8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 13, 2015

DIGITAL REALTY TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland	001-32336	26-0081711
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Four Embarcadero Center, Suite 3200 San Francisco, California	94111
(Address of principal executive offices)	(Zip Code)

(415) 738-6500

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01. Other Events.

The Telx Acquisition

As previously announced, Digital Realty Trust, Inc., a Maryland corporation (the “Company”), has entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Digital Delta, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), Telx Holdings, Inc., a Delaware corporation (“Telx”), and BSR LLC, as the sellers’ representative. The Merger Agreement provides for the acquisition of Telx by the Company pursuant to the merger of Merger Sub with and into Telx, with Telx as the surviving corporation (the “Telx Acquisition”).

Preferred Stock Offering

On August 13, 2015, the Company commenced an underwritten public offering of its series I preferred stock (the “Offering”). This Current Report on Form 8-K does not constitute an offer to sell or a solicitation of an offer to buy any securities.

The Company is filing certain historical financial and pro forma financial information related to the Telx Acquisition and the Offering as exhibits to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

The unaudited condensed consolidated interim financial statements of Telx as of June 30, 2015 and for the six months ended June 30, 2015 and 2014 are filed as Exhibit 99.1 hereto. The audited financial statements of Telx as of and for the years ended December 31, 2014, 2013 and 2012 (as restated) are filed as Exhibit 99.2 hereto.

(b) Pro Forma Financial Information

The unaudited pro forma condensed combined balance sheet as of June 30, 2015 and the unaudited pro forma condensed combined income statements for the year ended December 31, 2014 and the six months ended June 30, 2015 are filed as Exhibit 99.3 hereto. Such unaudited pro forma condensed combined financial statements are not necessarily indicative of the financial position or operating results that actually would have been achieved if the adjustments set forth therein had been in effect as of the dates and for the periods indicated or that may be achieved in future periods and should be read in conjunction with the historical financial statements of the Company and Telx.

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(d) Exhibits.

Exhibit No.	Description
23.1	Consent of PricewaterhouseCoopers LLP, Independent Accountants.
99.1	Unaudited condensed consolidated interim financial statements of Telx Holdings, Inc. as of June 30, 2015 and for the six months ended June 30, 2015 and 2014.
99.2	Audited financial statements of Telx Holdings, Inc. as of and for the years ended December 31, 2014, 2013 and 2012 (as restated).
99.3	Unaudited pro forma condensed combined financial information of Digital Realty Trust, Inc. as of June 30, 2015 and for the year ended December 31, 2014 and the six months ended June 30, 2015.

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Digital Realty Trust, Inc.
By:	/s/ JOSHUA A. MILLS
	Joshua A. Mills Senior Vice President, General Counsel and Secretary

Date: August 13, 2015

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EXHIBIT INDEX

Exhibit No.	Description
23.1	Consent of PricewaterhouseCoopers LLP, Independent Accountants.
99.1	Unaudited condensed consolidated interim financial statements of Telx Holdings, Inc. as of June 30, 2015 and for the six months ended June 30, 2015 and 2014.
99.2	Audited financial statements of Telx Holdings, Inc. as of and for the years ended December 31, 2014, 2013 and 2012 (as restated).
99.3	Unaudited pro forma condensed combined financial information of Digital Realty Trust, Inc. as of June 30, 2015 and for the year ended December 31, 2014 and the six months ended June 30, 2015.

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EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (Nos. 333-203535 and 333-203535-01) of Digital Realty Trust, Inc. and Digital Realty Trust, L.P. of our report dated March 14, 2015, except with respect to the effects of the restatement described in Note 2 to the consolidated financial statements, as to which the date is July 10, 2015, relating to the financial statements of Telx Holdings Inc., which appears in this Current Report on Form 8-K of Digital Realty Trust, Inc.

/s/ PricewaterhouseCoopers LLP

New York, New York

August 12, 2015

EX-99.1

Exhibit 99.1

Telx Holdings, Inc. and Subsidiaries

Condensed Consolidated Financial Statements

June 30, 2015

Telx Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

June 30, 2015 and December 31, 2014

(Unaudited)

(in thousands, except share and per share data)

	June 30,			December 31,
	2015			2014
				Restated
Assets
Cash and cash equivalents	$	9,012		$	11,865
Accounts receivable, net of allowance for doubtful accounts of $561 and $677		17,156			14,709
Current deferred tax assets		1,833			2,219
Prepaid expenses		2,504			2,565
Deferred sales commissions		2,979			2,713
Unbilled revenue		3,818			3,231
Deferred financing costs, net		3,835			3,963
Other current assets		652			863
Total current assets		41,789			42,128
Property and equipment, net		369,426			375,348
Goodwill		339,013			339,013
Trademark		129,941			129,941
Customer relationships, net		128,967			138,408
Other intangible assets, net		5,787			6,032
Deferred financing costs, net		19,296			22,737
Cash - restricted		1,773			1,965
Other assets		9,294			8,617
Total assets	$	1,045,286		$	1,064,189
Liabilities and Stockholders’ Equity
Accounts payable	$	4,779		$	8,472
Accrued power		4,706			4,378
Accrued payroll and bonus		4,735			6,675
Other accrued expenses and other current liabilities		11,520			12,758
Customer security deposits		2,020			1,652
Deferred revenue		4,278			4,268
Current portion of capital leases and other financing obligations		5,340			5,084
Current portion of term loan and other loans payable		22,181			29,174
Total current liabilities		59,559			72,461
Customer security deposits, less current portion		341			729
Deferred rent		103,246			87,328
Deferred revenue, less current portion		6,680			6,325
Deferred tax liabilities		59,128			59,111
Capital leases and other financing obligations, less current portion		44,529			47,334
Term loan and other loans payable, less current portion		733,211			730,013
Total liabilities		1,006,694			1,003,301
Common stock, par value $0.001 per share; 400,000 shares authorized, 300,083 shares issued and outstanding					—
Additional paid-in capital		157,485			157,225
Accumulated deficit		(118,893	)		(96,337	)
Total stockholders’ equity		38,592			60,888
Total liabilities and stockholders’ equity	$	1,045,286		$	1,064,189

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Telx Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

Six Months Ended June 30, 2015 and 2014

(Unaudited)

(in thousands)

	Six Months Ended June 30,
	2015			2014
Revenues
Revenues	$	164,233		$	141,242
Related party revenues		5,301			4,930
Total revenues		169,534			146,172
Expenses
Cost of revenues		116,825			98,956
Sales and marketing		23,822			21,849
General and administrative		19,285			18,697
Transaction costs		932			3,587
Total costs and operating expenses		160,864			143,089
Income from operations		8,670			3,083
Interest and other income		5			5
Interest expense		(29,806	)		(27,793	)
Loss before income taxes		(21,131	)		(24,705	)
Income tax (expense) benefit		(1,425	)		10,821
Net loss	$	(22,556	)	$	(13,884	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Telx Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2015 and 2014

(Unaudited)

(in thousands)

	Six Months Ended June 30,
	2015			2014
Cash flows from operating activities
Net loss	$	(22,556	)	$	(13,884	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		24,250			18,620
Amortization of intangibles assets		9,686			9,848
Amortization of deferred financing costs		1,912			2,152
Loss on early extinguishment of debt		1,657			1,307
Stock-based compensation		260			304
Provision for bad debts		61			124
Deferred tax expense (benefit)		403			(10,951	)
Noncash interest expense		5,791			3,294
Changes in operating assets and liabilities
Accounts receivable		(2,508	)		(5,848	)
Prepaid expenses and other current assets		(581	)		615
Other assets		(677	)		(1,016	)
Accounts payable		56			2,120
Customer security deposits		(20	)		116
Accrued expenses and other current liabilities		(1,178	)		(1,265	)
Deferred revenue		365			(842	)
Deferred rent		15,918			15,685
Net cash provided by operating activities		32,839			20,379
Cash flows from investing activities
Purchases of property and equipment		(23,749	)		(42,110	)
Change in restricted cash		192			(1	)
Net cash used in investing activities		(23,557	)		(42,111	)
Cash flows from financing activities
Payments of financing costs		—			(21,345	)
Payments on capital lease and other financial obligations		(2,549	)		(2,393	)
Proceeds from term loan and other loans payables		—			713,000
Repayment of term loan and other loans payable		(2,586	)		(527,939	)
Proceeds from revolving credit facility		13,000			19,000
Repayment of revolving credit facility		(20,000	)		(18,000	)
Payment of dividend		—			(148,000	)
Issuance of common shares		—			292
Net cash (used in) provided by financing activities		(12,135	)		14,615
Net decrease in cash and cash equivalents		(2,853	)		(7,117	)
Cash and cash equivalents
Beginning of period		11,865			16,624
End of period	$	9,012		$	9,507
Supplemental disclosures of cash flow information
Interest paid	$	20,378		$	21,175
Income taxes paid	$	155		$	282
Supplemental cash flow information for noncash activities
Purchase of property and equipment included in accounts payable and accrued expenses	$	2,666		$	13,757
Assets acquired through capital leases	$	—		$	4,126

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Telx Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

Six months ended June 30, 2015

(Unaudited)

(in thousands, except share data)

	Common Stock				Additional		Accumulated
	Shares		Amount		Paid-in Capital		Deficit			Total
Balances at December 31, 2014 Restated		300,083	$	—	$	157,225	$	(96,337	)	$	60,888
Compensation expense for common stock options		—		—		260		—			260
Net loss for the six months ended June 30, 2015		—		—		—		(22,556	)		(22,556	)
Balances at June 30, 2015		300,083	$	—	$	157,485	$	(118,893	)	$	38,592

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

1. Organization and Nature of Operations

Telx Holdings, Inc. (the “Company”) was incorporated under the laws of the State of Delaware for the initial purpose of acquiring The Telx Group, Inc. In September 2011, the holders of The Telx Group, Inc.’s common stock and Class A Preferred Stock approved and adopted an agreement and plan of merger by and among The Telx Group, Inc., Telx Holdings, Inc. and Telx Merger Sub, Inc., a wholly owned subsidiary of the Company, created specifically for the merger. On September 26, 2011, the wholly owned subsidiary of the Company merged into The Telx Group, Inc. and The Telx Group, Inc. was the surviving entity.

The Company is a leading provider in global interconnection, data center colocation and cloud enablement solutions. The Company operates secure, environmentally controlled facilities in which network providers and other customers place their equipment (Colocation Services) and converge their networks to conduct business with each other (Interconnection Services). As of June 30, 2015, the Company operated leased facilities throughout the United States of America and owned and operated buildings in Atlanta, Georgia and Clifton, New Jersey. The Company’s customers include international and domestic telecommunication companies, internet service providers, enterprises and media companies.

2. Restatement of the Consolidated Financial Statements

As previously disclosed in the consolidated financial statements for the years ended December 31, 2014, 2013 and 2012, the Company has restated its previously issued consolidated financial statements to correct an error in the accounting for a build to suit lease agreement. During 2012, the Company entered into an agreement for the construction and subsequent leasing of a Datacenter in Clifton, New Jersey. As a result of the nature of the Company’s involvement in the project, and certain provisions within the lease, the Company was deemed to be the owner of the construction project and subsequent building through December 31, 2034. The restated amounts as of December 31, 2014 are reflected in these condensed consolidated financial statements.

As a result of this error, the following adjustments have been made to the previously issued consolidated financial statements:

	December 31, 2014
Consolidated Balance Sheet	As Previously Reported			Adjustment			As Restated
Property and equipment, net	$	347,198		$	28,150		$	375,348
Total assets		1,036,039			28,150			1,064,189
Deferred rent		91,566			(4,238	)		87,328
Capital leases and other financing obligations, less current portion		11,512			35,822			47,334
Total liabilities		971,717			31,584			1,003,301
Accumulated deficit		(92,903	)		(3,434	)		(96,337	)
Total stockholders’ equity		64,322			(3,434	)		60,888
Total liabilities and stockholders’ equity		1,036,039			28,150			1,064,189

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Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

3. Basis of Presentation and Summary of Significant Accounting Policies

These condensed consolidated financial statements reflect the condensed consolidated historical results of operations, financial position and cash flows of the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying condensed consolidated financial statements of the Company as of June 30, 2015 and December 31, 2014 (restated) and for the six month periods ended June 30, 2015 and 2014 are unaudited and, in management’s opinion, reflect all adjustments, consisting of normal and recurring adjustments, necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the more detailed consolidated financial statements and notes thereto, included in the restated audited consolidated financial statements for the year ended December 31, 2014 issued on July 10, 2015. The year-end condensed balance sheet data was derived from the audited consolidated financial statements, but does not include all disclosures required by GAAP.

The Company has no elements of comprehensive loss other than net loss; therefore comprehensive loss equals net loss for all periods presented.

The following is a summary of significant accounting policies used in the preparation of the accompanying condensed consolidated financial statements.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and intangible assets, valuation allowances for receivables and deferred income taxes, stock based compensation, and sale leaseback accounting. These estimates and assumptions are based on management’s best estimate and judgment. Management evaluates its estimates and assumptions on an on-going basis using historical experience and other factors, including the current economic environment. The Company believes its estimates and assumptions are reasonable, and adjusts both as facts and circumstances dictate. As future events and their effects cannot be predicted with accuracy, actual results could differ significantly from these estimates. Changes in estimates resulting from changes in the economic environment will be reflected in the condensed consolidated financial statements in future periods.

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Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less from date of purchase to be cash equivalents. Cash equivalents consist of money market instruments, which are classified as Level 1 instruments.

Restricted Cash

Restricted cash represents deposits maintained with financial institutions as a) collateral for open letters of credit issued on behalf of the Company for certain operating leases and b) a mortgage escrow. The availability of the funds in those accounts is subject to restrictions for specific use.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, and accounts receivable. The Company maintains cash and cash equivalents primarily with one financial institution, and such deposits may exceed federal deposit insurance limits.

The Company’s customers are concentrated in the United States of America. The Company performs credit evaluations of its customers and requires collateral from some customers where considered appropriate. Collateral is in the form of customer deposits, payments for services are generally due on the first day of the month to which services relate, and standard customer contracts contain a right to retain customer equipment in case of nonpayment of an accounts receivable balance.

For the periods ended June 30, 2015 and 2014, the top five customers accounted for 19% and 19% of revenues, respectively. The Company has no customers that account for more than 10% of revenues for the six month periods ended June 30, 2015 or 2014.

Accounts Receivable and Allowance for Doubtful Accounts

Receivables are stated net of the allowance for doubtful accounts of $561 and $677 at June 30, 2015 and December 31, 2014, respectively. The Company extends credit to its customers in the normal course of business. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. Management analyzes bankruptcy filings, historical bad debts, customer credit-worthiness, and changes in customer payment patterns when evaluating collectability and the adequacy of reserves. Actual results could differ from management estimates. Receivables are written-off against the allowance when determined uncollectible.

Customer Security Deposits

The Company collects security deposits from certain customers based on a credit review of the customer. Security deposits are classified as short term when the underlying customer contract is scheduled to renew within the next twelve months or the customer contract has a month-to-month term.

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Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated when the asset is placed in service on the straight-line method over the estimated useful lives of the assets, as shown below. In the case of leasehold improvements, depreciation is calculated on the straight-line method over the shorter of the estimated useful life of the asset or the lease term. Maintenance and repairs are generally expensed as incurred. Gains and losses from sales and retirements of property and equipment are included in the operating results for the period in which they occur.

	Estimated Useful Life
Furniture and fixtures		5 years
Leasehold and building improvements		2-40 years
Buildings		25-40 years
Collocation and computer equipment		3-15 years

Capitalized Installation Costs

Capitalized installation costs include material and internal labor directly attributable to facility leasehold improvements and customer installations. These capitalized costs are included in property and equipment on the condensed consolidated balance sheet and amortized over their useful life or the remaining term of the lease, whichever is less.

Impairment of Long-Lived Assets

Long-lived assets such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company had no impairments of long-lived assets for the six month periods ended June 30, 2015 or 2014.

