Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 08, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | QTS Realty Trust, Inc. | |
Entity Central Index Key | 1,577,368 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-31 | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 51,021,328 | |
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 | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
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 | Mar. 31, 2018 | Dec. 31, 2017 |
Real Estate Assets | ||
Land | $ 88,215 | $ 88,216 |
Buildings, improvements and equipment | 1,778,322 | 1,701,287 |
Less: Accumulated depreciation | (417,150) | (394,823) |
Total real estate assets | 1,449,387 | 1,394,680 |
Construction in progress | 636,054 | 567,819 |
Real Estate Assets, net | 2,085,441 | 1,962,499 |
Cash and cash equivalents | 15,921 | 8,243 |
Rents and other receivables, net | 45,057 | 47,046 |
Acquired intangibles, net | 104,950 | 109,451 |
Deferred costs, net | 42,398 | 41,545 |
Prepaid expenses | 10,328 | 6,163 |
Goodwill | 173,843 | 173,843 |
Other assets, net | 64,950 | 66,266 |
TOTAL ASSETS | 2,542,888 | 2,415,056 |
LIABILITIES | ||
Unsecured credit facility, net | 832,462 | 825,186 |
Senior notes, net of debt issuance costs | 394,333 | 394,178 |
Capital lease, lease financing obligations and mortgage notes payable | 8,225 | 10,565 |
Accounts payable and accrued liabilities | 144,616 | 113,430 |
Dividends and distributions payable | 24,036 | 22,222 |
Advance rents, security deposits and other liabilities | 28,233 | 28,903 |
Deferred income taxes | 2,109 | 4,611 |
Deferred income | 28,679 | 25,305 |
TOTAL LIABILITIES | 1,462,693 | 1,424,400 |
EQUITY | ||
Additional paid-in capital | 1,052,202 | 1,049,176 |
Accumulated other comprehensive income | 6,573 | 1,283 |
Accumulated dividends in excess of earnings | (195,074) | (173,552) |
Total stockholders' equity | 967,396 | 877,414 |
Noncontrolling interests | 112,799 | 113,242 |
TOTAL EQUITY | 1,080,195 | 990,656 |
TOTAL LIABILITIES AND EQUITY | 2,542,888 | 2,415,056 |
Qualitytech, LP | ||
Real Estate Assets | ||
Land | 88,215 | 88,216 |
Buildings, improvements and equipment | 1,778,322 | 1,701,287 |
Less: Accumulated depreciation | (417,150) | (394,823) |
Total real estate assets | 1,449,387 | 1,394,680 |
Construction in progress | 636,054 | 567,819 |
Real Estate Assets, net | 2,085,441 | 1,962,499 |
Cash and cash equivalents | 15,921 | 8,243 |
Rents and other receivables, net | 45,057 | 47,046 |
Acquired intangibles, net | 104,950 | 109,451 |
Deferred costs, net | 42,398 | 41,545 |
Prepaid expenses | 10,328 | 6,163 |
Goodwill | 173,843 | 173,843 |
Other assets, net | 64,950 | 66,266 |
TOTAL ASSETS | 2,542,888 | 2,415,056 |
LIABILITIES | ||
Unsecured credit facility, net | 832,462 | 825,186 |
Senior notes, net of debt issuance costs | 394,333 | 394,178 |
Capital lease, lease financing obligations and mortgage notes payable | 8,225 | 10,565 |
Accounts payable and accrued liabilities | 144,616 | 113,430 |
Dividends and distributions payable | 24,036 | 22,222 |
Advance rents, security deposits and other liabilities | 28,233 | 28,903 |
Deferred income taxes | 2,109 | 4,611 |
Deferred income | 28,679 | 25,305 |
TOTAL LIABILITIES | 1,462,693 | 1,424,400 |
EQUITY | ||
Accumulated other comprehensive income | 7,431 | 1,449 |
TOTAL EQUITY | 1,080,195 | 990,656 |
TOTAL PARTNERS' CAPITAL | 1,080,195 | 990,656 |
TOTAL LIABILITIES AND EQUITY | 2,542,888 | 2,415,056 |
Series A 7.125 | ||
EQUITY | ||
Series A 7.125% cumulative redeemable perpetual preferred stock: $0.01 par value (liquidation preference $25.00 per share), 4,600,000 shares authorized, 4,280,000 shares issued and outstanding as of March 31, 2018; zero shares authorized, issued and outstanding as of December 31, 2017 | 103,184 | |
Series A 7.125 | Qualitytech, LP | ||
EQUITY | ||
Series A 7.125% cumulative redeemable perpetual preferred stock: $0.01 par value (liquidation preference $25.00 per share), 4,600,000 shares authorized, 4,280,000 shares issued and outstanding as of March 31, 2018; zero shares authorized, issued and outstanding as of December 31, 2017 | 103,184 | |
Common Units | ||
EQUITY | ||
Common stock/units | 511 | 507 |
Common Units | Qualitytech, LP | ||
EQUITY | ||
Common stock/units | $ 969,580 | $ 989,207 |
INTERIM CONSOLIDATED FINANCIAL3
INTERIM CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Preferred stock, liquidation preference | $ 25 | |
Series A 7.125 | ||
Preferred stock, par value | 0.01 | $ 0.01 |
Preferred stock, liquidation preference | $ 25 | $ 25 |
Preferred stock, authorized | 4,600,000 | 0 |
Preferred stock, issued | 4,280,000 | 0 |
Preferred stock, outstanding | 4,280,000 | 0 |
Series A 7.125 | Qualitytech, LP | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, liquidation preference | $ 25 | $ 25 |
Preferred stock, authorized | 4,600,000 | 0 |
Preferred stock, issued | 4,280,000 | 0 |
Preferred stock, outstanding | 4,280,000 | 0 |
Common Units | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,133,000 | 450,133,000 |
Common stock, shares issued | 51,135,691 | 50,701,795 |
Common stock, shares outstanding | 51,135,691 | 50,701,795 |
Common Units | Qualitytech, LP | ||
Common stock, shares issued | 57,810,023 | 57,245,524 |
Common stock, shares outstanding | 57,810,023 | 57,245,524 |
INTERIM CONSOLIDATED FINANCIAL4
INTERIM CONSOLIDATED FINANCIAL STATEMENTS STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||
Rental | $ 85,713 | $ 79,117 |
Total revenues | 113,697 | 105,964 |
Operating Expenses: | ||
Property operating costs | 37,740 | 35,421 |
Real estate taxes and insurance | 2,905 | 3,147 |
Depreciation and amortization | 35,913 | 33,948 |
General and administrative | 22,234 | 22,197 |
Transaction, integration and impairment costs | 920 | 336 |
Restructuring | 8,530 | |
Total operating expenses | 108,242 | 95,049 |
Operating income | 5,455 | 10,915 |
Other income and expenses: | ||
Interest income | 1 | 1 |
Interest expense | (8,110) | (6,869) |
Income (loss) before taxes | (2,654) | 4,047 |
Tax benefit of taxable REIT subsidiaries | 2,402 | 1,521 |
Net income (loss) | (252) | 5,568 |
Net (income) loss attributable to noncontrolling interests | 29 | (691) |
Net income (loss) attributable to QTS Realty Trust, Inc. | (223) | 4,877 |
Preferred stock dividends | (328) | |
Net income (loss) attributable to common stokholders | $ (551) | $ 4,877 |
Net income (loss) per share attributable to common shares: | ||
Basic | $ (0.02) | $ 0.10 |
Diluted | $ (0.02) | $ 0.10 |
Recoveries From Customers | ||
Revenues: | ||
Revenue | $ 11,513 | $ 8,361 |
Cloud and managed services | ||
Revenues: | ||
Revenue | 13,181 | 16,965 |
Other | ||
Revenues: | ||
Revenue | 3,290 | 1,521 |
Qualitytech, LP | ||
Revenues: | ||
Rental | 85,713 | 79,117 |
Total revenues | 113,697 | 105,964 |
Operating Expenses: | ||
Property operating costs | 37,740 | 35,421 |
Real estate taxes and insurance | 2,905 | 3,147 |
Depreciation and amortization | 35,913 | 33,948 |
General and administrative | 22,234 | 22,197 |
Transaction, integration and impairment costs | 920 | 336 |
Restructuring | 8,530 | |
Total operating expenses | 108,242 | 95,049 |
Operating income | 5,455 | 10,915 |
Other income and expenses: | ||
Interest income | 1 | 1 |
Interest expense | (8,110) | (6,869) |
Income (loss) before taxes | (2,654) | 4,047 |
Tax benefit of taxable REIT subsidiaries | 2,402 | 1,521 |
Net income (loss) | (252) | 5,568 |
Preferred unit distributions | (328) | |
Net income (loss) attributable to common stokholders | (580) | 5,568 |
Qualitytech, LP | Recoveries From Customers | ||
Revenues: | ||
Revenue | 11,513 | 8,361 |
Qualitytech, LP | Cloud and managed services | ||
Revenues: | ||
Revenue | 13,181 | 16,965 |
Qualitytech, LP | Other | ||
Revenues: | ||
Revenue | $ 3,290 | $ 1,521 |
INTERIM CONSOLIDATED FINANCIAL5
INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net income (loss) | $ (252) | $ 5,568 |
Other comprehensive income: | ||
Increase in fair value of interest rate swaps | 5,982 | |
Reclassification of other comprehensive income to interest expense | 402 | |
Comprehensive income | 6,132 | 5,568 |
Comprehensive (income) attributable to noncontrolling interests | (702) | (691) |
Comprehensive income attributable to QTS Realty Trust, Inc. | 5,430 | 4,877 |
Qualitytech, LP | ||
Net income (loss) | (252) | 5,568 |
Other comprehensive income: | ||
Increase in fair value of interest rate swaps | 5,982 | |
Reclassification of other comprehensive income to interest expense | 402 | |
Comprehensive income | $ 6,132 | $ 5,568 |
INTERIM CONSOLIDATED FINANCIAL6
INTERIM CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF EQUITY - 3 months ended Mar. 31, 2018 - USD ($) shares in Thousands, $ in Thousands | Qualitytech, LPAccumulated Other Comprehensive Income (Loss) | Qualitytech, LPSeries A 7.125Limited Partner | Qualitytech, LPCommon UnitsGeneral Partner | Qualitytech, LPCommon UnitsLimited Partner | Qualitytech, LP | Preferred Stock | 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, 2017 | $ 1,449 | $ 990,656 | $ 507 | $ 1,049,176 | $ 1,283 | $ (173,552) | $ 877,414 | $ 113,242 | $ 990,656 | ||||
Beginning balance at Dec. 31, 2017 | $ 989,207 | ||||||||||||
Partners' Capital, Beginning Balance at Dec. 31, 2017 | 990,656 | ||||||||||||
Beginning balance, shares at Dec. 31, 2017 | 50,702 | ||||||||||||
Beginning balance, shares at Dec. 31, 2017 | 57,246 | ||||||||||||
Beginning balance, shares at Dec. 31, 2017 | 1 | ||||||||||||
Net share activity through equity award plan | $ (238) | (238) | $ 4 | (1,311) | (1,307) | 1,069 | (238) | ||||||
Net share activity through equity award plan, shares | 564 | 434 | |||||||||||
Increase in fair value of interest rate swaps | 5,982 | 5,982 | 5,290 | 5,290 | 692 | 5,982 | |||||||
Equity-based compensation expense | $ 4,898 | 4,898 | 4,337 | 4,337 | 561 | 4,898 | |||||||
Net proceeds from Series A Preferred Stock offering | $ 103,184 | 103,184 | $ 103,184 | 103,184 | 103,184 | ||||||||
Net proceeds from Series A Preferred Stock offering (in shares) | 4,280 | 4,280 | |||||||||||
Dividends declared on Preferred Stock | (328) | (328) | (328) | ||||||||||
Dividends declared on Preferred Units | (328) | (328) | |||||||||||
Dividends to stockholders | (20,971) | (20,971) | (20,971) | (20,971) | (20,971) | ||||||||
Distributions to noncontrolling interests | (2,736) | (2,736) | |||||||||||
Partnership distributions | (2,736) | (2,736) | |||||||||||
Net income (loss) | (252) | (252) | (223) | (223) | (29) | (252) | |||||||
Ending balance at Mar. 31, 2018 | $ 7,431 | 1,080,195 | $ 103,184 | $ 511 | $ 1,052,202 | $ 6,573 | $ (195,074) | $ 967,396 | $ 112,799 | $ 1,080,195 | |||
Ending balance at Mar. 31, 2018 | $ 103,184 | $ 969,580 | |||||||||||
Partners' Capital, Ending Balance at Mar. 31, 2018 | $ 1,080,195 | ||||||||||||
Ending balance, shares at Mar. 31, 2018 | 4,280 | 51,136 | |||||||||||
Ending balance, shares at Mar. 31, 2018 | 4,280 | 57,810 | |||||||||||
Ending balance, shares at Mar. 31, 2018 | 1 |
INTERIM CONSOLIDATED FINANCIAL7
INTERIM CONSOLIDATED FINANCIAL STATEMENTS STATEMENTS OF CASH FLOW - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flow from operating activities: | ||
Net income (loss) | $ (252) | $ 5,568 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 34,580 | 32,970 |
Amortization of above and below market leases | 139 | 259 |
Amortization of deferred loan costs | 962 | 872 |
Amortization of senior notes discount | 68 | |
Equity-based compensation expense | 3,481 | 3,082 |
Bad debt expense (recoveries) | (863) | 314 |
Deferred tax benefit | (2,402) | (1,581) |
Restructuring costs, net of cash paid | 8,020 | |
Changes in operating assets and liabilities | ||
Rents and other receivables, net | 2,753 | (1,084) |
Prepaid expenses | (4,165) | (3,253) |
Other assets | (3,339) | (800) |
Accounts payable and accrued liabilities | 9,619 | (11,815) |
Advance rents, security deposits and other liabilities | (354) | 4,144 |
Deferred income | 3,374 | 1,791 |
Net cash provided by operating activities | 51,553 | 30,535 |
Cash flow from investing activities: | ||
Acquisitions, net of cash acquired | (24,626) | |
Additions to property and equipment | (103,936) | (66,119) |
Net cash used in investing activities | (128,562) | (66,119) |
Cash flow from financing activities: | ||
Credit facility proceeds | 102,000 | 67,000 |
Credit facility repayments | (95,000) | |
Debt proceeds | 1,920 | |
Payment of deferred financing costs | (499) | (4) |
Payment of dividends | (19,670) | (17,222) |
Distribution to noncontrolling interests | (2,552) | (2,442) |
Proceeds from exercise of stock options | 42 | |
Payment of tax withholdings related to equity based awards | (867) | (1,770) |
Principal payments on capital lease obligations | (2,324) | (3,249) |
Mortgage principal debt repayments | (16) | (14) |
Preferred Stock issuance proceeds, net of costs | 103,615 | |
Net cash provided by financing activities | 84,687 | 44,261 |
Net increase in cash and cash equivalents | 7,678 | 8,677 |
Cash and cash equivalents, beginning of period | 8,243 | 9,580 |
Cash and cash equivalents, end of period | 15,921 | 18,257 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest (excluding deferred financing costs and amounts capitalized) | 4,720 | 9,368 |
Noncash investing and financing activities: | ||
Accrued capital additions | 102,489 | 39,673 |
Increase in other assets related to change in fair value of interest rate swaps | 5,982 | |
Accrued equity issuance costs | 432 | |
Accrued preferred stock dividend | 328 | |
Qualitytech, LP | ||
Cash flow from operating activities: | ||
Net income (loss) | (252) | 5,568 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 34,580 | 32,970 |
Amortization of above and below market leases | 139 | 259 |
Amortization of deferred loan costs | 962 | 872 |
Amortization of senior notes discount | 68 | |
Equity-based compensation expense | 3,481 | 3,082 |
Bad debt expense (recoveries) | (863) | 314 |
Deferred tax benefit | (2,402) | (1,581) |
Restructuring costs, net of cash paid | 8,020 | |
Changes in operating assets and liabilities | ||
Rents and other receivables, net | 2,753 | (1,084) |
Prepaid expenses | (4,165) | (3,253) |
Other assets | (3,339) | (800) |
Accounts payable and accrued liabilities | 9,619 | (11,815) |
Advance rents, security deposits and other liabilities | (354) | 4,144 |
Deferred income | 3,374 | 1,791 |
Net cash provided by operating activities | 51,553 | 30,535 |
Cash flow from investing activities: | ||
Acquisitions, net of cash acquired | (24,626) | |
Additions to property and equipment | (103,936) | (66,119) |
Net cash used in investing activities | (128,562) | (66,119) |
Cash flow from financing activities: | ||
Credit facility proceeds | 102,000 | 67,000 |
Credit facility repayments | (95,000) | |
Debt proceeds | 1,920 | |
Payment of deferred financing costs | (499) | (4) |
Payment of dividends | (19,670) | (17,222) |
Partnership distributions | (2,552) | (2,442) |
Proceeds from exercise of stock options | 42 | |
Payment of tax withholdings related to equity based awards | (867) | (1,770) |
Principal payments on capital lease obligations | (2,324) | (3,249) |
Mortgage principal debt repayments | (16) | (14) |
Preferred Stock issuance proceeds, net of costs | 103,615 | |
Net cash provided by financing activities | 84,687 | 44,261 |
Net increase in cash and cash equivalents | 7,678 | 8,677 |
Cash and cash equivalents, beginning of period | 8,243 | 9,580 |
Cash and cash equivalents, end of period | 15,921 | 18,257 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest (excluding deferred financing costs and amounts capitalized) | 4,720 | 9,368 |
Noncash investing and financing activities: | ||
Accrued capital additions | 102,489 | $ 39,673 |
Increase in other assets related to change in fair value of interest rate swaps | 5,982 | |
Accrued equity issuance costs | 432 | |
Accrued preferred stock dividend | $ 328 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2018 | |
Description of Business [Abstract] | |
Description of Business | 1. Description of Business QTS Realty Trust, Inc., a Maryland corporation, (“QTS”) through its controlling interest in QualityTech, LP (the “Operating Partnership” and collectively with QTS and their subsidiaries, the “Company”) and the subsidiaries of the Operating Partnership, is engaged in the business of owning, acquiring, constructing, redeveloping and managing multi-tenant data centers. The Company’s portfolio consists of 26 wholly-owned and leased properties with data centers located throughout the United States, Canada, Europe and Asia. QTS elected to be taxed as a real estate investment trust (“REIT”), for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2013. As a REIT, QTS generally is not required to pay federal corporate income taxes on its taxable income to the extent it is currently distributed to its stockholders. The Operating Partnership is a Delaware limited partnership formed on August 5, 2009 and is QTS’ historical predecessor. As of March 31, 2018, QTS owned approximately 88.5% of the interests in the Operating Partnership. Substantially all of QTS’ assets are held by, and QTS’ operations are conducted through, the Operating Partnership. QTS’ interest in the Operating Partnership entitles QTS to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to QTS’ percentage ownership. As the sole general partner of the Operating Partnership, QTS generally has the exclusive power under the partnership agreement of the Operating Partnership to manage and conduct the Operating Partnership’s business and affairs, subject to certain limited approval and voting rights of the limited partners. QTS’ board of directors manages the Company’s business and affairs. