sep. 30, 2017 | |
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 as of the date of the IPO. Commencing at any time beginning November 1, 2014, at the election of the holders of the noncontrolling interest, the Class A units of the Operating Partnership are redeemable for cash or, at the election of the Company, Class A common stock of the Company on a one-for-one basis. As a result of approximately 0.5 million redemptions of Class A units into Class A common stock and the issuance of additional common stock, the noncontrolling ownership interest of QualityTech, LP, was 11.5% at September 30, 2017. |
Earnings per share of QTS Realt
Earnings per share of QTS Realty Trust, Inc. | 9 Months Ended |
Sep. 30, 2017 | |
Earnings per Share [Abstract] | |
Earnings per Share | 11. Earnings per share of QTS Realty Trust, Inc. Basic income per share is calculated by dividing the net income attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted income per share adjusts basic income per share for the effects of potentially dilutive common shares. The computation of basic and diluted net income per share is as follows (in thousands, except per share data, and unaudited): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Numerator: Net income available to common stockholders - basic $ 6,507 $ 5,730 $ 15,424 $ 16,719 Effect of net income attributable to noncontrolling interests and income allocated to participating securities 684 808 1,496 2,485 Net income available to common stockholders $ 7,191 $ 6,538 $ 16,920 $ 19,204 Denominator: Weighted average shares outstanding - basic 48,714 47,855 47,862 45,651 Effect of Class A and Class RS partnership units 6,669 6,767 6,744 6,787 Effect of Class O units and options to purchase Class A common stock and restricted Class A common stock on an "as if" converted basis * 788 1,066 799 982 Weighted average shares outstanding - diluted 56,171 55,688 55,405 53,420 Basic net income per share $ 0.13 $ 0.12 $ 0.31 $ 0.37 Diluted net income per share $ 0.13 $ 0.12 $ 0.31 $ 0.36 * The Class A units and Class O units represent limited partnership interests in the Operating Partnership, and are described in more detail in Note 8. No securities were antidilutive for the three and nine months ended September 30, 2017 and 2016, and as such, no securities were excluded from the computation of diluted net income per share for those periods. |
Customer Leases, as Lessor
Customer Leases, as Lessor | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Customer Leases, as Lessor | 12. Customer Leases, as Lessor Future minimum lease payments to be received under non-cancelable operating customer leases (inclusive of payments for contracts which have not yet commenced, and exclusive of recoveries of operating costs from customers) are as follows for the years ending December 31 (unaudited and in thousands): 2017 (October - December) $ 91,771 2018 310,606 2019 222,798 2020 164,134 2021 131,335 Thereafter 168,089 Total $ 1,088,733 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
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 approximate fair value. Interest rate swaps: The effective portion of changes in the fair value of the Company’s interest rate swaps, which are derivatives designated and that qualify as cash flow hedges, is recorded in accumulated other comprehensive income or loss on the condensed consolidated balance sheets and statement of comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. There was no ineffectiveness recognized for the three and nine months ended September 30, 2017, therefore the entire $1.8 million unrealized loss for the nine months ended September 30, 2017 related to the interest rate swaps was recorded in accumulated other comprehensive loss. No amounts were recorded in other comprehensive income or loss on the consolidated financial statements as of and for the three and nine months ended September 30, 2016. The $1.8 million interest rate swap liability as of September 30, 2017 is recorded within the condensed consolidated balance sheet as Advance rents, security deposits and other liabilities. The Company valued its interest rate swaps utilizing Level 2 and Level 3 inputs. 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 majority of the inputs used to determine the fair value of the interest rate swaps fall within Level 2 of the fair value hierarchy while certain credit valuation adjustments to the fair value utilize Level 3 inputs such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of September 30, 2017, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The Company does not have any fair value measurements on a recurring basis using significant unobservable inputs (Level 3) as of September 30, 2017 or December 31, 2016. Credit facility and Senior Notes: The Company’s unsecured credit facility did not have interest rates which were materially different than current market conditions and therefore, the fair value approximated the carrying value. The fair value of the Company’s Senior Notes was estimated using Level 2 “significant other observable inputs,” primarily based on quoted market prices for the same or similar issuances. At September 30, 2017, the fair value of the Senior Notes was approximately $311.1 million. Other debt instruments: The fair value of the Company’s other debt instruments (including capital leases, lease financing obligations and mortgage notes payable) were estimated in the same manner as the unsecured credit facility above. Similarly, each of these instruments did not have interest rates which were materially different than current market conditions and therefore, the fair value of each instrument approximated the respective carrying values. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events On October 5, 2017, the Company paid its regular quarterly cash dividend of $0.39 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on September 22, 2017. Additionally, in October 2017, the Company completed the following transactions: · The Company completed the acquisition of approximately 92 acres of land in Hillsboro, Oregon at a purchase price of approximately $26 million. · The Company completed the acquisition of approximately 28 acres of land in Ashburn, Virginia for approximately $36 million. · The Company completed the buyout of its Vault Campus in Dulles, Virginia. The Company previously leased the property under a capital lease agreement of approximately $17.8 million and purchased it for approximately $34.1 million cash, for a net purchase price of $16.3 million. · The Operating Partnership, Quality Tech, LP, and QTS Finance Corporation (collectively, the “Issuers”), the Company and certain of its other subsidiaries entered into a purchase agreement pursuant to which the Issuers expect to issue $400 million aggregate principal amount of 4.75% senior notes due November 15, 2025 (the “Notes”) in a private offering. The Notes will have an interest rate of 4.750% per annum and will be issued at a price equal to 100% of their face value. The net proceeds from the offering are expected to be used to fund the redemption of, and satisfy and discharge the indenture pursuant to which the Issuers issued, all of their outstanding 5.875% Senior Notes due 2022 and to repay a portion of the amount outstanding under the Company’s unsecured revolving credit facility. The Notes will be offered and sold only to qualified institutional buyers in the U.S. pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons outside the U.S. pursuant to Regulation S under the Securities Act. The Company will pay one-time fees in the fourth quarter of 2017 associated with issuance of the Notes, including a call premium to redeem the 5.875% Senior Notes due 2022. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in compliance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes and management’s discussion and analysis included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 1, 2017. The consolidated balance sheet data included herein as of December 31, 2016 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying financial statements are presented for both QTS Realty Trust, Inc. and QualityTech, LP. References to “QTS” mean QTS Realty Trust, Inc. and its controlled subsidiaries and references to the “Operating Partnership” mean QualityTech, LP and its controlled subsidiaries. In 2016, the Company adopted ASU 2015-02, Amendments to the Consolidation Analysis. This standard amends certain guidance applicable to the consolidation of various legal entities, including variable interest entities (“VIE”). The Company evaluated the application of the ASU and concluded that no change was required to its accounting for its interest in the Operating Partnership. However, under the new guidance, the Operating Partnership now meets the definition and criteria of a VIE and the Company is the primary beneficiary of the VIE. As discussed below, QTS’ only material asset is its ownership interest in the Operating Partnership, and consequently, all of its assets and liabilities represent those assets and liabilities of the Operating Partnership. QTS’ debt is an obligation of the Operating Partnership where the creditors may have recourse, under certain circumstances, against the credit of QTS. QTS is the sole general partner of the Operating Partnership, and its only material asset consists of its ownership interest in the Operating Partnership. Management operates QTS and the Operating Partnership as one business. The management of QTS consists of the same employees as the management of the Operating Partnership. QTS does not conduct business itself, other than acting as the sole general partner of the Operating Partnership and issuing public equity from time to time. QTS has not issued or guaranteed any indebtedness. Except for net proceeds from public equity issuances by QTS, which are contributed to the Operating Partnership in exchange for units of limited partnership interest of the Operating Partnership, the Operating Partnership generates all remaining capital required by the business through its operations, the direct or indirect incurrence of indebtedness, and the issuance of partnership units. Therefore, as general partner with control of the Operating Partnership, QTS consolidates the Operating Partnership for financial reporting purposes. The Company believes, therefore, that providing one set of notes for the financial statements of QTS and the Operating Partnership provides the following benefits: · enhances investors’ understanding of QTS and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; · eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both QTS and the Operating Partnership; and · creates time and cost efficiencies through the preparation of one set of notes instead of two separate sets of notes. In addition, in light of these combined notes, the Company believes it is important for investors to understand the few differences between QTS and the Operating Partnership in the context of how QTS and the Operating Partnership operate as a consolidated company. With respect to balance sheets, the presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated balance sheets of QTS and those of the Operating Partnership. On the Operating Partnership’s consolidated balance sheets, partners’ capital includes partnership units that are owned by QTS and other partners. On QTS’ consolidated balance sheets, stockholders’ equity includes common stock, additional paid in capital, and accumulated dividends in excess of earnings. The remaining equity reflected on QTS’s consolidated balance sheet is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. With respect to statements of operations, the primary difference in QTS' Statements of Operations is that for net income, QTS retains its proportionate share of the net income based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership. These combined notes refer to actions or holdings as being actions or holdings of “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, management believes that these general references to “the Company” in this context is appropriate because the business is one enterprise operated through the Operating Partnership. As discussed above, QTS owns no operating assets and has no operations independent of the Operating Partnership and its subsidiaries. Also, the Operating Partnership owns no operating assets and has no operations independent of its subsidiaries. Obligations under the 5.875% Senior Notes due 2022 and the unsecured credit facility, both discussed in Note 6, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries, other than 1) 2470 Satellite Boulevard, LLC, a subsidiary formed in December 2015 that acquired an office building in Duluth, Georgia and has de minimis assets and operations, 2) seven other subsidiaries that own vacant land purchased during or subsequent to the three months ended September 30, 2017, or were formed in connection with such land purchases, and have de minimis assets and operations and 3) with respect to the 5.875% Senior Notes due 2022 only, QTS Finance Corporation, the co-issuer of the 5.875% Senior Notes due 2022. As such, consolidating financial information for the guarantors is not being presented in the notes to the interim 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 “Code”). The interim consolidated financial statements of QTS Realty Trust, Inc. for the three and nine months ended September 30, 2017 and 2016, and as of September 30, 2017 and December 31, 2016 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 consolidated financial statements. |