Goodwill and Other Intangible Assets

The Company has one reportable operating unit. At June 30, 2015 and December 31, 2014, all goodwill was attributable to the Company’s one reporting unit. Goodwill represents the amount by which the purchase price exceeds the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in an acquisition. The Company accounts for its goodwill and other intangible assets under Accounting Standards Codification (“ASC”) FASB ASC Topic 350-20, Goodwill, Accounting Standard Update (“ASU” 2011-08, Testing Goodwill for Impairment, and FASB ASC Topic 350-30, General Intangibles Other than Goodwill. Goodwill and intangible assets acquired in an acquisition and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value amount of these assets might not be fully recoverable. The Company elected to perform the two-step goodwill impairment test approach. The first step involves a comparison of the fair value of the reporting unit with its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, the second step is performed. The second step involves a comparison of the implied fair value and carrying value of the reporting

9

Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

unit’s goodwill. To the extent that a reporting unit’s goodwill carrying amount exceeds the implied fair value of its goodwill, an impairment loss is recognized. Trademark and goodwill are the only intangible assets with indefinite lives. Assembled workforce is included in goodwill. The Company completed its annual impairment review as of September 30, 2014 and determined that no impairment charge was required.

Intangible assets with finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Customer relationships are amortized over their useful lives on a basis consistent with the expected cash flows to be generated from the relationships. Other intangibles are amortized on a straight-line basis over their respective useful lives.

Fair Value Measurements

FASB ASC Topic 820 defines fair value and establishes guidelines for measuring fair value and disclosures regarding fair value measurements. The Company follows the guidelines of FASB ASC Topic 820 for all of its financial assets and liabilities that are disclosed at fair value on a recurring basis. FASB ASC Topic 820 establishes a fair value hierarchy based on the input used in valuation techniques. There are three levels to the hierarchy of inputs to fair value as follows:

Level 1	Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2	Inputs that reflect quoted prices for identical assets in markets that are not active; quoted prices for similar assets in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3	Unobservable inputs that reflect the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

The Company endeavors to utilize the best available information in measuring fair value. Financial instruments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (Note 4).

Deferred Financing Costs

Deferred financing costs represent the direct costs related primarily to the issuance of the Company’s Term Loan, Revolving Credit Facility and Senior Unsecured Notes (Note 4). Net deferred financing costs were approximately $23,131 and $26,700 as of June 30, 2015 and December 31, 2014, respectively. Costs associated with obtaining financing are deferred and amortized to interest expense using an effective rate method over the term of the related borrowing facility. Unamortized deferred financing costs are written-off when the respective debt is extinguished prior to maturity.

Leases

The Company occupies all but two owned facilities and offices under various leases, which are accounted for as operating leases in accordance with FASB ASC Topic 840, Leases. Lease terms are determined to include renewal periods when the renewals are reasonably assured. The leases

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Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

include scheduled base rent increases over the term of the leases. The Company recognizes rent expense from operating leases over the lease term on a straight-line basis. Rent expense includes adjustments for rent concessions, escalations and leasehold improvement allowances.

The Company leases certain equipment under capital lease agreements. The assets held under capital leases and the related obligations are recorded at the lesser of the present value of aggregate future minimum lease payments, including estimated bargain purchase options, or the fair value of the assets held under capital lease. The related assets are depreciated over the term of the lease or the estimated useful life in accordance with FASB ASC Topic 840, Leases.

The Company considers the nature of renovations and the Company’s involvement during the construction period of newly leased space to determine if it is considered the owner of the construction project during the construction period. If the company determines that it is the owner of the construction project, it is required to capitalize all construction costs incurred on its consolidated balance sheet along with the corresponding financing liability (“build-to-suit accounting”). Upon completion of the project, the Company assesses whether the circumstances qualify for sales recognition under sale lease-back accounting guidance. If the lease meets the sale-leaseback criteria, the Company will remove the asset and related financial obligation from the balance sheet and treat the building lease as either an operating or capital lease. If upon completion of construction, the project does not meet sale-lease back criteria, the Company will record the building at its fair value and the related financial obligation for accounting purposes.

The Company capitalizes lease origination costs, and amortizes these costs on a straight-line basis over the respective lease terms.

Accounting for Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation, which requires that all stock-based compensation be recognized as an expense in the condensed consolidated financial statements and that such cost be measured as the fair value of the award at the grant date and also requires that any excess tax benefits related to stock-based compensation exercises be reflected as cash flows from financing activities.

The Company recognizes compensation costs on a straight-line basis over the requisite service period for the entire award. The Company uses the Black-Scholes-Merton option-pricing model to determine the fair value of stock-based awards. The determination of the fair value of stock-based awards is based on a number of complex and subjective assumptions. These assumptions include the dividend yield of the underlying security, the expected volatility of the underlying security, a risk-free interest rate, the expected term of the option, and the forfeiture rate for the award class.

The Company engaged a third-party independent valuation specialist to assist in estimating the fair value of the underlying securities for all stock-based awards issued. The Company utilized a consistent methodology for estimating the fair value of the underlying securities for all stock-based awards issued through and outstanding as of June 30, 2015.

In the event of a change of control, all outstanding stock-based awards will be accelerated and become fully vested in accordance with the plan description.

11

Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

Derivative Financial Instruments

Derivative instruments are recorded in the condensed consolidated balance sheet as either assets or liabilities and measured at fair value. As required by the Credit Agreement (Note 4), the Company entered into certain interest rate hedging agreements to reduce interest rate risks and to manage interest expense. The interest rate differentials to be paid or received under such derivatives and the changes in fair value of the instruments are recognized in interest expense. The principle objectives of the derivative instruments were to minimize the risks and reduce the expenses associated with financing activities. The Company does not enter into derivative instruments for trading purposes.

Advertising Costs

Advertising costs are charged to expense in the period incurred. Advertising costs for the six month periods ended June 30, 2015 and 2014 were $1,175 and $1,312, respectively, and are included in sales and marketing expenses in the condensed consolidated statements of operations.

Income Taxes

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 carry-forwards. 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 the condensed consolidated statement of operations in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. A valuation allowance was established in the third quarter of 2014 and continues to be applied to reduce deferred tax assets to the amounts that are more likely than not to be realized. This allowance accounts for the difference between the effective tax rate and the statutory rate for the six months ended June 30, 2015.

There were no significant changes in estimates that affected the provision for the six months ended June 30, 2015 and 2014, respectively.

The Company accounts for uncertain tax positions in accordance with FASB ASC Topic 740, Income Taxes, which prescribes a recognition threshold and measurement attribute for the financial recognition and measurement of a tax position taken or expected to be taken on a tax return. It requires that the Company determine whether the benefits of its tax positions will more likely than not be sustained upon audit based on the technical merits of its tax position. Guidance is also provided on de-recognition, classification, interest and penalties, accounting in interim periods, and disclosure. The Company recognizes penalties and interest related to uncertain tax positions, if any, as a component of income tax expense. As of June 30, 2015, the Company had no liabilities for uncertain tax positions.

Revenue Recognition

The Company generates recurring revenue from providing colocation and interconnection services. A substantial part of the Company’s revenues are provided from these recurring revenues. The remaining revenues are nonrecurring and are earned by providing installation services and technical support. All revenue is earned in the United States of America.

12

Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

Colocation services are generally governed by the terms and conditions of a master service agreement (MSA). Customers typically execute a MSA for one to three year terms. The Company bills customers on a monthly basis and recognizes the revenue as those services are performed over the term of the agreement. Revenues from installation services for colocation services are initially deferred and recognized on a straight-line basis over the average life of the customer relationship.

Interconnection services are generally provided on a month-to-month, one year or multi-year term under the MSA for colocation services. Interconnection services include port and cross connect services. Port services are typically sold on a one year or multi-year term and revenue is recognized on a recurring monthly basis similar to colocation services. The Company bills customers on a monthly basis and recognizes the revenue in the period the service is provided. Revenue for cross connect installations is generally recognized in the period the cross connect is installed.

Technical support services are provided on a time and materials basis and are billed and recognized in the period services are provided.

Revenue is recognized only when the service has been provided and when there is persuasive evidence of an arrangement, the fee is fixed or determinable, and collection of the receivable is reasonably assured. The Company regularly assesses collectability of accounts receivable from customers based on a number of factors, including prior history with the customer and the credit status of the customer. If the Company determines that collection of revenue from a customer is not reasonably assured, the Company does not recognize revenue until collection becomes reasonably assured, which is generally upon receipt of cash. Sales tax collected from customers on certain services and products are remitted to the applicable taxing authorities and accounted for on a net basis, with no impact on revenue.

Revenue from customer orders that include specific periodic contractual rate increases is generally recognized on a straight-line basis over the actual contract life.

13

Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

4. Current and Long-Term Debt, Capital Leases, and Other Financing Obligations

Current and long-term debt consists of the following:

	June 30, 2015			December 31, 2014 Restated
Term loans (1)	$	630,250		$	632,625
Revolving credit facility (1)		17,000			24,000
Unsecured Senior Note (1)		91,585			85,794
Mortgage (2)		16,557			16,767
Capital leases (4)		10,453			12,688
Other financing obligations (3)		39,416			39,731
		805,261			811,605
Less: Current portion		(27,521	)		(34,258	)
	$	777,740		$	777,347

(1) On September 26, 2011, the Company entered into a credit agreement with Morgan Stanley Senior Funding, Inc. consisting of a $255,000 term loan (the “Term Loan”) and a $50,000 revolving credit facility (collectively, the “Credit Agreement”). On the same date, the Company entered into an Indenture Agreement for 12% Senior Unsecured Notes (the “Notes”) in the aggregate amount of $180,000, with Wilmington Trust National Association.

The Term Loan had a maturity date of September 25, 2017 and required quarterly interest payments at a Eurodollar rate or 1.25%, whichever was higher, plus a 6.5% applicable margin. Principal payments of 0.25% of the original principal amount were due quarterly, with the remaining principal outstanding due at maturity.

The revolving credit facility had a maturity date of September 25, 2016 and required quarterly interest payments at a Eurodollar rate or 1.25%, whichever was higher, plus a 4.5% applicable margin.

The Notes were due at their maturity date of September 25, 2019, with interest payable quarterly at 12%. Interest was to be paid in cash, except that an amount equal to 2% per annum shall be capitalized and added to the principal amount of the Notes rather than paid in cash. The Company had the option to pay the entire amount of such interest due in cash by providing the Trustee notice in writing at least ten (10) business days prior to any interest payment, as defined, that it will pay the entire amount of interest due on such Interest Payment Date in cash.

On February 17, 2012, the Company obtained an additional $75,000 in funding under the Term Loan.

14

Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

On October 9, 2012, the Company refinanced the $330,000 Term Loan and increased the size of the Term Loan by $35,000. The interest rate was changed to a Eurodollar rate or 1.25%, whichever is higher, plus a 5% applicable margin. The Company also increased the revolving credit facility by $15,000 to $65,000.

On October 10, 2013, the Company amended the terms of the Term Loan lowering the applicable margin to 4%. In addition, the applicable margin on the revolving credit facility was lowered to 4%.The Company also increased the revolving credit facility by $20,000 to $85,000.

On April 9, 2014 the Company entered into a new debt refinancing transaction replacing the September 2011 Credit Agreement, as amended, and the Notes with a $475,000 first lien term loan, a $110,000 revolving credit facility, a $160,000 second lien term loan (collectively, the “New Credit Agreement”), and a $78,000 Unsecured Senior Note. Under ASC 470-50-40 Debt-Modifications and Extinguishment, the Company recorded a loss on the extinguishment of debt of $1,307, consisting of write-offs of deferred financing costs associated with certain lenders leaving the loan syndicate. The loss is included in interest expense on the condensed consolidated statement of operations for the six months ended June 30, 2014.

At June 30, 2015 and December 31, 2014, the Company had $ 3,261 in outstanding letters of credit under the New Credit Agreement relating to certain operating leases, which reduce, on a dollar for dollar basis, the amount of borrowing capacity under the Company’s revolving credit facility.

The first lien term loan is due at the maturity date of April 9, 2020, interest is payable quarterly at a rate of LIBOR with a 1% floor, plus an applicable margin of 3.5% and principal is payable quarterly at 0.25% of the original principal amount. The second lien term loan is due at the maturity date of April 9, 2021. Interest is payable quarterly at a rate of LIBOR with a 1% floor, plus an applicable margin of 6.5% and the principal is due at maturity. The Unsecured Senior Note is due at the maturity date of July 9, 2021. Interest on the Unsecured Senior Note is capitalized at 13.5% and added to the principal balance, which is due at maturity.

The revolving credit facility has a maturity date of April 9, 2020 and requires quarterly interest payments at an adjusted LIBOR with a 1% floor, plus an applicable margin of 3.25%.

The obligations under the New Credit Agreement are collateralized by substantially all of the Company’s assets.

The Term Loan contains restrictive covenants that are triggered if the Company has drawn down more than 30% of the revolving credit facility at the end of the reporting period. The covenants include one financial covenant requiring the Company to maintain a leverage ratio, as defined in the New Credit Agreement. These covenants have not been triggered during any of the periods presented.

(2) On January 25, 2013, the Company entered into a $17,500 Commercial Mortgage Loan (“Mortgage’) with The Provident Bank. The Mortgage has a maturity date of January 1, 2020, an interest rate of 4.25% per annum, and requires monthly payments of principal and interest of $95 until the maturity date, upon which date the entire unpaid amount is due and payable. The Mortgage is collateralized by the Company’s owned building at 100 Delawanna Avenue in Clifton, NJ.

15

Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

(3) The Company has a loan payable to Digital-Bryan Street Partnership, L.P. entered into under the provisions of the Third Amendment to the Master Meet-Me-Room agreement (MMR), exercised at the Company’s option under the December 1, 2006 Operating Agreement between the Company and Digital Realty Trust, L.P., the Parent of Digital-Bryan Street Partnership, L.P., for the utilization of $2,400 of MMR Alteration Allowance. The Third Amendment was effective April 1, 2008. The assets purchased under the MMR Alteration Allowance were capitalized and the $2,400 was recognized as a liability, as the Company is obligated to repay this loan to Digital Realty Trust (who made payments to the contractors directly) over the term of the agreement of ten years. The loan carries an interest rate of 10% per annum and requires monthly payments of principal and interest of $32. The outstanding balance on this loan was $912 and $1,052 as of June 30, 2015 and December 31, 2014, respectively.

The Company has a lease for datacenter space in Chicago, Illinois. In connection with this lease, the Company received $1,000 in financing from the landlord for leasehold improvements that is included in other financing obligations in the condensed consolidated balance sheets. The loan carries an interest rate of 11% per annum and requires monthly payments of principal and interest of $14. At June 30, 2015 and December 31, 2014, $609 and $657, respectively, remain outstanding on this obligation.

During 2012, the Company entered into the construction of a datacenter in Clifton, New Jersey. As a result of the nature of the Company’s involvement in the project, and certain provisions within the lease, the Company was deemed to be the owner of the construction project and subsequent building (“build-to-suit accounting”) through December 31, 2034. The deemed loan carries an interest rate of 11%. At June 30, 2015 and December 31, 2014, $35,787 and $35,822, respectively, remain outstanding on this deemed financing obligation.

During 2013, the Company entered into a lease for datacenter space in Seattle, Washington. In connection with this lease, the Company received $2,399 in financing from the landlord for generator and chiller improvements that is included in other financing obligations in the condensed consolidated balance sheet. The loan carries an interest rate of 9% per annum and requires monthly payments of principal and interest of $32. At June 30, 2015 and December 31, 2014, $2,108 and $2,200 respectively remain outstanding on this obligation.

(4) The Company has several capital leases for financed equipment purchases, which are accounted for in accordance with ASC 840-30 Leases – Capital Leases (Note 7).

16

Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

Future Principal Payments

The following table provides the schedule of future principal payments of the Company’s debt obligations by year, excluding capital and built-to-suit lease obligations (Note 7), as of June 30, 2015:

Years Ending December 31,
2015 (6 months remaining)	$	19,883
2016		5,824
2017		5,911
2018		5,707
2019		5,674
Thereafter		716,022
	$	759,021

Fair Value of Debt Facilities

The following table provides the estimated fair values of the Company’s Term Loans, Unsecured Senior Note, and other debt as of June 30, 2015 and December 31, 2014:

	June 30, 2015		December 31, 2014 Restated
Term loans (Level 1)	$	627,123	$	612,065
Revolving credit facility (Level 1)		17,000		24,000
Unsecured Senior Note (Level 1)		96,851		91,251
Mortgage (Level 2)		15,747		15,891
Capital leases (Level 2)		10,453		12,688
Other financing obligations (Level 2)		39,416		39,731
	$	806,590	$	795,626

Level 1	Fair value was determined based on quoted active market prices for our debt.
Level 2	Fair value was determined based on quoted prices for similar debt in active markets.