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in compliance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes and management’s discussion and analysis included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 28, 2018. The consolidated balance sheet data included herein as of December 31, 2017 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying financial statements are presented for both QTS Realty Trust, Inc. and QualityTech, LP. References to “QTS” mean QTS Realty Trust, Inc. and its controlled subsidiaries and references to the “Operating Partnership” mean QualityTech, LP and its controlled subsidiaries. The Operating Partnership meets the definition and criteria of a variable interest entity (“VIE”) in accordance with ASC 810 Consolidation , and the Company is the primary beneficiary of the VIE. As discussed below, the Company’s only material asset is its ownership interest in the Operating Partnership, and consequently, all of its assets and liabilities represent those assets and liabilities of the Operating Partnership. The Company’s debt is an obligation of the Operating Partnership where the creditors may have recourse, under certain circumstances, against the credit of the Company. QTS is the sole general partner of the Operating Partnership, and its only material asset consists of its ownership interest in the Operating Partnership. Management operates QTS and the Operating Partnership as one business. The management of QTS consists of the same employees as the management of the Operating Partnership. QTS does not conduct business itself, other than acting as the sole general partner of the Operating Partnership and issuing public equity from time to time. QTS has not issued or guaranteed any indebtedness. Except for net proceeds from public equity issuances by QTS, which are contributed to the Operating Partnership in exchange for units of limited partnership interest of the Operating Partnership, the Operating Partnership generates all remaining capital required by the business through its operations, the direct or indirect incurrence of indebtedness, and the issuance of partnership units. Therefore, as general partner with control of the Operating Partnership, QTS consolidates the Operating Partnership for financial reporting purposes. The Company believes, therefore, that providing one set of notes for the financial statements of QTS and the Operating Partnership provides the following benefits: · enhances investors’ understanding of QTS and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; · eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both QTS and the Operating Partnership; and · creates time and cost efficiencies through the preparation of one set of notes instead of two separate sets of notes. In addition, in light of these combined notes, the Company believes it is important for investors to understand the few differences between QTS and the Operating Partnership in the context of how QTS and the Operating Partnership operate as a consolidated company. With respect to balance sheets, the presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated balance sheets of QTS and those of the Operating Partnership. On the Operating Partnership’s consolidated balance sheets, partners’ capital includes preferred partnership units and common partnership units that are owned by QTS and other partners as well as accumulated other comprehensive income (loss). On QTS’ consolidated balance sheets, stockholders’ equity includes preferred stock, common stock, additional paid in capital, accumulated other comprehensive income (loss) and accumulated dividends in excess of earnings. The remaining equity reflected on QTS’s consolidated balance sheet is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. With respect to statements of operations, the primary difference in QTS' Statements of Operations and Statements of Comprehensive Income is that for net income (loss), QTS retains its proportionate share of the net income (loss) based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership. These combined notes refer to actions or holdings as being actions or holdings of “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, management believes that these general references to “the Company” in this context is appropriate because the business is one enterprise operated through the Operating Partnership. As discussed above, QTS owns no operating assets and has no operations independent of the Operating Partnership and its subsidiaries. Also, the Operating Partnership owns no operating assets and has no operations independent of its subsidiaries. Obligations under the 4.75% Senior Notes due 2025 and the unsecured credit facility, both discussed in Note 5, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries (other than foreign subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Issuers or any other subsidiary guarantor, other than 1) QTS Investment Properties Manassas, LLC, a subsidiary formed in March 2018 in connection with a vacant land purchase, and has de minimis assets and operations; and 2) QTS Finance Corporation, the co-issuer of the 4.75% Senior Notes due 2025. The indenture governing the 4.75% Senior Notes due 2025 restricts the ability of the Operating Partnership to make distributions to QTS, subject to certain exceptions, including distributions required in order for QTS to maintain its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the “Code”). The interim consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority owned subsidiaries. This includes the operating results of the Operating Partnership for all periods presented. Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals. Principles of Consolidation – The consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority-owned subsidiaries. The consolidated financial statements of QualityTech, LP include the accounts of QualityTech, LP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in the financial statements. Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation for real estate assets is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended March 31, 2018, depreciation expense related to real estate assets and non-real estate assets was $23.7 million and $3.2 million, respectively, for a total of $26.9 million. For the three months ended March 31, 2017, depreciation expense related to real estate assets and non-real estate assets was $21.4 million and $3.6 million, respectively, for a total of $25.0 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 $3.5 million and $2.5 million for the three months ended March 31, 2018 and 2017, respectively. Interest is capitalized during the period of development by first applying the Company’s actual borrowing rate on the related asset and second, to the extent necessary, by applying the Company’s weighted average effective borrowing rate to the actual development and other costs expended during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $5.4 million and $3.1 million for the three months ended March 31, 2018 and 2017, 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 analyzed a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets. Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. This amortization expense is accounted for as real estate amortization expense. Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. This amortization expense is accounted for as real estate amortization expense. Other acquired intangible assets, which includes platform, above or below market leases, and trade name intangibles, are amortized on a straight-line basis over their respective expected lives. Above or below market leases are amortized as a reduction to or increase in rental revenue when the Company is a lessor as well as a reduction or increase to rent expense over the remaining lease terms in the case of the Company as lessee. The expense associated with 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. In March 2018, the Company completed the acquisition of approximately 61 acres of land in Manassas, Virginia for approximately $24.6 million to be used for future development. The acquisition was accounted for as an asset acquisition. The land acquired in the Manassas purchase is included within the “Construction in Progress” line item of the consolidated balance sheets. Impairment of Long-Lived Assets, Intangible Assets and Goodwill – The Company reviews its long-lived assets and intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset exceeds the value of the undiscounted cash flows, the fair value of the asset is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. The Company recognized $4.1 million of impairment losses related to certain product related assets in the three months ended March 31, 2018. 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. In connection with the goodwill impairment evaluation that the Company performed on October 1, 2017, the Company determined qualitatively that it is not more likely than not that the fair value of the Company’s one reporting unit was less than the carrying amount, thus it did not perform a quantitative analysis. As the Company continues to operate and assess its Goodwill at the corporate level and its market capitalization exceeds its net asset value, further analysis was not deemed necessary as of March 31, 2018. Cash and Cash Equivalents – The Company considers all demand deposits and money market accounts purchased with a maturity date of three months or less at the date of purchase to be cash equivalents. The Company’s account balances at one or more institutions periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is concentration of credit risk related to amounts on deposit in excess of FDIC coverage. The Company mitigates this risk by depositing a majority of its funds with several major financial institutions. The Company also has not experienced any losses and, therefore, does not believe that the risk is significant. Deferred Costs – Deferred costs, net, on the Company’s balance sheets include both financing costs and leasing costs. Deferred financing costs represent fees and other costs incurred in connection with obtaining debt and are amortized over the term of the loan and are included in interest expense. Debt issuance costs related to revolving debt arrangements are deferred and presented as assets on the balance sheet; however, all other debt issuance costs are recorded as a direct offset to the associated liability. Amortization of debt issuance costs, including those costs presented as offsets to the associated liability in the consolidated balance sheet, was $1.0 million and $0.9 million for the three months ended March 31, 2018 and 2017, respectively. Deferred financing costs presented as assets on the balance sheet related to revolving debt arrangements, net of accumulated amortization, are as follows: March 31, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 9,759 $ 9,775 Accumulated amortization (2,398) (1,908) Deferred financing costs, net $ 7,361 $ 7,867 Deferred financing costs presented as offsets to the associated liabilities on the balance sheet related to fixed debt arrangements, net of accumulated amortization, are as follows: March 31, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 12,715 $ 12,675 Accumulated amortization (1,510) (1,039) Deferred financing costs, net $ 11,205 $ 11,636 Initial direct costs, or deferred leasing costs, include commissions paid to third parties, including brokers, leasing and referral agents, and internal sales commissions paid to employees for successful execution of lease agreements. These costs are incurred when the Company executes lease agreements and represent only incremental costs that would not have been incurred if the lease agreement had not been executed. The Company incurs the same incremental costs to obtain managed services and cloud contracts with customers that are accounted for pursuant to ASC 606. These costs are accounted for under ASC 340-40 which includes the same framework for capitalization that is applied to the Company’s leasing contracts as only the direct and incremental costs of obtaining a revenue contract are capitalized. Because the framework of accounting for these costs and the underlying nature of the costs are the same for the Company’s revenue and lease contracts, the costs are presented on a combined basis within the Company’s financial statements and within the below table. Both revenue and leasing commissions are capitalized and generally amortized over the term of the related leases or the expected term of the contract using the straight-line method. If a customer lease terminates prior to the expiration of its initial term, any unamortized initial direct costs related to the lease are written off to amortization expense. Amortization of deferred leasing costs totaled $4.9 million and $4.2 million for the three months ended March 31, 2018 and 2017, respectively. Deferred leasing costs, net of accumulated amortization, are as follows: March 31, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred leasing costs $ 56,563 $ 54,868 Accumulated amortization (21,526) (20,956) Deferred leasing costs, net $ 35,037 $ 33,912 Revenue Recognition – In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance codified in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , which supersedes the current revenue recognition requirements in ASC Topic 605, Revenue Recognition . Under this new guidance, entities should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This standard also requires enhanced disclosures. The standard is effective for annual and interim periods beginning after December 15, 2017. Retrospective and modified retrospective application is allowed. The Company adopted ASC Topic 606 effective January 1, 2018, and elected the modified retrospective transition approach. The adoption did not result in a cumulative catch-up adjustment to opening equity and does not change the recognition pattern of the Company’s operating revenues. Under the standard, disclosures are required to provide information on the nature, amount, timing, and uncertainty of revenue, certain costs, and cash flows arising from contracts with customers. The Company derives its revenues from leases with customers for data center space which include lease rental revenue components and nonlease revenue components, such as power, connectivity, cloud and managed services. A description of each of the Company’s disaggregated revenue streams is as follows: Rental Revenue The Company’s leases with customers are classified as operating leases and rental revenue is recognized on a straight-line basis over the customer lease term. Occasionally, customer leases include options to extend or terminate the lease agreements. The Company does not include any of these extension or termination options in a customer’s lease term for lease classification purposes or recognizing rental revenue unless it is reasonably certain the customer will exercise these extension or termination options. Rental revenue also includes revenue from power delivery on fixed power arrangements, whereby customers are billed and pay a fixed monthly fee per committed available amount of connected power. These fixed power arrangements require the Company to provide a series of distinct services of standing ready to deliver the power over the contracted term which is co-terminus with the lease. The Company recognizes revenue from these nonlease fixed power components over time on a straight-line basis in the same manner as the lease components of the contract as the customer simultaneously receives and consumes the power benefits provided over the lease term. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed below. Recoveries from Customers Certain customer leases contain provisions under which customers reimburse the Company for power and cooling-related charges as well as a portion of the property’s real estate taxes, insurance and other operating expenses. Recoveries of power and cooling-related expenses are nonlease components and relate specifically to the Company’s variable power arrangements, whereby customers pay variable monthly fees for the specific amount of power utilized at the current utility rates. The Company’s performance obligation is to stand ready to deliver power over the life of the customer contract up to a contracted power capacity. Customers have the flexibility to increase or decrease the amount of power consumed, and therefore sub-metered power revenue is constrained at contract inception. The reimbursements are included in revenue as recoveries from customers and are recognized each month as the uncertainty related to the consideration is resolved (i.e. the Company provides power to its customers) and customers utilize the power. Reimbursement of real estate taxes, insurance, common area maintenance, or other operating expenses are accounted for as executory costs under lease guidance and are recognized as revenue in the period that the expenses are recognized. Cloud and Managed Services The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. In both its cloud and managed services offerings the Company’s performance obligation is to provide services (e.g. cloud hosting, data backup, data storage or data center personnel labor hours) to facilitate a fully integrated IT outsourcing environment over a contracted term. Although underlying services may vary, over the contracted term monthly service offerings are substantially the same and the Company accounts for the services as a series of distinct services. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. As the Company has the right to consideration from customers in an amount that corresponds directly with the value to the customer of the Company’s performance of providing continuous services, the Company recognizes monthly revenue for the amount invoiced. With respect to the transaction price allocated to remaining performance obligations within the Company’s cloud and managed service contracts, the Company has elected to use the optional exemption provided by the standard whereby the Company is not required to estimate the total transaction price allocated to remaining performance obligations as the Company applies the “right-to-invoice” practical expedient. As described above, the nature of our performance obligation in these contracts is to provide monthly services that are substantially the same and accounted for as a series of distinct services. These contracts generally have a remaining term ranging from month-to-month to three years. Other Other revenue primarily consists of straight line rent. Straight line rent represents the difference in rents recognized versus amounts contractually due pursuant to the underlying leases and is recorded as deferred rent receivable/payable in the consolidated balance sheets. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net was $26.1 million and $23.4 million as of March 31, 2018 and December 31, 2017, respectively. Advance Rents and Security Deposits – Advance rents, typically prepayment of the following month’s rent, consist of payments received from customers prior to the time they are earned and are recognized as revenue in subsequent periods when earned. Security deposits are collected from customers at the lease origination and are generally refunded to customers upon lease expiration. Deferred Income – Deferred income generally results from non-refundable charges paid by the customer at lease inception to prepare their space for occupancy. The Company records this initial payment, commonly referred to as set-up fees, as a deferred income liability which amortizes into rental revenue over the term of the related lease on a straight-line basis. Deferred income was $28.7 million and $25.3 million as of March 31, 2018 and December 31, 2017, respectively. Additionally, $2.9 million and $2.6 million of deferred income was amortized into revenue for the three months ended March 31, 2018 and 2017, respectively. Equity-based Compensation – Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification and amortized ratably over their respective vesting periods. We have elected to account for forfeitures as they occur. Equity-based compensation expense net of forfeited and repurchased awards was $3.5 million and $3.1 million for the three months ended March 31, 2018 and 2017, respectively. Equity based compensation expense for the three months ended March 31, 2018 excludes $1.4 million of equity based compensation expense associated with the acceleration of equity awards related to certain employees impacted by the Company’s strategic growth plan. The aforementioned equity based compensation expense is included in the “Restructuring” expense line item on the consolidated statements of operations. Allowance for Uncollectible Accounts Receivable – Rents receivable are recognized when due and are carried at cost, less an allowance for doubtful accounts. The Company records a provision for losses on rents receivable equal to the estimated uncollectible accounts, which is based on management’s historical experience and a review of the current status of the Company’s receivables. As necessary, the Company also establishes an appropriate allowance for doubtful accounts for receivables arising from the straight-lining of rents. The aggregate allowance for doubtful accounts was $10.8 million and $11.5 million as of March 31, 2018 and December 31, 2017, respectively. Capital Leases and Lease Financing Obligations – The Company evaluates leased real estate to determine whether the lease should be classified as a capital or operating lease in accordance with U.S. GAAP. The Company periodically enters into capital leases for certain equipment. In addition, through its acquisition of Carpathia on June 16, 2015, the Company is party to capital leases for property and equipment, as well as certain financing obligations. The outstanding liabilities for the capital leases were $5.7 million and $7.8 million as of March 31, 2018 and December 31, 2017, respectively. The outstanding liabilities for the lease financing obligations were $0.7 million and $0.9 million as of March 31, 2018 and December 31, 2017, respectively. The net book value of the assets associated with these leases was approximately $12.6 million and $14.7 million as of March 31, 2018 and December 31, 2017, respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations. See Note 5 for further discussion of capital leases and lease financing obligations. Segment Information – The Company manages its business as one operating segment and thus one reportable segment consisting of a portfolio of investments in data centers located primarily in the United States. Customer Concentrations – As of March 31, 2018, one of the Company’s customers represented 11.8% of its total monthly rental revenue. No other customers exceeded 5% of total monthly rental revenue. As of March 31, 2018, five of the Company’s customers exceeded 5% of total accounts receivable. In aggregate, these five customers accounted for approximately 36% of total accounts receivable. None of these customers exceeded 10% of total accounts receivable. Income Taxes – The Company has elected for two of its existing subsidiaries to be taxed as taxable REIT subsidiaries pursuant to the REIT rules of the U.S. Internal Revenue Code. For the taxable REIT subsidiaries, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. 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 three months ended March 31, 2018, in connection with recorded operating losses. As of March 31, 2018, 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 subsidiaries’ effective tax rates were 23.1% and 39.7% for the three months ended March 31, 2018 and 2017, respectively. On December 22, 2017, the Tax Cuts and Jobs Act ("The Act"), was signed into law by President Trump. The Act contains several provisions, including the lowering of the U.S. corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. The Company has significant deferred |
