10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 001-36109

QTS Realty Trust, Inc.

QualityTech, LP

(Exact name of registrant as specified in its charter)

Maryland (QTS Realty Trust, Inc.)	46-2809094
Delaware (QualityTech, LP) (State or other jurisdiction of incorporation or organization)	27-0707288 (I.R.S. Employer Identification No.)
12851 Foster Street, Overland Park, Kansas	66213
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code) (913) 312-5503

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

QTS Realty Trust, Inc.  Yes  x     No ¨  QualityTech, LP   Yes  x     No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

QTS Realty Trust, Inc.  Yes  x     No  ¨  QualityTech, LP   Yes  x     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

QTS Realty Trust, Inc.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

QualityTech, LP

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

QTS Realty Trust, Inc.  Yes  ¨     No  x  QualityTech, LP   Yes  ¨     No  x

There were 40,825,412 shares of Class A common stock, $0.01 par value per share, and 133,000 shares of Class B common stock, $0.01 par value per share, of QTS Realty Trust, Inc. outstanding on August 6, 2015.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q of QTS Realty Trust, Inc. (“QTS”) and QualityTech, LP, a Delaware limited partnership, which is our operating partnership (the “Operating Partnership”). 

Management operates QTS and the Operating Partnership as one business. The management of QTS consists of the same employees as the management of the Operating Partnership. QTS is the sole general partner of the Operating Partnership, and, as of June 30, 2015, its only material asset consisted of its ownership of approximately 85.4% of the Operating Partnership. QTS does not conduct business itself, other than acting as the sole general partner of the Operating Partnership and issuing public equity from time to time. QTS has not issued or guaranteed any indebtedness. Except for net proceeds from public equity issuances by QTS, which are contributed to the Operating Partnership in exchange for units of limited partnership interest of the Operating Partnership, the Operating Partnership generates all remaining capital required by our business through its operations, the direct or indirect incurrence of indebtedness, and the issuance of partnership units. Therefore, as general partner with control of the Operating Partnership, QTS consolidates the Operating Partnership for financial reporting purposes.

We believe, therefore, that a combined presentation with respect to QTS and the Operating Partnership, including providing one set of notes for the financial statements of QTS and the Operating Partnership, provides the following benefits:

· enhances investors’ understanding of QTS and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

· eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure in this report applies to both QTS and the Operating Partnership; and

· creates time and cost efficiencies through the preparation of one presentation instead of two separate presentations.

In addition, in light of these combined disclosures, we believe it is important for investors to understand the few differences between QTS and the Operating Partnership in the context of how QTS and the Operating Partnership operate as a consolidated company. The presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated balance sheets of QTS and those of the Operating Partnership. The Operating Partnership’s capital includes general and limited common units that are owned by QTS and the other partners. QTS' stockholders’ equity includes common stock, additional paid in capital, accumulated other comprehensive income (loss) and accumulated dividends in excess of earnings. The remaining equity is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. The primary difference in QTS' Statements of Operations and Comprehensive Income (Loss) is that for net income (loss), QTS retains its proportionate share of the net income (loss) based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership.

In order to highlight the few differences between QTS and the Operating Partnership, there are sections and disclosure in this report that discuss QTS and the Operating Partnership separately, including separate financial statements, separate controls and procedures sections, separate Exhibit 31 and 32 certifications, and certain accompanying notes to the financial statements, including Note 8 – Partners’ Capital, Equity and Incentive Compensation Plans. In the sections that combine disclosure for QTS and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of “we,” “our,” “us,” “our company” and “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, we believe that these general references to “we,” “our,” “us,” “our company” and “the Company” in this context are appropriate because the business is one enterprise operated through the Operating Partnership.

2

QTS Realty Trust, Inc.

QualityTech, LP

Form 10-Q

For the Quarterly Period Ended June 30, 2015

INDEX

		Page
PART I.	FINANCIAL INFORMATION
ITEM 1.	Financial Statements of QTS Realty Trust, Inc.	4
	Financial Statements of QualityTech, LP	8
	Notes to QTS Realty Trust, Inc. and QualityTech, LP Financial Statements	12
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	38
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	62
ITEM 4.	Controls and Procedures	62
PART II.	OTHER INFORMATION
ITEM 1.	Legal Proceedings	63
ITEM 1A.	Risk Factors	63
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
ITEM 3.	Defaults Upon Senior Securities	67
ITEM 4.	Mine Safety Disclosures	67
ITEM 5.	Other Information	67
ITEM 6.	Exhibits	68
	Signatures	70

3

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

QTS REALTY TRUST, INC.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BALANCE SHEETS

(in thousands except share data)

	June 30, 2015			December 31, 2014
	(unaudited)
ASSETS
Real Estate Assets
Land	$	52,430		$	48,577
Buildings and improvements		1,073,120			914,286
Less: Accumulated depreciation		(205,284	)		(180,167	)
		920,266			782,696
Construction in progress		320,885			214,719
Real Estate Assets, net		1,241,151			997,415
Cash and cash equivalents		10,744			10,788
Rents and other receivables, net		30,548			15,579
Acquired intangibles, net		122,005			18,000
Deferred costs, net		38,013			37,058
Prepaid expenses		7,132			3,079
Goodwill		173,237			-
Other assets, net		29,198			24,640
TOTAL ASSETS	$	1,652,028		$	1,106,559
LIABILITIES
Mortgage notes payable	$	70,000		$	86,600
Unsecured credit facility		330,000			239,838
Senior notes, net of discount		297,852			297,729
Capital lease and lease financing obligations		56,211			13,062
Accounts payable and accrued liabilities		92,708			64,607
Dividends and distributions payable		15,322			10,705
Advance rents, security deposits and other liabilities		19,444			3,302
Deferred income taxes		16,449			-
Deferred income		19,557			10,531
TOTAL LIABILITIES		917,543			726,374
EQUITY
Common stock, $0.01 par value, 450,133,000 shares authorized, 40,881,002 and 29,408,138 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively		409			294
Additional paid-in capital		664,751			324,917
Accumulated dividends in excess of earnings		(38,014	)		(22,503	)
Total stockholders’ equity		627,146			302,708
Noncontrolling interests		107,339			77,477
TOTAL EQUITY		734,485			380,185
TOTAL LIABILITIES AND EQUITY	$	1,652,028		$	1,106,559

See accompanying notes to financial statements.

4

QTS REALTY TRUST, INC.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

(in thousands except share and per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
Revenues:	2015			2014			2015			2014
Rental	$	52,193		$	41,966		$	101,526		$	82,545
Recoveries from customers		5,582			3,852			11,246			7,543
Cloud and managed services		8,220			4,970			14,015			9,201
Other		2,122			550			2,716			992
Total revenues		68,117			51,338			129,503			100,281
Operating Expenses:
Property operating costs		22,031			16,529			41,367			32,752
Real estate taxes and insurance		1,474			1,118			2,959			2,336
Depreciation and amortization		18,062			13,817			34,305			27,064
General and administrative		14,615			11,473			28,453			22,251
Restructuring		-			1,046			-			1,046
Transaction and integration costs		4,669			1,089			4,774			1,153
Total operating expenses		60,851			45,072			111,858			86,602
Operating income		7,266			6,266			17,645			13,679
Other income and expenses:
Interest income		1			-			1			8
Interest expense		(4,799	)		(2,208	)		(10,141	)		(4,273	)
Other (expense) income, net		(83	)		(110	)		(83	)		(110	)
Income before taxes		2,385			3,948			7,422			9,304
Tax benefit (expense) of taxable REIT subsidiaries		3,135			(27	)		3,135			(55	)
Net income		5,520			3,921			10,557			9,249
Net income attributable to noncontrolling interests		(888	)		(831	)		(1,843	)		(1,961	)
Net income attributable to QTS Realty Trust, Inc.		4,632			3,090			8,714			7,288
Unrealized gain on swap		-			127			-			232
Comprehensive income	$	4,632		$	3,217		$	8,714		$	7,520
Net income per share attributable to common shares:
Basic	$	0.13		$	0.11		$	0.26		$	0.25
Diluted		0.12			0.11			0.25			0.25
Weighted average common shares outstanding:
Basic		36,668,755			29,016,774			33,996,467			29,001,374
Diluted		44,444,104			37,009,746			41,867,944			36,934,210

 See accompanying notes to financial statements.

5

QTS REALTY TRUST, INC.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF EQUITY

(unaudited and in thousands)

								Accumulated			Total
	Common stock				Additional			dividends in			stockholders'			Noncontrolling
	Shares		Amount		paid-in capital			excess of earnings			equity			interest			Total
Balance January 1, 2015		29,408	$	294	$	324,917		$	(22,503	)	$	302,708		$	77,477		$	380,185
Issuance of shares through equity award plan		193		2		(2	)		-			-			-			-
Reclassification of noncontrolling interest upon conversion of partnership units to common stock		530		5		6,196			-			6,201			(6,201	)		-
Equity-based compensation expense		-		-		2,590			-			2,590			548			3,138
Net proceeds from equity offering		10,750		108		331,050			-			331,158			38,151			369,309
Dividends to shareholders		-		-		-			(24,225	)		(24,225	)		-			(24,225	)
Distributions to noncontrolling interests		-		-		-			-			-			(4,479	)		(4,479	)
Net income		-		-		-			8,714			8,714			1,843			10,557
Balance June 30, 2015		40,881	$	409	$	664,751		$	(38,014	)	$	627,146		$	107,339		$	734,485

See accompanying notes to financial statements.

6

QTS REALTY TRUST, INC.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STATEMENTS OF CASH FLOW

(unaudited and in thousands)

For the six months ended June 30, 2015 and 2014

Cash flow from operating activities:	2015			2014
Net income	$	10,557		$	9,249
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		33,475			25,668
Amortization of deferred loan costs		1,585			1,314
Amortization of senior notes discount		123			-
Equity-based compensation expense		3,138			1,976
Bad debt expense		366			269
Write off of deferred loan costs		83			110
Deferred tax benefit		(3,135	)		-
Changes in operating assets and liabilities
Rents and other receivables, net		(1,556	)		1,592
Prepaid expenses		(2,760	)		(2,501	)
Other assets		(326	)		(252	)
Accounts payable and accrued liabilities		(1,823	)		(7,996	)
Advance rents, security deposits and other liabilities		(454	)		(64	)
Deferred income		1,888			285
Net cash provided by operating activities		41,161			29,650
Cash flow from investing activities:
Acquisitions, net of cash acquired		(288,865	)		(73,300	)
Additions to property and equipment		(170,150	)		(114,157	)
Cash used in investing activities		(459,015	)		(187,457	)
Cash flow from financing activities:
Credit facility proceeds		350,162			182,500
Debt repayment		(260,000	)		-
Payment of deferred financing costs		(512	)		(924	)
Payment of cash dividends		(19,673	)		(15,368	)
Distribution to noncontrolling interests		(4,414	)		(4,654	)
Principal payments on capital lease obligations		(1,227	)		(367	)
Scheduled mortgage principal debt repayments		(16,600	)		(1,100	)
Equity proceeds, net of costs		370,074			-
Net cash provided by financing activities		417,810			160,087
Net (decrease) increase in cash and cash equivalents		(44	)		2,279
Cash and cash equivalents, beginning of period		10,788			5,210
Cash and cash equivalents, end of period	$	10,744		$	7,489
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest (excluding deferred financing costs and amounts capitalized)	$	8,866		$	2,973
Noncash investing and financing activities:
Accrued capital additions	$	56,366		$	32,638
Capital lease and lease financing obligations assumed	$	43,832		$	-

See accompanying notes to financial statements.

7

QUALITYTECH, LP

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BALANCE SHEETS

(in thousands)

	June 30, 2015			December 31, 2014
	(unaudited)
ASSETS
Real Estate Assets
Land	$	52,430		$	48,577
Buildings and improvements		1,073,120			914,286
Less: Accumulated depreciation		(205,284	)		(180,167	)
		920,266			782,696
Construction in progress		320,885			214,719
Real Estate Assets, net		1,241,151			997,415
Cash and cash equivalents		10,744			10,788
Rents and other receivables, net		30,548			15,579
Acquired intangibles, net		122,005			18,000
Deferred costs, net		38,013			37,058
Prepaid expenses		7,132			3,079
Goodwill		173,237			-
Other assets, net		29,198			24,640
TOTAL ASSETS	$	1,652,028		$	1,106,559
LIABILITIES
Mortgage notes payable	$	70,000		$	86,600
Unsecured credit facility		330,000			239,838
Senior notes, net of discount		297,852			297,729
Capital lease and lease financing obligations		56,211			13,062
Accounts payable and accrued liabilities		92,708			64,607
Dividends and distributions payable		15,322			10,705
Advance rents, security deposits and other liabilities		19,444			3,302
Deferred income taxes		16,449			-
Deferred income		19,557			10,531
TOTAL LIABILITIES		917,543			726,374
PARTNERS' CAPITAL
Partners' capital		734,485			380,185
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	1,652,028		$	1,106,559

See accompanying notes to financial statements.

8

QUALITYTECH, LP

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
Revenues:	2015			2014			2015			2014
Rental	$	52,193		$	41,966		$	101,526		$	82,545
Recoveries from customers		5,582			3,852			11,246			7,543
Cloud and managed services		8,220			4,970			14,015			9,201
Other		2,122			550			2,716			992
Total revenues		68,117			51,338			129,503			100,281
Operating Expenses:
Property operating costs		22,031			16,529			41,367			32,752
Real estate taxes and insurance		1,474			1,118			2,959			2,336
Depreciation and amortization		18,062			13,817			34,305			27,064
General and administrative		14,615			11,473			28,453			22,251
Restructuring		-			1,046			-			1,046
Transaction and integration costs		4,669			1,089			4,774			1,153
Total operating expenses		60,851			45,072			111,858			86,602
Operating income		7,266			6,266			17,645			13,679
Other income and expenses:
Interest income		1			-			1			8
Interest expense		(4,799	)		(2,208	)		(10,141	)		(4,273	)
Other (expense) income, net		(83	)		(110	)		(83	)		(110	)
Income before taxes		2,385			3,948			7,422			9,304
Tax benefit (expense) of taxable REIT subsidiaries		3,135			(27	)		3,135			(55	)
Net income		5,520			3,921			10,557			9,249
Unrealized gain on swap		-			127			-			232
Comprehensive income	$	5,520		$	4,048		$	10,557		$	9,481

See accompanying notes to financial statements.

9

QUALITYTECH, LP

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL

(unaudited and in thousands)

	Limited Partners' Capital					General Partner's Capital
	Units		Amount			Units		Amount		Total
Balance January 1, 2015		36,935	$	380,185			1	$	-	$	380,185
Issuance of shares through equity award plan		193		-			-		-		-
Equity-based compensation expense		-		3,138			-		-		3,138
Net proceeds from QTS Realty Trust, Inc. equity offering		10,750		369,309			-		-		369,309
Dividends to QTS Realty Trust, Inc.		-		(24,225	)		-		-		(24,225	)
Partnership distributions		-		(4,479	)		-		-		(4,479	)
Net income		-		10,557			-		-		10,557
Balance June 30, 2015		47,878	$	734,485			1	$	-	$	734,485

See accompanying notes to financial statements.

10

QUALITYTECH, LP

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STATEMENTS OF CASH FLOW

(unaudited and in thousands)

For the six months ended June 30, 2015 and 2014

Cash flow from operating activities:	2015			2014
Net income	$	10,557		$	9,249
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		33,475			25,668
Amortization of deferred loan costs		1,585			1,314
Amortization of senior notes discount		123			-
Equity-based compensation expense		3,138			1,976
Bad debt expense		366			269
Write off of deferred loan costs		83			110
Deferred tax benefit		(3,135	)		-
Changes in operating assets and liabilities
Rents and other receivables, net		(1,556	)		1,592
Prepaid expenses		(2,760	)		(2,501	)
Other assets		(326	)		(252	)
Accounts payable and accrued liabilities		(1,823	)		(7,996	)
Advance rents, security deposits and other liabilities		(454	)		(64	)
Deferred income		1,888			285
Net cash provided by operating activities		41,161			29,650
Cash flow from investing activities:
Acquisitions, net of cash acquired		(288,865	)		(73,300	)
Additions to property and equipment		(170,150	)		(114,157	)
Cash used in investing activities		(459,015	)		(187,457	)
Cash flow from financing activities:
Credit facility proceeds		350,162			182,500
Debt repayment		(260,000	)		-
Payment of deferred financing costs		(512	)		(924	)
Payment of cash dividends		(19,673	)		(15,368	)
Partnership distributions		(4,414	)		(4,654	)
Principal payments on capital lease obligations		(1,227	)		(367	)
Scheduled mortgage principal debt repayments		(16,600	)		(1,100	)
Equity proceeds, net of costs		370,074			-
Net cash provided by financing activities		417,810			160,087
Net (decrease) increase in cash and cash equivalents		(44	)		2,279
Cash and cash equivalents, beginning of period		10,788			5,210
Cash and cash equivalents, end of period	$	10,744		$	7,489
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest (excluding deferred financing costs and amounts capitalized)	$	8,866		$	2,973
Noncash investing and financing activities:
Accrued capital additions	$	56,366		$	32,638
Capital lease and lease financing obligations assumed	$	43,832		$	-

See accompanying notes to financial statements.

11

QTS REALTY TRUST, INC.

QUALITYTECH, LP

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

QTS Realty Trust, Inc. (“QTS”) through its controlling interest in QualityTech, LP (the “Operating Partnership” and collectively with QTS and their subsidiaries, the “Company”) and the subsidiaries of the Operating Partnership, is engaged in the business of owning, acquiring, redeveloping and managing multi-tenant data centers. The Company’s portfolio consists of 25 wholly-owned and leased properties with data centers located throughout the United States, Canada, Europe and the Asia-Pacific region.

QTS was formed as a Maryland corporation on May 17, 2013. On October 15, 2013, QTS completed its initial public offering of 14,087,500 shares of Class A common stock, $0.01 par value per share (the “IPO”), including shares issued pursuant to the underwriters’ option to purchase additional shares, which was exercised in full, and received net proceeds of approximately $279 million. QTS elected to be taxed as a real estate investment trust (“REIT”), for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2013. As a REIT, QTS generally is not required to pay federal corporate income taxes on its taxable income to the extent it is currently distributed to its stockholders.

Concurrently with the completion of the IPO, the Company consummated a series of transactions, including the merger of General Atlantic REIT, Inc. with the Company, pursuant to which the Company became the sole general partner and majority owner of QualityTech, LP, the Operating Partnership. QTS contributed the net proceeds received from the IPO to the Operating Partnership in exchange for partnership units therein. As of June 30, 2015, QTS owned approximately 85.4% of the interests in the Operating Partnership. Substantially all of QTS’ assets are held by, and QTS’ operations are conducted through, the Operating Partnership. QTS’ interest in the Operating Partnership entitles QTS to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to QTS’ percentage ownership. As the sole general partner of the Operating Partnership, QTS generally has the exclusive power under the partnership agreement to manage and conduct the Operating Partnership’s business and affairs, subject to certain limited approval and voting rights of the limited partners. QTS’ board of directors manages the Company’s business and affairs.

2. Summary of Significant Accounting Policies

Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

The accompanying financial statements are presented for both QTS Realty Trust, Inc. and QualityTech, LP. References to “QTS” mean QTS Realty Trust, Inc. and its controlled subsidiaries; and references to the “Operating Partnership” mean QualityTech, LP and its controlled subsidiaries.

Management operates QTS and the Operating Partnership as one business. The management of QTS consists of the same employees as the management of the Operating Partnership. QTS is the sole general partner of the Operating Partnership, and its only material asset consists of its ownership interest in the Operating Partnership. QTS does not conduct business itself, other than acting as the sole general partner of the Operating Partnership and issuing public equity from time to time. QTS has not issued or guaranteed any indebtedness. Except for net proceeds from public equity issuances by QTS, which are contributed to the Operating Partnership in exchange for units of limited partnership interest of the Operating Partnership, the Operating Partnership generates all remaining capital required by the business through its operations, the direct or indirect incurrence of indebtedness, and the issuance of partnership units. As general partner with control of the Operating Partnership, QTS consolidates the Operating Partnership for financial reporting purposes.

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The Company believes, therefore, that providing one set of notes for the financial statements of QTS and the Operating Partnership provides the following benefits:

· enhances investors’ understanding of QTS and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

· eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both QTS and the Operating Partnership; and

· creates time and cost efficiencies through the preparation of one set of notes instead of two separate sets of notes.

In addition, in light of these combined notes, the Company believes it is important for investors to understand the few differences between QTS and the Operating Partnership in the context of how QTS and the Operating Partnership operate as a consolidated company. The presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated balance sheets of QTS and those of the Operating Partnership. The Operating Partnership’s capital includes general and limited common units that are owned by QTS and the other partners. QTS' stockholders’ equity includes common stock, additional paid in capital, accumulated other comprehensive income (loss) and accumulated dividends in excess of earnings. The remaining equity is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. The primary difference in QTS' Statements of Operations and Comprehensive Income (Loss) is that for net income (loss), QTS retains its proportionate share of the net income (loss) based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership. These combined notes refer to actions or holdings as being actions or holdings of “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, management believes that these general references to “the Company” in this context is appropriate because the business is one enterprise operated through the Operating Partnership.

As discussed above, QTS owns no operating assets and has no operations independent of the Operating Partnership and its subsidiaries. Also, the Operating Partnership owns no operating assets and has no operations independent of its subsidiaries. Obligations under the 5.875% Senior Notes due 2022 and the unsecured credit facility, both discussed in Note 5, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries, other than QTS Finance Corporation, the co-issuer of the 5.875% Senior Notes due 2022, and entities related to Carpathia Hosting, Inc. The indenture governing the 5.875% Senior Notes due 2022 restricts the ability of the Operating Partnership to make distributions to QTS, subject to certain exceptions, including distributions required in order for QTS to maintain its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended.

The interim condensed consolidated financial statements of QTS Realty Trust, Inc. for the three and six months ended June 30, 2015 and 2014, and as of June 30, 2015 and December 31, 2014 present the accounts of QTS Realty Trust, Inc. and its majority owned subsidiaries. This includes the operating results of the Operating Partnership for all periods presented.

Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals.

Principles of Consolidation – The consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority-owned subsidiaries. The consolidated financial statements of QualityTech, LP include the accounts of QualityTech, LP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in the financial statements.

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Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended June 30, 2015, depreciation expense related to real estate assets and non-real estate assets was $12.4 million and $1.7 million, respectively, for a total of $14.1 million. For the three months ended June 30, 2014, depreciation expense related to real estate assets and non-real estate assets was $9.1 million and $1.6 million, respectively, for a total of $10.7 million. For the six months ended June 30, 2015, depreciation expense related to real estate assets and non-real estate assets was $23.3 million and $3.6 million, respectively, for a total of $26.9 million. For the six months ended June 30, 2014, depreciation expense related to real estate assets and non-real estate assets was $17.9 million and $3.0 million, respectively, for a total of $20.9 million. The Company capitalizes certain development costs, including internal costs incurred in connection with development. The capitalization of costs during the construction period (including interest and related loan fees, property taxes and other direct and indirect costs) begins when development efforts commence and ends when the asset is ready for its intended use. Capitalization of such costs, excluding interest, aggregated to $2.6 million and $2.5 million for the three months ended June 30, 2015 and 2014, respectively, and $5.9 million and $4.7 million for the six months ended June 30, 2015 and 2014, respectively. Interest is capitalized during the period of development by first applying the Company’s actual borrowing rate on the related asset and second, to the extent necessary, by applying the Company’s weighted average effective borrowing rate to the actual development and other costs expended during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $2.4 million and $1.8 million for the three months ended June 30, 2015 and 2014, respectively, and $4.4 million and $3.4 million for the six months ended June 30, 2015 and 2014, respectively.

Acquisitions – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances. Purchase accounting is applied to the assets and liabilities related to all real estate investments acquired in accordance with the accounting requirements of ASC 805, Business Combinations, which requires the recording of net assets of acquired businesses at fair value. The fair value of the consideration transferred is allocated to the acquired tangible assets, consisting primarily of land, building and improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases, value of customer relationships, trade names, software intangibles and capital leases. The excess of the fair value of liabilities assumed, common stock issued and cash paid over the fair value of identifiable assets acquired is allocated to goodwill, which is not amortized by the Company.

In developing estimates of fair value of acquired assets and assumed liabilities, management analyzed a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets.

Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. Amortization of acquired in place lease costs totaled $0.5 million and $0.6 million for the three months ended June 30, 2015 and 2014, respectively, and $0.9 million and $1.3 million for the six months ended June 30, 2015 and 2014, respectively. This amortization expense is accounted for as real estate amortization expense.

Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. Amortization of acquired customer relationships totaled $0.6 million and $0.3 million for the three months ended June 30, 2015 and 2014, respectively, and $0.9 million and $0.7 million for the six months ended June 30, 2015 and 2014, respectively. This amortization expense is accounted for as real estate amortization expense.

Other acquired intangible assets, which includes platform, above or below market leases, and trade name intangibles, are amortized on a straight-line basis over their respective expected lives. Platform and trade name intangibles are amortized as amortization expense, which totaled $0.2 million for the three and six months ended June 30, 2015. Above or below market leases are amortized as rent expense, which was immaterial for the three and six months ended June 30, 2015. There was no amortization expense related to platform and trade name intangibles for the three and six months ended June 30, 2014. The expense associated with above and below market leases is accounted for as real estate expense, whereas the expense associated with the amortization of platform and trade name intangibles is accounted for as non-real estate expense.

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See Note 3 for discussion of the preliminary purchase price allocation for the acquisition of Carpathia Hosting, Inc. on June 16, 2015, as well as the final purchase price allocation for the Princeton facility that the Company acquired on June 30, 2014.

Impairment of Long-Lived and Intangible Assets – The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is generally measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset exceeds the value of the undiscounted cash flows, the fair value of the asset is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three and six months ended June 30, 2015 and 2014, respectively.

As a result of the Carpathia acquisition in June 2015, the Company recognized approximately $173 million in goodwill. The fair value of goodwill is the consideration transferred which is not allocable to identifiable intangible and tangible assets. The Company believes that it has one reporting unit for goodwill purposes, thus will assess goodwill for impairment at least annually on that basis. Based on the initial purchase price allocation, the Company does not believe there is any immediate impairment that would need to be recognized in relation to goodwill.

Cash and Cash Equivalents – The Company considers all demand deposits and money market accounts purchased with a maturity date of three months or less at the date of purchase to be cash equivalents. The Company’s account balances at one or more institutions periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is concentration of credit risk related to amounts on deposit in excess of FDIC coverage. The Company mitigates this risk by depositing a majority of its funds with several major financial institutions. The Company also has not experienced any losses and, therefore, does not believe that the risk is significant.

Deferred Costs – Deferred costs, net, on the Company’s balance sheets include both financing costs and leasing costs.

Deferred financing costs represent fees and other costs incurred in connection with obtaining debt and are amortized over the term of the loan and are included in interest expense. Amortization of the deferred financing costs was $0.8 million and $0.6 million for the three months ended June 30, 2015 and 2014, respectively, and $1.6 million and $1.2 million for the six months ended June 30, 2015 and 2014, respectively. During the three months ended June 30, 2015, the Company wrote off unamortized financing costs of $0.1 million in connection with the repayment of the Atlanta Metro equipment loan, as discussed in Note 5. During the three months ended June 30, 2014, the Company wrote off unamortized financing costs of $0.1 million in connection with the modification of its credit facility that is secured by the Richmond data center. Deferred financing costs, net of accumulated amortization are as follows:
 

	June 30,			December 31,
(dollars in thousands)	2015			2014
	(unaudited)
Deferred financing costs	$	18,581		$	18,152
Accumulated amortization		(3,303	)		(1,683	)
Deferred financing costs, net	$	15,278		$	16,469

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Deferred leasing costs consist of external fees and internal costs incurred in the successful negotiations of leases and are deferred and amortized over the terms of the related leases on a straight-line basis. If an applicable lease terminates prior to the expiration of its initial term, the carrying amount of the costs are written off to amortization expense. Amortization of deferred leasing costs totaled $2.8 million and $2.1 million for the three months ended June 30, 2015 and 2014, respectively, and $5.5 million and $4.2 million for the six months ended June 30, 2015 and 2014, respectively. Deferred leasing costs, net of accumulated amortization are as follows (excluding $2.9 million, net of amortization, related to a leasing arrangement at the Company’s Princeton facility in 2014):

	June 30,			December 31,
(dollars in thousands)	2015			2014
	(unaudited)
Deferred leasing costs	$	33,154		$	26,799
Accumulated amortization		(13,380	)		(9,378	)
Deferred leasing costs, net	$	19,774		$	17,421

Advance Rents and Security Deposits – Advance rents, typically prepayment of the following month’s rent, consist of payments received from customers prior to the time they are earned and are recognized as revenue in subsequent periods when earned. Security deposits are collected from customers at the lease origination and are generally refunded to customers upon lease expiration.

Deferred Income – Deferred income generally results from non-refundable charges paid by the customer at lease inception to prepare their space for occupancy. The Company records this initial payment, commonly referred to as set-up fees, as a deferred income liability which amortizes into rental revenue over the term of the related lease on a straight-line basis. Deferred income was $19.6 million and $10.5 million as of June 30, 2015 and December 31, 2014, respectively. Additionally, $1.4 million and $1.2 million of deferred income was amortized into revenue for the three months ended June 30, 2015 and 2014, respectively, and $2.7 million and $2.4 million for the six months ended June 30, 2015 and 2014, respectively.

Interest Rate Derivative Instruments – The Company utilizes derivatives to manage its interest rate exposure. During February 2012, the Company entered into interest rate swaps with a notional amount of $150 million which were cash flow hedges and qualified for hedge accounting. For these hedges, the effective portion of the change in fair value was recognized through other comprehensive income or loss. Amounts were reclassified out of other comprehensive income (loss) as the hedged item was recognized in earnings, either for ineffectiveness or for amounts paid relating to the hedge. The Company reflected all changes in the fair value of the swaps in other comprehensive income (loss) during the three and six months ended June 30, 2014, as there was no ineffectiveness recorded in that period. The Company had no interest rate swaps outstanding at June 30, 2015 and December 31, 2014.