5. Stockholders’ Equity

Common Stock

As of June 30, 2015, and December 31, 2014, the Company had 300,083 shares of common stock, outstanding, par value $0.001. Each share of common stock is entitled to one vote. For the six months ended June 30, 2015, and 2014, dividends of $0 and $148,000 were declared and paid on the common stock.

6. Related Party Transactions

Management Fees

The Company has management agreements with its owners, ABRY Partners, LLC and Berkshire Partners, LLC (collectively, the “Managers”). The Company engaged the Managers for a term of 10 years, through September 2021, to provide consulting and management advisory services for an annual fee of $1,000, which is included in general and administrative expenses on the condensed consolidated statements of operations.

17

Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

Datapipe

Datapipe is a vendor of the Company. ABRY has ownership in Datapipe. The Company expensed $37 and $38 for services provided by Datapipe for the six months ended June 30, 2015 and 2014, respectively.

RCN Cable

RNC Cable is a customer of the Company. ABRY has ownership in RNC Cable, who provided revenues to the Company of approximately $76 and $72 for services in the six months ended June 30, 2015 and 2014, respectively.

One Source Networks

One Source Networks is a customer of the Company. ABRY has ownership in One Source Networks, who provided revenues to the Company of approximately $67 and $47 for the six months ended June 30, 2015 and 2014, respectively. The Company had receivables due from One Source Networks of $0 and $1 at June 30, 2015 and December 31, 2014, respectively.

Securus

Securus is a customer of the Company. ABRY has ownership in Securus, who provided revenues to the Company of approximately $659 and $713 for services in the six months ended June 30, 2015 and 2014, respectively. The Company had receivables due from Securus of $114 and $116 at June 30, 2015 and December 31, 2014, respectively.

Lightower Fiber Networks

Lightower Fiber Networks is a customer of the Company. Berkshire and ABRY have ownership in Lightower Fiber Networks and the predecessor companies, who provided revenues to the Company of approximately $4,197 and $3,843 for services in the six months ended June 30, 2015 and 2014, respectively. The Company had $474 and $0 receivables due from Lightower Fiber Networks and the predecessor companies at June 30, 2015, and December 31, 2014, respectively.

Asurion Insurance Services Inc.

Asurion Insurance Services Inc. is a customer of the Company. Berkshire has ownership in Asurion, who provided revenues to the Company of approximately $302 and $291 for services in the six months ended June 30, 2015 and 2014, respectively.

Airband

Airband is a customer of the Company. ABRY has ownership in Airband. The Company had receivables due from Airband of $0 and $23 at June 30, 2015 and December 31, 2014, respectively.

18

Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

7. Commitments and Contingencies

Operating Leases, Capital Leases and Build-to-Suit Lease

The Company leases certain operating facilities, offices, and equipment under various lease agreements expiring during the years ending December 2015 through December 2037. Future minimum lease payments under operating leases, capital leases, and a build-to-suit lease that have remaining non-cancelable lease terms at June 30, 2015 are as follows:

	Operating		Capital			Build-to-Suit
	Leases		Leases			Lease
Year Ending December 31,
2015 (6 months remaining)		44,661		2,719			2,023
2016		93,579		5,438			4,046
2017		102,086		3,192			4,046
2018		106,798		236			4,100
2019		112,332		—			4,154
Thereafter		1,230,167		—			68,754
Total minimum payments required	$	1,689,623		11,585			87,123
Less: Amount representing interest				(1,132	)		(64,573	)
Present value of net minimum lease payments			$	10,453		$	22,550

In December 2012, the Company entered into a 23 year lease agreement for a 216,000 square foot Datacenter in Clifton New Jersey. The Company incurred construction costs during 2012 related to the construction of this new facility, and therefore was deemed the accounting owner of the construction project. Because of a condemnation clause in the lease which allowed the Company to participate in property appreciation in the event of a condemnation award, we were deemed to have continuing involvement in the building and were considered to be the owner of the facility for accounting purposes. The Company recorded a $29,827 building and deemed financing obligation in 2012 under the build-to-suit accounting model. The deemed financing obligation is included in long term capital leases and other financing obligations in the accompanying condensed consolidated balance sheet.

The operating leases for the Company’s facilities at 60 Hudson Street in New York, New York require the Company to maintain a $1,450 letter of credit, issued for the benefit of 60 Hudson Owner, LLC, the Company’s landlord at 60 Hudson Street. The letter of credit is collateralized by cash deposits of at least the amount of the letter of credit held in a restricted account and is reflected in Cash-restricted on the condensed consolidated balance sheet. An additional outstanding letter of credit for $113 is collateralized by the Company’s revolving line of credit.

The operating lease for the Company’s facilities at 32 Avenue of the Americas requires the Company to maintain a $3,148 letter of credit, issued for the benefit of 32 Sixth Avenue Company, LLC, the Company’s landlord at 32 Avenue of the Americas. $1,648 of this letter of credit is related to the build out of the leased space and is expected to be released upon meeting certain construction milestones. The letter of credit is collateralized by the company’s revolving line of credit.

19

Telx Holdings, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

June 30, 2015

(Unaudited)

(in thousands, except share and per share data)

Rent expense for the six months ended June 30, 2015 and 2014 was $67,355 and $56,803, respectively. This amount is net of sublease income for the six months ended June 30, 2015 and 2014 of approximately $54 and $53, respectively.

Legal Matters

The Company and its subsidiaries are parties in various lawsuits arising in the ordinary course of business. In the opinion of management, with the advice of its legal counsel, the ultimate disposition of these matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company.

8. Subsequent Events

On July 13, 2015, the Company signed a definitive agreement under which Digital Realty Trust Inc. will acquire the Company’s equity, including 100% of the voting interest, in an all cash transaction that values the Company at $1.886 billion. The transaction is subject to various closing conditions and is expected to close in 2015.

The Company’s management has performed an evaluation of subsequent events as of August 5, 2015, the date the condensed consolidated financial statements were available to be issued, and noted no other subsequent events or transactions which require recognition or disclosure in the condensed consolidated financial statements.

20

EX-99.2

Exhibit 99.2

Telx Holdings, Inc. and Subsidiaries

Consolidated Financial Statements

December 31, 2014, 2013 and 2012

Telx Holdings, Inc. and Subsidiaries

Index

December 31, 2014, 2013 and 2012

	Page(s)
Independent Auditor’s Report		1–2
Consolidated Financial Statements
Balance Sheets		3
Statements of Operations		4
Statements of Cash Flows		4
Statements of Stockholders’ Equity		6
Notes to the Consolidated Financial Statements		7–30

Independent Auditor’s Report

To the Management of Telx Holdings, Inc.

We have audited the accompanying consolidated financial statements of Telx Holdings, Inc. and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2014, 2013 and 2012, and the related consolidated statements of operations, cash flows and stockholders’ equity for the years then ended.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Telx Holdings, Inc. and its subsidiaries at December 31, 2014, 2013 and 2012, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

As discussed in Note 2 to the consolidated financial statements, the Company has restated its 2014, 2013 and 2012 financial statements to correct an error. Our opinion is not modified with respect to this matter.

/s/ PricewaterhouseCoopers LLP

March 14, 2015, except for the effects of the restatement described in Note 2, as to which the date is July 10, 2015

2

Telx Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

	2014			2013			2012
	Restated			Restated			Restated
Assets
Cash and cash equivalents	$	11,865		$	16,624		$	29,486
Accounts receivable, net of allowance for doubtful accounts of $677, $937 and $1,242		14,709			12,222			12,893
Current deferred tax assets		2,219			1,437			1,282
Prepaid expenses		2,565			2,551			1,838
Deferred sales commissions		2,713			1,765			943
Unbilled revenue		3,231			2,891			1,909
Deferred financing costs		3,963			4,428			4,242
Other current assets		863			1,865			745
Total current assets		42,128			43,783			53,338
Property and equipment, net		375,348			330,267			281,149
Goodwill		339,013			339,013			339,013
Intangible assets, net		274,381			293,905			313,036
Deferred financing costs, net		22,737			11,493			17,628
Cash - restricted		1,965			1,962			1,459
Other assets		8,617			7,167			4,586
Total assets	$	1,064,189		$	1,027,590		$	1,010,209
Liabilities and Stockholders’ Equity
Accounts payable	$	8,472		$	9,267		$	7,275
Accrued power		4,378			3,958			2,992
Accrued payroll and bonus		6,675			5,916			4,865
Other accrued expenses and other current liabilities		12,758			13,875			17,885
Customer security deposits		1,652			1,729			1,646
Deferred revenue		4,268			5,630			6,497
Current portion of capital leases and other financing obligations		5,084			4,402			3,914
Current portion of term loan and other loans payable		29,174			16,021			3,619
Total current liabilities		72,461			60,798			48,693
Customer security deposits, less current portion		729			523			410
Deferred rent		87,328			61,068			24,893
Deferred revenue, less current portion		6,325			5,248			4,750
Deferred tax liabilities		59,111			70,460			90,452
Capital leases and other financing obligations, less current portion		47,334			47,421			44,239
Term loan and other loans payable, less current portion		730,013			540,890			524,373
Total liabilities		1,003,301			786,408			737,810
Commitments and contingencies (Note 12)
Common stock, par value $0.001 per share; 400,000 shares authorized, 300,083 shares issued and outstanding at December 31, 2014 and 299,583 shares issued and outstanding at December 31, 2013 and 2012		—			—			—
Additional paid-in capital		157,225			304,224			303,452
Accumulated deficit		(96,337	)		(63,042	)		(31,053	)
Total stockholders’ equity		60,888			241,182			272,399
Total liabilities and stockholders’ equity	$	1,064,189		$	1,027,590		$	1,010,209

The accompanying notes are an integral part of these consolidated financial statements.

3

Telx Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended December 31, 2014, 2013 and 2012

(in thousands)

	2014			2013			2012
	Restated			Restated			Restated
Revenues
Revenues	$	299,207		$	251,961		$	210,161
Related Party Revenues		9,449			4,714			4,091
Total Revenues	$	308,656		$	256,675		$	214,252
Operating Expenses
Cost of revenues		206,232			170,571			129,734
Sales and marketing		44,030			44,254			35,381
General and administrative		38,691			36,068			25,005
Transaction costs		3,606			878			1,280
Total operating expenses		292,559			251,771			191,400
Income from operations		16,097			4,904			22,852
Interest and other income		32			128			176
Interest expense		(61,367	)		(56,779	)		(54,420	)
Loss before income taxes		(45,238	)		(51,747	)		(31,392	)
Income tax benefit		11,943			19,757			13,670
Net loss	$	(33,295	)	$	(31,990	)	$	(17,722	)

The accompanying notes are an integral part of these consolidated financial statements.

4

Telx Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended December 31, 2014, 2013 and 2012

(in thousands)

	2014			2013			2012
	Restated			Restated			Restated
Cash flows from operating activities
Net loss	$	(33,295	)	$	(31,990	)		(17,722	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		40,590			29,707			18,819
Amortization of intangibles assets		19,700			19,538			16,740
Amortization of deferred financing costs		4,327			3,352			4,038
Loss on early extinguishment of debt		6,240			5,244			2,818
Stock-based compensation		709			772			873
Provision for bad debts		649			1,091			2,174
Deferred tax benefit		(12,131	)		(20,146	)		(13,998	)
Noncash interest expense		9,369			6,948			4,395
Changes in operating assets and liabilities
Accounts receivable		(3,136	)		(420	)		(4,901	)
Prepaid expenses and other current assets		(300	)		(3,637	)		(3,180	)
Other assets		(1,626	)		(2,988	)		(2,461	)
Accounts payable		324			(3,767	)		534
Customer security deposits		129			196			203
Accrued expenses and other current liabilities		2,190			4,447			(395	)
Deferred revenue		(285	)		(369	)		2,238
Deferred rent		26,260			36,175			19,879
Net cash provided by operating activities		59,714			44,153			30,054
Cash flows from investing activities
Purchases of property and equipment		(84,785	)		(75,386	)		(73,395	)
Payments for Telx Group (post acquisition)		—			—			(12,619	)
Change in restricted cash		(3	)		(503	)		10,412
Net cash used in investing activities		(84,788	)		(75,889	)		(75,602	)
Cash flows from financing activities
Payments of financing costs		(21,345	)		(2,647	)		(3,952	)
Payments on capital lease and other financial obligations		(5,113	)		(4,033	)		(2,016	)
Proceeds from term loan and other loans payable		713,000			17,500			110,000
Repayment of term loan and other loans payable		(530,519	)		(3,946	)		(20,879	)
Proceeds from revolving credit facility		42,000			19,500			—
Repayment of revolving credit facility		(30,000	)		(7,500	)		(19,650	)
Payment of dividend		(148,000	)		—			—
Issuance of commons shares		292			—			—
Net cash provided by financing activities		20,315			18,874			63,503
Net (decrease) increase in cash and cash equivalents		(4,759	)		(12,862	)		17,955
Cash and cash equivalents
Beginning of year		16,624			29,486			11,531
End of year	$	11,865		$	16,624		$	29,486
Supplemental disclosures of cash flow information
Interest paid	$	41,635		$	41,596		$	51,524
Income taxes paid	$	342		$	562		$	568
Supplemental cash flow information for noncash activities
Purchase of property and equipment included in accounts payable and accrued expenses	$	8,087		$	11,335		$	12,016
Assets acquired through capital leases	$	4,126		$	1,721		$	15,458
Noncash addition to property and equipment related to build-to-suit lease and financing obligation	$	—		$	—		$	29,827

The accompanying notes are an integral part of these consolidated financial statements.

5

Telx Holdings, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

Years Ended December 31, 2014, 2013 and 2012

(in thousands, except share data)

	Common Stock				Additional			Accumulated
	Shares		Amount		Paid-in Capital			Deficit			Total
Balances at January 1, 2012		299,583	$	—	$	302,579		$	(13,330	)	$	289,249
Compensation expense for common stock options		—		—		873			—			873
Net loss for the year ended December 31, 2012 (restated)		—		—		—			(17,722	)		(17,722	)
Balances at December 31, 2012		299,583		—		303,452			(31,052	)		272,400
Compensation expense for common stock options		—		—		772			—			772
Net loss for the year ended December 31, 2013 (restated)		—		—		—			(31,990	)		(31,990	)
Balances at December 31, 2013		299,583		—		304,224			(63,042	)		241,182
Compensation expense for common stock options		—		—		709			—			709
Issuance of common shares		500		—		292			—			292
Dividend payment to common stockholders		—		—		(148,000	)		—			(148,000	)
Net loss for the year ended December 31, 2014 (restated)		—		—		—			(33,295	)		(33,295	)
Balances at December 31, 2014		300,083	$	—	$	157,225		$	(96,337	)	$	60,888

The accompanying notes are an integral part of these consolidated financial statements.

6

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

1. Organization and Nature of Operations

Telx Holdings, Inc. (the “Company”) was incorporated under the laws of the State of Delaware for the initial purpose of acquiring The Telx Group, Inc. In September 2011, the holders of The Telx Group, Inc.’s common stock and Class A Preferred Stock approved and adopted an agreement and plan of merger by and among The Telx Group, Inc., Telx Holdings, Inc. and Telx Merger Sub, Inc., a wholly owned subsidiary of the Company, created specifically for the merger. On September 26, 2011, the wholly owned subsidiary of the Company merged into The Telx Group, Inc. and The Telx Group, Inc. was the surviving entity.

The Company is a leading provider in global interconnection, data center colocation and cloud enablement solutions. The Company operates secure, environmentally controlled facilities in which network providers and other customers place their equipment (Colocation Services) and converge their networks to conduct business with each other (Interconnection Services). As of December 31, 2014, the Company operated leased facilities throughout the United States of America and owned and operated buildings in Atlanta, Georgia and Clifton, New Jersey. The Company’s customers include international and domestic telecommunication companies, internet service providers, enterprises and media companies.

2. Restatement of the Consolidated Financial Statements

The Company has restated its previously issued consolidated financial statements as of and for the years ended December 31, 2014, 2013 and 2012 to correct an error in the accounting for a build-to-suit lease agreement. During 2012, the Company entered into an agreement for the construction and subsequent leasing of a Datacenter in Clifton, New Jersey. As a result of the nature of the Company’s involvement in the project, and certain provisions within the lease, the Company was deemed to be the owner of the construction project and subsequent building through December 31, 2034. The restatements are reflected in these consolidated financial statements. See Note 12 for information related to the build-to-suit accounting.