Reclassifications | Reclassifications – The consolidated statement of cash flows for the nine months ended September 30, 2016 reflects a reclassification of $0.9 million from “ Payment of Tax Withholdings related to Equity Based Awards” to “Proceeds from Exercise of Stock Options” in accordance with the Company’s adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting as of January 1, 2017 with retrospective application of this provision. |
Real Estate Assets | Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation for real estate assets is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended September 30, 2017, depreciation expense related to real estate assets and non-real estate assets was $22.6 million and $3.3 million, respectively, for a total of $25.9 million. For the three months ended September 30, 2016, depreciation expense related to real estate assets and non-real estate assets was $20.4 million and $3.4 million, respectively, for a total of $23.8 million. For the nine months ended September 30, 2017, depreciation expense related to real estate assets and non-real estate assets was $66.1 million and $10.3 million, respectively, for a total of $76.4 million. For the nine months ended September 30, 2016, depreciation expense related to real estate assets and non-real estate assets was $57.6 million and $9.5 million, respectively, for a total of $67.1 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 $3.6 million and $2.8 million for the three months ended September 30, 2017 and 2016, respectively, and $9.5 million and $9.1 million for the nine months ended September 30, 2017 and 2016, 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 $3.6 million and $2.5 million for the three months ended September 30, 2017 and 2016, respectively, and $9.9 million and $8.4 million for the nine months ended September 30, 2017 and 2016, respectively. |
Acquisitions | Acquisitions – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances. Purchase accounting is applied to the assets and liabilities related to all real estate investments acquired in accordance with the accounting requirements of ASC 805, Business Combinations , which requires the recording of net assets of acquired businesses at fair value. The fair value of the consideration transferred is allocated to the acquired tangible assets, consisting primarily of land, construction in progress, building and improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases, value of customer relationships, trade names, software intangibles and capital leases. The excess of the fair value of liabilities assumed, common stock issued and cash paid over the fair value of identifiable assets acquired is allocated to goodwill, which is not amortized by the Company. In developing estimates of fair value of acquired assets and assumed liabilities, management analyzes a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets. Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. This amortization expense is accounted for as real estate amortization expense. Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. This amortization expense is accounted for as real estate amortization expense. Other acquired intangible assets, which includes platform, above or below market leases, and trade name intangibles, are amortized on a straight-line basis over their respective expected lives. Above or below market leases are amortized as a reduction to or increase in rental revenue as well as a reduction to rent expense over the remaining lease terms in the case of the Company as lessor. The expense associated with above and below market leases and trade name intangibles is accounted for as real estate expense, whereas the expense associated with the amortization of platform intangibles is accounted for as non-real estate expense. See Note 3 for discussion of the final purchase price allocation for the Piscataway, New Jersey facility (the “Piscataway facility”) that the Company acquired on June 6, 2016 as well as the preliminary purchase price allocation for the Fort Worth, Texas facility (the “Fort Worth facility”) that the Company acquired on December 16, 2016. |
Impairment of Long-Lived and Intangible Assets | Impairment of Long-Lived Assets, Intangible Assets and Goodwill – The Company reviews its long-lived assets and intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset exceeds the value of the undiscounted cash flows, the fair value of the asset is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three and nine months ended September 30, 2017 and 2016, respectively. The fair value of goodwill is the consideration transferred which is not allocable to identifiable intangible and tangible assets. Goodwill is subject to at least an annual assessment for impairment. As a result of the Carpathia Hosting, Inc. (“Carpathia”) acquisition, the Company recognized approximately $173.8 million in goodwill. In connection with the goodwill impairment evaluation that the Company performed on October 1, 2016, the Company determined qualitatively that there were no indicators of impairment, thus it did not perform a quantitative analysis. |
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 does not believe that the risk is significant. |
Deferred Costs | Deferred Costs – Deferred costs, net, on the Company’s balance sheets include both financing costs and leasing costs. Deferred financing costs represent fees and other costs incurred in connection with obtaining debt and are amortized over the term of the loan and are included in interest expense. Debt issuance costs related to revolving debt arrangements are deferred and presented as assets on the balance sheet; however, all other debt issuance costs are recorded as a direct offset to the associated liability. Amortization of debt issuance costs, including those costs presented as offsets to the associated liability in the consolidated balance sheet, was $0.9 million and $0.8 million for the three months ended September 30, 2017 and 2016, respectively, and $2.7 million and $2.4 million for the nine months ended September 30, 2017 and 2016, respectively. Deferred financing costs presented as assets on the balance sheet related to revolving debt arrangements, net of accumulated amortization, are as follows: September 30, December 31, (dollars in thousands) 2017 2016 (unaudited) Deferred financing costs $ 7,132 $ 7,128 Accumulated amortization (1,453) (145) Deferred financing costs, net $ 5,679 $ 6,983 Deferred financing costs presented as offsets to the associated liabilities on the balance sheet related to fixed debt arrangements, net of accumulated amortization, are as follows: September 30, December 31, (dollars in thousands) 2017 2016 (unaudited) Deferred financing costs $ 12,943 $ 12,779 Accumulated amortization (4,089) (2,660) Deferred financing costs, net $ 8,854 $ 10,119 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 $4.8 million and $3.7 million for the three months ended September 30, 2017 and 2016, respectively, and $13.5 million and $10.8 million for the nine months ended September 30, 2017 and 2016, respectively. Deferred leasing costs, net of accumulated amortization, are as follows: September 30, December 31, (dollars in thousands) 2017 2016 (unaudited) Deferred leasing costs $ 54,411 $ 50,026 Accumulated amortization (21,918) (18,502) Deferred leasing costs, net $ 32,493 $ 31,524 |
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 $22.5 million and $22.0 million as of September 30, 2017 and December 31, 2016, respectively. Additionally, $2.7 million and $2.4 million of deferred income was amortized into revenue for the three months ended September 30, 2017 and 2016, respectively, and $7.7 million and $6.5 million for the nine months ended September 30, 2017 and 2016, respectively. |
Equity-based Compensation | Equity-based Compensation – All equity-based compensation is measured at fair value on the grant date, 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 was $3.7 million and $2.6 million for the three months ended September 30, 2017 and 2016, respectively, and $10.5 million and $7.9 million for the nine months ended September 30, 2017 and 2016, 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 $21.1 million and $17.3 million as of September 30, 2017 and December 31, 2016, respectively. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed above. |
Cloud and Managed Services Revenue | Cloud and Managed Services Revenue – The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. |
Allowance for Uncollectible Accounts Receivable | Allowance for Uncollectible Accounts Receivable – Rents receivable are recognized when due and are carried at cost, less an allowance for doubtful accounts. The Company records a provision for losses on rents receivable equal to the estimated uncollectible accounts, which is based on management’s historical experience and a review of the current status of the Company’s receivables. As necessary, the Company also establishes an appropriate allowance for doubtful accounts for receivables arising from the straight-lining of rents. The aggregate allowance for doubtful accounts was $5.7 million and $4.2 million as of September 30, 2017 and December 31, 2016, respectively. |
Capital Leases and Lease Financing Obligations | Capital Leases and Lease Financing Obligations – The Company evaluates leased real estate to determine whether the lease should be classified as a capital or operating lease in accordance with U.S. GAAP. The Company periodically enters into capital leases for certain equipment. In addition, through its acquisition of Carpathia Hosting, Inc. on June 16, 2015, the Company is party to capital leases for property and equipment, as well as financing obligations related to a sale-leaseback transaction. The outstanding liabilities for the capital leases were $10.0 million and $18.1 million as of September 30, 2017 and December 31, 2016, respectively. The outstanding liabilities for the lease financing obligations were $18.8 million and $20.6 million as of September 30, 2017 and December 31, 2016, respectively. The net book value of the assets associated with these leases was approximately $33.2 million and $41.5 million as of September 30, 2017 and December 31, 2016, respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations. See Note 6 for further discussion of capital leases and lease financing obligations. |
