Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 28, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2020 | |
Entity File Number | 001-36109 | |
Entity Registrant Name | QTS Realty Trust, Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 46-2809094 | |
Entity Address, Address Line One | 12851 Foster Street | |
Entity Address, City or Town | Overland Park | |
Entity Address, State or Province | KS | |
Entity Address, Postal Zip Code | 66213 | |
City Area Code | 913 | |
Local Phone Number | 312-5503 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001577368 | |
Amendment Flag | false | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Class A common stock, $0.01 par value | |
Trading Symbol | QTS | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 64,307,096 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 128,408 | |
Series A Redeemable Perpetual Preferred Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Preferred Stock, 7.125% Series A Cumulative Redeemable Perpetual, $0.01 par value | |
Trading Symbol | QTS PR A | |
Security Exchange Name | NYSE | |
Series B Convertible Perpetual Preferred Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Preferred Stock, 6.50% Series B Cumulative Convertible Perpetual, $0.01 par value | |
Trading Symbol | QTS PR B | |
Security Exchange Name | NYSE | |
QualityTech, LP | ||
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2020 | |
Entity Registrant Name | QualityTech, LP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 27-0707288 | |
Entity Address, Address Line One | 12851 Foster Street | |
Entity Address, City or Town | Overland Park | |
Entity Address, State or Province | KS | |
Entity Address, Postal Zip Code | 66213 | |
City Area Code | 913 | |
Local Phone Number | 312-5503 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001561164 | |
Amendment Flag | false |
INTERIM CONSOLIDATED BALANCE SH
INTERIM CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Real Estate Assets | ||
Land | $ 164,816 | $ 130,605 |
Buildings, improvements and equipment | 2,681,827 | 2,178,901 |
Less: Accumulated depreciation | (662,454) | (558,560) |
Total real estate assets | 2,184,189 | 1,750,946 |
Construction in progress | 957,592 | 920,922 |
Real Estate Assets, net | 3,141,781 | 2,671,868 |
Investments in unconsolidated entity | 22,883 | 30,218 |
Operating lease right-of-use assets, net | 52,816 | 57,141 |
Cash and cash equivalents | 21,998 | 15,653 |
Rents and other receivables, net | 87,479 | 81,181 |
Acquired intangibles, net | 71,367 | 81,679 |
Deferred costs, net | 57,058 | 52,363 |
Prepaid expenses | 11,281 | 10,586 |
Goodwill | 173,843 | 173,843 |
Other assets, net | 49,046 | 49,001 |
TOTAL ASSETS | 3,689,552 | 3,223,533 |
LIABILITIES | ||
Unsecured credit facility, net | 1,217,356 | 1,010,640 |
Senior notes, net of debt issuance costs | 396,121 | 395,549 |
Finance leases and mortgage notes payable | 44,911 | 46,876 |
Operating lease liabilities | 59,642 | 64,416 |
Accounts payable and accrued liabilities | 173,793 | 142,547 |
Dividends and distributions payable | 37,969 | 34,500 |
Advance rents, security deposits and other liabilities | 21,833 | 18,027 |
Derivative liabilities | 60,032 | 26,609 |
Deferred income taxes | 637 | 749 |
Deferred income | 55,422 | 39,169 |
TOTAL LIABILITIES | 2,067,716 | 1,779,082 |
EQUITY | ||
Common stock/units | 644 | 582 |
Additional paid-in capital | 1,614,508 | 1,330,444 |
Accumulated other comprehensive income (loss) | (56,480) | (24,642) |
Accumulated dividends in excess of earnings | (457,993) | (376,002) |
Total stockholders’ equity | 1,508,114 | 1,337,817 |
Noncontrolling interests | 113,722 | 106,634 |
TOTAL EQUITY | 1,621,836 | 1,444,451 |
TOTAL LIABILITIES AND EQUITY | 3,689,552 | 3,223,533 |
QualityTech, LP | ||
Real Estate Assets | ||
Land | 164,816 | 130,605 |
Buildings, improvements and equipment | 2,681,827 | 2,178,901 |
Less: Accumulated depreciation | (662,454) | (558,560) |
Total real estate assets | 2,184,189 | 1,750,946 |
Construction in progress | 957,592 | 920,922 |
Real Estate Assets, net | 3,141,781 | 2,671,868 |
Investments in unconsolidated entity | 22,883 | 30,218 |
Operating lease right-of-use assets, net | 52,816 | 57,141 |
Cash and cash equivalents | 21,998 | 15,653 |
Rents and other receivables, net | 87,479 | 81,181 |
Acquired intangibles, net | 71,367 | 81,679 |
Deferred costs, net | 57,058 | 52,363 |
Prepaid expenses | 11,281 | 10,586 |
Goodwill | 173,843 | 173,843 |
Other assets, net | 49,046 | 49,001 |
TOTAL ASSETS | 3,689,552 | 3,223,533 |
LIABILITIES | ||
Unsecured credit facility, net | 1,217,356 | 1,010,640 |
Senior notes, net of debt issuance costs | 396,121 | 395,549 |
Finance leases and mortgage notes payable | 44,911 | 46,876 |
Operating lease liabilities | 59,642 | 64,416 |
Accounts payable and accrued liabilities | 173,793 | 142,547 |
Dividends and distributions payable | 37,969 | 34,500 |
Advance rents, security deposits and other liabilities | 21,833 | 18,027 |
Derivative liabilities | 60,032 | 26,609 |
Deferred income taxes | 637 | 749 |
Deferred income | 55,422 | 39,169 |
TOTAL LIABILITIES | 2,067,716 | 1,779,082 |
EQUITY | ||
Accumulated other comprehensive income (loss) | (62,314) | (27,465) |
TOTAL EQUITY | 1,621,836 | 1,444,451 |
TOTAL PARTNERS' CAPITAL | 1,621,836 | 1,444,451 |
TOTAL LIABILITIES AND EQUITY | 3,689,552 | 3,223,533 |
QualityTech, LP | Series A Redeemable Perpetual Preferred Units | ||
EQUITY | ||
Cumulative redeemable perpetual preferred stock / units | 103,212 | 103,212 |
QualityTech, LP | Series B Redeemable Perpetual Preferred Units | ||
EQUITY | ||
Cumulative redeemable perpetual preferred stock / units | 304,223 | 304,223 |
QualityTech, LP | Common units | ||
EQUITY | ||
Common stock/units | 1,276,715 | 1,064,481 |
Series A Redeemable Perpetual Preferred Stock | ||
EQUITY | ||
Cumulative redeemable perpetual preferred stock / units | 103,212 | 103,212 |
Series B Convertible Perpetual Preferred Stock | ||
EQUITY | ||
Cumulative redeemable perpetual preferred stock / units | $ 304,223 | $ 304,223 |
INTERIM CONSOLIDATED BALANCE _2
INTERIM CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Preferred stock, liquidation preference | $ 25 | |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,133,000 | 450,133,000 |
Common stock, shares issued | 64,442,343 | 58,227,523 |
Common stock, shares outstanding | 64,442,343 | 58,227,523 |
QualityTech, LP | Series A Redeemable Perpetual Preferred Units | ||
Dividend rate (as a percent) | 7.125% | 7.125% |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, liquidation preference | $ 25 | $ 25 |
Preferred stock, shares authorized | 4,600,000 | 4,600,000 |
Preferred stock, shares issued | 4,280,000 | 4,280,000 |
Preferred stock, shares outstanding | 4,280,000 | 4,280,000 |
QualityTech, LP | Series B Redeemable Perpetual Preferred Units | ||
Dividend rate (as a percent) | 6.50% | 6.50% |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, liquidation preference | $ 100 | $ 100 |
Preferred stock, shares authorized | 3,162,500 | 3,162,500 |
Preferred stock, shares issued | 3,162,500 | 3,162,500 |
Preferred stock, shares outstanding | 3,162,500 | 3,162,500 |
QualityTech, LP | Common units | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,133,000 | 450,133,000 |
Common stock, shares issued | 71,100,542 | 64,901,157 |
Common stock, shares outstanding | 71,100,542 | 64,901,157 |
Series A Redeemable Perpetual Preferred Stock | ||
Dividend rate (as a percent) | 7.125% | 7.125% |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, liquidation preference | $ 25 | $ 25 |
Preferred stock, shares authorized | 4,600,000 | 4,600,000 |
Preferred stock, shares issued | 4,280,000 | 4,280,000 |
Preferred stock, shares outstanding | 4,280,000 | 4,280,000 |
Series B Convertible Perpetual Preferred Stock | ||
Dividend rate (as a percent) | 6.50% | 6.50% |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, liquidation preference | $ 100 | $ 100 |
Preferred stock, shares authorized | 3,162,500 | 3,162,500 |
Preferred stock, shares issued | 3,162,500 | 3,162,500 |
Preferred stock, shares outstanding | 3,162,500 | 3,162,500 |
INTERIM CONSOLIDATED STATEMENTS
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Rental | $ 133,782 | $ 121,475 | $ 379,860 | $ 345,841 |
Other | 3,756 | 3,780 | 15,611 | 11,270 |
Total revenues | 137,538 | 125,255 | 395,471 | 357,111 |
Operating expenses: | ||||
Property operating costs | 43,979 | 44,730 | 125,109 | 117,403 |
Real estate taxes and insurance | 4,005 | 3,713 | 12,023 | 10,435 |
Depreciation and amortization | 51,378 | 42,875 | 144,002 | 123,144 |
General and administrative | 22,082 | 19,504 | 64,156 | 59,519 |
Transaction, integration, and impairment costs | 1,078 | 827 | 1,675 | 3,080 |
Total operating expenses | 122,522 | 111,649 | 346,965 | 313,581 |
Gain on sale of real estate, net | 0 | 0 | 0 | 13,408 |
Operating income | 15,016 | 13,606 | 48,506 | 56,938 |
Other income and expense: | ||||
Interest income | 0 | 22 | 2 | 103 |
Interest expense | (7,516) | (6,724) | (21,602) | (20,329) |
Other income | 0 | 370 | 159 | 330 |
Equity in net loss of unconsolidated entity | (366) | (317) | (1,633) | (992) |
Income before taxes | 7,134 | 6,957 | 25,432 | 36,050 |
Tax expense | (227) | (369) | (196) | (779) |
Net income | 6,907 | 6,588 | 25,236 | 35,271 |
Net (income) loss attributable to noncontrolling interests | 18 | 49 | (408) | (1,593) |
Net income attributable to QTS Realty Trust, Inc. | 6,925 | 6,637 | 24,828 | 33,678 |
Preferred stock dividends | (7,045) | (7,045) | (21,135) | (21,135) |
Net income (loss) attributable to common stockholders | $ (120) | $ (408) | $ 3,693 | $ 12,543 |
Net income (loss) per share attributable to common shares: | ||||
Basic (in dollars per share) | $ (0.07) | $ (0.05) | $ (0.13) | $ 0.12 |
Diluted (in dollars per share) | $ (0.07) | $ (0.05) | $ (0.13) | $ 0.12 |
QualityTech, LP | ||||
Revenues: | ||||
Rental | $ 133,782 | $ 121,475 | $ 379,860 | $ 345,841 |
Other | 3,756 | 3,780 | 15,611 | 11,270 |
Total revenues | 137,538 | 125,255 | 395,471 | 357,111 |
Operating expenses: | ||||
Property operating costs | 43,979 | 44,730 | 125,109 | 117,403 |
Real estate taxes and insurance | 4,005 | 3,713 | 12,023 | 10,435 |
Depreciation and amortization | 51,378 | 42,875 | 144,002 | 123,144 |
General and administrative | 22,082 | 19,504 | 64,156 | 59,519 |
Transaction, integration, and impairment costs | 1,078 | 827 | 1,675 | 3,080 |
Total operating expenses | 122,522 | 111,649 | 346,965 | 313,581 |
Gain on sale of real estate, net | 0 | 0 | 0 | 13,408 |
Operating income | 15,016 | 13,606 | 48,506 | 56,938 |
Other income and expense: | ||||
Interest income | 0 | 22 | 2 | 103 |
Interest expense | (7,516) | (6,724) | (21,602) | (20,329) |
Other income | 0 | 370 | 159 | 330 |
Equity in net loss of unconsolidated entity | (366) | (317) | (1,633) | (992) |
Income before taxes | 7,134 | 6,957 | 25,432 | 36,050 |
Tax expense | (227) | (369) | (196) | (779) |
Net income | 6,907 | 6,588 | 25,236 | 35,271 |
Preferred stock dividends | (7,045) | (7,045) | (21,135) | (21,135) |
Net income (loss) attributable to common stockholders | $ (138) | $ (457) | $ 4,101 | $ 14,136 |
INTERIM CONSOLIDATED STATEMEN_2
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net income | $ 6,907 | $ 6,588 | $ 25,236 | $ 35,271 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment gain (loss) | 166 | (426) | 7 | (360) |
Increase (decrease) in fair value of derivative contracts | 5,500 | (5,733) | (34,856) | (34,192) |
Reclassification of other comprehensive income to utilities expense | 197 | 0 | 961 | 0 |
Reclassification of other comprehensive income to interest expense | 3,352 | (235) | 6,813 | (1,200) |
Comprehensive income (loss) | 16,122 | 194 | (1,839) | (481) |
Comprehensive (income) loss attributable to noncontrolling interests | (1,626) | (22) | 183 | 52 |
Comprehensive income (loss) attributable to QTS Realty Trust, Inc. | 14,496 | 172 | (1,656) | (429) |
QualityTech, LP | ||||
Net income | 6,907 | 6,588 | 25,236 | 35,271 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment gain (loss) | 166 | (426) | 7 | (360) |
Increase (decrease) in fair value of derivative contracts | 5,500 | (5,733) | (34,856) | (34,192) |
Reclassification of other comprehensive income to utilities expense | 197 | 0 | 961 | 0 |
Reclassification of other comprehensive income to interest expense | 3,352 | (235) | 6,813 | (1,200) |
Comprehensive income (loss) | $ 16,122 | $ 194 | $ (1,839) | $ (481) |
INTERIM CONSOLIDATED STATEMEN_3
INTERIM CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | QualityTech, LP | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, AdjustmentQualityTech, LP | Series A Preferred Stock | Series A Preferred StockQualityTech, LP | Series B Preferred Stock | Series B Preferred StockQualityTech, LP | Total stockholders' equity | Total stockholders' equityCumulative Effect, Period of Adoption, Adjustment | Total stockholders' equitySeries A Preferred Stock | Total stockholders' equitySeries B Preferred Stock | Preferred Stock | Preferred StockQualityTech, LPLimited Partner | Common stock | Common stockQualityTech, LPLimited Partner | Common stockQualityTech, LPGeneral Partner | Common stockCumulative Effect, Period of Adoption, AdjustmentQualityTech, LPLimited Partner | Common stockSeries A Preferred StockQualityTech, LPLimited Partner | Common stockSeries B Preferred StockQualityTech, LPLimited Partner | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated other comprehensive income (loss)QualityTech, LP | Accumulated dividends in excess of earnings | Accumulated dividends in excess of earningsCumulative Effect, Period of Adoption, Adjustment | Accumulated dividends in excess of earningsSeries A Preferred Stock | Accumulated dividends in excess of earningsSeries B Preferred Stock | Noncontrolling interests |
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | us-gaap:AccountingStandardsUpdate201602Member | ||||||||||||||||||||||||||
Beginning balance, shares at Dec. 31, 2018 | 7,443 | 7,443 | 51,123 | 57,799 | 1 | |||||||||||||||||||||||
Beginning balance at Dec. 31, 2018 | $ 1,296,687 | $ 1,296,687 | $ (1,813) | $ (1,813) | $ 1,193,986 | $ (1,813) | $ 407,477 | $ 407,477 | $ 511 | $ 886,866 | $ 0 | $ (1,813) | $ 1,062,473 | $ 2,073 | $ 2,344 | $ (278,548) | $ (1,813) | $ 102,701 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||||||||
Net share activity through equity award plan (in shares) | 231 | 229 | ||||||||||||||||||||||||||
Net share activity through equity award plan | 741 | 741 | 663 | $ 3 | $ 741 | 660 | 78 | |||||||||||||||||||||
Increase (decrease) in fair value of derivative contracts | (9,853) | (9,853) | (8,775) | (8,775) | (9,853) | (1,078) | ||||||||||||||||||||||
Equity-based compensation expense | 3,300 | 3,300 | 2,928 | $ 3,300 | 2,928 | 372 | ||||||||||||||||||||||
Adjustment to expenses net from Series B Convertible Preferred stock offering | (42) | (42) | (42) | (42) | (42) | |||||||||||||||||||||||
Proceeds net of fees from common equity offering (in shares) | 4,000 | 4,000 | ||||||||||||||||||||||||||
Proceeds net of fees from common equity offering | 158,663 | 158,663 | 148,690 | $ 40 | $ 158,663 | 148,650 | 9,973 | |||||||||||||||||||||
Dividends declared on Preferred Stock | $ (1,906) | $ (1,906) | $ (5,139) | $ (5,139) | $ (1,906) | $ (5,139) | $ (1,906) | $ (5,139) | $ (1,906) | $ (5,139) | ||||||||||||||||||
Dividends declared to common stockholders | (24,371) | (24,371) | (24,371) | (24,371) | (24,371) | |||||||||||||||||||||||
Dividends declared to noncontrolling interests | (2,935) | 0 | (2,935) | |||||||||||||||||||||||||
Partnership distributions | (2,935) | (2,935) | ||||||||||||||||||||||||||
Net income | 21,148 | 21,148 | 19,558 | 21,148 | 19,558 | 1,590 | ||||||||||||||||||||||
Ending balance at Mar. 31, 2019 | 1,434,480 | 1,434,480 | 1,323,779 | $ 407,435 | $ 407,435 | $ 554 | $ 1,034,554 | $ 0 | 1,214,711 | (6,702) | (7,509) | (292,219) | 110,701 | |||||||||||||||
Ending balance, shares at Mar. 31, 2019 | 7,443 | 7,443 | 55,354 | 62,028 | 1 | |||||||||||||||||||||||
Beginning balance, shares at Dec. 31, 2018 | 7,443 | 7,443 | 51,123 | 57,799 | 1 | |||||||||||||||||||||||
Beginning balance at Dec. 31, 2018 | 1,296,687 | 1,296,687 | $ (1,813) | $ (1,813) | 1,193,986 | $ (1,813) | $ 407,477 | $ 407,477 | $ 511 | $ 886,866 | $ 0 | $ (1,813) | 1,062,473 | 2,073 | 2,344 | (278,548) | $ (1,813) | 102,701 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||||||||
Increase (decrease) in fair value of derivative contracts | (34,192) | (34,192) | ||||||||||||||||||||||||||
Dividends declared on Preferred Stock | (21,135) | (21,135) | ||||||||||||||||||||||||||
Net income | 35,271 | 35,271 | ||||||||||||||||||||||||||
Ending balance at Sep. 30, 2019 | 1,473,812 | 1,473,812 | 1,364,261 | $ 407,435 | $ 407,435 | $ 582 | $ 1,098,651 | $ 0 | 1,326,087 | (28,900) | (32,274) | (340,943) | 109,551 | |||||||||||||||
Ending balance, shares at Sep. 30, 2019 | 7,443 | 7,443 | 58,238 | 64,906 | 1 | |||||||||||||||||||||||
Beginning balance, shares at Mar. 31, 2019 | 7,443 | 7,443 | 55,354 | 62,028 | 1 | |||||||||||||||||||||||
Beginning balance at Mar. 31, 2019 | 1,434,480 | 1,434,480 | 1,323,779 | $ 407,435 | $ 407,435 | $ 554 | $ 1,034,554 | $ 0 | 1,214,711 | (6,702) | (7,509) | (292,219) | 110,701 | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||||||||
Net share activity through equity award plan (in shares) | 37 | 31 | ||||||||||||||||||||||||||
Net share activity through equity award plan | 179 | 179 | 505 | $ 179 | 505 | (326) | ||||||||||||||||||||||
Increase (decrease) in fair value of derivative contracts | (18,606) | (18,606) | (16,608) | (16,608) | (18,606) | (1,998) | ||||||||||||||||||||||
Equity-based compensation expense | 4,296 | 4,296 | 3,832 | 4,296 | 3,832 | 464 | ||||||||||||||||||||||
Dividends declared on Preferred Stock | (1,906) | (1,906) | (5,139) | (5,139) | (1,906) | (5,139) | (1,906) | (5,139) | (1,906) | (5,139) | ||||||||||||||||||
Dividends declared to common stockholders | (24,377) | (24,377) | (24,377) | (24,377) | (24,377) | |||||||||||||||||||||||
Dividends declared to noncontrolling interests | (2,932) | 0 | (2,932) | |||||||||||||||||||||||||
Partnership distributions | (2,932) | (2,932) | ||||||||||||||||||||||||||
Net income | 7,535 | 7,535 | 7,483 | 7,535 | 7,483 | 52 | ||||||||||||||||||||||
Ending balance at Jun. 30, 2019 | 1,393,530 | 1,393,530 | 1,287,569 | $ 407,435 | $ 407,435 | $ 554 | $ 1,012,210 | $ 0 | 1,219,048 | (23,310) | (26,115) | (316,158) | 105,961 | |||||||||||||||
Ending balance, shares at Jun. 30, 2019 | 7,443 | 7,443 | 55,391 | 62,059 | 1 | |||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||||||||
Net share activity through equity award plan (in shares) | 15 | 15 | ||||||||||||||||||||||||||
Net share activity through equity award plan | 260 | 260 | 239 | $ 260 | 239 | 21 | ||||||||||||||||||||||
Increase (decrease) in fair value of derivative contracts | (5,733) | (5,733) | (5,207) | (5,207) | (5,733) | (526) | ||||||||||||||||||||||
Foreign currency translation adjustments | (426) | (426) | (383) | (383) | (426) | (43) | ||||||||||||||||||||||
Equity-based compensation expense | 4,457 | 4,457 | 3,979 | $ 4,457 | 3,979 | 478 | ||||||||||||||||||||||
Proceeds net of fees from settlement of forward shares (in shares) | 2,832 | 2,832 | ||||||||||||||||||||||||||
Proceeds net of fees from settlement of forward shares | 109,490 | 109,490 | 102,849 | $ 28 | $ 109,490 | 102,821 | 6,641 | |||||||||||||||||||||
Dividends declared on Preferred Stock | (7,045) | (7,045) | (1,906) | (1,906) | (5,139) | (5,139) | (1,906) | (5,139) | (1,906) | (5,139) | (1,906) | (5,139) | ||||||||||||||||
Dividends declared to common stockholders | (24,377) | (24,377) | (24,377) | (24,377) | (24,377) | |||||||||||||||||||||||
Dividends declared to noncontrolling interests | (2,932) | 0 | (2,932) | |||||||||||||||||||||||||
Partnership distributions | (2,932) | (2,932) | ||||||||||||||||||||||||||
Net income | 6,588 | 6,588 | 6,637 | 6,588 | 6,637 | (49) | ||||||||||||||||||||||
Ending balance at Sep. 30, 2019 | 1,473,812 | 1,473,812 | 1,364,261 | $ 407,435 | $ 407,435 | $ 582 | $ 1,098,651 | $ 0 | 1,326,087 | (28,900) | (32,274) | (340,943) | 109,551 | |||||||||||||||
Ending balance, shares at Sep. 30, 2019 | 7,443 | 7,443 | 58,238 | 64,906 | 1 | |||||||||||||||||||||||
Beginning balance, shares at Dec. 31, 2019 | 7,443 | 7,443 | 58,228 | 64,901 | 1 | |||||||||||||||||||||||
Beginning balance at Dec. 31, 2019 | 1,444,451 | 1,444,451 | 1,337,817 | $ 407,435 | $ 407,435 | $ 582 | $ 1,064,481 | $ 0 | 1,330,444 | (24,642) | (27,465) | (376,002) | 106,634 | |||||||||||||||
Partners' Capital, Beginning Balance at Dec. 31, 2019 | 1,444,451 | |||||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||||||||
Net share activity through equity award plan (in shares) | 240 | 238 | ||||||||||||||||||||||||||
Net share activity through equity award plan | (1,458) | (1,458) | (1,309) | $ 3 | $ (1,458) | (1,312) | (149) | |||||||||||||||||||||
Increase (decrease) in fair value of derivative contracts | (36,715) | (36,715) | (33,155) | (33,155) | (36,715) | (3,560) | ||||||||||||||||||||||
Foreign currency translation adjustments | (223) | (223) | (201) | (201) | (223) | (22) | ||||||||||||||||||||||
Equity-based compensation expense | 4,875 | 4,875 | 4,377 | $ 4,875 | 4,377 | 498 | ||||||||||||||||||||||
Proceeds net of fees from settlement of forward shares (in shares) | 1,930 | 1,930 | ||||||||||||||||||||||||||
Proceeds net of fees from settlement of forward shares | 83,217 | 83,217 | 78,535 | $ 19 | $ 83,217 | 78,516 | 4,682 | |||||||||||||||||||||
Dividends declared on Preferred Stock | (1,906) | (1,906) | (5,139) | (5,139) | (1,906) | (5,139) | (1,906) | (5,139) | (1,906) | (5,139) | ||||||||||||||||||
Dividends declared to common stockholders | (28,393) | (28,393) | (28,393) | (28,393) | (28,393) | |||||||||||||||||||||||
Dividends declared to noncontrolling interests | (3,133) | 0 | (3,133) | |||||||||||||||||||||||||
Partnership distributions | (3,133) | (3,133) | ||||||||||||||||||||||||||
Net income | 8,120 | 8,120 | 8,010 | 8,120 | 8,010 | 110 | ||||||||||||||||||||||
Ending balance at Mar. 31, 2020 | $ 1,463,696 | 1,463,696 | 1,358,636 | $ 407,435 | $ 407,435 | $ 604 | $ 1,120,664 | $ 0 | 1,412,025 | (57,998) | (64,403) | (403,430) | 105,060 | |||||||||||||||
Ending balance, shares at Mar. 31, 2020 | 7,443 | 7,443 | 60,398 | 67,069 | 1 | |||||||||||||||||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201815Member | |||||||||||||||||||||||||||
Beginning balance, shares at Dec. 31, 2019 | 7,443 | 7,443 | 58,228 | 64,901 | 1 | |||||||||||||||||||||||
Beginning balance at Dec. 31, 2019 | $ 1,444,451 | 1,444,451 | 1,337,817 | $ 407,435 | $ 407,435 | $ 582 | $ 1,064,481 | $ 0 | 1,330,444 | (24,642) | (27,465) | (376,002) | 106,634 | |||||||||||||||
Partners' Capital, Beginning Balance at Dec. 31, 2019 | 1,444,451 | |||||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||||||||
Increase (decrease) in fair value of derivative contracts | (34,856) | (34,856) | ||||||||||||||||||||||||||
Dividends declared on Preferred Stock | (21,135) | (21,135) | ||||||||||||||||||||||||||
Net income | 25,236 | 25,236 | ||||||||||||||||||||||||||
Ending balance at Sep. 30, 2020 | 1,621,836 | 1,621,836 | 1,508,114 | $ 407,435 | $ 407,435 | $ 644 | $ 1,276,715 | $ 0 | 1,614,508 | (56,480) | (62,314) | (457,993) | 113,722 | |||||||||||||||
Ending balance, shares at Sep. 30, 2020 | 7,443 | 7,443 | 64,442 | 71,101 | 1 | |||||||||||||||||||||||
Partners' Capital, Ending Balance at Sep. 30, 2020 | 1,621,836 | |||||||||||||||||||||||||||
Beginning balance, shares at Mar. 31, 2020 | 7,443 | 7,443 | 60,398 | 67,069 | 1 | |||||||||||||||||||||||
Beginning balance at Mar. 31, 2020 | 1,463,696 | 1,463,696 | 1,358,636 | $ 407,435 | $ 407,435 | $ 604 | $ 1,120,664 | $ 0 | 1,412,025 | (57,998) | (64,403) | (403,430) | 105,060 | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||||||||
Net share activity through equity award plan (in shares) | 1 | 1 | ||||||||||||||||||||||||||
Net share activity through equity award plan | (1,360) | (1,360) | (1,225) | $ (1,360) | (1,225) | (135) | ||||||||||||||||||||||
Increase (decrease) in fair value of derivative contracts | (3,641) | (3,641) | (3,382) | (3,382) | (3,641) | (259) | ||||||||||||||||||||||
Foreign currency translation adjustments | 64 | 64 | 58 | 58 | 64 | 6 | ||||||||||||||||||||||
Equity-based compensation expense | 6,081 | 6,081 | 5,477 | $ 6,081 | 5,477 | 604 | ||||||||||||||||||||||
Proceeds net of fees from settlement of forward shares (in shares) | 1,033 | 1,032 | ||||||||||||||||||||||||||
Proceeds net of fees from settlement of forward shares | 50,455 | 50,455 | 47,178 | $ 10 | $ 50,455 | 47,168 | 3,277 | |||||||||||||||||||||
Dividends declared on Preferred Stock | (1,906) | (1,906) | (5,139) | (5,139) | (1,906) | (5,139) | (1,906) | (5,139) | (1,906) | (5,139) | ||||||||||||||||||
Dividends declared to common stockholders | (28,389) | (28,389) | (28,389) | (28,389) | (28,389) | |||||||||||||||||||||||
Dividends declared to noncontrolling interests | (3,134) | 0 | (3,134) | |||||||||||||||||||||||||
Partnership distributions | (3,134) | (3,134) | ||||||||||||||||||||||||||
Net income | 10,209 | 10,209 | 9,892 | 10,209 | 9,892 | 317 | ||||||||||||||||||||||
Ending balance at Jun. 30, 2020 | 1,486,936 | 1,486,936 | 1,381,200 | $ 407,435 | $ 407,435 | $ 614 | $ 1,147,481 | $ 0 | 1,463,445 | (61,322) | (67,980) | (428,972) | 105,736 | |||||||||||||||