Equity-based Compensation – All equity-based compensation is measured at fair value on the grant date or date of modification, as applicable, and recognized in earnings over the requisite service period. Depending upon the settlement terms of the awards, all or a portion of the fair value of equity-based awards may be presented as a liability or as equity in the consolidated balance sheets. Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification. Equity-based compensation expense net of forfeited and repurchased awards was $1.8 million and $1.1 million for the three months ended June 30, 2015 and 2014, respectively, and $3.1 million and $2.0 million for the six months ended June 30, 2015 and 2014, respectively.

Rental Revenue – The Company, as a lessor, has retained substantially all of the risks and benefits of ownership and accounts for its leases as operating leases. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net was $5.8 million and $4.0 million as of June 30, 2015 and December 31, 2014, respectively. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed above.

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Cloud and Managed Services Revenue – The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided.

Allowance for Uncollectible Accounts Receivable – Rents receivable are recognized when due and are carried at cost, less an allowance for doubtful accounts. The Company records a provision for losses on rents receivable equal to the estimated uncollectible accounts, which is based on management’s historical experience and a review of the current status of the Company’s receivables. As necessary, the Company also establishes an appropriate allowance for doubtful accounts for receivables arising from the straight-lining of rents. The aggregate allowance for doubtful accounts was $5.2 million and $3.7 million as of June 30, 2015 and December 31, 2014, respectively.

Capital Leases and Lease Financing Obligations – The Company evaluates leased real estate to determine whether the lease should be classified as a capital or operating lease in accordance with U.S GAAP.

The Company periodically enters into capital leases for certain equipment. In addition, through its acquisition of Carpathia Hosting, Inc. (“Carpathia”) on June 16, 2015, the Company is now party to capital leases for property and equipment, as well as financing obligations related to a sale-leaseback transaction. The outstanding liabilities for the capital leases were $32.3 million and $13.1 million as of June 30, 2015 and December 31, 2014, respectively. The outstanding liabilities for the lease financing obligations were $23.9 million as of June 30, 2015. The value of the assets associated with these leases approximates the outstanding obligations as of June 30, 2015 and December 31, 2014, respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income.

See Note 3 for further discussion of the acquisition of Carpathia and Note 5 for further discussion of capital leases and lease financing obligations.

Recoveries from Customers – Certain customer leases contain provisions under which the customers reimburse the Company for a portion of the property’s real estate taxes, insurance and other operating expenses, which include certain power and cooling-related charges. The reimbursements are included in revenue as recoveries from customers in the Statements of Operations and Comprehensive Income in the period the applicable expenditures are incurred. Certain customer leases are structured to provide a fixed monthly billing amount that includes an estimate of various operating expenses, with all revenue from such leases included in rental revenues.

Segment Information – The Company manages its business as one operating segment and thus one reportable segment consisting of a portfolio of investments in data centers located in the United States, Canada, Europe and the Asia-Pacific region.

Customer Concentrations – As of June 30, 2015, one of the Company’s customers represented 7.3% of its total monthly rental revenue. No other customers exceeded 5% of total monthly rental revenue.

As of June 30, 2015, three of the Company’s customers exceeded 5% of total accounts receivable. In aggregate, these three customers accounted for 36% of total accounts receivable. Two of these three customers individually exceeded 10% of total accounts receivable.

Income Taxes – The Company elected for one of its existing subsidiaries to be taxed as a taxable REIT subsidiary pursuant to the REIT rules of the U.S. Internal Revenue Code.

For the taxable REIT subsidiary, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

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As of December 31, 2014, the taxable REIT subsidiary’s deferred tax assets were primarily the result of U.S. net operating loss carryforwards. A valuation allowance was recorded against its gross deferred tax asset balance as of December 31, 2014. As a result of the acquisition of Carpathia, the Company has determined that it is more likely than not that pre-existing deferred tax assets will be realized by the combined entity, and the valuation allowance should be eliminated. The change in the valuation allowance resulting from the change in circumstances is included in income, recognized in deferred income tax benefit in the three and sixth months ended June 30, 2015.

Fair Value Measurements – ASC Topic 820, Fair Value Measurements, emphasizes that fair-value is a market-based measurement, not an entity-specific measurement. Therefore, a fair-value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, a fair-value hierarchy is established that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the level in the fair-value hierarchy within which the entire fair-value measurement falls is based on the lowest level input that is significant to the fair-value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

As the Company’s previous interest rate swaps matured on September 28, 2014, there are no financial assets or liabilities measured at fair value on a recurring basis on the consolidated balance sheets as of June 30, 2015 and December 31, 2014.

New Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. The new guidance narrows the definition of discontinued operations to disposals that represent a strategic shift in operations and requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in the ASU are effective for annual and interim reporting periods beginning on and after December 15, 2014. Early adoption is permitted. Adoption of this standard did not have any effect on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the current revenue recognition requirements in ASC 606, Revenue Recognition. Under this new guidance, entities should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This ASU also requires enhanced disclosures. In July 2015, the FASB finalized its decision to delay the effective date of the amendments in this ASU by one year, and as such, they are effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted; however, entities are not permitted to adopt the standard earlier than December 15, 2016, the original effective date. Retrospective and modified retrospective application is allowed. The Company is currently assessing the impact of this standard on its consolidated financial statements.

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In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, and not as a separate deferred charge. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. In June 2015, the Securities and Exchange Commission (“SEC”) stated that given the absence of authoritative guidance within this ASU for debt issuance costs related to revolving debt arrangements, the SEC staff would not object to an entity deferring and presenting such costs as an asset and subsequently amortizing them ratably over the term of the revolving debt arrangement. This announcement confirms that revolver arrangement costs are not within the scope of this ASU. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The amendments are required to be applied on a retrospective basis, and upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. Adoption of this standard will affect the Company’s Consolidated Balance Sheets.

3. Acquisitions

Carpathia Acquisition

On June 16, 2015, the Company completed the acquisition of 100% of the outstanding stock of Carpathia Hosting, Inc. (“Carpathia”), a Virginia-based colocation, cloud and managed services provider for approximately $326 million (as defined in the purchase and sale agreement). Upon completion of this acquisition, the Company assumed all of the assets and liabilities of Carpathia Acquisition, Inc. Carpathia Acquisition, Inc. and its subsidiaries, including Carpathia, became indirect, wholly-owned subsidiaries of the Company. Carpathia is a provider of colocation, hybrid cloud and Infrastructure-as-a-Service (IaaS) servicing enterprise customers and federal agencies, with a customer base of approximately 230 customers as of June 16, 2015. Carpathia utilizes eight domestic data centers located in Dulles, Virginia; Phoenix, Arizona; San Jose, California; Harrisonburg, Virginia and Ashburn, Virginia; and five international data centers located in Toronto; Amsterdam; London; Hong Kong and Sydney.

The Company accounted for this acquisition in accordance with ASC 805, Business Combinations, as a business combination. The preliminary purchase price allocation was based on an assessment of the fair value of the assets acquired and liabilities assumed, and excludes acquisition-related costs which in accordance with ASC 805 were expensed as incurred. The Company is valuing the assets acquired and liabilities assumed using Level 3 inputs.

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The following table summarizes the consideration for the Carpathia acquisition and the preliminary allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (in thousands). This allocation is subject to change pending the final valuation of these assets and liabilities:

	June 16, 2015
Land	$	1,130
Buildings and improvements		79,372
Construction in process		12,127
Acquired intangibles, net		89,847
Net working capital		2,569
Total identifiable assets acquired		185,045
Capital lease and lease financing obligations		43,832
Deferred income taxes		19,766
Total liabilities assumed		63,598
Net identifiable assets acquired		121,447
Goodwill		173,237
Net assets acquired	$	294,684

Goodwill recognized in the transaction relates primarily to anticipated operating synergies, Carpathia’s in-place workforce and access to Carpathia’s broader customer base. Based on the preliminary purchase price allocation, amortization expenses relative to the intangible assets acquired are expected to be approximately $5.9 million, $10.9 million, $10.9 million, $8.8 million and $6.6 million for the years ended December 31, 2015 through December 31, 2019, respectively.

The following table represents the pro forma condensed consolidated statements of operations for the three-month periods ended June 30, 2015 and 2014, and for the six-month periods ended June 30, 2015 and 2014 (in thousands):

	(Unaudited) Pro Forma Condensed Consolidated Statements of Operations
	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenue	$	90,984	$	75,493	$	174,309	$	147,877
Net income	$	9,363	$	4,804	$	16,500	$	8,766

These amounts have been calculated after applying the Company’s accounting policies, and give effect to the Carpathia acquisition, related issuance of equity and certain historical transactions as if they had occurred on January 1, 2014, including the acquisition of the Princeton, NJ facility discussed below, the issuance of $300 million of senior unsecured notes, the issuance of approximately $387 million of Class A common stock, the acquisition of the Chicago, IL facility and the modification of the unsecured credit facility and the credit facility secured by the Richmond Property resulting in decreased interest rates on both. The purchase price allocation for this acquisition has been prepared on a preliminary basis. Accordingly, the purchase accounting adjustments made in connection with the development of the unaudited pro forma consolidated statements of operations are preliminary and subject to change.

The unaudited pro forma condensed consolidated financial information is for comparative purposes only and not necessarily indicative of what actual results of operations of the Company would have been had the transactions noted above been consummated on January 1, 2014, nor does it purport to represent the results of operations for future periods.

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Revenue and net income generated by Carpathia subsequent to the Company’s acquisition from June 16, 2015 to June 30, 2015 were $3.7 million and $0.2 million, respectively.

Princeton Acquisition

On June 30, 2014, the Company completed the acquisition of a data center facility in New Jersey (the “Princeton facility”), from McGraw Hill Financial, Inc., for an aggregate cost of approximately $73.3 million. This facility is located on approximately 194 acres and consists of approximately 560,000 gross square feet, including approximately 58,000 square feet of raised floor, and 12 MW of gross power. This acquisition was funded with a draw on the unsecured revolving credit facility. Concurrently with acquiring this data center the Company entered into a 10 year lease for the facility’s 58,000 square feet of raised floor with Atos, an international information technology services company headquartered in Bezos, France. The lease includes, at the option of Atos, the ability to renew for up to 15 years.

The Company accounted for this acquisition in accordance with ASC 805, Business Combinations, as a business combination. The preliminary purchase price allocation was based on an assessment of the fair value of the assets acquired, and excludes acquisition-related costs which in accordance with ASC 805 were expensed as incurred. The Company acquired the Princeton facility on June 30, 2014. The Company valued the assets acquired using Level 3 inputs.

In June 2015, the Company finalized the Princeton facility purchase price allocation. The following table summarizes the consideration for the Princeton facility and the final valuation of the fair value of assets acquired as of June 30, 2015 (in thousands):

	Princeton facility			Weighted average useful life
Buildings	$	32,126			40
Land		20,700			N/A
Acquired intangibles		30,634			13
Deferred costs		3,290			10
Other assets		297			10
Intangible liabilities		(13,747	)		17
Total purchase price	$	73,300

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4. Real Estate Assets and Construction in Progress

The following is a summary of properties owned or leased by the Company as of June 30, 2015 and December 31, 2014 (in thousands):

As of June 30, 2015 (unaudited):

Property Location	Land		Buildings and Improvements		Construction in Progress		Total Cost
Owned Properties
Suwanee, Georgia (Atlanta-Suwanee)	$	3,521	$	143,672	$	13,699	$	160,892
Atlanta, Georgia (Atlanta-Metro)		15,396		374,600		36,183		426,179
Santa Clara, California*		-		92,614		916		93,530
Richmond, Virginia		2,180		166,030		107,770		275,980
Sacramento, California		1,481		60,179		524		62,184
Princeton, New Jersey		20,700		32,572		272		53,544
Dallas-Fort Worth, Texas		5,808		61,863		111,247		178,918
Chicago, Illinois		-		-		35,491		35,491
Miami, Florida		1,777		28,875		1,192		31,844
Lenexa, Kansas		437		3,466		21		3,924
Wichita, Kansas		-		1,409		-		1,409
		51,300		965,280		307,315		1,323,895
Leased Properties
Carpathia properties ***		1,130		79,372		12,127		92,629
Jersey City, New Jersey		-		27,611		1,404		29,015
Overland Park, Kansas **		-		857		39		896
		1,130		107,840		13,570		122,540
	$	52,430	$	1,073,120	$	320,885	$	1,446,435

* Owned facility subject to long-term ground sublease.
** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers.
*** Includes 13 facilities. All facilities are leased, including those subject to capital leases.

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As of December 31, 2014:

Property Location	Land		Buildings and Improvements		Construction in Progress		Total Cost
Owned Properties
Suwanee, Georgia (Atlanta-Suwanee)	$	3,521	$	138,991	$	6,345	$	148,857
Atlanta, Georgia (Atlanta-Metro)		15,397		356,122		22,693		394,212
Santa Clara, California*		-		90,332		650		90,982
Richmond, Virginia		2,180		127,080		71,794		201,054
Sacramento, California		1,481		60,094		278		61,853
Princeton, New Jersey		17,976		35,951		90		54,017
Dallas-Fort Worth, Texas		5,808		44,053		89,982		139,843
Chicago, Illinois		-		-		21,786		21,786
Miami, Florida		1,777		28,786		129		30,692
Lenexa, Kansas		437		3,298		25		3,760
Wichita, Kansas		-		1,409		-		1,409
		48,577		886,116		213,772		1,148,465
Leased Properties
Jersey City, New Jersey		-		27,318		920		28,238
Overland Park, Kansas **		-		852		27		879
		-		28,170		947		29,117
	$	48,577	$	914,286	$	214,719	$	1,177,582

_____________________________

* Owned facility subject to long-term ground sublease.
** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers.

5. Debt

Below is a listing of the Company’s outstanding debt, including capital leases and lease financing obligations, as of June 30, 2015 and December 31, 2014 (in thousands):

	June 30,		December 31,
	2015		2014
	(Unaudited)
Unsecured Credit Facility	$	330,000	$	239,838
Senior Notes, net of discount		297,852		297,729
Richmond Credit Facility		70,000		70,000
Atlanta-Metro Equipment Loan		-		16,600
Capital Lease and Lease Financing Obligations		56,211		13,062
Total	$	754,063	$	637,229

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Credit Facilities, Senior Notes and Mortgage Notes Payable

(a) Unsecured Credit Facility – On May 1, 2013, the Company entered into a $575 million unsecured credit facility comprised of a five-year $225 million term loan and a four-year $350 million revolving credit facility with a one year extension, subject to satisfaction of certain conditions, and had the ability to expand the total credit facility by an additional $100 million subject to certain conditions set forth in the credit agreement. In July 2014, the Company’s term loan was reduced by $75 million to $150 million in connection with the issuance of the Senior Notes. On December 17, 2014, the Company amended and restated its unsecured credit facility to provide for a $650 million unsecured credit facility comprised of a five-year $100 million term loan maturing December 17, 2019 and a four-year $550 million revolving credit facility maturing December 17, 2018, with the option to extend one year until December 17, 2019, subject to the satisfaction of certain conditions. The lenders under the unsecured credit facility may issue up to $30 million in letters of credit subject to the satisfaction of certain conditions.  The total unsecured credit facility may be increased from the current capacity of $650 million to up to $850 million subject to certain conditions set forth in the credit agreement, including the consent of the administrative agent and obtaining necessary commitments. As of June 30, 2015, borrowings under the unsecured credit facility consisted of $230.0 million outstanding under the revolving credit facility and $100.0 million outstanding under the term loan.

The unsecured credit facility requires monthly interest payments and requires the Company to comply with various customary affirmative and negative covenants and quarterly financial covenant requirements relating to the debt service coverage ratio, fixed charge ratio, leverage ratio and tangible net worth and various other operational requirements. In connection with the unsecured credit facility, as of June 30, 2015, the Company had an additional $2.5 million letter of credit outstanding.

Amounts outstanding under the unsecured credit facility bear interest at a variable rate equal to, at the Company’s election, LIBOR or a base rate, plus a spread that will vary depending upon the Company’s leverage ratio. For revolving credit loans, the spread ranges from 1.70% to 2.25% for LIBOR loans and 0.70% to 1.25% for base rate loans. For term loans, the spread ranges from 1.65% to 2.20% for LIBOR loans and 0.65% to 1.20% for base rate loans. As of June 30, 2015, the weighted average interest rate for amounts outstanding under the unsecured credit facility was 1.87%.

(b) Senior Notes – On July 23, 2014, the Operating Partnership and QTS Finance Corporation, a subsidiary of the Operating Partnership formed solely for the purpose of facilitating the offering of the notes described below (collectively, the “Issuers”), issued $300 million aggregate principal amount of 5.875% Senior Notes due 2022 (the “Senior Notes”). The Senior Notes have an interest rate of 5.875% per annum, were issued at a price equal to 99.211% of their face value and mature on August 1, 2022. The proceeds from the offering were used to repay amounts outstanding under the unsecured credit facility, including $75 million outstanding under the term loan. The Senior Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Operating Partnership’s existing subsidiaries (other than foreign subsidiaries, Carpathia related subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Issuers or any other subsidiary guarantor. The Company will not initially guarantee the Senior Notes and will not be required to guarantee the Senior Notes except under certain circumstances. The offering was conducted pursuant to Rule 144A of the Securities Act of 1933, as amended, and the Senior Notes were issued pursuant to an indenture, dated as of July 23, 2014, among the Operating Partnership, QTS Finance Corporation, the Company, the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee (the “Indenture”).

On March 23, 2015, the SEC declared effective the Operating Partnership and QTS Finance Corporation’s registration statement on Form S-4 pursuant to which the issuers exchanged the originally issued Senior Notes for $300 million of 5.875% Senior Notes due 2022 (the “Exchange Notes”) that are registered under the Securities Act of 1933, as amended. The exchange offer was completed on April 23, 2015, and all outstanding originally issued Senior Notes were tendered. The Exchange Notes did not provide the Company with any additional proceeds and satisfied its obligations under a registration rights agreement entered into in connection with the issuance of the Senior Notes.

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(c) Richmond Credit Facility – In December 2012, the Company entered into a credit facility secured by the Company’s Richmond data center (the “Richmond Credit Facility”). As of June 30, 2015, the Richmond Credit Facility had capacity of $120 million and includes an accordion feature that allows the Company to increase the size of the credit facility up to $200 million. The Richmond Credit Facility matures June 30, 2019. The Richmond Credit Facility requires the Company to comply with covenants similar to the unsecured credit facility.

Amounts outstanding under the Richmond Credit Facility bear interest at a variable rate equal to, at the Company’s election, LIBOR or a base rate, plus a spread that will range, depending upon the Company’s leverage ratio, from 2.10% to 2.85% for LIBOR loans or 1.10% to 1.85% for base rate loans. As of June 30, 2015, the interest rate for amounts outstanding under the Richmond Credit Facility was 2.29%.

On December 17, 2014, the Company further amended the Richmond Credit Facility to, among other things, conform certain terms of the Richmond Credit Facility to the unsecured credit facility and allow two subsidiaries of the Operating Partnership that were parties to the Richmond Credit Facility to guarantee unsecured obligations of the Operating Partnership and its subsidiaries, including the unsecured credit facility and the Senior Notes.

(d) Atlanta-Metro Equipment Loan – On April 9, 2010, the Company entered into a $25 million loan to finance equipment related to an expansion project at the Company’s Atlanta-Metro data center (the “Atlanta-Metro Equipment Loan”). The loan originally required monthly interest-only payments and subsequently required monthly interest and principal payments. The loan bore interest at 6.85% and was scheduled to mature on June 1, 2020. This debt was repaid in June 2015 when its prepayment penalties expired.

The annual remaining principal payment requirements as of June 30, 2015 per the contractual maturities and excluding extension options, capital leases and lease financing obligations, are as follows (in thousands):

2015	$	-
2016		-
2017		-
2018		230,000
2019		170,000
Thereafter		300,000
Total	$	700,000

As of June 30, 2015, the Company was in compliance with all of its covenants.

Capital Leases

The Company has historically entered into capital leases for certain equipment. In addition, through its acquisition of Carpathia on June 16, 2015, the Company acquired capital leases of both equipment and certain properties. Total outstanding liabilities for capital leases were $32.3 million as of June 30, 2015, of which $19.6 million were assumed through the Carpathia acquisition, $19.2 million of which was related to the lease of real property. Carpathia had entered into capital lease arrangements for datacenter space under two lease agreements expiring in 2018 and 2019 at its Harrisonburg, Virginia and Ashburn, Virginia locations. Total recurring monthly payments range from approximately $0.2 million to $0.5 million during the terms of the leases, in addition to payments made for utilities. Depreciation related to the associated assets for the capital leases is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income.

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Lease Financing Obligations

Through the acquisition of Carpathia, the Company acquired lease financing obligations totaling $23.9 million at June 30, 2015, of which $21.3 million related to a sale-leaseback transaction where Carpathia has continuing involvement. On December 23, 2011, Carpathia sold the shell of a building and the associated land to an unrelated third party. Carpathia leases the property back and is a party to an agreement with the same third party to construct a new building on the adjoining property for use as a data center. Carpathia is primarily responsible for financing the improvements and outfitting the building with the necessary equipment. The third party leases back the new building in stages to Carpathia as the various stages are completed. In accordance with ASC 840-40, Leases, Carpathia has continuing involvement with the related leased assets; therefore, the Company will continue to account for the existing building shell and the associated land as fixed assets and will capitalize the construction costs of the new building. The financing obligation related to the building and equipment was $19.6 million at June 30, 2015. In addition, due to Carpathia’s continuing involvement, it was required to defer a gain on the sale of the assets. The deferred gain was $1.7 million at June 30, 2015, and is also included in lease financing obligations.

The financing obligation is reduced as rental payments are made on the existing building, which payments started in January 2012. Rental payments, which include amounts attributable to both principal and interest, increased to approximately $0.2 million per month in March 2013, which is when the newly constructed building was inhabited by Carpathia. Depreciation expense on the related asset is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income.

The Company, through its acquisition of Carpathia, also has a lease financing agreement in connection with a $4.8 million tenant improvement allowance on one of its data center lease agreements. The financing requires monthly payments of principal and interest of less than $0.1 million through February 2019. The outstanding balance on the financing agreement was $2.6 million as of June 30, 2015. Depreciation expense on the related leasehold improvements is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income.

The following table summarizes the Company’s combined future payment obligations, excluding interest, as of June 30, 2015, on the capital leases and lease financing obligations above (in thousands):

2015	$	6,450
2016		12,558
2017		12,388
2018		8,804
2019		2,461
Thereafter		13,550
Total	$	56,211

6. Interest Rate Derivative Instruments

The Company entered into interest rate swap agreements with a notional amount of $150 million on February 8, 2012, which were designated as cash flow hedges for hedge accounting, and matured on September 28, 2014. For derivative instruments that are accounted for as hedges, the change in fair value for the effective portions of qualifying hedges is recorded through other comprehensive income (loss). The total amount of unrealized gains recorded in other comprehensive income (loss) for the six months ended June 30, 2014 was $0.2 million, with no unrealized gains or losses recorded for the six months ended June 30, 2015. Interest expense related to payments on interest rate swaps for the three and six months ended June 30, 2014 was $0.2 million and $0.3 million, respectively, with no interest expense recorded for the three and six months ended June 30, 2015.

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7. Commitments and Contingencies

The Company is subject to various routine legal proceedings and other matters in the ordinary course of business. The Company does not currently have any litigation that would have a material adverse impact on the Company’s financial statements.

8. Partners’ Capital, Equity and Incentive Compensation Plans

QualityTech, LP

QTS has the full power and authority to do all the things necessary to conduct the business of the Operating Partnership.

As of June 30, 2015, the Operating Partnership had three classes of limited partnership units outstanding: Class A units of limited partnership interest (“Class A units”), Class RS LTIP units of limited partnership interest (“Class RS units”) and Class O LTIP units of limited partnership units (“Class O units”). The Class A Units are redeemable at any time on or after one year following the later of November 1, 2013 (which is the beginning of the first full calendar month following the completion of the IPO) or the date of initial issuance. The Company may in its sole discretion elect to assume and satisfy the redemption amount with cash or its shares. Class RS units or Class O units were issued upon grants made under the QualityTech, LP 2010 Equity Incentive Plan (the “2010 Equity Incentive Plan”). Class RS units and Class O units may be subject to vesting and are pari passu with Class A units. Each Class RS unit and Class O unit is convertible into Class A units by the Operating Partnership at any time or by the holder at any time following full vesting (if such unit is subject to vesting) based on formulas contained in the partnership agreement. In addition, upon certain circumstances set forth in the partnership agreement, vested Class RS units automatically convert into Class A units of the Operating Partnership.

QTS Realty Trust, Inc.

In connection with its IPO, QTS issued Class A common stock and Class B common stock. Class B common stock entitles the holder to 50 votes per share and was issued to enable the Company’s Chief Executive Officer to exchange 2% of his Operating Partnership units so he may have a vote proportionate to his economic interest in the Company. Also in connection with its IPO, QTS adopted the QTS Realty Trust, Inc. 2013 Equity Incentive plan (the “2013 Equity Incentive Plan”), which authorized 1.75 million shares of Class A common stock to be issued under the plan, including options to purchase Class A common stock, restricted Class A common stock, Class O units, and Class RS units. In March 2015, the Board of Directors approved an amendment to the 2013 Equity Incentive Plan to, among other things, increase the number of shares available for issuance under the plan by 3,000,000, subject to stockholder approval. The stockholders approved the amendment at the annual meeting of stockholders held on May 4, 2015, increasing the total number of shares available for issuance under the 2013 Equity Incentive Plan to 4,750,000.

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The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the six months ended June 30, 2015:

	2010 Equity Incentive Plan												2013 Equity Incentive Plan
	Number of Class O units			Weighted average exercise price		Weighted average fair  value		Number of Class RS units			Weighted average grant date value		Options			Weighted average exercise price		Weighted average fair value		Restricted Stock			Weighted average grant date value
Outstanding at December 31, 2014		1,518,717		$	23.49	$	3.75		74,625		$	23.49		584,949		$	22.87	$	4.10		246,785		$	29.13
Granted		—			—		—		—			—		312,997			36.14		8.02		186,070			35.95
Exercised/Vested (2)		(46,170	)		20.62		4.74		—			—		(8,843	)		21.80		3.80		(20,453	)		23.26
Released from restriction (1)		—			—		—		(17,375	)		25.00		—			—		—		—			—
Cancelled/Expired (3)		—			—		—		—			—		(8,594	)		21.00		3.52		(9,625	)		23.92
Outstanding at June 30, 2015		1,472,547		$	23.58	$	3.72		57,250		$	23.03		880,509		$	27.61	$	5.50		402,777		$	32.70

(1) This represents Class RS units that upon vesting have converted to Operating Partnership units.

(2) This represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock.

(3) Includes 9,625 restricted Class A common stock surrendered by certain employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock.

The assumptions and fair values for restricted stock and options to purchase shares of Class A common stock granted for the six months ended June 30, 2015 are included in the following table on a per unit basis. Class O units and options to purchase shares of Class A common stock were valued using the Black-Scholes model.

	Three and Six Months Ended June 30, 2015
Fair value of restricted stock granted		$35.81-$37.64
Fair value of options granted		$8.00-$8.05
Expected term (years)		5.5-6.1
Expected volatility		33	%
Expected dividend yield		3.50-3.57	%
Expected risk-free interest rates		1.67-1.69	%

The following table summarizes information about awards outstanding as of June 30, 2015.

	Operating Partnership Awards Outstanding
	Exercise prices		Awards outstanding		Weighted average remaining vesting period (years)
Class RS Units	$	-		57,250		2
Class O Units		$20-25		1,472,547		1
Total Operating Partnership awards outstanding				1,529,797

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	QTS Realty Trust, Inc. Awards Outstanding
	Exercise prices		Awards outstanding		Weighted average remaining vesting period (years)
Restricted stock	$	-		402,777		3
Options to purchase Class A common stock		$21-36.54		880,509		1
Total QTS Realty Trust, Inc. awards outstanding				1,283,286

All nonvested LTIP unit awards are valued as of the grant date and generally vest ratably over a defined service period. Certain nonvested LTIP unit awards vest on the earlier of achievement by the Company of various performance goals or specified dates in 2015 and 2016. As of June 30, 2015 there were 0.6 million, 0.1 million, 0.4 million and 0.4 million nonvested Class O units, Class RS units, restricted Class A common stock and options to purchase Class A common stock outstanding, respectively. As of June 30, 2015 the Company had $16.8 million of unrecognized equity-based compensation expense which will be recognized over the remaining vesting period of up to 4 years. The total intrinsic value of the awards outstanding at June 30, 2015 was $44.1 million.

On January 7, 2014, the Company paid its first and prorated dividend to common stockholders of $0.24 per common share and the Operating Partnership made a distribution to its partners of $0.24 per unit in an aggregate amount of $9.0 million. On April 8, 2014, the Company paid its regular quarterly cash dividend of $0.29 per common share and the Operating Partnership made a distribution to its partners of $0.29 per unit in an aggregate amount of $10.7 million. Additionally, a distribution of approximately $200,000 was made to Class O LTIP holders during the three months ended June 30, 2014 to cover federal, state and local taxes on the allocated taxable income of the O LTIPs.

On January 7, 2015, the Company paid its regular quarterly cash dividend of $0.29 per common share and the Operating Partnership made a distribution to its partners of $0.29 per unit in an aggregate amount of $10.7 million. On April 7, 2015, the Company paid its regular quarterly cash dividend of $0.32 per common share and the Operating Partnership made a distribution to its partners of $0.32 per unit in an aggregate amount of $13.4 million.  

On March 2, 2015, the Company issued 5,000,000 shares of QTS’ Class A common stock and GA QTS Interholdco, LLC, a selling stockholder and an affiliate of General Atlantic LLC, sold 4,350,000 shares of QTS’ Class A common stock at a price of $34.75 per share. The selling stockholder granted the underwriters a 30-day option to purchase an aggregate of up to an additional 1,402,500 shares of QTS’ Class A common stock at the public offering price, which the underwriters exercised. The Company used the net proceeds of approximately $166.4 million to repay amounts outstanding under its unsecured revolving credit facility. The Company did not receive any proceeds from the offering of shares by the selling stockholder.