Recoveries from Customers | Recoveries from Customers – Certain customer leases contain provisions under which the customers reimburse the Company for a portion of the property’s real estate taxes, insurance and other operating expenses, which include certain power and cooling-related charges. The reimbursements are included in revenue as recoveries from customers in the Statements of Operations in the period the applicable expenditures are incurred. Certain customer leases are structured to provide a fixed monthly billing amount that includes an estimate of various operating expenses, with all revenue from such leases included in rental revenues. |
Segment Information | Segment Information – The Company manages its business as one operating segment and thus one reportable segment consisting of a portfolio of investments in data centers located primarily in the United States with others in Canada, Europe and Asia. |
Customer Concentrations | Customer Concentrations – As of September 30, 2017, one of the Company’s customers represented 12.5% of its total monthly rental revenue. No other customers exceeded 5% of total monthly rental revenue. As of September 30, 2017, five of the Company’s customers exceeded 5% of total accounts receivable. In aggregate, these five customers accounted for approximately 44% of total accounts receivable. Two of these five customers exceeded 10% of total accounts receivable. |
Income Taxes | Income Taxes – The Company has elected for two of its existing subsidiaries, Quality Technology Services Holdings, LLC and QTS Finance Corporation, to be taxed as taxable REIT subsidiaries pursuant to the REIT rules of the U.S. Internal Revenue Code. For the taxable REIT subsidiaries, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of December 31, 2014, one of the Company’s taxable REIT subsidiaries’ deferred tax assets were primarily the result of U.S. net operating loss carryforwards. A valuation allowance was recorded against its gross deferred tax asset balance as of December 31, 2014. As a result of the acquisition of Carpathia, the Company determined that it is more likely than not that pre-existing deferred tax assets would be realized by the Company, and the valuation allowance was eliminated. The change in the valuation allowance resulting from the change in circumstances was included in income, and recognized as a deferred income tax benefit in the year ended December 31, 2015. A deferred tax benefit has been recognized in subsequent periods, including in the nine months ended September 30, 2017, in connection with recorded operating losses. As of September 30, 2017, this taxable REIT subsidiary has a net deferred tax liability position primarily due to customer-based intangibles acquired as part of the Carpathia acquisition. The Company provides for income taxes during interim periods based on the estimated effective tax rate for the year. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the taxable REIT subsidiary, tax law changes and future business acquisitions. The taxable REIT subsidiary’s effective tax rates were 46.4% and 48.9% for the nine months ended September 30, 2017 and 2016, respectively. |
Interest Rate Swaps | Interest Rate Swaps – On April 2017, the Company entered into forward interest rate swap agreements with an aggregate notional amount of $400 million. The forward swap agreements effectively will fix the interest rate on $400 million of term loan borrowings from January 2, 2018 through the current maturity dates, which are December 17, 2021 and April 27, 2022 ($200 million of swaps allocated to each term loan). The Company reflects its forward interest rate swap agreements, which are designated as cash flow hedges, at fair value as either assets or liabilities on the consolidated balance sheets. The forward interest rate swap agreements currently qualify for hedge accounting whereby the Company records the effective portion of the gain or loss on the hedging instruments as a component of accumulated other comprehensive income or loss. Any ineffective portion of a derivative's change in fair value is immediately recognized within net income. |
Fair Value Measurements | Fair Value Measurements – ASC Topic 820, Fair Value Measurement , emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy is established that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. As of September 30, 2017, the Company valued its interest rate swaps which were entered into in April 2017 utilizing Level 2 and Level 3 inputs. There were no financial assets or liabilities measured at fair value on a recurring basis on the consolidated balance sheets as of December 31, 2016. The Company’s purchase price allocations of Piscataway and Fort Worth are fair value estimates that utilized Level 3 inputs and are measured on a non-recurring basis. See Note 3 for further detail on these acquisitions. |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , which supersedes the current revenue recognition requirements in ASC 605, Revenue Recognition . Under this new guidance, entities should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This ASU also requires enhanced disclosures. In April 2016, the FASB finalized amendments to the guidance on identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB finalized amendments to the guidance related to the assessment of collectability, the definition of completed contracts at transition, and the measurement of the fair value of non-cash consideration at contract inception. The FASB also added new practical expedients for the presentation of sales taxes collected from customers and the accounting for contract modifications at transition. These amendments are not intended to change the core principles of the standard; however, they are intended to clarify important aspects of the guidance and improve its operability, as well as to address implementation issues. The amendments have the same effective date and transition requirements as the new revenue standard, which is effective for annual and interim periods beginning after December 15, 2017. Retrospective and modified retrospective application is allowed. The Company will adopt ASC Topic 606 effective January 1, 2018, and expects to elect the modified retrospective transition approach. The Company is currently evaluating the impact that the adoption of the standard will have on the consolidated financial statements. As leasing arrangements are excluded from the scope of ASC Topic 606, the Company expects that the new revenue standard will primarily affect its accounting policies related to non-lease components and is finalizing its analysis of those impacts but currently does not expect the new standard to materially change the pattern of recognition for the Company’s revenue that will be accounted for under ASC 606. The new revenue standard does require allocation of consideration to lease and non-lease components and, as a result, the Company does anticipate changes to its classification and disclosure of revenues under ASC 606 and is continuing to evaluate the allocation between lease and non lease components required under the new revenue standard. ASC Topic 606 also consolidates and simplifies the accounting for the Company’s cloud and managed services portfolio. The Company does not expect the new standard to materially change the timing or amounts of revenue recognized related to the Company’s cloud and managed services portfolio. The Company is continuing to evaluate the other impacts of the revenue standard and related cost guidance on its significant accounting policies and consolidated financial statements. The Company will disclose any changes to this analysis as identified. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which supersedes the current lease guidance in ASC 840, Lease s. The core principle of Topic 842 requires lessees to recognize the assets and liabilities that arise from nearly all leases in the statement of financial position. Accounting applied by lessors will remain largely consistent with previous guidance, with additional changes set to align lessor accounting with the revised lessee model and the FASB’s revenue recognition guidance in Topic 606. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, early adoption is permitted. The standard requires a modified retrospective transition approach. The Company plans to adopt ASC 842 effective January 1, 2019, and is in the process of evaluating the impact of the standard. As part of this analysis the Company is analyzing its lease portfolio as lessor and lessee and evaluating systems to comply with the standard’s retrospective adoption requirements. The new lease standard more narrowly defines initial direct costs as only costs that are incremental at the signing of a lease. As the Company does not currently capitalize material non-incremental costs, it expects the impact of this change to be immaterial to the financial statements. As lessee the Company does not anticipate the classification of its leases to change but it will recognize a new initial lease liability and right-of-use asset on the consolidated balance sheet for all operating leases which is expected to be material to our consolidated balance sheet. The Company will disclose any changes to this analysis as identified. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which amends ASC 718, Compensation – Stock Compensation . The ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements, including simplified income tax accounting for stock-based compensation, enhanced tax withholding rules, accounting policy options with regard to forfeitures and clarified guidance on statement of cash flow presentation. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company adopted this standard in the three months ended March 31, 2017, and provisions of the standard did not have a material impact on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . The standard provides guidance on eight specific cash flow classification issues including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, and separately identifiable cash flows and application of the predominance principle. The standard will be effective for fiscal years beginning January 1, 2018, and subsequent interim periods. The Company does not expect the provisions of the standard will have a material impact on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory . Under current U.S. GAAP, the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use. The new guidance eliminates the exception for all intra-entity sales of assets other than inventory. As a result, a reporting entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The new guidance will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted, but the guidance can only be adopted in the first interim period of a fiscal year. The Company is currently assessing the impact of this standard on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . The standard changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. As a result of this new guidance, acquisitions may now be more likely to result in a transaction being classified as an asset purchase rather than a business combination. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The new guidance eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The guidance will be applied prospectively and is effective for calendar year-end public companies in 2020, with early adoption permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company does not expect the provisions of the standard will have a material impact on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting . The provisions in the update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The guidance seeks to provide clarity and reduce both diversity in practice and cost and complexity when changing the terms or conditions of a share-based payment award. The guidance will be applied prospectively and is effective for all entities for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company is currently assessing the impact of this standard on its consolidated financial statements. In August 2017, the FASB issued ASU 2017-12; Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in ASU 2017-12 change the recognition and presentation requirements of hedge accounting, including the elimination of the requirement to separately measure and report hedge ineffectiveness and the addition of a requirement to present all items that affect earnings in the same income statement line item as the hedged item. ASU 2017-12 also provides new alternatives for: applying hedge accounting to additional hedging strategies; measuring the hedged item in fair value hedges of interest rate risk; reducing the cost and complexity of applying hedge accounting by easing the requirements for effectiveness testing, hedge documentation and application of the critical terms match method; and reducing the risk of material error correction if a company applies the shortcut method inappropriately. The guidance is effective for public entities for fiscal years beginning after December 18, 2018, and interim periods within those fiscal years. Early application is permitted. The Company does not expect the provisions of the standard will have a material impact on its consolidated financial statements. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Deferred Financing Costs, Net of Accumulated Amortization | September 30, December 31, (dollars in thousands) 2017 2016 (unaudited) Deferred financing costs $ 7,132 $ 7,128 Accumulated amortization (1,453) (145) Deferred financing costs, net $ 5,679 $ 6,983 |
