Acquisitions and Joint Ventures

12 Months Ended

Dec. 31, 2020

ACQUISITIONS AND JOINT VENTURES

ACQUISITIONS

We account for acquisitions using the acquisition method of accounting, and, accordingly, the assets and liabilities acquired are recorded at their estimated fair values and the results of operations for each acquisition have been included in our consolidated results from their respective acquisition dates.

A. ACQUISITIONS COMPLETED DURING THE YEAR ENDED DECEMBER 31, 2020

Prior to January 9, 2020, we owned a 25% equity interest in OSG Records Management (Europe) Limited ("OSG"). On January 9, 2020, we acquired the remaining 75% equity interest in OSG for cash consideration of approximately $95,500 (the "OSG Acquisition"). The OSG Acquisition enabled us to extend our Global RIM Business in Russia, Ukraine, Kazakhstan, Belarus, and Armenia. The results of OSG are fully consolidated within our consolidated financial statements from the closing date of the OSG Acquisition. In connection with the OSG Acquisition, our previously held 25% equity investment in OSG was remeasured to fair value at the closing date of the OSG Acquisition; as a result, we recorded a gain of approximately $10,000 during the first quarter of 2020, which is included as a component of Other expense (income), net on our Consolidated Statements of Operations. The fair value of the 25% equity investment in OSG was determined based on the purchase price of the OSG Acquisition.

On February 17, 2020, in order to enhance our existing operations in the United Arab Emirates, we acquired Glenbeigh Records Management DWC-LLC, a storage and records management company, for total cash consideration of approximately $29,100.

B. ACQUISITIONS COMPLETED DURING THE YEAR ENDED DECEMBER 31, 2019

During the year ended December 31, 2019, in order to enhance our existing operations in the United States, Colombia, Germany, Hong Kong, Latvia, Slovakia, Switzerland, Thailand and the United Kingdom and to expand our operations into Bulgaria, we completed the acquisition of 10 storage and records management companies and one art storage company for total cash consideration of approximately $51,000. The individual purchase prices of these acquisitions ranged from approximately $700 to $12,500.

3. ACQUISITIONS AND JOINT VENTURES (CONTINUED)

C. ACQUISITIONS COMPLETED DURING THE YEAR ENDED DECEMBER 31, 2018

ACQUISITION OF IO DATA CENTERS

On January 10, 2018, we completed the acquisition of the United States operations of IODC, a leading data center colocation space and solutions provider based in Phoenix, Arizona, including the land and buildings associated with four data centers in Phoenix and Scottsdale, Arizona; Edison, New Jersey; and Columbus, Ohio (the “IODC Transaction”). At the closing of the IODC Transaction, we paid approximately $1,347,000. In February 2019, we paid approximately $31,000 in additional purchase price associated with the execution of customer contracts from the closing through the one-year anniversary of the IODC Transaction, which, net of amortization, is reported as a third-party commissions asset as a component of Other within Other assets, net in our Consolidated Balance Sheets at December 31, 2020 and 2019.

OTHER 2018 NOTEWORTHY ACQUISITIONS

On May 25, 2018, in order to further expand our data center operations in Europe, we acquired EvoSwitch Netherlands B.V. and EvoSwitch Global Services B.V., a data center colocation space and solutions provider with a data center in Amsterdam (the “EvoSwitch Transaction”), for (i) cash consideration of 189,000 Euros (or approximately $222,000, based upon the exchange rate between the Euro and the United States dollar on the closing date of the EvoSwitch Transaction) and (ii) $25,000 of additional consideration in the form of future services we will provide to the seller, which is included in purchase price holdbacks and other in the allocation of the purchase price paid table below.

On March 8, 2018, in order to expand our data center operations into Europe and Asia, we acquired the operations of two data centers in London and Singapore from Credit Suisse International and Credit Suisse AG (together, “Credit Suisse”) for a total of (i) 34,600 British pounds sterling and (ii) 81,000 Singapore dollars (or collectively, approximately $111,400, based upon the exchange rates between the United States dollar and the British pound sterling and Singapore dollar on the closing date of the Credit Suisse transaction) (the “Credit Suisse Transaction”). As part of the Credit Suisse Transaction, Credit Suisse entered into a long-term lease with us to maintain existing data center operations.

In addition to the transactions noted above, during 2018, in order to enhance our existing operations in the United States, Brazil, China, India, Ireland, Philippines, South Korea and the United Kingdom and to expand our operations into Croatia, we completed the acquisition of 11 storage and records management companies and three art storage companies for total consideration of approximately $98,100. The individual purchase prices of these acquisitions ranged from approximately $1,000 to $34,100.

3. ACQUISITIONS AND JOINT VENTURES (CONTINUED)

D. PURCHASE PRICE ALLOCATION

A summary of the cumulative consideration paid and the allocation of the purchase price paid for all of our acquisitions in each respective year is as follows:


	2020		2019		2018
	TOTAL		TOTAL		IODC TRANSACTION		OTHER FISCAL YEAR 2018 ACQUISITIONS		TOTAL
Cash Paid (gross of cash acquired)(1)	$	124,614	$	53,230	$	1,347,046	$	432,078	$	1,779,124
Purchase Price Holdbacks and Other(2)	—		4,135		—		35,218		35,218
Fair Value of Investments Applied to Acquisitions	27,276		—		—		—		—
Total Consideration	151,890		57,365		1,347,046		467,296		1,814,342
Fair Value of Identifiable Assets Acquired:
Cash	6,545		2,260		34,307		10,227		44,534
Accounts Receivable, Prepaid Expenses and Other Assets	16,559		3,102		7,070		17,662		24,732
Property, Plant and Equipment(3)	52,021		5,396		863,027		225,848		1,088,875
Customer Relationship Intangible Assets(4)	79,065		22,071		—		44,622		44,622
Operating Lease Right-of-Use Assets	100,040		16,956		—		—		—
Data Center In-Place Leases(5)	—		—		104,340		36,130		140,470
Data Center Tenant Relationships(6)	—		—		77,362		18,410		95,772
Data Center Above-Market Leases(7)	—		—		16,439		2,381		18,820