On June 5, 2015, the Company issued 5,750,000 shares of QTS’ Class A common stock and GA QTS Interholdco, LLC, a selling stockholder, sold 1,250,000 shares of QTS’ Class A common stock at a price of $37.00 per share. The selling stockholder granted the underwriters a 30-day option to purchase an aggregate of up to an additional 1,050,000 shares of QTS’ Class A common stock at the public offering price, which the underwriters exercised. The Company used the net proceeds of approximately $203.7 million to fund a portion of the cash consideration payable by the Company in the Carpathia acquisition, and prior to such use, it used a portion of the net proceeds to repay amounts outstanding under its unsecured revolving credit facility and to pay off its Atlanta-Metro Equipment Loan. The

Company did not receive any proceeds from the offering of shares by the selling stockholder.

QTS Realty Trust, Inc. Employee Stock Purchase Plan

In June 2015, the Company established the QTS Realty Trust, Inc. Employee Stock Purchase Plan (the “Plan”) to give eligible employees the opportunity to purchase, through payroll deductions, shares of the Company’s Class A common stock in the open market by an independent broker selected by the Company’s Board of Directors (the “Board”) or the plan’s administrator. Eligible employees include all employees of the Company and its majority-owned subsidiaries (excluding executives) who have been employed for at least thirty days and who perform at least thirty hours of service per week for the Company. The Plan will be effective July 1, 2015 and will be administered by the Board or by a committee of one or more persons appointed by the Board. The Company has reserved 250,000 shares for purchase under the Plan and has also agreed to pay the brokerage commissions and fees associated with a Plan participant's purchase of shares. An eligible employee may deduct a minimum of $40 per month and a maximum of $2,000 per month towards the purchase of shares. On June 17, 2015, the Company filed a registration statement on Form S-8 to register the 250,000 shares of the Company’s Class A common stock related to the Plan.

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9. Related Party Transactions

The Company periodically executes transactions with entities affiliated with its Chairman and Chief Executive Officer. Such transactions include automobile, furniture and equipment purchases as well as building operating lease payments and receipts, and reimbursement for the use of a private aircraft service by the Company’s officers and directors.

The transactions which occurred during the three and six months ended June 30, 2015 and 2014 are outlined below (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(dollars in thousands)	2015		2014		2015		2014
Tax, utility, insurance and other reimbursement	$	65	$	115	$	145	$	167
Rent expense		254		257		507		519
Capital assets acquired		26		27		125		74
Total	$	345	$	399	$	777	$	760

10. Noncontrolling Interest

Concurrently with the completion of the IPO, QTS consummated a series of transactions pursuant to which QTS became the sole general partner and majority owner of QualityTech, LP, which then became its operating partnership. The previous owners of QualityTech, LP retained 21.2% ownership of the Operating Partnership.

Commencing at any time beginning November 1, 2014, at the election of the holders of the noncontrolling interest, the Class A units are redeemable for cash or, at the election of the Company, common stock of the Company on a one-for-one basis. During the first and second quarters of 2015, approximately 230,000 and 300,000 Class A units, respectively, were redeemed for the Company’s Class A common stock. As a result, the noncontrolling ownership interest of QualityTech, LP, after taking into account the Class A units redeemed, the grant of equity awards and the issuance of 5,000,000 and 5,750,000 shares of common stock in March and June 2015, respectively, was 14.6% at June 30, 2015.

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11. Earnings per share of QTS Realty Trust, Inc.

Basic income (loss) per share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share adjusts basic income (loss) per share for the effects of potentially dilutive common shares.

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2015		2014		2015		2014
Net income available to common stockholders	$	4,632	$	3,090	$	8,714	$	7,288
Weighted average shares outstanding—basic		36,669		29,017		33,996		29,001
Net income per share—basic	$	0.13	$	0.11	$	0.26	$	0.25
Net income	$	5,520	$	3,921	$	10,557	$	9,249
Weighted average shares outstanding—diluted (1)		44,444		37,010		41,868		36,934
Net income per share—diluted	$	0.12	$	0.11	$	0.25	$	0.25

(1) Includes 7,063 Class A and Class RS units, 492 “in the money” value of Class O units on an “as if” converted basis and 220 “in the money” value of options to purchase shares of Class A common stock on an “as if” converted basis as of the three months ended June 30, 2015, and 7,189 Class A and Class RS units, 464 “in the money” value of Class O units on an “as if” converted basis and 218 “in the money” value of options to purchase shares of Class A common stock on an “as if” converted basis as of the six months ended June 30, 2015. As of the three months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 89 “in the money” value of Class O units on as “as if” converted basis and 107 “in the money” value options to purchase shares of Class A common stock on an “as if” converted basis, and as of the six months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 57 “in the money” value of Class O units on an “as if” converted basis and 79 “in the money” value options to purchase shares of Class A common stock on as “as if” converted basis.

 
12. Customer Leases, as Lessor

Future minimum lease payments to be received under non-cancelable operating customer leases (inclusive of payments for contracts which have not yet commenced, and exclusive of recoveries of operating costs from customers) are as follows for the years ending December 31 (in thousands):

Period Ending December 31,
2015 (July - December)	$	153,057
2016		266,881
2017		204,361
2018		135,643
2019		86,934
Thereafter		247,162
Total	$	1,094,038

13. Fair Value of Financial Instruments

ASC Topic 825 requires disclosure of fair value information about financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows based upon market yields or by using other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts.

Short-term instruments: The carrying amounts of cash and cash equivalents and restricted cash approximate fair value.

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Credit facilities, Senior Notes and mortgage notes payable: The fair value of the Company’s floating rate mortgage loans was estimated using Level 2 “significant other observable inputs” such as available market information based on borrowing rates that the Company believes it could obtain with similar terms and maturities. The Company’s unsecured credit facility and Richmond Credit Facility did not have interest rates which were materially different than current market conditions and therefore, the fair value of each of the credit facilities approximated the carrying value of each note. The fair value of the Company’s Senior Notes was estimated using Level 2 “significant other observable inputs,” primarily based on quoted market prices for the same or similar issuances. At June 30, 2015, the fair value of the Senior Notes was approximately $299.3 million.

Other debt instruments: The fair value of the Company’s other debt instruments (including capital leases and lease financing obligations) were estimated in the same manner as the credit facilities and mortgage notes payable above. Similarly, because each of these instruments did not have interest rates which were materially different than current market conditions and therefore, the fair value of each instrument approximated the respective carrying values.

14. Condensed Consolidating Financial Information

QualityTech, LP has no significant operations independent of its subsidiaries. Obligations under the Senior Notes are jointly and severally guaranteed by substantially all of our restricted subsidiaries, except for Carpathia Hosting, Inc. and its subsidiaries (the “Non-Guarantor Subsidiaries”).

The tables below present condensed consolidating financial statements for QualityTech, LP and its subsidiaries that guarantee the Senior Notes (the “Guarantor Subsidiaries”), and the Non-Guarantor Subsidiaries as of June 30, 2015, and for the three and six months ended June 30, 2015. As there were no Non-Guarantor Subsidiaries as of December 31, 2014 or for the three and six months ended June 30, 2014, no condensed consolidating financial statements are presented for those respective periods or dates. The financial information may not necessarily be indicative of the results of operations, cash flows or financial position had the subsidiaries operated as independent entities.

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Interim Condensed Consolidating Balance Sheet
June 30, 2015
(in thousands)

	Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Real Estate Assets
Land	$	51,300		$	1,130		$	-		$	52,430
Buildings and improvements		993,748			79,372			-			1,073,120
Less: Accumulated depreciation		(204,606	)		(678	)		-			(205,284	)
		840,442			79,824			-			920,266
Construction in progress		308,758			12,127			-			320,885
Real Estate Assets, net		1,149,200			91,951			-			1,241,151
Cash and cash equivalents		6,117			4,627			-			10,744
Rents and other receivables, net		18,294			12,254			-			30,548
Acquired intangibles, net		30,158			91,847			-			122,005
Deferred costs, net		38,013			-			-			38,013
Prepaid expenses		5,534			1,598			-			7,132
Goodwill		-			173,237			-			173,237
Investment in subsidiaries		294,858			-			(294,858	)		-
Other assets, net		28,563			635			-			29,198
TOTAL ASSETS	$	1,570,737		$	376,149		$	(294,858	)	$	1,652,028
LIABILITIES
Mortgage notes payable	$	70,000		$	-		$	-		$	70,000
Unsecured credit facility		330,000			-			-			330,000
Senior notes, net of discount		297,852			-			-			297,852
Capital lease and lease financing obligations		12,379			43,832			-			56,211
Accounts payable and accrued liabilities		84,816			7,892			-			92,708
Dividends and distributions payable		15,322			-			-			15,322
Advance rents, security deposits and other liabilities		16,600			2,844			-			19,444
Deferred income taxes		(3,135)			19,584			-			16,449
Deferred income		12,418			7,139			-			19,557
TOTAL LIABILITIES		836,252			81,291			-			917,543
PARTNERS' CAPITAL
Partners' capital		734,485			294,858			(294,858	)		734,485
TOTAL LIABILITIES AND PARTNERS' CAPITAL	$	1,570,737		$	376,149		$	(294,858	)	$	1,652,028

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Interim Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Three Months Ended June 30, 2015
(in thousands)

	Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues:
Rental	$	50,740		$	1,453		$	-		$	52,193
Recoveries from customers		5,582			-			-			5,582
Cloud and managed services		5,958			2,262			-			8,220
Other		2,120			2			-			2,122
Total revenues		64,400			3,717			-			68,117
Operating Expenses:
Property operating costs		20,564			1,467			-			22,031
Real estate taxes and insurance		1,474			-			-			1,474
Depreciation and amortization		16,876			1,186			-			18,062
General and administrative		13,781			834			-			14,615
Restructuring		-			-			-			-
Transaction and integration costs		4,669			-			-			4,669
Total operating expenses		57,364			3,487			-			60,851
Operating income		7,036			230			-			7,266
Other income and expenses:
Interest income		1			-			-			1
Interest expense		(4,743	)		(56	)		-			(4,799	)
Other (expense) income, net		(83	)		-			-			(83	)
Equity in net income of subsidiaries		174			-			(174	)		-
Income (loss) before taxes		2,385			174			(174	)		2,385
Tax benefit of taxable REIT subsidiaries		3,135			-			-			3,135
Net income (loss)	$	5,520		$	174		$	(174	)	$	5,520

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Interim Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Six Months Ended June 30, 2015
(in thousands)

	Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues:
Rental	$	100,073		$	1,453		$	-		$	101,526
Recoveries from customers		11,246			-			-			11,246
Cloud and managed services		11,753			2,262			-			14,015
Other		2,714			2			-			2,716
Total revenues		125,786			3,717			-			129,503
Operating Expenses:
Property operating costs		39,900			1,467			-			41,367
Real estate taxes and insurance		2,959			-			-			2,959
Depreciation and amortization		33,119			1,186			-			34,305
General and administrative		27,619			834			-			28,453
Restructuring					-			-			-
Transaction and integration costs		4,774			-			-			4,774
Total operating expenses		108,371			3,487			-			111,858
Operating income		17,415			230			-			17,645
Other income and expenses:
Interest income		1			-			-			1
Interest expense		(10,085	)		(56	)		-			(10,141	)
Other (expense) income, net		(83	)		-			-			(83	)
Equity in net income of subsidiaries		174			-			(174	)		-
Income (loss) before taxes		7,422			174			(174	)		7,422
Tax benefit of taxable REIT subsidiaries		3,135			-			-			3,135
Net income (loss)	$	10,557		$	174		$	(174	)	$	10,557

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Interim Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2015
(in thousands)

	Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidated
Net cash provided by operating activities	$	36,534		$	4,627	$	41,161
Cash flow from investing activities:
Acquisitions, net of cash acquired		(288,865	)		-		(288,865	)
Additions to property and equipment		(170,150	)		-		(170,150	)
Cash used in investing activities		(459,015	)		-		(459,015	)
Cash flow from financing activities:
Credit facility proceeds		350,162			-		350,162
Debt repayment		(260,000	)		-		(260,000	)
Payment of deferred financing costs		(512	)		-		(512	)
Payment of cash dividends		(19,673	)		-		(19,673	)
Partnership distributions		(4,414	)		-		(4,414	)
Principal payments on capital lease obligations		(1,227	)		-		(1,227	)
Scheduled mortgage principal debt repayments		(16,600	)		-		(16,600	)
Equity proceeds, net of costs		370,074			-		370,074
Net cash provided by financing activities		417,810			-		417,810
Net (decrease) increase in cash and cash equivalents		(4,671	)		4,627		(44	)
Cash and cash equivalents, beginning of period		10,788			-		10,788
Cash and cash equivalents, end of period	$	6,117		$	4,627	$	10,744

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15. Subsequent Events

On July 8, 2015, the Company paid its regular quarterly cash dividend of $0.32 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on June 19, 2015.

On August 6, 2015, the Company declared its cash dividend for the third quarter of 2015 of $0.32 per common share and per unit in the Operating Partnership. The dividend is payable on October 6, 2015 to stockholders and unit holders of record as of the close of business on September 18, 2015.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents the financial condition and results of operations of QTS Realty Trust, Inc. (“QTS”), which includes the operations of QualityTech, LP (the “Operating Partnership”), for the three and six months ended June 30, 2015 and 2014. You should read the following discussion and analysis in conjunction with QTS’ and the Operating Partnership’s accompanying consolidated financial statements and related notes contained elsewhere in this Form 10-Q. We believe it is important for investors to understand the few differences between the financial statements of QTS and the Operating Partnership. See “Explanatory Note” for an explanation of these few differences. Since the financial data presented in this Item 2 does not contain any differences between QTS and the Operating Partnership, all periods presented reflect the operating results of the Operating Partnership.

Forward-Looking Statements

Some of the statements contained in this Form 10-Q constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions are forward-looking statements. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

The forward-looking statements contained in this Form 10-Q reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

· adverse economic or real estate developments in our markets or the technology industry;

· global, national and local economic conditions;

· risks related to our international operations;

· difficulties in identifying properties to acquire and completing acquisitions;

· our failure to successfully develop, redevelop and operate acquired properties, including data centers acquired in our acquisition of Carpathia Hosting, Inc.;

· significant increases in construction and development costs;

· the increasingly competitive environment in which we operate;

· defaults on, or termination or non-renewal of, leases by customers;

· increased interest rates and operating costs, including increased energy costs;

· financing risks, including our failure to obtain necessary outside financing;

· decreased rental rates or increased vacancy rates;

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· dependence on third parties to provide Internet, telecommunications and network connectivity to our data centers;

· our failure to qualify and maintain QTS’ qualification as a real estate investment trust (“REIT”);

· environmental uncertainties and risks related to natural disasters;

· financial market fluctuations; and

· changes in real estate and zoning laws and increases in real property tax rates.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause our future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014 and Item 1A. “Risk Factors” of this Form 10-Q.

Overview

We are a leading owner, developer and operator of state-of-the-art, carrier-neutral, multi-tenant data centers. Our data centers are facilities that house the network and computer equipment of multiple customers and provide access to a range of communications carriers. We have a fully integrated platform through which we own and operate our data centers and provide a broad range of IT infrastructure solutions. We refer to our spectrum of core data center products as our “3Cs,” which consists of Custom Data Center, Colocation and Cloud and Managed Services. We believe that we own and operate one of the largest portfolios of multi-tenant data centers in the United States, as measured by gross square footage, and have the capacity to more than double our leased raised floor without constructing or acquiring any new buildings.

Inclusive of the recent acquisition of Carpathia Hosting, Inc. discussed below, we operate a portfolio of 25 data centers located throughout the United States, Canada, Europe and the Asia-Pacific region. Within the U.S., we are located in some of the top U.S. data center markets plus other high-growth markets. Our data centers are highly specialized, full-service, mission-critical facilities used by our customers to house, power and cool the networking equipment and computer systems that support their most critical business processes. We believe that our data centers are best-in-class and engineered to adhere to the highest specifications commercially available to customers, providing fully redundant, high-density power and cooling sufficient to meet the needs of major national and international companies and organizations. This is in part reflected by our operating track record of “five-nines” (99.999%) reliability and by our diverse customer base of more than 1,000 customers, including financial institutions, healthcare companies, government agencies, communications service providers, software companies and global Internet companies.

On June 16, 2015, we completed the acquisition of 100% of the outstanding stock of Carpathia Hosting, Inc. (“Carpathia”), a Virginia-based colocation, cloud and managed services provider, for approximately $326 million (as defined in the purchase and sale agreement). Upon completion of this acquisition, we assumed all of the assets and liabilities of Carpathia Acquisition, Inc. Carpathia Acquisition, Inc. and its subsidiaries, including Carpathia, became indirect, wholly-owned subsidiaries of us. Carpathia is a provider of colocation, hybrid cloud services and Infrastructure-as-a-Service (IaaS) servicing enterprise customers and federal agencies, with a customer base of approximately 230 customers as of June 16, 2015. Carpathia utilizes eight domestic data centers located in Dulles, VA, Phoenix, AZ, San Jose, CA, Harrisonburg, VA and Ashburn, VA, and five international data centers located in Toronto, Amsterdam, London, Hong Kong and Sydney.

As of June 30, 2015, QTS owned an approximate 85.4% ownership interest in the Operating Partnership. Substantially all of our assets are held by, and our operations are conducted through, the Operating Partnership.

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The Operating Partnership is a Delaware limited partnership formed on August 5, 2009 and was QTS’ historical predecessor prior to the initial public offering (“IPO”), having operated the Company’s business until the IPO.

We believe that QTS has operated and has been organized in conformity with the requirements for qualification and taxation as a REIT commencing with our taxable year ended December 31, 2013. Our qualification as a REIT, and maintenance of such qualification, depends upon our ability to meet, on a continuing basis, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”) relating to, among other things, the sources of our gross income, the composition and values of our assets, our distributions to our stockholders and the concentration of ownership of our equity shares.

Our Customer Base

We provide data center solutions to a diverse set of customers. Our customer base is comprised of companies of all sizes representing an array of industries, each with unique and varied business models and needs. We serve Fortune 1000 companies as well as small and medium-sized businesses, or SMBs, including financial institutions, healthcare companies, government agencies, communications service providers, software companies and global Internet companies.

Our Custom Data Center, or C1, customers typically are large enterprises with significant IT expertise and specific IT requirements, including financial institutions, “Big Four” accounting firms and the world’s largest global Internet companies. Our Colocation, or C2, customers consist of a wide range of organizations, including major healthcare, telecommunications and software and web-based companies. Our C3 Cloud customers include both large organizations and SMBs seeking to reduce their capital expenditures and outsource their IT infrastructure on a flexible basis. Examples of current C3 Cloud customers include a global financial processing company and a U.S. government agency.

As a result of our diverse customer base, customer concentration in our portfolio is limited. As of June 30, 2015, only five of our more than 1,000 customers individually accounted for more than 3% of our monthly recurring revenue (“MRR”) (as defined below), with the largest customer accounting for approximately 7% of our MRR. In addition, greater than 50% of our MRR was attributable to customers who use more than one of our 3C products.

Our Portfolio

Inclusive of the recent acquisition of Carpathia, we develop and operate 25 data centers located throughout the United States, Canada, Europe and the Asia-Pacific region, containing an aggregate of approximately 4.8 million gross square feet of space (approximately 91% of which is wholly owned by us), including approximately 2.2 million “basis-of-design” raised floor square feet, which represents the total data center raised floor potential of our existing data center facilities. This represents the maximum amount of space in our existing buildings that could be leased following full build-out, depending on the configuration that we deploy. As of June 30, 2015, this space included approximately 1,054,000 raised floor operating net rentable square feet, or NRSF, plus approximately 1.1 million square feet of additional raised floor in our development pipeline, of which approximately 67,000 NRSF is expected to become operational by December 31, 2015. Our facilities collectively have access to over 500 megawatts (“MW”) of gross utility power with 439 MW of available utility power. We believe such access to power gives us a competitive advantage in redeveloping data center space, since access to power is usually the most limiting and expensive component in data center redevelopment.

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The following table presents an overview of the portfolio of operating properties that we own or lease, based on information as of June 30, 2015:

					Operating Net Rentable Square Feet (Operating NRSF) (3)
Property	Year Acquired (1)		Gross Square Feet (2)		Raised Floor (4)		Office & Other (5)		Supporting Infrastructure (6)		Total		% Occupied and Billing (7)			Annualized Rent (8)		Available Utility Power (MW) (9)		Basis of Design NRSF		% Raised Floor
Richmond, VA		2010		1,318,353		121,623		51,093		131,324		304,040		70.8	%	$	22,827,816		110		556,623		21.9	%
Atlanta, GA (Metro)		2006		968,695		407,986		36,953		315,676		760,615		90.8	%	$	78,020,867		72		527,186		77.4	%
Dallas-Fort Worth, TX		2013		698,000		47,014		2,321		28,825		78,160		88.7	%	$	5,806,604		140		292,000		16.1	%
Princeton, NJ		2014		553,930		58,157		2,229		111,405		171,791		100.0	%	$	9,540,975		22		158,157		36.8	%
Suwanee, GA		2005		369,822		185,422		8,697		108,266		302,385		78.3	%	$	51,820,970		36		208,008		89.1	%
Chicago, IL		2014		317,000		-		-		-		-		-	%	$	-		8		133,000		-	%
Santa Clara, CA**		2007		135,322		55,494		944		45,687		102,125		98.1	%	$	24,312,164		11		80,347		69.1	%
Jersey City, NJ*		2006		122,448		31,503		14,208		41,901		87,612		99.2	%	$	12,157,436		7		52,744		59.7	%
Sacramento, CA		2012		92,644		54,595		2,794		23,916		81,305		46.0	%	$	11,455,653		8		57,906		94.3	%
Miami, FL		2008		30,029		19,887		-		6,592		26,479		69.7	%	$	5,228,967		4		19,887		100.0	%
Carpathia facilities ***		2015		154,368		67,007		5,242		14,169		86,418		79.5	%	$	83,596,528		20		102,509		65.4	%
Other		Misc		81,921		5,129		37,854		38,723		81,706		20.6	%	$	906,650		1		5,129		100.0	%
Total				4,842,532		1,053,817		162,335		866,484		2,082,636		84.2	%	$	305,674,630		439		2,193,496		48.0	%

(1) Represents the year a property was acquired or, in the case of a property under lease, the year our initial lease commenced for the property.

(2) With respect to our owned properties, gross square feet represents the entire building area. With respect to leased properties, gross square feet represents that portion of the gross square feet subject to our lease. This includes 218,926 square feet of our office and support space, which is not included in operating NRSF.

(3) Represents the total square feet of a building that is currently leased or available for lease plus developed supporting infrastructure, based on engineering drawings and estimates, but does not include space held for redevelopment or space used for our own office space.

(4) Represents management’s estimate of the portion of NRSF of the facility with available power and cooling capacity that is currently leased or readily available to be leased to customers as data center space based on engineering drawings.

(5) Represents the operating NRSF of the facility other than data center space (typically office and storage space) that is currently leased or available to be leased.

(6) Represents required data center support space, including mechanical, telecommunications and utility rooms, as well as building common areas.

(7) Calculated as data center raised floor that is subject to a signed lease for which billing has commenced (693,246 square feet as of June 30, 2015) divided by leasable raised floor based on the current configuration of the properties (823,526 square feet as of June 30, 2015), expressed as a percentage.

(8) We define annualized rent as MRR multiplied by 12. We calculate MRR as monthly contractual revenue under executed contracts as of a particular date, which includes revenue from our C1, C2 and C3 rental activities and cloud and managed services, but excludes customer recoveries, deferred set up fees and other one-time and variable revenues. MRR does not include the impact from booked-not-billed contracts as of a particular date, unless otherwise specifically noted.

(9) Represents installed utility power and transformation capacity that is available for use by the facility as of June 30, 2015.

* Represents facilities that we lease.

** Subject to long term ground lease

*** Includes 13 facilities. All facilities are leased, including those subject to capital leases.

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Key Operating Metrics

The following sets forth definitions for our key operating metrics. These metrics may differ from similar definitions used by other companies.

Monthly Recurring Revenue (“MRR”). We calculate MRR as monthly contractual revenue under signed leases as of a particular date, which includes revenue from our C1, C2 and C3 rental and cloud and managed services activities, but excludes customer recoveries, deferred set-up fees, variable related revenues, non-cash revenues and other one-time revenues. MRR does not include the impact from booked-not-billed leases as of a particular date, unless otherwise specifically noted.

Annualized Rent. We define annualized rent as MRR multiplied by 12.

Rental Churn. We define rental churn as the MRR impact from a customer completely departing our platform in a given period compared to the total MRR at the beginning of the period.

Leasable Raised Floor. We define leasable raised floor as the amount of raised floor square footage that we have leased plus the available capacity of raised floor square footage that is in a leasable format as of a particular date and according to a particular product configuration. The amount of our leasable raised floor may change even without completion of new redevelopment projects due to changes in our configuration of C1, C2 and C3 product space.

Percentage (%) Occupied and Billing Raised Floor. We define percentage occupied and billing raised floor as the square footage that is subject to a signed lease for which billing has commenced as of a particular date compared to leasable raised floor as of that date, expressed as a percentage.

Booked-not-Billed. We define booked-not-billed as our customer leases that have been signed, but for which lease payments have not yet commenced.

Factors That May Influence Future Results of Operations and Cash Flows

Revenue. Our revenue growth will depend on our ability to maintain the historical occupancy rates of leasable raised floor, lease currently available space, lease new capacity that becomes available as a result of our development and redevelopment activities, attract new customers and continue to meet the ongoing technological requirements of our customers. As of June 30, 2015, we had in place customer leases generating revenue for approximately 84% of our leasable raised floor. Our ability to grow revenue also will be affected by our ability to maintain or increase rental, cloud and managed services rates at our properties. Future economic downturns, regional downturns or downturns in the technology industry could impair our ability to attract new customers or renew existing customers’ leases on favorable terms, or at all, and could adversely affect our customers’ ability to meet their obligations to us. Negative trends in one or more of these factors could adversely affect our revenue in future periods, which would impact our results of operations and cash flows. We also at times may elect to reclaim space from customers in a negotiated transaction where we believe that we can redevelop and/or re-lease that space at higher rates, which may cause a decrease in revenue until the space is re-leased.

Leasing Arrangements. As of June 30, 2015, 18% of our MRR came from customers which individually occupied greater than or equal to 6,600 square feet of space (or approximately 1 MW of power), and which had metered power. As of June 30, 2015, approximately 32% of our MRR came from C1 customers that are subject to the metered power model. Under the metered power model, the customer pays us a fixed monthly rent amount, plus reimbursement of certain other operating costs, including actual costs of sub-metered electricity used to power its data center equipment and an estimate of costs for electricity used to power supporting infrastructure for the data center, expressed as a factor of the customer’s actual electricity usage. Fluctuations in our customers’ utilization of power and the supplier pricing of power do not significantly impact our results of operations or cash flows under the metered power model. These leases generally have a minimum term of five years. As of June 30, 2015, 82% of our MRR was leased to customers which individually occupied less than 6,600 square feet of space, and which are billed on a gross lease basis. Our C2/C3 customers are billed under a gross lease model and as of June 30, 2015, represented 68% of our MRR. Under a gross lease, the customer pays us a fixed rent on a monthly basis, and does not separately reimburse us for operating costs, including utilities, maintenance, repair, property taxes and insurance, as reimbursement for these costs is factored into MRR. However, if customers access more utility costs than their leases permit, we are able to charge these customers for overages. For leases under the gross lease model, fluctuations in our customers’ utilization of power and the prices our utility providers charge us will impact our results of operations and cash flows. Our leases on a gross lease basis generally have a term of three years or less.

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Scheduled Lease Expirations. Our ability to minimize rental churn and customer downgrades at renewal and renew, lease and re-lease expiring space will impact our results of operations and cash flows. Leases representing approximately 8% and 12% of our total leased raised floor are scheduled to expire during the years ending December 31, 2015 (including all month-to-month leases) and 2016, respectively. These leases also represented approximately 17% and 25%, respectively, of our annualized rent as of June 30, 2015. At expiration, as a general matter, based on current market conditions, we expect that expiring rents will be at or below the then-current market rents.

Acquisitions, Redevelopment and Financing. Our revenue growth also will depend on our ability to acquire and redevelop and subsequently lease data center space at favorable rates. We generally fund the cost of data center acquisition and redevelopment from our net cash provided by operations, credit facilities, other unsecured and secured borrowings or the issuance of additional equity. We believe that we have sufficient access to capital from our current cash and cash equivalents, and borrowings under our credit facilities to fund our redevelopment projects.

Operating Expenses. Our operating expenses generally consist of direct personnel costs, utilities, property and ad valorem taxes, insurance and site maintenance costs and rental expenses on our ground and building leases. In particular, our buildings require significant power to support the data center operations conducted in them. Although substantially all of our long-term leases—leases with a term greater than three years—contain reimbursements for certain operating expenses, we will not in all instances be reimbursed for all of the property operating expenses we incur. We also incur general and administrative expenses, including expenses relating to senior management, our in-house sales and marketing organization, cloud and managed services support personnel and legal, human resources, accounting and other expenses related to professional services. We also incur additional expenses arising from being a publicly traded company, including employee equity-based compensation. Increases or decreases in our operating expenses will impact our results of operations and cash flows. We expect to incur additional operating expenses as we continue to expand.

General Leasing Activity

During the three and six months ended June 30, 2015, we entered into customer leases representing approximately $0.9 million and $2.0 million of incremental MRR, net of downgrades (and representing approximately $10.6 million and $24.2 million of incremental annualized rent) at $1,207 and $731 per square foot, respectively. In addition, $3.6 million and $7.4 million of leasing commissions was associated with new and renewal leasing activity for the three and six months ended June 30, 2015, respectively.