Deferred Leasing Costs, Net of Accumulated Amortization | September 30, December 31, (dollars in thousands) 2017 2016 (unaudited) Deferred leasing costs $ 54,411 $ 50,026 Accumulated amortization (21,918) (18,502) Deferred leasing costs, net $ 32,493 $ 31,524 |
Fixed debt arrangements | |
Deferred Financing Costs, Net of Accumulated Amortization | September 30, December 31, (dollars in thousands) 2017 2016 (unaudited) Deferred financing costs $ 12,943 $ 12,779 Accumulated amortization (4,089) (2,660) Deferred financing costs, net $ 8,854 $ 10,119 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Schedule of the Preliminary Allocation of the Fair Value of Assets Acquired and Liabilities Assumed in Acquisition | The following table summarizes the consideration for the Fort Worth facility and the preliminary allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (unaudited and in thousands). This allocation is subject to change pending the final valuation of these assets and liabilities: Fort Worth Allocation as of September 30, 2017 Original Allocation Reported as of December 31, 2016 Adjusted Fair Value Land $ 136 $ 136 $ — Buildings and improvements 610 610 — Construction in progress 48,987 48,984 3 Acquired intangibles 237 240 (3) Deferred costs 23 23 — Other assets 7 7 — Net Working Capital 86 86 — Total identifiable assets acquired $ 50,086 $ 50,086 $ — |
Piscataway Facility | |
Schedule of the Preliminary Allocation of the Fair Value of Assets Acquired and Liabilities Assumed in Acquisition | In June 2017, the Company finalized the Piscataway purchase price allocation. The following table summarizes the Piscataway acquisition and the final allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (unaudited and in thousands): Final Piscataway Allocation as of June 30, 2017 Original Allocation Reported as of June 30, 2016 Adjusted Fair Value Land $ 7,466 $ 7,440 $ 26 Buildings and improvements 80,366 78,370 1,996 Construction in progress 13,900 13,900 — Acquired intangibles 19,581 21,668 (2,087) Deferred costs 4,390 4,084 306 Other assets 106 106 — Total identifiable assets acquired 125,809 125,568 241 Acquired below market lease 809 568 241 Net working capital 2,019 2,019 — Total liabilities assumed 2,828 2,587 241 Net identifiable assets acquired $ 122,981 $ 122,981 $ — |
Acquired Intangibles Assets a25
Acquired Intangibles Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Acquired Intangible Assets and Liabilities | |
Schedule of carrying values for the major classes of intangible assets and liabilities | Summarized below are the carrying values for the major classes of intangible assets and liabilities (unaudited and in thousands): September 30, 2017 December 31, 2016 Useful Lives Gross Accumulated Net Carrying Gross Accumulated Net Carrying Customer Relationships 1 to 12 years $ 95,705 $ (18,524) $ 77,181 $ 95,705 $ (12,358) $ 83,347 In-Place Leases 0.5 to 10 years 32,066 (11,679) 20,387 32,066 (7,197) 24,869 Solar Power Agreement (1) 17 years 13,747 (2,628) 11,119 13,747 (2,022) 11,725 Platform Intangible 3 years 9,600 (7,333) 2,267 9,600 (4,933) 4,667 Acquired Favorable Leases 0.5 to 8 years 4,649 (2,049) 2,600 4,652 (1,013) 3,639 Tradenames 3 years 3,100 (2,368) 732 3,100 (1,593) 1,507 Total Intangible Assets $ 158,867 $ (44,581) $ 114,286 $ 158,870 $ (29,116) $ 129,754 Solar Power Agreement (1) 17 years 13,747 (2,628) 11,119 13,747 (2,022) 11,725 Acquired Unfavorable Leases Acquired below market leases - as Lessor 3 to 4 years 809 (316) 493 809 (138) 671 Acquired above market leases - as Lessee 11 to 12 years 2,453 (496) 1,957 2,453 (334) 2,119 Total Intangible Liabilities (2) $ 17,009 $ (3,440) $ 13,569 $ 17,009 $ (2,494) $ 14,515 (1) Amortization related to the Solar Power Agreement asset and liability is recorded at the same rate and therefore has no net impact on the statement of operations. (2) Intangible liabilities are included within the “Advance rents, security deposits and other liabilities” line item of the consolidated balance sheets. |
Schedule of estimated amortization of acquired favorable and unfavorable leases | The estimated amortization of acquired favorable and unfavorable leases for each of the five succeeding fiscal years ending December 31 is as follows (unaudited and in thousands): Net Rental Revenue Decreases Rental Expense 2017 (October - December) $ 220 $ 54 2018 682 216 2019 479 216 2020 647 216 2021 46 216 Thereafter 33 1,039 Total $ 2,107 $ 1,957 |
Schedule of estimated amortization of all other identified intangible assets | The estimated net amortization of all other identified intangible assets and liabilities for each of the five succeeding fiscal years ending December 31 is as follows (unaudited and in thousands): 2017 (October - December) $ 4,353 2018 14,574 2019 11,965 2020 11,379 2021 10,137 Thereafter 48,159 Total $ 100,567 |
Real Estate Assets and Constr26
Real Estate Assets and Construction in Progress (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Real Estate Assets and Construction in Progress [Abstract] | ||
Summary of Properties Owned or Leased by the Company | The following is a summary of properties owned or leased by the Company as of September 30, 2017 and December 31, 2016 (in thousands): As of September 30, 2017 (unaudited): Property Location Land Buildings, Construction Total Cost Atlanta, Georgia (Atlanta-Metro) $ 20,416 $ 450,128 $ 24,269 $ 494,813 Richmond, Virginia 2,180 253,346 61,257 316,783 Irving, Texas 8,606 259,999 68,478 337,083 Suwanee, Georgia (Atlanta-Suwanee) 3,521 169,625 2,876 176,022 Chicago, Illinois 9,400 80,737 125,350 215,487 Leased Facilities * 1,130 123,052 11,000 135,182 Piscataway, New Jersey 7,466 82,571 36,250 126,287 Santa Clara, California ** — 100,565 6,909 107,474 Sacramento, California 1,481 62,529 1,868 65,878 Princeton, New Jersey 20,700 32,823 469 53,992 Fort Worth, Texas 9,079 17,587 32,611 59,277 Ashburn, Virginia — — 32,829 32,829 Phoenix, Arizona — — 25,091 25,091 Other *** 2,213 35,541 133 37,887 $ 86,192 $ 1,668,503 $ 429,390 $ 2,184,085 * Includes 13 facilities. All facilities are leased, including those subject to capital leases. During the quarter ended March 31, 2017, the Company moved its Jersey City, NJ facility to the “Leased facilities” line item. In October 2017, the Company finalized the buyout of the Vault facility in Dulles, VA that was previously subject to a capital lease agreement. As the purchase occurred subsequent to September 30, 2017, the Vault facility is included within the “Leased Facilities” line item herein. ** Owned facility subject to long-term ground sublease. *** Consists of Miami, FL; Lenexa, KS and Overland Park, KS facilities. During the quarter ended June 30, 2017, fixed assets and the associated accumulated depreciation related to the Duluth, GA facility (comprised of $1.9 million of land, $8.7 million of buildings, improvements, and equipment, and $0.1 million of construction in progress) were moved from Real Estate Assets, net to Other assets, net on the Consolidated Balance Sheet as the facility was transitioned to corporate office space. | As of December 31, 2016: Property Location Land Buildings, Construction Total Cost Atlanta, Georgia (Atlanta-Metro) $ 15,397 $ 434,965 $ 32,422 $ 482,784 Richmond, Virginia 2,180 237,347 70,580 310,107 Irving, Texas 8,606 204,713 69,653 282,972 Suwanee, Georgia (Atlanta-Suwanee) 3,521 171,376 2,013 176,910 Chicago, Illinois 9,400 45,848 100,623 155,871 Leased Facilities * 1,130 116,290 10,003 127,423 Piscataway, New Jersey 7,466 82,210 17,261 106,937 Santa Clara, California ** — 98,708 7,078 105,786 Sacramento, California 1,481 62,102 390 63,973 Princeton, New Jersey 20,700 32,788 538 54,026 Fort Worth, Texas 136 610 49,116 49,862 Other *** 4,113 37,810 6,283 48,206 $ 74,130 $ 1,524,767 $ 365,960 $ 1,964,857 * Includes 13 facilities. All facilities are leased, including those subject to capital leases. During the quarter ended March 31, 2017, the Company moved its Jersey City, NJ facility to the “Leased facilities” line item, therefore has conformed December 31, 2016 information to comparable categories. In October 2017, the Company finalized the buyout of the Vault facility in Dulles, VA that was previously subject to a capital lease agreement. As the purchase occurred subsequent to September 30, 2017, the Vault facility is included within the “Leased Facilities” line item herein. ** Owned facility subject to long-term ground sublease. *** Consists of Miami, FL; Lenexa, KS; Overland Park, KS; and Duluth, GA facilities. |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt [Abstract] | |
Outstanding Debt Including Capital Leases and Lease Financing Obligations | Below is a listing of the Company’s outstanding debt, including capital leases and lease financing obligations, as of September 30, 2017 and December 31, 2016 (in thousands): Weighted Average Coupon Interest Rate at September 30, December 31, September 30, 2017 Maturities 2017 2016 (unaudited) (unaudited) Unsecured Credit Facility Revolving Credit Facility 2.78% December 17, 2020 $ 279,000 $ 139,000 Term Loan I 2.74% December 17, 2021 300,000 300,000 Term Loan II 2.74% April 27, 2022 200,000 200,000 Senior Notes 5.88% August 1, 2022 300,000 300,000 Lenexa Mortgage 4.10% May 1, 2022 1,882 — Capital Lease and Lease Financing Obligations 3.87% 2017 - 2025 28,843 38,708 3.63% 1,109,725 977,708 Less discount and net debt issuance costs (10,410) (11,882) Total outstanding debt, net $ 1,099,315 $ 965,826 |
Annual Remaining Principal Payment | The annual remaining principal payment requirements as of September 30, 2017 per the contractual maturities and excluding extension options, capital leases and lease financing obligations, are as follows (unaudited and in thousands): 2017 (October - December) $ 11 2018 65 2019 68 2020 279,071 2021 300,074 Thereafter 501,593 Total $ 1,080,882 |
Schedule of Combined Future Payment Obligations, Excluding Interest | The following table summarizes the Company’s combined future payment obligations, excluding interest, as of September 30, 2017, on the capital leases and lease financing obligations above (unaudited and in thousands): 2017 (October - December) $ 3,078 2018 9,370 2019 2,844 2020 2,190 2021 2,388 Thereafter 8,973 Total $ 28,843 |
Partners' Capital, Equity and28