Debt Assumed	(27,363)		—		—		(12,312)		(12,312)
Accounts Payable, Accrued Expenses and Other Liabilities	(19,564)		(3,233)		(36,230)		(17,206)		(53,436)
Operating Lease Liabilities	(100,040)		(16,956)		—		—		—
Deferred Income Taxes	(9,631)		(1,813)		—		(43,218)		(43,218)
Data Center Below-Market Leases(7)	—		—		(11,421)		(694)		(12,115)
Total Fair Value of Identifiable Net Assets Acquired	97,632		27,783		1,054,894		281,850		1,336,744
Goodwill Initially Recorded(8)	$	54,258	$	29,582	$	292,152	$	185,446	$	477,598

(1)Cash paid for acquisitions, net of cash acquired in our Consolidated Statement of Cash Flows includes contingent and other payments of $512, $7,267 and $23,967 for the years ended December 31, 2020, 2019 and 2018, respectively, related to acquisitions made in the years prior to 2020, 2019 and 2018, respectively.

(2)Purchase price holdbacks and other includes $18,824 purchase price accrued for the EvoSwitch Transaction in 2018.

(3)Consists primarily of buildings, building improvements, leasehold improvements, data center infrastructure, racking structures, warehouse equipment and computer hardware and software.

(4)The weighted average lives of Customer Relationship Intangible Assets associated with acquisitions in 2020, 2019 and 2018 was 14 years, 16 years and 10 years, respectively.

(5)The weighted average lives of Data Center In-Place Leases associated with acquisitions in 2018 was six years.

(6)The weighted average lives of Data Center Tenant Relationships associated with acquisitions in 2018 was nine years.

(7)The weighted average lives of Data Center Above-Market Leases associated with acquisitions in 2018 was three years and the weighted average lives of data center below-market leases associated with acquisitions in 2018 was seven years.

(8)The goodwill associated with acquisitions, including IODC, is primarily attributable to the assembled workforce, expanded market opportunities and costs and other operating synergies anticipated upon the integration of the operations of our business and the acquired businesses.

3. ACQUISITIONS AND JOINT VENTURES (CONTINUED)

Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon the finalization of the purchase price allocations. The accounting for business combinations requires estimates and judgments regarding expectations for future cash flows of the acquired business, and the allocations of those cash flows to identifiable tangible and intangible assets, in determining the assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s best estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. The estimates and assumptions underlying the initial valuations are subject to the collection of information necessary to complete the valuations within the measurement periods, which are up to one year from the respective acquisition dates.

As the valuation of certain assets and liabilities for purposes of purchase price allocations are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances regarding these assets and liabilities that existed at the acquisition date. Any adjustments to our estimates of purchase price allocation will be made in the periods in which the adjustments are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates. Adjustments recorded during the fourth quarter of 2020 and year ended December 31, 2020 were not material to our results from operations.

JOINT VENTURES

A. FRANKFURT DATA CENTER JOINT VENTURE

In October 2020, we formed a joint venture (the “Frankfurt JV”) with AGC Equity Partners (“AGC”) to design and develop a 280,000 square foot, 27 megawatt, hyperscale data center currently under development in Frankfurt, Germany (the “Frankfurt JV Transaction”). AGC acquired an 80% equity interest in the Frankfurt JV, while we retained a 20% equity interest (the "Frankfurt JV Investment"). The total cash consideration for the 80% equity interest sold to AGC was approximately $105,000. We received approximately $93,300 (gross of certain transaction expenses) upon the closing of the Frankfurt JV, and we are entitled to receive an additional approximately $11,700 upon the completion of development of the data center, which we expect to occur in the second quarter of 2021. In connection with the Frankfurt JV Transaction, we also entered into agreements whereby we will earn various fees, including property management and construction and development fees, for services we are providing to the Frankfurt JV.

As a result of the Frankfurt JV Transaction, we recognized a gain of approximately $24,100, representing the excess of the fair value of the consideration received over the carrying value of the assets, which consisted primarily of land and land development assets which were previously included within our Global Data Center Business segment.

We account for our Frankfurt JV Investment as an equity method investment. At the closing date of the Frankfurt JV Transaction, the fair value of the Frankfurt JV Investment was approximately $23,300. The carrying value of our Frankfurt JV Investment at December 31, 2020 was $26,500, which is presented as a component of Other within Other assets, net in our Consolidated Balance Sheet.

B. MAKESPACE JOINT VENTURE

In March 2019, we formed a joint venture entity (the “MakeSpace JV”) with MakeSpace Labs, Inc., a consumer storage provider (“MakeSpace”). In the second quarter of 2020, we committed to participate in a round of equity funding for the MakeSpace JV whereby we agreed to contribute $36,000 of the $45,000 being raised in installments beginning in May 2020 through October 2021. We account for our investment in the MakeSpace JV as an equity method investment. At December 31, 2020 and 2019, we owned approximately 39% and 34%, respectively, of the outstanding equity in the MakeSpace JV, and the carrying value of our investment in the MakeSpace JV at December 31, 2020 and 2019 was $16,924 and $18,570, respectively, which is presented as a component of Other within Other assets, net in our Consolidated Balance Sheets. See Note 4 for additional detail on the divestment of our consumer storage business that was completed in conjunction with the formation of the MakeSpace JV.