Acquired Intangibles Assets and
Acquired Intangibles Assets and Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Acquired Intangible Assets and Liabilities [Abstract] | |
Acquired Intangibles Assets and Liabilities | 3. Acquired Intangible Assets and Liabilities Summarized below are the carrying values for the major classes of intangible assets and liabilities (unaudited and in thousands): March 31, 2018 December 31, 2017 Useful Lives Gross Accumulated Net Carrying Gross Accumulated Net Carrying Customer Relationships 1 to 12 years $ 95,705 $ (22,500) $ 73,205 $ 95,705 $ (20,512) $ 75,193 In-Place Leases 0.5 to 10 years 32,066 (14,213) 17,853 32,066 (12,987) 19,079 Solar Power Agreement (1) 17 years 13,747 (3,032) 10,715 13,747 (2,830) 10,917 Platform Intangible 3 years 9,600 (8,762) 838 9,600 (8,133) 1,467 Acquired Favorable Leases 0.5 to 8 years 4,649 (2,581) 2,068 4,649 (2,328) 2,321 Tradenames 3 years 3,100 (2,829) 271 3,100 (2,626) 474 Total Intangible Assets $ 158,867 $ (53,917) $ 104,950 $ 158,867 $ (49,416) $ 109,451 Solar Power Agreement (1) 17 years 13,747 (3,032) 10,715 13,747 (2,830) 10,917 Acquired Unfavorable Leases Acquired below market leases - as Lessor 3 to 4 years 809 (434) 375 809 (375) 434 Acquired above market leases - as Lessee 11 to 12 years 2,453 (604) 1,849 2,453 (550) 1,903 Total Intangible Liabilities (2) $ 17,009 $ (4,070) $ 12,939 $ 17,009 $ (3,755) $ 13,254 (1) Amortization related to the Solar Power Agreement asset and liability is recorded at the same rate and therefore has no net impact on the statement of operations. (2) Intangible liabilities are included within the “Advance rents, security deposits and other liabilities” line item of the consolidated balance sheets. Above or below market leases are amortized as a reduction to or increase in rental revenue as well as a reduction to rent expense in the case of the Company as lessee over the remaining lease terms. The net effect of amortization of acquired above‑market and below‑market leases resulted in a net decrease in rental revenue of $0.1 million and $0.3 million for the three months ended March 31, 2018 and 2017, respectively. The estimated amortization of acquired favorable and unfavorable leases for each of the five succeeding fiscal years ending December 31 is as follows (unaudited and in thousands): Net Rental Revenue Decreases Rental Expense 2018 (April - December) $ 487 $ 162 2019 479 216 2020 647 216 2021 46 216 2022 17 216 Thereafter 17 823 Total $ 1,693 $ 1,849 Net amortization of all other identified intangible assets and liabilities was $4.0 million and $4.7 million for the three months ended March 31, 2018 and 2017, respectively. The estimated net amortization of all other identified intangible assets and liabilities for each of the five succeeding fiscal years ending December 31 is as follows (unaudited and in thousands): 2018 (April - December) $ 10,528 2019 11,965 2020 11,379 2021 10,137 2022 9,910 Thereafter 38,248 Total $ 92,167 |
Real Estate Assets and Construc
Real Estate Assets and Construction in Progress | 3 Months Ended |
Mar. 31, 2018 | |
Real Estate Assets and Construction in Progress [Abstract] | |
Real Estate Assets and Construction in Progress | 4. Real Estate Assets and Construction in Progress The following is a summary of properties owned or leased by the Company as of March 31, 2018 and December 31, 2017 (in thousands): As of March 31, 2018 (unaudited): Property Location Land Buildings, Construction Total Cost Atlanta, Georgia (Atlanta-Metro) $ 20,416 $ 461,668 $ 24,705 $ 506,789 Irving, Texas 8,606 326,024 69,317 403,947 Richmond, Virginia 2,180 254,868 63,007 320,055 Chicago, Illinois 9,400 95,691 128,587 233,678 Suwanee, Georgia (Atlanta-Suwanee) 3,521 168,759 3,266 175,546 Ashburn, Virginia (3) — 158 170,741 170,899 Piscataway, New Jersey 7,466 84,122 38,898 130,486 Santa Clara, California (1) — 100,450 7,052 107,502 Dulles, Virginia 3,154 77,569 3,952 84,675 Sacramento, California 1,481 64,438 16 65,935 Leased Facilities (2) — 57,499 6,417 63,916 Fort Worth, Texas 9,079 18,423 34,887 62,389 Princeton, New Jersey 20,700 32,987 595 54,282 Phoenix, Arizona (3) — — 28,269 28,269 Hillsboro, Oregon (3) — — 31,593 31,593 Manassas, Virginia (3) — — 24,717 24,717 Other (4) 2,212 35,666 35 37,913 $ 88,215 $ 1,778,322 $ 636,054 $ 2,502,591 (1) Owned facility subject to long-term ground sublease. (2) Includes 11 facilities. All facilities are leased, including those subject to capital leases. (3) Represent land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use. (4) Consists of Miami, FL; Lenexa, KS and Overland Park, KS facilities. As of December 31, 2017: Property Location Land Buildings, Construction Total Cost Atlanta, Georgia (Atlanta-Metro) $ 20,416 $ 452,836 $ 28,614 $ 501,866 Irving, Texas 8,606 276,894 86,320 371,820 Richmond, Virginia 2,180 254,603 61,888 318,671 Chicago, Illinois 9,400 81,463 135,479 226,342 Suwanee, Georgia (Atlanta-Suwanee) 3,521 165,915 3,620 173,056 Ashburn, Virginia (3) — — 106,952 106,952 Piscataway, New Jersey 7,466 83,251 37,807 128,524 Santa Clara, California (1) — 100,028 6,989 107,017 Dulles, Virginia 3,154 76,239 3,565 82,958 Sacramento, California 1,481 64,251 58 65,790 Leased Facilities (2) — 59,460 5,534 64,994 Fort Worth, Texas 9,079 17,894 33,774 60,747 Princeton, New Jersey 20,700 32,948 451 54,099 Phoenix, Arizona (3) — — 27,402 27,402 Hillsboro, Oregon (3) — — 29,278 29,278 Other (4) 2,213 35,505 88 37,806 $ 88,216 $ 1,701,287 $ 567,819 $ 2,357,322 (1) Owned facility subject to long-term ground sublease. (2) Includes 11 facilities. All facilities are leased, including those subject to capital leases. (3) Represent land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use. (4) Consists of Miami, FL; Lenexa, KS; Overland Park, KS; and Duluth, GA facilities. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt [Abstract] | |
Debt | 5. Debt Below is a listing of the Company’s outstanding debt, including capital leases and lease financing obligations, as of March 31, 2018 and December 31, 2017 (in thousands): Weighted Average Coupon Interest Rate at March 31, December 31, March 31, 2018 Maturities 2018 2017 (unaudited) (unaudited) Unsecured Credit Facility Revolving Credit Facility 3.35% December 17, 2021 $ 138,000 $ 131,000 Term Loan I 3.35% December 17, 2022 350,000 350,000 Term Loan II 3.37% April 27, 2023 350,000 350,000 Senior Notes 4.75% November 15, 2025 400,000 400,000 Lenexa Mortgage 4.10% May 1, 2022 1,850 1,866 Capital Lease and Lease Financing Obligations 1.98% 2018 - 2019 6,375 8,699 3.80% 1,246,225 1,241,565 Less net debt issuance costs (11,205) (11,636) Total outstanding debt, net $ 1,235,020 $ 1,229,929 Credit Facilities, Senior Notes and Mortgage Notes Payable (a) Unsecured Credit Facility – In December 2017, the Company amended its amended and restated unsecured credit facility (the “unsecured credit facility”), increasing the total capacity to $1.52 billion and extending the term. The unsecured credit facility includes a $350 million term loan which matures on December 17, 2022, a $350 million term loan which matures on April 27, 2023, and an $820 million revolving credit facility which matures on December 17, 2021, with a one year extension option. Amounts outstanding under the amended unsecured credit facility bear interest at a variable rate equal to, at the Company’s election, LIBOR or a base rate, plus a spread that will vary depending upon the Company’s leverage ratio. For revolving credit loans, the spread ranges from 1.55% to 2.15% for LIBOR loans and 0.55% to 1.15% for base rate loans. For term loans, the spread ranges from 1.50% to 2.10% for LIBOR loans and 0.50% to 1.10% for base rate loans. The unsecured credit facility also includes a $400 million accordion feature. Under the unsecured credit facility, the capacity may be increased from the current capacity of $1.52 billion to $1.92 billion subject to certain conditions set forth in the credit agreement, including the consent of the administrative agent and obtaining necessary commitments. The Company is also required to pay a commitment fee to the lenders assessed on the unused portion of the unsecured revolving credit facility. At the Company’s election, it can prepay amounts outstanding under the unsecured credit facility, in whole or in part, without penalty or premium. The Company’s ability to borrow under the amended unsecured credit facility is subject to ongoing compliance with a number of customary affirmative and negative covenants, including limitations on liens, mergers, consolidations, investments, distributions, asset sales and affiliate transactions, as well as the following financial covenants: (i) the Operating Partnership's and its subsidiaries' consolidated total unsecured debt plus any capitalized lease obligations with respect to the unencumbered asset pool properties may not exceed 60% of the unencumbered asset pool value (or 65% of the unencumbered asset pool value for up to two consecutive fiscal quarters immediately following a material acquisition for which the Operating Partnership has provided written notice to the Agent; provided the two fiscal quarter period includes the quarter in which the material acquisition was consummated); (ii) the unencumbered asset pool debt yield cannot be less than 14% (or 12.5% for the two consecutive fiscal quarters immediately following a material acquisition for which the Operating Partnership has provided written notice to the Agent; provided the two fiscal quarter period includes the quarter in which the material acquisition was consummated); (iii) QTS must maintain a minimum fixed charge coverage ratio (defined as the ratio of consolidated EBITDA, subject to certain adjustments, to consolidated fixed charges) for the prior two most recently-ended calendar quarters of 1.70 to 1.00; (iv) QTS must maintain a maximum debt to gross asset value (as defined in the amended and restated agreement) ratio of 60% (or 65% for the two consecutive fiscal quarters immediately following a material acquisition for which the Operating Partnership has provided written notice to the Agent; provided the two fiscal quarter period includes the quarter in which the material acquisition was consummated); (v) QTS must maintain tangible net worth (as defined in the amended and restated agreement) cannot be less than the sum of $1,209,000,000 plus 75% of the net proceeds from any future equity offerings; and (vi) a maximum distribution payout ratio of the greater of (i) 95% of the Company’s Funds from Operations (as defined in the amended and restated agreement) and (ii) the amount required for the Company to qualify as a REIT under the Code. The availability under the revolving credit facility is the lesser of (i) $820 million, (ii) 60% of the unencumbered asset pool capitalized value (or 65% of the unencumbered asset pool capitalized value for the two consecutive fiscal quarters immediately following a material acquisition for which the Operating Partnership has provided written notice to the Agent; provided the two fiscal quarter period includes the quarter in which the material acquisition was consummated) and (iii) the amount resulting in an unencumbered asset pool debt yield of 14% (or 12.5% for the two consecutive fiscal quarters immediately following a material acquisition for which the Operating Partnership has provided written notice to the Agent; provided the two fiscal quarter period includes the quarter in which the material acquisition was consummated). In the case of clauses (ii) and (iii) of the preceding sentence, the amount available under the revolving credit facility is adjusted to take into account any other unsecured debt and certain capitalized leases. A material acquisition is an acquisition of properties or assets with a gross purchase price equal to or in excess of 15% of the Operating Partnership's gross asset value (as defined in the amended and restated agreement) as of the end of the most recently ended quarter for which financial statements are publicly available. The availability of funds under the unsecured credit facility depends on compliance with certain covenants. As of March 31, 2018, the Company had outstanding $838 million of indebtedness under the unsecured credit facility, consisting of $138 million of outstanding borrowings under the unsecured revolving credit facility and $700 million outstanding under the term loans, exclusive of net debt issuance costs of $5.7 million. In connection with the unsecured credit facility, as of March 31, 2018, the Company had additional letters of credit outstanding aggregating to $2.1 million. As of March 31, 2018, the weighted average interest rate for amounts outstanding under the unsecured credit facility, including the effects of interest rate swaps, was 3.36%. On April 5, 2017, the Company entered into forward interest rate swap agreements with an aggregate notional amount of $400 million. The forward swap agreements effectively fix the interest rate on $400 million of term loan borrowings, $200 million of swaps allocated to each term loan, from January 2, 2018 through December 17, 2021 and April 27, 2022, respectively. The weighted average effective fixed interest rate on the $400 million notional amount of term loan financing approximates 3.5% and commenced on January 2, 2018. (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 “2022 Notes”). The 2022 Notes had an interest rate of 5.875% per annum, were issued at a price equal to 99.211% of their face value and were scheduled to mature on August 1, 2022. On November 8, 2017, the Issuers, the Company and certain of its other subsidiaries entered into a purchase agreement pursuant to which the Issuers issued $400 million aggregate principal amount of 4.75% Senior Notes due November 15, 2025 (the “Senior Notes”) in a private offering. The Senior Notes have an interest rate of 4.750% per annum and were issued at a price equal to 100% of their face value. The net proceeds from the offering were used to fund the redemption of, and satisfy and discharge the indenture pursuant to which the Issuers issued, all of their outstanding 2022 Notes and to repay a portion of the amount outstanding under the Company’s unsecured revolving credit facility. As of March 31, 2018, the outstanding net debt issuance costs associated with the Senior Notes were $5.7 million. The Senior Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Operating Partnership’s existing subsidiaries (other than foreign subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Issuers or any other subsidiary guarantor, other than 1) QTS Investment Properties Manassas, LLC, a subsidiary formed in March 2018 in connection with a vacant land purchase, and has de minimis assets and operations; and 2) QTS Finance Corporation, the co-issuer of the Senior Notes. QTS does not guarantee the Senior Notes and will not be required to guarantee the Senior Notes except under certain circumstances. The offering was conducted pursuant to Rule 144A of the Securities Act of 1933, as amended, and the Senior Notes were issued pursuant to an indenture, dated as of November 8, 2017, among QTS, the Issuers, the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee. The annual remaining principal payment requirements as of March 31, 2018 per the contractual maturities and excluding extension options, capital leases and lease financing obligations, are as follows (unaudited and in thousands): 2018 $ 44 2019 68 2020 71 2021 138,074 2022 350,077 Thereafter 751,516 Total $ 1,239,850 As of March 31, 2018, the Company was in compliance with all of its covenants. Capital Leases The Company has historically entered into capital leases for certain equipment. In addition, through its acquisition of Carpathia on June 16, 2015, the Company acquired capital leases of both equipment and certain properties. Total outstanding liabilities for capital leases were $5.7 million as of March 31, 2018, of which $4.3 million were assumed through the Carpathia acquisition, all of which was related to the lease of real property. Carpathia had entered into capital lease arrangements for datacenter space under two lease agreements expiring in 2018 and 2019 at its Harrisonburg, Virginia and Ashburn, Virginia locations. Total recurring monthly payments range from approximately $0.2 million to $0.5 million during the terms of the leases, in addition to payments made for utilities. Depreciation related to the associated assets for the capital leases is included in depreciation and amortization expense in the Statements of Operations and Statements of Comprehensive Income. Lease Financing Obligations The Company, through its acquisition of Carpathia has a lease financing agreement in connection with a $4.8 million tenant improvement allowance on one of its data center lease agreements. The financing requires monthly payments of principal and interest of less than $0.1 million through February 2019. The outstanding balance on the financing agreement was $0.7 million as of March 31, 2018. Depreciation expense on the related leasehold improvements is included in depreciation and amortization expense in the Statements of Operations. The following table summarizes the Company’s combined future payment obligations, excluding interest, as of March 31, 2018, on the capital leases and lease financing obligations above (unaudited and in thousands): 2018 $ 5,293 2019 956 2020 117 2021 9 2022 — Thereafter — Total $ 6,375 |
Restructuring
Restructuring | 3 Months Ended |
Mar. 31, 2018 | |
Restructuring [Abstract] | |