Partners' Capital, Equity and Incentive Compensation Plans (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 nine months ended September 30, 2017 (unaudited) : 2010 Equity Incentive Plan 2013 Equity Incentive Plan Number of Weighted Weighted Options Weighted Weighted Restricted Weighted Outstanding at December 31, 2016 1,134,811 $ 24.06 $ 3.62 1,058,297 $ $ 414,691 $ 40.67 Granted — — — 468,875 50.25 Exercised/Vested (1) (552,146) 24.66 2.14 (154,965) 31.93 6.61 41.22 Cancelled/Expired — — — (2,000) (2) 40.49 Outstanding at September 30, 2017 582,665 $ 23.49 $ 5.03 1,370,207 $ 38.17 $ 7.80 442,996 $ 45.48 (1) This represents Class O units which were converted to Class A units and options to purchase Class A common stock which were exercised for their respective columns. This also represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy the holder’s federal and state tax obligations associated with the vesting of restricted common stock. (2) Includes restricted Class A common stock surrendered by certain employees to satisfy their federal and state tax obligations associated with the vesting of restricted common stock. |
Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted | Nine Months Ended September 30, 2017 Fair value of restricted stock granted $48.63 - $51.88 Fair value of options granted $10.11 - $10.36 Expected term (years) 5.5 - 5.9 Expected volatility Expected dividend yield Expected risk-free interest rates 2.12% - 2.18% |
Summary of Information About Awards Outstanding | The following table summarizes information about awards outstanding as of September 30, 2017 (unaudited). Operating Partnership Awards Outstanding Exercise prices Awards Weighted average Class O Units $ 20.00 - 25.00 582,665 — Total Operating Partnership awards outstanding 582,665 QTS Realty Trust, Inc. Awards Outstanding Exercise prices Awards Weighted average Restricted stock $ — 1.8 Options to purchase Class A common stock $ 21.00 - 50.66 0.9 Total QTS Realty Trust, Inc. awards outstanding |
Schedule of Quarterly Cash Dividends | The following tables present quarterly cash dividends and distributions paid to QTS’ common stockholders and the Operating Partnership’s unit holders for the nine months ended September 30, 2017 and 2016 (unaudited): Nine Months Ended September 30, 2017 Record Date Payment Date Per Common Share and Aggregate Dividend/Distribution Amount (in millions) June 16, 2017 July 6, 2017 $ 0.39 $ 21.6 March 16, 2017 April 5, 2017 $ 0.39 21.4 December 16, 2016 January 5, 2017 $ 0.36 19.7 $ 62.7 Nine Months Ended September 30, 2016 Record Date Payment Date Per Common Share and Aggregate Dividend/Distribution Amount (in millions) June 17, 2016 July 6, 2016 $ 0.36 $ 19.7 March 18, 2016 April 5, 2016 $ 0.36 17.4 December 17, 2015 January 6, 2016 $ 0.32 15.4 $ 52.5 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Summary of Related Party Transactions | The transactions which occurred during the three and nine months ended September 30, 2017 and 2016 are outlined below (unaudited and in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Tax, utility, insurance and other reimbursement $ 118 $ 155 $ 467 $ 527 Rent expense 254 254 762 761 Capital assets acquired 32 24 384 191 Total $ 404 $ 433 $ 1,613 $ 1,479 |
Earnings per share of QTS Rea30
Earnings per share of QTS Realty Trust, Inc. (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings per Share [Abstract] | |
Summary of Basic and Diluted Earnings Per Share | The computation of basic and diluted net income per share is as follows (in thousands, except per share data, and unaudited): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Numerator: Net income available to common stockholders - basic $ 6,507 $ 5,730 $ 15,424 $ 16,719 Effect of net income attributable to noncontrolling interests and income allocated to participating securities 684 808 1,496 2,485 Net income available to common stockholders $ 7,191 $ 6,538 $ 16,920 $ 19,204 Denominator: Weighted average shares outstanding - basic 48,714 47,855 47,862 45,651 Effect of Class A and Class RS partnership units 6,669 6,767 6,744 6,787 Effect of Class O units and options to purchase Class A common stock and restricted Class A common stock on an "as if" converted basis * 788 1,066 799 982 Weighted average shares outstanding - diluted 56,171 55,688 55,405 53,420 Basic net income per share $ 0.13 $ 0.12 $ 0.31 $ 0.37 Diluted net income per share $ 0.13 $ 0.12 $ 0.31 $ 0.36 * The Class A units and Class O units represent limited partnership interests in the Operating Partnership, and are described in more detail in Note 8. |
Customer Leases, as Lessor (Tab
Customer Leases, as Lessor (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Future Minimum Lease Payments to be Received Under Non-Cancelable Operating Customer Leases | Future minimum lease payments to be received under non-cancelable operating customer leases (inclusive of payments for contracts which have not yet commenced, and exclusive of recoveries of operating costs from customers) are as follows for the years ending December 31 (unaudited and in thousands): 2017 (October - December) $ 91,771 2018 310,606 2019 222,798 2020 164,134 2021 131,335 Thereafter 168,089 Total $ 1,088,733 |
Description of Business (Narrat
Description of Business (Narrative) (Details) | Sep. 30, 2017property |
Organization And Description Of Business [Line Items] | |
Number of properties | 25 |
Carpathia Hosting, Inc. | |
Organization And Description Of Business [Line Items] | |
Ownership interest | 88.50% |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017USD ($)subsidiary | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)subsidiary | Sep. 30, 2016USD ($) | Oct. 31, 2017 | Jul. 23, 2014 | |
Summary Of Significant Accounting Policies [Line Items] | ||||||
The number of other subsidiaries excluded from guaranty provisions | subsidiary | 7 | 7 | ||||
Payment of minimum tax withholdings related to equity based awards | $ 3,310 | $ 2,111 | ||||
Proceeds from exercise of stock options | $ 4,948 | 859 | ||||
Useful life of property | 40 years | |||||
Depreciation expense from operation | $ 25,900 | $ 23,800 | $ 76,400 | 67,100 | ||
Real estate cost capitalized excluding interest cost | 3,600 | 2,800 | 9,500 | 9,100 | ||
Real estate interest cost capitalized incurred | 3,600 | 2,500 | 9,900 | 8,400 | ||
Qualitytech, LP | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Payment of minimum tax withholdings related to equity based awards | 3,310 | 2,111 | ||||
Proceeds from exercise of stock options | 4,948 | 859 | ||||
Real Estate Assets | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Depreciation expense from operation | 22,600 | 20,400 | 66,100 | 57,600 | ||
Non-Real Estate Assets | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Depreciation expense from operation | $ 3,300 | $ 3,400 | $ 10,300 | $ 9,500 | ||
Minimum | Real Property | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Useful life of property | 20 years | |||||
Maximum | Real Property | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Useful life of property | 40 years | |||||
Maximum | Leasehold Improvements | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Useful life of property | 20 years | |||||
Senior Notes. | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Interest rate | 5.875% | 5.875% | ||||
Cash Inflows | Accounting Standards Update 201609 | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Proceeds from exercise of stock options | $ 900 | |||||
Cash Outflows | Accounting Standards Update 201609 | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Payment of minimum tax withholdings related to equity based awards | $ 900 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Additional Information 1) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Impairment losses | $ 0 | $ 0 | $ 0 | $ 0 | |
Goodwill | 173,843 | 173,843 | $ 173,843 | ||
Amortization of the deferred financing costs | 2,737 | 2,424 | |||
Amortization of deferred leasing costs totaled | 4,800 | 3,700 | 13,500 | 10,800 | |
Deferred income | 22,540 | 22,540 | 21,993 | ||
Amortization of deferred revenue | 2,700 | 2,400 | 7,700 | 6,500 | |
Company recorded equity-based compensation expense net of repurchased awards and forfeits | 3,700 | 2,600 | 10,500 | 7,900 | |
Amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net | 21,100 | 21,100 | $ 17,300 | ||
Unsecured Revolving Credit Facility | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Amortization of the deferred financing costs | $ 900 | $ 800 | $ 2,700 | $ 2,400 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Deferred Financing Costs, Net of Accumulated Amortization) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Deferred financing costs | $ 7,132 | $ 7,128 |
Accumulated amortization | (1,453) | (145) |
Deferred financing costs, net | 5,679 | 6,983 |
Fixed debt arrangements | ||
Deferred financing costs | 12,943 | 12,779 |
Accumulated amortization | (4,089) | (2,660) |
Deferred financing costs, net | $ 8,854 | $ 10,119 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Deferred Leasing Costs, Net of Accumulated Amortization) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Summary of Significant Accounting Policies [Abstract] | ||
Deferred leasing costs | $ 54,411 | $ 50,026 |
Accumulated amortization | (21,918) | (18,502) |
Deferred leasing costs, net | $ 32,493 | $ 31,524 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Additional Information 2) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017USD ($)subsidiary | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segmentsubsidiary | Sep. 30, 2016USD ($) | Apr. 05, 2017USD ($) | Dec. 31, 2016USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | ||||||
Capital lease obligations | $ 10,000 | $ 10,000 | $ 18,100 | |||
Lease financing obligations | 18,800 | 18,800 | 20,600 | |||
Net book value of assets associated with leases | $ 33,200 | $ 33,200 | 41,500 | |||
Number of operating segments | segment | 1 | |||||
Number of reportable segments | segment | 1 | |||||
Financial assets | 0 | |||||
Financial liability | 0 | |||||
Number of subsidiaries taxed as taxable REIT | subsidiary | 2 | |||||
Number of REIT subsidiaries' deferred tax assets due to U.S. NOL carryforwards | subsidiary | 1 | 1 | ||||
Effective tax rate | 46.40% | 48.90% | ||||
Decrease in fair value of interest rate swaps | $ (286) | $ (1,785) | ||||
Interest Rate Swap | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Derivative instruments, notional amount | $ 400,000 | |||||
Decrease in fair value of interest rate swaps | $ 0 | $ 0 | ||||
Interest Rate Swap | Term Loan | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Debt Instrument Face Amount | 400,000 | |||||
Interest Rate Swap | Term Loan Maturing December 17,2021 | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Derivative instruments, notional amount | 200,000 | |||||
Interest Rate Swap | Term Loan Maturing April 27, 2022 | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Derivative instruments, notional amount | $ 200,000 | |||||
Accounts Receivable | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Aggregate allowance for doubtful accounts | $ 5,700 | $ 5,700 | $ 4,200 | |||
Customer One | Rental Revenue | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Percentage of total revenue | 12.50% | |||||
No Other Customers | Rental Revenue | Minimum | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Percentage of total revenue | 5.00% | |||||
Five Customers | Accounts Receivable | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Percentage of total accounts receivable | 44.00% | 44.00% | ||||
Five Customers | Accounts Receivable | Minimum | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Percentage of total accounts receivable | 5.00% | 5.00% | ||||
Two Customers [Member] | Accounts Receivable | Minimum | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Percentage of total accounts receivable | 10.00% | 10.00% | ||||
Carpathia Hosting, Inc. | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Lease financing obligations | $ 18,800 | $ 18,800 |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) $ in Millions | Dec. 16, 2016USD ($)ft²aMW | Jun. 06, 2016ft²aMW |
Fort Worth Facility | ||
Business Acquisition [Line Items] | ||
Date of acquisition | Dec. 16, 2016 | |
Acquisition costs | $ | $ 50.1 | |