Certain disclosures, including Notes 3, 6, 7, 8 and 12, have been restated consistent with the consolidated financial statements.

As a result of this error, the following adjustments have been made to the previously issued consolidated financial statements:

	December 31, 2014
Consolidated Balance Sheet	As Previously Reported			Adjustment			As Restated
Property and equipment, net	$	347,198		$	28,150		$	375,348
Total assets	$	1,036,039		$	28,150		$	1,064,189
Deferred rent	$	91,566		$	(4,238	)	$	87,328
Capital leases and other financing obligations, less current portion	$	11,512		$	35,822		$	47,334
Total liabilities	$	971,717		$	31,584		$	1,003,301
Accumulated deficit	$	(92,903	)	$	(3,434	)	$	(96,337	)
Total stockholders’ equity	$	64,322		$	(3,434	)	$	60,888
Total liabilities and stockholders’ equity	$	1,036,039		$	28,150		$	1,064,189

7

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

	December 31, 2013
Consolidated Balance Sheet	As Previously Reported			Adjustment			As Restated
Property and equipment, net	$	301,372		$	28,895		$	330,267
Total assets	$	998,695		$	28,895		$	1,027,590
Deferred rent	$	63,375		$	(2,307	)	$	61,068
Deferred tax liabilities	$	71,726		$	(1,266	)	$	70,460
Capital leases and other financing obligations, less current portion	$	13,175		$	34,246		$	47,421
Total liabilities	$	755,735		$	30,673		$	786,408
Accumulated deficit	$	(61,264	)	$	(1,778	)	$	(63,042	)
Total stockholders’ equity	$	242,960		$	(1,778	)	$	241,182
Total liabilities and stockholders’ equity	$	998,695		$	28,895		$	1,027,590

	December 31, 2012
Consolidated Balance Sheet	As Previously Reported			Adjustment			As Restated
Property and equipment, net	$	251,508		$	29,641		$	281,149
Total assets	$	980,568		$	29,641		$	1,010,209
Deferred rent	$	24,784		$	109		$	24,893
Deferred tax liabilities	$	90,918		$	(466	)	$	90,452
Capital leases and other financing obligations, less current portion	$	13,576		$	30,663		$	44,239
Total liabilities	$	707,504		$	30,306		$	737,810
Accumulated deficit	$	(30,388	)	$	(665	)	$	(31,053	)
Total stockholders’ equity	$	273,064		$	(665	)	$	272,399
Total liabilities and stockholders’ equity	$	980,568		$	29,641		$	1,010,209

	For the Year Ended December 31, 2014
Consolidated Statement of Operations	As Previously Reported			Adjustment			As Restated
Cost of revenues	$	209,732		$	(3,500	)	$	206,232
Total operating expenses	$	296,059		$	(3,500	)	$	292,559
Income from operations	$	12,597		$	3,500		$	16,097
Interest expense	$	(57,477	)	$	(3,890	)	$	(61,367	)
Loss before income taxes	$	(44,848	)	$	(390	)	$	(45,238	)
Income tax benefit	$	13,209		$	(1,266	)	$	11,943
Net loss	$	(31,639	)	$	(1,656	)	$	(33,295	)

8

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

	For the Year Ended December 31, 2013
Consolidated Statement of Operations	As Previously Reported			Adjustment			As Restated
Cost of revenues	$	172,241		$	(1,670	)	$	170,571
Total operating expenses	$	253,441		$	(1,670	)	$	251,771
Income from operations	$	3,234		$	1,670		$	4,904
Interest expense	$	(53,196	)	$	(3,583	)	$	(56,779	)
Loss before income taxes	$	(49,834	)	$	(1,913	)	$	(51,747	)
Income tax benefit	$	18,958		$	799		$	19,757
Net loss	$	(30,876	)	$	(1,114	)	$	(31,990	)

	For the Year Ended December 31, 2012
Consolidated Statement of Operations	As Previously Reported			Adjustment			As Restated
Cost of revenues	$	129,439		$	295		$	129,734
Total operating expenses	$	191,105		$	295		$	191,400
Income from operations	$	23,147		$	(295	)	$	22,852
Interest expense	$	(53,584	)	$	(836	)	$	(54,420	)
Loss before income taxes	$	(30,261	)	$	(1,131	)	$	(31,392	)
Income tax benefit	$	13,204		$	466		$	13,670
Net loss	$	(17,057	)	$	(665	)	$	(17,722	)

	For the Year Ended December 31, 2014
Consolidated Statement of Cash Flows	As Previously Reported			Adjustment			As Restated
Cash flows from operating activities
Net loss	$	(31,639	)	$	(1,656	)	$	(33,295	)
Depreciation and amortization	$	39,844		$	746		$	40,590
Deferred tax benefit	$	(13,397	)	$	1,266		$	(12,131	)
Noncash interest expense	$	7,794		$	1,575		$	9,369
Deferred rent	$	28,191		$	(1,931	)	$	26,260

9

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

	For the Year Ended December 31, 2013
Consolidated Statement of Cash Flows	As Previously Reported			Adjustment			As Restated
Cash flows from operating activities
Net loss	$	(30,876	)	$	(1,114	)	$	(31,990	)
Depreciation and amortization	$	28,961		$	746		$	29,707
Deferred tax benefit	$	(19,347	)	$	(799	)	$	(20,146	)
Noncash interest expense	$	3,365		$	3,583		$	6,948
Deferred rent	$	38,591		$	(2,416	)	$	36,175

	For the Year Ended December 31, 2012
Consolidated Statement of Cash Flows	As Previously Reported			Adjustment			As Restated
Cash flows from operating activities
Net loss	$	(17,057	)	$	(665	)	$	(17,722	)
Depreciation and amortization	$	18,633		$	186		$	18,819
Deferred tax benefit	$	(13,532	)	$	(466	)	$	(13,998	)
Noncash interest expense	$	3,559		$	836		$	4,395
Deferred rent	$	19,770		$	109		$	19,879

The noncash activity for additions to property and equipment related to a build-to-suit lease and financing obligation, was adjusted from $0, as previously reported to, $29,827 for the year ended December 31, 2012.

	For the Year Ended December 31, 2014
Consolidated Statement of Stockholders’ Equity	As Previously Reported			Adjustment			As Restated
Net loss for the year ended December 31, 2014	$	(31,639	)	$	(1,656	)	$	(33,295	)
Total Accumulated Deficit	$	(92,903	)	$	(3,434	)	$	(96,337	)
Total Stockholders’ Equity	$	64,322		$	(3,434	)	$	60,888

	For the Year Ended December 31, 2013
Consolidated Statement of Stockholders’ Equity	As Previously Reported			Adjustment			As Restated
Net loss for the year ended December 31, 2013	$	(30,876	)	$	(1,114	)	$	(31,990	)
Total Accumulated Deficit	$	(61,264	)	$	(1,778	)	$	(63,042	)
Total Stockholders’ Equity	$	242,960		$	(1,778	)	$	241,182

	For the Year Ended December 31, 2012
Consolidated Statement of Stockholders’ Equity	As Previously Reported			Adjustment			As Restated
Net loss for the year ended December 31, 2012	$	(17,057	)	$	(665	)	$	(17,722	)
Total Accumulated Deficit	$	(30,388	)	$	(665	)	$	(31,052	)
Total Stockholders’ Equity	$	273,064		$	(665	)	$	272,400

10

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

3. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The following is a summary of significant accounting policies used in the preparation of the accompanying consolidated financial statements.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and intangible assets, valuation allowances for receivables and deferred income taxes, stock based compensation, and sale lease-back accounting. These estimates and assumptions are based on management’s best estimate and judgment. Management evaluates its estimates and assumptions on an on-going basis using historical experience and other factors, including the current economic environment. The Company believes its estimates and assumptions are reasonable, and adjusts both as facts and circumstances dictate. As future events and their effects cannot be predicted with accuracy, actual results could differ significantly from these estimates. Changes in estimates resulting from changes in the economic environment will be reflected in the consolidated financial statements in future periods.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less from date of purchase to be cash equivalents. Cash equivalents consist of money market instruments.

Restricted Cash

Restricted cash represents deposits maintained with financial institutions as collateral for open letters of credit issued on behalf of the Company for certain operating leases and a mortgage escrow. The availability of the funds in those accounts is subject to restrictions for specific use.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, and accounts receivable. The Company maintains cash and cash equivalents primarily with one financial institution, and such deposits may exceed federal deposit insurance limits.

The Company’s customers are concentrated in the United States of America. The Company performs ongoing credit evaluations of its customers and requires collateral from some customers where considered appropriate. Collateral is in the form of customer deposits, payments for services are generally due on the first day of the month to which services relate, and standard customer contracts contain a right to retain customer equipment in case of nonpayment of an accounts receivable balance.

11

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

For the years ended December 31, 2014, 2013 and 2012, the top five customers accounted for 18%, 12% and 15% of revenues, respectively. The Company has no customers that account for more than 10% of revenues for the years ended December 31, 2014 or 2013 or 2012. One customer accounted for approximately 10% of accounts receivable as of December 31, 2013.

Accounts Receivable and Allowance for Doubtful Accounts

Receivables are stated net of the allowance for doubtful accounts of $677, $937 and $1,242 at December 31, 2014, 2013 and 2012, respectively. The Company extends credit to its customers in the normal course of business. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. Management analyzes bankruptcy filings, historical bad debts, customer credit-worthiness, and changes in customer payment patterns when evaluating collectability and the adequacy of reserves. Actual results could differ from management estimates. Receivables are written-off against the allowance when determined uncollectible.

Customer Security Deposits

The Company collects security deposits from certain customers based on a credit review of the customer. Security deposits are classified as short term when the underlying customer contract is scheduled to renew within the next twelve months or the customer contract has a month-to-month term.

Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated when the asset is placed in service on the straight-line method over the estimated useful lives of the assets, as shown below. In the case of leasehold improvements, depreciation is calculated on the straight-line method over the shorter of the estimated useful life of the asset or the lease term. Maintenance and repairs are expensed as incurred. Gains and losses from sales and retirements of property and equipment are included in the operating results for the period in which they occur.

	Estimated
	Useful Life
Furniture and fixtures		5 years
Leasehold and building improvements		2–40 years
Buildings		25-40 years
Collocation equipment		3–15 years

Capitalized Installation Costs

Capitalized installation costs include material and internal labor directly attributable to facility leasehold improvements and the internal cost of installation of equipment as part of the improvements. These capitalized costs are included in property and equipment on the consolidated balance sheet and amortized over their useful life or the remaining term of the lease, whichever is less.

12

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

Impairment of Long-Lived Assets

Long-lived assets such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company had no impairments of long-lived assets for the years ended December 31, 2014 or 2013 or 2012.

Goodwill and Other Intangible Assets

The Company has one reportable operating unit. At December 31, 2014, all goodwill was attributable to the Company’s one reporting unit. Goodwill represents the amount by which the purchase price exceeds the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in an acquisition. The Company accounts for its goodwill and other intangible assets under Accounting Standards Codification (“ASC”) FASB ASC Topic 350-20, Goodwill, Accounting Standard Update 2011-08, Testing Goodwill for Impairment, and FASB ASC Topic 350-30, General Intangibles Other than Goodwill. Goodwill and intangible assets acquired in an acquisition and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value amount of these assets might not be fully recoverable. The Company elected to perform the two-step goodwill impairment test approach. The first step involves a comparison of the fair value of the reporting unit with its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, the second step is performed. The second step involves a comparison of the implied fair value and carrying value of the reporting unit’s goodwill. To the extent that a reporting unit’s goodwill carrying amount exceeds the implied fair value of its goodwill, an impairment loss is recognized. Trademark and goodwill are the only intangible assets with indefinite lives. Assembled workforce is included in goodwill. The Company completed its annual impairment review as of September 30, 2014, 2013 and 2012 and determined that no impairment charge was required.

Intangible assets with finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Customer relationships are amortized over their useful lives on a basis consistent with the expected cash flows to be generated from the relationships. Other intangibles are amortized on a straight-line basis over their respective useful lives.

Fair Value Measurements

FASB ASC Topic 820 defines fair value and establishes guidelines for measuring fair value and disclosures regarding fair value measurements. The Company follows the guidelines of FASB ASC Topic 820 for all of its financial assets and liabilities that are disclosed at fair value on a recurring basis. FASB ASC Topic 820 establishes a fair value hierarchy based on the input used in valuation techniques. There are three levels to the hierarchy of inputs to fair value as follows:

Level 1 Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

13

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

Level 2	Inputs that reflect quoted prices for identical assets in markets that are not active; quoted prices for similar assets in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or collaborated by observable market data by correlation or other means.
Level 3	Unobservable inputs that reflect the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

The Company endeavors to utilize the best available information in measuring fair value. Financial instruments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (Note 7).

Deferred Financing Costs

Deferred financing costs represent the direct costs related primarily to the issuance of the Company’s Term Loan, Revolving Credit Facility and Senior Unsecured Notes (Note 7). Net deferred financing costs were approximately $26,699, $15,921 and $21,870 as of December 31, 2014, 2013 and 2012, respectively.

Leases

The Company occupies all but two owned facilities and offices under various leases, which are accounted for as operating leases in accordance with FASB ASC Topic 840, Leases. Lease terms are determined to include renewal periods when the renewals are reasonably assured. The leases include scheduled base rent increases over the term of the leases. The Company recognizes rent expense from operating leases over the lease term on a straight-line basis. Rent expense includes adjustments for rent concessions, escalations and leasehold improvement allowances.

The Company leases certain equipment under capital lease agreements. The assets held under capital leases and the related obligations are recorded at the lesser of the present value of aggregate future minimum lease payments, including estimated bargain purchase options, or the fair value of the assets held under capital lease. The related assets are depreciated over the term of the lease or the estimated useful life in accordance with FASB ASC Topic 840, Leases.

The Company considers the nature of renovations and the Company’s involvement during the construction period of newly leased space to determine if it is considered the owner of the construction project during the construction period. If the company determines that it is the owner of the construction project, it is required to capitalize all construction costs incurred on its consolidated balance sheet along with the corresponding financing liability (“build-to-suit accounting”). Upon completion of the project, the Company assesses whether the circumstances qualify for sales recognition under sale lease-back accounting guidance. If the lease meets the sale-leaseback criteria, the Company will remove the asset and related financial obligation from the balance sheet and treat the building lease as either an operating or capital lease. If upon completion of construction, the project does not meet sale-lease back criteria, the Company will record the building at its fair value and the related financial obligation for accounting purposes.

The Company capitalizes lease origination costs, and amortizes these costs on a straight-line basis over the respective lease terms.

14

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

Accounting for Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation, which requires that all stock-based compensation be recognized as an expense in the consolidated financial statements and that such cost be measured as the fair value of the award at the grant date and also requires that any excess tax benefits related to stock-based compensation exercises be reflected as cash flows from financing activities.

The Company recognizes compensation costs on a straight-line basis over the requisite service period for the entire award. The Company uses the Black-Scholes-Merton option-pricing model to determine the fair value of stock-based awards. The determination of the fair value of stock-based awards is based on a number of complex and subjective assumptions. These assumptions include the dividend yield of the underlying security, the expected volatility of the underlying security, a risk-free interest rate, the expected term of the option, and the forfeiture rate for the award class.

The Company engaged a third-party independent valuation specialist to assist in estimating the fair value of the underlying securities for all stock-based awards issued. The Company utilized a consistent methodology for estimating the fair value of the underlying securities for all stock-based awards issued through December 31, 2014.

In the event of a change of control, all outstanding stock-based awards will be accelerated and become fully vested in accordance with the plan description.

Derivative Financial Instruments

Derivative instruments are recorded in the consolidated balance sheet as either assets or liabilities and measured at fair value. As required by the Credit Agreement (Note 7), the Company entered into certain interest rate hedging agreements to reduce interest rate risks and to manage interest expense. The interest rate differentials to be paid or received under such derivatives and the changes in fair value of the instruments are recognized in interest expense. The principle objectives of the derivative instruments were to minimize the risks and reduce the expenses associated with financing activities. The Company does not enter into derivative instruments for trading purposes.

Advertising Costs

Advertising costs are charged to expense in the period incurred. Advertising costs for the years ended December 31, 2014, 2013 and 2012 were $2,387, $2,122 and $1,622, respectively, and are included in sales and marketing expenses in the consolidated statements of operations.