Restructuring | 6. Restructuring On February 20, 2018, the Company announced a strategic growth plan to realign its product offerings around its hyperscale and hybrid colocation product offerings, along with technology and services from the Company’s cloud and managed services business that support hyperscale and hybrid colocation customers. As part of the strategic growth plan, the Company is narrowing its focus around certain of its cloud and managed services offerings. The Company has incurred and will continue to incur various expenses associated with the strategic growth plan through 2018, with such costs included in the “Restructuring” line item on the consolidated income statement. Restructuring charges incurred during the three months ended March 31, 2018 are as follows: Equity Based Compensation and Product Related Severance Professional Fees and Other Total Balance as of December 31, 2017 $ — $ — $ — $ — Expensed but not paid 1,738 1,936 4,346 8,020 Cash paid 510 — — 510 Balance as of March 31, 2018 $ 2,248 $ 1,936 $ 4,346 $ 8,530 In addition to the expenses incurred to date, the Company expects to incur a total of approximately $10 million to $15 million in expenses associated with this strategic growth plan through December 31, 2018. This does not include any charges that may be taken in future periods on assets that are being transitioned to the Company’s strategic partner, as those specific assets have not yet been identified. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 7. Commitments and Contingencies The Company is subject to various routine legal proceedings and other matters in the ordinary course of business. The Company currently does not have any litigation that would have material adverse impact on the Company’s financial statements. |
Partners' Capital, Equity and I
Partners' Capital, Equity and Incentive Compensation Plans | 3 Months Ended |
Mar. 31, 2018 | |
Partners' Capital, Equity and Incentive Compensation Plans [Abstract] | |
Partners' Capital, Equity and Incentive Compensation Plans | 8. Partners’ Capital, Equity and Incentive Compensation Plans QualityTech, LP QTS has the full power and authority to do all the things necessary to conduct the business of the Operating Partnership. As of March 31, 2018, the Operating Partnership had three classes of limited partnership units outstanding: Preferred Stock Units, Class A units of limited partnership interest (“Class A units”) and Class O LTIP units of limited partnership units (“Class O units”). The Class A units are now redeemable at any time for cash or shares of Class A common stock of QTS. The Company may in its sole discretion elect to assume and satisfy the redemption amount with cash or its shares. Class O units were issued upon grants made under the QualityTech, LP 2010 Equity Incentive Plan (the “2010 Equity Incentive Plan”). Class O units are pari passu with Class A units. Each Class O unit is convertible into Class A units by the Operating Partnership at any time or by the holder at any time following full vesting (if such unit is subject to vesting) based on formulas contained in the partnership agreement. QTS Realty Trust, Inc. In connection with its IPO, QTS issued Class A common stock and Class B common stock. Class B common stock entitles the holder to 50 votes per share and was issued to enable the Company’s Chief Executive Officer to exchange 2% of his Operating Partnership units so he may have a vote proportionate to his economic interest in the Company. Also in connection with its IPO, QTS adopted the QTS Realty Trust, Inc. 2013 Equity Incentive plan (the “2013 Equity Incentive Plan”), which authorized 1.75 million shares of Class A common stock to be issued under the plan, including 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 three months ended March 31, 2018 (unaudited) : 2010 Equity Incentive Plan 2013 Equity Incentive Plan Number of Weighted Weighted Options Weighted Weighted Restricted Weighted Outstanding at December 31, 2017 568,040 $ 23.52 $ 5.00 1,369,270 $ 38.18 $ 7.80 381,864 $ 46.37 Granted — — — 672,549 34.03 5.63 35.27 Exercised/Vested (1) (459,472) 23.31 4.73 — — — 48.90 Cancelled/Expired (1,567) 25.00 10.26 — — — (2) 47.06 Outstanding at March 31, 2018 107,001 $ 24.40 $ 6.06 2,041,819 $ 36.81 $ 7.08 589,639 $ 39.50 (1) This represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock. This also represents Class O units which were converted to Class A units and Options to purchase Class A common stock which were exercised for their respective columns. (2) Includes restricted Class A common stock surrendered by certain employees to satisfy their federal and state tax obligations associated with the vesting of restricted common stock. The assumptions and fair values for restricted stock and options to purchase shares of Class A common stock granted for the three months ended March 31, 2018 are included in the following table on a per unit basis (unaudited). Options to purchase shares of Class A common stock were valued using the Black-Scholes model. Three Months Ended March 31, 2018 Fair value of restricted stock granted $34.03 - $54.01 Fair value of options granted $5.55 - $5.64 Expected term (years) 5.5 - 6.0 Expected volatility Expected dividend yield Expected risk-free interest rates 2.69% - 2.73% The following tables summarize information about awards outstanding as of March 31, 2018 (unaudited). Operating Partnership Awards Outstanding Exercise prices Awards Weighted average remaining vesting period (years) Class O Units $ 20.00 - 25.00 107,001 — Total Operating Partnership awards outstanding 107,001 QTS Realty Trust, Inc. Awards Outstanding Exercise prices Awards Weighted average remaining vesting period (years) Restricted stock $ — 2.0 Options to purchase Class A common stock $ 21.00 - 50.66 1.3 Total QTS Realty Trust, Inc. awards outstanding As of March 31, 2018, there were no Class RS units outstanding. Any remaining nonvested awards are valued as of the grant date and generally vest ratably over a defined service period. As of March 31, 2018 there were approximately 0.6 million and 0.9 million nonvested restricted Class A common stock and options to purchase Class A common stock outstanding, respectively. As of March 31, 2018 the Company had $27.1 million of unrecognized equity-based compensation expense which will be recognized over a remaining weighted-average vesting period of 1.5 years. The total intrinsic value of the awards outstanding at March 31, 2018 was $30.1 million. Dividends and Distributions The following tables present quarterly cash dividends and distributions paid to QTS’ common stockholders and the Operating Partnership’s unit holders for the three months ended March 31, 2018 and 2017 (unaudited): Three Months Ended March 31, 2018 Record Date Payment Date Per Common Share and Aggregate Dividend/Distribution Amount (in millions) December 5, 2017 January 5, 2018 $ 0.39 $ 22.2 $ 22.2 Three Months Ended March 31, 2017 Record Date Payment Date Per Common Share and Aggregate Dividend/Distribution Amount (in millions) December 16, 2016 January 5, 2017 $ 0.36 $ 19.7 $ 19.7 Additionally, on April 5, 2018, the Company paid its regular quarterly cash dividend of $0.41 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on March 22, 2018. Equity Issuances In March 2017, QTS established an “at-the-market” equity offering program (the “ATM Program”) pursuant to which the Company may issue, from time to time, up to $300 million of its Class A common stock. The Company issued no shares under the ATM Program during the three months ended March 31, 2018. On March 15, 2018, QTS issued 4,280,000 shares of 7.125% Series A Cumulative Redeemable Perpetual Preferred Stock (“Series A Preferred Stock”) with a liquidation preference of $25.00 per share, which included 280,000 shares of the underwriters’ partial exercise of their option to purchase additional shares. The Company used the net proceeds of approximately $103.2 million to repay amounts outstanding under its unsecured revolving credit facility. In connection with the issuance of the Series A Preferred Stock, on March 15, 2018 the Operating Partnership issued to the Company 4,280,000 Series A Preferred Units, which have economic terms that are substantially similar to the Company’s Series A Preferred Stock. The Series A Preferred Units were issued in exchange for the Company’s contribution of the net offering proceeds of the offering of the Series A Preferred Stock to the Operating Partnership. Dividends on the Series A Preferred Stock will be payable quarterly in arrears on or about the 15th day of each January, April, July and October. The first dividend on the Series A Preferred Stock was paid on April 16, 2018, in the amount of $0.14844 per share. The Series A Preferred Stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, the Series A Preferred Stock will rank senior to common stock with respect to the payment of distributions and other amounts. Except in instances relating to preservation of QTS’s qualification as a REIT or pursuant to the Company’s special optional redemption right, the Series A Preferred Stock is not redeemable prior to March 15, 2023. On and after March 15, 2023, the Company may, at its option, redeem the Series A Preferred Stock, in whole, at any time, or in part, from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but not including, the date of redemption. Upon the occurrence of a change of control, the Company has a special optional redemption right that enables it to redeem the Series A Preferred Stock, in whole, at any time, or in part, from time to time, within 120 days after the first date on which a change of control has occurred resulting in neither QTS nor the surviving entity having a class of common shares listed on the NYSE, NYSE Amex, or NASDAQ or the acquisition of beneficial ownership of its stock entitling a person to exercise more than 50% of the total voting power of all our stock entitled to vote generally in election of directors. The special optional redemption price is $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but not including, the date of redemption. Upon the occurrence of a change of control, holders will have the right (unless the Company has elected to exercise its special optional redemption right to redeem their Series A Preferred Stock) to convert some or all of such holder’s Series A Preferred Stock into a number of shares of Class A common stock, par value $0.01 per share, equal to the lesser of: · the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any accrued and unpaid dividends (whether or not declared) to, but not including, the change of control conversion date (unless the change of control conversion date is after a record date for a Series A Preferred Stock dividend payment and prior to the corresponding Series A Preferred Stock dividend payment date, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Stock Price; and · 1.46929 (i.e., the Share Cap); subject, in each case, to certain adjustments and provisions for the receipt of alternative consideration of equivalent value as described in the prospectus supplement for the Series A Preferred Stock. QTS Realty Trust, Inc. Employee Stock Purchase Plan In June 2015, the Company established the QTS Realty Trust, Inc. Employee Stock Purchase Plan (the “2015 Plan”) to give eligible employees the opportunity to purchase, through payroll deductions, shares of the Company’s Class A common stock in the open market by an independent broker with the Company paying the brokerage commissions and fees associated with such share purchases. The 2015 Plan became effective July 1, 2015. The Company reserved 250,000 shares of its Class A common stock for purchase under the 2015 Plan, which were registered pursuant to a registration statement on Form S-8 filed on June 17, 2015. On May 4, 2017, the stockholders of the Company approved an amendment and restatement of the Plan (the “2017 Plan”). The 2017 Plan became effective July 1, 2017 and is administered by the Compensation Committee of the board of directors (or by a committee of one or more persons appointed by it or the board of directors). The 2017 Plan permits participants to purchase the Company’s Class A common stock at a discount of up to 10% (as determined by the Compensation Committee). Employees of the Company and its majority-owned subsidiaries who have been employed for at least thirty days and who perform at least thirty hours of service per week for the Company are eligible to participate in the 2017 Plan, excluding any employee who, at any time during which the payroll deductions are made on behalf of the participating employees to purchase stocks, owns shares representing five percent or more of the total combined voting power or value of all classes of shares of the Company, or who is a Section 16 officer. Under the 2017 Plan, there are four purchase periods per year, and participants may deduct a minimum of $20 per paycheck and a maximum of $1,000 per paycheck towards the purchase of shares. Shares purchased under the 2017 Plan are subject to a one-year holding period following the purchase date, during which they may not be sold or transferred. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
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 months ended March 31, 2018 and 2017 are outlined below (unaudited and in thousands): Three Months Ended March 31, 2018 2017 Tax, utility, insurance and other reimbursement $ 261 $ 143 Rent expense 254 254 Capital assets acquired 158 233 Total $ 673 $ 630 |
Noncontrolling Interest
Noncontrolling Interest | 3 Months Ended |
Mar. 31, 2018 | |
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 of March 31, 2018, the noncontrolling ownership interest percentage of QualityTech, LP was 11.5%. |
Earnings per share of QTS Realt
Earnings per share of QTS Realty Trust, Inc. | 3 Months Ended |
Mar. 31, 2018 | |
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. Unvested restricted stock awards contain non-forfeitable rights to dividends and thus are participating securities and are included in the computation of earnings per share pursuant to the two-class method for all periods presented. The two-class method is an earnings allocation formula that treats a participating security as having rights to undistributed earnings that would otherwise have been available to common stockholders. Accordingly, service-based restricted stock awards were included in the calculation of earnings per share using the two-class method for all periods presented. The computation of basic and diluted net income per share is as follows (in thousands, except per share data, and unaudited): Three Months Ended March 31, 2018 2017 Numerator: Net income (loss) $ (252) $ 5,568 Loss (income) attributable to noncontrolling interests 29 (691) Preferred stock dividends (328) — Earnings attributable to participating securities (258) (233) Net income (loss) available to common stockholders after allocation of participating securities $ (809) $ 4,644 Denominator: Weighted average shares outstanding - basic 50,279 47,485 Effect of Class O units and options to purchase Class A common stock on an "as if" converted basis * — 876 Weighted average shares outstanding - diluted 50,279 48,361 Basic net income (loss) per share $ $ Diluted net income (loss) per share $ $ * Does not include Class A partnership units of 6.6 million and 6.8 million for the three months ended March 31, 2018 and 2017, respectively, and 0.5 million reflecting the effects of Class O units and options to purchase common stock on an "as if" converted basis for the three months ended March 31, 2018, as their respective inclusion would have been antidilutive. |
Contracts with Customers
Contracts with Customers | 3 Months Ended |
Mar. 31, 2018 | |
Contracts with Customers [Abstract] | |
Contracts with Customers | 12. Contracts with Customers Future minimum payments to be received under non-cancelable customer contracts (inclusive of payments for contracts which have not yet commenced, and exclusive of recoveries of operating costs from customers) are as follows for the years ending December 31 (unaudited and in thousands): 2018 (April - December) $ 267,764 2019 295,789 2020 219,661 2021 171,447 2022 105,632 Thereafter 122,238 Total $ 1,182,531 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2018 | |
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 and restricted cash approximate fair value. Interest rate swaps: Currently, the Company uses interest rate swaps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of fair value accounting guidance, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of March 31, 2018, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The Company does not have any fair value measurements on a recurring basis using significant unobservable inputs (Level 3) as of March 31, 2018 or December 31, 2017. Credit facility and Senior Notes: The Company’s unsecured credit facility did not have interest rates which were materially different than current market conditions and therefore, the fair value approximated the carrying value. The fair value of the Company’s Senior Notes was estimated using Level 2 “significant other observable inputs,” primarily based on quoted market prices for the same or similar issuances. At March 31, 2018, the fair value of the Senior Notes was approximately $375.0 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 | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events On April 5, 2018, the Company paid its regular quarterly cash dividend of $0.41 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on March 22, 2018. On April 16, 2018, the Company paid a quarterly cash dividend of $0.14844 per share on its 7.125% Series A Preferred Stock to holders of Series A Preferred Stock of record as of the close of business on March 15, 2018. On April 24, 2018, the Company, through the Operating Partnership, and Quality Technology Services Holding, LLC, a wholly owned subsidiary of the Operating Partnership, entered into definitive agreements with General Datatech, L.P. (“GDT”), an international provider of managed IT solutions, pursuant to which the Company agreed to assign to GDT certain assets, contracts and liabilities associated with the Company’s cloud and managed services products in exchange for, among other things, certain cash payments and the payment by GDT of continuing channel fees to the Company based on revenue received under the assigned contracts and any new customers referred by the Company. These assets, contracts and liabilities primarily consist of customer contracts and certain physical equipment. The Company and its affiliates expect to complete the transfer of these assets, contracts and liabilities by the end of 2018. However, after August 31, 2018, the Company and its affiliates have no obligation to transfer any assets, contracts or liabilities that have not been transferred by such date, and it has not yet determined whether all of such assets, contracts or liabilities or only a portion thereof ultimately will be transferred. Under the agreements, the Company will transition certain cloud and managed services customer contracts and support to GDT, and GDT will expand its colocation presence within the Company’s facilities to support customers as they are migrated to GDT’s platform. The agreements fulfill part of the Company’s strategic growth plan announced in February 2018 – see Note 6 ‘Restructuring’ for additional details. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in compliance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes and management’s discussion and analysis included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 28, 2018. The consolidated balance sheet data included herein as of December 31, 2017 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying financial statements are presented for both QTS Realty Trust, Inc. and QualityTech, LP. References to “QTS” mean QTS Realty Trust, Inc. and its controlled subsidiaries and references to the “Operating Partnership” mean QualityTech, LP and its controlled subsidiaries. The Operating Partnership meets the definition and criteria of a variable interest entity (“VIE”) in accordance with ASC 810 Consolidation , and the Company is the primary beneficiary of the VIE. As discussed below, the Company’s only material asset is its ownership interest in the Operating Partnership, and consequently, all of its assets and liabilities represent those assets and liabilities of the Operating Partnership. The Company’s debt is an obligation of the Operating Partnership where the creditors may have recourse, under certain circumstances, against the credit of the Company. QTS is the sole general partner of the Operating Partnership, and its only material asset consists of its ownership interest in the Operating Partnership. Management operates QTS and the Operating Partnership as one business. The management of QTS consists of the same employees as the management of the Operating Partnership. QTS does not conduct business itself, other than acting as the sole general partner of the Operating Partnership and issuing public equity from time to time. QTS has not issued or guaranteed any indebtedness. Except for net proceeds from public equity issuances by QTS, which are contributed to the Operating Partnership in exchange for units of limited partnership interest of the Operating Partnership, the Operating Partnership generates all remaining capital required by the business through its operations, the direct or indirect incurrence of indebtedness, and the issuance of partnership units. Therefore, as general partner with control of the Operating Partnership, QTS consolidates the Operating Partnership for financial reporting purposes. The Company believes, therefore, that providing one set of notes for the financial statements of QTS and the Operating Partnership provides the following benefits: · enhances investors’ understanding of QTS and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; · eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both QTS and the Operating Partnership; and · creates time and cost efficiencies through the preparation of one set of notes instead of two separate sets of notes. In addition, in light of these combined notes, the Company believes it is important for investors to understand the few differences between QTS and the Operating Partnership in the context of how QTS and the Operating Partnership operate as a consolidated company. With respect to balance sheets, the presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated balance sheets of QTS and those of the Operating Partnership. On the Operating Partnership’s consolidated balance sheets, partners’ capital includes preferred partnership units and common partnership units that are owned by QTS and other partners as well as accumulated other comprehensive income (loss). On QTS’ consolidated balance sheets, stockholders’ equity includes preferred stock, common stock, additional paid in capital, accumulated other comprehensive income (loss) and accumulated dividends in excess of earnings. The remaining equity reflected on QTS’s consolidated balance sheet is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. With respect to statements of operations, the primary difference in QTS' Statements of Operations and Statements of Comprehensive Income is that for net income (loss), QTS retains its proportionate share of the net income (loss) based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership. These combined notes refer to actions or holdings as being actions or holdings of “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, management believes that these general references to “the Company” in this context is appropriate because the business is one enterprise operated through the Operating Partnership. As discussed above, QTS owns no operating assets and has no operations independent of the Operating Partnership and its subsidiaries. Also, the Operating Partnership owns no operating assets and has no operations independent of its subsidiaries. Obligations under the 4.75% Senior Notes due 2025 and the unsecured credit facility, both discussed in Note 5, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries (other than foreign subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Issuers or any other subsidiary guarantor, other than 1) QTS Investment Properties Manassas, LLC, a subsidiary formed in March 2018 in connection with a vacant land purchase, and has de minimis assets and operations; and 2) QTS Finance Corporation, the co-issuer of the 4.75% Senior Notes due 2025. The indenture governing the 4.75% Senior Notes due 2025 restricts the ability of the Operating Partnership to make distributions to QTS, subject to certain exceptions, including distributions required in order for QTS to maintain its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the “Code”). The interim consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority owned subsidiaries. This includes the operating results of the Operating Partnership for all periods presented. |
Use of Estimates | Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals. |
Principles of Consolidation | Principles of Consolidation – The consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority-owned subsidiaries. The consolidated financial statements of QualityTech, LP include the accounts of QualityTech, LP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in the financial statements. |
Real Estate Assets | Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation for real estate assets is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended March 31, 2018, depreciation expense related to real estate assets and non-real estate assets was $23.7 million and $3.2 million, respectively, for a total of $26.9 million. For the three months ended March 31, 2017, depreciation expense related to real estate assets and non-real estate assets was $21.4 million and $3.6 million, respectively, for a total of $25.0 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 $3.5 million and $2.5 million for the three months ended March 31, 2018 and 2017, respectively. Interest is capitalized during the period of development by first applying the Company’s actual borrowing rate on the related asset and second, to the extent necessary, by applying the Company’s weighted average effective borrowing rate to the actual development and other costs expended during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $5.4 million and $3.1 million for the three months ended March 31, 2018 and 2017, 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 analyzed a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets. Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. This amortization expense is accounted for as real estate amortization expense. Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. This amortization expense is accounted for as real estate amortization expense. Other acquired intangible assets, which includes platform, above or below market leases, and trade name intangibles, are amortized on a straight-line basis over their respective expected lives. Above or below market leases are amortized as a reduction to or increase in rental revenue when the Company is a lessor as well as a reduction or increase to rent expense over the remaining lease terms in the case of the Company as lessee. The expense associated with 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. In March 2018, the Company completed the acquisition of approximately 61 acres of land in Manassas, Virginia for approximately $24.6 million to be used for future development. The acquisition was accounted for as an asset acquisition. The land acquired in the Manassas purchase is included within the “Construction in Progress” line item of the consolidated balance sheets. |
Impairment of Long-Lived and Intangible Assets | Impairment of Long-Lived Assets, Intangible Assets and Goodwill – The Company reviews its long-lived assets and intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset exceeds the value of the undiscounted cash flows, the fair value of the asset is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. The Company recognized $4.1 million of impairment losses related to certain product related assets in the three months ended March 31, 2018. 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. In connection with the goodwill impairment evaluation that the Company performed on October 1, 2017, the Company determined qualitatively that it is not more likely than not that the fair value of the Company’s one reporting unit was less than the carrying amount, thus it did not perform a quantitative analysis. |
Cash and Cash Equivalents | Cash and Cash Equivalents – The Company considers all demand deposits and money market accounts purchased with a maturity date of three months or less at the date of purchase to be cash equivalents. The Company’s account balances at one or more institutions periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is concentration of credit risk related to amounts on deposit in excess of FDIC coverage. The Company mitigates this risk by depositing a majority of its funds with several major financial institutions. The Company also has not experienced any losses and, therefore, does not believe that the risk is significant. |
Deferred Costs | Deferred Costs – Deferred costs, net, on the Company’s balance sheets include both financing costs and leasing costs. Deferred financing costs represent fees and other costs incurred in connection with obtaining debt and are amortized over the term of the loan and are included in interest expense. Debt issuance costs related to revolving debt arrangements are deferred and presented as assets on the balance sheet; however, all other debt issuance costs are recorded as a direct offset to the associated liability. Amortization of debt issuance costs, including those costs presented as offsets to the associated liability in the consolidated balance sheet, was $1.0 million and $0.9 million for the three months ended March 31, 2018 and 2017, respectively. Deferred financing costs presented as assets on the balance sheet related to revolving debt arrangements, net of accumulated amortization, are as follows: March 31, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 9,759 $ 9,775 Accumulated amortization (2,398) (1,908) Deferred financing costs, net $ 7,361 $ 7,867 Deferred financing costs presented as offsets to the associated liabilities on the balance sheet related to fixed debt arrangements, net of accumulated amortization, are as follows: March 31, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 12,715 $ 12,675 Accumulated amortization (1,510) (1,039) Deferred financing costs, net $ 11,205 $ 11,636 Initial direct costs, or deferred leasing costs, include commissions paid to third parties, including brokers, leasing and referral agents, and internal sales commissions paid to employees for successful execution of lease agreements. These costs are incurred when the Company executes lease agreements and represent only incremental costs that would not have been incurred if the lease agreement had not been executed. The Company incurs the same incremental costs to obtain managed services and cloud contracts with customers that are accounted for pursuant to ASC 606. These costs are accounted for under ASC 340-40 which includes the same framework for capitalization that is applied to the Company’s leasing contracts as only the direct and incremental costs of obtaining a revenue contract are capitalized. Because the framework of accounting for these costs and the underlying nature of the costs are the same for the Company’s revenue and lease contracts, the costs are presented on a combined basis within the Company’s financial statements and within the below table. Both revenue and leasing commissions are capitalized and generally amortized over the term of the related leases or the expected term of the contract using the straight-line method. If a customer lease terminates prior to the expiration of its initial term, any unamortized initial direct costs related to the lease are written off to amortization expense. Amortization of deferred leasing costs totaled $4.9 million and $4.2 million for the three months ended March 31, 2018 and 2017, respectively. Deferred leasing costs, net of accumulated amortization, are as follows: March 31, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred leasing costs $ 56,563 $ 54,868 Accumulated amortization (21,526) (20,956) Deferred leasing costs, net $ 35,037 $ 33,912 |
Revenue Recognition | Revenue Recognition – In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance codified in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , which supersedes the current revenue recognition requirements in ASC Topic 605, Revenue Recognition . Under this new guidance, entities should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This standard also requires enhanced disclosures. The standard is effective for annual and interim periods beginning after December 15, 2017. Retrospective and modified retrospective application is allowed. The Company adopted ASC Topic 606 effective January 1, 2018, and elected the modified retrospective transition approach. The adoption did not result in a cumulative catch-up adjustment to opening equity and does not change the recognition pattern of the Company’s operating revenues. Under the standard, disclosures are required to provide information on the nature, amount, timing, and uncertainty of revenue, certain costs, and cash flows arising from contracts with customers. The Company derives its revenues from leases with customers for data center space which include lease rental revenue components and nonlease revenue components, such as power, connectivity, cloud and managed services. A description of each of the Company’s disaggregated revenue streams is as follows: Rental Revenue The Company’s leases with customers are classified as operating leases and rental revenue is recognized on a straight-line basis over the customer lease term. Occasionally, customer leases include options to extend or terminate the lease agreements. The Company does not include any of these extension or termination options in a customer’s lease term for lease classification purposes or recognizing rental revenue unless it is reasonably certain the customer will exercise these extension or termination options. Rental revenue also includes revenue from power delivery on fixed power arrangements, whereby customers are billed and pay a fixed monthly fee per committed available amount of connected power. These fixed power arrangements require the Company to provide a series of distinct services of standing ready to deliver the power over the contracted term which is co-terminus with the lease. The Company recognizes revenue from these nonlease fixed power components over time on a straight-line basis in the same manner as the lease components of the contract as the customer simultaneously receives and consumes the power benefits provided over the lease term. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed below. Recoveries from Customers Certain customer leases contain provisions under which customers reimburse the Company for power and cooling-related charges as well as a portion of the property’s real estate taxes, insurance and other operating expenses. Recoveries of power and cooling-related expenses are nonlease components and relate specifically to the Company’s variable power arrangements, whereby customers pay variable monthly fees for the specific amount of power utilized at the current utility rates. The Company’s performance obligation is to stand ready to deliver power over the life of the customer contract up to a contracted power capacity. Customers have the flexibility to increase or decrease the amount of power consumed, and therefore sub-metered power revenue is constrained at contract inception. The reimbursements are included in revenue as recoveries from customers and are recognized each month as the uncertainty related to the consideration is resolved (i.e. the Company provides power to its customers) and customers utilize the power. Reimbursement of real estate taxes, insurance, common area maintenance, or other operating expenses are accounted for as executory costs under lease guidance and are recognized as revenue in the period that the expenses are recognized. Cloud and Managed Services The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. In both its cloud and managed services offerings the Company’s performance obligation is to provide services (e.g. cloud hosting, data backup, data storage or data center personnel labor hours) to facilitate a fully integrated IT outsourcing environment over a contracted term. Although underlying services may vary, over the contracted term monthly service offerings are substantially the same and the Company accounts for the services as a series of distinct services. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. As the Company has the right to consideration from customers in an amount that corresponds directly with the value to the customer of the Company’s performance of providing continuous services, the Company recognizes monthly revenue for the amount invoiced. With respect to the transaction price allocated to remaining performance obligations within the Company’s cloud and managed service contracts, the Company has elected to use the optional exemption provided by the standard whereby the Company is not required to estimate the total transaction price allocated to remaining performance obligations as the Company applies the “right-to-invoice” practical expedient. As described above, the nature of our performance obligation in these contracts is to provide monthly services that are substantially the same and accounted for as a series of distinct services. These contracts generally have a remaining term ranging from month-to-month to three years. Other Other revenue primarily consists of straight line rent. Straight line rent represents the difference in rents recognized versus amounts contractually due pursuant to the underlying leases and is recorded as deferred rent receivable/payable in the consolidated balance sheets. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net was $26.1 million and $23.4 million as of March 31, 2018 and December 31, 2017, respectively. |
Advance Rents and Security Deposits | Advance Rents and Security Deposits – Advance rents, typically prepayment of the following month’s rent, consist of payments received from customers prior to the time they are earned and are recognized as revenue in subsequent periods when earned. Security deposits are collected from customers at the lease origination and are generally refunded to customers upon lease expiration. |
Deferred Income | Deferred Income – Deferred income generally results from non-refundable charges paid by the customer at lease inception to prepare their space for occupancy. The Company records this initial payment, commonly referred to as set-up fees, as a deferred income liability which amortizes into rental revenue over the term of the related lease on a straight-line basis. Deferred income was $28.7 million and $25.3 million as of March 31, 2018 and December 31, 2017, respectively. Additionally, $2.9 million and $2.6 million of deferred income was amortized into revenue for the three months ended March 31, 2018 and 2017, respectively. |
Equity-based Compensation | Equity-based Compensation – Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification and amortized ratably over their respective vesting periods. We have elected to account for forfeitures as they occur. Equity-based compensation expense net of forfeited and repurchased awards was $3.5 million and $3.1 million for the three months ended March 31, 2018 and 2017, respectively. Equity based compensation expense for the three months ended March 31, 2018 excludes $1.4 million of equity based compensation expense associated with the acceleration of equity awards related to certain employees impacted by the Company’s strategic growth plan. The aforementioned equity based compensation expense is included in the “Restructuring” expense line item on the consolidated statements of operations. |