During the three and six months ended June 30, 2015, we renewed leases with a total annualized rent of $7.5 million and $12.9 million at an average rent per square foot of $785 and $816, respectively, which was 5.1% and 3.0% higher than the annualized rent prior to their respective renewals. Customers that renew with adjustments to square feet are reflected in the net leasing activity discussed above. The rental churn rate for the three and six months ended June 30, 2015 was 0.4% and $0.8%, respectively.

During the three and six months ended June 30, 2015, we commenced customer leases representing approximately $2.2 million and $3.7 million of incremental MRR (and representing approximately $26.9 million and $44.7 million of annualized rent) at $525 and $612 per square foot, respectively.

As of June 30, 2015, our booked-not-billed MRR balance (which represents customer leases that have been executed, but for which lease payments have not commenced as of June 30, 2015) was approximately $5.7 million, or $68.7 million of annualized rent. The booked-not-billed balance is expected to contribute an incremental $9.7 million to revenue in 2015 (representing $31.9 million in annualized revenues), an incremental $13.9 million in 2016 (representing $19.4 million in annualized revenues), and an incremental $17.4 million in annualized revenues thereafter. We estimate the remaining capital cost to provide the space, power, connectivity and other services to the customer contracts which had been booked but not billed as of June 30, 2015 to be approximately $75 million. This estimate generally includes C1 customers with newly contracted space of more than 3,300 square feet. The space, power, connectivity and other services provided to customers that contract for smaller amounts of space is generally provided by existing space which was previously developed.

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Results of Operations

Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014

Changes in revenues and expenses for the three months ended June 30, 2015 compared to the three months ended June 30, 2014 are summarized below (unaudited, in thousands):

	Three Months Ended June 30,
	2015			2014			$ Change			% Change
Revenues:
Rental	$	52,193		$	41,966		$	10,227			24	%
Recoveries from customers		5,582			3,852			1,730			45	%
Cloud and managed services		8,220			4,970			3,250			65	%
Other		2,122			550			1,572			286	%
Total revenues		68,117			51,338			16,779			33	%
Operating expenses:
Property operating costs		22,031			16,529			5,502			33	%
Real estate taxes and insurance		1,474			1,118			356			32	%
Depreciation and amortization		18,062			13,817			4,245			31	%
General and administrative		14,615			11,473			3,142			27	%
Restructuring		-			1,046			(1,046	)		*
Transaction  and integration costs		4,669			1,089			3,580			329	%
Total operating expenses		60,851			45,072			15,779			35	%
Operating income		7,266			6,266			1,000			16	%
Other income and expense:
Interest income		1			-			1			*
Interest expense		(4,799	)		(2,208	)		(2,591	)		117	%
Other expense		(83	)		(110	)		27			-25	%
Income before taxes		2,385			3,948			(1,563	)		-40	%
Tax benefit (expense) of taxable REIT subsidiaries		3,135			(27	)		3,162			*
Net income	$	5,520		$	3,921		$	1,599			41	%

Revenues. Total revenues for the three months ended June 30, 2015 were $68.1 million compared to $51.3 million for the three months ended June 30, 2014. The increase of $16.8 million, or 33%, was primarily due to organic growth in our customer base as well as acquisitions of Carpathia Hosting Inc. (“Carpathia”) on June 16, 2015, and our data center facility in New Jersey (the “Princeton facility”) on June 30, 2014. These acquisitions contributed $7.5 million in incremental revenue for the three months ended June 30, 2015.

The increase of $13.5 million, or 29%, in combined rental and cloud and managed services revenue was primarily due to newly leased space as well as increases in rents from previously leased space, net of downgrades at renewal and rental churn. Additionally, the acquisition of the Princeton facility as well as the acquisition of Carpathia contributed $6.2 million in combined rental and cloud and managed services revenue for the three months ended June 30, 2015.

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As of June 30, 2015, our data centers were approximately 84% occupied and billing based on leasable raised floor of approximately 824,000 square feet, with an average annualized rent of $441 per leased raised floor square foot including cloud and managed services revenue, or $330 per leased raised floor square foot excluding cloud and managed services revenue. As of June 30, 2015, the average annualized rent for our C1 product, including managed services for our C1 product, was $187 per leased raised floor square foot, and the average annualized rent for our C2 product, including Cloud and managed services combined was $1,180 per leased raised floor square foot. As of June 30, 2014, our data centers were 90% occupied and billing based on leasable raised floor of approximately 616,000 square feet, with an average annualized rent of $346 per leased raised floor square foot including cloud and managed services revenue, or $310 per leased raised floor square foot excluding cloud and managed services revenue. The increase in leasable raised floor between 2014 and 2015 is primarily related to the addition of raised floor square footage from our redevelopment activities primarily in the Atlanta-Metro, Dallas-Fort Worth and Atlanta-Suwanee facilities, as well as the acquisitions of Carpathia and the Princeton facility. The increase in average annualized rent per leased raised floor square foot, both including and excluding cloud and managed services revenue, is primarily due to the acquisition of Carpathia. The increase in average annualized rent per leased raised floor square foot including cloud and managed service revenue from $346 to $441 is primarily due to the increase in C3 product mix associated with the Carpathia acquisition. As of June 30, 2015, a larger portion of our product mix was attributable to C3 revenue (25% of MRR) compared to June 30, 2014 (10% of MRR). Due to the fact that C3 customers utilize less space than C1/C2 customers in proportion to MRR received, our weighted average rent per square feet price has increased.

Higher recoveries from customers for the three months ended June 30, 2015 compared to the three months ended June 30, 2014 were primarily due to reimbursements associated with the acquisition of the Princeton facility which contributed $1.1 million to the increase as well as increased utility costs generally related to an increase in usage from customers operating under our metered power model at our Atlanta-Metro data center which contributed $0.5 million to the increase. The remaining increase of $0.1 million in recoveries revenue was attributable to various other locations. The $1.6 million increase in other revenue for the three months ended June 30, 2015 compared to the three months ended June 30, 2014 was primarily due to higher straight line rent as well as increased sales of scrap metals and other unused materials.

Property Operating Costs. Property operating costs for the three months ended June 30, 2015 were $22.0 million compared to property operating costs of $16.5 million for the three months ended June 30, 2014, an increase of $5.5 million, or 33%. The breakdown of our property operating costs is summarized in the table below (unaudited, in thousands):

	Three Months Ended June 30,
	2015		2014		$ Change		% Change
Property operating costs:
Direct payroll	$	3,922	$	2,850	$	1,072		38	%
Rent		1,823		1,225		598		49	%
Repairs and maintenance		1,996		1,179		817		69	%
Utilities		8,197		7,062		1,135		16	%
Management fee allocation		2,669		2,045		624		31	%
Other		3,424		2,168		1,256		58	%
Total property operating costs	$	22,031	$	16,529	$	5,502		33	%

The acquisitions of Carpathia and the Princeton facility contributed $2.7 million to the total increase in property operating costs for the three months ended June 30, 2015, of which $0.7 million related to direct payroll, $0.6 million related to rent expense, $0.4 million related to repairs and maintenance, $0.3 million related to utilities, $0.3 million related to management fee allocation and $0.4 million related to other property operating costs. The remaining $2.8 million increase in total property operating costs was primarily attributable to a $0.8 million increase in utilities expense primarily related to increased utilities usage in our Atlanta-Metro and Richmond facilities as well as the opening of our Dallas-Fort Worth data center, offset by reduced utilities usage at our Sacramento data center, $0.5 million of increased repairs and maintenance expense which tends to fluctuate from period to period and increase with the expansion and lease-up of our facilities, and increased direct payroll allocation of $0.4 million. In addition, management fee allocation increased $0.3 million (exclusive of the increase attributable to Carpathia and Princeton as discussed above). Management fee allocation is based on 4% of cash rental revenues for each facility and reflects an allocation of internal charges to cover back-office and service-related costs associated with the day-to-day operations of our data center facilities, with a corresponding offset to general and administrative expenses. The remaining $0.8 million increase in other property operating costs was primarily due to higher outside services expenses from consulting fees and outsourcing of our facility security personnel, which resulted in lower direct payroll costs, as well as higher software license costs.

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Real Estate Taxes and Insurance. Real estate taxes and insurance for the three months ended June 30, 2015 were $1.5 million compared to $1.1 million for the three months ended June 30, 2014. The increase of $0.4 million, or 32%, was primarily attributable to the acquisition of our Princeton data center which contributed $0.2 million to the increase, with the remaining $0.2 million increase primarily related to property taxes at our Dallas data center.

Depreciation and Amortization. Depreciation and amortization for the three months ended June 30, 2015 was $18.1 million compared to $13.8 million for the three months ended June 30, 2014. The increase of $4.2 million, or 31%, was due to depreciation expense of $3.4 million primarily associated with additional depreciation of the Dallas-Fort Worth data center, the acquisitions of Carpathia and the Princeton data center, as well as expansion of the Richmond, Atlanta-Metro and Atlanta-Suwanee data centers, and higher amortization expense of $0.8 million primarily related to a higher level of leasing commissions.

General and Administrative Expenses. General and administrative expenses were $14.6 million for the three months ended June 30, 2015 compared to general and administrative expenses of $11.5 million for the three months ended June 30, 2014, an increase of $3.1 million, or 27%, of which the acquisition of Carpathia contributed $0.8 million. Approximately $4.6 million of the total general and administrative expenses for the three months ended June 30, 2015 resulted from sales and marketing expenses, compared to $3.1 million for the three months ended June 30, 2014, resulting in an increase of $1.5 million. The remaining increase in general and administrative expenses was primarily attributable to higher payroll related costs of $1.8 million primarily due to growth in our portfolio, higher software license costs of $0.3 million due to growth of our customer base, higher consulting fees from investing in our product portfolio of $0.1 million and other costs of $0.1 million. Total equity-based compensation expense was $1.8 million and $1.1 million for the three months ended June 30, 2015 and 2014, respectively. These increases were partially offset by lower professional fees related to recruiting and consulting fees of $0.2 million, lower repairs and maintenance expense related to computer and software of $0.2 million, an increase in direct payroll allocation of $0.4 million as well as an increase in management fee allocation $0.6 million, both of which reclassify costs from general and administrative costs to operating costs. Our general and administrative expenses represented 21.5% of total revenues for the three months ended June 30, 2015 compared to 22.3% for the three months ended June 30, 2014.

Restructuring Costs. For the three months ended June 30, 2014, we incurred $1.0 million in restructuring costs related to severance for various remote employees. No such costs were incurred in the three months ended June 30, 2015.

Transaction and Integration Costs. For the three months ended June 30, 2015 and 2014, we incurred $4.3 million and $1.1 million, respectively, in costs related to the examination of actual and potential acquisitions. We also recognized $0.4 million in integration costs for the three months ended June 30, 2015 related to the acquisition of Carpathia. Acquisition-related costs for acquisitions accounted for as a business combination in accordance with ASC 805, Business Combinations, are expensed in the periods in which the costs are incurred and the services are received.

Interest Expense. Interest expense for the three months ended June 30, 2015 was $4.8 million compared to $2.2 million for the three months ended June 30, 2014. The increase of $2.6 million, or 117%, was due primarily to an increase in the weighted average interest rate on our borrowings and an increase in the average debt balance of $172.8 million, both primarily as a result of our $300 million aggregate principal amount of 5.875% Senior Notes Due 2022 (the “Senior Notes”) issuance in July 2014, partially offset by higher capitalized interest during the period due to the growth in construction projects. The average debt balance for the three months ended June 30, 2015 was $637.5 million, with a weighted average interest rate, including the effect of amortization of deferred financing costs, of 4.53%. This compared to an average debt balance of $464.7 million for the three months ended June 30, 2014, with a weighted average interest rate, including the effect of interest rate swaps and amortization of deferred financing costs, of 3.47%. Interest capitalized in connection with our redevelopment activities during the three months ended June 30, 2015 and June 30, 2014 was $2.4 million and $1.8 million, respectively.

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Tax (Expense) Benefit of Taxable REIT Subsidiaries. Tax benefit of taxable REIT subsidiaries for the three months ended June 30, 2015 primarily relates to the reversal of valuation allowances which were related to the deferred tax assets. These deferred tax assets were generally created by net operating losses of the taxable REIT subsidiary, and previously had valuation allowances applied to them in their entirety as there were continuing losses for that entity.  With the acquisition of Carpathia, offsetting deferred tax liabilities were created, which in turn caused the Company to release the previously recorded valuation allowances and resulted in this tax benefit of the taxable REIT subsidiary.

Net Income. A summary of the components of the increase in net income of $1.6 million for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014 is as follows (in millions):

	$ Change
Increase in revenues, net of property operating costs, real estate taxes and insurance	$	10.9
Increase in general and administrative expense		(3.1	)
Increase in depreciation and amortization		(4.2	)
Decrease in restructuring charges		1.0
Increase in transaction and integration costs		(3.6	)
Increase in interest expense net of interest income		(2.6	)
Increase in tax benefit		3.2
Increase in net income	$	1.6

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Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014

Changes in revenues and expenses for the six months ended June 30, 2015 compared to the six months ended June 30, 2014 are summarized below (unaudited, in thousands):

	Six Months Ended June 30,
	2015			2014			$ Change			% Change
Revenues:
Rental	$	101,526		$	82,545		$	18,981			23	%
Recoveries from customers		11,246			7,543			3,703			49	%
Cloud and managed services		14,015			9,201			4,814			52	%
Other		2,716			992			1,724			174	%
Total revenues		129,503			100,281			29,222			29	%
Operating expenses:
Property operating costs		41,367			32,752			8,615			26	%
Real estate taxes and insurance		2,959			2,336			623			27	%
Depreciation and amortization		34,305			27,064			7,241			27	%
General and administrative		28,453			22,251			6,202			28	%
Restructuring		-			1,046			(1,046	)		*
Transaction and integration costs		4,774			1,153			3,621			314	%
Total operating expenses		111,858			86,602			25,256			29	%
Operating income		17,645			13,679			3,966			29	%
Other income and expense:
Interest income		1			8			(7	)		-88	%
Interest expense		(10,141	)		(4,273	)		(5,868	)		137	%
Other expense		(83	)		(110	)		27			-25	%
Income (loss) before taxes		7,422			9,304			(1,882	)		-20	%
Tax benefit (expense) of taxable REIT subsidiaries		3,135			(55	)		3,190			*
Net income (loss)	$	10,557		$	9,249		$	1,308			14	%

Revenues. Total revenues for the six months ended June 30, 2015 were $129.5 million compared to $100.3 million for the six months ended June 30, 2014. The increase of $29.2 million, or 29%, was primarily due to organic growth in our customer base as well as acquisitions of Carpathia and the Princeton facility. These acquisitions contributed $11.9 million in incremental revenue for the six months ended June 30, 2015.

The increase of $23.8 million, or 26%, in combined rental and cloud and managed services revenue was primarily due to newly leased space as well as increases in rents from previously leased space, net of downgrades at renewal and rental churn. Additionally, the acquisition of the Princeton facility as well as the acquisition of Carpathia contributed $8.6 million in combined rental and cloud and managed services revenue for the six months ended June 30, 2015.

Higher recoveries from customers for the six months ended June 30, 2015 compared to the six months ended June 30, 2014 were primarily due to reimbursements associated with the acquisition of the Princeton facility which contributed $3.0 million to the increase. The remaining increase of $0.7 million in recoveries revenue was primarily attributable to increased utility costs generally related to an increase in usage from customers operating under our metered power model at our Atlanta-Metro and Richmond data centers, which contributed $0.7 million and $0.4 million to the increase, respectively, offset by decreased utility costs generally related to a reduction in usage from customers operating under our metered power model at our Sacramento data center reducing the increase by $0.4 million. The $1.7 million increase in other revenue for the six months ended June 30, 2015 compared to the six months ended June 30, 2014 was primarily due to higher straight line rent as well as increased sales of scrap metals and other unused materials.

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Property Operating Costs. Property operating costs for the six months ended June 30, 2015 were $41.4 million compared to property operating costs of $32.8 million for the six months ended June 30, 2014, an increase of $8.6 million, or 26%. The breakdown of our property operating costs is summarized in the table below (unaudited, in thousands):

	Six Months Ended June 30,
	2015		2014		$ Change		% Change
Property operating costs:
Direct payroll	$	7,524	$	5,791	$	1,733		30	%
Rent		3,051		2,444		607		25	%
Repairs and maintenance		4,140		2,330		1,810		78	%
Utilities		15,593		13,695		1,898		14	%
Management fee allocation		5,107		3,995		1,112		28	%
Other		5,952		4,497		1,455		32	%
Total property operating costs	$	41,367	$	32,752	$	8,615		26	%

The acquisitions of Carpathia and the Princeton facility contributed $4.5 million to the total increase in property operating costs for the six months ended June 30, 2015, of which $1.1 million related to direct payroll, $0.6 million related to rent expense, $0.8 million related to repairs and maintenance, $1.0 million related to utilities, $0.5 million related to management fee allocation and $0.5 million related to other property operating costs. The remaining $4.1 million increase in total property operating costs was primarily attributable to $1.0 million of increased repairs and maintenance expense which tends to fluctuate from period to period and increase with the expansion and lease-up of our facilities, a $0.9 million increase in utilities expense primarily related to increased utilities usage in our Atlanta-Metro and Richmond facilities as well as the opening of our Dallas-Fort Worth data center, offset by reduced utilities usage at our Sacramento data center, and increased direct payroll allocation of $0.7 million throughout our facilities. In addition, management fee allocation increased $0.6 million (exclusive of the increase attributable to Carpathia and Princeton as discussed above). Management fee allocation is based on 4% of cash rental revenues for each facility and reflects an allocation of internal charges to cover back-office and service-related costs associated with the day-to-day operations of our data center facilities, with a corresponding offset to general and administrative expenses. The remaining $0.9 million increase in other property operating costs was primarily due to higher outside services expenses from consulting fees and outsourcing of our facility security personnel, which resulted in lower direct payroll costs, and also higher software license costs.

Real Estate Taxes and Insurance. Real estate taxes and insurance for the six months ended June 30, 2015 were $3.0 million compared to $2.3 million for the six months ended June 30, 2014. The increase of $0.6 million, or 27%, was primarily attributable to the acquisition of our Princeton data center, which contributed $0.5 million to the increase, with the remaining $0.1 million increase primarily related to property taxes at our Dallas data center.

Depreciation and Amortization. Depreciation and amortization for the six months ended June 30, 2015 was $34.3 million compared to $27.1 million for the six months ended June 30, 2014. The increase of $7.2 million, or 27%, was due to additional depreciation of $6.0 million primarily associated additional depreciation of the Dallas-Fort Worth data center, acquisitions of Carpathia and the Princeton data center, as well as expansion of the Richmond, Atlanta-Metro and Atlanta-Suwanee data centers, and higher amortization expense of $1.2 million primarily related to a higher level of leasing commissions.

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General and Administrative Expenses. General and administrative expenses were $28.5 million for the six months ended June 30, 2015 compared to general and administrative expenses of $22.3 million for the six months ended June 30, 2014, an increase of $6.2 million, or 28%. Approximately $8.2 million of the total general and administrative expenses for the six months ended June 30, 2015 resulted from sales and marketing expenses, compared to $5.8 million for the six months ended June 30, 2014, resulting in an increase of $2.4 million. The remaining increase in general and administrative expenses was primarily attributable to higher payroll related costs of $3.6 million primarily due to growth in our portfolio, higher consulting fees from investing in our product portfolio of $0.7 million, higher software license costs of $0.7 million due to the growth of our customer base and other costs of $0.4 million. Total equity-based compensation expense was $3.1 million and $2.0 million for the six months ended June 30, 2015 and 2014, respectively. These increases were partially offset by an increase in direct payroll allocation of $1.6 million as well as an increase in management fee allocation $1.1 million, both of which reclassify costs from general and administrative costs to operating costs. Our general and administrative expenses represented 22.0% of total revenues for the six months ended June 30, 2015 compared to 22.2% for the six months ended June 30, 2014.

Restructuring Costs. For the six months ended June 30, 2014, we incurred $1.0 million in restructuring costs related to severance for various remote employees. No such costs were incurred in the six months ended June 30, 2015.

Transaction and Integration Costs. For the six months ended June 30, 2015 and 2014 we incurred $4.4 million and $1.1 million, respectively, in costs related to the examination of actual and potential acquisitions. We also recognized $0.4 million in integration costs for the six months ended June 30, 2015 related to the acquisition of Carpathia. Acquisition-related costs for acquisitions accounted for as a business combination in accordance with ASC 805, Business Combinations, are expensed in the periods in which the costs are incurred and the services are received.

Interest Expense. Interest expense for the six months ended June 30, 2015 was $10.1 million compared to $4.3 million for the six months ended June 30, 2014. The increase of $5.9 million, or 137%, was due primarily to an increase in the weighted average interest rate on our borrowings and an increase in the average debt balance of $202.9 million, both primarily as a result of our $300 million aggregate principal amount of 5.875% Senior Notes Due 2022 (the “Senior Notes”) issuance in July 2014, partially offset by higher capitalized interest during the period due to the growth in construction projects. The average debt balance for the six months ended June 30, 2015 was $629.9 million, with a weighted average interest rate, including the effect of amortization of deferred financing costs, of 4.62%. This compared to an average debt balance of $427.0 million for the six months ended June 30, 2014, with a weighted average interest rate, including the effect of interest rate swaps and amortization of deferred financing costs, of 3.60%. Interest capitalized in connection with our redevelopment activities during the six months ended June 30, 2015 and 2014 was $4.4 million and $3.4 million, respectively.

Tax (Expense) Benefit of Taxable REIT Subsidiaries. Tax benefit of taxable REIT subsidiaries for the six months ended June 30, 2015 primarily relates to the reversal of valuation allowances which were related to the deferred tax assets. These deferred tax assets were generally created by net operating losses of the taxable REIT subsidiary, and previously had valuation allowances applied to them in their entirety as there were continuing losses for that entity.  With the acquisition of Carpathia, offsetting deferred tax liabilities were created, which in turn caused the Company to release the previously recorded valuation allowances and resulted in this tax benefit of the taxable REIT subsidiary.

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Net Income. A summary of the components of the increase in net income of $1.3 million for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014 is as follows (in millions):

	$ Change
Increase in revenues, net of property operating costs, real estate taxes and insurance	$	20.0
Increase in general and administrative expense		(6.2	)
Increase in depreciation and amortization		(7.2	)
Decrease in restructuring charges		1.0
Increase in transaction and integration costs		(3.6	)
Increase in interest expense net of interest income		(5.9	)
Increase in tax benefit		3.2
Increase in net income	$	1.3

Non-GAAP Financial Measures

We consider the following non-GAAP financial measures to be useful to investors as key supplemental measures of our performance: (1) FFO; (2) Operating FFO; (3) Adjusted Operating FFO; (4) MRR; (5) NOI; (6) EBITDA; and (7) Adjusted EBITDA. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss and cash flows from operating activities as a measure of our operating performance and liquidity. FFO, Operating FFO, Adjusted Operating FFO, MRR, NOI, EBITDA and Adjusted EBITDA, as calculated by us, may not be comparable to FFO, Operating FFO, Adjusted Operating FFO, MRR, NOI, EBITDA and Adjusted EBITDA as reported by other companies that do not use the same definition or implementation guidelines or interpret the standards differently from us.

FFO, Operating FFO and Adjusted Operating FFO

We consider funds from operations (“FFO”) to be a supplemental measure of our performance which should be considered along with, but not as an alternative to, net income (loss) and cash provided by operating activities as a measure of operating performance and liquidity. We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents net income (loss) (computed in accordance with GAAP), adjusted to exclude gains (or losses) from sales of property, real estate related depreciation and amortization and similar adjustments for unconsolidated partnerships and joint ventures. Our management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs.

Due to the volatility and nature of certain significant charges and gains recorded in our operating results that management believes are not reflective of our core operating performance and liquidity, management computes an adjusted measure of FFO, which we refer to as Operating FFO. We generally calculate Operating FFO as FFO excluding certain non-recurring and primarily non-cash charges and gains and losses that management believes are not indicative of the results of our operating real estate portfolio. We believe that Operating FFO provides investors with another financial measure that may facilitate comparisons of operating performance and liquidity between periods and, to the extent they calculate Operating FFO on a comparable basis, between REITs.

Adjusted Operating Funds From Operations (“Adjusted Operating FFO”) is a non-GAAP measure that is used as a supplemental operating measure for comparing year over year ability to fund dividend distributions from operating activities. We use Adjusted Operating FFO as a basis to address cash flow and our ability to fund dividend payments. We calculate Adjusted Operating FFO by adding or subtracting from Operating FFO items such as: maintenance capital investment, paid leasing commissions, amortization of deferred financing costs and bond discount, non-real estate depreciation, straight line rent adjustments, and non-cash compensation.

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We offer these measures because we recognize that FFO, Operating FFO and Adjusted Operating FFO will be used by investors as a basis to compare our operating performance and liquidity with that of other REITs. However, because FFO, Operating FFO and Adjusted Operating FFO exclude real estate depreciation and amortization and capture neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our financial condition, cash flows and results of operations, the utility of FFO, Operating FFO and Adjusted Operating FFO as measures of our operating performance and liquidity is limited. Our calculation of FFO may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO or do not calculate FFO in accordance with NAREIT guidance. In addition, our calculations of FFO, Operating FFO and Adjusted Operating FFO are not necessarily comparable to FFO, Operating FFO and Adjusted Operating FFO as calculated by other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us. FFO, Operating FFO and Adjusted Operating FFO are non-GAAP measures and should not be considered a measure of our results of operations or liquidity or as a substitute for, or an alternative to, net income (loss), cash provided by operating activities or any other performance measure determined in accordance with GAAP, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders.

A reconciliation of net income to FFO, Operating FFO and Adjusted Operating FFO is presented below:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
FFO
Net income	$	5,520		$	3,921		$	10,557		$	9,249
Real estate depreciation and amortization		16,325			12,203			30,627			24,067
FFO		21,845			16,124			41,184			33,316
Operating FFO
Write off of unamortized deferred finance costs		83			110			83			110
Restructuring costs		-			1,046			-			1,046
Integration costs		422			-			422			-
Transaction costs		4,247			1,089			4,352			1,153
Non-cash reversal of deferred tax asset valuation allowance		(3,175	)		-			(3,175	)		-
Operating FFO		23,422			18,369			42,866			35,625
Maintenance Capex		(609	)		(22	)		(626	)		(95	)
Leasing commissions paid		(3,782	)		(2,839	)		(6,866	)		(5,088	)
Amortization of deferred financing costs and bond discount		854			621			1,703			1,203
Non real estate depreciation and amortization		1,682			1,616			3,623			2,998
Straight line rent revenue		(1,371	)		(170	)		(1,807	)		(322	)
Straight line rent expense		211			74			282			149
Equity-based compensation expense		1,831			1,065			3,138			1,976
Adjusted Operating FFO	$	22,238		$	18,714		$	42,313		$	36,446

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Monthly Recurring Revenue (MRR) and Recognized MRR

We calculate MRR as monthly contractual revenue under signed leases as of a particular date, which includes revenue from our C1, C2 and C3 rental and cloud and managed services activities, but excludes customer recoveries, deferred set-up fees, variable related revenues, non-cash revenues and other one-time revenues. MRR does not include the impact from booked-not-billed leases as of a particular date, unless otherwise specifically noted.

Separately, we calculate recognized MRR as the recurring revenue recognized during a given period, which includes revenue from our C1, C2 and C3 rental and cloud and managed services activities, but excludes customer recoveries, deferred set-up fees, variable related revenues, non-cash revenues and other one-time revenues.

Management uses MRR and recognized MRR as supplemental performance measures because they provide useful measures of increases in contractual revenue from our customer leases. MRR and recognized MRR should not be viewed by investors as alternatives to actual monthly revenue, as determined in accordance with GAAP. Other companies may not calculate MRR or recognized MRR in the same manner. Accordingly, our MRR and recognized MRR may not be comparable to other companies’ MRR and recognized MRR. MRR and recognized MRR should be considered only as supplements to total revenues as a measure of our performance. MRR and recognized MRR should not be used as measures of our results of operations or liquidity, nor is it indicative of funds available to meet our cash needs, including our ability to make distributions to our stockholders.

A reconciliation of total revenues to recognized MRR in the period and MRR at period end is presented below:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Recognized MRR
Total period revenues (GAAP basis)	$	68,117		$	51,338		$	129,503		$	100,281
Less: Total period recoveries		(5,582	)		(3,852	)		(11,246	)		(7,543	)
Total period deferred setup fees		(1,412	)		(1,164	)		(2,658	)		(2,383	)
Total period straight line rent and other		(3,170	)		(1,107	)		(5,182	)		(1,985	)
Recognized MRR (in the period)		57,953			45,215			110,417			88,370
MRR
Total period revenues (GAAP basis)	$	68,117		$	51,338		$	129,503		$	100,281
Less: Total revenues excluding last month		(41,871	)		(34,000	)		(103,257	)		(82,943	)
Total revenues for last month of period		26,246			17,338			26,246			17,338
Less: Last month recoveries		(2,185	)		(1,464	)		(2,185	)		(1,464	)
Last month deferred setup fees		(513	)		(421	)		(513	)		(421	)
Last month straight line rent and other		1,925			582			1,925			582
MRR (at period end) *	$	25,473		$	16,035		$	25,473		$	16,035

* Does not include our booked-not-billed MRR balance, which was $5.7 million and $3.4 million as of June 30, 2015 and 2014, respectively.

Net Operating Income (NOI)

We calculate net operating income (“NOI”), as net income (loss), excluding interest expense, interest income, tax expense (benefit) of taxable REIT subsidiaries, depreciation and amortization, write off of unamortized deferred financing costs, gain on extinguishment of debt, transaction and integration costs, gain on legal settlement, gain (loss) on sale of real estate, restructuring charge and general and administrative expenses. We allocate a management fee charge of 4% of cash rental revenues as a property operating cost and a corresponding reduction to general and administrative expense to cover the day-to-day administrative costs to operate our data centers. The management fee charge of 4% is reflected as a reduction to net operating income.