Ending balance, shares at Jun. 30, 2020 | 7,443 | 7,443 | 61,432 | 68,102 | 1 | |||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||||||||
Net share activity through equity award plan (in shares) | 62 | 51 | ||||||||||||||||||||||||||
Net share activity through equity award plan | 1,397 | 1,397 | 1,261 | $ 1 | $ 1,397 | 1,260 | 136 | |||||||||||||||||||||
Increase (decrease) in fair value of derivative contracts | 5,500 | 5,500 | 4,692 | 4,692 | 5,500 | 808 | ||||||||||||||||||||||
Foreign currency translation adjustments | 166 | 166 | 150 | 150 | 166 | 16 | ||||||||||||||||||||||
Equity-based compensation expense | 8,247 | 8,247 | 7,443 | $ 8,247 | 7,443 | 804 | ||||||||||||||||||||||
Proceeds net of fees from settlement of forward shares (in shares) | 2,948 | 2,948 | ||||||||||||||||||||||||||
Proceeds net of fees from settlement of forward shares | 151,758 | 151,758 | 142,389 | $ 29 | $ 151,758 | 142,360 | 9,369 | |||||||||||||||||||||
Dividends declared on Preferred Stock | (7,045) | (7,045) | $ (1,906) | $ (1,906) | $ (5,139) | $ (5,139) | $ (1,906) | $ (5,139) | $ (1,906) | $ (5,139) | $ (1,906) | $ (5,139) | ||||||||||||||||
Dividends declared to common stockholders | (28,901) | (28,901) | (28,901) | (28,901) | (28,901) | |||||||||||||||||||||||
Dividends declared to noncontrolling interests | (3,129) | 0 | (3,129) | |||||||||||||||||||||||||
Partnership distributions | (3,129) | (3,129) | ||||||||||||||||||||||||||
Net income | 6,907 | 6,907 | 6,925 | 6,907 | 6,925 | (18) | ||||||||||||||||||||||
Ending balance at Sep. 30, 2020 | $ 1,621,836 | 1,621,836 | $ 1,508,114 | $ 407,435 | $ 407,435 | $ 644 | $ 1,276,715 | $ 0 | $ 1,614,508 | $ (56,480) | $ (62,314) | $ (457,993) | $ 113,722 | |||||||||||||||
Ending balance, shares at Sep. 30, 2020 | 7,443 | 7,443 | 64,442 | 71,101 | 1 | |||||||||||||||||||||||
Partners' Capital, Ending Balance at Sep. 30, 2020 | $ 1,621,836 |
INTERIM CONSOLIDATED STATEMEN_4
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flow from operating activities: | ||
Net income | $ 25,236 | $ 35,271 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 138,770 | 117,448 |
Amortization of above and below market leases | 330 | 126 |
Amortization of deferred loan costs | 2,968 | 2,935 |
Distributions from unconsolidated entity | 1,600 | 0 |
Equity in net loss of unconsolidated entity | 1,633 | 992 |
Equity-based compensation expense | 19,203 | 12,052 |
Bad debt expense | 4,599 | 740 |
Gain on sale of real estate, net | 0 | (13,408) |
Deferred tax expense (benefit) | (115) | 466 |
Foreign currency remeasurement (income) loss | (159) | (330) |
Changes in operating assets and liabilities | ||
Rents and other receivables, net | (10,685) | (20,606) |
Prepaid expenses | (681) | (1,318) |
Due to/from affiliates, net | 2,669 | 8,378 |
Other assets | (1,941) | (1,544) |
Accounts payable and accrued liabilities | 16,298 | 3,587 |
Advance rents, security deposits and other liabilities | 4,201 | (3,719) |
Deferred income | 16,194 | 8,163 |
Net cash provided by operating activities | 220,120 | 149,233 |
Cash flow from investing activities: | ||
Proceeds from sale of property, net | 0 | 52,722 |
Acquisitions, net of cash acquired | (12,628) | (69,355) |
Additions to property and equipment | (574,539) | (270,879) |
Net cash used in investing activities | (587,167) | (287,512) |
Cash flow from financing activities: | ||
Credit facility proceeds | 491,610 | 306,149 |
Credit facility repayments | (289,000) | (334,000) |
Payment of deferred financing costs | (101) | (182) |
Payment of preferred stock dividends | (21,135) | (21,135) |
Payment of common stock dividends | (82,410) | (69,709) |
Distribution to noncontrolling interests | (9,201) | (8,601) |
Proceeds from exercise of stock options | 2,524 | 3,594 |
Payment of tax withholdings related to equity-based awards | (4,242) | (3,143) |
Principal payments on finance lease obligations | (1,919) | (2,243) |
Mortgage principal debt repayments | (46) | (43) |
Common stock issuance proceeds, net of costs | 285,480 | 268,392 |
Net cash provided by financing activities | 371,560 | 139,079 |
Effect of foreign currency exchange rates on cash and cash equivalents | 1,832 | 959 |
Net change in cash and cash equivalents | 6,345 | 1,759 |
Cash and cash equivalents, beginning of period | 15,653 | 11,759 |
Cash and cash equivalents, end of period | 21,998 | 13,518 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest | 37,008 | 37,735 |
Noncash investing and financing activities: | ||
Accrued capital additions | 110,656 | 41,013 |
Net decrease in other assets/liabilities related to change in fair value of derivative contracts | (33,423) | (34,192) |
Equity received in unconsolidated entity in exchange for real estate assets | 0 | 25,280 |
Increase in assets in exchange for finance lease obligation | 0 | 45,024 |
Accrued equity issuance costs | 48 | 197 |
Accrued preferred stock dividend | 5,938 | 5,938 |
QualityTech, LP | ||
Cash flow from operating activities: | ||
Net income | 25,236 | 35,271 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 138,770 | 117,448 |
Amortization of above and below market leases | 330 | 126 |
Amortization of deferred loan costs | 2,968 | 2,935 |
Distributions from unconsolidated entity | 1,600 | 0 |
Equity in net loss of unconsolidated entity | 1,633 | 992 |
Equity-based compensation expense | 19,203 | 12,052 |
Bad debt expense | 4,599 | 740 |
Gain on sale of real estate, net | 0 | (13,408) |
Deferred tax expense (benefit) | (115) | 466 |
Foreign currency remeasurement (income) loss | (159) | (330) |
Changes in operating assets and liabilities | ||
Rents and other receivables, net | (10,685) | (20,606) |
Prepaid expenses | (681) | (1,318) |
Due to/from affiliates, net | 2,669 | 8,378 |
Other assets | (1,941) | (1,544) |
Accounts payable and accrued liabilities | 16,298 | 3,587 |
Advance rents, security deposits and other liabilities | 4,201 | (3,719) |
Deferred income | 16,194 | 8,163 |
Net cash provided by operating activities | 220,120 | 149,233 |
Cash flow from investing activities: | ||
Proceeds from sale of property, net | 0 | 52,722 |
Acquisitions, net of cash acquired | (12,628) | (69,355) |
Additions to property and equipment | (574,539) | (270,879) |
Net cash used in investing activities | (587,167) | (287,512) |
Cash flow from financing activities: | ||
Credit facility proceeds | 491,610 | 306,149 |
Credit facility repayments | (289,000) | (334,000) |
Payment of deferred financing costs | (101) | (182) |
Payment of preferred stock dividends | (21,135) | (21,135) |
Payment of dividends to QTS Realty Trust, Inc. | (82,410) | (69,709) |
Partnership distributions | (9,201) | (8,601) |
Proceeds from exercise of stock options | 2,524 | 3,594 |
Payment of tax withholdings related to equity-based awards | (4,242) | (3,143) |
Principal payments on finance lease obligations | (1,919) | (2,243) |
Mortgage principal debt repayments | (46) | (43) |
Common stock issuance proceeds, net of costs | 285,480 | 268,392 |
Net cash provided by financing activities | 371,560 | 139,079 |
Effect of foreign currency exchange rates on cash and cash equivalents | 1,832 | 959 |
Net change in cash and cash equivalents | 6,345 | 1,759 |
Cash and cash equivalents, beginning of period | 15,653 | 11,759 |
Cash and cash equivalents, end of period | 21,998 | 13,518 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest | 37,008 | 37,735 |
Noncash investing and financing activities: | ||
Accrued capital additions | 110,656 | 41,013 |
Net decrease in other assets/liabilities related to change in fair value of derivative contracts | (33,423) | (34,192) |
Equity received in unconsolidated entity in exchange for real estate assets | 0 | 25,280 |
Increase in assets in exchange for finance lease obligation | 0 | 45,024 |
Accrued equity issuance costs | 48 | 197 |
Accrued preferred stock dividend | $ 5,938 | $ 5,938 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business QTS Realty Trust, Inc., (“QTS”) through its controlling interest in QualityTech, LP (the “Operating Partnership” and collectively with QTS and its subsidiaries, the “Company,” “we,” “us,” or “our”) and the subsidiaries of the Operating Partnership, is engaged in the business of owning, acquiring, constructing, redeveloping and managing multi-tenant data centers. As of September 30, 2020 our portfolio consisted of 27 owned and leased properties, including a property owned by an unconsolidated entity, with data centers located throughout the United States, Canada and Europe. As of September 30, 2020, QTS owned approximately 90.6% 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. QTS’ board of directors manages the Company’s business and affairs. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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 our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 28, 2020. The consolidated balance sheet data included herein as of December 31, 2019 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 Accounting Standards Codification (“ASC”) Topic 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 presents one set of notes for the consolidated financial statements of QTS and 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 4.750% Senior Notes due 2025 and the unsecured credit facility, both discussed in Note 6, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries (other than certain foreign subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Operating Partnership, QTS Finance Corporation (the co-issuer of the 4.750% Senior Notes due 2025) or any subsidiary guarantor. The indenture governing the 4.750% 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”). See Note 15 for information related to our satisfaction and discharge of the indenture governing the 4.750% Senior Notes due 2025. The interim consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority owned controlled subsidiaries including the Operating Partnership as well as unconsolidated entities accounted for using equity method accounting. 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. The impacts of the COVID-19 pandemic increases uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates and judgments may be subject to greater volatility than has been the case in the past. Principles of Consolidation – The consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its controlled 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. We evaluate our investments in less than wholly owned entities to determine whether they should be recorded on a consolidated basis. The percentage of ownership interest in the entity, an evaluation of control and whether a VIE exists are all considered in our consolidation assessment. Investments in real estate entities which we have the ability to exercise significant influence, but do not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, our share of the earnings or losses of these entities is included in consolidated net income (loss). Variable Interest Entities (VIEs) – We determine whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. The determination of whether an entity in which we hold a direct or indirect variable interest is a VIE is based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, and then a quantitative analysis, if necessary. We analyze any investments in VIEs to determine if we are the primary beneficiary. In evaluating whether we are the primary beneficiary, we evaluate our direct and indirect economic interests in the entity. Determining which reporting entity, if any, is the primary beneficiary of a VIE is primarily a qualitative approach focused on identifying which reporting entity has both (1) the power to direct the activities of a VIE that most significantly impact such entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgment. We consider a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct financing, leasing, construction and other operating decisions and activities. In addition, we consider the rights of other investors to participate in those decisions, to replace the manager and to sell or liquidate the entity. We determine whether we are the primary beneficiary of a VIE at the time we become involved with a variable interest entity and reconsider that conclusion upon a reconsideration event. As of September 30, 2020, we had one unconsolidated entity that was considered a VIE for which we are not the primary beneficiary. Our maximum exposure to losses associated with this VIE is limited to our net investment, which was approximately $22.9 million as of September 30, 2020. Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation for real estate assets is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended September 30, 2020, depreciation expense related to real estate assets and non-real estate assets was $37.9 million and $3.5 million, respectively, for a total of $41.4 million. For the three months ended September 30, 2019, depreciation expense related to real estate assets and non-real estate assets was $29.8 million and $2.9 million, respectively, for a total of $32.7 million. For the nine months ended September 30, 2020, depreciation expense related to real estate assets and non-real estate assets was $104.9 million and $10.2 million, respectively, for a total of $115.1 million. For the nine months ended September 30, 2019, depreciation expense related to real estate assets and non-real estate assets was $86.8 million and $8.7 million, respectively, for a total of $95.5 million. We capitalize certain real estate 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 project costs) begins when development efforts commence and ends when the asset is ready for its intended use. The capitalization of internal costs increases construction in progress recognized during development of the related property and the cost of the real estate asset when placed into service and such costs are depreciated over its estimated useful life. Capitalization of such costs, excluding interest, aggregated to $4.5 million and $4.8 million for the three months ended September 30, 2020 and 2019, respectively, and $13.8 million and $13.1 million for the nine months ended September 30, 2020 and 2019, respectively. Interest is capitalized during the period of development by applying our weighted average effective borrowing rate to the actual development and other capitalized costs paid during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $7.1 million and $8.7 million for the three months ended September 30, 2020 and 2019, respectively, and $22.9 million and $24.9 million for the nine months ended September 30, 2020 and 2019, respectively. Acquisitions and Sales – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances. When substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the transaction is accounted for as an asset acquisition. In an asset acquisition, the purchase price paid for assets acquired is allocated between identified tangible and intangible assets acquired based on relative fair value. Transaction costs associated with asset acquisitions are capitalized. When substantially all of the fair value of assets acquired is not concentrated in a group of similar identifiable assets, the set of assets will generally be considered a business. When accounting for business combinations, purchase accounting is applied to the assets and liabilities related to all real estate investments acquired in accordance with the accounting requirements of ASC Topic 805, Business Combinations , which requires the recording of net assets of acquired businesses at fair value. The fair value of the consideration transferred is assigned to the acquired tangible assets, consisting primarily of land, construction in progress, building and improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases, value of customer relationships and finance 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. Transaction costs associated with business combinations are expensed as incurred. In developing estimates of fair value of acquired assets and assumed liabilities, management analyzes a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets. Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. These amortization expenses are accounted for as real estate amortization expense. Above or below market leases are amortized on a straight-line basis over their expected lives and are recorded as a reduction to or increase in rental revenue when we are the lessor as well as a reduction to or increase in rent expense over the remaining lease terms when we are the lessee. During the nine months ended September 30, 2020, we completed multiple acquisitions of land totaling 25.6 acres for an aggregate purchase price of approximately $12.6 million to be used for future development. These acquisitions were accounted for as asset acquisitions and were included within the “Construction in Progress” line item of the consolidated balance sheets at the time of acquisition. During the nine months ended September 30, 2019, we sold our Manassas facility to an unconsolidated entity in exchange for cash consideration and noncash consideration in the form of an equity interest in the unconsolidated entity. After measuring the consideration received at fair value, we recognized a $13.4 million gain on sale of real estate, net of approximately $5.8 million of transaction costs, associated with our contribution of certain assets in our Manassas facility to the unconsolidated entity. Substantially all of the fair value of the assets contributed to the entity was concentrated in a group of similar identifiable assets and the sale of the assets were not to a customer, therefore the transaction was accounted for as an asset sale. The gain on sale of real estate was included within the “Gain on sale of real estate, net” line item of the consolidated statements of operations. Impairment of Long-Lived Assets, Intangible Assets and Goodwill – We review our long-lived assets, intangible assets and equity method investments 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 group exceeds the value of the undiscounted cash flows, the fair value of the asset group is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three and nine months ended September 30, 2020 and September 30, 2019. The fair value of goodwill is the consideration transferred in a business combination which is not allocable to identifiable intangible and tangible assets. Goodwill is subject to at least an annual assessment for impairment. In connection with the goodwill impairment evaluation that we performed as of October 1, 2019, we determined qualitatively that it is not more likely than not that the fair value of our one reporting unit was less than the carrying amount, thus we did not perform a quantitative analysis. As we continue to operate and assess our goodwill at the consolidated level for our single reporting unit and our market capitalization significantly exceeds our net asset value, further analysis was not deemed necessary as of September 30, 2020. Cash and Cash Equivalents – We consider 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. Our 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. We mitigate this risk by depositing a majority of our funds with several major financial institutions. We also have not experienced any losses and do not believe that the risk is significant. Deferred Costs – Deferred costs, net, on our balance sheets include both deferred financing costs and deferred 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 for each of the three months ended September 30, 2020 and 2019, and $3.0 million and $2.9 million the nine months ended September 30, 2020 and 2019, respectively. 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 and are accounted for pursuant to ASC Topic 842, Leases . These costs are incurred when we execute lease agreements and represent only incremental costs that would not have been incurred if the lease agreement had not been executed. To a lesser extent, we incur the same incremental costs to obtain managed services and cloud contracts with customers that are accounted for pursuant to ASC Topic 606, Revenue from Contracts with Customers. Because the framework of accounting for these costs and the underlying nature of the costs are the same for our revenue and lease contracts, the costs are presented on a combined basis within our financial statements. 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 $6.8 million and $6.7 million for the three months ended September 30, 2020 and 2019, respectively, and $19.3 million and $17.7 million for the nine months ended September 30, 2020 and 2019, respectively. Revenue Recognition – We derive our revenues from leases with customers for data center space which include lease components and nonlease revenue components, such as power, tenant recoveries, cloud and managed services. We have elected the available practical expedient under ASC Topic 842, Leases , to combine our nonlease revenue components that have the same pattern of transfer as the related operating lease component into a single combined lease component. The single combined component is accounted for under ASC Topic 842 if the lease component is the predominant component and is accounted for under ASC Topic 606 if the nonlease components are the predominant components. In our contracts, the single combined component is accounted for under ASC Topic 842 as the lease component is the predominant component. A description of each of our disaggregated revenue streams is as follows: Rental Revenue Our 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. We do 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 us to provide a series of distinct services and to stand ready to deliver the power over the contracted term which is co-terminus with the lease. Customer fixed power arrangements have the same pattern of transfer over the lease term as the lease component and are therefore combined with the lease component to form a single lease component that is recognized over the term of the lease on a straight line basis. In addition, rental revenue includes straight line rent. Straight line rent represents the difference in rents recognized during the period 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 $54.3 million and $38.7 million as of September 30, 2020 and December 31, 2019, respectively. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed below. Variable Lease Revenue from Recoveries Certain customer leases contain provisions under which customers reimburse us 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 relate specifically to our variable power arrangements, whereby customers pay variable monthly fees for the specific amount of power utilized at the current utility rates. Our 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. we provide power to our customers) and customers utilize the power. Reimbursement of real estate taxes, insurance, common area maintenance, or other operating expenses are accounted for as variable payments under lease guidance pursuant to the practical expedient and are recognized as revenue in the period that the expenses are recognized. Variable lease revenue from recoveries discussed above, including power, common area maintenance or other operating costs, have the same pattern of transfer over the lease term as the lease component and are therefore combined with the lease component to form a single lease component. Variable lease revenue from recoveries is included within the “rental” line item on the statements of operations. Other Revenue Other revenue primarily consists of revenue from our cloud and managed service offerings, as well as revenue earned from partner channel, management and development fees. We, through our Taxable REIT Subsidiaries (“TRS”), may provide both our cloud product and use of our managed services to our customers on an individual or combined basis. In both our cloud and managed services offerings the TRS’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 information technology (“IT”) outsourcing environment over a contracted term. Although underlying services may vary, over the contracted term monthly service offerings are substantially the same and we account for the services as a series of distinct services in accordance with ASC Topic 606. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. As we have the right to consideration from customers in an amount that corresponds directly with the value to the customer of the TRS’s performance of providing continuous services, we recognize monthly revenue for the amount invoiced. With respect to the transaction price allocated to remaining performance obligations within our cloud and managed service contracts, we have elected to use the optional exemption provided by ASC Topic 606 whereby we are not required to estimate the total transaction price allocated to remaining performance obligations as we apply 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. Management fees and other revenues are generally received from our unconsolidated entity properties as well as third parties. Management fee revenue is earned based on a contractual percentage of unconsolidated entity property revenue. Development fee revenue is earned on a contractual percentage of hard costs to develop a property. We recognize revenue for these services provided when earned based on the performance criteria in ASC Topic 606, with such revenue recorded in “Other” revenue on the consolidated statements of operations. Leases as Lessee – We determine if an arrangement is a lease at inception. If the contract is considered a lease, we evaluate leased property to determine whether the lease should be classified as a finance or operating lease in accordance with U.S. GAAP. We periodically enter into finance leases for certain data center facilities, equipment, and fiber optic transmission cabling. Finance lease assets are included within the “Buildings, improvements and equipment” line item of the consolidated balance sheets and finance lease liabilities are included within “Finance leases and mortgage notes payable” line item of the consolidated balance sheets. In addition, we lease certain real estate (primarily land or real estate space) under operating lease agreements with such assets included within the “Operating lease right of use assets, net” line item of the consolidated balance sheets and the associated lease liabilities included within the “Operating lease liabilities” line item on the consolidated balance sheets. Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases as lessee typically do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We assess multiple variables when determining the incremental borrowing rate, such as lease term, payment terms, collateral, economic conditions, and creditworthiness. ROU assets also include any lease payments made and exclude lease incentives. Many of our lease agreements include options to extend the lease, which we do not include in our expected lease terms unless they are reasonably certain to be exercised. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. Allowance for Uncollectible Accounts Receivable – We record a provision for uncollectible accounts if a receivable balance relating to lease components from an individual contract is considered by management to be not probable of collection, and this provision is recorded as a reduction to leasing revenues. We also record a general provision of estimated uncollectible tenant receivables based on general probability of collection in accordance with ASC 450-20 Loss Contingencies . This provision is recorded as bad debt expense and recorded within the “Property Operating Costs” line item of the consolidated statements of operations. The aggregate allowance for doubtful accounts on the consolidated balance sheets was $5.6 million and $2.3 million as of September 30, 2020 and December 31, 2019, 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. We record 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 $55.4 million and $39.2 million as of September 30, 2020 and December 31, 2019, respectively. Additionally, $5.3 million and $4.0 million of deferred income was amortized into revenue for the three months ended September 30, 2020 and 2019, respectively, and $13.7 million and $11.1 million for the nine months ended September 30, 2020 and 2019, respectively. Foreign Currency - The financial position of foreign subsidiaries is translated at the exchange rates in effect at the end of the period, while revenues and expenses are translated at average exchange rates during the period. Gains or losses from translation of foreign operations where the local currency is the functional currency are included as components of other comprehensive income (loss). Prior to February 2020, gains or losses from foreign currency transactions were included in determining net income (loss). In February 2020, we entered into a |