Acres of real estate property | a | 53 | |
Area of facility (in square feet) | 262,000 | |
Fort Worth Facility | Basis Of Design With Eight MW Available Power | ||
Business Acquisition [Line Items] | ||
Area of facility (in square feet) | 80,000 | |
Capacity of the plant (in MW) | MW | 8 | |
Fort Worth Facility | Additional Critical Power | ||
Business Acquisition [Line Items] | ||
Capacity of the plant (in MW) | MW | 8 | |
Piscataway Facility | ||
Business Acquisition [Line Items] | ||
Date of acquisition | Jun. 6, 2016 | |
Acres of real estate property | a | 38 | |
Area of facility (in square feet) | 360,000 | |
Piscataway Facility | Raised Floor With 18 MW of Critical Power | ||
Business Acquisition [Line Items] | ||
Area of facility (in square feet) | 89,000 | |
Capacity of the plant (in MW) | MW | 18 | |
Piscataway Facility | Additional Raised Floor With 8 MW of Additional Critical Power | ||
Business Acquisition [Line Items] | ||
Area of facility (in square feet) | 87,000 | |
Capacity of the plant (in MW) | MW | 8 |
Acquisitions (Allocation of the
Acquisitions (Allocation of the Fair Value of Assets Acquired and Liabilities Assumed as of the Acquisition Date) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 |
Business Acquisition [Line Items] | ||||
Land | $ 5,019 | $ 7,440 | ||
Buildings and improvements | 80,390 | |||
Construction in Progress | 41,994 | 13,900 | ||
Deferred costs | 4,391 | |||
Other assets | $ 303 | |||
Fort Worth Facility | ||||
Business Acquisition [Line Items] | ||||
Land | 136 | |||
Buildings and improvements | 610 | |||
Construction in Progress | 48,987 | |||
Acquired intangibles | 237 | |||
Deferred costs | 23 | |||
Other assets | 7 | |||
Net working capital | 86 | |||
Total identifiable assets acquired | 50,086 | |||
Fort Worth Facility | Original Allocation Reported | ||||
Business Acquisition [Line Items] | ||||
Land | $ 136 | |||
Buildings and improvements | 610 | |||
Construction in Progress | 48,984 | |||
Acquired intangibles | 240 | |||
Deferred costs | 23 | |||
Other assets | 7 | |||
Net working capital | 86 | |||
Total identifiable assets acquired | $ 50,086 | |||
Fort Worth Facility | Adjustment | ||||
Business Acquisition [Line Items] | ||||
Construction in Progress | 3 | |||
Acquired intangibles | (3) | |||
Piscataway Facility | ||||
Business Acquisition [Line Items] | ||||
Land | $ 7,466 | |||
Buildings and improvements | 80,366 | |||
Construction in Progress | 13,900 | |||
Acquired intangibles | 19,581 | |||
Deferred costs | 4,390 | |||
Other assets | 106 | |||
Total identifiable assets acquired | 125,809 | |||
Acquired below market lease | 809 | |||
Net working capital | 2,019 | |||
Total liabilities assumed | 2,828 | |||
Net identifiable assets acquired | 122,981 | |||
Piscataway Facility | Original Allocation Reported | ||||
Business Acquisition [Line Items] | ||||
Land | 7,440 | |||
Buildings and improvements | 78,370 | |||
Construction in Progress | 13,900 | |||
Acquired intangibles | 21,668 | |||
Deferred costs | 4,084 | |||
Other assets | 106 | |||
Total identifiable assets acquired | 125,568 | |||
Acquired below market lease | 568 | |||
Net working capital | 2,019 | |||
Total liabilities assumed | 2,587 | |||
Net identifiable assets acquired | $ 122,981 | |||
Piscataway Facility | Adjustment | ||||
Business Acquisition [Line Items] | ||||
Land | 26 | |||
Buildings and improvements | 1,996 | |||
Acquired intangibles | (2,087) | |||
Deferred costs | 306 | |||
Total identifiable assets acquired | 241 | |||
Acquired below market lease | 241 | |||
Total liabilities assumed | $ 241 |
Acquisitions (Land Parcels) (De
Acquisitions (Land Parcels) (Details) $ in Thousands | 1 Months Ended | |||
Aug. 31, 2017USD ($)a | Jul. 31, 2017USD ($)a | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | |
Property, Plant and Equipment [Line Items] | ||||
Construction in progress | $ 429,390 | $ 365,960 | ||
Ashburn, Virginia And Phoenix, Arizona Land | Construction in Progress | ||||
Property, Plant and Equipment [Line Items] | ||||
Fair value of land acquired | $ 42,000 | |||
Land in Ashburn, Virginia | ||||
Property, Plant and Equipment [Line Items] | ||||
Acres of land | a | 24 | |||
Payments to Acquire Land | $ 17,000 | |||
Phoenix Arizona Land | ||||
Property, Plant and Equipment [Line Items] | ||||
Acres of land | a | 84 | |||
Payments to Acquire Land | $ 25,000 |
Acquired Intangibles Assets a41
Acquired Intangibles Assets and Liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Finite-lived intangible assets | ||
Gross Carrying Value | $ 158,867 | $ 158,870 |
Accumulated Amortization | (44,581) | (29,116) |
Net Carrying Value | 114,286 | 129,754 |
Acquired below market leases - as Lessor | ||
Gross Carrying Value | 809 | 809 |
Accumulated Amortization | (316) | (138) |
Net Carrying Value | 493 | 671 |
Acquired above market leases - as Lessee | ||
Gross Carrying Value | 2,453 | 2,453 |
Accumulated Amortization | (496) | (334) |
Net Carrying Value | 1,957 | 2,119 |
Acquired Intangible Liabilities | ||
Acquired intangible liabilities | 17,009 | 17,009 |
Accumulated Amortization | (3,440) | (2,494) |
New Carrying Value | $ 13,569 | $ 14,515 |
Minimum | ||
Acquired below market leases - as Lessor | ||
Useful Lives | 3 years | 3 years |
Acquired above market leases - as Lessee | ||
Useful Lives | 11 years | 11 years |
Maximum | ||
Acquired below market leases - as Lessor | ||
Useful Lives | 4 years | 4 years |
Acquired above market leases - as Lessee | ||
Useful Lives | 12 years | 12 years |
Customer Relationships | ||
Finite-lived intangible assets | ||
Gross Carrying Value | $ 95,705 | $ 95,705 |
Accumulated Amortization | (18,524) | (12,358) |
Net Carrying Value | $ 77,181 | $ 83,347 |
Customer Relationships | Minimum | ||
Finite-lived intangible assets | ||
Useful Lives | 1 year | 1 year |
Customer Relationships | Maximum | ||
Finite-lived intangible assets | ||
Useful Lives | 12 years | 12 years |
In Place Leases | ||
Finite-lived intangible assets | ||
Gross Carrying Value | $ 32,066 | $ 32,066 |
Accumulated Amortization | (11,679) | (7,197) |
Net Carrying Value | $ 20,387 | $ 24,869 |
In Place Leases | Minimum | ||
Finite-lived intangible assets | ||
Useful Lives | 6 months | 6 months |
In Place Leases | Maximum | ||
Finite-lived intangible assets | ||
Useful Lives | 10 years | 10 years |
Platform Intangible | ||
Finite-lived intangible assets | ||
Useful Lives | 3 years | 3 years |
Gross Carrying Value | $ 9,600 | $ 9,600 |
Accumulated Amortization | (7,333) | (4,933) |
Net Carrying Value | 2,267 | 4,667 |
Acquired favorable leases | ||
Finite-lived intangible assets | ||
Gross Carrying Value | 4,649 | 4,652 |
Accumulated Amortization | (2,049) | (1,013) |
Net Carrying Value | $ 2,600 | $ 3,639 |
Acquired favorable leases | Minimum | ||
Finite-lived intangible assets | ||
Useful Lives | 6 months | 6 months |
Acquired favorable leases | Maximum | ||
Finite-lived intangible assets | ||
Useful Lives | 8 years | 8 years |
Tradenames | ||
Finite-lived intangible assets | ||
Useful Lives | 3 years | 3 years |
Gross Carrying Value | $ 3,100 | $ 3,100 |
Accumulated Amortization | (2,368) | (1,593) |
Net Carrying Value | $ 732 | $ 1,507 |
Solar Power Agreement | ||
Finite-lived intangible assets | ||
Useful Lives | 17 years | 17 years |
Gross Carrying Value | $ 13,747 | $ 13,747 |
Accumulated Amortization | (2,628) | (2,022) |
Net Carrying Value | $ 11,119 | $ 11,725 |
Acquired Intangibles Assets a42
Acquired Intangibles Assets and Liabilities - Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Acquired Intangible Assets and Liabilities | |||||
Amortization of acquired above and below-market leases, net | $ 200 | $ 300 | $ 699 | $ 337 | |
Amortization of all other identified intangible assets | 4,600 | $ 5,200 | 13,800 | $ 13,800 | |
Estimated amortization of acquired favorable and unfavorable leases Rental Expense | |||||
2017 (October - December) | 54 | 54 | |||
2,018 | 216 | 216 | |||
2,019 | 216 | 216 | |||
2,020 | 216 | 216 | |||
2,021 | 216 | 216 | |||
Thereafter | 1,039 | 1,039 | |||
Total | 1,957 | 1,957 | |||
Finite Lived Intangible Assets Liabilities Amortization | |||||
Above Market Lease Net | 1,957 | 1,957 | $ 2,119 | ||
Estimated amortization of all other identified intangible assets | |||||
Net Carrying Value | 114,286 | 114,286 | 129,754 | ||
Acquired favorable leases | |||||
Estimated amortization of all other identified intangible assets | |||||
Net Carrying Value | 2,600 | 2,600 | 3,639 | ||
Acquired favorable leases | |||||
Estimated amortization of acquired favorable and unfavorable leases Rental Revenue | |||||
2017 (October - December) | 220 | 220 | |||
2,018 | 682 | 682 | |||
2,019 | 479 | 479 | |||
2,020 | 647 | 647 | |||
2,021 | 46 | 46 | |||
Thereafter | 33 | 33 | |||
Total | 2,107 | 2,107 | |||
All other identified intangible assets | |||||
Estimated amortization of all other identified intangible assets | |||||
2017 (July - December) | 4,353 | 4,353 | |||
2,018 | 14,574 | 14,574 | |||
2,019 | 11,965 | 11,965 | |||
2,020 | 11,379 | 11,379 | |||
2,021 | 10,137 | 10,137 | |||
Thereafter | 48,159 | 48,159 | |||
Net Carrying Value | 100,567 | 100,567 | |||
Solar Power Agreement | |||||
Estimated amortization of all other identified intangible assets | |||||
Net Carrying Value | $ 11,119 | $ 11,119 | $ 11,725 |
Real Estate Assets and Constr43
Real Estate Assets and Construction in Progress (Summary of Properties Owned or Leased by the Company) (Details) $ in Thousands | Sep. 30, 2017USD ($)property | Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($)property |
Real Estate Properties [Line Items] | |||
Land | $ 86,192 | $ 74,130 | |
Buildings and improvements | 1,668,503 | 1,524,767 | |
Construction in progress | 429,390 | 365,960 | |
Total cost | $ 2,184,085 | $ 1,964,857 | |
Number of facilities leased | property | 13 | 13 | |
Duluth, Georgia | Other Assets. | |||
Real Estate Properties [Line Items] | |||
Land | $ 1,900 | ||
Buildings and improvements | 8,700 | ||
Construction in progress | $ 100 | ||
Owned Properties | Atlanta, Georgia (Atlanta-Metro) | |||
Real Estate Properties [Line Items] | |||
Land | $ 20,416 | $ 15,397 | |
Buildings and improvements | 450,128 | 434,965 | |
Construction in progress | 24,269 | 32,422 | |
Total cost | 494,813 | 482,784 | |
Owned Properties | Richmond, Virginia | |||
Real Estate Properties [Line Items] | |||
Land | 2,180 | 2,180 | |
Buildings and improvements | 253,346 | 237,347 | |
Construction in progress | 61,257 | 70,580 | |
Total cost | 316,783 | 310,107 | |
Owned Properties | Irving Texas | |||
Real Estate Properties [Line Items] | |||
Land | 8,606 | 8,606 | |
Buildings and improvements | 259,999 | 204,713 | |
Construction in progress | 68,478 | 69,653 | |
Total cost | 337,083 | 282,972 | |
Owned Properties | Suwanee, Georgia (Atlanta-Suwanee) | |||
Real Estate Properties [Line Items] | |||
Land | 3,521 | 3,521 | |
Buildings and improvements | 169,625 | 171,376 | |
Construction in progress | 2,876 | 2,013 | |
Total cost | 176,022 | 176,910 | |
Owned Properties | Chicago, Illinois | |||
Real Estate Properties [Line Items] | |||
Land | 9,400 | 9,400 | |
Buildings and improvements | 80,737 | 45,848 | |
Construction in progress | 125,350 | 100,623 | |
Total cost | 215,487 | 155,871 | |
Owned Properties | Piscataway New Jersey | |||
Real Estate Properties [Line Items] | |||
Land | 7,466 | 7,466 | |
Buildings and improvements | 82,571 | 82,210 | |
Construction in progress | 36,250 | 17,261 | |
Total cost | 126,287 | 106,937 | |
Owned Properties | Santa Clara, California | |||
Real Estate Properties [Line Items] | |||
Buildings and improvements | 100,565 | 98,708 | |
Construction in progress | 6,909 | 7,078 | |
Total cost | 107,474 | 105,786 | |
Owned Properties | Sacramento, California | |||
Real Estate Properties [Line Items] | |||
Land | 1,481 | 1,481 | |
Buildings and improvements | 62,529 | 62,102 | |
Construction in progress | 1,868 | 390 | |
Total cost | 65,878 | 63,973 | |
Owned Properties | Princeton, New Jersey | |||
Real Estate Properties [Line Items] | |||
Land | 20,700 | 20,700 | |
Buildings and improvements | 32,823 | 32,788 | |