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Management uses NOI as a supplemental performance measure because it provides a useful measure of the operating results from our customer leases. In addition, we believe it is useful to investors in evaluating and comparing the operating performance of our properties and to compute the fair value of our properties. Our NOI may not be comparable to other REITs’ NOI as other REITs may not calculate NOI in the same manner. NOI should be considered only as a supplement to net income as a measure of our performance and should not be used as a measure of our results of operations or liquidity or as an indication of funds available to meet our cash needs, including our ability to make distributions to our stockholders. NOI is a measure of the operating performance of our properties and not of our performance as a whole. NOI is therefore not a substitute for net income as computed in accordance with GAAP.

A reconciliation of net income to NOI is presented below:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2015			2014		2015			2014
Net Operating Income (NOI)
Net income	$	5,520		$	3,921	$	10,557		$	9,249
Interest expense		4,799			2,208		10,141			4,273
Interest income		(1	)		-		(1	)		(8	)
Depreciation and amortization		18,062			13,817		34,305			27,064
Write off of unamortized deferred finance costs		83			110		83			110
Tax (benefit) expense of taxable REIT subsidiaries		(3,135	)		27		(3,135	)		55
Restructuring costs		-			1,046		-			1,046
Integration costs		422			-		422			-
Transaction costs		4,247			1,089		4,352			1,153
General and administrative expenses		14,615			11,473		28,453			22,251
NOI (1)	$	44,612		$	33,691	$	85,177		$	65,193
Breakdown of NOI by facility:
Atlanta-Metro data center	$	16,875		$	15,194	$	33,641		$	29,596
Atlanta-Suwanee data center		10,094			8,578		20,224			16,752
Santa Clara data center		3,574			3,318		6,951			6,048
Richmond data center		4,933			3,339		9,188			6,386
Sacramento data center		1,900			2,339		3,771			4,663
Princeton data center		2,310			23		4,659			23
Dallas-Fort Worth data center		1,462			-		2,211			-
Carpathia data centers		2,250			-		2,250			-
Other data centers		1,214			900		2,282			1,725
NOI (1)	$	44,612		$	33,691	$	85,177		$	65,193

(1) Includes facility level general and administrative allocation charges of 4% of revenue which aggregated to $2.7 million and $2.0 million for the three month periods ended June 30, 2015 and 2014, respectively, and $5.2 million and $4.0 million for the six month periods ended June 30, 2015 and 2014, respectively.

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Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

We calculate EBITDA as net income (loss) adjusted to exclude interest expense and interest income, provision for income taxes (including income taxes applicable to sale of assets) and depreciation and amortization. Management believes that EBITDA is useful to investors in evaluating and facilitating comparisons of our operating performance between periods and between REITs by removing the impact of our capital structure (primarily interest expense) and asset base charges (primarily depreciation and amortization) from our operating results.

In addition to EBITDA, we calculate an adjusted measure of EBITDA, which we refer to as Adjusted EBITDA, as EBITDA excluding unamortized deferred financing costs, gains on extinguishment of debt, transaction and integration costs, equity-based compensation expense, restructuring charge, gain (loss) on legal settlement and gain on sale of real estate. We believe that Adjusted EBITDA provides investors with another financial measure that can facilitate comparisons of operating performance between periods and between REITs.

Management uses EBITDA and Adjusted EBITDA as supplemental performance measures as they provide useful measures of assessing our operating results. Other companies may not calculate EBITDA or Adjusted EBITDA in the same manner. Accordingly, our EBITDA and Adjusted EBITDA may not be comparable to others. EBITDA and Adjusted EBITDA should be considered only as supplements to net income (loss) as measures of our performance and should not be used as substitutes for net income (loss), as measures of our results of operations or liquidity or as indications of funds available to meet our cash needs, including our ability to make distributions to our stockholders.

A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2015			2014		2015			2014
EBITDA and adjusted EBITDA
Net income	$	5,520		$	3,921	$	10,557		$	9,249
Interest expense		4,799			2,208		10,141			4,273
Interest income		(1	)		-		(1	)		(8	)
Tax (benefit) expense of taxable REIT subsidiaries		(3,135	)		27		(3,135	)		55
Depreciation and amortization		18,062			13,817		34,305			27,064
EBITDA		25,245			19,973		51,867			40,633
Write off of unamortized deferred finance costs		83			110		83			110
Equity-based compensation expense		1,831			1,065		3,138			1,976
Restructuring costs		-			1,046		-			1,046
Integration costs		422			-		422			-
Transaction costs		4,247			1,089		4,352			1,153
Adjusted EBITDA	$	31,828		$	23,283	$	59,862		$	44,918

Liquidity and Capital Resources

Short-Term Liquidity

Our short-term liquidity needs include funding capital expenditures for the redevelopment of data center space (a significant portion of which is discretionary), meeting debt service and debt maturity obligations, including interest payments on our Senior Notes, funding payments for capital lease and lease financing obligations, funding distributions to our stockholders and unit holders, utility costs, site maintenance costs, real estate and personal property taxes, insurance, rental expenses, general and administrative expenses and certain recurring and non-recurring capital expenditures.

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In addition to the $170.2 million of capital expenditures, excluding acquisitions, incurred in the six months ended June 30, 2015, we expect that we will incur between $130 million and $180 million in additional capital expenditures through December 31, 2015 in connection with the redevelopment of our data center facilities. We expect to spend approximately $110 million to $150 million of capital expenditures on redevelopment, and the remainder on recurring capital expenditures and capitalized overhead costs (including capitalized interest, commissions, payroll and other similar costs), personal property and other less material capital projects. We expect to fund these costs using operating cash flows and draws on our credit facilities. A significant portion of these expenditures are discretionary in nature and we may ultimately determine not to make these expenditures or the timing of such expenditures may vary. We continue to evaluate acquisition opportunities, but none are considered probable at this time and therefore the related expenditures are not currently included in these future estimates.

We expect to meet our short-term liquidity needs through operating cash flow, cash and cash equivalents and borrowings under our credit facilities.

Our cash paid for capital expenditures, excluding acquisitions, for the six months ended June 30, 2015 and 2014 are summarized in the table below (in thousands):

	Six Months Ended June 30,
	2015		2014
Redevelopment	$	147,398	$	96,162
Personal property		4,258		4,911
Maintenance capital expenditures		626		95
Capitalized interest, commissions and other overhead costs		17,868		12,989
Total capital expenditures	$	170,150	$	114,157

Long-Term Liquidity

Our long-term liquidity needs primarily consist of funds for property acquisitions, scheduled debt maturities, payment of principal at maturity of our Senior Notes, funding payments for capital lease and lease financing obligations, and recurring and non-recurring capital expenditures. We may also pursue additional redevelopment of our Atlanta-Metro, Dallas-Fort Worth, Richmond and Chicago data centers and future redevelopment of other space in our portfolio. The redevelopment of this space, including timing, is at our discretion and will depend on a number of factors, including availability of capital and our estimate of the demand for data center space in the applicable market. We expect to meet our long-term liquidity needs with net cash provided by operations, incurrence of additional long-term indebtedness, borrowings under our credit facilities and issuance of additional equity or debt securities, subject to prevailing market conditions, as discussed below.

On November 25, 2014, the Securities and Exchange Commission (“SEC”) declared effective QTS’ universal shelf registration statement allowing QTS to offer, from time to time, up to $1 billion of our Class A common stock, preferred stock, depositary shares representing preferred stock, warrants and rights to purchase our common stock or any combination thereof, subject to the ability of QTS to effect offerings on satisfactory terms based on prevailing conditions. Pursuant to the Operating Partnership’s limited partnership agreement, each time QTS issues shares of stock pursuant to the foregoing programs or other equity offerings, the Operating Partnership issues to QTS, its general partner, an equal number of units for the same price at which the shares were sold, and QTS contributes the net proceeds of such offerings to the Operating Partnership. Our ability to raise funds through sales of common and preferred stock or other securities in the future is dependent on, among other things, general market conditions for REITs, market perceptions about our company and the current trading price of QTS’s Class A common stock. We will continue to analyze which source of capital is most advantageous to us at any particular point in time, but the equity markets may not be consistently available on terms that are attractive or at all.

On March 2, 2015, QTS issued 5,000,000 shares of QTS’ Class A common stock and GA QTS Interholdco, LLC, a selling stockholder and an affiliate of General Atlantic LLC, sold 4,350,000 shares of QTS’ Class A common stock at a price of $34.75 per share. The selling stockholder granted the underwriters a 30-day option to purchase an aggregate of up to an additional 1,402,500 shares of QTS’ Class A common stock at the public offering price, which the underwriters exercised. We used the net proceeds of approximately $166.4 million to repay amounts outstanding under our unsecured revolving credit facility. We did not receive any proceeds from the offering of shares by the selling stockholder.

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On June 5, 2015, QTS issued 5,750,000 shares of QTS’ Class A common stock and GA QTS Interholdco, LLC, a selling stockholder, sold 1,250,000 shares of QTS’ Class A common stock at a price of $37.00 per share. The selling stockholder granted the underwriters a 30-day option to purchase an aggregate of up to an additional 1,050,000 shares of QTS’ Class A common stock at the public offering price, which the underwriters exercised. We used the net proceeds, after expenses, of approximately $203.7 million to fund a portion of the cash consideration payable by us in the Carpathia acquisition, and prior to such use, we used a portion of the net proceeds to repay amounts outstanding under our unsecured revolving credit facility and to pay off our Atlanta-Metro Equipment Loan. We did not receive any proceeds from the offering of shares by the selling stockholder.

Cash

As of June 30, 2015, we had $10.7 million of unrestricted cash and cash equivalents.

On January 7, 2015, we paid our regular quarterly cash dividend of $0.29 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on December 19, 2014 in an aggregate amount of $10.7 million.

On April 7, 2015, we paid our regular quarterly cash dividend of $0.32 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on March 20, 2015 in an aggregate amount of $13.4 million.

On July 8, 2015, we paid our regular quarterly cash dividend of $0.32 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on June 19, 2015 in an aggregate amount of $15.3 million.

Indebtedness

As of June 30, 2015, we had approximately $754.1 million of indebtedness, including capital leases and lease financing obligations.

Unsecured Credit Facility. On May 1, 2013, we entered into a $575 million unsecured credit facility comprised of a five-year $225 million term loan and a four-year $350 million revolving credit facility with a one year extension, subject to satisfaction of certain conditions, and had the ability to expand the total credit facility by an additional $100 million subject to certain conditions set forth in the credit agreement. In July 2014 our term loan was reduced by $75 million to $150 million in connection with the issuance of the Senior Notes. On December 17, 2014, we entered into a third amended and restated credit agreement providing for a $650 million unsecured credit facility comprised of a five-year $100 million term loan maturing December 17, 2019 and a four-year $550 million revolving credit facility maturing December 17, 2018, with the option to extend one year until December 17, 2019, subject to the satisfaction of certain conditions. The lenders under the unsecured credit facility may issue up to $30 million in letters of credit subject to the satisfaction of certain conditions. 

The total unsecured credit facility may be increased from the current capacity of $650 million to $850 million subject to certain conditions set forth in the credit agreement, including the consent of the administrative agent and obtaining necessary commitments. Amounts outstanding under the unsecured credit facility bear interest at a variable rate equal to, at our election, LIBOR or a base rate, plus a spread that will vary depending upon our leverage ratio. For revolving credit loans, the spread ranges from 1.70% to 2.25% for LIBOR loans and 0.70% to 1.25% for base rate loans. For term loans, the spread ranges from 1.65% to 2.20% for LIBOR loans and 0.65% to 1.20% for base rate loans. As of June 30, 2015, the weighted average interest rate for amounts outstanding under our unsecured credit facility was 1.87%. We are also required to pay a commitment fee to the lenders assessed on the unused portion of the unsecured revolving credit facility. At our election, we can prepay amounts outstanding under the unsecured credit facility, in whole or in part, without penalty.

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Our ability to borrow under the unsecured credit facility is subject to ongoing compliance with a number of customary affirmative and negative covenants, including limitations on liens, mergers, consolidations, investments, distributions, asset sales and affiliate transactions, as well as the following financial covenants: (i) the outstanding principal balance of the loans and letter of credit liabilities cannot exceed the unencumbered asset pool availability (as defined in the third amended and restated credit agreement), (ii) a maximum leverage ratio of total indebtedness to gross asset value (as defined in the third amended and restated credit agreement) not in excess of 60%, (iii) a minimum fixed charge coverage ratio (defined as the ratio of consolidated EBITDA, subject to certain adjustments, to consolidated fixed charges) for the prior two most recently-ended calendar quarters of not less than 1.70 to 1.00, (iv) tangible net worth of at least $645 million plus 85% of the sum of net equity offering proceeds and the value of interests in the Operating Partnership issued upon contribution of assets to the Operating Partnership or its subsidiaries, (v) unhedged variable rate debt not greater than 35% of gross asset value and (vi) a maximum distribution payout ratio of the greater of (a) 95% of our “funds from operations” (as defined in the agreement) and (b) the amount required for QTS to qualify as a REIT under the Code. The interest rate applied to the outstanding balance of the unsecured credit facility decreases incrementally for every 5% below the maximum leverage ratio.

The availability under the unsecured revolving credit facility is the lesser of (i) $550 million, (ii) 60% of unencumbered asset pool capitalized value, (iii) the amount resulting in an unencumbered asset pool debt service ratio of 1.70 to 1.00 or (iv) the amount resulting in an unencumbered asset pool debt yield of 14%. In the case of clauses (ii), (iii) and (iv) of the preceding sentence, the amount available under the unsecured revolving credit facility is adjusted to take into account any other unsecured debt, a certain equipment-related loan and certain capitalized leases. The availability of funds under our unsecured credit facility depends on compliance with our covenants. As of June 30, 2015, we had outstanding $330.0 million of indebtedness under the unsecured credit facility, consisting of $230.0 million of outstanding borrowings under our unsecured revolving credit facility and $100.0 million outstanding term loan indebtedness. In connection with the unsecured credit facility, as of June 30, 2015, we had an additional $2.5 million letter of credit outstanding.

5.875% Senior Notes due 2022. On July 23, 2014, the operating partnership and QTS Finance Corporation, a subsidiary of the operating partnership formed solely for the purpose of facilitating the offering of the Senior Notes described below (collectively, the “Issuers”), issued $300 million aggregate principal amount of 5.875% Senior Notes due 2022. The Senior Notes have an interest rate of 5.875% per annum and were issued at a price equal to 99.211% of their face value. The proceeds from the offering were used to repay amounts outstanding under the unsecured credit facility, including $75 million outstanding under the term loan. The Senior Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Operating Partnership’s existing subsidiaries (other than foreign subsidiaries, Carpathia related subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS, the Issuers or any other subsidiary guarantor. QTS Realty Trust, Inc. will not initially guarantee the Senior Notes and will not be required to guarantee the Senior Notes except under certain circumstances. The offering was conducted pursuant to Rule 144A of the Securities Act of 1933, as amended, and the Senior Notes were issued pursuant to an indenture, dated as of July 23, 2014, among QTS, the Operating Partnership, QTS Finance Corporation, the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee (the “Indenture”).

On March 23, 2015, the SEC declared effective the Operating Partnership and QTS Finance Corporation’s registration statement on Form S-4 pursuant to which the issuers exchanged the originally issued Senior Notes for $300 million of 5.875% Senior Notes due 2022 (the “Exchange Notes”) that are registered under the Securities Act of 1933, as amended. The exchange offer was completed on April 23, 2015, and all outstanding originally issued Senior Notes were tendered. The Exchange Notes did not provide the Company with any additional proceeds and satisfied its obligations under a registration rights agreement entered into in connection with the issuance of the Senior Notes.

The Indenture contains affirmative and negative covenants that, among other things, limit or restrict the Operating Partnership’s ability and the ability of certain of its subsidiaries (“Restricted Subsidiaries”) to: incur additional indebtedness; pay dividends; make certain investments or other restricted payments; enter into transactions with affiliates; enter into agreements limiting the ability of the operating partnership’s restricted subsidiaries to pay dividends; engage in sales of assets; and engage in mergers, consolidations or sales of substantially all of their assets. However, certain of these covenants will be suspended if and for so long as the Senior Notes are rated investment grade by specified debt rating services and there is no default under the Indenture. The Operating Partnership and its Restricted Subsidiaries also are required to maintain total unencumbered assets (as defined in the Indenture) of at least 150% of their unsecured debt on a consolidated basis.

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The Senior Notes may be redeemed by the Issuers, in whole or in part, at any time prior to August 1, 2017 at a redemption price equal to (i) 100% of principal amount, plus (ii) accrued and unpaid interest to the redemption date, and (iii) a make-whole premium. Thereafter, the Issuers may redeem the Senior Notes prior to maturity at 104.406% of the principal amount at August 1, 2017 and declining ratably to par at August 1, 2020 and thereafter, in each case plus accrued and unpaid interest to the redemption date. At any time prior to August 1, 2017, the Issuers may, subject to certain conditions, redeem up to 35% of the aggregate principal amount of the Senior Notes at 105.875% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of certain equity offerings consummated by us or the Operating Partnership. Also, upon the occurrence of a change of control of us or the Operating Partnership, holders of the Senior Notes may require the Issuers to repurchase all or a portion of the Senior Notes at a price equal to 101% of the principal amount of the Senior Notes to be repurchased plus accrued and unpaid interest to the repurchase date.

Richmond Secured Credit Facility. In December 2012, we entered into a credit facility secured by our Richmond data center (the “Richmond Credit Facility”). The proceeds from our Richmond Credit Facility may be used solely to finance the development of the Richmond property into a data center and to repay indebtedness under our unsecured credit facility. The Richmond Credit Facility requires us to comply with covenants similar to the unsecured credit facility.

As amended on June 30, 2014, the Richmond Credit Facility has a stated maturity of June 30, 2019, capacity of $120 million with an accordion feature to provide for total borrowing capacity of up to $200 million. The interest rate for LIBOR loans ranges from 2.10% to 2.85%, with the rate determined by the overall leverage ratio as defined in the agreement.

On December 17, 2014, we further amended the Richmond Credit Facility to, among other things, conform certain terms of the Richmond Credit Facility to the unsecured credit facility and allowed two subsidiaries of the Operating Partnership that were parties to the Richmond Credit Facility to guarantee unsecured obligations of the Operating Partnership and its subsidiaries including the unsecured credit facility and the Senior Notes.

Atlanta-Metro Equipment Loan. In April 2010, we entered into a $25 million loan to finance equipment related to an expansion project at our Atlanta-Metro data center. The loan required monthly interest and principal payments. The loan bore interest at 6.85% per annum and was scheduled to mature on June 1, 2020. This debt was repaid in June 2015 when its prepayment penalties expired.

Contingencies

We are subject to various routine legal proceedings and other matters in the ordinary course of business. While resolution of these matters cannot be predicted with certainty, management believes, based upon information currently available, that the final outcome of these proceedings will not have a material adverse effect on our financial condition, liquidity or results of operations.

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Contractual Obligations

The following table summarizes our contractual obligations as of June 30, 2015, including the future non-cancellable minimum rental payments required under operating leases and the maturities and scheduled principal repayments of indebtedness and other agreements (in thousands):

Obligations	2015		2016		2017		2018		2019		Thereafter		Total
Operating Leases	$	2,729	$	5,533	$	5,606	$	5,606	$	4,591	$	64,045	$	88,110
Capital Leases and Lease Financing Obligations		6,450		12,558		12,388		8,804		2,461		13,550		56,211
Future principal payments of Indebtedness (1)		-		-		-		230,000		170,000		300,000		700,000
Total (2)	$	9,179	$	18,091	$	17,994	$	244,410	$	177,052	$	377,595	$	844,321

(1) Does not include the discount on Senior Notes reflected at June 30, 2015 nor the letter of credit of $2.5 million outstanding as of June 30, 2015 under our unsecured credit facility.

(2) Total obligations does not include contractual interest that we are required to pay on our long-term debt obligations. Contractual interest payments on our credit facilities, Senior Notes, mortgages, capital leases, lease financing obligations and other financing arrangements through the scheduled maturity date, assuming no prepayment of debt, are shown below. Interest payments were estimated based on the principal amount of debt outstanding and the applicable interest rate as of June 30, 2015 (in thousands):

2015		2016		2017		2018		2019		Thereafter		Total
$	13,906	$	27,579	$	27,258	$	26,722	$	19,942	$	47,103	$	162,510

Off-Balance Sheet Arrangements

We utilize derivatives to manage our interest rate exposure. During February 2012, we entered into two interest rate swaps with an aggregate notional amount of $150 million which qualified for hedge accounting treatment. These interest rate swaps, which matured on September 28, 2014, were designated as a cash flow hedge of future interest payments. We perform assessments of hedging effectiveness, and any ineffectiveness is recorded in interest expense. There was no ineffectiveness for the periods ended June 30, 2015 or 2014.

Cash Flows

	Six Months Ended
	June 30,
(in thousands)	2015			2014
Cash Flow Data
Cash flow provided by (used for):
Operating activities	$	41,161		$	29,650
Investing activities		(459,015	)		(187,457	)
Financing activities		417,810			160,087

Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014

Cash flow provided by operating activities was $41.2 million for the six months ended June 30, 2015, compared to $29.7 million for the six months ended June 30, 2014. There was an increase in cash operating income of $7.6 million from the prior period, and an increase in cash flow associated with net changes in working capital of $3.9 million primarily relating to changes in rents and other receivables and accounts payable and accrued expenses.

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Cash flow used for investing activities increased by $271.5 million to $459.0 million for the six months ended June 30, 2015, compared to $187.5 million for the six months ended June 30, 2014. The increase was due primarily to the acquisition of Carpathia as well as higher cash paid for capital expenditures primarily related to redevelopment of our Dallas-Fort Worth, Atlanta-Metro, Chicago and Richmond data centers of $56.0 million. These expenditures include capitalized soft costs such as interest, payroll and other costs to redevelop properties, which were, in the aggregate, $10.3 million and $8.1 million for the six months ended June 30, 2015 and 2014, respectively.

Cash flow provided by financing activities was $417.8 million for the six months ended June 30, 2015, compared to $160.1 million for the six months ended June 30, 2014. The increase was primarily due to the net proceeds from the equity offerings completed in March and June of 2015 of $370.1 million, as well as higher net proceeds of $92.3 million under our unsecured credit facility, partially offset by an increase in mortgage principal debt repayments of $15.5 million due to paying off the Atlanta-Metro equipment loan in full in the current quarter, an increase in payments of cash dividends to common stockholders of $4.3 million which was due to the increase in shares outstanding related to the March 2, 2015 equity issuance, and an increase in principal payments on capital lease obligations of $0.9 million.

Critical Accounting Policies

The Company applies those accounting policies that management believes best reflect the underlying business and economic events, consistent with accounting principles generally accepted in the United States. Inherent in such policies are certain key assumptions and estimates made by management. Management periodically updates its estimates used in the preparation of the consolidated financial statements based on its latest assessment of the current and projected business and general economic environment. Information regarding the Company’s Critical Accounting Policies and Estimates is included in Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, with an additional policy noted below for recently acquired goodwill.

As a result of the Carpathia acquisition in June 2015, the Company recognized approximately $173 million in goodwill. The fair value of goodwill is the consideration transferred which is not allocable to identifiable intangible and tangible assets. The Company believes that it has one reporting unit for goodwill purposes, thus will assess goodwill for impairment at least annually on that basis. Based on the initial purchase price allocation, the Company does not believe there is any immediate impairment that would need to be recognized in relation to goodwill.

Inflation

Substantially all of our long-term leases—leases with a term greater than three years—contain rent increases and reimbursement for certain operating costs. As a result, we believe that we are largely insulated from the effects of inflation over periods greater than three years. Leases with terms of three years or less will be replaced or renegotiated within three years and should adjust to reflect changed conditions, also mitigating the effects of inflation. Moreover, to the extent that there are material increases in utility costs, we generally reserve the right to renegotiate the rate. However, any increases in the costs of redevelopment of our properties will generally result in a higher cost of the property, which will result in increased cash requirements to redevelop our properties and increased depreciation and amortization expense in future periods, and, in some circumstances, we may not be able to directly pass along the increase in these redevelopment costs to our customers in the form of higher rental rates.

Distribution Policy

To satisfy the requirements to qualify as a REIT, and to avoid paying tax on our income, QTS intends to continue to make regular quarterly distributions of all, or substantially all, of its REIT taxable income (excluding net capital gains) to its stockholders.

All distributions will be made at the discretion of our board of directors and will depend on our historical and projected results of operations, liquidity and financial condition, QTS’ REIT qualification, our debt service requirements, operating expenses and capital expenditures, prohibitions and other restrictions under financing arrangements and applicable law and other factors as our board of directors may deem relevant from time to time. We anticipate that our estimated cash available for distribution will exceed the annual distribution requirements applicable to REITs and the amount necessary to avoid the payment of tax on undistributed income. However, under some circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet these distribution requirements and we may need to borrow funds to make certain distributions. If we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.

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The Operating Partnership also includes certain partners that are subject to a taxable income allocation, however, not entitled to receive recurring distributions. The partnership agreement does stipulate however, to the extent that taxable income is allocated to these partners that the partnership will make a distribution to these partners equal to the lesser of the actual per unit distributions made to Class A partners or an estimated amount to cover federal, state and local taxes on the allocated taxable income. No distributions related to allocated taxable income were made to these partners for the six months ended June 30, 2015; however, a distribution of approximately $200,000 was made to Class O LTIP holders during the three months ended June 30, 2014.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. The primary market risk to which we believe we are exposed is interest rate risk. Many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control, contribute to interest rate risk.

As of June 30, 2015, we had outstanding $400.0 million of consolidated indebtedness that bore interest at variable rates. An interest rate cap of $50 million was in place as of June 30, 2015 with a capped LIBOR rate of 3% through December 18, 2015.

We monitor our market risk exposures using a sensitivity analysis. Our sensitivity analysis estimates the exposure to market risk sensitive instruments assuming a hypothetical 1% change in year-end interest rates. LIBOR rates are not currently within 1% of our interest rate caps, therefore a 1% increase in interest rates would increase the interest expense on the $400.0 million of variable indebtedness outstanding as of June 30, 2015 by approximately $4.0 million annually. Conversely, a decrease in the LIBOR rate to 0% would decrease the interest expense on this $400.0 million of variable indebtedness outstanding by approximately $0.7 million annually based on the one month LIBOR rate of approximately 0.2% as of June 30, 2015.

The above analyses do not consider the effect of any change in overall economic activity that could impact interest rates or expected changes associated with future indebtedness. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

ITEM 4. Controls and Procedures

QTS Realty Trust, Inc.

Disclosure Controls and Procedures

Based on an evaluation of disclosure controls and procedures for the period ended June 30, 2015, conducted by the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer concluded that QTS’ disclosure controls and procedures are effective to ensure that information required to be disclosed by QTS in reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company’s management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure, and is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in QTS’ internal control over financial reporting during the period ended June 30, 2015, that have materially affected, or are reasonably likely to materially affect, QTS’ internal control over financial reporting.

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QualityTech LP

Disclosure Controls and Procedures

Based on an evaluation of disclosure controls and procedures for the period ended June 30, 2015, conducted by the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer concluded that the Operating Partnership’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Operating Partnership in reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company’s management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure, and is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in the Operating Partnership’s internal control over financial reporting during the period ended June 30, 2015, that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

In the ordinary course of our business, we are subject to claims and administrative proceedings, none of which we believe are material or would be expected to have, individually or in the aggregate, a material adverse effect on us.

ITEM 1A. Risk Factors

Except as described below, there have been no material changes to the risk factors disclosed in our Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission (“SEC”) on March 7, 2014, which is accessible on the SEC’s website at www.sec.gov.

Risks Related to the Carpathia Acquisition

The intended benefits of the Carpathia acquisition may not be realized, which could negatively impact our business, prospects, financial condition, liquidity and results of operations, which could have a material adverse effect on us.

We may not be able to achieve the anticipated benefits of the Carpathia acquisition. We are integrating the business of Carpathia with our existing operations, but we may be unable to accomplish the integration smoothly, successfully or within anticipated cost estimates. The diversion of our management’s attention from our current operations to these integration efforts, and any difficulties encountered, could prevent us from realizing the full benefits we anticipate to result from the Carpathia acquisition and could have a material adverse effect on us. Additional risks include, among others:

· the inability to successfully integrate the operations, maintain consistent standards, controls, policies and procedures, or realize the benefits we anticipate of the Carpathia acquisition within the anticipated timeframe or at all;

· the inability to effectively monitor and manage our expanded business, retain customers, suppliers and business partners, attract new customers, retain key employees or attract highly qualified new employees;

· anticipated future synergies, accretion, revenues, cost savings or operating metrics may fail to materialize or our estimates thereof may prove to be inaccurate;

· the acquired business may fail to perform as expected;

· certain portions of the acquired business are located in new markets, including foreign markets, in which we have not previously operated, where we face risks associated with an incomplete knowledge or understanding of the local market;

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· the market price of our common stock may decline if we do not achieve the benefits we anticipate of the transaction as rapidly or to the extent anticipated by financial or industry analysts or if the effect of the transaction on our financial results is not consistent with the expectations of financial or industry analysts; and

· potential unknown liabilities with limited or no recourse against Carpathia Holdings, LLC (the “Seller”) and unforeseen increased expenses related to the Carpathia acquisition.

We cannot assure you that we will be able to complete the integration without encountering difficulties or that any such difficulties will not have a material adverse effect on us. Failure to realize the intended benefits of the Carpathia acquisition could adversely affect our business, prospects, financial condition, liquidity and results of operations, which could have a material adverse effect on us.

Our indemnification rights under the Stock Purchase Agreement are limited.

Under the stock purchase agreement we entered into with the Seller in the Carpathia acquisition (the “Stock Purchase Agreement”), our right to recover losses from the Seller arising from breaches of representations and warranties and failure to perform covenants survives only for 15 months following closing of the Carpathia Acquisition (subject to certain exceptions for breaches of post-closing covenants and for income taxes) and is subject to an overall cap of $20 million (although claims for fraud, intentional breach and income taxes related to pre-closing tax periods are not subject to the cap). Claims for breaches of representations and warranties are further subject to a deductible of $1.5 million (other than with respect to taxes, which are subject to a deductible of $750,000). Therefore, to the extent we incur losses from the Carpathia acquisition due to breaches by the Seller, even of certain “fundamental” representations such as capitalization and authority, our recovery generally will be limited to the $20 million cap and 15 month survival period, which could have a material adverse effect on us.