Real Estate Assets and Construc
Real Estate Assets and Construction in Progress | 9 Months Ended |
Sep. 30, 2020 | |
Real Estate [Abstract] | |
Real Estate Assets and Construction in Progress | Real Estate Assets and Construction in Progress The following is a summary of our cost of owned or leased properties as of September 30, 2020 and December 31, 2019 (in thousands): As of September 30, 2020 (unaudited): Property Location Land Buildings, Improvements and Equipment Construction in Progress Total Cost Atlanta, Georgia Campus (1) $ 55,157 $ 637,590 $ 214,778 $ 907,525 Irving, Texas 8,606 390,777 95,957 495,340 Ashburn, Virginia Campus (2) 16,475 354,069 119,378 489,922 Richmond, Virginia 2,180 197,573 149,235 348,988 Chicago, Illinois 9,400 238,973 91,523 339,896 Suwanee, Georgia (Atlanta-Suwanee) 3,521 183,021 4,565 191,107 Piscataway, New Jersey 7,466 115,522 34,372 157,360 Fort Worth, Texas 9,079 120,419 2,708 132,206 Hillsboro, Oregon 18,414 21,167 84,009 123,590 Santa Clara, California (3) — 116,829 1,511 118,340 Leased Facilities (4) — 84,778 4,090 88,868 Sacramento, California 1,481 65,990 193 67,664 Eemshaven, Netherlands 5,150 20,826 40,899 66,875 Dulles, Virginia 3,154 52,283 5,351 60,788 Manassas, Virginia (5) — — 59,645 59,645 Princeton, New Jersey 20,700 35,227 73 56,000 Phoenix, Arizona (5) — — 33,282 33,282 Groningen, Netherlands 1,820 10,290 3,572 15,682 Other (6) 2,213 36,493 12,451 51,157 $ 164,816 $ 2,681,827 $ 957,592 $ 3,804,235 _______________________________ (1) The “Atlanta, Georgia Campus” includes both the existing data center Atlanta (DC-1) as well as the recently developed data center Atlanta, GA (DC-2) on land adjacent to the existing Atlanta, GA (DC-1) facility. (2) The “Ashburn, Virginia Campus” includes both the existing data center Ashburn, VA (DC-1) as well as new property development associated with the construction of a second data center Ashburn, VA (DC-2). (3) Owned facility subject to long-term ground sublease. (4) Includes 7 facilities. All facilities are leased, including one subject to a finance lease. (5) 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. (6) Consists of Miami, FL; Lenexa, KS; Overland Park, KS and Texas facilities. As of December 31, 2019: Property Location Land Buildings, Improvements and Equipment Construction in Progress Total Cost Atlanta, Georgia Campus (1) $ 44,588 $ 525,300 $ 128,930 $ 698,818 Irving, Texas 8,606 369,727 98,170 476,503 Ashburn, Virginia (2) 16,476 156,396 189,375 362,247 Richmond, Virginia 2,180 195,684 139,948 337,812 Chicago, Illinois 9,400 205,026 86,878 301,304 Suwanee, Georgia (Atlanta-Suwanee) 3,521 174,124 5,559 183,204 Piscataway, New Jersey 7,466 103,553 36,056 147,075 Santa Clara, California (3) — 114,499 1,238 115,737 Fort Worth, Texas 9,079 55,018 35,722 99,819 Leased Facilities (4) — 85,225 1,241 86,466 Sacramento, California 1,481 65,258 163 66,902 Hillsboro, Oregon (2) — — 63,573 63,573 Manassas, Virginia (2) — — 57,662 57,662 Princeton, New Jersey 20,700 35,192 39 55,931 Dulles, Virginia 3,154 48,651 4,688 56,493 Eemshaven, Netherlands — — 37,267 37,267 Phoenix, Arizona (2) — — 31,265 31,265 Groningen, Netherlands 1,741 9,085 3,028 13,854 Other (5) 2,213 36,163 120 38,496 $ 130,605 $ 2,178,901 $ 920,922 $ 3,230,428 _______________________________ (1) The “Atlanta, Georgia Campus” includes both the existing data center Atlanta (DC-1) as well as new property development associated with construction of a second data center Atlanta (DC-2) on land adjacent to the existing Atlanta DC-1 facility (2) 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. (3) Owned facility subject to long-term ground sublease. (4) Includes 7 facilities. All facilities are leased, including one subject to a finance lease. (5) Consists of Miami, FL; Lenexa, KS and Overland Park, KS facilities. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases Leases as Lessee We use leasing as a source of financing for certain data center facilities and related equipment. We currently operate one data center facility, along with various equipment and fiber optic transmission cabling, that are subject to finance leases. The remaining terms of our finance leases range from less than one We currently lease six other facilities under operating lease agreements for various data centers, our corporate headquarters and additional office space. Our leases have remaining lease terms ranging from three Components of lease expense were as follows (unaudited and in thousands): Three months ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Finance lease cost: Amortization of assets $ 1,038 $ 1,091 $ 3,115 $ 2,496 Interest on lease liabilities 475 505 1,446 1,204 Operating lease expense: Operating lease cost 2,266 2,256 6,768 6,849 Variable lease cost 270 223 802 653 Sublease income (49) (46) (144) (139) Total lease costs $ 4,000 $ 4,029 $ 11,987 $ 11,063 Leases as lessor Our lease revenue contains both minimum lease payments as well as variable lease payments. See Note 2 – ‘Summary of Significant Accounting Policies’ for further details of our revenue streams and associated accounting treatment. The components of our lease revenue were as follows (unaudited and in thousands): Three months ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Lease revenue: Minimum lease revenue $ 118,458 $ 103,623 $ 339,092 $ 304,166 Variable lease revenue (primarily recoveries from customers) 15,324 17,852 40,768 41,675 Total lease revenue $ 133,782 $ 121,475 $ 379,860 $ 345,841 |
Leases | Leases Leases as Lessee We use leasing as a source of financing for certain data center facilities and related equipment. We currently operate one data center facility, along with various equipment and fiber optic transmission cabling, that are subject to finance leases. The remaining terms of our finance leases range from less than one We currently lease six other facilities under operating lease agreements for various data centers, our corporate headquarters and additional office space. Our leases have remaining lease terms ranging from three Components of lease expense were as follows (unaudited and in thousands): Three months ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Finance lease cost: Amortization of assets $ 1,038 $ 1,091 $ 3,115 $ 2,496 Interest on lease liabilities 475 505 1,446 1,204 Operating lease expense: Operating lease cost 2,266 2,256 6,768 6,849 Variable lease cost 270 223 802 653 Sublease income (49) (46) (144) (139) Total lease costs $ 4,000 $ 4,029 $ 11,987 $ 11,063 Leases as lessor Our lease revenue contains both minimum lease payments as well as variable lease payments. See Note 2 – ‘Summary of Significant Accounting Policies’ for further details of our revenue streams and associated accounting treatment. The components of our lease revenue were as follows (unaudited and in thousands): Three months ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Lease revenue: Minimum lease revenue $ 118,458 $ 103,623 $ 339,092 $ 304,166 Variable lease revenue (primarily recoveries from customers) 15,324 17,852 40,768 41,675 Total lease revenue $ 133,782 $ 121,475 $ 379,860 $ 345,841 |
Leases | Leases Leases as Lessee We use leasing as a source of financing for certain data center facilities and related equipment. We currently operate one data center facility, along with various equipment and fiber optic transmission cabling, that are subject to finance leases. The remaining terms of our finance leases range from less than one We currently lease six other facilities under operating lease agreements for various data centers, our corporate headquarters and additional office space. Our leases have remaining lease terms ranging from three Components of lease expense were as follows (unaudited and in thousands): Three months ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Finance lease cost: Amortization of assets $ 1,038 $ 1,091 $ 3,115 $ 2,496 Interest on lease liabilities 475 505 1,446 1,204 Operating lease expense: Operating lease cost 2,266 2,256 6,768 6,849 Variable lease cost 270 223 802 653 Sublease income (49) (46) (144) (139) Total lease costs $ 4,000 $ 4,029 $ 11,987 $ 11,063 Leases as lessor Our lease revenue contains both minimum lease payments as well as variable lease payments. See Note 2 – ‘Summary of Significant Accounting Policies’ for further details of our revenue streams and associated accounting treatment. The components of our lease revenue were as follows (unaudited and in thousands): Three months ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Lease revenue: Minimum lease revenue $ 118,458 $ 103,623 $ 339,092 $ 304,166 Variable lease revenue (primarily recoveries from customers) 15,324 17,852 40,768 41,675 Total lease revenue $ 133,782 $ 121,475 $ 379,860 $ 345,841 |
Investments in Unconsolidated E
Investments in Unconsolidated Entity | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in Unconsolidated Entity | Investments in Unconsolidated Entity During the three months ended March 31, 2019, QTS formed an unconsolidated entity with Alinda Capital Partners (“Alinda”), an infrastructure investment firm. QTS contributed a hyperscale data center under development in Manassas, Virginia to the entity. The facility, and the previously executed 10-year operating lease agreement with a global cloud-based software company, was contributed to the unconsolidated entity in exchange for cash and noncash consideration in the form of equity interest in the entity that was measured at fair value pursuant to Topic 820. The equity interest received and any amounts due from the unconsolidated entity are recorded within our consolidated balance sheets and totaled $22.9 million as of September 30, 2020. QTS and Alinda each own a 50% interest in the entity. As we are not the primary beneficiary of the arrangement but have the ability to exercise significant influence, we concluded that the investment should be accounted for as an unconsolidated entity using equity method investment accounting. As of September 30, 2020, the total assets of the entity were $141.2 million and the total debt outstanding, net of deferred financing costs, was $89.0 million. Under the equity method, our cost of investment is adjusted for additional contributions to and distributions from the unconsolidated entity, as well as our share of equity in the earnings and losses of the unconsolidated entity. Generally, distributions of cash flows from operations and capital events are made to members of the unconsolidated entity in accordance with each member’s ownership percentages and the terms of the agreement, but also provides us with rights to preferential cash distributions as certain phases are completed and leased to the underlying tenant. Our policy is to account for distributions from the unconsolidated entity on the basis of the nature of the activities that generated the distribution. Distributions from the operations of the unconsolidated entity are a return on our investment and we classify these distributions as operating cash flows. Any differences between the cost of our investment in an unconsolidated entity and its underlying equity as reflected in the unconsolidated entity’s financial statements generally result from costs of our investment that are not reflected on the unconsolidated entity’s financial statements. Under the unconsolidated entity agreement, we serve as the entity’s operating member, subject to authority and oversight of a board appointed by us and Alinda, and separately we serve as manager and developer of the facility in exchange for management and development fees. The entity agreement includes various transfer restrictions and rights of first offer that will allow us to repurchase Alinda’s interest should Alinda wish to exit in the future. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Below is a listing of our outstanding debt, including finance leases, as of September 30, 2020 and December 31, 2019 (in thousands): Weighted Average Effective Interest Rate at September 30, 2020 Maturity Date September 30, December 31, (unaudited) (unaudited) Unsecured Credit Facility Revolving Credit Facility 1.38% December 17, 2023 $ 522,951 $ 317,028 Term Loan A (1) 3.26% December 17, 2024 225,000 225,000 Term Loan B (1) 3.30% April 27, 2025 225,000 225,000 Term Loan C (1) 3.46% October 18, 2026 250,000 250,000 Senior Notes 4.75% November 15, 2025 400,000 400,000 Lenexa Mortgage 4.10% May 1, 2022 1,689 1,736 Finance Leases 4.36% 2021 - 2038 43,222 45,140 3.09% 1,667,862 1,463,904 Less net debt issuance costs (9,474) (10,839) Total outstanding debt, net $ 1,658,388 $ 1,453,065 _________________________ (1) The coupon interest rates associated with Term Loan A, Term Loan B, and Term Loan C incorporate the effects of our interest rate swaps in effect as of September 30, 2020. Credit Facilities, Senior Notes and Mortgage Notes Payable (a) Unsecured Credit Facility – In October 2019, we amended and restated our unsecured credit facility (the “unsecured credit facility”), which among other things increased the total potential borrowings, extended maturity dates, lowered interest rates, and provided for an additional term loan under the agreement. The unsecured credit facility includes a $225 million term loan which matures on December 17, 2024 (the “Term Loan A”), a $225 million term loan which matures on April 27, 2025 (the “Term Loan B”), an additional term loan of $250 million, maturing on October 18, 2026 (the “Term Loan C”), and a $1.0 billion revolving credit facility which matures on December 17, 2023. The revolving portion of the unsecured facility has a one Under the unsecured credit facility, the capacity may be increased from the current capacity of $1.7 billion to $2.2 billion subject to certain conditions set forth in the credit agreement, including the consent of the administrative agent and obtaining necessary commitments. We are also required to pay a commitment fee to the lenders assessed on the unused portion of the unsecured revolving credit facility. At our election, we can prepay amounts outstanding under the unsecured credit facility, in whole or in part, without penalty or premium. Our ability to borrow under the unsecured credit facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of September 30, 2020, we were in compliance with all of our covenants. As of September 30, 2020, we had outstanding $1,223.0 million of indebtedness under the unsecured credit facility, consisting of $523.0 million of outstanding borrowings under the unsecured revolving credit facility and $700.0 million outstanding under the term loans, exclusive of net debt issuance costs of $5.6 million. In connection with the unsecured credit facility, as of September 30, 2020, we had additional letters of credit outstanding aggregating to $3.5 million. We have also entered into certain interest rate swap agreements. See Note 7 – ‘Derivative Instruments’ for additional details. (b) Senior Notes – On November 8, 2017, the Operating Partnership and QTS Finance Corporation, a subsidiary of the Operating Partnership formed solely for the purpose of facilitating the offering of the 5.875% Senior Notes due 2022 (collectively, the “Issuers”), issued $400.0 million aggregate principal amount of 4.750% 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 the outstanding 5.875% Senior Notes and to repay a portion of the amount outstanding under our unsecured revolving credit facility. As of September 30, 2020, the outstanding net debt issuance costs associated with the Senior Notes were $3.9 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 certain foreign subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Issuers or any other subsidiary guarantor, other than QTS Finance Corporation, the co-issuer of the Senior Notes. QTS Realty Trust, Inc. does not guarantee the Senior Notes and will not be required to guarantee the Senior Notes except under certain circumstances. The offering was conducted pursuant to Rule 144A of the Securities Act of 1933, as amended, and the Senior Notes were issued pursuant to an indenture, dated as of November 8, 2017, among QTS, the Issuers, the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee. (c) Lenexa Mortgage – On March 8, 2017, we entered into a $1.9 million mortgage loan secured by our Lenexa facility. This mortgage has a fixed rate of 4.1%, with periodic principal payments due monthly and a balloon payment of $1.6 million in May 2022. As of September 30, 2020, the outstanding balance under the Lenexa mortgage was $1.7 million. The annual remaining principal payment requirements of our debt securities as of September 30, 2020 per the contractual maturities, excluding extension options and excluding operating and finance leases, are as follows (unaudited and in thousands): 2020 (October - December) $ 18 2021 73 2022 1,599 2023 522,951 2024 225,000 Thereafter 875,000 Total $ 1,624,641 As of September 30, 2020, we were in compliance with all of our covenants. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments From time to time, we enter into derivative financial instruments to manage certain cash flow risks. Derivatives designated and qualifying as a hedge of the exposure to variability in the cash flows of a specific asset or liability that is attributable to a particular risk, such as interest rate risk, are considered cash flow hedges. Interest Rate Swaps Our 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, we primarily use interest rate swaps as part of our 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 us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of September 30, 2020, we had interest rate swap agreements in place with an aggregate notional amount of $700 million. The forward swap agreements effectively fix the interest rate on $700 million of term loan borrowings, $225 million of swaps allocated to Term Loan A, $225 million allocated to Term Loan B and $250 million allocated to Term Loan C, through the current maturity dates of the respective term loans. We reflect our 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 “Derivative liabilities” line items, as applicable. As of September 30, 2020 and December 31, 2019, the fair value of interest rate swaps represented an aggregate liability of $55.5 million and $19.9 million, respectively. The forward interest rate swap agreements are derivatives that currently qualify for hedge accounting whereby we record 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 statements 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 as an increase to interest expense on the consolidated statements of operations was $3.4 million and $6.8 million for the three and nine months ended September 30, 2020, respectively. The amount reclassified from other comprehensive income as a reduction in interest expense on the consolidated statements of operations was $0.2 million and $1.2 million for the three and nine months ended September 30, 2019, respectively. There was no ineffectiveness recognized for the three and nine months ended September 30, 2020, and 2019. During the subsequent twelve months, beginning October 1, 2020, we estimate that $13.4 million will be reclassified from other comprehensive income as an increase to interest expense. Interest rate derivatives and their fair values as of September 30, 2020 and December 31, 2019 were as follows (unaudited and in thousands): Notional Amount Fixed One Month Fair Value September 30, 2020 December 31, 2019 Effective Date Expiration Date September 30, 2020 December 31, 2019 $ 25,000 $ 25,000 1.989 % January 2, 2018 Dec 17, 2021 $ (557) $ (209) 100,000 100,000 1.989 % January 2, 2018 Dec 17, 2021 (2,227) (837) 75,000 75,000 1.989 % January 2, 2018 Dec 17, 2021 (1,671) (627) 50,000 50,000 2.033 % January 2, 2018 Apr 27, 2022 (1,470) (545) 100,000 100,000 2.029 % January 2, 2018 Apr 27, 2022 (2,933) (1,081) 50,000 50,000 2.033 % January 2, 2018 Apr 27, 2022 (1,470) (545) 100,000 100,000 2.617 % January 2, 2020 Dec 17, 2023 (7,884) (4,007) 100,000 100,000 2.621 % January 2, 2020 Apr 27, 2024 (8,727) (4,324) 70,000 — 0.968 % March 2, 2020 Oct 18, 2026 (2,738) — 30,000 — 0.973 % March 2, 2020 Oct 18, 2026 (1,180) — 200,000 200,000 2.636 % December 17, 2021 Dec 17, 2023 (9,812) (3,939) 200,000 200,000 2.642 % April 27, 2022 Apr 27, 2024 (9,716) (3,802) 125,000 — 1.014 % December 17, 2023 Dec 17, 2024 (850) — 100,000 — 1.035 % December 17, 2023 Dec 17, 2024 (700) — 75,000 — 1.110 % December 17, 2023 Oct 18, 2026 (1,256) — 100,000 — 1.088 % April 27, 2024 Apr 27, 2025 (680) — 125,000 — 1.082 % April 27, 2024 Apr 27, 2025 (842) — 75,000 — 0.977 % April 27, 2024 Oct 18, 2026 (789) — $ (55,502) $ (19,916) Power Purchase Agreements In March 2019, we entered into two 10 year agreements to purchase renewable energy equal to the expected electricity needs of our datacenters in Chicago, Illinois and Piscataway, New Jersey. These arrangements currently qualify for hedge accounting whereby we record the changes in fair value of the instruments in “Accumulated other comprehensive income” or loss on the consolidated balance sheets and statements of comprehensive income which is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The amount reclassified from other comprehensive income as an increase to utilities expense on the consolidated statements of operations was $0.2 million and $1.0 million for the three and nine months ended September 30, 2020. We currently reflect these agreements, which are designated as cash flow hedges, at fair value as liabilities on the consolidated balance sheets within the “Derivative liabilities” line item. Power purchase agreement derivatives and their fair values as of September 30, 2020 and December 31, 2019 were as follows (unaudited and in thousands): Fair Value Counterparty Facility Effective Date Expiration Date September 30, 2020 December 31, 2019 Calpine Energy Solutions, LLC Piscataway 3/8/2019 Feb 28, 2029 $ (2,155) $ (2,919) Calpine Energy Solutions, LLC Chicago 3/8/2019 Feb 28, 2029 (2,375) (3,774) $ (4,530) $ (6,693) |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesWe are subject to various routine legal proceedings and other matters in the ordinary course of business. We currently do not have any litigation that would have a material adverse impact on our financial statements. Additionally, we do not currently have any material contingencies related to the impact of COVID-19 reflected in our financial statements aside from certain increases to our general bad debt reserve provided for under ASC 450-20. |