Construction in progress | 469 | 538 | |
Total cost | 53,992 | 54,026 | |
Owned Properties | Fort Worth, Texas | |||
Real Estate Properties [Line Items] | |||
Land | 9,079 | 136 | |
Buildings and improvements | 17,587 | 610 | |
Construction in progress | 32,611 | 49,116 | |
Total cost | 59,277 | 49,862 | |
Owned Properties | Ashburn, Virginia | |||
Real Estate Properties [Line Items] | |||
Construction in progress | 32,829 | ||
Total cost | 32,829 | ||
Owned Properties | Phoenix, Arizona | |||
Real Estate Properties [Line Items] | |||
Construction in progress | 25,091 | ||
Total cost | 25,091 | ||
Owned Properties | Other | |||
Real Estate Properties [Line Items] | |||
Land | 2,213 | 4,113 | |
Buildings and improvements | 35,541 | 37,810 | |
Construction in progress | 133 | 6,283 | |
Total cost | 37,887 | 48,206 | |
Leased Properties | Owned Properties | |||
Real Estate Properties [Line Items] | |||
Land | 1,130 | ||
Buildings and improvements | 123,052 | ||
Construction in progress | 11,000 | ||
Total cost | $ 135,182 | ||
Leased Properties | Owned Properties | Princeton, New Jersey | |||
Real Estate Properties [Line Items] | |||
Land | 1,130 | ||
Buildings and improvements | 116,290 | ||
Construction in progress | 10,003 | ||
Total cost | $ 127,423 |
Debt (Unsecured Credit Facility
Debt (Unsecured Credit Facility Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2017 | |
Debt Instrument [Line Items] | |||
Debt instrument, discount | $ 11,882 | $ 10,410 | $ 10,410 |
Debt and Capital Lease Obligations | 977,708 | 1,109,725 | 1,109,725 |
Total outstanding debt, net | $ 965,826 | 1,099,315 | 1,099,315 |
Term Loan | |||
Debt Instrument [Line Items] | |||
Debt Instrument Carrying Amount | 500,000 | 500,000 | |
Outstanding debt | 500,000 | $ 500,000 | |
Term Loan Maturing April 27, 2021 | |||
Debt Instrument [Line Items] | |||
Maturity date | Apr. 27, 2022 | ||
Term Loan Maturing December 17, 2020 | |||
Debt Instrument [Line Items] | |||
Maturity date | Dec. 17, 2021 | ||
Letter of Credit [Member] | |||
Debt Instrument [Line Items] | |||
Letter of credit outstanding | $ 2,100 | $ 2,100 | |
Line of credit facility weighted average interest rate outstanding percentage | 2.75% | 2.75% | |
Unsecured Credit Facility | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | $ 1,200,000 | ||
Debt extension period | 1 year | ||
Line of credit facility accordion feature | $ 300,000 | ||
Additional contingent borrowing capacity, maximum | $ 1,500,000 | 1,500,000 | |
Debt Instrument Carrying Amount | 779,000 | 779,000 | |
Outstanding debt | $ 779,000 | $ 779,000 | |
Minimum | Term Loan | LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.50% | ||
Minimum | Term Loan | Base Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.50% | ||
Minimum | Revolving Credit Facility | LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.55% | ||
Minimum | Revolving Credit Facility | Base Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.55% | ||
Maximum | Term Loan | LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 2.10% | ||
Maximum | Term Loan | Base Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.10% | ||
Maximum | Revolving Credit Facility | LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 2.15% | ||
Maximum | Revolving Credit Facility | Base Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.15% | ||
Unsecured Credit Facility | |||
Debt Instrument [Line Items] | |||
Weighted average coupon interest rate | 3.63% | 3.63% | |
Debt Instrument, Covenant Compliance | the Company was in compliance with all of its covenants | ||
Unsecured Credit Facility | Term Loan Maturing April 27, 2021 | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | 200,000 | ||
Unsecured Credit Facility | Term Loan Maturing December 17, 2020 | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | 300,000 | ||
Unsecured Credit Facility | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | $ 700,000 | ||
Maturity date | Dec. 17, 2020 | Dec. 17, 2020 | |
Debt Instrument Carrying Amount | $ 139,000 | $ 279,000 | $ 279,000 |
Outstanding debt | $ 139,000 | $ 279,000 | $ 279,000 |
Weighted average coupon interest rate | 2.78% | 2.78% |
Debt (Senior Notes) (Details)
Debt (Senior Notes) (Details) $ in Thousands | Apr. 05, 2017USD ($) | Jul. 23, 2014USD ($) | Oct. 31, 2017USD ($) | Sep. 30, 2017USD ($)subsidiary | Dec. 31, 2016USD ($) |
Debt Instrument [Line Items] | |||||
Debt issuance costs, net | $ 5,679 | $ 6,983 | |||
The number of other subsidiaries excluded from guaranty provisions | subsidiary | 7 | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs, net | $ 3,600 | ||||
Unsecured Credit Facility | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Unsecured term loan outstanding | $ 75,000 | ||||
Senior Notes. | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 300,000 | ||||
Interest rate | 5.875% | 5.875% | |||
Senior notes due | 2,022 | ||||
Maturity date | Aug. 1, 2022 | ||||
Debt discount recorded | 1,600 | ||||
Debt issuance costs, net | $ 5,300 | ||||
Percentage of issued price equal to face value | 99.211% | ||||
Interest Rate Swap | |||||
Debt Instrument [Line Items] | |||||
Weighted average effective fixed interest rate | 3.50% | ||||
Derivative instruments, notional amount | $ 400,000 | ||||
Interest Rate Swap | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | 400,000 | ||||
Interest Rate Swap | Term Loan Maturing December 17,2021 | |||||
Debt Instrument [Line Items] | |||||
Derivative instruments, notional amount | 200,000 | ||||
Interest Rate Swap | Term Loan Maturing April 27, 2022 | |||||
Debt Instrument [Line Items] | |||||
Derivative instruments, notional amount | $ 200,000 | ||||
LIBOR | Interest Rate Swap | |||||
Debt Instrument [Line Items] | |||||
Variable rate basis | LIBOR | ||||
Spread | 1.50% | ||||
Private offering | Subsequent Event | Senior Notes. | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 400,000 | ||||
Interest rate | 4.75% |
Debt (Lenexa Mortgage) (Details
Debt (Lenexa Mortgage) (Details) - Lenexa Mortgage - USD ($) $ in Millions | Sep. 30, 2017 | Mar. 08, 2017 |
Debt Instrument [Line Items] | ||
Aggregate principal amount | $ 1.9 | $ 1.9 |
Interest rate | 4.10% | |
Balloon payment | $ 1.6 |
Debt (Outstanding Debt Includin
Debt (Outstanding Debt Including Capital Leases) (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended |
Dec. 31, 2016 | Sep. 30, 2017 | |
Debt Instrument [Line Items] | ||
Total debt and lease obligations | $ 977,708 | $ 1,109,725 |
Less discount and debt issuance costs | (11,882) | (10,410) |
Total outstanding debt, net | 965,826 | $ 1,099,315 |
Senior Notes. | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 5.88% | |
Maturity date | Aug. 1, 2022 | |
Outstanding debt | 300,000 | $ 300,000 |
Lenexa Mortgage | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 4.10% | |
Maturity date | May 1, 2022 | |
Outstanding debt | $ 1,882 | |
Capital Lease and Lease Financing Obligations [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.87% | |
Maturity date description | 2017 - 2025 | |
Capital Lease and Lease Financing Obligations | $ 38,708 | $ 28,843 |
Unsecured Credit Facility | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.63% | |
Unsecured Credit Facility | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 2.78% | |
Maturity date | Dec. 17, 2020 | Dec. 17, 2020 |
Outstanding debt | $ 139,000 | $ 279,000 |
Unsecured Credit Facility | Term Loan I [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 2.74% | |
Maturity date | Dec. 17, 2021 | |
Outstanding debt | 300,000 | $ 300,000 |
Unsecured Credit Facility | Term Loan II [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 2.74% | |
Maturity date | Apr. 27, 2022 | |
Outstanding debt | $ 200,000 | $ 200,000 |
Debt (Annual Remaining Principa
Debt (Annual Remaining Principal Payment) (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Debt [Abstract] | |
2017 (October - December) | $ 11 |
2,018 | 65 |
2,019 | 68 |
2,020 | 279,071 |
2,021 | 300,074 |
Thereafter | 501,593 |
Total | $ 1,080,882 |
Debt (Lease Narrative) (Details
Debt (Lease Narrative) (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2017USD ($)agreementfacility | Dec. 31, 2016USD ($) | |
Capital Leased Assets [Line Items] | ||
Lease financing obligations | $ 18.8 | $ 20.6 |
Carpathia Hosting, Inc. | ||
Capital Leased Assets [Line Items] | ||
Capital lease, lease financing obligations and mortgage notes payable | 10 | |
Capital lease and lease financing obligations assumed | $ 7.1 | |
Number of lease agreements | agreement | 2 | |
Lease financing obligations | $ 18.8 | |
The number of data centers with lease agreements and lease financing agreements | facility | 1 | |
Outstanding financing agreement | $ 1 | |
Deferred gain of lease financing obligations | $ 1.4 | |
Lease financing expiration date | Feb. 1, 2019 | |
Carpathia Hosting, Inc. | Sale-Leaseback Transaction [Member] | ||
Capital Leased Assets [Line Items] | ||
Capital lease and lease financing obligations assumed | $ 17.8 | |
Outstanding financing agreement | 16.4 | |
Carpathia Hosting, Inc. | Tenant Improvement Allowance [Member] | ||
Capital Leased Assets [Line Items] | ||
Lease financing obligations | $ 4.8 | |
Minimum | Carpathia Hosting, Inc. | ||
Capital Leased Assets [Line Items] | ||
Lease expiration year | 2,018 | |
Monthly lease payment | $ 0.2 | |
Maximum | Carpathia Hosting, Inc. | ||
Capital Leased Assets [Line Items] | ||
Lease expiration year | 2,019 | |
Monthly lease payment | $ 0.5 | |
Lease financing monthly principal and interest payment | $ 0.1 |
Debt (Future Payment Obligation
Debt (Future Payment Obligations) (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Debt [Abstract] | |
2017 (October - December) | $ 3,078 |
2,018 | 9,370 |
2,019 | 2,844 |
2,020 | 2,190 |
2,021 | 2,388 |
Thereafter | 8,973 |
Total lease obligations | $ 28,843 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Sep. 30, 2017subsidiary |
Commitments and Contingencies [Abstract] | |
Number of subsidiaries named as a defendant | 1 |
Partners' Capital, Equity and52
Partners' Capital, Equity and Incentive Compensation Plans (Narrative) (Details) $ / shares in Units, $ in Thousands | Oct. 05, 2017$ / shares | May 04, 2017item$ / shares | Sep. 30, 2017USD ($)item$ / sharesshares | Jun. 30, 2017$ / shares | Mar. 31, 2017USD ($)$ / shares | Sep. 30, 2016$ / shares | Jun. 30, 2016$ / shares | Mar. 31, 2016$ / shares | Sep. 30, 2017USD ($)securityitem$ / sharesshares | May 31, 2015shares |
Partners Capital And Distributions [Line Items] | ||||||||||
Number of classes of partnership units outstanding | security | 2 | |||||||||
Equity based compensation expense unrecognized | $ | $ 21,700 | $ 21,700 | ||||||||
Equity based compensation expense vesting period | 1 year 1 month 6 days | |||||||||
Equity based compensation awards intrinsic value | $ | $ 59,600 | $ 59,600 | ||||||||
Dividend paid to common stockholders | $ / shares | $ 0.39 | $ 0.39 | $ 0.36 | $ 0.36 | $ 0.36 | $ 0.32 | ||||
Dividends payable, date payable | Jul. 6, 2017 | Apr. 5, 2017 | Jan. 5, 2017 | Jul. 6, 2016 | Apr. 5, 2016 | Jan. 6, 2016 | ||||
Shares issued, Value | $ | $ 92,587 | |||||||||
QTS Realty Trust, Inc. Employee Stock Purchase Plan | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Shares reserved for purchase under plan | shares | 250,000 | 250,000 | ||||||||
2017 Plan | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Minimum period of service | 30 days | |||||||||
Minimum hours per week of service | item | 30 | |||||||||
Purchase period per year | item | 4 | |||||||||
Subsequent Event | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Dividend paid to common stockholders | $ / shares | $ 0.39 | |||||||||
Partnership distribution per unit | $ / shares | $ 0.39 | |||||||||
Dividends payable, date payable | Oct. 5, 2017 | |||||||||
Class RS Units | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Number of units outstanding | shares | 0 | 0 | ||||||||
Class B Common Stock | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Number of votes per share | item | 50 | 50 | ||||||||