Allowance for Uncollectible Accounts Receivable | Allowance for Uncollectible Accounts Receivable – Rents receivable are recognized when due and are carried at cost, less an allowance for doubtful accounts. The Company records a provision for losses on rents receivable equal to the estimated uncollectible accounts, which is based on management’s historical experience and a review of the current status of the Company’s receivables. As necessary, the Company also establishes an appropriate allowance for doubtful accounts for receivables arising from the straight-lining of rents. The aggregate allowance for doubtful accounts was $10.8 million and $11.5 million as of March 31, 2018 and December 31, 2017, respectively. |
Capital Leases and Lease Financing Obligations | Capital Leases and Lease Financing Obligations – The Company evaluates leased real estate to determine whether the lease should be classified as a capital or operating lease in accordance with U.S. GAAP. The Company periodically enters into capital leases for certain equipment. In addition, through its acquisition of Carpathia on June 16, 2015, the Company is party to capital leases for property and equipment, as well as certain financing obligations. The outstanding liabilities for the capital leases were $5.7 million and $7.8 million as of March 31, 2018 and December 31, 2017, respectively. The outstanding liabilities for the lease financing obligations were $0.7 million and $0.9 million as of March 31, 2018 and December 31, 2017, respectively. The net book value of the assets associated with these leases was approximately $12.6 million and $14.7 million as of March 31, 2018 and December 31, 2017, respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations. See Note 5 for further discussion of capital leases and lease financing obligations. |
Segment Information | Segment Information – The Company manages its business as one operating segment and thus one reportable segment consisting of a portfolio of investments in data centers located primarily in the United States. |
Customer Concentrations | Customer Concentrations – As of March 31, 2018, one of the Company’s customers represented 11.8% of its total monthly rental revenue. No other customers exceeded 5% of total monthly rental revenue. As of March 31, 2018, five of the Company’s customers exceeded 5% of total accounts receivable. In aggregate, these five customers accounted for approximately 36% of total accounts receivable. None of these customers exceeded 10% of total accounts receivable. |
Income Taxes | Income Taxes – The Company has elected for two of its existing subsidiaries to be taxed as taxable REIT subsidiaries pursuant to the REIT rules of the U.S. Internal Revenue Code. For the taxable REIT subsidiaries, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. 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 three months ended March 31, 2018, in connection with recorded operating losses. As of March 31, 2018, 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 subsidiaries’ effective tax rates were 23.1% and 39.7% for the three months ended March 31, 2018 and 2017, respectively. On December 22, 2017, the Tax Cuts and Jobs Act ("The Act"), was signed into law by President Trump. The Act contains several provisions, including the lowering of the U.S. corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. The Company has significant deferred tax liabilities, primarily related to fixed assets and intangibles, on its balance sheet as of March 31, 2018. The value of the net deferred tax liabilities has decreased significantly as a result of the reduction in the U.S. corporate income tax rate. |
Interest Rate Swaps | Interest Rate Swaps – The Company’s objectives in using interest rate swaps are to reduce variability in interest expense and to manage exposure to adverse interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. On April 5, 2017, the Company entered into forward interest rate swap agreements with an aggregate notional amount of $400 million. The forward swap agreements effectively fix the interest rate on $400 million of term loan borrowings, $200 million of swaps allocated to each term loan, from January 2, 2018 through December 17, 2021 and April 27, 2022, respectively. The Company reflects its forward interest rate swap agreements, which are designated as cash flow hedges, at fair value as either assets or liabilities on the consolidated balance sheets within the “Other assets, net” or “Advance rents, security deposits and other liabilities” line items, as applicable. As of March 31, 2018, the fair value of interest rate swaps was $7.4 million, which was recorded within the “Other assets, net” line item of the consolidated balance sheet. The forward interest rate swap agreements are derivatives that currently qualify for hedge accounting whereby the Company records the effective portion of changes in fair value of the interest rate swaps in accumulated other comprehensive income or loss on the consolidated balance sheets and statement of comprehensive income which is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Any ineffective portion of a derivative's change in fair value is immediately recognized within net income. The amount reclassified from other comprehensive income to interest expense on the consolidated statements of operations was $0.4 million for the three months ended March 31, 2018. There was no ineffectiveness recognized for the three months ended March 31, 2018. No amounts were recorded in other comprehensive income or loss on the consolidated financial statements as of and for the three months ended March 31, 2017. During the subsequent twelve months, beginning April 1, 2018, we estimate that $0.5 million will be reclassified from other comprehensive income as a reduction to interest expense. Interest rate derivatives and their fair values as of March 31, 2018 and December 31, 2017 were as follows (unaudited and in thousands): Notional Amount Fixed One Month Fair Value March 31, 2018 December 31, 2017 LIBOR rate per annum Effective Date Expiration Date March 31, 2018 December 31, 2017 $ 25,000 $ 25,000 January 2, 2018 December 17, 2021 $ 453 $ 100 100,000 100,000 January 2, 2018 December 17, 2021 1,822 401 75,000 75,000 January 2, 2018 December 17, 2021 1,366 298 50,000 50,000 January 2, 2018 April 27, 2022 940 158 100,000 100,000 January 2, 2018 April 27, 2022 1,908 337 50,000 50,000 January 2, 2018 April 27, 2022 942 155 $ 400,000 $ 400,000 $ 7,431 $ 1,449 |
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 March 31, 2018, the Company valued its interest rate swaps which were entered into in April 2017 primarily utilizing Level 2 inputs. |
New Accounting Pronouncements | New Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which supersedes the current lease guidance in ASC 840, Lease s. The core principle of Topic 842 requires lessees to recognize the assets and liabilities that arise from nearly all leases in the statement of financial position. Accounting applied by lessors will remain largely consistent with previous guidance, with additional changes set to align lessor accounting with the revised lessee model and the FASB’s revenue recognition guidance in Topic 606. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The standard requires a modified retrospective transition approach. The FASB has issued a Proposed Accounting Standards Update, Leases – Targeted Improvements , which proposes updates to the lease standard that include practical expedients that would remove the requirement to restate prior period financial statements upon adoption of the standard as well as a proposed practical expedient which allows lessors not to separate non-lease components from the related lease components if both the timing and pattern of revenue recognition are the same for the non-lease component(s) and related lease component and the combined single lease component would be classified as an operating lease. The Company plans to adopt ASC 842 effective January 1, 2019, and if the proposed accounting standard updated is issued in final form, the Company will apply the transition relief under the new lease standard as of January 2, 2019. As lessee, the Company does not anticipate the classification of its leases to change but will recognize a new initial lease liability and right-of-use asset on the consolidated balance sheet for all operating leases which is expected to be material to our consolidated balance sheet. As lessor, accounting for our leases will remain largely unchanged, apart from the narrower definition of initial direct costs that can be capitalized. The new lease standard more narrowly defines initial direct costs as only costs that are incremental at the signing of a lease. As the Company does not currently capitalize material non-incremental costs, it expects the impact of this change to be immaterial to the financial statements. If formally approved, the Proposed Accounting Standards Update, Leases – Targeted Improvements transition relief would eliminate the need for the Company to restate prior period comparative financial statements that would have included a right of use asset and liability from the Company’s operating leases as lessee. Additionally, from a lessor perspective, the transition relief would alleviate the Company’s need to separate lease from non-lease components within its rental revenue contracts. The Company will disclose any changes to this analysis as identified. In 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 Company adopted this standard as of January 1, 2018, and provisions of the standard did not 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 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 Company adopted this standard as of January 1, 2018, and provisions of the standard did not have a material impact 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 Company adopted this standard as of January 1, 2018, and as a result of this new guidance, acquisitions may now be more likely to result in a transaction being classified as an asset purchase rather than a business combination. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The new guidance eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The guidance will be applied prospectively and is effective for calendar year-end public companies in 2020, with early adoption permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company does not expect the provisions of the standard will have a material impact on its consolidated financial statements. In 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 Company adopted this standard as of January 1, 2018, and provisions of the standard did not have a material impact on its consolidated financial statements. In August 2017, the FASB issued ASU 2017-12; Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in ASU 2017-12 change the recognition and presentation requirements of hedge accounting, including the elimination of the requirement to separately measure and report hedge ineffectiveness and the addition of a requirement to present all items that affect earnings in the same income statement line item as the hedged item. ASU 2017-12 also provides new alternatives for: applying hedge accounting to additional hedging strategies; measuring the hedged item in fair value hedges of interest rate risk; reducing the cost and complexity of applying hedge accounting by easing the requirements for effectiveness testing, hedge documentation and application of the critical terms match method; and reducing the risk of material error correction if a company applies the shortcut method inappropriately. The guidance is effective for public entities for fiscal years beginning after December 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) | 3 Months Ended |
Mar. 31, 2018 | |
Deferred Financing Costs, Net of Accumulated Amortization | March 31, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 9,759 $ 9,775 Accumulated amortization (2,398) (1,908) Deferred financing costs, net $ 7,361 $ 7,867 |
Deferred Leasing Costs, Net of Accumulated Amortization | March 31, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred leasing costs $ 56,563 $ 54,868 Accumulated amortization (21,526) (20,956) Deferred leasing costs, net $ 35,037 $ 33,912 |
Schedule of interest rate derivatives and their fair values | Interest rate derivatives and their fair values as of March 31, 2018 and December 31, 2017 were as follows (unaudited and in thousands): Notional Amount Fixed One Month Fair Value March 31, 2018 December 31, 2017 LIBOR rate per annum Effective Date Expiration Date March 31, 2018 December 31, 2017 $ 25,000 $ 25,000 January 2, 2018 December 17, 2021 $ 453 $ 100 100,000 100,000 January 2, 2018 December 17, 2021 1,822 401 75,000 75,000 January 2, 2018 December 17, 2021 1,366 298 50,000 50,000 January 2, 2018 April 27, 2022 940 158 100,000 100,000 January 2, 2018 April 27, 2022 1,908 337 50,000 50,000 January 2, 2018 April 27, 2022 942 155 $ 400,000 $ 400,000 $ 7,431 $ 1,449 |
Fixed debt arrangements | |
Deferred Financing Costs, Net of Accumulated Amortization | March 31, December 31, (dollars in thousands) 2018 2017 (unaudited) Deferred financing costs $ 12,715 $ 12,675 Accumulated amortization (1,510) (1,039) Deferred financing costs, net $ 11,205 $ 11,636 |
Acquired Intangibles Assets a24
Acquired Intangibles Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Acquired Intangible Assets and Liabilities [Abstract] | |
Schedule of carrying values for the major classes of intangible assets and liabilities | Summarized below are the carrying values for the major classes of intangible assets and liabilities (unaudited and in thousands): March 31, 2018 December 31, 2017 Useful Lives Gross Accumulated Net Carrying Gross Accumulated Net Carrying Customer Relationships 1 to 12 years $ 95,705 $ (22,500) $ 73,205 $ 95,705 $ (20,512) $ 75,193 In-Place Leases 0.5 to 10 years 32,066 (14,213) 17,853 32,066 (12,987) 19,079 Solar Power Agreement (1) 17 years 13,747 (3,032) 10,715 13,747 (2,830) 10,917 Platform Intangible 3 years 9,600 (8,762) 838 9,600 (8,133) 1,467 Acquired Favorable Leases 0.5 to 8 years 4,649 (2,581) 2,068 4,649 (2,328) 2,321 Tradenames 3 years 3,100 (2,829) 271 3,100 (2,626) 474 Total Intangible Assets $ 158,867 $ (53,917) $ 104,950 $ 158,867 $ (49,416) $ 109,451 Solar Power Agreement (1) 17 years 13,747 (3,032) 10,715 13,747 (2,830) 10,917 Acquired Unfavorable Leases Acquired below market leases - as Lessor 3 to 4 years 809 (434) 375 809 (375) 434 Acquired above market leases - as Lessee 11 to 12 years 2,453 (604) 1,849 2,453 (550) 1,903 Total Intangible Liabilities (2) $ 17,009 $ (4,070) $ 12,939 $ 17,009 $ (3,755) $ 13,254 (1) Amortization related to the Solar Power Agreement asset and liability is recorded at the same rate and therefore has no net impact on the statement of operations. (2) Intangible liabilities are included within the “Advance rents, security deposits and other liabilities” line item of the consolidated balance sheets. |
Schedule of estimated amortization of acquired favorable and unfavorable leases | The 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 2018 (April - December) $ 487 $ 162 2019 479 216 2020 647 216 2021 46 216 2022 17 216 Thereafter 17 823 Total $ 1,693 $ 1,849 |
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): 2018 (April - December) $ 10,528 2019 11,965 2020 11,379 2021 10,137 2022 9,910 Thereafter 38,248 Total $ 92,167 |
Real Estate Assets and Constr25
Real Estate Assets and Construction in Progress (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Real Estate Assets and Construction in Progress [Abstract] | |
Summary of Properties Owned or Leased by the Company | The following is a summary of properties owned or leased by the Company as of March 31, 2018 and December 31, 2017 (in thousands): As of March 31, 2018 (unaudited): Property Location Land Buildings, Construction Total Cost Atlanta, Georgia (Atlanta-Metro) $ 20,416 $ 461,668 $ 24,705 $ 506,789 Irving, Texas 8,606 326,024 69,317 403,947 Richmond, Virginia 2,180 254,868 63,007 320,055 Chicago, Illinois 9,400 95,691 128,587 233,678 Suwanee, Georgia (Atlanta-Suwanee) 3,521 168,759 3,266 175,546 Ashburn, Virginia (3) — 158 170,741 170,899 Piscataway, New Jersey 7,466 84,122 38,898 130,486 Santa Clara, California (1) — 100,450 7,052 107,502 Dulles, Virginia 3,154 77,569 3,952 84,675 Sacramento, California 1,481 64,438 16 65,935 Leased Facilities (2) — 57,499 6,417 63,916 Fort Worth, Texas 9,079 18,423 34,887 62,389 Princeton, New Jersey 20,700 32,987 595 54,282 Phoenix, Arizona (3) — — 28,269 28,269 Hillsboro, Oregon (3) — — 31,593 31,593 Manassas, Virginia (3) — — 24,717 24,717 Other (4) 2,212 35,666 35 37,913 $ 88,215 $ 1,778,322 $ 636,054 $ 2,502,591 (1) Owned facility subject to long-term ground sublease. (2) Includes 11 facilities. All facilities are leased, including those subject to capital leases. (3) Represent land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use. (4) Consists of Miami, FL; Lenexa, KS and Overland Park, KS facilities. As of December 31, 2017: Property Location Land Buildings, Construction Total Cost Atlanta, Georgia (Atlanta-Metro) $ 20,416 $ 452,836 $ 28,614 $ 501,866 Irving, Texas 8,606 276,894 86,320 371,820 Richmond, Virginia 2,180 254,603 61,888 318,671 Chicago, Illinois 9,400 81,463 135,479 226,342 Suwanee, Georgia (Atlanta-Suwanee) 3,521 165,915 3,620 173,056 Ashburn, Virginia (3) — — 106,952 106,952 Piscataway, New Jersey 7,466 83,251 37,807 128,524 Santa Clara, California (1) — 100,028 6,989 107,017 Dulles, Virginia 3,154 76,239 3,565 82,958 Sacramento, California 1,481 64,251 58 65,790 Leased Facilities (2) — 59,460 5,534 64,994 Fort Worth, Texas 9,079 17,894 33,774 60,747 Princeton, New Jersey 20,700 32,948 451 54,099 Phoenix, Arizona (3) — — 27,402 27,402 Hillsboro, Oregon (3) — — 29,278 29,278 Other (4) 2,213 35,505 88 37,806 $ 88,216 $ 1,701,287 $ 567,819 $ 2,357,322 (1) Owned facility subject to long-term ground sublease. (2) Includes 11 facilities. All facilities are leased, including those subject to capital leases. (3) Represent land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use. (4) Consists of Miami, FL; Lenexa, KS; Overland Park, KS; and Duluth, GA facilities. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt [Abstract] | |
Outstanding Debt Including Capital Leases and Lease Financing Obligations | Below is a listing of the Company’s outstanding debt, including capital leases and lease financing obligations, as of March 31, 2018 and December 31, 2017 (in thousands): Weighted Average Coupon Interest Rate at March 31, December 31, March 31, 2018 Maturities 2018 2017 (unaudited) (unaudited) Unsecured Credit Facility Revolving Credit Facility 3.35% December 17, 2021 $ 138,000 $ 131,000 Term Loan I 3.35% December 17, 2022 350,000 350,000 Term Loan II 3.37% April 27, 2023 350,000 350,000 Senior Notes 4.75% November 15, 2025 400,000 400,000 Lenexa Mortgage 4.10% May 1, 2022 1,850 1,866 Capital Lease and Lease Financing Obligations 1.98% 2018 - 2019 6,375 8,699 3.80% 1,246,225 1,241,565 Less net debt issuance costs (11,205) (11,636) Total outstanding debt, net $ 1,235,020 $ 1,229,929 |
Annual Remaining Principal Payment | The annual remaining principal payment requirements as of March 31, 2018 per the contractual maturities and excluding extension options, capital leases and lease financing obligations, are as follows (unaudited and in thousands): 2018 $ 44 2019 68 2020 71 2021 138,074 2022 350,077 Thereafter 751,516 Total $ 1,239,850 |
Schedule of Combined Future Payment Obligations, Excluding Interest | The following table summarizes the Company’s combined future payment obligations, excluding interest, as of March 31, 2018, on the capital leases and lease financing obligations above (unaudited and in thousands): 2018 $ 5,293 2019 956 2020 117 2021 9 2022 — Thereafter — Total $ 6,375 |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Restructuring [Abstract] | |
Schedule of changes in the restructuring liability | Equity Based Compensation and Product Related Severance Professional Fees and Other Total Balance as of December 31, 2017 $ — $ — $ — $ — Expensed but not paid 1,738 1,936 4,346 8,020 Cash paid 510 — — 510 Balance as of March 31, 2018 $ 2,248 $ 1,936 $ 4,346 $ 8,530 |