Income Taxes

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 carry-forwards. 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 the consolidated statement of operations in the period that includes the enactment date.

The Company accounts for uncertain tax positions in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”), which prescribes a recognition threshold and measurement attribute

15

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

for the financial recognition and measurement of a tax position taken or expected to be taken on a tax return. It requires that the Company determine whether the benefits of its tax positions will more likely than not be sustained upon audit based on the technical merits of its tax position. Guidance is also provided on de-recognition, classification, interest and penalties, accounting in interim periods, and disclosure. The Company recognizes penalties and interest related to uncertain tax positions, if any, as a component of income tax expense.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company records valuation allowances to reduce deferred tax assets to the amounts that are more likely than not to be realized.

Revenue Recognition

The Company generates recurring revenue from providing colocation and interconnection services. A substantial part of the Company’s revenues are provided from these recurring revenues. The remaining revenues are nonrecurring and consist of installation services and technical support. All revenue is earned in the United States of America.

Colocation services are generally governed by the terms and conditions of a master service agreement (MSA). Customers typically execute a MSA for one to three year terms. The Company bills customers on a monthly basis and recognizes the revenue as those services are performed over the term of the agreement. Revenues from installation services for colocation services are initially deferred and recognized on a straight-line basis over the average life of customer contracts.

Interconnection services are generally provided on a month-to-month, one year or multi-year term under the MSA for colocation services. Interconnection services include port and cross connect services. Port services are typically sold on a one year or multi-year term and revenue is recognized on a recurring monthly basis similar to colocation services. The Company bills customers on a monthly basis and recognizes the revenue in the period the service is provided. Revenue for cross connect installations is generally recognized in the period the cross connect is installed.

16

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

Technical support services are provided on a time and materials basis and are billed and recognized in the period services are provided.

Revenue is recognized only when the service has been provided and when there is persuasive evidence of an arrangement, the fee is fixed or determinable, and collection of the receivable is reasonably assured. The Company regularly assesses collectability of accounts receivable from customers based on a number of factors, including prior history with the customer and the credit status of the customer. If the Company determines that collection of revenue from a customer is not reasonably assured, the Company does not recognize revenue until collection becomes reasonably assured, which is generally upon receipt of cash. Sales tax collected from customers on certain services and products are remitted to the applicable taxing authorities and accounted for on a net basis, with no impact on revenue.

Revenue from customer orders that include specific periodic contractual rate increases is generally recognized on a straight-line basis over the actual contract life.

4. Accounts Receivable

Accounts receivable, net, consists of the following:

	December 31,
	2014			2013			2012
Accounts receivable	$	15,386		$	13,159		$	14,135
Allowance for doubtful accounts		(677	)		(937	)		(1,242	)
Accounts receivable, net	$	14,709		$	12,222		$	12,893

5. Intangible Assets

The weighted average useful life, gross carrying value, accumulated amortization, and net carrying value of intangible assets as of December 31, 2014, 2013 and 2012 are as follows:

	2014
	Weighted	Gross
	Average	Carrying		Accumulated
	Useful Life	Amount		Amortization			Net
Goodwill	Indefinite	$	339,013	$	—		$	339,013
Trademark	Indefinite	$	129,941	$	—		$	129,941
Customer relationships	17.3		196,743		(58,335	)		138,408
Other intangibles assets	15		7,931		(1,899	)		6,032
		$	334,615	$	(60,234	)	$	274,381

17

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

	2013
	Weighted	Gross
	Average	Carrying		Accumulated
	Useful Life	Amount		Amortization			Net
Goodwill	Indefinite	$	339,013	$	—		$	339,013
Trademark	Indefinite	$	129,941	$	—		$	129,941
Customer relationships	17.3		196,743		(39,117	)		157,626
Other intangibles assets	15		7,755		(1,417	)		6,338
		$	334,439	$	(40,534	)	$	293,905

	2012
	Weighted	Gross
	Average	Carrying		Accumulated
	Useful Life	Amount		Amortization			Net
Goodwill	Indefinite	$	339,013	$	—		$	339,013
Trademark	Indefinite	$	129,941	$	—		$	129,941
Customer relationships	17.3		196,743		(20,048	)		176,695
Other intangibles assets	15		7,348		(948	)		6,400
		$	334,032	$	(20,996	)	$	313,036

Aggregate amortization expense for identified intangible assets with definite useful lives for the years ended December 31, 2014, 2013 and 2012 was $19,700, $19,538 and $16,740, respectively. Estimated amortization expense for the next five years and thereafter as of December 31, 2014 is as follows:

Year Ending December 31,
2015	$	19,373
2016		18,326
2017		17,148
2018		14,897
2019		12,947
Thereafter		61,749
	$	144,440

18

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

6. Property and Equipment

Property and equipment, net, consists of the following:

	December 31,
	Restated			Restated			Restated
	2014			2013			2012
Land	$	3,493		$	3,493		$	3,493
Building and building improvements		91,206			91,206			91,205
Equipment, furniture and fixtures		114,275			82,839			42,478
Equipment under capital leases		25,832			20,520			17,706
Leasehold improvements and other		226,290			173,941			117,689
Construction in progress		7,126			10,553			31,156
		468,222			382,552			303,727
Less: Accumulated depreciation and amortization		(92,874	)		(52,285	)		(22,578	)
Property and equipment, net	$	375,348		$	330,267		$	281,149

Total depreciation and amortization expense for property and equipment for the years ended December 31, 2014, 2013 and 2012 was $40,590, $29,707 and $18,819, respectively. Interest cost capitalized into leasehold improvements for the years ended December 31, 2014, 2013 and 2012 was $418, $494 and $409, respectively. Accumulated depreciation on equipment under capital leases was $8,070, $3,691 and $748 at December 31, 2014, 2013 and 2012, respectively.

7. Current and Long-Term Debt, Capital Leases, and Other Financing Obligations

Current and long-term debt consists of the following:

	December 31,
	Restated			Restated			Restated
	2014			2013			2012
Term loan (1)	$	632,625		$	357,364			360,983
Revolving credit facility (1)		24,000			12,000			—
Senior unsecured notes (1)		85,794			170,374			167,009
Mortgage (2)		16,767			17,172			—
Other financing obligations (3)		39,731			38,676			33,036
Capital leases (4)		12,688			13,148			15,117
		811,605			608,734			576,145
Less: Current portion		(34,258	)		(20,423	)		(7,533	)
	$	777,347		$	588,311		$	568,612

⁽¹⁾  On September 26, 2011, the Company entered into a credit agreement with Morgan Stanley Senior Funding, Inc. consisting of a $255,000 term loan (“Term Loan”) and a $50,000 revolving credit facility (collectively, the “Credit Agreement”). On the same date, the Company entered into an Indenture Agreement for 12% Senior Unsecured Notes (“Notes”) in the aggregate amount of $180,000, with Wilmington Trust National Association.

19

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

The Term Loan had a maturity date of September 25, 2017 and required quarterly interest payments at a Eurodollar rate or 1.25%, whichever was higher, plus 6.5% applicable margin. Principal payments of 0.25% of the original principal amount were due quarterly, with the remaining principal outstanding due at maturity.

The revolving credit facility had a maturity date of September 25, 2016 and required quarterly interest payments at a Eurodollar rate or 1.25%, whichever was higher, plus 4.5% applicable margin.

The Notes were due at their maturity date of September 25, 2019 and interest was payable quarterly at 12%. Interest was to be paid in cash, except that an amount equal to 2% per annum shall be capitalized and added to the principal amount of the Notes rather than paid in cash. The Company had the option to pay the entire amount of such interest due in cash by providing the Trustee notice in writing at least ten (10) business days prior to any Interest Payment Date, as defined, that it will pay the entire amount of interest due on such Interest Payment Date in cash.

On February 17, 2012, the Company obtained an additional $75,000 in funding under the Term Loan. Under ASC 470-50-40 Debt-Modifications and Extinguishment, the Company recorded a loss on the extinguishment of debt of $1,160, which consisted of a write-off of deferred financing costs associated with certain lenders leaving the loan syndicate. The loss is included in interest expense on the consolidated statement of operations for the year ended December 31, 2012.

On October 9, 2012, the Company refinanced the $330,000 Term Loan and increased the size of the Term Loan by $35,000. The interest rate was changed to a Eurodollar rate or 1.25%, whichever is higher, plus a 5% applicable margin. The Company also increased the revolving credit facility by $15,000 to $65,000. Under ASC 470-50-40 Debt-Modifications and Extinguishment, the Company recorded a loss on the extinguishment of debt of $1,658, consisting of write-offs of deferred financing costs associated with certain lenders leaving the loan syndicate. The loss is included in interest expense on the consolidated statement of operations for the year ended December 31, 2012.

On October 10, 2013, the Company amended the terms of the Term Loan lowering the applicable margin to 4%. In addition, the applicable margin on the revolving credit facility was lowered to 4%. The Company also increased the revolving credit facility by $20,000 to $85,000. Under ASC 470-50-40 Debt-Modifications and Extinguishment, the Company recorded a loss on the extinguishment of debt of $5,244, consisting of write-offs of deferred financing costs associated with certain lenders leaving the loan syndicate. The loss is included in interest expense on the consolidated statement of operations for the year ended December 31, 2013.

On April 9, 2014 the Company entered into a new debt refinancing transaction replacing the September 2011 Credit Agreement, as amended, and the Notes with a $475,000 first lien term loan, a $110,000 revolving credit facility, a $160,000 second lien term loan (collectively the “New Credit Agreement”), and a $78,000 Unsecured Senior Note. Under ASC 470-50-40 Debt-Modifications and Extinguishment, the Company recorded a loss on the extinguishment of debt of $6,240, consisting of write-offs of deferred financing costs associated with certain lenders leaving the loan syndicate. The loss is included in interest expense on the consolidated statement of operations for the year ended December 31, 2014.

20

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

At December 31, 2014, the Company has $3,261 in outstanding letters of credit under the New Credit Agreement relating to certain operating leases, which reduce, on a dollar for dollar basis, the amount of borrowing capacity under the Company’s revolving credit facility.

The first lien term loan is due at the maturity date of April 9, 2020, interest is payable quarterly at a rate of LIBO with a 1% floor, plus an applicable margin of 3.5% and principal is payable quarterly at 0.25% of the original principal amount. The second lien term loan is due at the maturity date of April 9, 2021. Interest is payable quarterly at a rate of LIBO with a 1% floor, plus an applicable margin of 6.5% and the principal is due at maturity. The Unsecured Senior Note is due at the maturity date of July 9, 2021. Interest on the Unsecured Senior Note is capitalized at 13.5% and added to the principal balance, which is due at maturity.

The revolving credit facility has a maturity date of April 9, 2020 and requires quarterly interest payments at a rate of LIBO with a 1% floor, plus an applicable margin of 3.25%.

The obligations under the New Credit Agreement are collateralized by substantially all of the Company’s assets.

The Term Loan contains restrictive covenants that are triggered if the Company has drawn down more than 30% of the revolving credit facility at the end of the reporting period. The covenants include one financial covenant requiring the Company to maintain a leverage ratio, as defined in the New Credit Agreement.

⁽²⁾  On January 25, 2013, the Company entered into a $17,500 Commercial Mortgage Loan (“Mortgage’) with The Provident Bank. The Mortgage has a maturity date of January 1, 2020, an interest rate of 4.25% per annum, and requires monthly payments of principal and interest of $95 until the maturity date, upon which date the entire unpaid amount is due and payable. The Mortgage is collateralized by the Company’s owned building in Clifton, NJ.

⁽³⁾  The Company has a loan payable to Digital-Bryan Street Partnership, L.P. entered into under the provisions of the Third Amendment to the Master Meet-Me-Room agreement (MMR), exercised at the Company’s option under the December 1, 2006 Operating Agreement between the Company and Digital Realty Trust, L.P., the Parent of Digital-Bryan Street Partnership, L.P., for the utilization of $2,400 of MMR Alteration Allowance. The Third Amendment was effective April 1, 2008. The assets purchased under the MMR Alteration Allowance were capitalized and the $2,400 was recognized as a liability, as the Company is obligated to repay this loan to Digital Realty Trust (who made payments to the contractors directly) over the term of the agreement of ten years. The loan carries an interest rate of 10% per annum and requires monthly payments of principal and interest of $32. The outstanding balance on this loan was $1,052, $1,313 and $1,549 as of December 31, 2014, 2013 and 2012, respectively.

The Company has a lease for datacenter space in Chicago, Illinois. In connection with this lease, the Company received $1,000 in financing from the landlord for leasehold improvements that is included in other financing obligations in the consolidated balance sheets. The loan carries an interest rate of 11% per annum and requires monthly payments of principal and interest of $14. At December 31, 2014, 2013 and 2012, $657, $745 and $824, respectively, remain outstanding on this obligation.

During 2012, the Company entered into construction of a Datacenter in Clifton, New Jersey. As a result of the nature of the Company’s involvement in the project, and certain provisions within the lease, the Company was deemed to be the owner of the construction project and

21

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

subsequent building (“build-to-suit accounting”) through December 31, 2034. The deemed loan carries an interest rate of 11%. At December 31, 2014, 2013 and 2012, $35,822, $34,246, $30,663, respectively, remain outstanding on this deemed financing obligation.

During 2013, the Company entered into a lease for datacenter space in Seattle, Washington. In connection with this lease, the Company received $2,399 in financing from the landlord for generator and chiller improvements that is included in other financing obligations in the consolidated balance sheet. The loan carries an interest rate of 9% per annum and requires monthly payments of principal and interest of $32. At December 31, 2014 and 2013, $2,200 and $2,372, respectively, remain outstanding on this obligation.

⁽⁴⁾ The Company has several capital leases for financed equipment purchases, which are accounted for in accordance with ASC 840-30 Leases – Capital Leases (Note 12).

Interest Rate Cap Agreements

In October 2011, the Company entered into an interest rate cap agreement with Morgan Stanley Capital Services LLC, with a notional amount of $37,500. The term of the agreement was two years, beginning in October 2011 and ending in October 2013. The agreement called for a cap rate of 4.5% on a floating option of 3 Month US Dollar LIBOR interest rate. Under this arrangement, the Company would pay a maximum rate of 9.5% on the related notional amount.

In December 2012, the Company entered into an interest rate cap agreement with Morgan Stanley Capital Services LLC, with a notional amount of $60,500, as required by the Credit Agreement. The term of the agreement was two years, beginning in December 2012 and ending in December 2014. The agreement called for a cap rate of 4.5% on a floating option of 3 Month US Dollar LIBOR interest rate. Under this arrangement, the Company would pay a maximum rate of 9.5% on the related notional amount. The agreement was settled in April 2014 in connection with the refinancing of the Credit Agreement.