Class A Common Stock | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Net proceeds from issuance of shares | $ | $ 54,000 | $ 93,000 | ||||||||
Class A Common Stock | At Market [Member] | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Maximum value of stock which may be issued | $ | $ 300,000 | |||||||||
Shares issued | shares | 1,015,332 | 1,761,681 | ||||||||
Weighted average price per share (in dollars per share) | $ / shares | $ 53.65 | $ 53.63 | ||||||||
Class A Common Stock | 2017 Plan | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Discount rate of purchase price of common stock | 10.00% | |||||||||
Chief Executive Officer | Class B Common Stock | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Percentage of operating partnership unit exchanged | 2.00% | |||||||||
Qualitytech, LP | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Shares issued, Value | $ | $ 92,587 | |||||||||
Minimum | 2017 Plan | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Minimum percentage of combined voting power | 5.00% | |||||||||
Deductions per paycheck for purchase of share | $ / shares | $ 20 | |||||||||
Holding period after purchase of share | 1 year | |||||||||
Maximum | 2017 Plan | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Deductions per paycheck for purchase of share | $ / shares | $ 1,000 | |||||||||
Restricted Class A Common Stock | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Nonvested awards outstanding | shares | 400,000 | 400,000 | ||||||||
Options to purchase Class A common stock | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Nonvested awards outstanding | shares | 600,000 | 600,000 | ||||||||
2013 Equity Incentive Plan | ||||||||||
Partners Capital And Distributions [Line Items] | ||||||||||
Authorized shares to be issued under the plan | shares | 1,750,000 | 1,750,000 | 4,750,000 |
Partners' Capital, Equity and53
Partners' Capital, Equity and Incentive Compensation Plans (Summary of Award Activity Under 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and Related Information) (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
2013 Equity Incentive Plan | Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning balance, Options Outstanding (in shares) | shares | 1,058,297 |
Options, Granted (in shares) | shares | 468,875 |
Options, Exercised (in shares) | shares | (154,965) |
Options, Cancelled/Expired (in shares) | shares | (2,000) |
Ending balance, Options Outstanding (in shares) | shares | 1,370,207 |
Beginning balance, Weighted average exercise price options outstanding | $ 31.72 |
Weighted average exercise price options outstanding, Granted | 50.66 |
Weighted average exercise price options outstanding, Exercised | 31.93 |
Weighted average exercise price options outstanding, Cancelled/Expired | 37.69 |
Ending balance, Weighted average exercise price options outstanding | 38.17 |
Beginning balance, weighted average fair value, options | 6.51 |
Weighted average fair value, granted, options | 10.32 |
Weighted average fair value, vested, options | 6.61 |
Weighted average fair value, cancelled/expired, options | 8.77 |
Ending balance, weighted average fair value, options | $ 7.80 |
2013 Equity Incentive Plan | Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning balance, Options Outstanding (in shares) | shares | 414,691 |
Options, Granted (in shares) | shares | 228,576 |
Options, Exercised (in shares) | shares | (130,368) |
Options, Cancelled/Expired (in shares) | shares | (69,903) |
Ending balance, Options Outstanding (in shares) | shares | 442,996 |
Beginning balance, weighted average fair value, options | $ 40.67 |
Weighted average fair value, granted, options | 50.25 |
Weighted average fair value, vested, options | 41.22 |
Weighted average fair value, cancelled/expired, options | 40.49 |
Ending balance, weighted average fair value, options | $ 45.48 |
Class O Units | 2010 Equity Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning balance, Number of units (in shares) | shares | 1,134,811 |
Number of units, Exercised | shares | (552,146) |
Ending balance, Number of units (in shares) | shares | 582,665 |
Beginning balance, Weighted average exercise price units | $ 24.06 |
Weighted average exercise price units, Exercised | 24.66 |
Ending balance, Weighted average exercise price units | 23.49 |
Beginning balance, Weighted average fair value | 3.62 |
Weighted average fair value, Exercised | 2.14 |
Ending balance, Weighted average fair value | $ 5.03 |
Partners' Capital, Equity and54
Partners' Capital, Equity and Incentive Compensation Plans (Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted) (Details) | 9 Months Ended |
Sep. 30, 2017$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected dividend yield | 3.08% |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of restricted stock granted | $ 48.63 |
Fair value of options granted | $ 10.11 |
Expected volatility | 28.00% |
Expected risk-free interest rates | 2.12% |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of restricted stock granted | $ 51.88 |
Fair value of options granted | $ 10.36 |
Expected risk-free interest rates | 2.18% |
Class O Units | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (years) | 5 years 6 months |
Class O Units | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (years) | 5 years 10 months 24 days |
Partners' Capital, Equity and55
Partners' Capital, Equity and Incentive Compensation Plans (Summary of Information About Awards Outstanding) (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Operating Partnership | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 582,665 |
QTS Realty Trust, Inc Awards Outstanding | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 1,813,203 |
QTS Realty Trust, Inc Awards Outstanding | Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 442,996 |
Remaining term of awards | 1 year 9 months 18 days |
QTS Realty Trust, Inc Awards Outstanding | Options to purchase Class A common stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Lower limit of exercise price | $ / shares | $ 21 |
Upper limit of exercise price | $ / shares | $ 50.66 |
Awards Outstanding | 1,370,207 |
Remaining term of awards | 10 months 24 days |
Class O Units | Operating Partnership | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Lower limit of exercise price | $ / shares | $ 20 |
Upper limit of exercise price | $ / shares | $ 25 |
Awards Outstanding | 582,665 |
Remaining term of awards | 0 years |
Partners' Capital, Equity and56
Partners' Capital, Equity and Incentive Compensation Plans (Schedule of Quarterly Cash Dividends) (Details) - USD ($) $ / shares in Units, $ in Millions | Sep. 22, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Partners' Capital, Equity and Incentive Compensation Plans [Abstract] | |||||||||
Record Date | Sep. 22, 2017 | Jun. 16, 2017 | Mar. 16, 2017 | Dec. 16, 2016 | Jun. 17, 2016 | Mar. 18, 2016 | Dec. 17, 2015 | ||
Payment Date | Jul. 6, 2017 | Apr. 5, 2017 | Jan. 5, 2017 | Jul. 6, 2016 | Apr. 5, 2016 | Jan. 6, 2016 | |||
Per Common Share and Per Unit Rate | $ 0.39 | $ 0.39 | $ 0.36 | $ 0.36 | $ 0.36 | $ 0.32 | |||
Dividend/Distribution Amount | $ 21.6 | $ 21.4 | $ 19.7 | $ 19.7 | $ 17.4 | $ 15.4 | $ 62.7 | $ 52.5 |
Related Party Transactions (Sum
Related Party Transactions (Summary of Related Party Transactions) (Details) - Affiliated Entity - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Related Party Transaction [Line Items] | ||||
Tax, utility, insurance and other reimbursement | $ 118 | $ 155 | $ 467 | $ 527 |
Rent expense | 254 | 254 | 762 | 761 |
Capital assets acquired | 32 | 24 | 384 | 191 |
Total | $ 404 | $ 433 | $ 1,613 | $ 1,479 |
Noncontrolling Interest (Narrat
Noncontrolling Interest (Narrative) (Details) shares in Millions | 9 Months Ended |
Sep. 30, 2017shares | |
Quality Tech LP ownership percentage in operating partnership | 21.20% |
Stock conversion ratio | 1 |
Units redeemed for common stock | 0.5 |
Qualitytech, LP | |
Quality Tech LP ownership percentage in operating partnership | 11.50% |
Earnings per share of QTS Rea59
Earnings per share of QTS Realty Trust, Inc. (Computation of Basic and Diluted Net Income per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings per Share [Abstract] | ||||
Net income available to common stockholders - basic | $ 6,507 | $ 5,730 | $ 15,424 | $ 16,719 |
Effect of net income attributable to noncontrolling interests and income allocated to participating securities | 684 | 808 | 1,496 | 2,485 |
Net income available to common stockholders | $ 7,191 | $ 6,538 | $ 16,920 | $ 19,204 |
Effect of Class A and Class RS partnership units | 6,669 | 6,767 | 6,744 | 6,787 |
Effect of Class O units and options to purchase Class A common stock and restricted Class A common stock on an "as if" converted basis | 788 | 1,066 | 799 | 982 |
Basic net income per share | $ 0.13 | $ 0.12 | $ 0.31 | $ 0.37 |
Diluted net income per share | $ 0.13 | $ 0.12 | $ 0.31 | $ 0.36 |
Customer Leases, as Lessor (Fut
Customer Leases, as Lessor (Future Minimum Lease Payments to be Received Under Non-Cancelable Operating Customer Leases) (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Leases [Abstract] | |
2017 (October - December) | $ 91,771 |
2,018 | 310,606 |
2,019 | 222,798 |
2,020 | 164,134 |
2,021 | 131,335 |
Thereafter | 168,089 |
Total | $ 1,088,733 |
Fair Value of Financial Instr61
Fair Value of Financial Instruments (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Fair Value Of Financial Instruments [Line Items] | ||||
Other comprehensive loss | $ (286) | $ (1,785) | ||
Senior Notes. | Fair Value Measurements, Level 2 | ||||
Fair Value Of Financial Instruments [Line Items] | ||||
Fair value of loan based on current market rates | 311,100 | 311,100 | ||
Interest Rate Swap | ||||
Fair Value Of Financial Instruments [Line Items] | ||||
Other comprehensive loss | $ 0 | $ 0 | ||
Interest rate swap liability | $ 1,800 | $ 1,800 |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) $ / shares in Units, $ in Millions | Oct. 05, 2017$ / shares | Sep. 22, 2017 | Oct. 31, 2017USD ($)a | Aug. 31, 2017USD ($)a | Sep. 30, 2017$ / shares | Jun. 30, 2017$ / shares | Mar. 31, 2017$ / shares | Sep. 30, 2016$ / shares | Jun. 30, 2016$ / shares | Mar. 31, 2016$ / shares | Jul. 23, 2014USD ($) |
Subsequent Event [Line Items] | |||||||||||
Dividends payable, date payable | Jul. 6, 2017 | Apr. 5, 2017 | Jan. 5, 2017 | Jul. 6, 2016 | Apr. 5, 2016 | Jan. 6, 2016 | |||||
Dividend paid to common stockholders | $ / shares | $ 0.39 | $ 0.39 | $ 0.36 | $ 0.36 | $ 0.36 | $ 0.32 | |||||
Dividends payable, date of record | Sep. 22, 2017 | Jun. 16, 2017 | Mar. 16, 2017 | Dec. 16, 2016 | Jun. 17, 2016 | Mar. 18, 2016 | Dec. 17, 2015 | ||||
Subsequent Event | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Dividends payable, date payable | Oct. 5, 2017 | ||||||||||
Dividend paid to common stockholders | $ / shares | $ 0.39 | ||||||||||
Senior Notes. | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Aggregate principal amount | $ 300 | ||||||||||
Interest rate | 5.875% | 5.875% | |||||||||
Senior Notes. | Private offering | Subsequent Event | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Aggregate principal amount | $ 400 | ||||||||||
Interest rate | 4.75% | ||||||||||
Percentage of issue price | 100.00% | ||||||||||
Land in Hillsboro, Oregon | Subsequent Event | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Acres of land | a | 92 | ||||||||||
Purchase price of land | $ 26 | ||||||||||
Land in Ashburn, Virginia | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Acres of land | a | 24 | ||||||||||
Purchase price of land | $ 17 | ||||||||||
Land in Ashburn, Virginia | Subsequent Event | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Acres of land | a | 28 | ||||||||||
Purchase price of land | $ 36 | ||||||||||
Vault Campus in Dulles, Virginia | Subsequent Event | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Capital lease and lease financing obligations assumed | 17.8 | ||||||||||
Purchase price of land | 34.1 | ||||||||||
Net purchase price | $ 16.3 |