Partners' Capital, Equity and28
Partners' Capital, Equity and Incentive Compensation Plans (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Partners' Capital, Equity and Incentive Compensation Plans [Abstract] | |
Summary of Award Activity Under 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and Related Information | 2010 Equity Incentive Plan 2013 Equity Incentive Plan Number of Weighted Weighted Options Weighted Weighted Restricted Weighted Outstanding at December 31, 2017 568,040 $ 23.52 $ 5.00 1,369,270 $ 38.18 $ 7.80 381,864 $ 46.37 Granted — — — 672,549 34.03 5.63 35.27 Exercised/Vested (1) (459,472) 23.31 4.73 — — — 48.90 Cancelled/Expired (1,567) 25.00 10.26 — — — (2) 47.06 Outstanding at March 31, 2018 107,001 $ 24.40 $ 6.06 2,041,819 $ 36.81 $ 7.08 589,639 $ 39.50 (1) This represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock. This also represents Class O units which were converted to Class A units and Options to purchase Class A common stock which were exercised for their respective columns. (2) Includes restricted Class A common stock surrendered by certain employees to satisfy their federal and state tax obligations associated with the vesting of restricted common stock. |
Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted | Three Months Ended March 31, 2018 Fair value of restricted stock granted $34.03 - $54.01 Fair value of options granted $5.55 - $5.64 Expected term (years) 5.5 - 6.0 Expected volatility Expected dividend yield Expected risk-free interest rates 2.69% - 2.73% |
Summary of Information About Awards Outstanding | The following tables summarize information about awards outstanding as of March 31, 2018 (unaudited). Operating Partnership Awards Outstanding Exercise prices Awards Weighted average remaining vesting period (years) Class O Units $ 20.00 - 25.00 107,001 — Total Operating Partnership awards outstanding 107,001 QTS Realty Trust, Inc. Awards Outstanding Exercise prices Awards Weighted average remaining vesting period (years) Restricted stock $ — 2.0 Options to purchase Class A common stock $ 21.00 - 50.66 1.3 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 three months ended March 31, 2018 and 2017 (unaudited): Three Months Ended March 31, 2018 Record Date Payment Date Per Common Share and Aggregate Dividend/Distribution Amount (in millions) December 5, 2017 January 5, 2018 $ 0.39 $ 22.2 $ 22.2 Three Months Ended March 31, 2017 Record Date Payment Date Per Common Share and Aggregate Dividend/Distribution Amount (in millions) December 16, 2016 January 5, 2017 $ 0.36 $ 19.7 $ 19.7 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Summary of Related Party Transactions | The transactions which occurred during the three months ended March 31, 2018 and 2017 are outlined below (unaudited and in thousands): Three Months Ended March 31, 2018 2017 Tax, utility, insurance and other reimbursement $ 261 $ 143 Rent expense 254 254 Capital assets acquired 158 233 Total $ 673 $ 630 |
Earnings per share of QTS Rea30
Earnings per share of QTS Realty Trust, Inc. (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 2017 Numerator: Net income (loss) $ (252) $ 5,568 Loss (income) attributable to noncontrolling interests 29 (691) Preferred stock dividends (328) — Earnings attributable to participating securities (258) (233) Net income (loss) available to common stockholders after allocation of participating securities $ (809) $ 4,644 Denominator: Weighted average shares outstanding - basic 50,279 47,485 Effect of Class O units and options to purchase Class A common stock on an "as if" converted basis * — 876 Weighted average shares outstanding - diluted 50,279 48,361 Basic net income (loss) per share $ $ Diluted net income (loss) per share $ $ Does not include Class A partnership units of 6.6 million and 6.8 million for the three months ended March 31, 2018 and 2017, respectively, and 0.5 million reflecting the effects of Class O units and options to purchase common stock on an "as if" converted basis for the three months ended March 31, 2018, as their respective inclusion would have been antidilutive. |
Contracts with Customers (Table
Contracts with Customers (Table) | 3 Months Ended |
Mar. 31, 2018 | |
Contracts with Customers [Abstract] | |
Schedule of Future minimum payments to be received under non-cancelable customer contracts | Future minimum payments to be received under non-cancelable customer contracts (inclusive of payments for contracts which have not yet commenced, and exclusive of recoveries of operating costs from customers) are as follows for the years ending December 31 (unaudited and in thousands): 2018 (April - December) $ 267,764 2019 295,789 2020 219,661 2021 171,447 2022 105,632 Thereafter 122,238 Total $ 1,182,531 |
Description of Business (Detail
Description of Business (Details) | 3 Months Ended |
Mar. 31, 2018property | |
Organization And Description Of Business [Line Items] | |
Number of properties | 26 |
QualityTech LP | |
Organization And Description Of Business [Line Items] | |
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest | 88.50% |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Narrative) (Details) | 3 Months Ended | |
Mar. 31, 2018USD ($)aitem | Mar. 31, 2017USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | ||
Operating assets independent of the Operating Partnership | $ 0 | |
Useful life of property | 40 years | |
Depreciation expense from operation | $ 26,900,000 | $ 25,000,000 |
Real estate cost capitalized excluding interest cost | 3,500,000 | 2,500,000 |
Real estate interest cost capitalized incurred | 5,400,000 | 3,100,000 |
Impairment losses | $ 4,100,000 | |
Number of reporting units | item | 1 | |
Term Loan Maturing 2025 | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Interest rate | 4.75% | |
Real Estate Assets | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Depreciation expense from operation | $ 23,700,000 | 21,400,000 |
Non-Real Estate Assets | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Depreciation expense from operation | $ 3,200,000 | $ 3,600,000 |
Land in Manassas, Virginia | Construction in Progress | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Acres of land | a | 61 | |
Payments to Acquire Land | $ 24,600,000 | |
Minimum | Real Property | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Useful life of property | 20 years | |
Maximum | Real Property | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Useful life of property | 40 years | |
Maximum | Leasehold Improvements | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Useful life of property | 20 years |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Additional Information 1) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |||
Amortization of the deferred financing costs | $ 962 | $ 872 | |
Amortization of deferred leasing costs totaled | 4,900 | 4,200 | |
Deferred income | 28,679 | $ 25,305 | |
Amortization of deferred revenue | 2,900 | 2,600 | |
Company recorded equity-based compensation expense net of repurchased awards and forfeits | 3,500 | $ 3,100 | |
Equity based compensation associated with the acceleration of equity awards | $ 1,400 | ||
Revenue, Practical Expedient, Remaining Performance Obligation [true/false] | true | ||
Amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net | $ 26,100 | $ 23,400 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Deferred Financing Costs, Net of Accumulated Amortization) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Deferred financing costs | $ 9,759 | $ 9,775 |
Accumulated amortization | (2,398) | (1,908) |
Deferred financing costs, net | 7,361 | 7,867 |
Fixed debt arrangements | ||
Deferred financing costs | 12,715 | 12,675 |
Accumulated amortization | (1,510) | (1,039) |
Deferred financing costs, net | $ 11,205 | $ 11,636 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Deferred Leasing Costs, Net of Accumulated Amortization) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Summary of Significant Accounting Policies [Abstract] | ||
Deferred leasing costs | $ 56,563 | $ 54,868 |
Accumulated amortization | (21,526) | (20,956) |
Deferred leasing costs, net | $ 35,037 | $ 33,912 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Additional Information 2) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2018USD ($)segmentsubsidiary | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | Apr. 05, 2017USD ($) | Dec. 31, 2014subsidiary | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Aggregate allowance for doubtful accounts | $ 10,800 | $ 11,500 | |||
Capital lease obligations | 5,700 | 7,800 | |||
Lease financing obligations | 700 | 900 | |||
Net book value of assets associated with leases | $ 12,600 | $ 14,700 | |||
Number of operating segments | segment | 1 | ||||
Number of reportable segments | segment | 1 | ||||
Number of subsidiaries taxed as taxable REIT | subsidiary | 2 | ||||
Number of REIT subsidiaries' deferred tax assets due to U.S. NOL carryforwards | subsidiary | 1 | ||||
Effective tax rate | 23.10% | 39.70% | |||
Statutory rate | 21.00% | 35.00% | |||
Increase in fair value of interest rate swaps | $ 5,982 | ||||
Other Assets. | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Fair value | $ 7,400 | ||||
Interest Rate Swap | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Derivative instruments, notional amount | $ 400,000 | ||||
Increase in fair value of interest rate swaps | $ 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 | Minimum | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Percentage of total accounts receivable | 10.00% | ||||
Customer One | Rental Revenue | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Percentage of total revenue | 11.80% | ||||
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 | 36.00% | ||||
Five Customers | Accounts Receivable | Minimum | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Percentage of total accounts receivable | 5.00% |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Interest rate derivatives and their fair values) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2019 | Dec. 31, 2017 | Apr. 05, 2017 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Reclassification of other comprehensive income to interest expense | $ 402 | |||
Forecast | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Reclassification of other comprehensive income to interest expense | $ 500 | |||
Interest Rate Swap | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Notional amount of derivative | $ 400,000 | |||
Interest Rate Swap | Cash flow hedging | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Notional amount of derivative | 400,000 | $ 400,000 | ||
Fair value | 7,431 | 1,449 | ||
Swap instrument one matures on December 17, 2021 | Cash flow hedging | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Notional amount of derivative | $ 25,000 | $ 25,000 | ||
Fixed Rate Per annum | 1.989% | 1.989% | ||
Expiration Date | Dec. 17, 2021 | Dec. 17, 2021 | ||
Fair value | $ 453 | $ 100 | ||
Swap instrument two matures on December 17, 2021 | Cash flow hedging | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Notional amount of derivative | $ 100,000 | $ 100,000 | ||
Fixed Rate Per annum | 1.989% | 1.989% | ||
Expiration Date | Dec. 17, 2021 | Dec. 17, 2021 | ||
Fair value | $ 1,822 | $ 401 | ||
Swap instrument three matures on December 17, 2021 | Cash flow hedging | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Notional amount of derivative | $ 75,000 | $ 75,000 | ||
Fixed Rate Per annum | 1.989% | 1.989% | ||
Expiration Date | Dec. 17, 2021 | Dec. 17, 2021 | ||
Fair value | $ 1,366 | $ 298 | ||
Swap instrument one matures on April 27, 2022 | Cash flow hedging | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Notional amount of derivative | $ 50,000 | $ 50,000 | ||
Fixed Rate Per annum | 2.033% | 2.033% | ||
Expiration Date | Apr. 27, 2022 | Apr. 27, 2022 | ||
Fair value | $ 940 | $ 158 | ||
Swap instrument two matures on April 27, 2022 | Cash flow hedging | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Notional amount of derivative | $ 100,000 | $ 100,000 | ||
Fixed Rate Per annum | 2.029% | 2.029% | ||
Expiration Date | Apr. 27, 2022 | Apr. 27, 2022 | ||
Fair value | $ 1,908 | $ 337 | ||
Swap instrument three matures on April 27, 2022 | Cash flow hedging | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Notional amount of derivative | $ 50,000 | $ 50,000 | ||
Fixed Rate Per annum | 2.033% | 2.033% | ||
Expiration Date | Apr. 27, 2022 | Apr. 27, 2022 | ||
Fair value | $ 942 | $ 155 |
Acquired Intangibles Assets a39
Acquired Intangibles Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Finite-lived intangible assets | ||
Gross Carrying Value | $ 158,867 | $ 158,867 |
Accumulated Amortization | (53,917) | (49,416) |
Net Carrying Value | 104,950 | 109,451 |
Acquired below market leases - as Lessor | ||
Gross Carrying Value | 809 | 809 |
Accumulated Amortization | (434) | (375) |
Net Carrying Value | 375 | 434 |
Acquired above market leases - as Lessee | ||
Gross Carrying Value | 2,453 | 2,453 |
Accumulated Amortization | (604) | (550) |
Net Carrying Value | 1,849 | 1,903 |
Acquired Intangible Liabilities | ||
Acquired intangible liabilities | 17,009 | 17,009 |
Accumulated Amortization | (4,070) | (3,755) |
New Carrying Value | $ 12,939 | $ 13,254 |
Minimum | ||
Acquired below market leases - as Lessor | ||
Useful Lives | 3 years | 3 years |
Acquired above market leases - as Lessee | ||
Useful Lives | 11 years | 11 years |
Maximum | ||
Acquired below market leases - as Lessor | ||
Useful Lives | 4 years | 4 years |
Acquired above market leases - as Lessee | ||
Useful Lives | 12 years | 12 years |
Customer Relationships | ||
Finite-lived intangible assets | ||
Gross Carrying Value | $ 95,705 | $ 95,705 |
Accumulated Amortization | (22,500) | (20,512) |
Net Carrying Value | $ 73,205 | $ 75,193 |
Customer Relationships | Minimum | ||
Finite-lived intangible assets | ||
Useful Lives | 1 year | 1 year |
Customer Relationships | Maximum | ||
Finite-lived intangible assets | ||
Useful Lives | 12 years | 12 years |
In Place Leases | ||
Finite-lived intangible assets | ||
Gross Carrying Value | $ 32,066 | $ 32,066 |
Accumulated Amortization | (14,213) | (12,987) |
Net Carrying Value | $ 17,853 | $ 19,079 |
In Place Leases | Minimum | ||
Finite-lived intangible assets | ||
Useful Lives | 6 months | 6 months |
In Place Leases | Maximum | ||
Finite-lived intangible assets | ||
Useful Lives | 10 years | 10 years |
Solar Power Agreement | ||
Finite-lived intangible assets | ||
Useful Lives | 17 years | 17 years |
Gross Carrying Value | $ 13,747 | $ 13,747 |
Accumulated Amortization | (3,032) | (2,830) |
Net Carrying Value | $ 10,715 | $ 10,917 |
Platform Intangible | ||
Finite-lived intangible assets | ||
Useful Lives | 3 years | 3 years |
Gross Carrying Value | $ 9,600 | $ 9,600 |
Accumulated Amortization | (8,762) | (8,133) |
Net Carrying Value | 838 | 1,467 |
Acquired favorable leases | ||
Finite-lived intangible assets | ||
Gross Carrying Value | 4,649 | 4,649 |
Accumulated Amortization | (2,581) | (2,328) |
Net Carrying Value | $ 2,068 | $ 2,321 |
Acquired favorable leases | Minimum | ||
Finite-lived intangible assets | ||
Useful Lives | 6 months | 6 months |
Acquired favorable leases | Maximum | ||
Finite-lived intangible assets | ||
Useful Lives | 8 years | 8 years |
Tradenames | ||
Finite-lived intangible assets | ||
Useful Lives | 3 years | 3 years |
Gross Carrying Value | $ 3,100 | $ 3,100 |
Accumulated Amortization | (2,829) | (2,626) |
Net Carrying Value | $ 271 | $ 474 |
Acquired Intangibles Assets a40
Acquired Intangibles Assets and Liabilities - Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Acquired Intangible Assets and Liabilities | |||
Amortization of acquired above and below-market leases, net | $ 139 | $ 259 | |
Amortization of all other identified intangible assets | 4,000 | $ 4,700 | |
Estimated amortization of all other identified intangible assets | |||
Net Carrying Value | 104,950 | $ 109,451 | |
Acquired favorable and unfavorable leases | |||
Estimated amortization of acquired favorable and unfavorable leases Rental Revenue | |||
2018 (April - December) | 487 | ||
2,019 | 479 | ||
2,020 | 647 | ||
2,021 | 46 | ||
2,022 | 17 | ||
Thereafter | 17 | ||
Total | 1,693 | ||
Estimated amortization of acquired favorable and unfavorable leases Rental Expense | |||
2018 (April - December) | 162 | ||
2,019 | 216 | ||
2,020 | 216 | ||
2,021 | 216 | ||
2,022 | 216 | ||
Thereafter | 823 | ||
Total | 1,849 | ||
All other identified intangible assets | |||
Estimated amortization of all other identified intangible assets | |||
2018 (April - December) | 10,528 | ||
2,019 | 11,965 | ||
2,020 | 11,379 | ||
2,021 | 10,137 | ||
2,022 | 9,910 | ||
Thereafter | 38,248 | ||
Net Carrying Value | $ 92,167 |
Real Estate Assets and Constr41
Real Estate Assets and Construction in Progress (Summary of Properties Owned or Leased by the Company) (Details) $ in Thousands | Mar. 31, 2018USD ($)property | Dec. 31, 2017USD ($)property |
Real Estate Properties [Line Items] | ||
Land | $ 88,215 | $ 88,216 |
Buildings and improvements | 1,778,322 | 1,701,287 |
Construction in progress | 636,054 | 567,819 |
Total cost | $ 2,502,591 | $ 2,357,322 |
Number of facilities leased | property | 11 | 11 |
Owned Properties | Atlanta, Georgia (Atlanta-Metro) | ||
Real Estate Properties [Line Items] | ||
Land | $ 20,416 | $ 20,416 |
Buildings and improvements | 461,668 | 452,836 |
Construction in progress | 24,705 | 28,614 |
Total cost | 506,789 | 501,866 |
Owned Properties | Irving Texas | ||
Real Estate Properties [Line Items] | ||
Land | 8,606 | 8,606 |
Buildings and improvements | 326,024 | 276,894 |
Construction in progress | 69,317 | 86,320 |
Total cost | 403,947 | 371,820 |
Owned Properties | Richmond, Virginia | ||
Real Estate Properties [Line Items] | ||
Land | 2,180 | 2,180 |
Buildings and improvements | 254,868 | 254,603 |
Construction in progress | 63,007 | 61,888 |
Total cost | 320,055 | 318,671 |
Owned Properties | Chicago, Illinois | ||
Real Estate Properties [Line Items] | ||
Land | 9,400 | 9,400 |
Buildings and improvements | 95,691 | 81,463 |
Construction in progress | 128,587 | 135,479 |
Total cost | 233,678 | 226,342 |
Owned Properties | Suwanee, Georgia (Atlanta-Suwanee) | ||
Real Estate Properties [Line Items] | ||
Land | 3,521 | 3,521 |
Buildings and improvements | 168,759 | 165,915 |
Construction in progress | 3,266 | 3,620 |
Total cost | 175,546 | 173,056 |
Owned Properties | Ashburn, Virginia | ||
Real Estate Properties [Line Items] | ||
Buildings and improvements | 158 | |
Construction in progress | 170,741 | 106,952 |
Total cost | 170,899 | 106,952 |
Owned Properties | Piscataway New Jersey | ||
Real Estate Properties [Line Items] | ||
Land | 7,466 | 7,466 |
Buildings and improvements | 84,122 | 83,251 |
Construction in progress | 38,898 | 37,807 |
Total cost | 130,486 | 128,524 |
Owned Properties | Santa Clara, California | ||
Real Estate Properties [Line Items] | ||
Buildings and improvements | 100,450 | 100,028 |
Construction in progress | 7,052 | 6,989 |
Total cost | 107,502 | 107,017 |
Owned Properties | Dulles, Virginia | ||
Real Estate Properties [Line Items] | ||
Land | 3,154 | 3,154 |
Buildings and improvements | 77,569 | 76,239 |
Construction in progress | 3,952 | 3,565 |
Total cost | 84,675 | 82,958 |
Owned Properties | Sacramento, California | ||
Real Estate Properties [Line Items] | ||
Land | 1,481 | 1,481 |
Buildings and improvements | 64,438 | 64,251 |
Construction in progress | 16 | 58 |
Total cost | 65,935 | 65,790 |
Owned Properties | Fort Worth, Texas | ||
Real Estate Properties [Line Items] | ||
Land | 9,079 | 9,079 |
Buildings and improvements | 18,423 | 17,894 |
Construction in progress | 34,887 | 33,774 |
Total cost | 62,389 | 60,747 |
Owned Properties | Princeton, New Jersey | ||