Future Principal Payments

The following table provides the schedule of future principal payments of the Company’s debt obligations by year, excluding capital and build-to-suite leases (Note 12), as of December 31, 2014:

Years Ending December 31,
2015	$	29,749
2016		5,824
2017		5,911
2018		5,707
2019		5,674
Thereafter		710,230
	$	763,095

22

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

Fair Value of Debt Facilities

The following table provides the estimated fair values of the Company’s Term Loan, Notes, and other debt as of December 31, 2014, 2013 and 2012:

	2014		2013		2012
	Restated		Restated		Restated
Term loan (Level 1)	$	612,065	$	357,364	$	363,015
Senior unsecured notes (Level 2)		91,251		170,767		173,054
Revolver (Level 1)		24,000		12,000		—
Mortgage (Level 2)		15,891		16,620		—
Capital Leases (Level 2)		12,688		13,148		15,117
Other Financing Obligations (Level 2)		39,731		38,676		33,036
	$	795,626	$	608,575	$	584,222

Level 1	Fair value was determined based on quoted active market prices for our debt.
Level 2	Fair value was determined based on quoted prices for similar debt in active markets

8. Income Taxes

Income tax (benefit) expense consists of the following for the years ended December 31, 2014, 2013 and 2012:

	2014			2013			2012
	Restated			Restated			Restated
Current
Federal	$	51		$	250		$	—
State		137			139			328
Total current		188			389			328
Deferred
Federal		(7,241	)		(16,582	)		(9,088	)
State		(4,890	)		(3,564	)		(4,910	)
Total deferred		(12,131	)		(20,146	)		(13,998	)
Income tax benefit	$	(11,943	)	$	(19,757	)	$	(13,670	)

The difference between income tax benefit and the amount resulting from applying the federal statutory rate of 34% to loss before income taxes is attributable to the following:

	December 31,
	2014			2013			2012
	Restated			Restated			Restated
Federal tax at statutory rate	$	(15,381	)	$	(17,594	)	$	(10,673	)
State taxes, net of federal benefit		(4,486	)		(2,298	)		(3,000	)
Nondeductible expense		212			158			76
Valuation allowance		7,683			—			—
Other		29			(23	)		(73	)
Income tax benefit	$	(11,943	)	$	(19,757	)	$	(13,670	)

23

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

The components of the Company’s deferred tax assets and liabilities as of December 31, 2014, 2013 and 2012 are as follows:

	2014			2013			2012
	Restated			Restated			Restated
Current deferred tax assets (liabilities)
Severance and other compensation	$	153		$	—		$	33
Deferred revenue		1,760			2,353			2,679
Deduction for repurchase premium		—			—			(193	)
Deferred financing costs		—			(1,851	)		(1,749	)
Accrued bonus		202			543			—
Allowance for doubtful accounts		279			392			512
		2,394			1,437			1,282
Valuation Allowance		(175	)		—			—
Current deferred tax assets	$	2,219		$	1,437		$	1,282
Noncurrent deferred tax assets
Net operating loss	$	37,970		$	37,247		$	42,186
AMT credit		602			549			299
Deferred revenue		2,608			2,193			1,958
Stock-based compensation		929			688			361
Deferred rent		35,059			25,522			10,265
Interest Expense		3,427			1,842			345
Other		53			—			—
		80,648			68,041			55,414
Valuation Allowance		(7,508	)		—			—
Noncurrent deferred tax assets		73,140			68,041			55,414
Noncurrent deferred tax liabilities
Land		(293	)		(297	)		(289	)
Goodwill and indefinite lived intangibles		(56,598	)		(56,424	)		(54,749	)
Property and equipment		(19,239	)		(21,403	)		(21,305	)
Intangible assets		(51,788	)		(59,175	)		(64,924	)
Deduction for repurchase premium		—			—			(900	)
Deferred financing costs		(4,333	)		(1,202	)		(3,699	)
Noncurrent deferred tax liabilities		(132,251	)		(138,501	)		(145,866	)
Net noncurrent deferred tax liabilities	$	(59,111	)	$	(70,460	)	$	(90,452	)

Considering the four sources of future taxable income as described in ASC 740, the Company determined that as of December 31, 2014, it was not more likely than not that the Company would be able to realize the future tax benefits of approximately $7,683 of deferred tax assets. As a result, a valuation allowance for this amount was established as of December 31, 2014. The Company has recognized a deferred tax liability of $56,891 for those liabilities that cannot be relied upon as future sources of taxable income.

24

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

For the year ended December 31, 2014, the Company generated net federal operating loss carryforwards of approximately $1,979. For the year ended December 31, 2013, the Company realized the benefit of net operating loss carryforwards of approximately $12,489. At December 31, 2014 the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $93,751 and $45,713, respectively, available to reduce future taxable income. The federal and state net operating loss carryforwards expire in various years from 2016 through 2034. However, the Internal Revenue Code of 1986 and applicable state tax laws impose substantial restrictions on the ability of a company to utilize net operating loss and tax credit carryforwards in the event of an ownership change as defined in section 382 of the Internal Revenue Code. The Company experienced ownership changes in 2003, 2006 and 2011, which triggered these limitations on its operating loss carryovers, which are reported net of any impact. The Company also has alternative minimum tax credit carryforwards of $602 that may be carried forward indefinitely.

The Company has concluded, based on its evaluation, that there were no significant uncertain tax positions requiring recognition as liabilities for unrecognized tax benefits at December 31, 2014, 2013 and 2012. However, there was $129 of liabilities for unrecognized tax benefits at December 31, 2012, which were released during 2013.

The Company conducts business in the U.S. and various state jurisdictions and, in the normal course of business, is subject to examination by taxing authorities. All income is generated in the United States of America. The Company’s tax years open for examination are the years ended December 2011 and later for federal, and 2008 and later for state and local jurisdictions. Furthermore, the IRS can review the Company’s net operating losses when utilized for tax years 2000 and subsequent.

9. Stockholders’ Equity

Common Stock

As of December 31, 2014, 2013 and 2012, the Company had 300,083, 299,583 and 299,583, respectively, shares of common stock outstanding, par value $0.001. Each share of common stock is entitled to one vote. In 2014, a $148,000 dividend was declared and paid on the common stock. In 2013 and 2012, no dividends were declared or paid on the common stock.

10. Stock-Based Compensation

2011 Equity Incentive Plan

On September 26, 2011, the Company established the 2011 Equity Incentive Plan (the “2011 Plan”) and the board of directors authorized the reservation of up to 30,864 shares of the Company’s Common Stock to be issued pursuant to the 2011 Plan. The 2011 Plan provides for the granting of Incentive Stock Options (ISOs), Nonqualified Options (NQOs), Stock Grants and Stock-Based Awards to employees and directors of, and certain consultants to, the Company and its affiliates. The 2011 Plan is administered by the board of directors, and the board of directors may terminate or amend the plan, with approval of the stockholders, as may be required by applicable regulations, at any time. Options granted under the 2011 Plan generally vest over 4 years, with one fourth of the total number of shares subject to vesting on each anniversary of the grant date and the final installment on the fourth anniversary of the grant date. Options are exercisable subject to the achievement of performance conditions specified in the 2011 Plan, and generally expire ten years from the date of the grant.

25

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

For the years ended December 31, 2014, 2013 and 2012, the Company recognized $709, $772 and $873, respectively, of stock-based compensation expense associated with NQOs issued under this plan.

The following table summarizes the activity for NQOs for the years ended December 31, 2014, 2013 and 2012:

				Weighted
				Average
				Exercise
	Shares			Price
Outstanding as of January 1, 2012		—		$	—
Granted		27,129			1,989
Exercised		—			—
Forfeited		(303	)		1,993
Outstanding as of December 31, 2012		26,826			1,989
Granted		3,226			1,998
Exercised		—			—
Forfeited		(6,877	)		1,998
Outstanding as of December 31, 2013		23,175			1,987
Granted		8,707			1,523
Exercised		—			—
Forfeited		(1,341	)		1,497
Outstanding as of December 31, 2014		30,541		$	1,501

For the years ended December 31, 2014, 2013 and 2012, the Company determined the fair value of NQOs granted by using the Black Scholes option pricing model with the following assumptions:

	December 31,
	2014			2013			2012
Expected term (years)		3.5			2.1			4.0
Risk free rate		1.1	%		0.35	%		0.66	%
Estimated volatility		32	%		34	%		60	%
Dividend yield		0	%		0	%		0	%
Forfeiture rate		9	%		9	%		9	%

As of December 31, 2014, 2013 and 2012, the unrecognized compensation cost for nonvested shares was $820, $1,014 and $2,209, respectively, over a weighted average period of 2.2, 2.3 and 3 years, respectively. No NQOs were exercisable as of December 31, 2014, 2013 and 2012.

26

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

The following table summarizes information about stock options outstanding as of December 31, 2014:

				Weighted
				Average		Weighted
				Remaining		Average
Exercise				Contractual		Exercise
Price		Outstanding		Life (Years)		Price
$	506		7,520		7.24	$	506
	583		3,789		9.20		583
	1,506		6,939		7.24		1,506
	1,583		2,685		9.27		1,583
	2,506		6,923		7.24		2,506
	2,583		2,685		9.27		2,583
			30,541			$	1,501

Warrants

At December 31, 2014, 2013 and 2012, the Company had 12,483 warrants outstanding, for the purchase of common stock, with an exercise price of $1,000 per share. The fair value of these warrants of $2,996 when issued in 2011 was accounted for as additional paid in capital. The warrants expire in 2031.

11. Related Party Transactions

Management Fees

The Company has management agreements with its owners, ABRY Partners, LLC and Berkshire Partners, LLC (collectively, the “Managers”). The Company engaged the Managers for a term of 10 years, through September 2021, to provide consulting and management advisory services for an annual fee of $1,000, which is included in general and administrative expenses on the consolidated statements of operations.

RCN Cable

RCN Cable is a vendor of the Company. ABRY has ownership in RCN Cable. The Company expensed $0, $67 and $8 for services provided by RCN Cable for the years ended December 31, 2014, 2013 and 2012, respectively.

Datapipe

Datapipe is a vendor of the Company. ABRY has ownership in Datapipe. The Company expensed $74, $78 and $61 for services provided by Datapipe for the years ended December 31, 2014, 2013 and 2012, respectively.

One Source Networks

One Source Networks is a vendor of the Company. ABRY has ownership in One Source Networks. The Company expensed $0, $53 and $0 for services provided by One Source Networks for the years ended December 31, 2014, 2013 and 2012, respectively.

27

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

RCN Cable

RCN Cable is a customer of the Company. ABRY has ownership in RCN Cable, who provided revenues to the Company of approximately $138, $93 and $0 for services in the year ended December 31, 2014, 2013 and 2012, respectively.

Airband

Airband is a customer of the Company. ABRY has ownership in Airband, who provided revenues to the Company of approximately $131, $228 and $197 for services in the years ended December 31, 2014, 2013 and 2012, respectively. The Company had receivables due from Airband of $23, $11 and $0 at December 31, 2014, 2013 and 2012, respectively.

Xand Corporation

Xand Corporation is a customer of the Company. ABRY had an ownership in Xand, who provided revenues to the Company of approximately $125, $143 and $139 for services in the years ended December 31, 2014, 2013 and 2012, respectively. The Company had receivables due from Xand of $1, $6 and $0 at December 31, 2014, 2013 and 2012, respectively.

One Source Networks

One Source Networks is a customer of the Company. ABRY has ownership in One Source Networks who provided revenues to the Company of approximately $111, $85 and $0 for the years ended December 31, 2014, 2013 and 2012 respectively. The Company had receivables due from One Source Networks of $1, $0 and $0 at December 31, 2014, 2013 and 2012, respectively.

Securus

Securus is a customer of the Company. ABRY has ownership in Securus, who provided revenues to the Company of approximately $1,388, $1,680 and $0 for services in the years ended December 31, 2014, 2013, and 2012 respectively. The Company had receivables due from Securus of $116, $0 and $0 at December 31, 2014, 2013 and 2012, respectively.

Lightower Fiber Networks

Lightower Fiber Networks is a customer of the Company. In April 2013, Lightower, a Berkshire owned Company, closed a merger with Sidera Networks, an ABRY owned entity, to form Lightower Fiber Networks. Berkshire and ABRY have ownership in Lightower Fiber Networks and the predecessor companies, who provided revenues to the Company of approximately $6,974, $1,929 and $3,379 for services in the years ended December 31, 2014, 2013 and 2012, respectively. The Company had receivables due from Lightower Fiber Networks and the predecessor companies of $0, $396 and $80 at December 31, 2014, 2013 and 2012, respectively.

Asurion Insurance Services Inc.

Asurion Insurance Services Inc. is a customer of the Company. Berkshire has ownership in Asurion, who provided revenues to the Company of approximately $582, $556 and $376 for services in the years ended December 31, 2014, 2013 and 2012 respectively. The Company had a receivable due from Asurion of $0, $0 and $51 at December 31, 2014, 2013 and 2012, respectively.

28

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

12. Commitments and Contingencies

Operating Leases, Capital Leases, and Build-to-Suit Lease.

The Company leases certain operating facilities, offices, and equipment under various lease agreements expiring during the years ending December 2015 through December 2037. Future minimum lease payments under operating leases, including a build-to-suit lease, and capital leases that have remaining noncancelable lease terms at December 31, 2014, are as follows:

	Operating Leases Restated		Capital Leases			Build-to-Suit Lease Restated
Year Ending December 31,
2015	$	86,515	$	5,503		$	4,046
2016		93,579		5,438			4,046
2017		102,086		3,192			4,046
2018		106,798		237			4,100
2019		112,332		—			4,154
Thereafter		1,228,684		—			68,755
Total minimum payments required	$	1,729,994		14,370			89,147
Less: Amount representing interest				(1,682	)		(66,561	)
Present value of net minimum lease payments			$	12,688		$	22,586

In December 2012, the Company entered into a 23 year lease agreement for a 216,000 square foot Datacenter in Clifton New Jersey. The Company incurred construction costs during 2012 related to the construction of this new facility, and therefore was deemed the accounting owner of the construction project. Due to a condemnation clause in the lease which allowed the Company to participate in property appreciation in the event of a condemnation award, the Company had continuing involvement in the deemed sale lease-back and was deemed to be the owner of the facility for accounting purposes.

The operating leases for the Company’s facilities at 60 Hudson Street in New York, New York require the Company to maintain a $1,450 letter of credit, issued for the benefit of 60 Hudson Owner, LLC, the Company’s landlord at 60 Hudson Street. The letter of credit is collateralized by cash deposits of at least the amount of the letter of credit held in a restricted account and is reflected in Cash-restricted on the condensed consolidated balance sheet. An additional letter of credit for $113 is collateralized by the Company’s revolving line of credit.

The operating lease for the Company’s facilities at 32 Avenue of the Americas requires the Company to maintain a $3,148 letter of credit, issued for the benefit of 32 Sixth Avenue Company, LLC, the Company’s landlord at 32 Avenue of the Americas. $1,648 of this letter of credit is related to the build out of the leased space and is expected to be released upon meeting certain construction milestones. The letter of credit is collateralized by the company’s revolving line of credit.

Rent expense for the years ended December 31, 2014, 2013 and 2012 was $116,322, $103,710 and $79,805 respectively. This amount is net of sublease income for the years ended December 31, 2014, 2013 and 2012 of approximately $106, $104 and $85, respectively.

29

Telx Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

(in thousands, except share and per share data)

Legal Matters

The Company and its subsidiaries are parties in various lawsuits arising in the ordinary course of business. In the opinion of management, with the advice of its legal counsel, the ultimate disposition of these matters will not have a material adverse effect on the financial position and results of operations of the Company.

13. Employee Benefits Plan

The Company has a 401(k) plan whereby employees may elect to make contributions to the Plan through pretax deductions from their compensation up to the annual limit established by the Internal Revenue Service. All employees are eligible to participate in the plan as of their date of hire. In April 2013, the Company began a matching contribution of 50% on every dollar on the first 3% of the employees’ compensation. The Company contribution for the years ended December 31, 2014, 2013 and 2012 respectively was $531, $309 and $0.

14. Subsequent Events

The Company’s management has performed an evaluation of subsequent events as of July 10, 2015, the date the consolidated financial statements were available to be issued, and has determined that there were no subsequent events or transactions required to be recognized or disclosed within the consolidated financial statements.

30

EX-99.3

Exhibit 99.3

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

During May, June, July and August of 2015, Digital Realty Trust, Inc. (together with its consolidated subsidiaries, the “Company”) entered into the following transactions, which have been included in the accompanying Unaudited Pro Forma Condensed Combined Financial Information as discussed more fully below.

Redemption of 4.50% Notes due 2015

On May 26, 2015, Digital Realty Trust, L.P., a Maryland limited partnership, of which the Company is the sole general partner (the “Operating Partnership”), redeemed the entire outstanding principal amount of its 4.50% notes due 2015 at a redemption price of 100% of the principal amount of the notes plus accrued and unpaid interest thereon up to, but excluding, the redemption date (the “Notes Redemption”).

Offering of 3.950% Notes due 2022

On June 23, 2015, the Operating Partnership issued $500.0 million aggregate principal amount of its 3.950% notes due 2022 in an underwritten public offering (the “Notes Offering”). The Operating Partnership will use the net proceeds from the Notes Offering to fund certain eligible green projects, including the development and redevelopment of such projects. Pending such uses, the Operating Partnership temporarily repaid borrowings under its global revolving credit facility.

Pending Telx Acquisition

On July 13, 2015, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Telx Holdings, Inc. (“Telx”), and BSR LLC, as representative of the sellers, pursuant to which the Company agreed to acquire Telx for approximately $1.886 billion in cash, excluding transaction related expenses, subject to customary closing adjustments (the “Telx Acquisition”). The Merger Agreement contains customary representations and warranties as well as covenants by each of the parties. The Telx Acquisition is expected to close later this year, subject to the satisfaction of closing conditions, including among others the continuing accuracy of representations and warranties and compliance with covenants and agreements in the Merger Agreement.