Following the Carpathia acquisition, the growth of our Cloud and Managed Services business continues to be limited by the 25% limit on ownership of TRS stock imposed by the Code.

We hold Carpathia’s business through our taxable REIT subsidiary. The Internal Revenue Code of 1986, as amended, provides that no more than 25% of the value of a REIT’s assets may consist of shares or securities of one or more taxable REIT subsidiaries (“TRSs”) and that at least 75% of its assets must consist of “real estate assets.” We provide Carpathia’s hybrid cloud services and IaaS product to customers through our TRS and the Carpathia acquisition has significantly increased the value of our TRS. Moreover, our investment in our TRS does not qualify as a “real estate asset” for purposes of the 75% “real estate asset” requirement. The 25% ownership limitation on TRS stock and the 75% “real estate asset” requirement could limit further growth of our Cloud and Managed Services business. In addition, because our TRS is subject to regular corporate income tax on its profits, subject to offset, to the extent we have available, tax net operating losses, our profits from our Cloud and Managed Services will be subject to regular corporate income tax and will not benefit from the special income tax treatment afforded REITs.

As a result of the Carpathia acquisition, we acquired additional government customers, contracts and subcontracts, which may subject us to additional risks, including early termination, audits, investigations, sanctions and penalties, which could have a material adverse effect on us.

As a result of the Carpathia acquisition, we will derive increased revenues from contracts with the U.S. government, state and local governments, and subcontracts with government contractors. Some of these customers may be entitled to terminate all or part of their contracts at any time, without cause.

Recently, political pressure has increased for governments and their agencies, both domestically and internationally, to reduce spending. Some of Carpathia’s and our federal government contracts and subcontracts are directly or indirectly subject to Congressional approval of appropriations to fund the expenditures under these contracts. Similarly, some of Carpathia’s and our contracts and subcontracts at the state and local levels are subject to government funding authorizations. To the extent that funding underlying any of these government contracts or subcontracts is reduced or eliminated, there is an increased risk that the counterparties may terminate the contracts or subcontracts, which could have a material adverse effect on us.

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Government contracts and subcontracts also are generally subject to government audits and investigations. To the extent we fail to comply with laws or regulations related to such contracts, any such audit or investigation of us could result in various civil and criminal penalties and administrative sanctions, including termination of such contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business, any of which could have a material adverse effect on us.

Our business could be adversely affected by security breaches through cyber attacks, cyber intrusions or otherwise.

We face risks associated with security breaches and other significant disruptions of our information technology networks and related systems, which are essential to our business operations. Following the Carpathia acquisition, we may be more subject to these risks. Such breaches and disruptions may occur through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization. Because a portion of our business focuses on serving United States government agencies and their contractors with a general focus on data security and information technology, we may be especially likely to be targeted by cyber attacks, including by governments, organizations or persons hostile to our government, following the Carpathia acquisition. Despite our activities to maintain the security and integrity of our networks and related systems, there can be no assurance that these activities will be effective. A security breach involving our networks and related systems could disrupt our operations in numerous ways, including by creating difficulties for our customers that may reflect poorly on us or by exposing us to potential liability, which could have a material adverse effect on us.

As a result of the Carpathia acquisition, we have international operations, in which we have no prior experience and international operations will expose us to regulatory, currency, legal, tax and other risks distinct from those faced by us in the U.S.

Foreign operations will involve risks not generally associated with investments in the United States, including:

· our limited knowledge of and relationships with customers, contractors, suppliers or other parties in these markets;

· complexity and costs associated with managing international development and operations;

· difficulty in hiring qualified management, sales and other personnel and service providers;

· differing employment practices and labor issues;

· multiple, conflicting and changing legal, regulatory, entitlement and permitting, and tax and treaty environments;

· exposure to increased taxation, confiscation or expropriation;

· currency transfer restrictions and limitations on our ability to distribute cash earned in foreign jurisdictions to the United States;

· difficulty in enforcing agreements in non-U.S. jurisdictions, including those entered into in connection with our acquisitions or in the event of a default by one or more of our customers, suppliers or contractors;

· local business and cultural factors; and

· political and economic instability, including sovereign credit risk, in certain geographic regions.

Our inability to overcome these risks could adversely affect our international operations and could harm our business, prospects, financial condition, liquidity and results of operations.

The Carpathia acquisition increases the proportion of our business associated with Cloud and Managed Services, which increases our exposure to the risks of that product service, including adverse economic or other conditions or adverse changes in law or other regulations relating to the Internet, communications or information technologies.

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The Carpathia acquisition increases the proportion of our business dedicated to the Cloud and Managed Services market. Therefore, adverse changes in that product service, such as increased regulation of, an oversupply of or a decrease in demand for, the Cloud and Managed Services market or any other adverse condition, would have a proportionately greater adverse effect on us than such change would have had before the Carpathia acquisition. Additionally, the adoption or modification of laws or regulations relating to the Internet, or otherwise relating to the our Cloud and Managed Services business or Carpathia’s business, or changes in interpretations of existing laws, would have a proportionately greater adverse effect on us than such change would have before the Carpathia acquisition. Therefore, this increased exposure to the Cloud and Managed Services market could have a material adverse effect on us.

Carpathia leased data center space in several locations under long-term non-cancellable lease agreements, and following the Carpathia acquisition, the non-renewal or loss of such leases, or the continuing obligations under such leases in the event of a loss of customers or customer revenues, could have a material adverse effect on us. 

Carpathia leased data center space in several locations under long-term non-cancellable lease agreements expiring through 2026 and, in turn, subleases that space to its customers. Following the Carpathia acquisition, we may incur costs if we are forced to vacate this space due to the high costs of relocating the equipment in these facilities and installing the necessary infrastructure in a new data center property. If we are forced to vacate any of these facilities, we could lose customers that chose our services based on our location. The landlords could attempt to evict us for reasons beyond our control. Further, we may be unable to maintain good working relationships with Carpathia’s landlords, which would adversely affect our relationship with our customers and could result in the loss of current customers. In addition, we cannot assure you that we will be able to renew these leases prior to their expiration dates on favorable terms or at all. Certain of such leases relate to data centers owned by companies that may view us as a competitor, which may impact their willingness to extend these leases upon expiration. If we are unable to renew these lease agreements, we could lose a significant number of customers who are unwilling to relocate their equipment to another one of our data center properties, which could have a material adverse effect on us. Even if we are able to renew these leases, the terms and other costs of renewal may be less favorable than our existing lease arrangements. Failure to sufficiently increase revenue from customers at these facilities to offset these projected higher costs could have a material adverse effect on us.

In addition, the terms of the customer contracts we assumed in the Carpathia acquisition are of shorter duration in many cases than the non-cancellable lease agreements for data center space described in above. We are obligated to make payments on these long-term non-cancellable leases regardless of whether our customer contracts are terminated or expire and regardless of whether our customers continue to make payments under their contracts. To the extent we experiences a loss of customers or customer revenue, including upon expiration or termination of customer contracts, our continuing obligations under the non-cancellable lease agreements for data center space may result in expenses to us without offsetting revenue, which could have a material adverse effect on us.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

QTS did not sell any securities during the six months ended June 30, 2015 that were not registered under the Securities Act of 1933, as amended (the “Securities Act”).

QTS from time to time issues shares of Class A common stock pursuant to the QTS Realty Trust, Inc. 2013 Equity Incentive Plan (the “2013 Equity Incentive Plan”), upon exercise of stock options issued under the 2013 Equity Incentive Plan, and upon redemption of Class A units of limited partnership of the Operating Partnership (either through Class A units previously held or those received from conversion of Class O units from the QualityTech, LP 2010 Equity Incentive Plan). Pursuant to the partnership agreement of the Operating Partnership, each time QTS issues shares of common stock, the Operating Partnership issues to QTS, its general partner, an equal number of Class A units. The units issued to QTS are are not registered under the Securities Act in reliance on Section 4(a)(2) of the Securities Act due to the fact that Class A units were issued only to QTS and therefore, did not involve a public offering. During the six months ended June 30, 2015, the Operating Partnership issued 0.6 million Class A units to QTS in connection with such redemptions and stock option exercises and issuances pursuant to the 2013 Equity Incentive Plan, with a value of approximately $20.0 million based on the respective dates of the redemptions and option exercises, as applicable.

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Repurchases of Equity Securities

During the six months ended June 30, 2015, certain of our employees surrendered Class A common stock owned by them to satisfy their statutory minimum federal and state tax obligations in connection with the vesting of restricted common stock under the 2013 Equity Incentive Plan. 

The following table summarizes all of these repurchases during the six months ended June 30, 2015.

Period	Total number of shares purchased			Average price paid per share			Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs
January 1, 2015 through January 31, 2015		-			N/A		N/A	N/A
February 1, 2015 through February 28, 2015		-			N/A		N/A	N/A
March 1, 2015 through March 31, 2015		7,091	(1)		$	36.50	N/A	N/A
April 1, 2015 through April 30, 2015		-			N/A		N/A	N/A
May 1, 2015 through May 31, 2015		-			N/A		N/A	N/A
June 1, 2015 through June 30, 2015		2,534	(1)		$	36.27	N/A	N/A
Total		9,625	(1)		$	36.44

(1) The number of shares purchased represents shares of Class A common stock surrendered by certain of our employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock. With respect to these shares, the price paid per share is based on the closing price of our Class A common stock as of the date of the determination of the statutory minimum federal income tax.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

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ITEM 6. Exhibits

Exhibit
Number	Exhibit Description
2.1	Stock Purchase Agreement, dated May 6, 2015, by and among Quality Technology Services Holding, LLC, Carpathia Holdings, LLC and Carpathia Acquisition, Inc. (Filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on May 12, 2015)
2.2	First Amendment to Stock Purchase Agreement, effective as of June 12, 2015, by and among Quality Technology Services Holding, LLC, Carpathia Holdings, LLC and Carpathia Acquisition, Inc. (Filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on June 19, 2015)
3.1	Articles of Amendment and Restatement of QTS Realty Trust, Inc. (Filed as Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on October 17, 2013)
3.2	Amended and Restated Bylaws of QTS Realty Trust, Inc. (Filed as Exhibit 3.2 to the Registration Statement on Form S-11/A filed with the SEC on September 26, 2013)
4.1	Form of Specimen Class A Common Stock Certificate (Filed as Exhibit 4.1 to the Registration Statement on Form S-11/A filed with the SEC on September 26, 2013)
4.2	Indenture, dated July 23, 2014, by and among QualityTech, LP, QTS Finance Corporation, QTS Realty Trust, Inc., certain subsidiaries of QualityTech, LP and Deutsche Bank Trust Company Americas (Filed as Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on July 25, 2014)
4.3	Supplemental Indenture, dated as of December 22, 2014, by and among QualityTech, LP, QTS Finance Corporation, QTS Realty Trust, Inc., the entities identified therein as Guaranteeing Subsidiaries, the entities identified therein as Subsidiary Guarantors, and Deutsche Bank Trust Company Americas, to the Indenture dated, as of July 23, 2014, by and among QualityTech, LP, and QTS Finance Corporation, as issuers, QTS Realty Trust, Inc., each of the subsidiary guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee (Filed as Exhibit 4.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 23, 2015)
4.4	Form of 5.875% Senior notes due 2022 (included in Exhibit 4.2 hereto)
10.1	Amendment # 2 to QTS Realty Trust, Inc. 2013 Equity Incentive Plan (Filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 6, 2015)
10.2	Fifth Amendment to Credit Agreement, by and among Quality Investment Properties Richmond, LLC, Quality Technology Services Richmond II, LLC, QualityTech, LP, QTS Realty Trust, Inc., each of the Lenders party thereto, and Regions Bank, dated June 5, 2015
10.3	Sixth Amendment to Credit Agreement, by and among Quality Investment Properties Richmond, LLC, Quality Technology Services Richmond II, LLC, QualityTech, LP, QTS Realty Trust, Inc., each of the Lenders party thereto, and Regions Bank, dated June 26, 2015
10.4	First Amendment to the Third Amended and Restated Credit Agreement, by and among QualityTech, LP, the entities listed on the signature pages thereto as guarantors, KeyBank National Association, the other lenders which are signatories thereto and KeyBank National Association, dated June 5, 2015

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10.5	Second Amendment to the Third Amended and Restated Credit Agreement, by and among QualityTech, LP, the entities listed on the signature pages thereto as guarantors, KeyBank National Association, the other lenders which are signatories thereto and KeyBank National Association, dated June 26, 2015
10.6	Employee Stock Purchase Plan, effective July 1, 2015 (Filed as Exhibit 99.1 to the Registration Statement on Form S-8 filed with the SEC on June 17, 2015)
10.7	Employment Agreement dated as of February 16, 2015 by and among QualityTech, LP, QTS Realty Trust, Inc., Quality Technology Services, LLC and Stanley M. Sword (Filed as Exhibit 10.10 to QualityTech, LP’s Registration Statement on Form S-4/A filed with the SEC on March 19, 2015)
10.8	Employment agreement dated as of May 6, 2015 by and among QTS Realty Trust, Inc., QualityTech, LP, Quality Technology Services Holding, LLC, Quality Technology Services, LLC and Peter Weber
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (QTS Realty Trust, Inc.)
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (QTS Realty Trust, Inc.)
31.3	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (QualityTech, LP)
31.4	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (QualityTech, LP)
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (QTS Realty Trust, Inc.)
32.2	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (QualityTech, LP)
101	The following materials from QTS Realty Trust, Inc.’s and QualityTech, LP’s Quarterly Report on Form 10-Q for the period ended June 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of operations and comprehensive income (loss), (iii) condensed consolidated statements of equity and partners’ capital, (iv) condensed consolidated statements of cash flow, and (v) the notes to the condensed consolidated financial statements

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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 thereunto duly authorized.

	QTS Realty Trust, Inc.
DATE: August 7, 2015	/s/ Chad L. Williams
	Chad L. Williams
	Chairman and Chief Executive Officer
DATE: August 7, 2015	/s/ William H. Schafer
	William H. Schafer
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)
	QualityTech, LP
	By: QTS Realty Trust, Inc.,
	its general partner
DATE: August 7, 2015	/s/ Chad L. Williams
	Chad L. Williams
	Chairman and Chief Executive Officer
DATE: August 7, 2015	/s/ William H. Schafer
	William H. Schafer
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

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EX-10.2

Exhibit 10.2

Fifth AMENDMENT TO CREDIT AGREEMENT

This Fifth AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) dated as of June 5, 2015, by and among QUALITY INVESTMENT PROPERTIES RICHMOND, LLC, a Delaware limited liability company (“QIPR”), QUALITY TECHNOLOGY SERVICES RICHMOND II, LLC, a Delaware limited liability company (“QTS Richmond TRS”), QUALITYTECH, LP, a Delaware limited partnership (“QTLP”), QTS REALTY TRUST, INC., a Maryland corporation (“REIT”), each of the Lenders party hereto, and REGIONS BANK, as Administrative Agent (the “Agent”).

WHEREAS, QIPR, QTS Richmond TRS, QTLP, REIT, any Additional Subsidiary Borrowers from time to time a party thereto as “Borrowers” pursuant to §5.5, the Lenders, the Agent and certain other parties have entered into that certain Credit Agreement dated as of December 21, 2012 (as amended, supplemented or otherwise modified and in effect immediately prior to the date hereof, the “Credit Agreement”); and

WHEREAS, QIPR, QTS Richmond TRS, QTLP, REIT, the Lenders and the Agent desire to amend certain provisions of the Credit Agreement on the terms and conditions contained herein;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby agree as follows:

Section 1. Specific Amendments to Credit Agreement.

(a)          The Credit Agreement is amended by adding the following new definitions to §1.1 thereof in the appropriate alphabetical order:

Carpathia Amsterdam. Collectively, (a) Luttenbergweg 4, 1100 AL Amsterdam, The Netherlands, (b) Postbox/Postbus 12478 1100 AL, Amsterdam, The Netherlands, and (c) Luttenbergweg 2-4 1101 EC Amsterdam Zuidoost, Luttenbergweg 2-4 1101 EC Amsterdam Zuidoost, The Netherlands.

Carpathia Hong Kong. 1/F Kerry Warehouse, 3 Shing Yiu Street, Kwai Chung, Hong Kong.

Carpathia International Data Centers. Collectively, Carpathia Amsterdam, Carpathia Hong Kong, Carpathia London, Carpathia Toronto and Carpathia Sydney.

Carpathia London. 8 Buckingham Avenue, Slough Trading Estate, Slough, Berkshire SL1 4AX, England.

Carpathia Sydney. Unit B 639 Gardners Rd, Mascot NSW 2020, Australia.

Carpathia Toronto. 151 Front Street West, Suite 600, Toronto, ON M5J 2N1.

(b)           The Credit Agreement is amended by restating §8.3(g) thereof in its entirety as follows:

(g)          the acquisition of fee interests or long-term ground lease interests or interests under Leases by Parent Company or its Subsidiaries in (i) the Carpathia International Data Centers and businesses and investments incidental thereto, (ii) Real Estate which is utilized for income-producing Data Center Properties located in the continental United States or the District of Columbia and businesses and investments incidental thereto, and (iii) subject to the restrictions set forth in this §8.3, Land Assets to be developed for the purposes set forth in §8.3(g)(ii) and Development Properties to be used for the purposes set forth in §8.3(g)(ii);

Section 2. Conditions Precedent. The effectiveness of this Amendment is subject to receipt by the Agent of a counterpart of this Amendment duly executed by QIPR, QTS Richmond TRS, QTLP, REIT and the Required Lenders.

Section 3. Representations. Each Borrower and Guarantor represents and warrants to the Agent and each Lender as follows:

(a)          Authorization. Each of QIPR, QTS Richmond TRS, QTLP and REIT has the right and power, and has taken all necessary action to authorize the execution and delivery of this Amendment and to perform its obligations hereunder and under the Credit Agreement, as amended by this Amendment, in accordance with their respective terms. This Amendment has been duly executed and delivered by the duly authorized officers of QIPR, QTS Richmond TRS and REIT and a duly authorized officer of the general partner of QTLP, and each of this Amendment and the Credit Agreement, as amended by this Amendment, is a legal, valid and binding obligation of QIPR, QTS Richmond TRS, QTLP and REIT enforceable against QIPR, QTS Richmond TRS, QTLP and REIT in accordance with its respective terms except as the same may be limited by bankruptcy, insolvency, and other similar laws affecting the rights of creditors generally and the availability of equitable remedies for the enforcement of certain obligations (other than the payment of principal) contained herein or therein and as may be limited by equitable principles generally.

(b)          Compliance with Laws, etc. The execution and delivery by QIPR, QTS Richmond TRS, QTLP and REIT of this Amendment and the performance by each of QIPR, QTS Richmond TRS, QTLP and REIT of this Amendment and the Credit Agreement, as amended by this Amendment, in accordance with their respective terms, do not and will not, by the passage of time, the giving of notice or otherwise: (i) require the approval or consent of, or filing or registration with, or the giving of any notice to, any court, department, board, governmental agency or authority; (ii) conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which such Person is subject or any judgment, order, writ, injunction, license or permit applicable to any such Person, (iii) conflict with or constitute a default (whether with the passage of time or the giving of notice, or both) under any provision of the partnership agreement, articles of incorporation or other charter documents or bylaws of, or any material agreement or other instrument binding upon, any such Person or any of its properties, or (iv) result in or require the imposition of any lien or other encumbrance on any of the properties, assets or rights of any such Person other than the liens and encumbrances in favor of Agent contemplated by the Credit Agreement and the other Loan Documents.

(c)          No Default. No Default or Event of Default has occurred and is continuing as of the date hereof or will exist immediately after giving effect to this Amendment.

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Section 4. Reaffirmation of Representations by Borrowers and Guarantors. Each of QIPR, QTS Richmond TRS, QTLP and REIT hereby repeats and reaffirms all representations and warranties made by such Person to the Agent and the Lenders in the Credit Agreement and the other Loan Documents to which it is a party on and as of the date hereof with the same force and effect as if such representations and warranties were set forth in this Amendment in full.

Section 5. Certain References. Each reference to the Credit Agreement in any of the Loan Documents shall be deemed to be a reference to the Credit Agreement as amended by this Amendment. This Amendment shall constitute a Loan Document.

Section 6. Expenses. The Borrowers shall reimburse the Agent upon demand for all reasonable out-of-pocket costs and expenses (including attorneys’ fees) actually incurred by the Agent in connection with the preparation, negotiation and execution of this Amendment and the other agreements and documents executed and delivered in connection herewith.

Section 7. Benefits. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

Section 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

Section 9. Effect. Except as expressly herein amended, the terms and conditions of the Credit Agreement and the other Loan Documents (other than the Guaranty and the Springing Guaranty) remain in full force and effect. Except as expressly amended by the First Amendment to Guaranty and the First Amendment to Springing Guaranty, respectively, the Guaranty and Springing Guaranty remain in full force and effect. This Amendment shall not limit, impair or constitute a waiver of the rights, powers or remedies available to the Lenders under the Credit Agreement or any other Loan Document. Unless otherwise stated within any amendment contained herein, the amendments contained herein shall be deemed to have prospective application only.

Section 10. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original and shall be binding upon all parties, their successors and assigns.

Section 11. Consent of Guarantors; Reaffirmation of Guaranty. Each of QTLP and QTS Richmond TRS hereby consents to the modifications and amendments relating to the Credit Agreement and Loan Documents as set forth herein, reaffirms its continuing obligations to the Agent and the Lenders under the Guaranty and agrees that the transactions contemplated by the Amendment shall not in any way affect the validity and enforceability of the Guaranty, or reduce, impair or discharge the obligations of such Person, in its capacity as a Guarantor, thereunder. REIT reaffirms its obligations to the Agent and the Lenders under the Springing Guaranty and agrees that the transactions contemplated by the Amendment shall not in any way affect the validity and enforceability of the Springing Guaranty, or reduce, impair or discharge the obligations of REIT, in its capacity as a Guarantor, thereunder.

Section 12. Waiver of Claims. Each of QIPR, QTS Richmond TRS, QTLP and REIT acknowledges, represents and agrees that as of the date hereof it has no defenses, setoffs, claims, counterclaims or causes of action of any kind or nature whatsoever with respect to the Loan Documents, the administration or funding of the Loans or with respect to any acts or omissions of Agent or any of the Lenders, or any past or present officers, agents or employees of Agent or any of the Lenders, and each of QIPR, QTS Richmond TRS, QTLP and REIT does hereby expressly waive, release and relinquish any and all such defenses, setoffs, claims, counterclaims and causes of action, if any.

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Section 13. Definitions. All capitalized terms not otherwise defined herein are used herein with the respective definitions given them in the Credit Agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to Credit Agreement to be executed as of the date first above written.

QIPR:
QUALITY INVESTMENT PROPERTIES RICHMOND, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QTLP:
QUALITYTECH, LP, a Delaware limited partnership
By:	QTS Realty Trust, Inc. a Maryland corporation, its general partner
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QTS RICHMOND TRS:
QUALITY TECHNOLOGY SERVICES RICHMOND II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
REIT:
QTS REALTY TRUST, INC., a Maryland corporation
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO and Treasurer
	(SEAL)

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[Signature Page to Fifth Amendment to Credit Agreement with Quality Investment Properties Richmond, LLC et al.]

regions bank, as Agent and as a Lender
By:	/s/ Kerri L. Raines
	Name:	Kerri L. Raines
	Title:	Senior Vice President

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[Signature Page to Fifth Amendment to Credit Agreement with Quality Investment Properties Richmond, LLC et al.]

BANK OF AMERICA, N.A.
By:	/s/ Gary J. Katunas
	Name:	Gary J. Katunas
	Title:	Senior Vice President

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[Signature Page to Fifth Amendment to Credit Agreement with Quality Investment Properties Richmond, LLC et al.]

CITIZENS BANK, NATIONAL ASSOCIATION
By:	/s/ Michelle Dawson
	Name:	Michelle Dawson
	Title:	Vice President

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[Signature Page to Fifth Amendment to Credit Agreement with Quality Investment Properties Richmond, LLC et al.]

TORONTO DOMINION (TEXAS) LLC
By:	/s/ Marie Fernandes
	Name:	Marie Fernandes
	Title:	Authorized Signatory

EX-10.3

Exhibit 10.3

sixth AMENDMENT TO CREDIT AGREEMENT

This sixth AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) dated as of June 26, 2015, by and among QUALITY INVESTMENT PROPERTIES RICHMOND, LLC, a Delaware limited liability company (“QIPR”), QUALITY TECHNOLOGY SERVICES RICHMOND II, LLC, a Delaware limited liability company (“QTS Richmond TRS”), QUALITYTECH, LP, a Delaware limited partnership (“QTLP”), QTS REALTY TRUST, INC., a Maryland corporation (“REIT”), each of the Lenders party hereto, and REGIONS BANK, as Administrative Agent (the “Agent”).

WHEREAS, QIPR, QTS Richmond TRS, QTLP, REIT, any Additional Subsidiary Borrowers from time to time a party thereto as “Borrowers” pursuant to §5.5, the Lenders, the Agent and certain other parties have entered into that certain Credit Agreement dated as of December 21, 2012 (as amended, supplemented or otherwise modified and in effect immediately prior to the date hereof, the “Credit Agreement”); and

WHEREAS, QIPR, QTS Richmond TRS, QTLP, REIT, the Lenders and the Agent desire to amend certain provisions of the Credit Agreement on the terms and conditions contained herein;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby agree as follows:

Section 1. Specific Amendment to Credit Agreement. The Credit Agreement is amended by deleting the following from subparagraph (b) of the definition of Change of Control in §1.1 of the Credit Agreement: “(excluding, in the case of both clause (ii) and (iii) above, any individual whose initial nomination for, or assumption of office as, a member of the REIT Board occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors or trustees by any Person or group other than a solicitation for the election of one or more directors or trustees by or on behalf of the REIT Board)”.

Section 2. Conditions Precedent. The effectiveness of this Amendment is subject to receipt by the Agent of a counterpart of this Amendment duly executed by QIPR, QTS Richmond TRS, QTLP, REIT and the Required Lenders.

Section 3. Representations. Each Borrower and Guarantor represents and warrants to the Agent and each Lender as follows:

(a)          Authorization. Each of QIPR, QTS Richmond TRS, QTLP and REIT has the right and power, and has taken all necessary action to authorize the execution and delivery of this Amendment and to perform its obligations hereunder and under the Credit Agreement, as amended by this Amendment, in accordance with their respective terms. This Amendment has been duly executed and delivered by the duly authorized officers of QIPR, QTS Richmond TRS and REIT and a duly authorized officer of the general partner of QTLP, and each of this Amendment and the Credit Agreement, as amended by this Amendment, is a legal, valid and binding obligation of QIPR, QTS Richmond TRS, QTLP and REIT enforceable against QIPR, QTS Richmond TRS, QTLP and REIT in accordance with its respective terms except as the same may be limited by bankruptcy, insolvency, and other similar laws affecting the rights of creditors generally and the availability of equitable remedies for the enforcement of certain obligations (other than the payment of principal) contained herein or therein and as may be limited by equitable principles generally.

(b)          Compliance with Laws, etc. The execution and delivery by QIPR, QTS Richmond TRS, QTLP and REIT of this Amendment and the performance by each of QIPR, QTS Richmond TRS, QTLP and REIT of this Amendment and the Credit Agreement, as amended by this Amendment, in accordance with their respective terms, do not and will not, by the passage of time, the giving of notice or otherwise: (i) require the approval or consent of, or filing or registration with, or the giving of any notice to, any court, department, board, governmental agency or authority; (ii) conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which such Person is subject or any judgment, order, writ, injunction, license or permit applicable to any such Person, (iii) conflict with or constitute a default (whether with the passage of time or the giving of notice, or both) under any provision of the partnership agreement, articles of incorporation or other charter documents or bylaws of, or any material agreement or other instrument binding upon, any such Person or any of its properties, or (iv) result in or require the imposition of any lien or other encumbrance on any of the properties, assets or rights of any such Person other than the liens and encumbrances in favor of Agent contemplated by the Credit Agreement and the other Loan Documents.

(c)          No Default. No Default or Event of Default has occurred and is continuing as of the date hereof or will exist immediately after giving effect to this Amendment.

Section 4. Reaffirmation of Representations by Borrowers and Guarantors. Each of QIPR, QTS Richmond TRS, QTLP and REIT hereby repeats and reaffirms all representations and warranties made by such Person to the Agent and the Lenders in the Credit Agreement and the other Loan Documents to which it is a party on and as of the date hereof with the same force and effect as if such representations and warranties were set forth in this Amendment in full.

Section 5. Certain References. Each reference to the Credit Agreement in any of the Loan Documents shall be deemed to be a reference to the Credit Agreement as amended by this Amendment. This Amendment shall constitute a Loan Document.

Section 6. Expenses. The Borrowers shall reimburse the Agent upon demand for all reasonable out-of-pocket costs and expenses (including attorneys’ fees) actually incurred by the Agent in connection with the preparation, negotiation and execution of this Amendment and the other agreements and documents executed and delivered in connection herewith.

Section 7. Benefits. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

Section 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

Section 9. Effect. Except as expressly herein amended, the terms and conditions of the Credit Agreement and the other Loan Documents (other than the Guaranty and the Springing Guaranty) remain in full force and effect. Except as expressly amended by the First Amendment to Guaranty and the First Amendment to Springing Guaranty, respectively, the Guaranty and Springing Guaranty remain in full force and effect. This Amendment shall not limit, impair or constitute a waiver of the rights, powers or remedies available to the Lenders under the Credit Agreement or any other Loan Document. Unless otherwise stated within any amendment contained herein, the amendments contained herein shall be deemed to have prospective application only.

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Section 10. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original and shall be binding upon all parties, their successors and assigns.