Partners' Capital, Equity and I
Partners' Capital, Equity and Incentive Compensation Plans | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Partners' Capital, Equity and Incentive Compensation Plans | Partners’ Capital, Equity and Incentive Compensation Plans QualityTech, LP QTS has the full power and authority to do all the things necessary to conduct the business of the Operating Partnership. As of September 30, 2020, the Operating Partnership had four classes of limited partnership units outstanding: Series A Preferred Units, Series B Convertible Preferred 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 currently outstanding are now redeemable on a one-for-one exchange rate 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 based on formulas contained in the partnership agreement. QTS Realty Trust, Inc. In connection with its initial public offering on October 13, 2013 (“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 our 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 2013 Equity Incentive Plan, including options to purchase Class A common stock if exercised. On May 4, 2015, following approval by our stockholders at our 2015 Annual Meeting of Stockholders, the total number of shares available for issuance under the 2013 Equity Incentive Plan was increased by an additional 3,000,000. On May 9, 2019, following approval by our stockholders at our 2019 Annual Meeting of Stockholders, the total number of shares available for issuance under the 2013 Equity Incentive Plan was increased by an additional 1,110,000 to 5,860,000. In March 2019, the Compensation Committee completed a redesign of the long-term incentive program for executive officers to include the following types of awards: a. Performance-Based FFO Unit Awards — performance-based restricted share unit awards, which may be earned based on Operating Funds From Operations (“OFFO”) per diluted share measured over a two b. Performance-Based Relative TSR Unit Awards — performance-based restricted share unit awards, which may be earned based on total stockholder return (“TSR”) as compared to the MSCI U.S. REIT Index (the “Index”) over a three based on our TSR compared to the Index. In addition, award payouts will be determined on a linear interpolation basis between threshold and target and target and maximum performance; and will be capped at the target performance level if our TSR is negative. c. Restricted Stock Awards — the restricted stock awards vest as to one-third of the shares subject to awards on the first anniversary of the date of grant and as to 8.375% of the shares subject to the awards each quarter-end thereafter, subject to the named executive officer’s continued service as an employee as of each vesting date. The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the nine months ended September 30, 2020 (unaudited) : 2010 Equity Incentive Plan 2013 Equity Incentive Plan Numbers of Class O units Weighted average exercise price Weighted average fair value Options Weighted average exercise price Weighted average fair value Restricted Stock / Deferred Stock Weighted average fair value at grand date TSR Units Weighted average fair value at grand date FFO Units Weighted average fair value at grand date Outstanding at December 31, 2019 82,310 $ 25.00 $ 5.97 1,934,838 $ 37.11 $ 7.05 389,750 $ 39.67 84,350 $ 54.64 84,350 $ 42.01 Granted — — — 99,872 56.84 9.35 264,545 56.90 84,202 79.18 84,202 56.84 Exercised/Vested (1) (1,875) 25.00 10.26 (88,022) 28.68 5.24 (220,564) 40.09 — — — — Cancelled/Expired — — — — — — (7,669) 48.88 — — — — Outstanding at September 30, 2020 80,435 $ 25.00 $ 5.87 1,946,688 $ 38.50 $ 7.25 426,062 $ 49.98 168,552 $ 66.90 168,552 $ 49.42 ____________________ (1) This represents (i) Class O units which were converted to Class A units, (ii) options to purchase Class A common stock which were exercised, and (iii) 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, with respect to the applicable column. The assumptions and fair values for restricted stock and options to purchase shares of Class A common stock granted for the nine months ended September 30, 2020 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 and TSR Units were valued using a Monte-Carlo simulation that leveraged similar assumptions to those used to value the Class A common stock and FFO Units. Nine Months Ended September 30, 2020 Fair value of FFO units and restricted stock granted $56.84 - $65.96 Fair value of TSR units granted $ 79.18 Fair value of options granted $ 9.35 Expected term (years) 5.5 Expected volatility 27 % Expected dividend yield 3.31 % Expected risk-free interest rates 0.61 % The following tables summarize information about awards outstanding as of September 30, 2020 (unaudited). Operating Partnership Awards Outstanding Exercise prices Awards outstanding Weight average remaining vesting period Class O Units $ 25.00 80,435 — Total Operating Partnership awards outstanding 80,435 QTS Realty Trust, Inc. Awards Outstanding Exercise prices Awards outstanding Weight average remaining vesting period Restricted stock $ — 426,062 0.7 TSR units — 168,552 0.8 FFO units — 168,552 0.5 Options to purchase Class A common stock 21.00 - 56.84 1,946,688 0.2 Total QTS Realty Trust, Inc. awards outstanding 2,709,854 Any awards outstanding as of the end of the period have been valued as of the grant date and generally vest ratably over a defined service period. As of September 30, 2020 all restricted Class A common stock, TSR units, and FFO units outstanding were unvested and approximately 0.1 million options to purchase Class A common stock were outstanding and unvested. As of September 30, 2020 we had $31.7 million of unrecognized equity-based compensation expense which will be recognized over a remaining weighted-average vesting period of 0.6 years. The total intrinsic value of Class O units and options to purchase Class A common stock outstanding at September 30, 2020 was $50.8 million. Dividends and Distributions The following tables present quarterly cash dividends and distributions paid to QTS’ common and preferred stockholders and the Operating Partnership’s unit holders for the nine months ended September 30, 2020 and 2019 (unaudited): Nine Months Ended September 30, 2020 Record Date Payment Date Per Share and Aggregate Dividend/Distribution Amount (in millions) Common Stock/Units June 19, 2020 July 7, 2020 $ 0.47 $ 31.5 March 20, 2020 April 7, 2020 $ 0.47 31.5 December 20, 2019 January 7, 2020 $ 0.44 28.6 $ 91.6 Series A Preferred Stock/Units June 30, 2020 July 15, 2020 $ 0.45 $ 1.9 March 31, 2020 April 15, 2020 $ 0.45 1.9 December 31, 2019 January 15, 2020 $ 0.45 1.9 $ 5.7 Series B Preferred Stock/Units June 30, 2020 July 15, 2020 $ 1.63 $ 5.1 March 31, 2020 April 15, 2020 $ 1.63 5.1 December 31, 2019 January 15, 2020 $ 1.63 5.1 $ 15.3 Nine Months Ended September 30, 2019 Record Date Payment Date Per Share and Aggregate Dividend/Distribution Amount (in millions) Common Stock/Units June 25, 2019 July 9, 2019 $ 0.44 $ 27.3 March 20, 2019 April 4, 2019 $ 0.44 27.3 December 21, 2018 January 8, 2019 $ 0.41 23.7 $ 78.3 Series A Preferred Stock/Units June 30, 2019 July 15, 2019 $ 0.45 $ 1.9 March 31, 2019 April 15, 2019 $ 0.45 1.9 December 31, 2018 January 15, 2019 $ 0.45 1.9 $ 5.7 Series B Preferred Stock/Units June 30, 2019 July 15, 2019 $ 1.63 $ 5.1 March 31, 2019 April 15, 2019 $ 1.63 5.1 December 31, 2018 January 15, 2019 $ 1.63 5.1 $ 15.3 Additionally, subsequent to September 30, 2020, the Company paid the following dividends: • On October 6, 2020, the Company paid its regular quarterly cash dividend of $0.47 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on September 18, 2020. • On October 15, 2020, the Company paid a quarterly cash dividend of approximately $0.45 per share on its Series A Preferred Stock to holders of Series A Preferred Stock of record as of the close of business on September 30, 2020, and the Operating Partnership paid a quarterly cash distribution of approximately $0.45 per unit on outstanding Series A Preferred Units held by the Company. • On October 15, 2020, the Company paid a quarterly cash dividend of approximately $1.63 per share on its Series B Preferred Stock to holders of Series B Preferred Stock of record as of the close of business on September 30, 2020, and the Operating Partnership paid a quarterly cash distribution of approximately $1.63 per unit on outstanding Series B Preferred Units held by the Company. Equity Issuances Class A Common Stock In September 2019, we established an “at-the-market” equity offering program (the “Prior ATM Program”) pursuant to which we could issue, from time to time, up to $400 million of our Class A common stock, $0.01 par value per share (the “Class A common stock”), which could include shares to be sold on a forward basis. The use of forward sales under the Prior ATM Program generally allows us to lock in a price on the sale of shares of our Class A common stock when sold by the forward sellers, but defer receiving the net proceeds from such sales until the shares of our Class A common stock are issued at settlement on a later date. We have concluded that the forward sale agreements meet the derivative scope exception for certain contracts involving an entity’s own equity. The initial forward sale price is subject to daily adjustment based on a floating interest rate factor equal to the specified daily rate less a spread, and will decrease by other fixed amounts specified in the forward sale agreement. Until settlement of all of the forward sale agreements, our earnings per share dilution resulting from the agreements, if any, is determined using the two-class method. In May 2020, we established a new “at-the-market” equity offering program (the “ATM Program”) pursuant to which we may issue, from time to time, up to $500 million of our Class A common stock, which may include shares to be sold on a forward basis. As under the Prior ATM Program, the use of forward sales under the ATM Program generally allows us to lock in a price on the sale of shares of our Class A common stock when sold by the forward sellers, but defer receiving the net proceeds from such sales until the shares of our Class A common stock are issued at settlement on a later date. We have concluded that the forward sale agreements meet the derivative scope exception for certain contracts involving an entity’s own equity. Until settlement of all of the forward sale agreements, our earnings per share dilution resulting from the agreements, if any, is determined using the two-class method. At any time during the term of any forward sale under the Prior ATM Program or the ATM Program, we may settle the forward sale by physical delivery of shares of Class A common stock to the forward purchasers or, at our election, cash settle or net share settle. The initial forward sale price per share under each forward sale equals the product of (x) an amount equal to 100% minus the applicable forward selling commission and (y) the volume weighted average price per share at which the borrowed shares of our common stock were sold pursuant to the equity distribution agreement by the relevant forward seller during the applicable forward hedge selling period for such shares to hedge the relevant forward purchaser’s exposure under such forward sale. Thereafter, the forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor equal to the specified daily rate less a spread, and is decreased based on specified amounts related to dividends on shares of our common stock during the term of the applicable forward sale. If the specified daily rate is less than the spread on any day, the interest rate factor will result in a daily reduction of the applicable forward sale price. During the three months ended September 30, 2020, we received $151.8 million of net proceeds from the settlement of forward shares as noted in the table below. We expect to physically settle (by delivering shares of Class A common stock) the remaining forward sales under the Prior ATM Program and ATM Program prior to the first anniversary date of each respective transaction. In addition, during the three months ended September 30, 2020, we utilized the forward provisions under the Prior ATM Program and the ATM Program to allow for the sale of additional shares of our common stock as noted in the table below. In June 2020, we conducted an underwritten offering of 4,400,000 shares of common stock offered on a forward basis at a price of $64.90 per share representing available net proceeds upon physical settlement of approximately $269.4 million as of September 30, 2020. We expect to physically settle the forward sale agreements (by the delivery of shares of common stock) and receive proceeds, subject to certain adjustments, from the sale of those shares of common stock by June 30, 2021, although we have the right to elect settlement prior to that time. We have concluded that the forward sale agreements meet the derivative scope exception for certain contracts involving an entity’s own equity. The initial forward sale price is subject to daily adjustment based on a floating interest rate factor equal to the specified daily rate less a spread, and will decrease by other fixed amounts specified in the forward sale agreement. Until settlement of all of the forward sale agreements, our earnings per share dilution resulting from the agreements, if any, is determined using the two-class method. The following table represents a summary of equity issuances of our Class A common stock for the three months ended September 30, 2020 (in thousands): Offering Program Forward Shares Sold/(Settled) Net Proceeds Available/(Received) (1) Shares and net proceeds available as of June 30, 2020 10,299 $ 584,924 (2) May 2020 ATM Program - Sales 114 7,348 June 2019 Prior ATM Program - Settlements (2,948) (3) (151,844) Shares and net proceeds available as of September 30, 2020 7,465 $ 440,428 ____________________ (1) Net Proceeds Available remain subject to certain adjustments until settled. (2) Proceeds available reported in the Form 10-Q for the period ended June 30, 2020 were $591 million. The $6 million decrease is primarily due to QTS’ declared dividends, which reduces cash expected to be received upon full physical settlement of the forward shares. (3) Represents the number of forward shares we elected to physically settle during the period Preferred Stock 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. In connection with the issuance of the Series A Preferred Stock, on March 15, 2018 the Operating Partnership issued to the Company 4,280,000 Series A Preferred Units, which have economic terms that are substantially similar to the Company’s Series A Preferred Stock. The Series A Preferred Units were issued in exchange for the Company’s contribution of the net offering proceeds of the offering of the Series A Preferred Stock to the Operating Partnership. Dividends on the Series A Preferred Stock are payable quarterly in arrears on or about the 15th day of each January, April, July and October. The Series A Preferred Stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, the Series A Preferred Stock will rank senior to common stock and pari passu with the Series B Preferred Stock with respect to the payment of distributions and other amounts. Except in instances relating to preservation of QTS’ qualification as a REIT or pursuant to the Company’s special optional redemption right, the Series A Preferred Stock is not redeemable prior to March 15, 2023. On and after March 15, 2023, the Company may, at its option, redeem the Series A Preferred Stock, in whole, at any time, or in part, from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but not including, the date of redemption. Upon the occurrence of a change of control, the Company has a special optional redemption right that enables it to redeem the Series A Preferred Stock, in whole, at any time, or in part, from time to time, within 120 days after the first date on which a change of control has occurred resulting in neither QTS nor the surviving entity having a class of common shares listed on the NYSE, NYSE Amex, or NASDAQ or the acquisition of beneficial ownership of its stock entitling a person to exercise more than 50% of the total voting power of all our stock entitled to vote generally in election of directors. The special optional redemption price is $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but not including, the date of redemption. Upon the occurrence of a change of control, holders will have the right (unless the Company has elected to exercise its special optional redemption right to redeem their Series A Preferred Stock) to convert some or all of such holder’s Series A Preferred Stock into a number of shares of Class A common stock, par value $0.01 per share, equal to the lesser of: • the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any accrued and unpaid dividends (whether or not declared) to, but not including, the change of control conversion date (unless the change of control conversion date is after a record date for a Series A Preferred Stock dividend payment and prior to the corresponding Series A Preferred Stock dividend payment date, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Stock Price; and • 1.46929 (i.e., the Share Cap); subject, in each case, to certain adjustments and provisions for the receipt of alternative consideration of equivalent value as described in the prospectus supplement for the Series A Preferred Stock. On June 25, 2018, QTS issued 3,162,500 shares of 6.50% Series B Cumulative Convertible Perpetual Preferred Stock (“Series B Preferred Stock”) with a liquidation preference of $100.00 per share, which included 412,500 shares the underwriters purchased pursuant to the exercise of their overallotment option in full. In connection with the issuance of the Series B Preferred Stock, on June 25, 2018 the Operating Partnership issued to the Company 3,162,500 Series B Preferred Units, which have economic terms that are substantially similar to the Company’s Series B Preferred Stock. The Series B Preferred Units were issued in exchange for the Company’s contribution of the net offering proceeds of the offering of the Series B Preferred Stock to the Operating Partnership. Dividends on the Series B Preferred Stock are payable quarterly in arrears on or about the 15th day of each January, April, July and October. The Series B Preferred Stock is convertible by holders into shares of Class A common stock at any time at the then-prevailing conversion rate. The conversion rate as of September 30, 2020 is 2.1382 shares of the Company’s Class A common stock per share of Series B Preferred Stock. The Series B Preferred Stock does not have a stated maturity date. Upon liquidation, dissolution or winding up, the Series B Preferred Stock will rank senior to common stock and pari passu with the Series A Preferred Stock with respect to the payment of distributions and other amounts. The Series B Preferred Stock is not redeemable by the Company. At any time on or after July 20, 2023, the Company may at its option cause all (but not less than all) outstanding shares of the Series B Preferred Stock to be automatically converted into the Company’s Class A common stock at the then-prevailing conversion rate if the closing sale price of the Company’s Class A common stock is equal to or exceeds 150% of the then-prevailing conversion price for at least 20 trading days in a period of 30 consecutive trading days, including the last trading day of such 30-day period, ending on the trading day prior to the issuance of a press release announcing the mandatory conversion. If a holder converts its shares of Series B Preferred Stock at any time beginning at the opening of business on the trading day immediately following the effective date of a fundamental change (as described in the prospectus supplement) and ending at the close of business on the 30th trading day immediately following such effective date, the holder will automatically receive a number of shares of the Company’s Class A common stock equal to the greater of: • the sum of (i) a number of shares of the Company’s Class A common stock, as may be adjusted, as described in the Articles Supplementary for the 6.50% Series B Cumulative Convertible Perpetual Preferred Stock filed with the State Department of Assessments and Taxation of Maryland on June 22, 2018 (the “Articles Supplementary”) and (ii) the make-whole premium described in the Articles Supplementary; and • a number of shares of the Company's Class A common stock equal to the lesser of (i) the liquidation preference divided by the average of the daily volume weighted average prices of the Company's Class A common stock for ten days preceding the effective date of a fundamental change and (ii) 5.1020 (subject to adjustment). |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions As described further in Note 5 – ‘Investments in Unconsolidated Entity’, during the nine months ended September 30, 2019, we formed an unconsolidated entity with Alinda, an infrastructure investment firm. We contributed a hyperscale data center under development in Manassas, Virginia to the entity. The facility, and the previously executed operating lease to a global cloud-based software company pursuant to a 10-year lease agreement, was contributed in exchange for cash and noncash consideration in the form of equity interest in the entity that was measured at fair value pursuant to ASC Topic 820. We and Alinda each own a 50% interest in the entity. Under the unconsolidated entity operating agreement, we serve as the entity’s operating member, subject to authority and oversight of a board appointed by us and Alinda, and separately we serve as manager and developer of the facility in exchange for management and development fees. During the three months ended September 30, 2020, we did not earn any development fees from the unconsolidated entity and earned less than $0.1 million during the three months ended September 30, 2019. We earned development fees of approximately $0.9 million and $0.4 million for the nine months ended September 30, 2020 and 2019, respectively. In addition, we earned approximately $0.2 million and $0.1 million in management fees from the unconsolidated entity during the three months ended September 30, 2020 and 2019, respectively, and $0.6 million and $0.3 million for the nine months ended September 30, 2020 and 2019, respectively. In addition, we periodically execute transactions with entities affiliated with our 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 our officers and directors. The transactions which occurred during the three and nine months ended September 30, 2020 and 2019 are outlined below (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Tax, utility, insurance and other reimbursement $ 114 $ 173 $ 368 $ 608 Rent expense 257 254 770 761 Capital assets acquired — 53 — 477 Total $ 371 $ 480 $ 1,138 $ 1,846 |
Noncontrolling Interest
Noncontrolling Interest | 9 Months Ended |
Sep. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | Noncontrolling Interest Concurrently with the completion of the IPO, we 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 currently outstanding 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 September 30, 2020, the noncontrolling ownership interest percentage of QualityTech, LP was 9.4%. |
Earnings per share of QTS Realt
Earnings per share of QTS Realty Trust, Inc. | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per share of QTS Realty Trust, Inc. | Earnings per share of QTS Realty Trust, Inc. Basic income per share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share adjusts basic income per share for the effects of potentially dilutive common shares. Unvested restricted stock awards and our forward sale contracts described in Note 9 contain non-forfeitable rights to dividends and thus are participating securities and are included in the computation of basic 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 and the forward sale contracts were included in the calculation of basic earnings per share using the two-class method for all periods presented to the extent outstanding during the period. The computation of basic and diluted net income per share is as follows (in thousands, except per share data, and unaudited): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net income $ 6,907 $ 6,588 $ 25,236 $ 35,271 (Income) loss attributable to noncontrolling interests 18 49 (408) (1,593) Preferred stock dividends (7,045) (7,045) (21,135) (21,135) Earnings attributable to participating securities (4,372) (2,184) (11,521) (5,999) Net income (loss) available to common stockholders after allocation to participating securities $ (4,492) $ (2,592) $ (7,828) $ 6,544 Denominator: Weighted average shares outstanding - basic 61,036 54,928 59,615 53,874 Effect of Class O units, TSR units and options to purchase Class A common stock on an "as if" converted basis — — — 463 Weighted average shares outstanding - diluted 61,036 54,928 59,615 54,337 Basic net income (loss) per share $ (0.07) $ (0.05) $ (0.13) $ 0.12 Diluted net income (loss) per share $ (0.07) $ (0.05) $ (0.13) $ 0.12 ______________________________ * Note: The calculations of basic and diluted net income (loss) per share above do not include the following number of Class A partnership units, Class O units, TSR units and options to purchase common stock on an “as if” converted basis, and the effects of Series B Convertible preferred stock on an “as if” converted basis, as their respective inclusions would have been antidilutive: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Class A Partnership units 6,658 6,668 6,667 6,670 Class O units, TSR units and options to purchase common stock on an "as if" converted basis 1,176 557 1,126 — Series B Convertible preferred stock on an "as if" converted basis 6,762 6,729 6,756 6,729 |