On July 13, 2015, in connection with the execution of the Merger Agreement, the Company entered into a commitment letter, pursuant to which the initial commitment parties agreed to provide a senior unsecured bridge loan facility (the “Bridge Facility”) in the original principal amount of $1.85 billion to fund the Telx Acquisition.

Forward Equity Sale

On July 14, 2015, the Company commenced an underwritten public offering of 10,500,000 shares of its common stock, all of which were offered in connection with forward sale agreements the Company entered into with certain financial institutions acting as forward purchasers. The forward purchasers borrowed and sold 10,500,000 shares of the Company’s common stock in the public offering. Pursuant to the terms of the forward sale agreements, and subject to its right to elect cash or net share settlement, the Company intends to sell, upon physical settlement of such forward sale agreements, an aggregate of 10,500,000 shares of its common stock to the forward purchasers (the “Forward Equity Sale”). In addition, the Company granted the underwriters a 30-day option to purchase an additional 1,575,000 shares of its common stock to cover overallotments, if any. The accompanying Unaudited Pro Forma Condensed Combined Financial Information assumes that the underwriters do not exercise this overallotment option.

The Company did not receive any proceeds from the sale of its common stock by the forward purchasers in the public offering. Assuming full physical settlement of the forward sale agreements (by the delivery of shares of the Company’s

common stock) and that the underwriters have not exercised their option to purchase additional shares, the Company expects to receive net proceeds of approximately $686.4 million, subject to certain adjustments pursuant to the forward sale agreements, upon settlement of the forward sale agreements, which settlement the Company expects will occur prior to or concurrently with the consummation of the Telx Acquisition. The Company intends to use the net proceeds from the Forward Equity Sale to fund a portion of the Telx Acquisition.

Preferred Stock Offering

On August 13, 2015, the Company commenced an underwritten public offering of shares of its series I cumulative redeemable preferred stock, par value $0.01 per share, with a liquidation preference of $25.00 per share (the “Preferred Offering”). The Company intends to use the net proceeds from the Preferred Offering to fund a portion of the Telx Acquisition. The accompanying Unaudited Pro Forma Condensed Combined Financial Information reflects (i) the payment of cumulative dividends on the Company’s series I preferred stock from the date of original issue at an assumed rate of 6.25% per annum of the $25.00 liquidation preference per share and (ii) the receipt of approximately $144.3 million of net proceeds from the Preferred Offering after deducting the underwriting discount and estimated offering expenses payable by the Company, based on an assumed total offering size of 6,000,000 shares of series I preferred stock. In the event that we sell more than 6,000,000 shares of series I preferred stock in the Preferred Offering, the draw on the Bridge Facility will be reduced, there will be a corresponding decrease in interest expense in connection therewith and a corresponding increase in preferred stock dividends.

The Notes Offering, the Notes Redemption, the Telx Acquisition, a draw on the Bridge Facility for a portion of the funds necessary to consummate the Telx Acquisition, the Forward Equity Sale and the Preferred Offering are collectively referred to in the Unaudited Pro Forma Condensed Combined Financial Information as the “Transactions.”

The following Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2015 and the Unaudited Pro Forma Condensed Combined Income Statement for the six months ended June 30, 2015 and for the year ended December 31, 2014 have been derived from the historical consolidated financial statements of the Company and Telx, as adjusted to give effect to the Transactions, and are intended to reflect the impact of the Transactions on the Company on a pro forma basis as of and for the periods indicated. The Unaudited Pro Forma Condensed Combined Financial Information does not give effect to any potential additional permanent financing of the Telx Acquisition.

The Unaudited Pro Forma Condensed Combined Financial Information has been prepared by the Company using the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. The fair value of identifiable tangible and intangible assets acquired and liabilities assumed from the Telx Acquisition are based on a preliminary estimate of fair value using assumptions described in the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information that the Company believes are reasonable.

The final purchase price allocation for the Transactions will be performed as soon as practicable after the closing of the Telx Acquisition and will depend on the final purchase price, which may be impacted by working capital adjustments, and final asset and liability valuations, which may depend in part on prevailing market rates and conditions. Final asset and liability valuations will be based on the actual net tangible and intangible assets that exist as of the closing of the Telx Acquisition. Any final adjustments may change the allocations of the purchase price, which could affect the fair value assigned to the assets acquired and liabilities assumed and could result in a change to the Unaudited Pro Forma Condensed Combined Financial Information, including the amount of goodwill and depreciation and amortization. Therefore, the result of the final purchase price allocation could be materially different from the preliminary allocation set forth herein.

Certain of the facilities acquired in the Telx Acquisition may be reassessed for property tax purposes after the consummation of the acquisition. Therefore, the amount of property taxes the Company pays in the future may change from what Telx has paid in the past. Given the uncertainty of the amounts involved, any property tax changes have not been reflected in the Unaudited Pro Forma Condensed Combined Financial Information. In addition, the Company plans to treat certain of Telx’s assets as real property (rather than personal property) for federal income tax purposes. This change will require the Company to recognize additional income over the following four years. While the Company has net operating losses that may shield this income through 2016, the Company currently estimates that it may be required to pay up to $20.0 million in federal income taxes, in the aggregate, as a result of this income recognition with respect to the 2017 to 2018 period.

The Unaudited Pro Forma Condensed Combined Balance Sheet reflects the Telx Acquisition, a draw on the Bridge Facility, the Forward Equity Sale and the Preferred Offering as if they had been consummated on June 30, 2015, and the Unaudited Pro Forma Condensed Combined Statements of Operations give effect to the Notes Offering, the Notes Redemption, the Telx Acquisition, a draw on the Bridge Facility, the Forward Equity Sale and the Preferred Offering as if they had been consummated on January 1, 2014. The following Unaudited Pro Forma Condensed Combined Financial Information is based on, and should be read in conjunction with:

• The historical audited consolidated and combined financial statements of the Company and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed with the Securities and Exchange Commission (“SEC”) on March 2, 2015;

• The historical unaudited condensed consolidated interim financial statements of the Company and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in its quarterly report on Form 10-Q for the quarterly period ended June 30, 2015, as filed with the SEC on August 6, 2015;

• The historical audited consolidated balance sheet of Telx as of December 31, 2014 and the consolidated statements of operations, cash flows and statements of stockholders’ equity for the year ended December 31, 2014 (included as Exhibit 99.2 to the Current Report on Form 8-K of which this financial information forms an exhibit); and

• The historical unaudited consolidated balance sheet of Telx as of June 30, 2015 and the consolidated statements of operations, cash flows and statements of stockholders’ equity for the six months ended June 30, 2015 (included as Exhibit 99.1 to the Current Report on Form 8-K of which this financial information forms an exhibit).

The Unaudited Pro Forma Condensed Combined Financial Information included herein has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. The Unaudited Pro Forma Condensed Combined Financial Information has been prepared to reflect adjustments to the Company’s historical consolidated financial information that are (i) directly attributable to the Transactions, (ii) factually supportable and (iii) with respect to the Unaudited Pro Forma Condensed Combined Income Statement, expected to have a continuing impact on the combined results. Certain information and certain note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading.

The Unaudited Pro Forma Condensed Combined Financial Information is presented for informational purposes only and is not necessarily indicative of the operating results or financial position that actually would have been achieved if the Transactions had occurred on the dates indicated or that may be achieved in future periods. The Unaudited Pro Forma Condensed Combined Financial Information should be read in conjunction with the financial statements of the Company and Telx. It also does not reflect any cost savings, operating synergies or revenue enhancements that the Company may achieve with respect to combining the companies or costs to integrate the business or the impact of any non-recurring activity and any one-time transaction related costs. Synergies and integration costs have been excluded from consideration because they do not meet the criteria for unaudited pro forma adjustments.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF JUNE 30, 2015

	Historical
	Digital Realty Trust, Inc.			Telx			Pro Forma Adjustments			Note Reference	Pro Forma Combined Company
ASSETS
Investments in real estate:
Properties:
Land	$	645,918		$	3,493		$	3,745		2(b)	$	653,156
Acquired ground leases		13,225			—			—				13,225
Buildings and improvements		8,938,019			483,057			113,580		2(b)		9,534,656
Tenant improvements		543,964			—			—				543,964
Total investments in properties		10,141,126			486,550			117,325				10,745,001
Accumulated depreciation and amortization		(2,033,289	)		(117,124	)		117,124				(2,033,289	)
Net investments in properties		8,107,837			369,426			234,449				8,711,712
Investment in unconsolidated joint ventures		103,410			—			—				103,410
Net investments in real estate		8,211,247			369,426			234,449				8,815,122
Cash and cash equivalents		59,152			9,012			—				68,164
Accounts and other receivables, net of allowance for doubtful accounts		126,734			17,155			—				143,889
Deferred rent		467,262			—			(73,732	)	2(f)		393,530
Acquired above-market leases, net		33,936			—			—				33,936
Acquired in-place lease value and deferred leasing costs, net		424,229			—			259,004		2(b)		683,233
Customer relationships		—			128,967			612,485		2(b)		741,452
Trademark		—			129,941			(121,785	)	2(b)		8,156
Other intangible assets		—			5,787			(5,787	)	2(b)		—
Goodwill		—			339,013			(54,592	)	2(b)		284,421
Deferred financing costs, net		30,203			19,296			(11,896	)	2(a), 2(c)		37,603
Restricted cash		9,394			1,773			—				11,167
Assets held for sale		171,990			—			—				171,990
Other assets		51,862			24,916			—				76,778
Total assets	$	9,586,009		$	1,045,286		$	838,146			$	11,469,441
LIABILITIES AND EQUITY
Global revolving credit facility	$	777,013		$	—		$	—		2(c)	$	777,013
Unsecured term loan		961,098			—			—				961,098
Senior unsecured bridge loan facility		—			—			1,031,725		2(a)		1,031,725
Unsecured senior notes, net of discount		2,856,408			—			—		2(c)		2,856,408
Mortgage loans, net of premiums		374,307			—			—				374,307
Term loan and other loans payable		—			755,392			(755,392	)	2(a)		—
Accounts payable and other accrued liabilities		516,232			199,072			(75,369	)	2(g)		639,935
Capital leases and other financing obligations		—			49,869			—				49,869
Accrued dividends and distributions		—			—			—				—
Acquired below-market leases, net		94,312			—			10,908		2(b)		105,220
Deferred rent		—			—			—				—
Security deposits and prepaid rents		109,005			2,361			—				111,366
Obligations associated with assets held for sale		7,441			—			—				7,441
Total liabilities		5,695,816			1,006,694			211,872				6,914,382
Commitments and contingencies
Equity:
Stockholders’ Equity:
Preferred Stock		1,048,121			—			144,275		2(e)		1,192,396
Common Stock		1,351			—			105		2(d)		1,456
Additional paid-in capital		3,974,398			157,485			686,295		2(d)		4,818,178
Accumulated dividends in excess of earnings		(1,108,701	)		(118,893	)		(204,401	)	2(h)		(1,431,995	)
Accumulated other comprehensive loss, net		(67,324	)		—			—				(67,324	)
Total stockholders’ equity		3,847,845			38,592			626,274				4,512,711
Noncontrolling Interests:
Noncontrolling interests in operating partnership		35,577			—			—				35,577
Noncontrolling interests in consolidated joint ventures		6,771			—			—				6,771
Total noncontrolling interests		42,348			—			—				42,348
Total equity		3,890,193			38,592			626,274				4,555,059
Total liabilities and equity	$	9,586,009		$	1,045,286		$	838,146			$	11,469,441

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT

FOR THE SIX MONTHS ENDED JUNE 30, 2015

	Historical
	Digital Realty Trust, Inc.			Telx (See Note 1)			Pro Forma Adjustments			Note Reference	Pro Forma Combined Company
Operating Revenues:
Rental	$	649,842		$	169,534		$	(31,433	)	3(a)	$	787,943
Tenant reimbursements		173,401			—			—				173,401
Fee income		3,163			—			—				3,163
Other		498			—			—				498
Total operating revenues		826,904			169,534			(31,433	)			965,005
Operating Expenses:
Rental property operating and maintenance		254,102			108,286			(32,231	)	3(b)		330,157
Property taxes		44,163			—			—				44,163
Insurance		4,309			—			—				4,309
Change in fair value of contingent consideration		(42,682	)		—			—				(42,682	)
Depreciation and amortization		260,597			35,290			68,720		3(c)		364,607
General and administrative		46,807			16,355			(750	)	3(d)		62,412
Transactions		3,259			932			—				4,191
Other		(22	)		—			—				(22	)
Total operating expenses		570,533			160,863			35,739				767,135
Operating income		256,371			8,671			(67,172	)			197,870
Other Income (Expenses):
Equity in earnings of unconsolidated joint ventures		8,001			—			—				8,001
Gain on sale of property		94,489			—			—				94,489
Interest and other income (expense)		(2,521	)		5			—				(2,516	)
Interest expense		(91,580	)		(29,806	)		16,453		3(e)		(104,933	)
Tax (expense) / benefit		(4,290	)		(1,425	)		—				(5,715	)
Loss from early extinguishment of debt		(148	)		—			—				(148	)
Net income		260,322			(22,555	)		(50,719	)			187,048
Net income attributable to noncontrolling interests		(4,628	)		—			1,465		3(f)		(3,163	)
Net income attributable to Digital Realty Trust, Inc.		255,694			(22,555	)		(49,254	)			183,885
Preferred stock dividends		(36,911	)		—			(4,688	)	3(g)		(41,599	)
Net income available to common stockholders	$	218,783		$	(22,555	)	$	(53,942	)		$	142,286
Net income per share available to common stockholders:
Basic	$	1.61									$	0.97
Diluted	$	1.61									$	0.97
Weighted average common shares outstanding:
Basic		135,757,584						10,500,000		2(d)		146,257,584
Diluted		136,260,995						10,500,000		2(d)		146,760,995

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2014

	Historical
	Digital Realty Trust, Inc.			Telx (See Note 1)			Pro Forma Adjustments			Note Reference	Pro Forma Combined Company
Operating Revenues:
Rental	$	1,256,086		$	308,656		$	(51,568	)	3(a)	$	1,513,174
Tenant reimbursements		350,234			—			—				350,234
Fee income		7,268			—			—				7,268
Other		2,850			—			—				2,850
Total operating revenues		1,616,438			308,656			(51,568	)			1,873,526
Operating Expenses:
Rental property operating and maintenance		503,140			193,165			(65,450	)	3(b)		630,855
Property taxes		91,538			—			—				91,538
Insurance		8,643			—			—				8,643
Change in fair value of contingent consideration		(8,093	)		—			—				(8,093	)
Depreciation and amortization		538,513			62,472			145,540		3(c)		746,525
General and administrative		93,188			33,316			(1,036	)	3(d)		125,468
Transactions		1,303			3,606			—				4,909
Impairment of investments in real estate		126,470			—			—				126,470
Other		3,070			—			—				3,070
Total operating expenses		1,357,772			292,559			79,054				1,729,385
Operating income		258,666			16,097			(130,622	)			144,141
Other Income (Expenses):
Equity in earnings of unconsolidated joint ventures		13,289			—			—				13,289
Gain on sale of property		15,945			—			—				15,945
Gain on contribution of properties to unconsolidated joint ventures		95,404			—			—				95,404
Gain on sale of investment		14,551			—			—				14,551
Interest and other income (expense)		2,663			32			—				2,695
Interest expense		(191,085	)		(61,367	)		34,245		3(e)		(218,207	)
Tax expense		(5,238	)		11,943			—				6,705
Loss from early extinguishment of debt		(780	)		—			—				(780	)
Net income		203,415			(33,295	)		(96,377	)			73,743
Net income attributable to noncontrolling interests		(3,232	)		—			2,593		3(f)		(639	)
Net income attributable to Digital Realty Trust, Inc.		200,183			(33,295	)		(93,784	)			73,104
Preferred stock dividends		(67,465	)		—			(9,375	)	3(g)		(76,840	)
Net income available to common stockholders	$	132,718		$	(33,295	)	$	(103,159	)		$	(3,736	)
Net income (loss) per share available to common stockholders:
Basic	$	1.00									$	(0.03	)
Diluted	$	0.99									$	(0.03	)
Weighted average common shares outstanding:
Basic		133,369,047						10,500,000		2(d)		143,869,047
Diluted		133,637,235						10,500,000		2(d)		143,869,047