Real Estate Properties [Line Items] | ||
Land | 20,700 | 20,700 |
Buildings and improvements | 32,987 | 32,948 |
Construction in progress | 595 | 451 |
Total cost | 54,282 | 54,099 |
Owned Properties | Phoenix, Arizona | ||
Real Estate Properties [Line Items] | ||
Construction in progress | 28,269 | 27,402 |
Total cost | 28,269 | 27,402 |
Owned Properties | Hillsboro, Oregon | ||
Real Estate Properties [Line Items] | ||
Construction in progress | 31,593 | 29,278 |
Total cost | 31,593 | 29,278 |
Owned Properties | Manassas, Virginia | ||
Real Estate Properties [Line Items] | ||
Construction in progress | 24,717 | |
Total cost | 24,717 | |
Owned Properties | Other | ||
Real Estate Properties [Line Items] | ||
Land | 2,212 | 2,213 |
Buildings and improvements | 35,666 | 35,505 |
Construction in progress | 35 | 88 |
Total cost | 37,913 | 37,806 |
Leased Properties | Owned Properties | ||
Real Estate Properties [Line Items] | ||
Buildings and improvements | 57,499 | 59,460 |
Construction in progress | 6,417 | 5,534 |
Total cost | $ 63,916 | $ 64,994 |
Debt (Outstanding Debt Includin
Debt (Outstanding Debt Including Capital Leases) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.80% | |
Total debt and lease obligations | $ 1,246,225 | $ 1,241,565 |
Less discount and net debt issuance costs | 11,205 | 11,636 |
Total outstanding debt, net | $ 1,235,020 | 1,229,929 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.35% | |
Maturity date | Dec. 17, 2021 | |
Outstanding debt | $ 138,000 | 131,000 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Outstanding debt | $ 700,000 | |
Term Loan I [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.35% | |
Maturity date | Dec. 17, 2022 | |
Outstanding debt | $ 350,000 | 350,000 |
Term Loan II [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 3.37% | |
Maturity date | Apr. 27, 2023 | |
Outstanding debt | $ 350,000 | 350,000 |
Lenexa Mortgage | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 4.10% | |
Maturity date | May 1, 2022 | |
Outstanding debt | $ 1,850 | 1,866 |
Capital Lease and Lease Financing Obligations [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 1.98% | |
Maturity date description | 2018 - 2019 | |
Capital Lease and Lease Financing Obligations | $ 6,375 | 8,699 |
Operating Partnership Quality Tech LP And QTS Finance Corporation | ||
Debt Instrument [Line Items] | ||
Weighted average coupon interest rate | 4.75% | |
Maturity date | Nov. 15, 2025 | |
Outstanding debt | $ 400,000 | $ 400,000 |
Debt (Unsecured Credit Facility
Debt (Unsecured Credit Facility Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | Apr. 05, 2017 | Mar. 31, 2017 | |
Debt Instrument [Line Items] | ||||
Percentage of operating partnerships gross asset value | 15.00% | |||
Interest Rate Swap | ||||
Debt Instrument [Line Items] | ||||
Weighted average effective fixed interest rate | 3.50% | |||
Term Loan | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument Carrying Amount | $ 700,000,000 | |||
Outstanding debt | $ 700,000,000 | |||
Term Loan Maturing April 27, 2021 | ||||
Debt Instrument [Line Items] | ||||
Maturity date | Apr. 27, 2023 | |||
Term Loan Maturing December 17, 2020 | ||||
Debt Instrument [Line Items] | ||||
Maturity date | Dec. 17, 2022 | |||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maturity date | Dec. 17, 2021 | |||
Debt Instrument Carrying Amount | $ 138,000,000 | $ 131,000,000 | ||
Outstanding debt | 138,000,000 | $ 131,000,000 | ||
Credit facility availability | $ 820,000,000 | |||
Maximum percentage of unencumbered asset pool capitalized value | 60.00% | |||
Maximum percentage of unencumbered asset pool capitalized value for two consecutive quarters | 65.00% | |||
Unencumbered asset pool debt yield limit | 14.00% | |||
Unencumbered asset pool debt yield limit for two consecutive quarters | 12.50% | |||
Leverage ratio | 1.70% | |||
Letter of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Letter of credit outstanding | $ 2,100,000 | |||
Line of credit facility weighted average interest rate outstanding percentage | 3.36% | |||
Unsecured Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility accordion feature | $ 400,000,000 | |||
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] | ||||
Credit facility maximum borrowing capacity | $ 1,520,000,000 | |||
Debt extension period | 1 year | |||
Additional contingent borrowing capacity, maximum | $ 1,920,000,000 | |||
Debt Instrument Carrying Amount | 838,000,000 | |||
Outstanding debt | 838,000,000 | |||
Minimum tangible net worth | $ 1,209,000,000 | |||
Credit facility covenant, percentage ownership requirements in addition to minimum tangible net worth | 75.00% | |||
Credit facility covenant, maximum distribution payout ratio of funds from operations | 95.00% | |||
Maximum percentage on gross asset value | 60.00% | |||
Maximum percentage to gross asset value for the next two quarters | 65.00% | |||
Debt Instrument, Covenant Compliance | the Company was in compliance with all of its covenants | |||
Unsecured Credit Facility | Term Loan Maturing April 27, 2021 | ||||
Debt Instrument [Line Items] | ||||
Credit facility maximum borrowing capacity | 350,000,000 | |||
Unsecured Credit Facility | Term Loan Maturing December 17, 2020 | ||||
Debt Instrument [Line Items] | ||||
Credit facility maximum borrowing capacity | 350,000,000 | |||
Unsecured Credit Facility | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Credit facility maximum borrowing capacity | $ 820,000,000 | |||
Maturity date | Dec. 17, 2021 | |||
Debt Instrument Carrying Amount | $ 138,000,000 | |||
Outstanding debt | $ 138,000,000 |
Debt (Senior Notes) (Details)
Debt (Senior Notes) (Details) - USD ($) $ in Thousands | Nov. 08, 2017 | Jul. 23, 2014 | Mar. 31, 2018 | Dec. 31, 2017 | Apr. 05, 2017 |
Debt Instrument [Line Items] | |||||
Debt issuance costs, net | $ 7,361 | $ 7,867 | |||
Operating Partnership And Qts Finance Corporation [Member] | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 300,000 | ||||
Interest rate | 5.875% | ||||
Senior notes due | 2,022 | ||||
Maturity date | Aug. 1, 2022 | ||||
Percentage of issued price equal to face value | 99.211% | ||||
Operating Partnership Quality Tech LP And QTS Finance Corporation | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 400,000 | ||||
Interest rate | 4.75% | ||||
Senior notes due | 2,025 | ||||
Maturity date | Nov. 15, 2025 | ||||
Debt issuance costs, net | $ 5,700 | ||||
Percentage of issued price equal to face value | 100.00% | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs, net | $ 5,700 | ||||
Term Loan | Interest Rate Swap | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 400,000 | ||||
Term Loan Maturing April 27, 2021 | |||||
Debt Instrument [Line Items] | |||||
Maturity date | Apr. 27, 2023 | ||||
Term Loan Maturing December 17, 2020 | |||||
Debt Instrument [Line Items] | |||||
Maturity date | Dec. 17, 2022 | ||||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maturity date | Dec. 17, 2021 | ||||
Revolving Credit Facility | Unsecured Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maturity date | Dec. 17, 2021 |
Debt (Annual Remaining Principa
Debt (Annual Remaining Principal Payment) (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Debt [Abstract] | |
2,018 | $ 44 |
2,019 | 68 |
2,020 | 71 |
2,021 | 138,074 |
2,022 | 350,077 |
Thereafter | 751,516 |
Total | $ 1,239,850 |
Debt (Lease Narrative) (Details
Debt (Lease Narrative) (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2018USD ($)agreementfacility | Dec. 31, 2017USD ($) | |
Capital Leased Assets [Line Items] | ||
Lease financing obligations | $ 0.7 | $ 0.9 |
Carpathia Hosting, Inc. | ||
Capital Leased Assets [Line Items] | ||
Capital lease, lease financing obligations and mortgage notes payable | 5.7 | |
Capital lease and lease financing obligations assumed | $ 4.3 | |
Number of lease agreements | agreement | 2 | |
The number of data centers with lease agreements and lease financing agreements | facility | 1 | |
Outstanding financing agreement | $ 0.7 | |
Lease financing expiration date | Feb. 1, 2019 | |
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 | Mar. 31, 2018USD ($) |
Debt [Abstract] | |
2,018 | $ 5,293 |
2,019 | 956 |
2,020 | 117 |
2,021 | 9 |
Total lease obligations | $ 6,375 |
Restructuring (Details)
Restructuring (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Changes in the restructuring liability | |
Expensed but not paid | $ 8,020 |
Cash paid | 510 |
Balance at end of the period | 8,530 |
Severance | |
Changes in the restructuring liability | |
Expensed but not paid | 1,738 |
Cash paid | 510 |
Balance at end of the period | 2,248 |
Equity Based Compensation And Professional Fees | |
Changes in the restructuring liability | |
Expensed but not paid | 1,936 |
Balance at end of the period | 1,936 |
Product Related and Other | |
Changes in the restructuring liability | |
Expensed but not paid | 4,346 |
Balance at end of the period | 4,346 |
Minimum | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring expenses incurred | 10,000 |
Maximum | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring expenses incurred | $ 15,000 |
Partners' Capital, Equity and49
Partners' Capital, Equity and Incentive Compensation Plans (Narrative) (Details) $ / shares in Units, $ in Millions | Apr. 05, 2018$ / shares | May 04, 2017item$ / shares | Mar. 31, 2018USD ($)item$ / sharesshares | Mar. 31, 2017USD ($)$ / shares | May 31, 2015shares |
Partners Capital And Distributions [Line Items] | |||||
Number of classes of partnership units outstanding | item | 3 | ||||
Equity based compensation expense unrecognized | $ | $ 27.1 | ||||
Equity based compensation expense vesting period | 1 year 6 months | ||||
Equity based compensation awards intrinsic value | $ | $ 30.1 | ||||
Dividend paid to common stockholders | $ / shares | $ 0.41 | $ 0.39 | $ 0.36 | ||
Partnership distribution per unit | $ / shares | $ 0.41 | ||||
Dividends payable, date payable | Apr. 5, 2018 | Jan. 5, 2018 | Jan. 5, 2017 | ||
QTS Realty Trust, Inc. Employee Stock Purchase Plan | |||||
Partners Capital And Distributions [Line Items] | |||||
Shares reserved for purchase under plan | 250,000 | ||||
2017 Plan | |||||
Partners Capital And Distributions [Line Items] | |||||
Minimum period of service | 30 days | ||||
Minimum hours per week of service | item | 30 | ||||
Purchase period per year | item | 4 | ||||
Class RS Units | |||||
Partners Capital And Distributions [Line Items] | |||||
Number of units outstanding | 0 | ||||
Class B Common Stock | |||||
Partners Capital And Distributions [Line Items] | |||||
Number of votes per share | item | 50 | ||||
Class A Common Stock | At Market | |||||
Partners Capital And Distributions [Line Items] | |||||
Maximum value of stock which may be issued | $ | $ 300 | ||||
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% | ||||
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 | 600,000 | ||||
Options to purchase Class A common stock | |||||
Partners Capital And Distributions [Line Items] | |||||
Nonvested awards outstanding | 900,000 | ||||
2013 Equity Incentive Plan | |||||
Partners Capital And Distributions [Line Items] | |||||
Authorized shares to be issued under the plan | 1.75 | 4,750,000 |
Partners' Capital, Equity and50
Partners' Capital, Equity and Incentive Compensation Plans (Summary of Award Activity Under 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and Related Information) (Details) | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
2013 Equity Incentive Plan | Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning balance, Options Outstanding (in shares) | shares | 1,369,270 |
Options, Granted (in shares) | shares | 672,549 |
Ending balance, Options Outstanding (in shares) | shares | 2,041,819 |
Beginning balance, Weighted average exercise price options outstanding | $ 38.18 |
Weighted average exercise price options outstanding, Granted | 34.03 |
Ending balance, Weighted average exercise price options outstanding | 36.81 |
Beginning balance, weighted average fair value, options | 7.80 |
Weighted average fair value, granted, options | 5.63 |
Ending balance, weighted average fair value, options | $ 7.08 |
2013 Equity Incentive Plan | Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning balance, Options Outstanding (in shares) | shares | 381,864 |
Options, Granted (in shares) | shares | 340,033 |
Options, Exercised (in shares) | shares | (101,248) |
Options, Cancelled/Expired (in shares) | shares | (31,010) |
Ending balance, Options Outstanding (in shares) | shares | 589,639 |
Beginning balance, weighted average fair value, options | $ 46.37 |
Weighted average fair value, granted, options | 35.27 |
Weighted average fair value, vested, options | 48.90 |
Weighted average fair value, cancelled/expired, options | 47.06 |
Ending balance, weighted average fair value, options | $ 39.50 |
Class O Units | 2010 Equity Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning balance, Number of units (in shares) | shares | 568,040 |
Number of units, Exercised | shares | (459,472) |
Number of units, Cancelled/Expired (in shares) | shares | (1,567) |
Ending balance, Number of units (in shares) | shares | 107,001 |
Beginning balance, Weighted average exercise price units | $ 23.52 |
Weighted average exercise price units, Exercised | 23.31 |
Weighted average exercise price units, Cancelled/Expired | 25 |
Ending balance, Weighted average exercise price units | 24.40 |
Beginning balance, Weighted average fair value | 5 |
Weighted average fair value, Exercised | 4.73 |
Weighted average fair value, Cancelled/Expired | 10.26 |
Ending balance, Weighted average fair value | $ 6.06 |
Partners' Capital, Equity and51
Partners' Capital, Equity and Incentive Compensation Plans (Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted) (Details) | 3 Months Ended |
Mar. 31, 2018$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 28.00% |
Expected dividend yield | 4.82% |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of restricted stock granted | $ 34.03 |
Fair value of options granted | $ 5.55 |
Expected risk-free interest rates | 2.69% |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of restricted stock granted | $ 54.01 |
Fair value of options granted | $ 5.64 |
Expected risk-free interest rates | 2.73% |
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) | 6 years |
Partners' Capital, Equity and52
Partners' Capital, Equity and Incentive Compensation Plans (Summary of Information About Awards Outstanding) (Details) | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
QualityTech LP | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 107,001 |
QTS Realty Trust, Inc Awards Outstanding | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 2,631,458 |
QTS Realty Trust, Inc Awards Outstanding | Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 589,639 |
Remaining term of awards | 2 years |
QTS Realty Trust, Inc Awards Outstanding | Options to purchase Class A common stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Lower limit of exercise price | $ / shares | $ 21 |
Upper limit of exercise price | $ / shares | $ 50.66 |
Awards Outstanding | 2,041,819 |
Remaining term of awards | 1 year 3 months 18 days |
Class O Units | QualityTech LP | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Lower limit of exercise price | $ / shares | $ 20 |
Upper limit of exercise price | $ / shares | $ 25 |
Awards Outstanding | 107,001 |
Remaining term of awards | 0 years |
Partners' Capital, Equity and53
Partners' Capital, Equity and Incentive Compensation Plans (Schedule of Quarterly Cash Dividends) (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 15, 2018 | Apr. 05, 2018 | Mar. 22, 2018 | Mar. 15, 2018 | Mar. 31, 2018 | Mar. 31, 2017 |
Record Date | Mar. 22, 2018 | Dec. 5, 2017 | Dec. 16, 2016 | |||
Payment Date | Apr. 5, 2018 | Jan. 5, 2018 | Jan. 5, 2017 | |||
Per Common Share and Per Unit Rate | $ 0.41 | $ 0.39 | $ 0.36 | |||
Dividend/Distribution Amount | $ 22,200 | $ 19,700 | ||||
Dividend rate (as a percent) | 7.125% | |||||
Preferred stock, issued | 4,280,000 | |||||
Preferred Stock issuance proceeds, net of costs | $ 103,615 | |||||
Preferred stock dividends per share cash paid | $ 0.14844 | |||||
Preferred stock redemption price per share | $ 25 | $ 25 | ||||
Threshold period of redemption of preferred stock | 120 days | |||||
Ownership interest | 50.00% | |||||
Convertible preferred stock par value | $ 0.01 | |||||
Preferred stock, liquidation preference | $ 25 | $ 25 | ||||
Share cap price | $ 1.46929 | |||||
Underwriter's Option | ||||||
Preferred stock, issued | 280,000 |
Related Party Transactions (Sum
Related Party Transactions (Summary of Related Party Transactions) (Details) - Affiliated Entity - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Related Party Transaction [Line Items] | ||
Tax, utility, insurance and other reimbursement | $ 261 | $ 143 |
Rent expense | 254 | 254 |
Capital assets acquired | 158 | 233 |
Total | $ 673 | $ 630 |
Noncontrolling Interest (Narrat
Noncontrolling Interest (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2018 | |
Quality Tech LP ownership percentage in operating partnership | 21.20% |
Stock conversion ratio | 1 |
Qualitytech, LP | |
Quality Tech LP ownership percentage in operating partnership | 11.50% |
Earnings per share of QTS Rea56
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 | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings per Share [Abstract] | ||
Net income (loss) | $ (252) | $ 5,568 |
Loss (Income) attributable to noncontrolling interests | 29 | (691) |
Preferred stock dividends | (328) | |
Earnings attributable to participating securities | (258) | (233) |
Net income (loss) available to common stockholders after allocation of participating securities | $ (809) | $ 4,644 |
Weighted average shares outstanding-basic | 50,279 | 47,485 |
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 | 876 | |
Weighted average shares outstanding-diluted | 50,279 | 48,361 |
Basic net income (loss) per share | $ (0.02) | $ 0.10 |
Diluted net income (loss) per share | $ (0.02) | $ 0.10 |
Earnings per share of QTS Rea57
Earnings per share of QTS Realty Trust, Inc.(Narrative) (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Class A Common Stock | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Antidilutive shares excluded from the computation of diluted net earning per share | 6.6 | 6.8 |
Class O Units | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Antidilutive shares excluded from the computation of diluted net earning per share | 0.5 |
Contracts with Customers (Detai
Contracts with Customers (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Contracts with Customers [Abstract] | |
2018 (April - December) | $ 267,764 |
2,019 | 295,789 |
2,020 | 219,661 |
2,021 | 171,447 |
2,022 | 105,632 |
Thereafter | 122,238 |
Total | $ 1,182,531 |
Fair Value of Financial Instr59
Fair Value of Financial Instruments (Narrative) (Details) $ in Millions | Mar. 31, 2018USD ($) |
Senior Notes. | Fair Value Measurements, Level 2 | |
Fair Value Of Financial Instruments [Line Items] | |
Fair value of loan based on current market rates | $ 375 |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) - $ / shares | Apr. 15, 2018 | Apr. 05, 2018 | Mar. 22, 2018 | Mar. 15, 2018 | Mar. 31, 2018 | Mar. 31, 2017 |
Subsequent Event [Line Items] | ||||||
Dividends payable, date payable | Apr. 5, 2018 | Jan. 5, 2018 | Jan. 5, 2017 | |||
Dividend paid to common stockholders | $ 0.41 | $ 0.39 | $ 0.36 | |||
Dividends payable, date of record | Mar. 22, 2018 | Dec. 5, 2017 | Dec. 16, 2016 | |||
Dividend rate (as a percent) | 7.125% | |||||
Common Stock | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Dividends payable, date payable | Apr. 5, 2018 | |||||
Dividend paid to common stockholders | $ 0.41 | |||||
Preferred Stock | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Dividends payable, date payable | Apr. 16, 2018 | |||||
Dividend paid to common stockholders | $ 0.14844 | |||||
Dividend rate (as a percent) | 7.125% |