Contracts with Customers
Contracts with Customers | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Contracts with Customers | Contracts with CustomersFuture minimum payments to be received under non-cancelable customer contracts including both lease rental revenue components and non-lease revenue components that are accounted for as a combined lease component in accordance with the practical expedient provided by ASC Topic 842 which is discussed in Note 2 above (inclusive of payments for contracts which have not yet commenced, and exclusive of variable lease revenue such as recoveries of operating costs from customers) are as follows for the years ending December 31 (unaudited and in thousands): 2020 (October - December) $ 108,231 2021 405,822 2022 323,623 2023 221,007 2024 169,774 Thereafter 421,599 Total $ 1,650,056 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC Topic 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows based upon market yields or by using other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, fair values are not necessarily indicative of the amounts we 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. Derivative Contracts: Interest rate swaps Currently, we use interest rate swaps to manage our 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, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of September 30, 2020, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. We do not have any fair value measurements on a recurring basis using significant unobservable inputs (Level 3) as of September 30, 2020 or December 31, 2019. Power Purchase Agreements In March 2019, we began using energy hedges to manage risk related to energy prices. The inputs used to value the derivatives primarily fall within Level 2 of the fair value hierarchy, and valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including futures curves. The fair values of the energy hedges 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 energy rates (forward curves) derived from observable market futures curves. To comply with the provisions of fair value accounting guidance, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Credit facility and Senior Notes: As market interest rates have fluctuated compared to contracted interest rates, the fair value of our unsecured credit facility approximated the carrying value of the credit facility less the fair value of the interest rate swap liability. The fair value of our Senior Notes was estimated using Level 2 “significant other observable inputs,” primarily based on quoted market prices for the same or similar issuances. At September 30, 2020, the fair value of the Senior Notes was approximately $415.0 million. Other debt instruments: The fair value of our other debt instruments (including finance leases and mortgage notes payable) were estimated in the same manner as the unsecured credit facility above. Similarly, each of these instruments did not have interest rates which were materially different than current market conditions and therefore, the fair value of each instrument approximated the respective carrying values. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events In October 2020, we paid our regular quarterly cash dividends on our common stock, Series A Preferred Stock and Series B Preferred Stock. See the ‘Dividends and Distributions’ section of Note 9 for additional details. In September 2020, through our subsidiaries, the Operating Partnership and QTS Finance Corporation (collectively, the “Issuers”), we conducted a private offering without registration rights of $500 million aggregate principal amount of senior notes due October 1, 2028 (the “2028 Senior Notes”). The 2028 Senior Notes have an interest rate of 3.875% per annum and were issued on October 7, 2020 at a price equal to 100% of their face value. The Notes will mature on October 1, 2028. The net proceeds from the offering were used to repay a portion of the amount outstanding under our unsecured revolving credit facility. Subsequently, we gave notice that we will redeem the 4.750% Senior Notes on November 16, 2020 and will use the corresponding availability under our unsecured revolving credit facility, along with additional borrowings from Term Loan D (discussed below), to satisfy and discharge the indenture. As a result of early repayment of the Senior Notes, we expect to incur early redemption fees equal to 3.563% of the aggregate principal amount, or approximately $14.3 million. Additionally, the deferred financing costs associated with the 4.750% Senior Notes, which were approximately $3.9 million as of September 30, 2020, will be written off at the time of repayment. In October 2020, through our Operating Partnership, we entered into a $250 million term loan (“Term Loan D”) that provides for commitments to make a single term loan borrowing of up to $250 million on or before November 16, 2020. We intend to draw the entire $250 million on or before November 16, 2020. Term Loan D will mature on January 15, 2026. Interest rates on Term Loan D can vary based on leverage levels consistent with our existing term loans as discussed in Note 6. As of the date of this report, the interest rate on Term Loan D is LIBOR plus 1.2% and includes a LIBOR floor of 25 basis points. When combined with our current $1.7 billion unsecured credit facility, Term Loan D increases QTS' aggregate unsecured credit facility capacity to $1.95 billion. Term Loan D also provides for a $250 million accordion feature to increase Term Loan D up to $500 million, subject to obtaining additional loan commitments. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
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 our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 28, 2020. The consolidated balance sheet data included herein as of December 31, 2019 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 Accounting Standards Codification (“ASC”) Topic 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 presents one set of notes for the consolidated financial statements of QTS and 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 4.750% Senior Notes due 2025 and the unsecured credit facility, both discussed in Note 6, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries (other than certain foreign subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Operating Partnership, QTS Finance Corporation (the co-issuer of the 4.750% Senior Notes due 2025) or any subsidiary guarantor. The indenture governing the 4.750% 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”). See Note 15 for information related to our satisfaction and discharge of the indenture governing the 4.750% Senior Notes due 2025. The interim consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority owned controlled subsidiaries including the Operating Partnership as well as unconsolidated entities accounted for using equity method accounting. 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. The impacts of the COVID-19 pandemic increases uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates and judgments may be subject to greater volatility than has been the case in the past. |
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 controlled 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. We evaluate our investments in less than wholly owned entities to determine whether they should be recorded on a consolidated basis. The percentage of ownership interest in the entity, an evaluation of control and whether a VIE exists are all considered in our consolidation assessment. Investments in real estate entities which we have the ability to exercise significant influence, but do not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, our share of the earnings or losses of these entities is included in consolidated net income (loss). |
Variable Interest Entities (VIEs) | Variable Interest Entities (VIEs) – We determine whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. The determination of whether an entity in which we hold a direct or indirect variable interest is a VIE is based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, and then a quantitative analysis, if necessary. We analyze any investments in VIEs to determine if we are the primary beneficiary. In evaluating whether we are the primary beneficiary, we evaluate our direct and indirect economic interests in the entity. Determining which reporting entity, if any, is the primary beneficiary of a VIE is primarily a qualitative approach focused on identifying which reporting entity has both (1) the power to direct the activities of a VIE that most significantly impact such entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgment. We consider a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct financing, leasing, construction and other operating decisions and activities. In addition, we consider the rights of other investors to participate in those decisions, to replace the manager and to sell or liquidate the entity. We determine whether we are the primary beneficiary of a VIE at the time we become involved with a variable interest entity and reconsider that conclusion upon a reconsideration event. As of September 30, 2020, we had one unconsolidated entity that was considered a VIE for which we are not the primary beneficiary. Our maximum exposure to losses associated with this VIE is limited to our net investment, which was approximately $22.9 million as of September 30, 2020. |
Real Estate Assets | Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation for real estate assets is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended September 30, 2020, depreciation expense related to real estate assets and non-real estate assets was $37.9 million and $3.5 million, respectively, for a total of $41.4 million. For the three months ended September 30, 2019, depreciation expense related to real estate assets and non-real estate assets was $29.8 million and $2.9 million, respectively, for a total of $32.7 million. For the nine months ended September 30, 2020, depreciation expense related to real estate assets and non-real estate assets was $104.9 million and $10.2 million, respectively, for a total of $115.1 million. For the nine months ended September 30, 2019, depreciation expense related to real estate assets and non-real estate assets was $86.8 million and $8.7 million, respectively, for a total of $95.5 million. We capitalize certain real estate 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 project costs) begins when development efforts commence and ends when the asset is ready for its intended use. The capitalization of internal costs increases construction in progress recognized during development of the related property and the cost of the real estate asset when placed into service and such costs are depreciated over its estimated useful life. Capitalization of such costs, excluding interest, aggregated to $4.5 million and $4.8 million for the three months ended September 30, 2020 and 2019, respectively, and $13.8 million and $13.1 million for the nine months ended September 30, 2020 and 2019, respectively. Interest is capitalized during the period of development by applying our weighted average effective borrowing rate to the actual development and other capitalized costs paid during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $7.1 million and $8.7 million for the three months ended September 30, 2020 and 2019, respectively, and $22.9 million and $24.9 million for the nine months ended September 30, 2020 and 2019, respectively. |
Acquisitions and Sales | Acquisitions and Sales – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances. When substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the transaction is accounted for as an asset acquisition. In an asset acquisition, the purchase price paid for assets acquired is allocated between identified tangible and intangible assets acquired based on relative fair value. Transaction costs associated with asset acquisitions are capitalized. When substantially all of the fair value of assets acquired is not concentrated in a group of similar identifiable assets, the set of assets will generally be considered a business. When accounting for business combinations, purchase accounting is applied to the assets and liabilities related to all real estate investments acquired in accordance with the accounting requirements of ASC Topic 805, Business Combinations , which requires the recording of net assets of acquired businesses at fair value. The fair value of the consideration transferred is assigned to the acquired tangible assets, consisting primarily of land, construction in progress, building and improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases, value of customer relationships and finance 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. Transaction costs associated with business combinations are expensed as incurred. In developing estimates of fair value of acquired assets and assumed liabilities, management analyzes a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets. Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. These amortization expenses are accounted for as real estate amortization expense. Above or below market leases are amortized on a straight-line basis over their expected lives and are recorded as a reduction to or increase in rental revenue when we are the lessor as well as a reduction to or increase in rent expense over the remaining lease terms when we are the lessee. During the nine months ended September 30, 2020, we completed multiple acquisitions of land totaling 25.6 acres for an aggregate purchase price of approximately $12.6 million to be used for future development. These acquisitions were accounted for as asset acquisitions and were included within the “Construction in Progress” line item of the consolidated balance sheets at the time of acquisition. During the nine months ended September 30, 2019, we sold our Manassas facility to an unconsolidated entity in exchange for cash consideration and noncash consideration in the form of an equity interest in the unconsolidated entity. After measuring the consideration received at fair value, we recognized a $13.4 million gain on sale of real estate, net of approximately $5.8 million of transaction costs, associated with our contribution of certain assets in our Manassas facility to the unconsolidated entity. Substantially all of the fair value of the assets contributed to the entity was concentrated in a group of similar identifiable assets and the sale of the assets were not to a customer, therefore the transaction was accounted for as an asset sale. The gain on sale of real estate was included within the “Gain on sale of real estate, net” line item of the consolidated statements of operations. |
Impairment of Long-Lived Assets, Intangible Assets and Goodwill - | Impairment of Long-Lived Assets, Intangible Assets and Goodwill – We review our long-lived assets, intangible assets and equity method investments 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 group exceeds the value of the undiscounted cash flows, the fair value of the asset group is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three and nine months ended September 30, 2020 and September 30, 2019. The fair value of goodwill is the consideration transferred in a business combination which is not allocable to identifiable intangible and tangible assets. Goodwill is subject to at least an annual assessment for impairment. In connection with the goodwill impairment evaluation that we performed as of October 1, 2019, we determined qualitatively that it is not more likely than not that the fair value of our one reporting unit was less than the carrying amount, thus we did not perform a quantitative analysis. As we continue to operate and assess our goodwill at the consolidated level for our single reporting unit and our market capitalization significantly exceeds our net asset value, further analysis was not deemed necessary as of September 30, 2020. |
Cash and Cash Equivalents | Cash and Cash Equivalents – We consider 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. Our 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. We mitigate this risk by depositing a majority of our funds with several major financial institutions. We also have not experienced any losses and do not believe that the risk is significant. |
Deferred Costs | Deferred Costs – Deferred costs, net, on our balance sheets include both deferred financing costs and deferred 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 for each of the three months ended September 30, 2020 and 2019, and $3.0 million and $2.9 million the nine months ended September 30, 2020 and 2019, respectively. 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 and are accounted for pursuant to ASC Topic 842, Leases . These costs are incurred when we execute lease agreements and represent only incremental costs that would not have been incurred if the lease agreement had not been executed. To a lesser extent, we incur the same incremental costs to obtain managed services and cloud contracts with customers that are accounted for pursuant to ASC Topic 606, Revenue from Contracts with Customers. Because the framework of accounting for these costs and the underlying nature of the costs are the same for our revenue and lease contracts, the costs are presented on a combined basis within our financial statements. 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 $6.8 million and $6.7 million for the three months ended September 30, 2020 and 2019, respectively, and $19.3 million and $17.7 million for the nine months ended September 30, 2020 and 2019, respectively. |
Revenue Recognition | Revenue Recognition – We derive our revenues from leases with customers for data center space which include lease components and nonlease revenue components, such as power, tenant recoveries, cloud and managed services. We have elected the available practical expedient under ASC Topic 842, Leases , to combine our nonlease revenue components that have the same pattern of transfer as the related operating lease component into a single combined lease component. The single combined component is accounted for under ASC Topic 842 if the lease component is the predominant component and is accounted for under ASC Topic 606 if the nonlease components are the predominant components. In our contracts, the single combined component is accounted for under ASC Topic 842 as the lease component is the predominant component. A description of each of our disaggregated revenue streams is as follows: Rental Revenue Our 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. We do 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 us to provide a series of distinct services and to stand ready to deliver the power over the contracted term which is co-terminus with the lease. Customer fixed power arrangements have the same pattern of transfer over the lease term as the lease component and are therefore combined with the lease component to form a single lease component that is recognized over the term of the lease on a straight line basis. In addition, rental revenue includes straight line rent. Straight line rent represents the difference in rents recognized during the period 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 $54.3 million and $38.7 million as of September 30, 2020 and December 31, 2019, respectively. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed below. Variable Lease Revenue from Recoveries Certain customer leases contain provisions under which customers reimburse us 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 relate specifically to our variable power arrangements, whereby customers pay variable monthly fees for the specific amount of power utilized at the current utility rates. Our 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. we provide power to our customers) and customers utilize the power. Reimbursement of real estate taxes, insurance, common area maintenance, or other operating expenses are accounted for as variable payments under lease guidance pursuant to the practical expedient and are recognized as revenue in the period that the expenses are recognized. Variable lease revenue from recoveries discussed above, including power, common area maintenance or other operating costs, have the same pattern of transfer over the lease term as the lease component and are therefore combined with the lease component to form a single lease component. Variable lease revenue from recoveries is included within the “rental” line item on the statements of operations. Other Revenue Other revenue primarily consists of revenue from our cloud and managed service offerings, as well as revenue earned from partner channel, management and development fees. We, through our Taxable REIT Subsidiaries (“TRS”), may provide both our cloud product and use of our managed services to our customers on an individual or combined basis. In both our cloud and managed services offerings the TRS’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 information technology (“IT”) outsourcing environment over a contracted term. Although underlying services may vary, over the contracted term monthly service offerings are substantially the same and we account for the services as a series of distinct services in accordance with ASC Topic 606. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. As we have the right to consideration from customers in an amount that corresponds directly with the value to the customer of the TRS’s performance of providing continuous services, we recognize monthly revenue for the amount invoiced. With respect to the transaction price allocated to remaining performance obligations within our cloud and managed service contracts, we have elected to use the optional exemption provided by ASC Topic 606 whereby we are not required to estimate the total transaction price allocated to remaining performance obligations as we apply 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. Management fees and other revenues are generally received from our unconsolidated entity properties as well as third parties. Management fee revenue is earned based on a contractual percentage of unconsolidated entity property revenue. Development fee revenue is earned on a contractual percentage of hard costs to develop a property. We recognize revenue for these services provided when earned based on the performance criteria in ASC Topic 606, with such revenue recorded in “Other” revenue on the consolidated statements of operations. Leases as Lessee – We determine if an arrangement is a lease at inception. If the contract is considered a lease, we evaluate leased property to determine whether the lease should be classified as a finance or operating lease in accordance with U.S. GAAP. We periodically enter into finance leases for certain data center facilities, equipment, and fiber optic transmission cabling. Finance lease assets are included within the “Buildings, improvements and equipment” line item of the consolidated balance sheets and finance lease liabilities are included within “Finance leases and mortgage notes payable” line item of the consolidated balance sheets. In addition, we lease certain real estate (primarily land or real estate space) under operating lease agreements with such assets included within the “Operating lease right of use assets, net” line item of the consolidated balance sheets and the associated lease liabilities included within the “Operating lease liabilities” line item on the consolidated balance sheets. Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases as lessee typically do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We assess multiple variables when determining the incremental borrowing rate, such as lease term, payment terms, collateral, economic conditions, and creditworthiness. ROU assets also include any lease payments made and exclude lease incentives. Many of our lease agreements include options to extend the lease, which we do not include in our expected lease terms unless they are reasonably certain to be exercised. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. |