Section 11. Consent of Guarantors; Reaffirmation of Guaranty. Each of QTLP and QTS Richmond TRS hereby consents to the modifications and amendments relating to the Credit Agreement and Loan Documents as set forth herein, reaffirms its continuing obligations to the Agent and the Lenders under the Guaranty and agrees that the transactions contemplated by the Amendment shall not in any way affect the validity and enforceability of the Guaranty, or reduce, impair or discharge the obligations of such Person, in its capacity as a Guarantor, thereunder. REIT reaffirms its obligations to the Agent and the Lenders under the Springing Guaranty and agrees that the transactions contemplated by the Amendment shall not in any way affect the validity and enforceability of the Springing Guaranty, or reduce, impair or discharge the obligations of REIT, in its capacity as a Guarantor, thereunder.

Section 12. Waiver of Claims. Each of QIPR, QTS Richmond TRS, QTLP and REIT acknowledges, represents and agrees that as of the date hereof it has no defenses, setoffs, claims, counterclaims or causes of action of any kind or nature whatsoever with respect to the Loan Documents, the administration or funding of the Loans or with respect to any acts or omissions of Agent or any of the Lenders, or any past or present officers, agents or employees of Agent or any of the Lenders, and each of QIPR, QTS Richmond TRS, QTLP and REIT does hereby expressly waive, release and relinquish any and all such defenses, setoffs, claims, counterclaims and causes of action, if any.

Section 13. Definitions. All capitalized terms not otherwise defined herein are used herein with the respective definitions given them in the Credit Agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment to Credit Agreement to be executed as of the date first above written.

QIPR:
QUALITY INVESTMENT PROPERTIES RICHMOND, LLC, a Delaware limited liability company
By:	/s/ Shirley E. Goza
Name:	Shirley E. Goza
Title:	Vice President, General Counsel and Secretary
	(SEAL)
QTLP:
QUALITYTECH, LP, a Delaware limited partnership
By:	QTS Realty Trust, Inc. a Maryland corporation, its general partner
By:	/s/ Shirley E. Goza
Name:	Shirley E. Goza
Title:	Vice President, General Counsel and Secretary
	(SEAL)
QTS RICHMOND TRS:
QUALITY TECHNOLOGY SERVICES RICHMOND II, LLC, a Delaware limited liability company
By:	/s/ Shirley E. Goza
Name:	Shirley E. Goza
Title:	Vice President, General Counsel and Secretary
	(SEAL)
REIT:
QTS REALTY TRUST, INC., a Maryland corporation
By:	/s/ Shirley E. Goza
Name:	Shirley E. Goza
Title:	General Counsel & Secretary
	(SEAL)

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[Signature Page to Sixth Amendment to Credit Agreement with Quality Investment Properties Richmond, LLC et al.]

regions bank, as Agent and as a Lender
By:	/s/ Kerri L. Raines
	Name:	Kerri L. Raines
	Title:	Senior Vice President

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[Signature Page to Sixth Amendment to Credit Agreement with Quality Investment Properties Richmond, LLC et al.]

BANK OF AMERICA, N.A.
By:	/s/ Gary J. Katunas
	Name:	Gary J. Katunas
	Title:	Senior Vice President

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[Signature Page to Sixth Amendment to Credit Agreement with Quality Investment Properties Richmond, LLC et al.]

CITIZENS BANK, NATIONAL ASSOCIATION
By:	/s/ Michelle Dawson
	Name:	Michelle Dawson
	Title:	Vice President

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[Signature Page to Sixth Amendment to Credit Agreement with Quality Investment Properties Richmond, LLC et al.]

TORONTO DOMINION (TEXAS) LLC
By:	/s/ Savio Bozic
	Name:	Savio Bozic
	Title:	Authorized Signatory

EX-10.4

Exhibit 10.4

FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT

THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), dated as of June 5, 2015, by and among QUALITYTECH, LP, a Delaware limited partnership (“Borrower”), THE ENTITIES LISTED ON THE SIGNATURE PAGES HEREOF AS GUARANTORS (“Guarantors”), KEYBANK NATIONAL ASSOCIATION (“KeyBank”), THE OTHER LENDERS WHICH ARE SIGNATORIES HERETO (KeyBank and the other lenders which are signatories hereto, collectively, the “Lenders”), and KEYBANK NATIONAL ASSOCIATION, a national banking association, as Agent (the “Agent” for the Lenders).

WITNESSETH:

WHEREAS, Borrower, Guarantors, Agent, and the Lenders entered into that certain Third Amended and Restated Credit Agreement dated as of December 17, 2014 (as the same may be varied, extended, supplemented, consolidated, replaced, increased, renewed, modified or amended from time to time, the “Credit Agreement”);

WHEREAS, Borrower and Guarantors have requested that the Agent and the Lenders make certain modifications to the Credit Agreement; and

WHEREAS, the Agent and the Lenders have consented to such modifications, subject to the execution and delivery of this Amendment.

NOW, THEREFORE, for and in consideration of the sum of TEN and NO/100 DOLLARS ($10.00), and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby covenant and agree as follows:

1.          Definitions. All terms used herein which are not otherwise defined herein shall have the meanings set forth in the Credit Agreement.

2.          Modification of the Credit Agreement. The Agent, the Lenders and the Borrower hereby amend the Credit Agreement as follows:

(a)          By inserting the following new definitions into §1.1 of the Credit Agreement:

"Carpathia Amsterdam. Collectively, (a) Luttenbergweg 4, 1100 AL Amsterdam, The Netherlands, (b) Postbox/Postbus 12478 1100 AL, Amsterdam, The Netherlands, and (c) Luttenbergweg 2-4 1101 EC Amsterdam Zuidoost, Luttenbergweg 2-4 1101 EC Amsterdam Zuidoost, The Netherlands.

"Carpathia Hong Kong. 1/F Kerry Warehouse, 3 Shing Yiu Street, Kwai Chung, Hong Kong."

"Carpathia International Data Centers. Collectively, Carpathia Amsterdam, Carpathia Hong Kong, Carpathia London, Carpathia Toronto and Carpathia Sydney.

"Carpathia London. 8 Buckingham Avenue, Slough Trading Estate, Slough, Berkshire SL1 4AX, England."

"Carpathia Sydney. Unit B 639 Gardners Rd, Mascot NSW 2020, Australia."

"Carpathia Toronto. 151 Front Street West, Suite 600, Toronto, ON M5J 2N1."

(b)          By deleting in its entirety §8.3(g) of the Credit Agreement, and inserting in lieu thereof the following:

“(g)          the acquisition of fee interests or long-term ground lease interests or interests under Leases by Parent Company or its Subsidiaries in (i) the Carpathia International Data Centers and businesses and investments incidental thereto, (ii) Real Estate which is utilized for income-producing Data Center Properties located in the continental United States or the District of Columbia and businesses and investments incidental thereto, and (iii) subject to the restrictions set forth in this §8.3, Land Assets to be developed for the purposes set forth in §8.3(g)(ii) and Development Properties to be used for the purposes set forth in §8.3(g)(ii);”

3.           References to Credit Agreement. All references in the Loan Documents to the Credit Agreement shall be deemed a reference to the Credit Agreement as modified and amended herein.

4.           Consent of Guarantors. By execution of this Amendment, Guarantors hereby expressly consent to the modifications and amendments relating to the Credit Agreement and the Loan Documents as set forth herein, and Borrower and Guarantors hereby acknowledge, represent and agree that the Loan Documents (including without limitation the Guaranty) remain in full force and effect and constitute the valid and legally binding obligation of Borrower and Guarantors, respectively, enforceable against such Persons in accordance with their respective terms, and that the Guaranty extends to and applies to the foregoing documents as modified and amended.

5.            Representations. Borrower and Guarantors represent and warrant to Agent and the Lenders as follows:

(a)          Authorization. The execution, delivery and performance of this Amendment and the transactions contemplated hereby (i) are within the authority of Borrower and Guarantors, (ii) have been duly authorized by all necessary proceedings on the part of such Persons, (iii) do not and will not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which any of such Persons is subject or any judgment, order, writ, injunction, license or permit applicable to such Persons, (iv) do not and will not conflict with or constitute a default (whether with the passage of time or the giving of notice, or both) under any provision of the partnership agreement or certificate, certificate of formation, operating agreement, articles of incorporation or other charter documents or bylaws of, or any mortgage, indenture, agreement, contract or other instrument binding upon, any of such Persons or any of its properties or to which any of such Persons is subject, and (v) do not and will not result in or require the imposition of any lien or other encumbrance on any of the properties, assets or rights of such Persons, other than the liens and encumbrances created by the Loan Documents.

(b)          Enforceability. The execution and delivery of this Amendment are valid and legally binding obligations of Borrower and Guarantors enforceable in accordance with the respective terms and provisions hereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and the effect of general principles of equity.

(c)          Approvals. The execution, delivery and performance of this Amendment and the transactions contemplated hereby do not require the approval or consent of or approval of any Person or the authorization, consent, approval of or any license or permit issued by, or any filing or registration with, or the giving of any notice to, any court, department, board, commission or other governmental agency or authority other than those already obtained.

(d)          Reaffirmation. Borrower and Guarantors reaffirm and restate as of the date hereof each and every representation and warranty made by the Borrower, the Guarantors and their respective Subsidiaries in the Loan Documents or otherwise made by or on behalf of such Persons in connection therewith except for representations or warranties that expressly relate to an earlier date.

6.           No Default. By execution hereof, the Borrower and Guarantors certify that the Borrower and Guarantors are and will be in compliance with all covenants under the Loan Documents after the execution and delivery of this Amendment, and that no Default or Event of Default has occurred and is continuing.

7.           Waiver of Claims. Borrower and Guarantors acknowledge, represent and agree that Borrower and Guarantors as of the date hereof have no defenses, setoffs, claims, counterclaims or causes of action of any kind or nature whatsoever with respect to the Loan Documents, the administration or funding of the Loans or with respect to any acts or omissions of Agent or any of the Lenders, or any past or present officers, agents or employees of Agent or any of the Lenders, and each of Borrower and Guarantors does hereby expressly waive, release and relinquish any and all such defenses, setoffs, claims, counterclaims and causes of action, if any.

8.           Ratification. Except as hereinabove set forth or in any other document previously executed or executed in connection herewith, all terms, covenants and provisions of the Credit Agreement, the Notes and the Guaranty remain unaltered and in full force and effect, and the parties hereto do hereby expressly ratify and confirm the Loan Documents as modified and amended herein. Nothing in this Amendment shall be deemed or construed to constitute, and there has not otherwise occurred, a novation, cancellation, satisfaction, release, extinguishment or substitution of the indebtedness evidenced by the Notes or the other obligations of Borrower and Guarantors under the Loan Documents (including without limitation the Guaranty).

9.           Counterparts. This Amendment may be executed in any number of counterparts which shall together constitute but one and the same agreement.

10.         Miscellaneous. This Amendment shall be construed and enforced in accordance with the laws of the State of Georgia (excluding the laws applicable to conflicts or choice of law). This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted successors, successors-in-title and assigns as provided in the Loan Documents.

11.         Effective Date. This Amendment shall be deemed effective and in full force and effect as of the date hereof upon the execution and delivery of this Amendment by Borrower, Guarantors, Agent and the Required Lenders.

IN WITNESS WHEREOF, the parties hereto have set their hands and affixed their seals as of the day and year first above written.

BORROWER:
QUALITYTECH, LP, a Delaware limited partnership
By:	QTS Realty Trust, Inc., a Maryland corporation, its general partner
	By:	/s/ William H. Schafer
	Name:	William H. Schafer
	Title:	CFO
		(SEAL)

GUARANTORS:
QTS REALTY TRUST, INC., a Maryland corporation
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO and Treasurer
	(SEAL)
QUALITY INVESTMENT PROPERTIES METRO, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY INVESTMENT PROPERTIES, SUWANEE, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)

QUALITY TECHNOLOGY SERVICES METRO II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES, SUWANEE II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QLD INVESTMENT PROPERTIES WICHITA TECHNOLOGY GROUP, L.L.C., a Kansas limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES WICHITA II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)

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QUALITY INVESTMENT PROPERTIES SACRAMENTO, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES SACRAMENTO II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY INVESTMENT PROPERTIES MIAMI, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES MIAMI II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)

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QUALITY INVESTMENT PROPERTIES SANTA CLARA, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES SANTA CLARA II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY INVESTMENT PROPERTIES IRVING, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES IRVING II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)

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QUALITY TECHNOLOGY SERVICES JERSEY CITY, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES, N.J., LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES, N.J. II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QTS INVESTMENT PROPERTIES PRINCETON, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)

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QUALITY TECHNOLOGY SERVICES PRINCETON II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QTS INVESTMENT PROPERTIES CHICAGO, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES CHICAGO II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY INVESTMENT PROPERTIES GATEWAY, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)

[Signatures Continued on Next Page]

QUALITY TECHNOLOGY SERVICES LENEXA, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY INVESTMENT PROPERTIES LENEXA, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES LENEXA II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY INVESTMENT PROPERTIES RICHMOND, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)

[Signatures Continued On Next Page]

QUALITY TECHNOLOGY SERVICES RICHMOND II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QTS CRITICAL FACILITIES MANAGEMENT, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QAE ACQUISITION COMPANY, LLC, a Georgia limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)

[Signatures Continued on Next Page]

QUALITY TECHNOLOGY SERVICES, NORTHEAST, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QTS FINANCE CORPORATION, a Delaware corporation
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO and Treasurer
	(SEAL)
QUALITY INVESTMENT PROPERTIES IRVING II, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)
QUALITY TECHNOLOGY SERVICES HOLDING, LLC, a Delaware limited liability company
By:	/s/ William H. Schafer
Name:	William H. Schafer
Title:	CFO
	(SEAL)

[Signatures Continued on Next Page]

AGENT AND LENDERS:
KEYBANK NATIONAL ASSOCIATION, individually and as Agent
By:	/s/ John Scott
Name:	John Scott
Title:	Senior Vice President
	(SEAL)

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BANK OF AMERICA, N.A., as Co-Syndication Agent
By:	/s/ Gary J. Katunas
Name:	Gary J. Katunas
Title:	Senior Vice President
	(SEAL)

[Signatures Continued on Next Page]

DEUTSCHE BANK AG NEW YORK BRANCH
By:	/s/ James Rolison
Name:	James Rolison
Title:	Managing Director
By:	/s/ Joanna Soliman
Name:	Joanna Soliman
Title:	Vice President
	(SEAL)

[Signatures Continued on Next Page]

REGIONS BANK, as Co-Syndication Agent
By:	/s/ Kerri L. Raines
Name:	Kerri L. Raines
Title:	Senior Vice President
	(SEAL)

[Signatures Continued on Next Page]

CITIZENS BANK, NATIONAL ASSOCIATION f/k/a RBS CITIZENS, N.A.
By:	/s/ Michelle Dawson
Name:	Michelle Dawson
Title:	Vice President
	(SEAL)

[Signatures Continued on Next Page]

GOLDMAN SACHS BANK USA
By:	/s/ Jamie Minieri
Name:	Jamie Minieri
Title:	Authorized Signatory
	(SEAL)

[Signatures Continued on Next Page]

JPMORGAN CHASE BANK, N.A.
By:	/s/ Brendan Poe
Name:	Brendan Poe
Title:	Executive Director
	(SEAL)

[Signatures Continued on Next Page]

PNC BANK, NATIONAL ASSOCIATION
By:	/s/ Brandon K. Fiddler
Name:	Brandon K. Fiddler
Title:	Vice President
	(SEAL)

[Signatures Continued on Next Page]

SUNTRUST BANK
By:	/s/ Francine Glandt
Name:	Francine Glandt
Title:	SVP, REIT Banking Group
	(SEAL)

[Signatures Continued on Next Page]

TORONTO DOMINION (TEXAS) LLC
By:	/s/ Marie Fernandes
Name:	Marie Fernandes
Title:	Authorized Signatory
	(SEAL)

[Signatures Continued on Next Page]

MORGAN STANLEY SENIOR FUNDING, INC.
By:	/s/ Christopher Winthrop
Name:	Christopher Winthrop
Title:	Vice President
	(SEAL)

[Signatures Continued on Next Page]

SYNOVUS BANK
By:	/s/ David W. Bowman
Name:	David W. Bowman
Title:	Director
	(SEAL)

[Signatures Continued on Next Page]

MORGAN STANLEY BANK, N.A.
By:	/s/ Christopher Winthrop
Name:	Christopher Winthrop
Title:	Vice President
	(SEAL)

[Signatures Continued on Next Page]

JEFFERIES GROUP LLC
By:	/s/ Mark Sahler
Name:	Mark Sahler
Title:	Managing Director
	(SEAL)

[Signatures Continued on Next Page]

STIFEL BANK & TRUST
By:	/s/ Suzanne Agin
Name:	Suzanne Agin
Title:	Vice President
	(SEAL)

[Signatures Continued on Next Page]

CROSSFIRST BANK
By:	/s/ Douglas G. McKay
Name:	Douglas G. McKay
Title:	Business Banker
	(SEAL)

[Signatures Continued on Next Page]

UMB BANK, N.A.
By:	/s/ Seth Lindsey
Name:	Seth Lindsey
Title:	VP/Commercial Banking
	(SEAL)

EX-10.5

Exhibit 10.5

SECOND AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT

THIS SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), dated as of June 26, 2015, by and among QUALITYTECH, LP, a Delaware limited partnership (“Borrower”), THE ENTITIES LISTED ON THE SIGNATURE PAGES HEREOF AS GUARANTORS (“Guarantors”), KEYBANK NATIONAL ASSOCIATION (“KeyBank”), THE OTHER LENDERS WHICH ARE SIGNATORIES HERETO (KeyBank and the other lenders which are signatories hereto, collectively, the “Lenders”), and KEYBANK NATIONAL ASSOCIATION, a national banking association, as Agent (the “Agent” for the Lenders).

WITNESSETH:

WHEREAS, Borrower, Guarantors, Agent, and the Lenders entered into that certain Third Amended and Restated Credit Agreement dated as of December 17, 2014, as amended by that certain First Amendment to Third Amended and Restated Credit Agreement dated as of June 5, 2015 (as the same may be varied, extended, supplemented, consolidated, replaced, increased, renewed, modified or amended from time to time, the “Credit Agreement”);

WHEREAS, Borrower and Guarantors have requested that the Agent and the Lenders make certain modifications to the Credit Agreement; and

WHEREAS, the Agent and the Lenders have consented to such modifications, subject to the execution and delivery of this Amendment.

NOW, THEREFORE, for and in consideration of the sum of TEN and NO/100 DOLLARS ($10.00), and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby covenant and agree as follows:

1.          Definitions. All terms used herein which are not otherwise defined herein shall have the meanings set forth in the Credit Agreement.

2.          Modification of the Credit Agreement. The Agent, the Lenders and the Borrower hereby amend the Credit Agreement by deleting the following from subparagraph (b) of the definition of Change of Control in §1.1 of the Credit Agreement: “(excluding, in the case of both clause (b)(ii) and (b)(iii) above, any individual whose initial nomination for, or assumption of office as, a member of the REIT Board occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors or trustees by any Person or group other than a solicitation for the election of one or more directors or trustees by or on behalf of the REIT Board)”.

3.          References to Credit Agreement. All references in the Loan Documents to the Credit Agreement shall be deemed a reference to the Credit Agreement as modified and amended herein.

4.          Consent of Guarantors. By execution of this Amendment, Guarantors hereby expressly consent to the modifications and amendments relating to the Credit Agreement and the Loan Documents as set forth herein, and Borrower and Guarantors hereby acknowledge, represent and agree that the Loan Documents (including without limitation the Guaranty) remain in full force and effect and constitute the valid and legally binding obligation of Borrower and Guarantors, respectively, enforceable against such Persons in accordance with their respective terms, and that the Guaranty extends to and applies to the foregoing documents as modified and amended.

5.           Representations. Borrower and Guarantors represent and warrant to Agent and the Lenders as follows:

(a)          Authorization. The execution, delivery and performance of this Amendment and the transactions contemplated hereby (i) are within the authority of Borrower and Guarantors, (ii) have been duly authorized by all necessary proceedings on the part of such Persons, (iii) do not and will not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which any of such Persons is subject or any judgment, order, writ, injunction, license or permit applicable to such Persons, (iv) do not and will not conflict with or constitute a default (whether with the passage of time or the giving of notice, or both) under any provision of the partnership agreement or certificate, certificate of formation, operating agreement, articles of incorporation or other charter documents or bylaws of, or any mortgage, indenture, agreement, contract or other instrument binding upon, any of such Persons or any of its properties or to which any of such Persons is subject, and (v) do not and will not result in or require the imposition of any lien or other encumbrance on any of the properties, assets or rights of such Persons, other than the liens and encumbrances created by the Loan Documents.

(b)          Enforceability. The execution and delivery of this Amendment are valid and legally binding obligations of Borrower and Guarantors enforceable in accordance with the respective terms and provisions hereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and the effect of general principles of equity.

(c)           Approvals. The execution, delivery and performance of this Amendment and the transactions contemplated hereby do not require the approval or consent of or approval of any Person or the authorization, consent, approval of or any license or permit issued by, or any filing or registration with, or the giving of any notice to, any court, department, board, commission or other governmental agency or authority other than those already obtained.

(d)          Reaffirmation. Borrower and Guarantors reaffirm and restate as of the date hereof each and every representation and warranty made by the Borrower, the Guarantors and their respective Subsidiaries in the Loan Documents or otherwise made by or on behalf of such Persons in connection therewith except for representations or warranties that expressly relate to an earlier date.

6.           No Default. By execution hereof, the Borrower and Guarantors certify that the Borrower and Guarantors are and will be in compliance with all covenants under the Loan Documents after the execution and delivery of this Amendment, and that no Default or Event of Default has occurred and is continuing.

7.           Waiver of Claims. Borrower and Guarantors acknowledge, represent and agree that Borrower and Guarantors as of the date hereof have no defenses, setoffs, claims, counterclaims or causes of action of any kind or nature whatsoever with respect to the Loan Documents, the administration or funding of the Loans or with respect to any acts or omissions of Agent or any of the Lenders, or any past or present officers, agents or employees of Agent or any of the Lenders, and each of Borrower and Guarantors does hereby expressly waive, release and relinquish any and all such defenses, setoffs, claims, counterclaims and causes of action, if any.

2

8.          Ratification. Except as hereinabove set forth or in any other document previously executed or executed in connection herewith, all terms, covenants and provisions of the Credit Agreement, the Notes and the Guaranty remain unaltered and in full force and effect, and the parties hereto do hereby expressly ratify and confirm the Loan Documents as modified and amended herein. Nothing in this Amendment shall be deemed or construed to constitute, and there has not otherwise occurred, a novation, cancellation, satisfaction, release, extinguishment or substitution of the indebtedness evidenced by the Notes or the other obligations of Borrower and Guarantors under the Loan Documents (including without limitation the Guaranty).

9.          Counterparts. This Amendment may be executed in any number of counterparts which shall together constitute but one and the same agreement.

10.        Miscellaneous. This Amendment shall be construed and enforced in accordance with the laws of the State of Georgia (excluding the laws applicable to conflicts or choice of law). This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted successors, successors-in-title and assigns as provided in the Loan Documents.

11.        Effective Date. This Amendment shall be deemed effective and in full force and effect as of the date hereof upon the execution and delivery of this Amendment by Borrower, Guarantors, Agent and the Required Lenders.

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IN WITNESS WHEREOF, the parties hereto have set their hands and affixed their seals as of the day and year first above written.

BORROWER:
QUALITYTECH, LP, a Delaware limited partnership
By:	QTS Realty Trust, Inc., a Maryland corporation, its general partner
	By:	/s/ Shirley E. Goza
	Name:	Shirley E. Goza
	Title:	General Counsel & Secretary
		(SEAL)

GUARANTORS:
QTS REALTY TRUST, INC., a Maryland corporation
By:	/s/ Shirley E. Goza
Name:	Shirley E. Goza
Title:	General Counsel & Secretary
	(SEAL)

[Signatures Continued on Next Page]

QUALITY INVESTMENT PROPERTIES METRO, LLC
QUALITY INVESTMENT PROPERTIES, SUWANEE, LLC
QUALITY TECHNOLOGY SERVICES METRO II, LLC
QUALITY TECHNOLOGY SERVICES, SUWANEE II, LLC
QUALITY TECHNOLOGY SERVICES WICHITA II, LLC
QUALITY INVESTMENT PROPERTIES SACRAMENTO, LLC
QUALITY TECHNOLOGY SERVICES SACRAMENTO II, LLC
QUALITY INVESTMENT PROPERTIES MIAMI, LLC
QUALITY TECHNOLOGY SERVICES MIAMI II, LLC
QUALITY INVESTMENT PROPERTIES SANTA CLARA, LLC
QUALITY TECHNOLOGY SERVICES SANTA CLARA II, LLC
QUALITY INVESTMENT PROPERTIES IRVING, LLC
QUALITY TECHNOLOGY SERVICES IRVING II, LLC
QUALITY TECHNOLOGY SERVICES JERSEY CITY, LLC
QUALITY TECHNOLOGY SERVICES, N.J., LLC
QUALITY TECHNOLOGY SERVICES, N.J. II, LLC
QTS INVESTMENT PROPERTIES PRINCETON, LLC
QUALITY TECHNOLOGY SERVICES PRINCETON II, LLC
QTS INVESTMENT PROPERTIES CHICAGO, LLC
QUALITY TECHNOLOGY SERVICES CHICAGO II, LLC
QUALITY INVESTMENT PROPERTIES GATEWAY, LLC
QUALITY TECHNOLOGY SERVICES LENEXA, LLC
QUALITY INVESTMENT PROPERTIES LENEXA, LLC
QUALITY TECHNOLOGY SERVICES LENEXA II, LLC
QUALITY INVESTMENT PROPERTIES RICHMOND, LLC
QUALITY TECHNOLOGY SERVICES RICHMOND II, LLC
QTS CRITICAL FACILITIES MANAGEMENT, LLC
QUALITY TECHNOLOGY SERVICES, LLC
QUALITY TECHNOLOGY SERVICES, NORTHEAST, LLC
QUALITY INVESTMENT PROPERTIES IRVING II, LLC
QUALITY TECHNOLOGY SERVICES HOLDING, LLC,
each a Delaware limited liability company
By:	/s/ Shirley E. Goza
Name:	Shirley E. Goza
Title:	Vice President, General Counsel & Secretary
	(SEAL)

[Signatures Continued on Next Page]

QLD INVESTMENT PROPERTIES WICHITA TECHNOLOGY GROUP, L.L.C., a Kansas limited liability company
By:	/s/ Shirley E. Goza
Name:	Shirley E. Goza
Title:	Vice President, General Counsel & Secretary
	(SEAL)
QAE ACQUISITION COMPANY, LLC, a Georgia limited liability company
By:	/s/ Shirley E. Goza
Name:	Shirley E. Goza
Title:	Vice President, General Counsel & Secretary
	(SEAL)
QTS FINANCE CORPORATION, a Delaware corporation
By:	/s/ Shirley E. Goza
Name:	Shirley E. Goza
Title:	General Counsel & Secretary
	(SEAL)

[Signatures Continued on Next Page]

AGENT AND LENDERS:
KEYBANK NATIONAL ASSOCIATION, individually and as Agent
By:	/s/ Timothy Sylvain
Name:	Timothy Sylvain
Title:	Vice President
	(SEAL)

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BANK OF AMERICA, N.A., as Co-Syndication Agent
By:	/s/ Gary J. Katunas
Name:	Gary J. Katunas
Title:	Senior Vice President
	(SEAL)

[Signatures Continued on Next Page]

DEUTSCHE BANK AG NEW YORK BRANCH
By:	/s/ James Rolison
Name:	James Rolison
Title:	Managing Director
By:	/s/ J. T. Johnston Coe
Name:	J. T. Johnston Coe
Title:	Managing Director
	(SEAL)

[Signatures Continued on Next Page]

REGIONS BANK, as Co-Syndication Agent
By:	/s/ Kerri L. Raines
Name:	Kerri L. Raines
Title:	Senior Vice President
	(SEAL)

[Signatures Continued on Next Page]

CITIZENS BANK, NATIONAL ASSOCIATION f/k/a RBS CITIZENS, N.A.
By:	/s/ Michelle Dawson
Name:	Michelle Dawson
Title:	Vice President
	(SEAL)

[Signatures Continued on Next Page]

GOLDMAN SACHS BANK USA
By:	/s/ Jamie Minieri
Name:	Jamie Minieri
Title:	Authorized Signatory
	(SEAL)

[Signatures Continued on Next Page]

PNC BANK, NATIONAL ASSOCIATION
By:	/s/ Andrew Fraser
Name:	Andrew Fraser
Title:	Vice President
	(SEAL)

[Signatures Continued on Next Page]

MORGAN STANLEY SENIOR FUNDING, INC.
By:	/s/ Emanuel Ma
Name:	Emanuel Ma
Title:	Vice President
	(SEAL)

[Signatures Continued on Next Page]

JPMORGAN CHASE BANK, N.A.
By:	/s/ Brendan Poe
Name:	Brendan Poe
Title:	Executive Director
	(SEAL)

[Signatures Continued on Next Page]

SUNTRUST BANK
By:	/s/ Francine Glandt
Name:	Francine Glandt
Title:	SVP, REIT Banking Group
	(SEAL)

[Signatures Continued on Next Page]

TORONTO DOMINION (TEXAS) LLC
By:	/s/ Savo Bozic
Name:	Savo Bozic
Title:	Authorized Signatory
	(SEAL)

[Signatures Continued on Next Page]

SYNOVUS BANK
By:	/s/ David W. Bowman
Name:	David W. Bowman
Title:	Director
	(SEAL)

[Signatures Continued on Next Page]

STIFEL BANK & TRUST
By:	/s/ Suzanne Agin
Name:	Suzanne Agin
Title:	Vice President
	(SEAL)

[Signatures Continued on Next Page]

MORGAN STANLEY BANK, N.A.
By:	/s/ Emanuel Ma
Name:	Emanuel Ma
Title:	Authorized Signatory
	(SEAL)

[Signatures Continued on Next Page]

JEFFERIES GROUP LLC
By:	/s/ Mark Sahler
Name:	Mark Sahler
Title:	Managing Director
	(SEAL)

[Signatures Continued on Next Page]

COBANK, ACB
By:	/s/ Kevin A. Oliver
Name:	Kevin A. Oliver
Title:	Vice President
	(SEAL)

[Signatures Continued on Next Page]

CROSSFIRST BANK
By:	/s/ Douglas McKay
Name:	Douglas McKay
Title:	Business Banker
	(SEAL)

EX-10.8

Exhibit 10.8

EMPLOYMENT AGREEMENT

(Peter Weber)

This EMPLOYMENT AGREEMENT (the “Agreement”) is made as of May 6, 2015 (“Effective Date”), by and among QTS Realty Trust, Inc., a Maryland Corporation (the “Company”), QualityTech, LP, a Delaware limited partnership (the “OP”), Quality Technology Services Holding, LLC, a Delaware limited liability company (the “Purchaser”), and Quality Technology Services, LLC, a Delaware limited liability company (“QTS”), and Peter Weber, an individual (“Executive”), with respect to the following facts and circumstances:

RECITALS

WHEREAS, Executive and Carpathia Hosting, Inc., a Delaware corporation have entered into an Employment Agreement effective as of May 30, 2008 (the “Original Agreement”);

WHEREAS, the Purchaser, Carpathia Holdings, LLC, a Delaware limited liability company (“Seller”), and Carpathia Acquisition, Inc., a Delaware corporation, have entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) dated May 6, 2015, pursuant to which, at the Closing, as such term is defined in the Stock Purchase Agreement, Seller shall sell to Purchaser and Purchaser shall purchase from Seller, all of the outstanding shares of capital stock of Carpathia Acquisition, Inc.;

WHEREAS, Executive’s execution of this Agreement is a material inducement of, and is a condition precedent for, the Purchaser to enter into the Stock Purchase Agreement;

WHEREAS, contingent upon the consummation of the Closing, the Company and the OP desire for Executive to be appointed Chief Product Officer of QTS, and Executive desires to accept such employment and appointment, on the terms set forth below; and

WHEREAS, the Company, OP, QTS and the Executive desire to provide for the continued employment of the Executive and to supersede the Original Agreement with this Agreement upon the consummation of the Closing.