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. Reclassifications of Historical Telx

Financial information presented in the “Historical Telx” columns in the Unaudited Pro Forma Condensed Combined Balance Sheet and Statement of Operations represents the historical balance sheet of Telx as of June 30, 2015 and the historical statement of operations of Telx for the year ended December 31, 2014 and for the six months ended June 30, 2015, respectively. Such financial information has been reclassified or classified to conform to the historical presentation in the Company’s consolidated financial statements as set forth below. Unless otherwise indicated, defined line items included in the footnotes have the meanings given to them in the historical financial statements of Telx.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (continued)

	Before Reclassification		Reclassification Amount				After Reclassification
Balance Sheet
Current deferred tax assets	$	1,833	$	(1,833	)	(1)	$	—
Prepaid expenses		2,504		(2,504	)	(1)		—
Other current assets		11,285		(11,285	)	(1)		—
Property and equipment, net		369,426		(369,426	)	(2)		—
Land		—		3,493		(2)		3,493
Building and improvements		—		483,057		(2)		483,057
Accumulated depreciation and amortization		—		(117,124	)	(2)		(117,124	)
Other assets		9,294		15,622		(1)		24,916
Accounts payable		4,779		(4,779	)	(3)		—
Accrued expenses and other current liabilities		20,961		(20,961	)	(3)		—
Accounts payable and other accrued liabilities		—		199,072		(3)		199,072
Customer security deposits		2,020		(2,020	)	(5)		—
Security deposits and prepaid rents		—		2,361		(5)		2,361
Deferred revenue		4,278		(4,278	)	(3)		—
Capital leases and other financing obligations		—		49,869		(4)		49,869
Current portion of capital leases and other financing obligations		5,340		(5,340	)	(4)		—
Current portion of term loan and other loans payable		22,181		(22,181	)	(6)		—
Term loan and other loans payable		—		755,392		(6)		755,392
Customer security deposits, less current portion		341		(341	)	(5)		—
Deferred rent		103,246		(103,246	)	(3)		—
Deferred revenue, less current portion		6,680		(6,680	)	(3)		—
Deferred tax liabilities		59,128		(59,128	)	(3)		—
Capital leases and other financing obligations, less current portion		44,529		(44,529	)	(4)		—
Term loan and other loans payable, less current portion		733,211		(733,211	)	(6)		—
Statement of Operations - For the Six Months Ended June 30, 2015
Cost of revenues	$	116,825	$	(116,825	)	(1)	$	—
Sales and marketing		23,822		(23,822	)	(2)		—
General and administrative		19,285		(2,930	)	(3)		16,355
Rental property operating and maintenance		—		108,286		(1)(2)		108,286
Depreciation and amortization		—		35,290		(1)(2)(3)		35,290
Statement of Operations - For the Year Ended December 31, 2014
Cost of revenues	$	206,232	$	(206,232	)	(1)	$	—
Sales and marketing		44,030		(44,030	)	(2)		—
General and administrative		38,691		(5,375	)	(3)		33,316
Rental property operating and maintenance		—		193,165		(1)(2)		193,165
Depreciation and amortization		—		62,472		(1)(2)(3)		62,472

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (continued)

Reclassification and classification of the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2015:

(1) Represents reclassification of “Current deferred tax assets” of $1.8 million, “Prepaid expenses” of $2.5 million and “Other current assets” of $11.3 million to “Other assets” of $15.6 million.

(2) Represents disaggregation and reclassification of “Property and equipment, net” of $369.4 million into “Land” of $3.5 million, “Buildings and improvements” of $483.0 million and “Accumulated depreciation and amortization” of $117.1 million.

(3) Represents reclassification of “Accounts payable” of $4.8 million, “Accrued expenses and other current liabilities” of $21.0 million, “Deferred revenue” of $4.3 million, “Deferred rent” of $103.2 million, “Deferred revenue, less current portion” of $6.7 million and “Deferred tax liabilities” of $59.1 million to “Accounts payable and other accrued liabilities” of $199.1 million.

(4) Represents reclassification of “Current portion of capital leases and other financing obligations” of $5.4 million and “Capital leases and other financing obligations, less current portion” of $44.5 million to “Capital leases and other financing obligations” of $49.9 million.

(5) Represents reclassification of “Customer security deposits” of $2.0 million and “Customer security deposits, less current portion” of $0.4 million to “Security deposits and prepaid rents” of $2.4 million.

(6) Represents reclassification of “Current portion of term loan and other loans payable” of $22.2 million and “Term loan and other loans payable, less current portion” of $733.2 million to “Term loan and other loans payable” of $755.4 million.

Reclassification and classification of the Unaudited Pro Forma Condensed Combined Income Statement for the six months ended June 30, 2015:

(1) Represents reclassification of “Cost of revenues” of $95.3 million to “Rental property operating and maintenance” and $21.6 million to “Depreciation and amortization.”

(2) Represents reclassification of “Sales and marketing” of $13.0 million to “Rental property operating and maintenance” and $10.8 million to “Depreciation and amortization.”

(3) Represents reclassification of “General and administrative” of $2.9 million to “Depreciation and amortization.”

Reclassification and classification of the Unaudited Pro Forma Condensed Combined Income Statement for the year ended December 31, 2014:

(1) Represents reclassification of “Cost of revenues” of $170.6 million to “Rental property operating and maintenance” and $35.7 million to “Depreciation and amortization.”

(2) Represents reclassification of “Sales and marketing” of $22.6 million to “Rental property operating and maintenance” and $21.4 million to “Depreciation and amortization.”

(3) Represents reclassification of “General and administrative” of $5.4 million to “Depreciation and amortization.”

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (continued)

2. Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments

The Unaudited Pro Forma Condensed Combined Balance Sheet reflects the effect of the following adjustments:

(a) Summary of sources and uses for the Telx Acquisition (in thousands):

Sources of funds:
Borrowings under Bridge Facility (1)	$	1,031,725
Net proceeds from Forward Equity Sale (2)		686,400
Net proceeds from Preferred Offering (3)	$	144,275
Total sources of funds	$	1,862,400
Uses of funds:
Purchase price	$	1,886,000
Assumed capital lease obligations		(46,000	)
Cash paid to sellers at closing (4)		1,840,000
Deferred financing costs associated with Bridge Facility		7,400
Transaction costs (5)		15,000
Total uses of funds	$	1,862,400

⁽¹⁾  Reflects a $1.0 billion draw under the Bridge Facility to consummate the Telx Acquisition.

⁽²⁾  See Note 2(d) for additional information on the net proceeds from the Forward Equity Sale.

⁽³⁾  See Note 2(e) for additional information on the net proceeds from the Preferred Offering.

⁽⁴⁾  Includes the payoff of Telx’s term loan and other loans payable of $755.4 million. These loans and the associated deferred financing costs of $19.3 million have been eliminated from the Unaudited Pro Forma Condensed Combined Balance Sheet, with a corresponding decrease to accumulated deficit.

⁽⁵⁾  The Company estimates that the total transaction costs will be approximately $15.0 million, excluding costs associated with the Forward Equity Sale, Preferred Offering and other offering costs of approximately $38.0 million. The actual amount may vary. The Company also expects to incur other financing costs and integration costs associated with the Telx Acquisition. Given the uncertainty of the amounts involved, such financing costs and integration costs are not reasonably estimable.

(b) Adjustment reflects the excess of purchase price over the estimated fair value of the net assets acquired. Under the acquisition method of accounting, the total estimated purchase price is allocated to Telx’s net tangible and intangible assets based on their estimated fair values at the date of the completion of the Telx Acquisition. Below is a preliminary estimate of the purchase consideration for Telx and the adjustments to Telx’s book values to reflect the preliminary allocation of that purchase consideration to acquired identifiable assets and assumed liabilities (in thousands):

	Preliminary estimate for allocation of the purchase price			Historical Telx		Pro Forma Adjustment
Land	$	7,238		$	3,493	$	3,745
Buildings and improvements (1)		596,637			483,057		113,580
Acquired in-place lease value and deferred leasing costs, net		259,004			—		259,004
Customer relationships		741,452			128,967		612,485
Trademark		8,156			129,941		(121,785	)
Other intangible assets		—			5,787		(5,787	)
Goodwill		284,421			339,013		(54,592	)
Unfavorable leases		(10,908	)		—		(10,908	)
Total	$	1,886,000		$	1,090,258	$	795,742

⁽¹⁾  Consists of building and improvements, equipment and construction in process.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (continued)

Upon closing, the purchase consideration will be adjusted for working capital levels and other adjustments as stipulated in the Merger Agreement.

Upon completion of the fair value assessment, the final purchase price allocation may differ from the preliminary allocation provided above. Any changes to the initial estimates of the fair value of the assets and liabilities will be recorded as adjustments to those assets and liabilities and the residual amounts will be allocated as an increase or decrease to goodwill. The goodwill recorded is due primarily to the synergies expected to be realized between the two companies and the assembled workforce acquired in connection with the Telx Acquisition.

The fair value of investment in real estate acquired of $603.9 million consists of land with an estimated fair value of $7.2 million, building and improvements with an estimated fair value of $272.1 million, equipment with an estimated fair value of $311.8 million and construction in process with an estimated fair value of $12.7 million. Investment in real estate is expected to be amortized on a straight-line basis over estimated useful lives of 3 - 39 years.

The components of investment in real estate have been valued using a combination of the income approach, the market approach and the cost approach, which is based on current replacement and/or reproduction cost of the asset as new, less depreciation attributable to physical, functional and economic factors.

The fair value of intangible assets acquired of $997.7 million consist of in-place leases with an estimated fair value of $259.0 million, customer relationships with an estimated fair value of $741.5 million and the Telx trade name with an estimated fair value of $8.2 million and unfavorable leases of $(10.9) million. The in-place lease value is expected to be amortized on a straight-line basis over an estimated useful life of two years, the customer relationship intangible assets are expected to be amortized on a straight-line basis over an estimated useful life of 18 years and the Telx trade name is expected to be amortized on a straight-line basis over an estimated useful life of five years and the unfavorable leases are expected to be amortized on a straight-line basis over an estimated useful life of five years.

The fair value of intangible assets is determined primarily using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an asset based on market participants’ expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of the valuations include the estimated annual net cash flows for each indefinite lived or definite lived intangible asset (including net revenues, operating expenses, selling and marketing costs and working capital asset/contributory asset charges), the appropriate discount rate that appropriately reflects the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, and competitive trends as well as other factors.

(c) Adjustment reflects the Notes Offering (and related financing costs), the use of proceeds therefrom and the Notes Redemption (in thousands):

	Principal balance used in pro forma adjustment			Pro Forma Financing Costs			Discount on Debt			Net proceeds / payments
Offering of 3.950% Notes due 2022	$	500,000		$	(4,375	)	$	(3,820	)	$	491,805
Redemption of 4.50% Notes due 2015		(375,000	)		—			—			(375,000	)
Repayments under global revolving credit facility		(116,805	)		—						(116,805	)
Total	$	8,195		$	(4,375	)	$	(3,820	)	$	—

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (continued)

(d) Adjustment reflects the full physical settlement of the forward sale agreements by the delivery of 10,500,000 shares of the Company’s common stock at an initial forward sale price of $65.28 per share (based on the $68.00 per share price at which the forward purchasers sold the Company’s common stock in the public offering, less the underwriting discount of $2.72 per share) (in thousands, except share and per share amounts):

	Forward Equity Sale
Net proceeds from Forward Equity Sale (1)	$	686,400
Common stock, 10,500,000 shares, $.01 per share	$	105
Additional paid in capital		686,295
Net proceeds from Forward Equity Sale	$	686,400

⁽¹⁾  Reflects other offering costs, net.

(e) Adjustment reflects the sale of 6,000,000 shares of the Company’s series I preferred stock in the Preferred Offering:

	Preferred Offering
Proceeds from Preferred Offering	$	150,000
Less costs of the offering:
Underwriting discount		(4,725	)
Other offering costs		(1,000	)
Net proceeds from Preferred Offering	$	144,275

(f) Adjustment removes the deferred rent receivable as the lessor from leases with Telx, resulting in a decrease in deferred rent of $73.7 million.

(g) Adjustment removes the deferred rent payable as the lessee from leases with the Company, resulting in a decrease in accounts payable and other accrued liabilities of $75.4 million.

(h) Adjustment primarily reflects the write off or write down of certain of Telx’s assets, including trademark, goodwill, deferred finance costs, net and other intangible assets, based on the Company’s preliminary purchase price allocation set forth in Note 2(b).

3. Unaudited Pro Forma Condensed Combined Income Statement Adjustments

The Unaudited Pro Forma Condensed Combined Income Statements reflect the effect of the following pro forma adjustments:

(a) Adjustment removes the rental revenue and percentage rent earned as the lessor from leases with Telx, resulting in a decrease in rental revenue of $31.4 million and $51.6 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively.

(b) Adjustment removes the rent and percentage rent expense recorded as the lessee from leases with the Company, resulting in a decrease in rental property operating and maintenance expense of $33.0 million and $67.3 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively. In addition, a straight-line rent expense adjustment was made for leases with third parties, assuming the Telx Acquisition occurred on January 1, 2014, resulting in an increase of $0.8 million and $1.8 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively.

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (continued)

(c) Reflects the net impact on depreciation and amortization expense of the following adjustments:

• A decrease to depreciation and amortization expense of $6.7 million and $4.9 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively, as a result of fair value accounting for investment in real estate and other fixed assets acquired in the Telx Acquisition.

• An increase to depreciation and amortization expense of $75.4 million and $150.4 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively, as a result of fair value accounting for definite-lived intangible assets acquired in the Telx Acquisition.

For the six months ended June 30, 2015, real estate depreciation expense for the assets acquired in the Telx Acquisition would have been $101.6 million and non-real estate depreciation expense would have been $2.4 million. For the year ended December 31, 2014, total real estate depreciation expense for the assets acquired in the Telx Acquisition would have been $203.3 million and non-real estate depreciation expense would have been $4.8 million.

(d) Adjustment reflects a reduction of general and administrative expense of $0.8 million and $1.0 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively, as a result of the elimination of an internal management fee. The Company expects to incur additional general and administrative costs as a result of the Telx Acquisition that will include, but are not limited to, incremental salaries and benefits, audit, tax and legal fees and other administrative costs. As the Company has not yet entered into contracts with third-parties to provide the services included within this estimate, these expenses do not appear in the Unaudited Pro Forma Condensed Combined Income Statements.

(e) Reflects the net impact on interest expense of the following adjustments:

• An increase in interest expense of $8.6 million and $17.2 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively, due to a $1.0 billion draw under the Bridge Facility, which will bear interest at LIBOR plus 1.45% (estimated to be 1.67%), to consummate the Telx Acquisition. In addition, amortization of deferred loan fees related to the Bridge Facility would total $2.9 million and $4.5 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively. A hypothetical 0.125% increase or decrease in the expected weighted average interest rate would increase or decrease interest expense associated with this additional debt by $0.6 million and $1.3 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively.

• A reduction in interest expense of $26.2 million and $46.9 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively, due to the payoff of Telx debt in connection with the Telx Acquisition, and elimination of the associated deferred financing cost amortization of $3.6 million and $10.6 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively.

• An increase in interest expense of $9.7 million and $20.2 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively, due to the issuance of $500.0 million aggregate principal amount of the Operating Partnership’s 3.950% notes due 2022 in the Notes Offering, and an increase in associated deferred financing cost amortization of $0.3 million and $0.6 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively, net of a reduction in interest expense of $0.9 million and $1.9 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively, due to the pay down of the Operating Partnership’s revolving credit facility with a portion of the net proceeds therefrom.

• A reduction in interest expense of $6.8 million and $16.9 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively, due to the redemption of $375.0 million aggregate principal amount

DIGITAL REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (continued)

of the Operating Partnership’s 4.50% notes due 2015 in connection with the Notes Redemption, and elimination of the associated deferred financing cost amortization of $0.3 million and $0.6 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively.

(f) Adjustment reflects the noncontrolling interest portion of the adjustments to the Unaudited Pro Forma Condensed Combined Income Statements.

(g) Adjustment reflects dividends on the series I preferred stock the Company intends to sell in the Preferred Offering of $4.7 million and $9.4 million for the six months ended June 30, 2015 and the year ended December 31, 2014, respectively.