Allowance for Uncollectible Accounts Receivable | Allowance for Uncollectible Accounts Receivable – We record a provision for uncollectible accounts if a receivable balance relating to lease components from an individual contract is considered by management to be not probable of collection, and this provision is recorded as a reduction to leasing revenues. We also record a general provision of estimated uncollectible tenant receivables based on general probability of collection in accordance with ASC 450-20 Loss Contingencies |
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. We record 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 $55.4 million and $39.2 million as of September 30, 2020 and December 31, 2019, respectively. Additionally, $5.3 million and |
Foreign Currency | Foreign Currency - The financial position of foreign subsidiaries is translated at the exchange rates in effect at the end of the period, while revenues and expenses are translated at average exchange rates during the period. Gains or losses from translation of foreign operations where the local currency is the functional currency are included as components of other comprehensive income (loss). Prior to February 2020, gains or losses from foreign currency transactions were included in determining net income (loss). In February 2020, we entered into a net investment hedge which resulted in gains or losses subsequently being recognized in Other Comprehensive Income (Loss). |
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 service periods. We have elected to account for forfeitures as they occur. Equity-based compensation expense was $8.2 million and $4.5 million for the three months ended September 30, 2020 and 2019, respectively, and $19.2 million and $12.1 million for the nine months ended September 30, 2020 and 2019, respectively. Equity based compensation expense for the three and nine months ended September 30, 2020 includes $0.9 million of equity-based compensation expense associated with the revaluation and acceleration of equity awards related to an executive officer's retirement which is included within the "Transaction, integration, and impairment costs" line item of the consolidated statements of operations. |
Segment Information | Segment Information – We manage our business as one operating segment and thus one reportable segment consisting of a portfolio of investments in multiple data centers. |
Customer Concentrations | Customer Concentrations – During the nine months ended September 30, 2020, one of our customers exceeded 10% of total revenues, representing approximately 11.3% of total revenues for the nine months ended September 30, 2020. As of September 30, 2020, three of our customers exceeded 5% of trade accounts receivable. In aggregate, these three customers accounted for approximately 23% of trade accounts receivable. One customer individually exceeded 10% of total trade accounts receivable representing 10.8% of total trade accounts receivable. |
Income Taxes | Income Taxes – We have elected for two of our existing subsidiaries to be taxed as taxable REIT subsidiaries pursuant to the REIT rules of the U.S. Internal Revenue Code. We also have subsidiaries subject to tax in non-US jurisdictions. 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. An income tax expense has been recognized in the nine months ended September 30, 2020, in connection with recorded operating activity. As of September 30, 2020, one of our taxable REIT subsidiaries is in a net deferred tax liability position primarily due to a valuation allowance against certain deferred tax assets. In considering whether it is more likely than not that some portion or all of the deferred tax assets will be realized, it has been determined that it is possible that some or all of our deferred tax assets could ultimately expire unused. We establish valuation allowances against deferred tax assets when the ability to fully utilize these benefits is determined to be uncertain. We provide a valuation allowance against deferred tax assets if, based on management’s assessment of operating results and other available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The evidence contemplated by management at September 30, 2020 consists of current and prior operating results, available tax planning strategies, and the scheduled reversal of existing taxable temporary differences. Evidence from the scheduled reversal of taxable temporary differences relies on management judgements based on the accumulation of available evidence. Those judgements may be subject to change in the future as evidence available to management changes. Management’s assessment of our valuation allowance may further change based on our generation of or ability to project future operating income, and changes in tax policy or tax planning strategies. We provide for income taxes during interim periods based on the estimated effective tax rate for the year. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the taxable REIT subsidiaries, tax law changes, and future business acquisitions or divestitures. The taxable subsidiaries’ effective tax rates were (5.70)% and (8.5)% for the nine months ended September 30, 2020 and 2019, respectively. On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). The CARES Act is an emergency economic stimulus package that includes measures and tax provisions to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19. The CARES Act provides tax changes in response to the COVID-19 pandemic. Some of the provisions which may impact our financial statements include the removal of certain limitations on utilization of net operating losses, increasing the ability to deduct interest expense, and amending certain provisions of the previously enacted Tax Cuts and Jobs Act. Due to the recent enactment of the CARES Act, we are currently evaluating the impact, if any that the CARES Act will have on our consolidated financial statements. We have not yet identified any material impacts that may result from the CARES Act. |
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 we have 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. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. As of September 30, 2020, we valued our derivative instruments primarily utilizing Level 2 inputs. See Note 14 – ‘Fair Value of Financial Instruments’ for additional details. |
COVID-19 | COVID-19 – We continue to actively monitor developments with respect to COVID-19 and have taken numerous actions based on corporate policies specifically focusing on the safety and wellness of our customers, partners, and employees, as well as providing continuous and resilient services. Although the COVID-19 pandemic has caused significant disruptions to the United States and global economy and has contributed to significant volatility and negative pressure in financial markets, as of September 30, 2020, these developments have not had a known material adverse effect on our business. As of September 30, 2020, each of our data centers in North America and Europe are fully operational and operating in accordance with our business continuity plans. Across each of the respective jurisdictions in which we operate, our business has been deemed essential operations, which has allowed us to remain fully staffed with critical personnel in place to continue to provide service and support for our customers. The extent to which the COVID-19 pandemic impacts our business and operations remains largely uncertain and will depend on future developments that are highly uncertain and cannot be predicted with confidence, including the duration and scope of the pandemic, new information that may emerge concerning the severity of COVID-19, the response of the overall economy and financial markets and the actions taken to contain COVID-19 or treat its impact, such as government actions, laws or orders or any changes or amendments thereto and the success of any lifting or easing of, or the risk of any premature lifting or easing of, any such restrictions, among others. Due to uncertainties regarding COVID-19, any estimates of the effects of COVID-19 as reflected and/or discussed in these financial statements are based upon our best estimates using information known to us at this time, and such estimates may change in the near term, the effects of which could be material. |
New Accounting Pronouncements | New Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in ASU 2018-13 eliminate the requirements to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, valuation processes for Level 3 fair value measurements, and policy for timing of transfers between levels. ASU 2018-13 also provides clarification in the measurement uncertainty disclosure by explaining that the disclosure is to communicate information about the uncertainty in measurement as of the reporting date. In addition, ASU 2018-13 added the following requirements: changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and range and weighted average of significant unobservable inputs used in Level 3 fair value measurements. Finally, ASU 2018-13 updated language to further encourage entities to apply materiality when considering de minimus determination for disclosure requirements. The guidance will be applied retrospectively for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with the exception of amendments to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used for Level 3 fair value measurements, and the narrative description of measurement uncertainty which will be applied prospectively. We adopted this ASU effective January 1, 2020, and the provisions of this standard did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15 Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract . The amendments in ASU 2018-15 clarifies that implementation costs incurred by customers in cloud computing arrangements are deferred if they would be capitalized by customers in the software licensing arrangements under the internal-use software guidance. ASU 2018-15 also clarifies that any amortization of capitalized costs should not be recorded to “Depreciation and amortization” in the Consolidated Statements of Operations for costs after adoption. ASU 2018-15 is effective for us beginning January 1, 2020 and provides for the alternative to adopt the ASU (a) prospectively only for new costs incurred after the adoption date or (b) by adjusting existing costs to comply with this standard, including the requirement to present the amortization of costs outside “Depreciation and amortization”. We adopted this ASU effective January 1, 2020 using the prospective transition approach to all new implementation costs incurred after adoption. Beginning in the first quarter of 2020, this standard results in expenses previously recognized as non-real estate depreciation being recognized as general and administrative or operating expense. During the three and nine months ended September 30, 2020, we recorded less than $0.1 million of amortization expense related to capitalized software implementation costs associated with cloud computing arrangements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , and subsequent amendments to the guidance: ASU 2018-19 in November 2018, ASU 2019-4 in April 2019, ASU 2019-5 in May 2019, ASUs 2019-10 & 2019-11 in November 2019, and ASU 2020-2 in February 2020. The standard, as amended, requires entities to use a new impairment model based on current expected credit losses (“CECL”) rather than incurred losses. The CECL model is designed to capture expected credit losses through the establishment of an allowance account, which will be presented as an offset to the amortized cost basis of the related financial asset. The guidance is effective for interim and annual periods beginning after December 15, 2019. We adopted this ASU effective January 1, 2020. As the majority of our revenue is generated from operating leases which are governed under ASC Topic 842, the provisions of this standard did not have a material impact on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions and adding some requirements regarding franchise (or similar) tax, step-ups in a business combination, treatment of entities not subject to tax and when to apply enacted changes in tax laws. This ASU is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments related to franchise taxes that are partially based on income should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. All other amendments should be applied on a prospective basis. Early adoption is permitted. We are currently assessing the impact of this standard on our consolidated financial statements. In January 2020, the FASB issued ASU 2020-1, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815, which clarifies the interaction between the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815. ASU 2020-1 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The amendments in this Update should be applied prospectively. We do not expect the provisions of the standard will have a material impact on our consolidated financial statements when adopted. In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . ASU 2020-4 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-4 is optional and may be elected over time as reference rate reform activities occur. Beginning in the first quarter of 2020, we have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance but we do not expect the provisions of the standard will have a material impact on our consolidated financial statements. We determined all other recently issued accounting pronouncements will not have a material impact on our consolidated financial statements or do not materially apply to our operations. |
Real Estate Assets and Constr_2
Real Estate Assets and Construction in Progress (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Real Estate [Abstract] | |
Summary of Cost of Owned and Leased Properties by the Company | The following is a summary of our cost of owned or leased properties as of September 30, 2020 and December 31, 2019 (in thousands): As of September 30, 2020 (unaudited): Property Location Land Buildings, Improvements and Equipment Construction in Progress Total Cost Atlanta, Georgia Campus (1) $ 55,157 $ 637,590 $ 214,778 $ 907,525 Irving, Texas 8,606 390,777 95,957 495,340 Ashburn, Virginia Campus (2) 16,475 354,069 119,378 489,922 Richmond, Virginia 2,180 197,573 149,235 348,988 Chicago, Illinois 9,400 238,973 91,523 339,896 Suwanee, Georgia (Atlanta-Suwanee) 3,521 183,021 4,565 191,107 Piscataway, New Jersey 7,466 115,522 34,372 157,360 Fort Worth, Texas 9,079 120,419 2,708 132,206 Hillsboro, Oregon 18,414 21,167 84,009 123,590 Santa Clara, California (3) — 116,829 1,511 118,340 Leased Facilities (4) — 84,778 4,090 88,868 Sacramento, California 1,481 65,990 193 67,664 Eemshaven, Netherlands 5,150 20,826 40,899 66,875 Dulles, Virginia 3,154 52,283 5,351 60,788 Manassas, Virginia (5) — — 59,645 59,645 Princeton, New Jersey 20,700 35,227 73 56,000 Phoenix, Arizona (5) — — 33,282 33,282 Groningen, Netherlands 1,820 10,290 3,572 15,682 Other (6) 2,213 36,493 12,451 51,157 $ 164,816 $ 2,681,827 $ 957,592 $ 3,804,235 _______________________________ (1) The “Atlanta, Georgia Campus” includes both the existing data center Atlanta (DC-1) as well as the recently developed data center Atlanta, GA (DC-2) on land adjacent to the existing Atlanta, GA (DC-1) facility. (2) The “Ashburn, Virginia Campus” includes both the existing data center Ashburn, VA (DC-1) as well as new property development associated with the construction of a second data center Ashburn, VA (DC-2). (3) Owned facility subject to long-term ground sublease. (4) Includes 7 facilities. All facilities are leased, including one subject to a finance lease. (5) 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. (6) Consists of Miami, FL; Lenexa, KS; Overland Park, KS and Texas facilities. As of December 31, 2019: Property Location Land Buildings, Improvements and Equipment Construction in Progress Total Cost Atlanta, Georgia Campus (1) $ 44,588 $ 525,300 $ 128,930 $ 698,818 Irving, Texas 8,606 369,727 98,170 476,503 Ashburn, Virginia (2) 16,476 156,396 189,375 362,247 Richmond, Virginia 2,180 195,684 139,948 337,812 Chicago, Illinois 9,400 205,026 86,878 301,304 Suwanee, Georgia (Atlanta-Suwanee) 3,521 174,124 5,559 183,204 Piscataway, New Jersey 7,466 103,553 36,056 147,075 Santa Clara, California (3) — 114,499 1,238 115,737 Fort Worth, Texas 9,079 55,018 35,722 99,819 Leased Facilities (4) — 85,225 1,241 86,466 Sacramento, California 1,481 65,258 163 66,902 Hillsboro, Oregon (2) — — 63,573 63,573 Manassas, Virginia (2) — — 57,662 57,662 Princeton, New Jersey 20,700 35,192 39 55,931 Dulles, Virginia 3,154 48,651 4,688 56,493 Eemshaven, Netherlands — — 37,267 37,267 Phoenix, Arizona (2) — — 31,265 31,265 Groningen, Netherlands 1,741 9,085 3,028 13,854 Other (5) 2,213 36,163 120 38,496 $ 130,605 $ 2,178,901 $ 920,922 $ 3,230,428 _______________________________ (1) The “Atlanta, Georgia Campus” includes both the existing data center Atlanta (DC-1) as well as new property development associated with construction of a second data center Atlanta (DC-2) on land adjacent to the existing Atlanta DC-1 facility (2) 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. (3) Owned facility subject to long-term ground sublease. (4) Includes 7 facilities. All facilities are leased, including one subject to a finance lease. (5) Consists of Miami, FL; Lenexa, KS and Overland Park, KS facilities. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of components of lease expenses | Components of lease expense were as follows (unaudited and in thousands): Three months ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Finance lease cost: Amortization of assets $ 1,038 $ 1,091 $ 3,115 $ 2,496 Interest on lease liabilities 475 505 1,446 1,204 Operating lease expense: Operating lease cost 2,266 2,256 6,768 6,849 Variable lease cost 270 223 802 653 Sublease income (49) (46) (144) (139) Total lease costs $ 4,000 $ 4,029 $ 11,987 $ 11,063 |
Schedule of components of lease revenue | The components of our lease revenue were as follows (unaudited and in thousands): Three months ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Lease revenue: Minimum lease revenue $ 118,458 $ 103,623 $ 339,092 $ 304,166 Variable lease revenue (primarily recoveries from customers) 15,324 17,852 40,768 41,675 Total lease revenue $ 133,782 $ 121,475 $ 379,860 $ 345,841 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Outstanding Debt Including Capital Leases and Lease Financing Obligations | Below is a listing of our outstanding debt, including finance leases, as of September 30, 2020 and December 31, 2019 (in thousands): Weighted Average Effective Interest Rate at September 30, 2020 Maturity Date September 30, December 31, (unaudited) (unaudited) Unsecured Credit Facility Revolving Credit Facility 1.38% December 17, 2023 $ 522,951 $ 317,028 Term Loan A (1) 3.26% December 17, 2024 225,000 225,000 Term Loan B (1) 3.30% April 27, 2025 225,000 225,000 Term Loan C (1) 3.46% October 18, 2026 250,000 250,000 Senior Notes 4.75% November 15, 2025 400,000 400,000 Lenexa Mortgage 4.10% May 1, 2022 1,689 1,736 Finance Leases 4.36% 2021 - 2038 43,222 45,140 3.09% 1,667,862 1,463,904 Less net debt issuance costs (9,474) (10,839) Total outstanding debt, net $ 1,658,388 $ 1,453,065 _________________________ (1) The coupon interest rates associated with Term Loan A, Term Loan B, and Term Loan C incorporate the effects of our interest rate swaps in effect as of September 30, 2020. |
Annual Remaining Principal Payment | The annual remaining principal payment requirements of our debt securities as of September 30, 2020 per the contractual maturities, excluding extension options and excluding operating and finance leases, are as follows (unaudited and in thousands): 2020 (October - December) $ 18 2021 73 2022 1,599 2023 522,951 2024 225,000 Thereafter 875,000 Total $ 1,624,641 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of interest rate derivatives and their fair values | Interest rate derivatives and their fair values as of September 30, 2020 and December 31, 2019 were as follows (unaudited and in thousands): Notional Amount Fixed One Month Fair Value September 30, 2020 December 31, 2019 Effective Date Expiration Date September 30, 2020 December 31, 2019 $ 25,000 $ 25,000 1.989 % January 2, 2018 Dec 17, 2021 $ (557) $ (209) 100,000 100,000 1.989 % January 2, 2018 Dec 17, 2021 (2,227) (837) 75,000 75,000 1.989 % January 2, 2018 Dec 17, 2021 (1,671) (627) 50,000 50,000 2.033 % January 2, 2018 Apr 27, 2022 (1,470) (545) 100,000 100,000 2.029 % January 2, 2018 Apr 27, 2022 (2,933) (1,081) 50,000 50,000 2.033 % January 2, 2018 Apr 27, 2022 (1,470) (545) 100,000 100,000 2.617 % January 2, 2020 Dec 17, 2023 (7,884) (4,007) 100,000 100,000 2.621 % January 2, 2020 Apr 27, 2024 (8,727) (4,324) 70,000 — 0.968 % March 2, 2020 Oct 18, 2026 (2,738) — 30,000 — 0.973 % March 2, 2020 Oct 18, 2026 (1,180) — 200,000 200,000 2.636 % December 17, 2021 Dec 17, 2023 (9,812) (3,939) 200,000 200,000 2.642 % April 27, 2022 Apr 27, 2024 (9,716) (3,802) 125,000 — 1.014 % December 17, 2023 Dec 17, 2024 (850) — 100,000 — 1.035 % December 17, 2023 Dec 17, 2024 (700) — 75,000 — 1.110 % December 17, 2023 Oct 18, 2026 (1,256) — 100,000 — 1.088 % April 27, 2024 Apr 27, 2025 (680) — 125,000 — 1.082 % April 27, 2024 Apr 27, 2025 (842) — 75,000 — 0.977 % April 27, 2024 Oct 18, 2026 (789) — $ (55,502) $ (19,916) |
Schedule of power purchase agreement derivatives | Power purchase agreement derivatives and their fair values as of September 30, 2020 and December 31, 2019 were as follows (unaudited and in thousands): Fair Value Counterparty Facility Effective Date Expiration Date September 30, 2020 December 31, 2019 Calpine Energy Solutions, LLC Piscataway 3/8/2019 Feb 28, 2029 $ (2,155) $ (2,919) Calpine Energy Solutions, LLC Chicago 3/8/2019 Feb 28, 2029 (2,375) (3,774) $ (4,530) $ (6,693) |
Partners' Capital, Equity and_2
Partners' Capital, Equity and Incentive Compensation Plans (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Summary of Award Activity Under 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and Related Information | The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the nine months ended September 30, 2020 (unaudited) : 2010 Equity Incentive Plan 2013 Equity Incentive Plan Numbers of Class O units Weighted average exercise price Weighted average fair value Options Weighted average exercise price Weighted average fair value Restricted Stock / Deferred Stock Weighted average fair value at grand date TSR Units Weighted average fair value at grand date FFO Units Weighted average fair value at grand date Outstanding at December 31, 2019 82,310 $ 25.00 $ 5.97 1,934,838 $ 37.11 $ 7.05 389,750 $ 39.67 84,350 $ 54.64 84,350 $ 42.01 Granted — — — 99,872 56.84 9.35 264,545 56.90 84,202 79.18 84,202 56.84 Exercised/Vested (1) (1,875) 25.00 10.26 (88,022) 28.68 5.24 (220,564) 40.09 — — — — Cancelled/Expired — — — — — — (7,669) 48.88 — — — — Outstanding at September 30, 2020 80,435 $ 25.00 $ 5.87 1,946,688 $ 38.50 $ 7.25 426,062 $ 49.98 168,552 $ 66.90 168,552 $ 49.42 ____________________ (1) This represents (i) Class O units which were converted to Class A units, (ii) options to purchase Class A common stock which were exercised, and (iii) 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, with respect to the applicable column. |
Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted | The assumptions and fair values for restricted stock and options to purchase shares of Class A common stock granted for the nine months ended September 30, 2020 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 and TSR Units were valued using a Monte-Carlo simulation that leveraged similar assumptions to those used to value the Class A common stock and FFO Units. Nine Months Ended September 30, 2020 Fair value of FFO units and restricted stock granted $56.84 - $65.96 Fair value of TSR units granted $ 79.18 Fair value of options granted $ 9.35 Expected term (years) 5.5 Expected volatility 27 % Expected dividend yield 3.31 % Expected risk-free interest rates 0.61 % |
Summary of Information About Awards Outstanding | The following tables summarize information about awards outstanding as of September 30, 2020 (unaudited). Operating Partnership Awards Outstanding Exercise prices Awards outstanding Weight average remaining vesting period Class O Units $ 25.00 80,435 — Total Operating Partnership awards outstanding 80,435 QTS Realty Trust, Inc. Awards Outstanding Exercise prices Awards outstanding Weight average remaining vesting period Restricted stock $ — 426,062 0.7 TSR units — 168,552 0.8 FFO units — 168,552 0.5 Options to purchase Class A common stock 21.00 - 56.84 1,946,688 0.2 Total QTS Realty Trust, Inc. awards outstanding 2,709,854 |
Schedule of Quarterly Cash Dividends | The following tables present quarterly cash dividends and distributions paid to QTS’ common and preferred stockholders and the Operating Partnership’s unit holders for the nine months ended September 30, 2020 and 2019 (unaudited): Nine Months Ended September 30, 2020 Record Date Payment Date Per Share and Aggregate Dividend/Distribution Amount (in millions) Common Stock/Units June 19, 2020 July 7, 2020 $ 0.47 $ 31.5 March 20, 2020 April 7, 2020 $ 0.47 31.5 December 20, 2019 January 7, 2020 $ 0.44 28.6 $ 91.6 Series A Preferred Stock/Units June 30, 2020 July 15, 2020 $ 0.45 $ 1.9 March 31, 2020 April 15, 2020 $ 0.45 1.9 December 31, 2019 January 15, 2020 $ 0.45 1.9 $ 5.7 Series B Preferred Stock/Units June 30, 2020 July 15, 2020 $ 1.63 $ 5.1 March 31, 2020 April 15, 2020 $ 1.63 5.1 December 31, 2019 January 15, 2020 $ 1.63 5.1 $ 15.3 Nine Months Ended September 30, 2019 Record Date Payment Date Per Share and Aggregate Dividend/Distribution Amount (in millions) Common Stock/Units June 25, 2019 July 9, 2019 $ 0.44 $ 27.3 March 20, 2019 April 4, 2019 $ 0.44 27.3 December 21, 2018 January 8, 2019 $ 0.41 23.7 $ 78.3 Series A Preferred Stock/Units June 30, 2019 July 15, 2019 $ 0.45 $ 1.9 March 31, 2019 April 15, 2019 $ 0.45 1.9 December 31, 2018 January 15, 2019 $ 0.45 1.9 $ 5.7 Series B Preferred Stock/Units June 30, 2019 July 15, 2019 $ 1.63 $ 5.1 March 31, 2019 April 15, 2019 $ 1.63 5.1 December 31, 2018 January 15, 2019 $ 1.63 5.1 $ 15.3 |
Summary of Equity Issued | The following table represents a summary of equity issuances of our Class A common stock for the three months ended September 30, 2020 (in thousands): Offering Program Forward Shares Sold/(Settled) Net Proceeds Available/(Received) (1) Shares and net proceeds available as of June 30, 2020 10,299 $ 584,924 (2) May 2020 ATM Program - Sales 114 7,348 June 2019 Prior ATM Program - Settlements (2,948) (3) (151,844) Shares and net proceeds available as of September 30, 2020 7,465 $ 440,428 ____________________ (1) Net Proceeds Available remain subject to certain adjustments until settled. (2) Proceeds available reported in the Form 10-Q for the period ended June 30, 2020 were $591 million. The $6 million decrease is primarily due to QTS’ declared dividends, which reduces cash expected to be received upon full physical settlement of the forward shares. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Summary of Related Party Transactions | The transactions which occurred during the three and nine months ended September 30, 2020 and 2019 are outlined below (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Tax, utility, insurance and other reimbursement $ 114 $ 173 $ 368 $ 608 Rent expense 257 254 770 761 Capital assets acquired — 53 — 477 Total $ 371 $ 480 $ 1,138 $ 1,846 |
Earnings per share of QTS Rea_2
Earnings per share of QTS Realty Trust, Inc. (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net income $ 6,907 $ 6,588 $ 25,236 $ 35,271 (Income) loss attributable to noncontrolling interests 18 49 (408) (1,593) Preferred stock dividends (7,045) (7,045) (21,135) (21,135) Earnings attributable to participating securities (4,372) (2,184) (11,521) (5,999) Net income (loss) available to common stockholders after allocation to participating securities $ (4,492) $ (2,592) $ (7,828) $ 6,544 Denominator: Weighted average shares outstanding - basic 61,036 54,928 59,615 53,874 Effect of Class O units, TSR units and options to purchase Class A common stock on an "as if" converted basis — — — 463 Weighted average shares outstanding - diluted 61,036 54,928 59,615 54,337 Basic net income (loss) per share $ (0.07) $ (0.05) $ (0.13) $ 0.12 Diluted net income (loss) per share $ (0.07) $ (0.05) $ (0.13) $ 0.12 ______________________________ * Note: The calculations of basic and diluted net income (loss) per share above do not include the following number of Class A partnership units, Class O units, TSR units and options to purchase common stock on an “as if” converted basis, and the effects of Series B Convertible preferred stock on an “as if” converted basis, as their respective inclusions would have been antidilutive: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Class A Partnership units 6,658 6,668 6,667 6,670 Class O units, TSR units and options to purchase common stock on an "as if" converted basis 1,176 557 1,126 — Series B Convertible preferred stock on an "as if" converted basis 6,762 6,729 6,756 6,729 |
Contracts with Customers (Table
Contracts with Customers (Table) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [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 including both lease rental revenue components and non-lease revenue components that are accounted for as a combined lease component in accordance with the practical expedient provided by ASC Topic 842 which is discussed in Note 2 above (inclusive of payments for contracts which have not yet commenced, and exclusive of variable lease revenue such as recoveries of operating costs from customers) are as follows for the years ending December 31 (unaudited and in thousands): 2020 (October - December) $ 108,231 2021 405,822 2022 323,623 2023 221,007 2024 169,774 Thereafter 421,599 Total $ 1,650,056 |
Description of Business (Detail
Description of Business (Details) | 9 Months Ended |
Sep. 30, 2020property | |
Organization And Description Of Business [Line Items] | |
Number of properties | 27 |
QualityTech LP | |
Organization And Description Of Business [Line Items] | |
Ownership interest | 90.60% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Basis of Presentation to Real Estate Assets (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020USD ($)entity | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)entity | Sep. 30, 2019USD ($) | Nov. 08, 2017 | Jul. 23, 2014 | |
Summary Of Significant Accounting Policies [Line Items] | ||||||
Operating assets independent of the Operating Partnership | $ 0 | $ 0 | ||||
Number of unconsolidated entities considered as a VIE for which entity is not the primary beneficiary | entity | 1 | 1 | ||||
Maximum exposure to losses | $ 22,900,000 | $ 22,900,000 | ||||
Depreciation expense from operation | 41,400,000 | $ 32,700,000 | 115,100,000 | $ 95,500,000 | ||
Real estate cost capitalized excluding interest cost | 4,500,000 | 4,800,000 | 13,800,000 | 13,100,000 | ||
Real estate interest cost capitalized incurred | 7,100,000 | 8,700,000 | 22,900,000 | 24,900,000 | ||
Gain on sale of real estate, net | 0 | 0 | 0 | 13,408,000 | ||
QualityTech, LP | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Operating assets independent of the Operating Partnership | 0 | 0 | ||||
Gain on sale of real estate, net | 0 | 0 | $ 0 | 13,408,000 | ||
Real Property | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Useful life of property | 40 years | |||||
Real Estate Assets | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Depreciation expense from operation | 37,900,000 | 29,800,000 | $ 104,900,000 | 86,800,000 | ||
Non-Real Estate Assets | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Depreciation expense from operation | $ 3,500,000 | $ 2,900,000 | $ 10,200,000 | 8,700,000 | ||
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 | |||||
Senior Notes | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Interest rate | 4.75% | 4.75% | 4.75% | 5.875% | ||
Unconsolidated Affiliate | Manassas, Virginia | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Gain on sale of real estate, net | 13,400,000 | |||||
Transaction cost | $ 5,800,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Acquisitions and Sales (Details) - Multiple Acquisitions $ in Millions | Sep. 30, 2020USD ($)a |
Business Acquisition [Line Items] | |
Acres of real estate property | a | 25.6 |
Purchase price | $ | $ 12.6 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Impairment to Equity-based Compensation (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)item | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Impairment losses | $ 0 | $ 0 | $ 0 | $ 0 | |
Number of reporting units | item | 1 | ||||
Amortization of the deferred financing costs | 1,000,000 | 1,000,000 | $ 2,968,000 | 2,935,000 | |
Amortization of deferred leasing costs | 6,800,000 | 6,700,000 | 19,300,000 | 17,700,000 | |
Aggregate allowance for doubtful accounts | 5,600,000 | 5,600,000 | $ 2,300,000 | ||
Deferred income | 55,422,000 | 55,422,000 | $ 39,169,000 | ||
Amortization of deferred revenue | 5,300,000 | 4,000,000 | 13,700,000 | 11,100,000 | |
Company recorded equity-based compensation expense net of repurchased awards and forfeits | 8,200,000 | $ 4,500,000 | 19,200,000 | $ 12,100,000 | |
Accelerated cost | $ 900,000 | $ 900,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Revenue Remaining Performance Obligation (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Deferred rent receivables | $ 54.3 | $ 38.7 |
Cloud and managed services | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining term | 3 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Segment Information to Taxes and Accounting Pronouncements (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($)subsidiary | Mar. 31, 2019 | Sep. 30, 2020USD ($)customersubsidiarysegment | Sep. 30, 2019 | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of operating segments | segment | 1 | |||
Number of reportable segments | segment | 1 | |||
Number of subsidiaries taxed as taxable REIT subsidiaries. | subsidiary | 2 | 2 | ||
Number of taxable REIT subsidiaries in a net deferred tax liability position | subsidiary | 1 | 1 | ||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | us-gaap:AccountingStandardsUpdate201815Member | ||
Cumulative Effect, Period of Adoption, Adjustment | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Amortization expense | $ | $ 0.1 | $ 0.1 | ||
Customer One | Rental Revenue | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration risk percentage | 11.30% | |||
Number of customers | customer | 1 | |||
Customer One | Accounts Receivable | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration risk percentage | 10.80% | |||
Number of customers | customer | 1 | |||
Three Customers | Accounts Receivable | Trade Accounts Receivable | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration risk percentage | 23.00% | |||
Three Customers | Accounts Receivable | Minimum | Trade Accounts Receivable | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration risk percentage | 5.00% | |||
Taxable REIT Subsidiaries | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Effective tax rate | (5.70%) | (8.50%) |
Real Estate Assets and Constr_3
Real Estate Assets and Construction in Progress (Details) $ in Thousands | Sep. 30, 2020USD ($)facility | Dec. 31, 2019USD ($)facility |
Real Estate Properties [Line Items] | ||
Land | $ 164,816 | $ 130,605 |
Buildings, Improvements and Equipment | 2,681,827 | 2,178,901 |
Construction in progress | 957,592 | 920,922 |
Owned Properties | ||
Real Estate Properties [Line Items] | ||
Land | 164,816 | 130,605 |
Buildings, Improvements and Equipment | 2,681,827 | 2,178,901 |
Construction in progress | 957,592 | 920,922 |
Total cost | 3,804,235 | 3,230,428 |
Owned Properties | Atlanta, Georgia Campus | ||
Real Estate Properties [Line Items] | ||
Land | 55,157 | 44,588 |
Buildings, Improvements and Equipment | 637,590 | 525,300 |
Construction in progress | 214,778 | 128,930 |
Total cost | 907,525 | 698,818 |
Owned Properties | Irving, Texas | ||
Real Estate Properties [Line Items] | ||
Land | 8,606 | 8,606 |
Buildings, Improvements and Equipment | 390,777 | 369,727 |
Construction in progress | 95,957 | 98,170 |
Total cost | 495,340 | 476,503 |
Owned Properties | Ashburn, Virginia Campus | ||
Real Estate Properties [Line Items] | ||
Land | 16,475 | 16,476 |
Buildings, Improvements and Equipment | 354,069 | 156,396 |
Construction in progress | 119,378 | 189,375 |
Total cost | 489,922 | 362,247 |
Owned Properties | Richmond, Virginia | ||
Real Estate Properties [Line Items] | ||
Land | 2,180 | 2,180 |
Buildings, Improvements and Equipment | 197,573 | 195,684 |
Construction in progress | 149,235 | 139,948 |
Total cost | 348,988 | 337,812 |
Owned Properties | Chicago, Illinois | ||
Real Estate Properties [Line Items] | ||
Land | 9,400 | 9,400 |
Buildings, Improvements and Equipment | 238,973 | 205,026 |
Construction in progress | 91,523 | 86,878 |
Total cost | 339,896 | 301,304 |
Owned Properties | Suwanee, Georgia (Atlanta-Suwanee) | ||
Real Estate Properties [Line Items] | ||
Land | 3,521 | 3,521 |
Buildings, Improvements and Equipment | 183,021 | 174,124 |
Construction in progress | 4,565 | 5,559 |
Total cost | 191,107 | 183,204 |
Owned Properties | Piscataway, New Jersey | ||
Real Estate Properties [Line Items] | ||
Land | 7,466 | 7,466 |
Buildings, Improvements and Equipment | 115,522 | 103,553 |
Construction in progress | 34,372 | 36,056 |
Total cost | 157,360 | 147,075 |
Owned Properties | Fort Worth, Texas | ||
Real Estate Properties [Line Items] | ||
Land | 9,079 | 9,079 |
Buildings, Improvements and Equipment | 120,419 | 55,018 |
Construction in progress | 2,708 | 35,722 |
Total cost | 132,206 | 99,819 |
Owned Properties | Hillsboro, Oregon | ||
Real Estate Properties [Line Items] | ||
Land | 18,414 | 0 |
Buildings, Improvements and Equipment | 21,167 | 0 |
Construction in progress | 84,009 | 63,573 |
Total cost | 123,590 | 63,573 |
Owned Properties | Santa Clara, California | ||
Real Estate Properties [Line Items] | ||
Land | 0 | 0 |
Buildings, Improvements and Equipment | 116,829 | 114,499 |
Construction in progress | 1,511 | 1,238 |
Total cost | 118,340 | 115,737 |
Owned Properties | Sacramento, California | ||
Real Estate Properties [Line Items] | ||
Land | 1,481 | 1,481 |
Buildings, Improvements and Equipment | 65,990 | 65,258 |
Construction in progress | 193 | 163 |
Total cost | 67,664 | 66,902 |
Owned Properties | Eemshaven, Netherlands | ||
Real Estate Properties [Line Items] | ||
Land | 5,150 | 0 |
Buildings, Improvements and Equipment | 20,826 | 0 |
Construction in progress | 40,899 | 37,267 |
Total cost | 66,875 | 37,267 |
Owned Properties | Dulles, Virginia | ||
Real Estate Properties [Line Items] | ||
Land | 3,154 | 3,154 |
Buildings, Improvements and Equipment | 52,283 | 48,651 |
Construction in progress | 5,351 | 4,688 |
Total cost | 60,788 | 56,493 |
Owned Properties | Manassas, Virginia | ||
Real Estate Properties [Line Items] | ||
Land | 0 | 0 |
Buildings, Improvements and Equipment | 0 | 0 |
Construction in progress | 59,645 | 57,662 |
Total cost | 59,645 | 57,662 |
Owned Properties | Princeton, New Jersey | ||
Real Estate Properties [Line Items] | ||
Land | 20,700 | 20,700 |
Buildings, Improvements and Equipment | 35,227 | 35,192 |
Construction in progress | 73 | 39 |
Total cost | 56,000 | 55,931 |
Owned Properties | Phoenix, Arizona | ||
Real Estate Properties [Line Items] | ||
Land | 0 | 0 |
Buildings, Improvements and Equipment | 0 | 0 |
Construction in progress | 33,282 | 31,265 |
Total cost | 33,282 | 31,265 |
Owned Properties | Groningen, Netherlands | ||
Real Estate Properties [Line Items] | ||
Land | 1,820 | 1,741 |
Buildings, Improvements and Equipment | 10,290 | 9,085 |
Construction in progress | 3,572 | 3,028 |
Total cost | 15,682 | 13,854 |
Owned Properties | Other | ||
Real Estate Properties [Line Items] | ||
Land | 2,213 | 2,213 |
Buildings, Improvements and Equipment | 36,493 | 36,163 |
Construction in progress | 12,451 | 120 |
Total cost | 51,157 | 38,496 |
Leased Properties | ||
Real Estate Properties [Line Items] | ||
Land | 0 | 0 |
Buildings, Improvements and Equipment | 84,778 | 85,225 |
Construction in progress | 4,090 | 1,241 |
Total cost | $ 88,868 | $ 86,466 |
Number of facilities leased | facility | 7 | 7 |
Leases - Finance leases (Detail
Leases - Finance leases (Details) | 9 Months Ended |
Sep. 30, 2020item | |
Lease as Lessee | |
Number of finance leases | 1 |
Minimum | |
Lease as Lessee | |
Remaining lease term | 1 year |
Maximum | |
Lease as Lessee | |
Remaining lease term | 18 years |
Leases - Operating leases (Deta
Leases - Operating leases (Details) | 9 Months Ended |
Sep. 30, 2020item | |
Lease as Lessee | |
Number of operating leases | 6 |
Number of ground leases under operating leases | 1 |
Minimum | |
Lease as Lessee | |
Remaining lease term | 3 years |
Maximum | |
Lease as Lessee | |
Remaining lease term | 6 years |
Leases - Components of lease ex
Leases - Components of lease expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Finance lease cost: | ||||
Amortization of assets | $ 1,038 | $ 1,091 | $ 3,115 | $ 2,496 |
Interest on lease liabilities | 475 | 505 | 1,446 | 1,204 |
Operating lease expense: | ||||
Operating lease cost | 2,266 | 2,256 | 6,768 | 6,849 |
Variable lease cost | 270 | 223 | 802 | 653 |
Sublease income | (49) | (46) | (144) | (139) |
Total lease costs | $ 4,000 | $ 4,029 | $ 11,987 | $ 11,063 |
Leases - Leases as lessor (Deta
Leases - Leases as lessor (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Lease revenue: | ||||
Minimum lease revenue | $ 118,458 | $ 103,623 | $ 339,092 | $ 304,166 |
Variable lease revenue (primarily recoveries from customers) | 15,324 | 17,852 | 40,768 | 41,675 |
Total lease revenue | $ 133,782 | $ 121,475 | $ 379,860 | $ 345,841 |
Investments in Unconsolidated_2
Investments in Unconsolidated Entity (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Investments in Unconsolidated Joint Ventures | |||
Assets | $ 3,689,552 | $ 3,223,533 | |
Liabilities | 2,067,716 | $ 1,779,082 | |
Joint venture with Alinda | |||
Investments in Unconsolidated Joint Ventures | |||
Equity method investments | $ 22,900 | ||
Ownership interest (as a percent) | 50.00% | ||
Joint venture with Alinda | |||
Investments in Unconsolidated Joint Ventures | |||
Lease term of facility with global cloud-based software company | 10 years | ||
Assets | $ 141,200 | ||
Liabilities | $ 89,000 |
Debt - Outstanding Debt Includi
Debt - Outstanding Debt Including Finance Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Weighted average effective interest rate (as a percent) | 3.09% | |
Total debt and lease obligations | $ 1,667,862 | $ 1,463,904 |
Less net debt issuance costs | (9,474) | (10,839) |
Total outstanding debt, net | 1,658,388 | 1,453,065 |
Lenexa Mortgage | ||
Debt Instrument [Line Items] | ||
Outstanding debt | $ 1,700 | |
Unsecured Credit Facility, Revolving Credit Facility, Matures on December 17, 2023 | ||
Debt Instrument [Line Items] | ||
Weighted average effective interest rate (as a percent) | 1.38% | |
Outstanding debt | $ 522,951 | 317,028 |
Unsecured Credit Facility, Term Loan A, Matures on December 17, 2024 | ||
Debt Instrument [Line Items] | ||
Weighted average effective interest rate (as a percent) | 3.26% | |
Outstanding debt | $ 225,000 | 225,000 |
Unsecured Credit Facility, Term Loan B, Matures on April 27 2025 | ||
Debt Instrument [Line Items] | ||
Weighted average effective interest rate (as a percent) | 3.30% | |
Outstanding debt | $ 225,000 | 225,000 |
Unsecured Credit Facility, Term Loan C, Matures on October 18 2026 | ||
Debt Instrument [Line Items] | ||
Weighted average effective interest rate (as a percent) | 3.46% | |
Outstanding debt | $ 250,000 | 250,000 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Weighted average effective interest rate (as a percent) | 4.75% | |
Outstanding debt | $ 400,000 | 400,000 |
Lenexa Mortgage | ||
Debt Instrument [Line Items] | ||
Weighted average effective interest rate (as a percent) | 4.10% | |
Outstanding debt | $ 1,689 | 1,736 |
Finance Leases | ||
Debt Instrument [Line Items] | ||
Weighted average effective interest rate (as a percent) | 4.36% | |
Outstanding debt | $ 43,222 | $ 45,140 |
Debt - Unsecured Credit Facilit
Debt - Unsecured Credit Facility (Details) - USD ($) | 1 Months Ended | ||
Oct. 31, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | |
Unsecured Credit Facility | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | $ 1,700,000,000 | ||
Maximum borrowing capacity in foreign currencies | 300,000,000 | ||
Maximum borrowing capacity including amount subject to certain conditions | 2,200,000,000 | ||
Outstanding debt | $ 1,223,000,000 | ||
Letter of credit outstanding | 3,500,000 | ||
Unsecured Credit Facility, Revolving Credit Facility, Matures on December 17, 2023 | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | $ 1,000,000,000 | ||
Debt extension period | 1 year | ||
Outstanding debt | 522,951,000 | $ 317,028,000 | |
Unsecured Credit Facility, Revolving Credit Facility, Matures on December 17, 2023 | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.25% | ||
Unsecured Credit Facility, Revolving Credit Facility, Matures on December 17, 2023 | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.85% | ||
Unsecured Credit Facility, Revolving Credit Facility, Matures on December 17, 2023 | Base Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.25% | ||
Unsecured Credit Facility, Revolving Credit Facility, Matures on December 17, 2023 | Base Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.85% | ||
Unsecured Credit Facility, Term Loan | |||
Debt Instrument [Line Items] | |||
Outstanding debt | 700,000,000 | ||
Debt issuance costs, net | 5,600,000 | ||
Unsecured Credit Facility, Term Loan A, Matures on December 17, 2024 | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | $ 225,000,000 | ||
Outstanding debt | 225,000,000 | 225,000,000 | |
Unsecured Credit Facility, Term Loan A, Matures on December 17, 2024 | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.20% | ||
Unsecured Credit Facility, Term Loan A, Matures on December 17, 2024 | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.80% | ||
Unsecured Credit Facility, Term Loan A, Matures on December 17, 2024 | Base Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.20% | ||
Unsecured Credit Facility, Term Loan A, Matures on December 17, 2024 | Base Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.80% | ||
Unsecured Credit Facility, Term Loan B, Matures on April 27 2025 | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | $ 225,000,000 | ||
Outstanding debt | 225,000,000 | 225,000,000 | |
Unsecured Credit Facility, Term Loan C, Matures on October 18 2026 | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | $ 250,000,000 | ||
Outstanding debt | $ 250,000,000 | $ 250,000,000 | |
Unsecured Credit Facility, Term Loan C, Matures on October 18 2026 | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.50% | ||
Unsecured Credit Facility, Term Loan C, Matures on October 18 2026 | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 1.85% | ||
Unsecured Credit Facility, Term Loan C, Matures on October 18 2026 | Base Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.50% | ||
Unsecured Credit Facility, Term Loan C, Matures on October 18 2026 | Base Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument spread on variable interest rate | 0.85% |
Debt - Senior Notes and Lenexa
Debt - Senior Notes and Lenexa Mortgage (Details) - USD ($) | Mar. 08, 2017 | Sep. 30, 2020 | Dec. 31, 2019 | Nov. 08, 2017 | Jul. 23, 2014 |
Lenexa Mortgage | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 4.10% | ||||
Aggregate principal amount | $ 1,900,000 | ||||
Periodic principal payments | $ 1,600,000 | ||||
Outstanding debt | $ 1,700,000 | ||||
Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 4.75% | 4.75% | 5.875% | ||
Aggregate principal amount | $ 400,000,000 | ||||
Percentage of issued price equal to face value | 100.00% | ||||
Debt issuance costs, net | $ 3,900,000 | ||||
Outstanding debt | $ 400,000,000 | $ 400,000,000 |
Debt - Annual Remaining Princip
Debt - Annual Remaining Principal Payment (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
2020 (October - December) | $ 18 |
2021 | 73 |
2022 | 1,599 |
2023 | 522,951 |
2024 | 225,000 |
Thereafter | 875,000 |
Total | $ 1,624,641 |
Derivative Instruments - Intere
Derivative Instruments - Interest rate swaps (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2021 | Dec. 31, 2019 | |
Derivative [Line Items] | ||||||
Reclassification of other comprehensive income to interest expense | $ 3,400 | $ (200) | $ 6,800 | $ (1,200) | ||
Forecast | ||||||
Derivative [Line Items] | ||||||
Reclassification of other comprehensive income to interest expense | $ 13,400 | |||||
Interest Rate Swap | ||||||
Derivative [Line Items] | ||||||
Derivative instruments, notional amount | 700,000 | 700,000 | ||||
Interest Rate Swap | Cash flow hedging | ||||||
Derivative [Line Items] | ||||||
Fair value | (55,502) | (55,502) | $ (19,916) | |||
Interest Rate Swap | Unsecured Credit Facility, Term Loan | ||||||
Derivative [Line Items] | ||||||
Aggregate principal amount | 700,000 | 700,000 | ||||
Interest Rate Swap | Unsecured Credit Facility, Term Loan A, Matures on December 17, 2024 | ||||||
Derivative [Line Items] | ||||||
Aggregate principal amount | 225,000 | 225,000 | ||||
Interest Rate Swap | Unsecured Credit Facility, Term Loan B, Matures on April 27 2025 | ||||||
Derivative [Line Items] | ||||||
Aggregate principal amount | 225,000 | 225,000 | ||||
Interest Rate Swap | Unsecured Credit Facility, Term Loan C, Matures on October 18 2026 | ||||||
Derivative [Line Items] | ||||||
Aggregate principal amount | $ 250,000 | $ 250,000 |
Derivative Instruments - Inte_2
Derivative Instruments - Interest rate derivatives and their fair values (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Interest Rate Swap | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 700,000,000 | |
Interest Rate Swap | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Fair value | (55,502,000) | $ (19,916,000) |
Swap instrument one matures on December 17, 2021 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 25,000,000 | 25,000,000 |
Fixed rate per annum | 1.989% | |
Fair value | $ (557,000) | (209,000) |
Swap instrument two matures on December 17, 2021 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 100,000,000 | 100,000,000 |
Fixed rate per annum | 1.989% | |
Fair value | $ (2,227,000) | (837,000) |
Swap instrument three matures on December 17, 2021 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 75,000,000 | 75,000,000 |
Fixed rate per annum | 1.989% | |
Fair value | $ (1,671,000) | (627,000) |
Swap instrument one matures on April 27, 2022 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 50,000,000 | 50,000,000 |
Fixed rate per annum | 2.033% | |
Fair value | $ (1,470,000) | (545,000) |
Swap instrument two matures on April 27, 2022 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 100,000,000 | 100,000,000 |
Fixed rate per annum | 2.029% | |
Fair value | $ (2,933,000) | (1,081,000) |
Swap instrument three matures on April 27, 2022 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 50,000,000 | 50,000,000 |
Fixed rate per annum | 2.033% | |
Fair value | $ (1,470,000) | (545,000) |
Swap instrument one matures on December 17, 2023 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 100,000,000 | 100,000,000 |
Fixed rate per annum | 2.617% | |
Fair value | $ (7,884,000) | (4,007,000) |
Swap instrument one matures on April 27, 2024 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 100,000,000 | 100,000,000 |
Fixed rate per annum | 2.621% | |
Fair value | $ (8,727,000) | (4,324,000) |
Swap instrument one matures on October 18, 2026 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 70,000,000 | 0 |
Fixed rate per annum | 0.968% | |
Fair value | $ (2,738,000) | 0 |
Swap instrument two matures on October 18, 2026 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 30,000,000 | 0 |
Fixed rate per annum | 0.973% | |
Fair value | $ (1,180,000) | 0 |
Swap instrument two matures on December 17, 2023 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 200,000,000 | 200,000,000 |
Fixed rate per annum | 2.636% | |
Fair value | $ (9,812,000) | (3,939,000) |
Swap instrument two matures on April 27, 2024 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 200,000,000 | 200,000,000 |
Fixed rate per annum | 2.642% | |
Fair value | $ (9,716,000) | (3,802,000) |
Swap instrument one matures on December 17, 2024 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 125,000,000 | 0 |
Fixed rate per annum | 1.014% | |
Fair value | $ (850,000) | 0 |
Swap instrument two matures on December 17, 2024 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 100,000,000 | 0 |
Fixed rate per annum | 1.035% | |
Fair value | $ (700,000) | 0 |
Swap instrument three matures on October 18, 2026 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 75,000,000 | 0 |
Fixed rate per annum | 1.11% | |
Fair value | $ (1,256,000) | 0 |
Swap instrument one matures on April 27, 2025 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 100,000,000 | 0 |
Fixed rate per annum | 1.088% | |
Fair value | $ (680,000) | 0 |
Swap instrument two matures on April 27, 2025 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 125,000,000 | 0 |
Fixed rate per annum | 1.082% | |
Fair value | $ (842,000) | 0 |
Swap instrument four matures on October 18, 2026 | Cash flow hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount of derivative | $ 75,000,000 | 0 |
Fixed rate per annum | 0.977% | |
Fair value | $ (789,000) | $ 0 |
Derivative Instruments - Power
Derivative Instruments - Power Purchase Agreements (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2019agreement | Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) | |
Derivative [Line Items] | ||||
Utilities expense | $ 200 | $ 1,000 | ||
Power Purchase Agreements | ||||
Derivative [Line Items] | ||||
Number of agreements | agreement | 2 | |||
Term of agreement | 10 years | |||
Cash flow hedging | Power Purchase Agreements | ||||
Derivative [Line Items] | ||||
Fair value | (4,530) | (4,530) | $ (6,693) | |
Cash flow hedging | Piscataway | Calpine Energy Solutions, LLC | ||||
Derivative [Line Items] | ||||
Fair value | (2,155) | (2,155) | (2,919) | |
Cash flow hedging | Chicago | Calpine Energy Solutions, LLC | ||||
Derivative [Line Items] | ||||
Fair value | $ (2,375) | $ (2,375) | $ (3,774) |
Partners' Capital, Equity and_3
Partners' Capital, Equity and Incentive Compensation Plans - Additional Information (Details) $ / shares in Units, $ in Millions | Oct. 15, 2020$ / shares | May 09, 2019shares | May 04, 2015shares | Oct. 13, 2013Voteshares | Mar. 31, 2019 | Sep. 30, 2020USD ($)classshares | Dec. 31, 2019shares |
Partners Capital And Distributions [Line Items] | |||||||
Options outstanding (in shares) | 100,000 | ||||||
Equity based compensation expense unrecognized | $ | $ 31.7 | ||||||
Equity based compensation expense vesting period | 7 months 6 days | ||||||
Performance-Based Relative TSR Units | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Vesting period | 3 years | ||||||
Restricted Class A Common Stock | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Vesting period | 2 years | ||||||
Class O Units and Options | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Equity based compensation awards intrinsic value | $ | $ 50.8 | ||||||
First portion | Performance-Based FFO Units | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Vesting period | 2 years | ||||||
Vesting percentage | 67.00% | ||||||
First portion | Restricted Class A Common Stock | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Vesting period | 1 year | ||||||
Vesting percentage | 33.00% | ||||||
Second portion | Performance-Based FFO Units | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Vesting period | 3 years | ||||||
Vesting percentage | 33.00% | ||||||
Second portion | Restricted Class A Common Stock | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Vesting percentage, per quarter | 8.375% | ||||||
2013 Equity Incentive Plan | Performance-Based FFO Units | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Options outstanding (in shares) | 168,552 | 84,350 | |||||
2013 Equity Incentive Plan | Performance-Based Relative TSR Units | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Options outstanding (in shares) | 168,552 | 84,350 | |||||
QualityTech, LP | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Number of classes of partnership units outstanding | class | 4 | ||||||
Class B Common Stock | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Number of votes per share | Vote | 50 | ||||||
Class B Common Stock | Chief Executive Officer | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Percentage of operating partnership unit exchanged | 2.00% | ||||||
Class A Common Stock | Performance-Based FFO Units | Minimum | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Percentage of target award | 0.00% | ||||||
Class A Common Stock | Performance-Based FFO Units | Maximum | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Percentage of target award | 200.00% | ||||||
Class A Common Stock | Performance-Based Relative TSR Units | Minimum | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Percentage of target award | 0.00% | ||||||
Class A Common Stock | Performance-Based Relative TSR Units | Maximum | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Percentage of target award | 200.00% | ||||||
Class A Common Stock | 2013 Equity Incentive Plan | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Authorized shares to be issued under the plan | 1,750,000 | ||||||
Additional shares available for issuance under plan approved by stockholders | 1,110,000 | 3,000,000 | |||||
Shares available for issuance | 5,860,000 | ||||||
Series A Redeemable Perpetual Preferred Stock | Subsequent Event | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Dividend paid to common stockholders (in dollars per share) | $ / shares | $ 0.45 | ||||||
Preferred Units Series A [Member] | QualityTech, LP | |||||||
Partners Capital And Distributions [Line Items] | |||||||
Exchange rate for cash or shares | 1 |
Partners' Capital, Equity and_4
Partners' Capital, Equity and Incentive Compensation Plans - Summary of Award Activity Under 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and Related Information (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Options | |
Ending balance (in shares) | shares | 100,000 |
2013 Equity Incentive Plan | Options | |
Options | |
Beginning balance (in shares) | shares | 1,934,838 |
Granted (in shares) | shares | 99,872 |
Exercised/Vested (in shares) | shares | (88,022) |
Ending balance (in shares) | shares | 1,946,688 |
Weighted average exercise price | |
Beginning balance (in dollars per share) | $ 37.11 |
Granted (in dollars per share) | 56.84 |
Exercised/Vested (in dollars per share) | 28.68 |
Ending balance (in dollars per share) | 38.50 |
Weighted average fair value | |
Beginning balance (in dollars per share) | 7.05 |
Granted (in dollars per share) | 9.35 |
Exercised/Vested (in dollars per share) | 5.24 |
Ending balance (in dollars per share) | $ 7.25 |
2013 Equity Incentive Plan | Restricted Stock | |
Options | |
Beginning balance (in shares) | shares | 389,750 |
Granted (in shares) | shares | 264,545 |
Exercised/Vested (in shares) | shares | (220,564) |
Cancelled/Expired (in shares) | shares | (7,669) |
Ending balance (in shares) | shares | 426,062 |
Weighted average fair value | |
Beginning balance (in dollars per share) | $ 39.67 |
Granted (in dollars per share) | 56.90 |
Exercised/Vested (in dollars per share) | 40.09 |
Cancelled/Expired (in dollars per share) | 48.88 |
Ending balance (in dollars per share) | $ 49.98 |
2013 Equity Incentive Plan | Performance-Based Relative TSR Units | |
Options | |
Beginning balance (in shares) | shares | 84,350 |
Granted (in shares) | shares | 84,202 |
Ending balance (in shares) | shares | 168,552 |
Weighted average fair value | |
Beginning balance (in dollars per share) | $ 54.64 |
Granted (in dollars per share) | 79.18 |
Ending balance (in dollars per share) | $ 66.90 |
2013 Equity Incentive Plan | Performance-Based FFO Units | |
Options | |
Beginning balance (in shares) | shares | 84,350 |
Granted (in shares) | shares | 84,202 |
Ending balance (in shares) | shares | 168,552 |
Weighted average fair value | |
Beginning balance (in dollars per share) | $ 42.01 |
Granted (in dollars per share) | 56.84 |
Ending balance (in dollars per share) | $ 49.42 |
2010 Equity Incentive Plan | Class O Units | |
Numbers of Class O units | |
Beginning balance (in shares) | shares | 82,310 |
Exercised/Vested (in shares) | shares | (1,875) |
Ending balance (in shares) | shares | 80,435 |
Weighted average exercise price | |
Beginning balance (in dollars per share) | $ 25 |
Exercised/Vested (in dollars per share) | 25 |
Ending balance (in dollars per share) | 25 |
Weighted average fair value | |
Beginning balance (in dollars per share) | 5.97 |
Exercised/Vested (in dollars per share) | 10.26 |
Ending balance (in dollars per share) | $ 5.87 |
Partners' Capital, Equity and_5
Partners' Capital, Equity and Incentive Compensation Plans - Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted (Details) | 9 Months Ended |
Sep. 30, 2020$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of TSR units granted (in dollars per share) | 79.18 |
Fair value of options granted (in dollars per share) | $ 9.35 |
Expected term (years) | 5 years 6 months |
Expected volatility | 27.00% |
Expected dividend yield | 3.31% |
Expected risk-free interest rates | 0.61% |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of FFO units and restricted stock granted (in dollars per share) | 56.84 |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of FFO units and restricted stock granted (in dollars per share) | 65.96 |
Partners' Capital, Equity and_6
Partners' Capital, Equity and Incentive Compensation Plans - Summary of Information About Awards Outstanding (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
QualityTech LP | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 80,435 |
QualityTech LP | Class O Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise Price (in dollars per share) | $ / shares | $ 25 |
Awards Outstanding | 80,435 |
QTS Realty Trust, Inc. | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 2,709,854 |
QTS Realty Trust, Inc. | Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 426,062 |
Remaining term of awards | 8 months 12 days |
QTS Realty Trust, Inc. | Performance-Based Relative TSR Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 168,552 |
Remaining term of awards | 9 months 18 days |
QTS Realty Trust, Inc. | Performance-Based FFO Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards Outstanding | 168,552 |
Remaining term of awards | 6 months |
QTS Realty Trust, Inc. | 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 | $ 56.84 |
Awards Outstanding | 1,946,688 |
Remaining term of awards | 2 months 12 days |
Partners' Capital, Equity and_7
Partners' Capital, Equity and Incentive Compensation Plans - Schedule of Quarterly Cash Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 15, 2020 | Oct. 06, 2020 | Jul. 15, 2020 | Jul. 07, 2020 | Apr. 15, 2020 | Apr. 07, 2020 | Jan. 15, 2020 | Jan. 07, 2020 | Jul. 15, 2019 | Jul. 09, 2019 | Apr. 15, 2019 | Apr. 04, 2019 | Jan. 15, 2019 | Jan. 08, 2019 | Jun. 25, 2018 | Jun. 22, 2018 | Mar. 15, 2018 | Sep. 30, 2020 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Jun. 30, 2020 |
Dividend rate (as a percent) | 7.125% | ||||||||||||||||||||||
Preferred stock, shares issued | 4,280,000 | ||||||||||||||||||||||
Preferred stock redemption price per share | $ 25 | $ 25 | |||||||||||||||||||||
Threshold period of redemption of preferred stock | 120 days | ||||||||||||||||||||||
Voting power threshold (as a percent) | 50.00% | 50.00% | |||||||||||||||||||||
Convertible preferred stock par value | $ 0.01 | $ 0.01 | |||||||||||||||||||||
Preferred stock, liquidation preference | $ 25 | 25 | 25 | ||||||||||||||||||||
Share cap price | $ 1.46929 | $ 1.46929 | |||||||||||||||||||||
Net proceeds | $ 285,480 | $ 268,392 | |||||||||||||||||||||
Preferred nits, issued (in shares) | 4,280,000 | ||||||||||||||||||||||
Series A Preferred Stock | |||||||||||||||||||||||
Per Share and Per Unit Rate (in dollars per share) | $ 0.45 | $ 0.45 | $ 0.45 | $ 0.45 | $ 0.45 | $ 0.45 | |||||||||||||||||
Aggregate Dividend/Distribution Amount | $ 1,900 | $ 1,900 | $ 1,900 | $ 1,900 | $ 1,900 | $ 1,900 | $ 5,700 | 5,700 | |||||||||||||||
Series A Redeemable Perpetual Preferred Stock | |||||||||||||||||||||||
Dividend rate (as a percent) | 7.125% | 7.125% | |||||||||||||||||||||
Preferred stock, shares issued | 4,280,000 | 4,280,000 | 4,280,000 | ||||||||||||||||||||
Preferred stock, liquidation preference | $ 25 | $ 25 | $ 25 | ||||||||||||||||||||
Series B Convertible Perpetual Preferred Stock | |||||||||||||||||||||||
Dividend rate (as a percent) | 6.50% | 6.50% | 6.50% | 6.50% | |||||||||||||||||||
Preferred stock, shares issued | 3,162,500 | 3,162,500 | 3,162,500 | 3,162,500 | |||||||||||||||||||
Conversion rate | 2.1382 | ||||||||||||||||||||||
Minimum percentage of closing sale price of common stock under preferred stock conversion (as a percent) | 150.00% | ||||||||||||||||||||||
Minimum trading days of closing sale price of common stock under preferred stock conversion (in days) | 20 days | ||||||||||||||||||||||
Maximum trading days of closing sale price of common stock under preferred stock conversion including the last trading day (in days) | 30 days | ||||||||||||||||||||||
Preferred stock, liquidation preference | $ 100 | $ 100 | $ 100 | $ 100 | |||||||||||||||||||
Period of average daily volume weighted average price | 10 days | ||||||||||||||||||||||
Share cap price | $ 5.1020 | $ 5.1020 | |||||||||||||||||||||
Series B Preferred Stock [Member] | |||||||||||||||||||||||
Per Share and Per Unit Rate (in dollars per share) | $ 1.63 | $ 1.63 | $ 1.63 | $ 1.63 | $ 1.63 | $ 1.63 | |||||||||||||||||
Aggregate Dividend/Distribution Amount | $ 5,100 | $ 5,100 | $ 5,100 | $ 5,100 | $ 5,100 | $ 5,100 | $ 15,300 | 15,300 | |||||||||||||||
Subsequent Event | Series A Redeemable Perpetual Preferred Stock | |||||||||||||||||||||||
Per Share and Per Unit Rate (in dollars per share) | $ 0.45 | ||||||||||||||||||||||
Subsequent Event | Series B Convertible Perpetual Preferred Stock | |||||||||||||||||||||||
Per Share and Per Unit Rate (in dollars per share) | $ 1.63 | ||||||||||||||||||||||
Underwriter's Option | |||||||||||||||||||||||
Preferred stock, shares issued | 280,000 | ||||||||||||||||||||||
Underwriter's Option | Series B Convertible Perpetual Preferred Stock | |||||||||||||||||||||||
Preferred stock, shares issued | 412,500 | ||||||||||||||||||||||
QualityTech, LP | |||||||||||||||||||||||
Net proceeds | $ 285,480 | 268,392 | |||||||||||||||||||||
QualityTech, LP | Series A Redeemable Perpetual Preferred Units | |||||||||||||||||||||||
Dividend rate (as a percent) | 7.125% | 7.125% | |||||||||||||||||||||
Preferred stock, shares issued | 4,280,000 | 4,280,000 | 4,280,000 | ||||||||||||||||||||
Preferred stock, liquidation preference | $ 25 | $ 25 | $ 25 | ||||||||||||||||||||
QualityTech, LP | Series B Redeemable Perpetual Preferred Units | |||||||||||||||||||||||
Dividend rate (as a percent) | 6.50% | 6.50% | |||||||||||||||||||||
Preferred stock, shares issued | 3,162,500 | 3,162,500 | 3,162,500 | ||||||||||||||||||||
Preferred stock, liquidation preference | $ 100 | $ 100 | $ 100 | ||||||||||||||||||||
QualityTech, LP | Series B Convertible Perpetual Preferred Stock | |||||||||||||||||||||||
Preferred stock, shares issued | 3,162,500 | ||||||||||||||||||||||
Common stock | |||||||||||||||||||||||
Per Share and Per Unit Rate (in dollars per share) | $ 0.47 | $ 0.47 | $ 0.44 | $ 0.44 | $ 0.44 | $ 0.41 | |||||||||||||||||
Aggregate Dividend/Distribution Amount | $ 31,500 | $ 31,500 | $ 28,600 | $ 27,300 | $ 27,300 | $ 23,700 | $ 91,600 | $ 78,300 | |||||||||||||||
Shares issued | 4,000,000 | ||||||||||||||||||||||
Common stock | Subsequent Event | |||||||||||||||||||||||
Per Share and Per Unit Rate (in dollars per share) | $ 0.47 | ||||||||||||||||||||||
Common stock | Underwritten Offering | |||||||||||||||||||||||
Share price (in dollars per share) | $ 64.90 | ||||||||||||||||||||||
Net proceeds | $ 269,400 |
Partners' Capital, Equity and_8
Partners' Capital, Equity and Incentive Compensation Plans - Equity Issuances (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | May 31, 2020 | Dec. 31, 2019 | |
Partners Capital And Distributions [Line Items] | ||||||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | |||
Shares under underwritten offering | 450,133,000 | 450,133,000 | 450,133,000 | |||
Common stock issuance proceeds, net of costs | $ 285,480,000 | $ 268,392,000 | ||||
ATM | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Percentage used in calculating initial forward sale price per share | 100.00% | 100.00% | ||||
Underwritten Offering | Common stock | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Share price (in dollars per share) | $ 64.90 | |||||
Common stock issuance proceeds, net of costs | $ 269,400,000 | |||||
Underwritten Offering | Common stock | Maximum | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Shares under underwritten offering | 4,400,000 | |||||
Class A Common Stock | Prior ATM Program | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Maximum value of stock which may be issued | $ 400,000,000 | |||||
Common stock, par value | $ 0.01 | |||||
Class A Common Stock | ATM | ||||||
Partners Capital And Distributions [Line Items] | ||||||
Maximum value of stock which may be issued | $ 500,000,000 |
Partners' Capital, Equity and_9
Partners' Capital, Equity and Incentive Compensation Plans - Summary of Equity Issued (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Jun. 30, 2020 | |
Forward Shares Sold/(Settled) | ||
Beginning Balance, Forward Shares Sold/(Settled) (in shares) | 10,299 | |
Sales (in shares) | 114 | |
Settlement (in shares) | (2,948) | |
Ending Balance, Forward Shares Sold/(Settled) (in shares) | 7,465 | 10,299 |
Net Proceeds Available/(Received) | ||
Beginning Balance, Net Proceeds Available/(Received) | $ 584,924 | |
Sales | 7,348 | |
Settlements | (151,844) | |
Ending Balance, Net Proceeds Available/(Received) | $ 440,428 | $ 584,924 |
Proceeds from issuance or sale of equity, excluding dividends | 591,000 | |
Dividends declared | $ 6,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Related Party Transaction [Line Items] | ||||
Revenue | $ 3,756,000 | $ 3,780,000 | $ 15,611,000 | $ 11,270,000 |
Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Term of contract | 10 years | 10 years | ||
Ownership interest (as a percent) | 50.00% | 50.00% | ||
Tax, utility, insurance and other reimbursement | $ 114,000 | 173,000 | $ 368,000 | 608,000 |
Rent expense | 257,000 | 254,000 | 770,000 | 761,000 |
Capital assets acquired | 0 | 53,000 | 0 | 477,000 |
Total | 371,000 | 480,000 | 1,138,000 | 1,846,000 |
Development Fees | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Revenue | 0 | 100,000 | 900,000 | 400,000 |
Management Fees | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Revenue | $ 200,000 | $ 100,000 | $ 600,000 | $ 300,000 |
Noncontrolling Interest (Detail
Noncontrolling Interest (Details) | Nov. 01, 2014 | Sep. 30, 2020 | Oct. 13, 2013 |
Stock conversion ratio | 1 | ||
Previous Owners of QualityTech, LP | QualityTech, LP | |||
QualityTech, LP ownership percentage in operating partnership | 9.40% | 21.20% |
Earnings per share of QTS Rea_3
Earnings per share of QTS Realty Trust, Inc. - Computation of Basic and Diluted Net Income per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||||||
Net income | $ 6,907 | $ 10,209 | $ 8,120 | $ 6,588 | $ 7,535 | $ 21,148 | $ 25,236 | $ 35,271 |
(Income) loss attributable to noncontrolling interests | 18 | 49 | (408) | (1,593) | ||||
Preferred stock dividends | (7,045) | (7,045) | (21,135) | (21,135) | ||||
Earnings attributable to participating securities | (4,372) | (2,184) | (11,521) | (5,999) | ||||
Net income (loss) available to common stockholders after allocation of participating securities | $ (4,492) | $ (2,592) | $ (7,828) | $ 6,544 | ||||
Weighted average shares outstanding - basic (in shares) | 61,036 | 54,928 | 59,615 | 53,874 | ||||
Effect of Class O units, TSR units and options to purchase Class A common stock on an "as if" converted basis (in shares) | 0 | 0 | 0 | 463 | ||||
Weighted average shares outstanding - diluted (in shares) | 61,036 | 54,928 | 59,615 | 54,337 | ||||
Basic net income (loss) per share (in dollars per share) | $ (0.07) | $ (0.05) | $ (0.13) | $ 0.12 | ||||
Diluted net income (loss) per share (in dollars per share) | $ (0.07) | $ (0.05) | $ (0.13) | $ 0.12 |
Earnings per share of QTS Rea_4
Earnings per share of QTS Realty Trust, Inc. - Antidilutive (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Class A Partnership 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 | 6,658 | 6,668 | 6,667 | 6,670 |
Class O units, TSR units and options to purchase common stock on an "as if" converted basis | ||||
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 | 1,176 | 557 | 1,126 | 0 |
Series B Convertible Perpetual Preferred Stock | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Antidilutive shares excluded from the computation of diluted net earning per share | 6,762 | 6,729 | 6,756 | 6,729 |
Contracts with Customers (Detai
Contracts with Customers (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
2020 (October - December) | $ 108,231 |
2021 | 405,822 |
2022 | 323,623 |
2023 | 221,007 |
2024 | 169,774 |
Thereafter | 421,599 |
Total | $ 1,650,056 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Details) $ in Millions | Sep. 30, 2020USD ($) |
Senior Notes | Fair Value Measurements, Level 2 | |
Fair Value Of Financial Instruments [Line Items] | |
Fair value of loan based on current market rates | $ 415 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Oct. 07, 2020 | Oct. 28, 2020 | Nov. 16, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | Oct. 31, 2019 | Nov. 08, 2017 | Jul. 23, 2014 |
Senior Notes | ||||||||
Subsequent Event [Line Items] | ||||||||
Aggregate principal amount | $ 400,000,000 | |||||||
Interest rate | 4.75% | 4.75% | 5.875% | |||||
Percentage of issued price equal to face value | 100.00% | |||||||
Debt issuance costs, net | $ 3,900,000 | |||||||
Outstanding debt | 400,000,000 | $ 400,000,000 | ||||||
Unsecured Credit Facility | ||||||||
Subsequent Event [Line Items] | ||||||||
Outstanding debt | $ 1,223,000,000 | |||||||
Credit facility maximum borrowing capacity | $ 1,700,000,000 | |||||||
Subsequent Event | Senior Notes due 2028 | ||||||||
Subsequent Event [Line Items] | ||||||||
Aggregate principal amount | $ 500,000,000 | |||||||
Interest rate | 3.875% | |||||||
Percentage of issued price equal to face value | 100.00% | |||||||
Subsequent Event | Senior Notes | ||||||||
Subsequent Event [Line Items] | ||||||||
Interest rate | 4.75% | |||||||
Penalty as percent of average principal amount | 3.563% | |||||||
Loss on extinguishment of debt | $ 14,300,000 | |||||||
Subsequent Event | Term Loan D | ||||||||
Subsequent Event [Line Items] | ||||||||
Current borrowing capacity | $ 250,000,000 | |||||||
Credit facility maximum borrowing capacity | 500,000,000 | |||||||
Accordion feature | $ 250,000,000 | |||||||
Subsequent Event | Term Loan D | LIBOR | ||||||||
Subsequent Event [Line Items] | ||||||||
Debt instrument spread on variable interest rate | 1.20% | |||||||
Floor over LIBOR | 0.25% | |||||||
Subsequent Event | Term Loan D | Plan | ||||||||
Subsequent Event [Line Items] | ||||||||
Outstanding debt | $ 250,000,000 | |||||||
Subsequent Event | Term Loan D, On or Before November 16, 2020 | ||||||||
Subsequent Event [Line Items] | ||||||||
Current borrowing capacity | $ 250,000,000 | |||||||
Subsequent Event | Unsecured Credit Facility | ||||||||
Subsequent Event [Line Items] | ||||||||
Current borrowing capacity | 1,700,000,000 | |||||||
Credit facility maximum borrowing capacity | $ 1,950,000,000 |