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE 1
EMPLOYMENT, TERM AND DUTIES

1.1           Employment. Effective as of the consummation of the Closing (the “Effective Date”) QTS and/or the Company shall employ Executive as the Chief Product Officer of QTS, upon the terms and conditions set forth in the Agreement; provided that in the event the Closing does not occur or the Stock Purchase Agreement is otherwise terminated upon the terms and subject to the conditions contained therein, this Agreement shall thereupon become null and void and the Original Agreement will continue in accordance with its terms. Executive shall report directly to the Chief Executive Officer (“CEO”) of the Company, unless otherwise determined by the CEO (but subject to Section 4.1.3(a)). Executive's principal place of employment shall be the principal offices of QTS currently located in Dulles, Virginia.

1.2           Term. QTS and/or the Company shall employ Executive, and Executive shall serve as the Chief Product Officer of QTS commencing upon the Effective Date, and continuing thereafter for a two (2) year term (the “Term”), unless earlier terminated under Article 4; provided, that the Term shall automatically renew for additional one (1)-year periods unless QTS (and/or the Company) or Executive gives notice of non-renewal at least thirty (30) days prior to expiration of the Term (as it may have been extended by any renewal period).

1.3           Duties.

(a)          Executive shall perform all of the duties and obligations consistent with the position of Chief Product Officer and consistent with the Bylaws or other governing documents of QTS and/or the Company as in effect from time to time, subject to the lawful and good faith direction of the CEO of the Company,and shall perform such other duties of an executive, managerial or administrative nature as shall be specified and designated from time to time by the CEO (including the performance of services for any subsidiary or affiliate of the Company without any additional compensation) consistent with the position of Chief Product Officer. Executive shall perform the duties contemplated herein faithfully and diligently.

(b)          Executive acknowledges and agrees that by executing this Agreement he waives any right to claim a termination for “Good Reason” under the terms of the Original Agreement by virtue of the position to which he is being appointed as of immediately following the Closing. Executive further acknowledges and agrees that effective as of the Closing this Agreement will completely supersede and replace the Original Agreement.

(c)          Executive shall devote substantially all of his business time and effort to the performance of Executive’s duties hereunder and to the business affairs of the OP, the Company and QTS; provided, that in no event shall this provision prohibit Executive from (i) performing social, civic, charitable and religious activities, (ii) managing personal investments and affairs (which includes Massachusetts Burger Enterprises LLC), (iii) participating in educational or professional associations, or (iv) any other activities approved by the CEO, so long as the activities set forth in clauses (i) through (iv) above do not materially and adversely interfere with Executive’s duties and obligations hereunder or to the business affairs of the Company and/or QTS. Executive also may serve on one or more boards of directors of another company (and committees thereof) upon approval of the CEO prior to commencing service on such other company board.

ARTICLE 2
COMPENSATION

Subject to the provisions of this Agreement, QTS or the Company shall pay and provide the following compensation and other benefits to Executive during each of the years of the Term as compensation for services hereunder:

2.1           Salary. In consideration for Executive’s services hereunder, QTS or the Company shall pay Executive an annual salary at the rate of $350,000 per year (“Base Pay”), payable in accordance with QTS’ regular payroll schedule from time to time (less any deductions required for Social Security, state, federal and local withholding taxes, and any other authorized or mandated similar withholdings). The Base Pay shall be reviewed by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company (the “Board”), no less frequently than annually.

2.2           Bonus. Executive will have the opportunity to earn a bonus to be paid in accordance with QTS’ regular bonus payment schedule. Executive’s bonus opportunity under the bonus plan in effect for calendar year 2015 as of immediately prior to the Closing shall be deemed satisfied at the target level. Following the Closing and for the remainder of 2015, Executive is eligible for a target bonus equal to 100% of his Base Pay based upon his performance, the performance of the Company and the attainment of integration objectives (“Target Bonus”). Both components of the bonus described in this Section 2.2 will be prorated based on the number of days the Executive worked pre-Closing and post-Closing and paid in 2016 in accordance with QTS’ regular bonus payment schedule and will be paid in March 2016.

2.3           Equity Award: Executive will be entitled to participate in the Company’s 2013 Equity Incentive Plan (or successor plan) (“Equity Plan”) in accordance with its terms and conditions as may be in effect from time to time. Executive will be awarded Restricted Stock Units with a value of $350,000 (based on the Closing price of a share of the Company on the date of grant) within ten (10) days of the Effective Date. The Restricted Stock Units will vest ratably over four years, with 25% vesting each year on the anniversary of the grant date, and will become 100% vested upon the occurrence of a Change in Control as defined in the Equity Plan. In addition, Executive will be entitled to receive equity awards of Options or Restricted Stock with the Company’s regular issuance schedule (“Equity Awards”) in accordance with QTS’ policies and as deemed appropriate by the Compensation Committee (for fiscal year 2016, the Equity Award will have a target value of $350,000). Executive will be eligible for an additional equity award pursuant to the Integration Bonus Plan as set forth in the Offer Letter between QTS and Executive, dated May 5, 2015, attached hereto as Attachment A and which is incorporated herein by reference.

ARTICLE 3
EXECUTIVE BENEFITS

3.1           Vacation. Executive shall be entitled to five (5) weeks paid vacation each calendar year in accordance with the general policies of QTS or the Company.

3.2           Employee Benefits. Executive shall receive group insurance, retirement plan benefits and other benefits pursuant to the terms of employee benefit plans and programs sponsored and maintained by the Company, QTS or its subsidiaries. Executive shall receive all other such fringe benefits as QTS and/or the Company may offer to other senior executives under personnel policies in effect from time to time.

3.3           Reimbursement for Expenses. Executive shall be reimbursed for all documented reasonable expenses incurred by Executive in the performance of his duties or otherwise in furtherance of the business of QTS and/or the Company in accordance with the reimbursement policies in effect from time to time. Any reimbursement under this Section 3.3 that is taxable to Executive shall be made by December 31 of the calendar year following the calendar year in which Executive incurred the expense.

ARTICLE 4
TERMINATION

4.1           Grounds for Termination.

4.1.1           Death or Disability. Executive’s employment shall terminate immediately in the event of Executive’s death or Disability. “Disability” has the meaning set forth in the long-term disability plan applicable to Executive.

4.1.2           Cause. QTS and the Company shall have the right to terminate Executive’s employment by giving written notice of such termination to Executive upon the occurrence of any one or more of the following events (which, for purposes of this Agreement, shall constitute “Cause”):

(a) Executive’s conviction of, or pleading guilty or nolo contendere to, a crime that constitutes a felony or any lesser criminal offense involving dishonesty or moral turpitude;

(b) any commission by Executive of an act of dishonesty, theft, fraud or embezzlement;

(c) any willful act by Executive that has a significant adverse effect on the reputation of QTS, the Company, or any of their affiliates;

(d) the substantial failure or refusal by Executive to perform the duties of Chief Product Officer. It shall be a condition precedent to the Company’s right to terminate employment for Cause pursuant to this subsection (d) that (i) the Company shall have first given Executive written notice stating with reasonable specificity the act(s) on which such termination is premised; (b) if such act(s) is susceptible of cure or remedy, Executive shall have sixty (60) days after receipt of such notice to cure any deficiencies, or;

(e) Executive’s material violation of the material written rules, regulations, procedures, or policies relating to the conduct of employees, directors or officers of the Company.

For purposes of paragraph (c), no act or omission by Executive shall be “willful” if conducted in good faith and with a reasonable belief that such act or omission was in the best interests of the Company.

4.1.3           Good Reason. Executive may terminate his employment under this Agreement by giving written notice to the Company upon the occurrence of any one or more of the following events (which, for purposes of this Agreement, shall constitute “Good Reason”):

(a) A material diminution in Executive’s authority, duties or responsibilities (including reporting responsibilities), or any significant adverse change in Executive’s title as Chief Product Officer of QTS, or;

(b) A material diminution in Executive’s Base Pay, as in effect from time to time, or;

(c) Executive’s place of employment is moved more than fifty (50) miles from Dulles, Virginia;

(d) A material breach by the Company or the OP of any term or provision of this Agreement, or;

(e) The failure of a successor to the assets or business of the Company or the OP to assume the obligations of the Company and the OP under the Agreement.

It shall be a condition precedent to Executive’s right to terminate his employment for Good Reason that (a) he shall have first given the Company written notice stating with reasonable specificity the act(s) on which such termination is premised within forty-five (45) days after Executive becomes aware of such act(s), (b) if such act(s) is susceptible of cure or remedy, it has not been cured or remedied within thirty (30) days after receipt of such notice, and (c) Executive has terminated his employment within forty-five (45) days after so notifying the Company.

4.1.4           Any Other Reason. Notwithstanding anything to the contrary herein, the Company shall have the right to terminate Executive’s employment under this Agreement at any time without Cause by giving written notice of such termination to Executive, and Executive shall have the right to terminate Executive’s employment under this Agreement at any time without Good Reason by giving written notice of such termination to the Company. Any notice by Executive hereunder shall be given at least sixty (60) days in advance of such termination.

4.2           Termination Date. Except as provided in Section 4.1.1 with respect to Executive’s death or Disability, any termination under Section 4.1 shall be effective upon receipt of notice by Executive or the Company, as the case may be, of such termination or upon such other later date as may be provided herein or specified by the Company or Executive in the notice (the “Termination Date”).

4.3           Effect of Termination.

4.3.1           Termination with Cause or without Good Reason. In the event that Executive’s employment is terminated by the Company with Cause or by Executive without Good Reason, the Company shall pay all Accrued Obligations to Executive in a lump sum in cash within twenty (20) days after the Termination Date or on such earlier date required by applicable law. “Accrued Obligations” means the sum of (a) Executive’s Base Pay hereunder through the Termination Date to the extent not theretofore paid, (b) the amount of any accrued but unused vacation pay, and (c) any business expense reimbursements incurred by Executive as of the Termination Date and submitted for reimbursement, in each case, consistent with the policy for such reimbursements, within ten (10) days following the Termination Date.

4.3.2           Termination without Cause, with Good Reason or due to Company Non-Renewal after the initial two-year Term. In the event that Executive’s employment is terminated by the Company without Cause, by Executive for Good Reason or due to Company Non-Renewal after the initial two-year Term:

(a) The Company shall pay all Accrued Obligations to Executive in a lump sum in cash within twenty (20) days after the Termination Date or on such earlier date required by law;

(b) The Company shall pay to Executive, in a lump sum in cash one (1) year of Executive’s Base Pay plus the Target Bonus as in effect on the Termination Date;

(c) The Company shall pay to Executive, in a lump sum in cash all bonus amounts earned but not yet paid for the year prior to the year in which the Termination Date occurs;

(d) If Executive elects COBRA coverage, the Company shall reimburse Executive for his premiums for such coverage for a period of twelve (12) months; and

(e) The Company shall provide to Executive, at the Company’s expense, with outplacement services and support, the scope and provider of which will be selected by Executive, for a period of one (1) year follow the Termination Date.

The Company’s delivery of any notice under Section 1.2 of this Agreement that the Agreement will not be renewed and any subsequent termination of Executive’s employment at the expiration of such Term of the Agreement shall not be considered a termination without Cause except in the case of non-renewal after the initial two-year Term, and Executive shall not be entitled to any payments or benefits under Section 4.3.2 under such circumstance.

4.3.3           Termination Due to Death or Disability. In the event that Executive’s employment is terminated due to Executive’s death or Disability the Company shall pay all Accrued Obligations to Executive or Executive’s estate in a lump sum in cash within thirty (30) business days after the Termination Date.

4.3.4           Waiver and Release Agreement. In consideration of the severance payments and other benefits described in clauses (b), (c), and (e) of Section 4.3.2, to which severance payments and benefits Executive would not otherwise be entitled, and as a precondition to Executive becoming entitled to such severance payments and other benefits under this Agreement, Executive agrees to execute and deliver to the Company a waiver and general release of claims (the “Release Agreement”) in favor of the Company and the OP, their respective predecessors and successors and affiliates, and all of the respective current or former directors, officers, employees, shareholders, partners, members, agents or representatives of any of the foregoing, in a form reasonably satisfactory to the Company, that has become effective in accordance with its terms within sixty (60) business days after the applicable Termination Date. If Executive fails to execute and deliver the Release Agreement and if such Release Agreement fails to become irrevocable within sixty (60) business days after the applicable Termination Date, or if Executive revokes such Release as provided therein, the Company shall have no obligation to provide any of the severance payments and other benefits described in clauses (b), (c), or (e) of Section 4.3.2. The severance payments and other benefits described in clauses (b), (c), and (e) of Section 4.3.2 shall be made as soon as practicable after the Release Agreement becomes irrevocable, provided that if such severance payments and other benefits could be paid in either of two calendar years depending on the date such release is delivered to the Company, such payments shall be made on the later of January 15, or the date such release is delivered and becomes non-revocable, of such later calendar year.

4.4           Required Delay For Certain Deferred Compensation and Section 409A. In the event that any compensation with respect to Executive’s termination is “deferred compensation” within the meaning of Section 409A of the Code and the regulations promulgated thereunder (“Section 409A”), the shares of the Company, the OP or any affiliate is publicly traded on an established securities market or otherwise, and Executive is determined to be a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, payment of such compensation shall be delayed as required by Section 409A. Such delay shall last six (6) months from the date of Executive’s termination, except in the event of Executive’s death. Within twenty (20) business days following the end of such six (6)-month period, or, if earlier, Executive’s death, the Company shall make a catch-up payment to Executive equal to the total amount of such payments that would have been made during the six (6)-month period but for this Section 4.4. Such catch-up payment shall bear simple interest at the prime rate of interest as published by the Wall Street Journal’s bank survey as of the first day of the six (6)-month period, which such interest shall be paid with the catch-up payment. Wherever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A.

4.5           Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company, QTS, the OP or its subsidiaries and for which Executive may qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under any other contract or agreement with the Company, QTS, the OP or its subsidiaries at or subsequent to the termination date, which shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement.

ARTICLE 5
RESTRICTIVE COVENANTS

5.1           Confidential Information.

5.1.1           Obligation to Maintain Confidentiality. Executive acknowledges that, by reason of Executive’s employment by the Company, Executive will have access to confidential information (collectively, “Confidential Information”) of the Company, the OP and their respective subsidiaries (collectively, the “Quality Companies”). Executive acknowledges that such Confidential Information is a valuable and unique asset of the Quality Companies and covenants that, both during and after the Term, Executive shall not disclose any Confidential Information to any person, partnership, corporation, limited liability company, or any other entity (“Person”) (except as Executive’s duties as a manager, or employee of the Company and the OP require) without the prior written authorization of the Board. The obligation of confidentiality imposed by this Section 5.1 shall not apply to Confidential Information that otherwise becomes known to the public through no act of Executive in breach of this Agreement or which is required to be disclosed by court order, applicable law or regulatory requirements, nor shall it apply to Executive’s disclosure of Confidential Information to his attorneys and advisors in connection with a dispute between Executive and a Quality Company.

5.1.2           Non-Competition. Executive agrees that for the period during which Executive is employed by, or serving as an officer of the Company, and for three (3) years thereafter, Executive will not, (a) directly or indirectly, engage in any business involving the development, construction, acquisition, ownership or operation of data center properties, colocation facilities, cloud, and/or the provision of managed services, whether such business is conducted by Executive individually or as a principal, partner, member, stockholder, joint venturer, director, trustee, officer, employee, consultant, advisor or independent contractor of any Person (as defined below) or (b) own any interests in any data center facilities, colocation facilities or managed service providers, in each case in the United States of America; provided, however, that this Section 1 shall not be deemed to prohibit the direct or indirect ownership by Executive of up to five (5) percent of the outstanding equity interests of any public company. For purposes of this Agreement, “Person” means any individual, firm, corporation, partnership, company, limited liability company, trust, joint venture, association or other entity.

5.1.3           Non-Solicitation. Executive agrees that for the period during which Executive is employed by, or serving as an officer of Company, and for three (3) years thereafter, Executive will not directly or indirectly (a) solicit, induce or encourage any employee (other than clerical employees) or independent contractor to terminate their employment with Company or to cease rendering services to Company, and Executive shall not initiate discussions with any such Person for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other Person, or (b) solicit, recruit, induce for employment or hire (on behalf of Executive or any other person or entity) any employee (other than clerical employees) or independent contractor who has left the employment or other service of Company (or any predecessor thereof) within one year of the termination of such employee’s or independent contractor’s employment or other service with Company or (c) solicit any of Company’s tenants to lease, purchase or otherwise occupy data center space in the United States of America or encourage any of Company’s tenants to reduce its patronage of Company.

5.1.4           Company Property. All records, designs, business plans, financial statements, customer lists, manuals, memoranda, lists, research and development plans, Intellectual Property and other property delivered to or compiled by Executive by or on behalf of any Quality Company or its providers, clients or customers that pertain to the business of any Quality Company, whether in tangible or electronic or digital form, shall be and remain the property of such Quality Company and be subject at all times to its discretion and control. Likewise, all correspondence, reports, records, charts, advertising materials and other similar data, whether in tangible or electronic or digital form, pertaining to the business, activities, research and development, Intellectual Property or future plans of a Quality Company that is collected by Executive shall be delivered promptly to such Quality Company without request by it upon termination of Executive’s employment for any reason.

5.1.5           “Intellectual Property” shall mean patents, copyrights, trademarks, trade dress, trade secrets, other such rights, and any applications therefor.

5.2           Inventions. Executive is hereby retained in a capacity such that Executive’s responsibilities may include the making of technical and managerial contributions of value to the Quality Companies. Executive hereby assigns to the applicable Quality Company all rights, title and interest in such contributions and inventions, and Intellectual Property therein, made or conceived by Executive alone or jointly with others during the Term that relate to the business of such Quality Company. This assignment shall include (a) the right to file and prosecute patent applications on such inventions in any and all countries, (b) the patent applications filed and patents issuing thereon, and (c) the right to obtain copyright, trademark or trade name protection for any such work product. Executive shall promptly and fully disclose all such contributions and inventions to the Company and the OP and assist the Company and the OP or any other Quality Company, as the case may be, in obtaining and protecting the Intellectual Property rights therein, in any and all countries; provided, however, that said contributions and inventions shall be the property of and are hereby assigned to the applicable Quality Company, whether or not patented or registered for copyright, trademark or trade name protection, as the case may be. Executive agrees to take any further steps and execute any further documentation necessary to assign rights in such contributions, inventions and Intellectual Property therein to the applicable Quality Company. Notwithstanding the foregoing, no Quality Company shall have any right, title or interest in any work product or copyrightable work developed outside of work hours and without the use of any Quality Company’s resources that does not relate to the business of any Quality Company and does not result from any work performed by Executive for any Quality Company.

5.3           Non-disparagement. Executive agrees that he will not talk about or otherwise communicate to any third parties in a malicious, disparaging, or defamatory manner regarding the Company, the OP or any of their affiliates, owners or their past or present employees, directors, officers or other representatives and will not make or authorize to be made any written or oral statement that may disparage or damage the reputation of the Company, the OP or any of their affiliates, owners or their past or present employees, directors, officers or other representatives or their past or present employees, officers or other representatives.

The Company and the OP agree that they will not talk about or otherwise communicate to any third parties in a malicious, disparaging, or defamatory manner regarding Executive and will not make or authorize to be made any written or oral statement that may disparage or damage the reputation of Executive. For purposes of this non-disparagement provision, the Company and the OP are defined to mean the Company’s executive team and the Board.

5.4           Cooperation. At all times during Executive’s employment and after the date of Executive’s termination of employment, Executive agrees to reasonably cooperate (if occurring after termination of employment, to the extent not interfering with Executive’s other business endeavors or personal commitments) (i) with the Company and the OP in the defense of any legal matter involving any matter that arose during Executive’s employment in the business of the Company and the OP, and (ii) with all government authorities on matters pertaining to any investigation, litigation or administrative proceeding pertaining to the business of the Company and the OP. The Company or the OP, as applicable, will reimburse Executive for reasonable travel and out of pocket expenses incurred by Executive in providing such cooperation.

5.5           Reasonableness of Restrictions; Blue-Penciling. Executive has carefully read and considered the provisions of Section 5 of this Agreement, and, having done so, agrees that the restrictions set forth in such paragraphs are fair and reasonable and reasonably required for the protection of the interests of the Company and the OP and their businesses. If any of the provisions of Section 5 shall be held to be invalid or unenforceable, the remaining provisions thereof shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable parts had not been included therein. If any provision of Section 5 relating to time periods or areas of restriction shall be declared by a court of competent jurisdiction to exceed the maximum time period or areas such court deems reasonable and enforceable, said time periods and/or areas of restriction shall be deemed to become and thereafter be the maximum time period and/or areas which such court deems reasonable and enforceable.

5.6           Breach of Restrictive Covenants. The parties agree that a breach or violation of any provision of this Article 5 will result in immediate and irreparable injury and harm to the Company, the OP and their business, and that the Company, the OP and their affiliates shall have, in addition to any and all remedies of law and other consequences under this Agreement, the right to seek an injunction, specific performance or other equitable relief to prevent the violation of the obligations hereunder, including without limitation, to address any threatened breach or violation, and to enjoin and restrain Executive and each and every person, firm, company or corporation concerned therewith, from the violation or continuance of such violation or breach. In addition thereto, Executive shall be responsible for all damages, including reasonable attorneys’ fees, sustained by the Company, the OP and their affiliates by reason of such violation.

ARTICLE 6
GOVERNING LAW

6.1           Governing Law. THER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF VIRGINIA APPLICABLE TO AGREEMENTS MADE AND TO BE WHOLLY PERFORMED WITHIN THAT STATE, WITHOUT REGARD TO ITS CONFLICT OF LAWS PROVISIONS OR THE CONFLICT OF LAWS PROVISIONS OF ANY OTHER JURISDICTION WHICH WOULD CAUSE THE APPLICATION OF ANY LAW OTHER THAN THAT OF THE STATE OF VIRGINIA.

ARTICLE 7
MISCELLANEOUS

7.1           Amendments. The provisions of this Agreement may not be waived, altered, amended or repealed in whole or in part except by the signed written consent of the parties sought to be bound by such waiver, alteration, amendment or repeal.

7.2           Entire Agreement. This Agreement, together with the Offer Letter, constitute the total and complete agreement of the parties with respect to the subject matter hereof and thereof and supersedes all prior and contemporaneous understandings and agreements heretofore made, and there are no other representations, understandings or agreements.

7.3           Counterparts. This Agreement may be executed in one of more counterparts, each of which shall be deemed and original, but all of which shall together constitute one and the same instrument.

7.4           Severability. Each term, covenant, condition or provision of this Agreement shall be viewed as separate and distinct, and in the event that any such term, covenant, condition or provision shall be deemed by an arbitrator or a court of competent jurisdiction to be invalid or unenforceable, the court or arbitrator finding such invalidity or unenforceability shall modify or reform this Agreement to give as much effect as possible to the terms and provisions of this Agreement. Any term or provision which cannot be so modified or reformed shall be deleted and the remaining terms and provisions shall continue in full force and effect.

7.5           Waiver or Delay. The failure or delay on the part of the Company or Executive to exercise any right or remedy, power or privilege hereunder shall not operate as a waiver thereof. A waiver, to be effective, must be in writing and signed by the party making the waiver. A written waiver of default shall not operate as a waiver of any other default or of the same type of default on a future occasion.

7.6           Successors and Assigns. This Agreement shall be binding on and shall inure to the benefit of the parties to it and their respective heirs, legal representatives, successors and assigns, except as otherwise provided herein. Neither this Agreement nor any of the rights, benefits, obligations or duties hereunder may be assigned or transferred by Executive except by operation of law. The Company and the OP may assign this Agreement to any affiliate or successor. The Company and the OP shall require any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company and the OP to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

7.7           Necessary Acts. Each party to this Agreement shall perform any further acts and execute and deliver any additional agreements, assignments or documents that may be reasonably necessary to carry out the provisions or to effectuate the purpose of this Agreement.

7.8           Notices. All notices, requests, demands and other communications to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served on the party to whom notice is to be given, or 48 hours after mailing, if mailed to the party to whom notice is to be given by certified or registered mail, return receipt requested, postage prepaid, and properly addressed to the party at his address set forth as follows or any other address that any party may designate by written notice to the other parties:

To Executive:	Peter Weber
	Address on file with the Company
To the Company or the OP:	c/o QTS Realty Trust, Inc.
	12851 Foster Street, Suite 205
	Overland Park,Kansas  66213
	Attention: General Counsel
	Facsimile: (913) 814-7766

7.9           Headings and Captions. The headings and captions used herein are solely for the purpose of reference only and are not to be considered as construing or interpreting the provisions of this Agreement.

7.10         Construction. All terms and definitions contained herein shall be construed in such a manner that shall give effect to the fullest extent possible to the express or implied intent of the parties hereby.

7.11         Counsel. Executive has been advised by the Company and the OP that he should consider seeking the advice of counsel in connection with the execution of this Agreement and the other agreements contemplated hereby and Executive has had an opportunity to do so. Executive has read and understands this Agreement, and has sought the advice of counsel to the extent he has determined appropriate.

7.12         Withholding of Compensation. Executive hereby agrees that the Company may deduct and withhold from the compensation or other amounts payable to Executive hereunder or otherwise in connection with Executive’s employment any amounts required to be deducted and withheld by the Company under the provisions of any applicable Federal, state and local statute, law, regulation, ordinance or order.

7.13         Executive Representation. Executive acknowledges that by entering into or complying with any provision of this Agreement he is not breaching or acting in contravention of any other agreement or commitment he has to any other firm, corporation, partnership, organization, person or any other individual or entity.

IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be duly executed and delivered as of the date first above written.

COMPANY
QTS Realty Trust, Inc.
By:	/s/ Chad L. Williams
Name:	Chad L. Williams
Title:	Chief Executive Officer

OP
QualityTech, LP
By:	QTS Realty Trust, Inc., its sole general partner
	By:	/s/ Chad L. Williams
	Name:	Chad L. Williams
	Title:	Chief Executive Officer
PURCHASER
Quality Technology Services Holding, LLC
By:	QualityTech, LP, its sole member
By:	QTS Realty Trust, Inc., its sole general partner
	By:	/s/ Chad L. Williams
	Name:	Chad L. Williams
	Title:	Chief Executive Officer
QTS
Quality Technology Services, LLC
By:	/s/ Chad L. Williams
Name:	Chad L. Williams
Title:	Chief Executive Officer
EXECUTIVE
/s/ Peter Weber
Peter Weber

ATTACHMENT A

Offer Letter

May 5, 2015

Peter Weber

15201 Highview Court

Waterford, VA 20197

Dear Peter,

On behalf of QTS, I am pleased to welcome you to our company. We are “Powered by People” and we are excited at the prospect of having the great people of Carpathia join our team. In particular, we are delighted that YOU will be joining our expanded leadership team. Together, we have a wonderful opportunity to create a truly great company and we are psyched you have decided to be part of this adventure.

The purpose of this letter is to outline the key terms of your employment which will become effective upon the closing of the QTS/Carpathia transaction. Your title will be Chief Product Officer reporting to Chad Williams, CEO of QTS. For purposes of this letter, your first day of work at QTS will be considered your “Employment Start Date” and will be the transaction closing date.

Please direct any questions pertaining to this offer to either Tammy Viola or myself. The following sections of this letter briefly outline terms of employment and employee benefits:

Compensation and Incentives

Your starting annual base salary will be $350,000. QTS’s regularly scheduled pay days are currently on the 15^th and last day of every month. You also will be eligible to participate in the Company’s incentive compensation plan with a target bonus of 100% of your base salary prorated for any changes to your base salary in 2015. This bonus will be based on your performance and the performance of QTS. This bonus will be paid in March 2016. In addition, you will be eligible to receive a 2016 Long Term Incentive (LTI) grant with a target value of $700,000 based on you your performance. As an exception to normal practice, this LTI will be made in two separate grants your first year. The first grant has a target value of $350,000 and will be made in time-based Restricted Stock Units within ten days of the closing. These shares will vest ratably over four years, 25% vesting each year on the anniversary of the grant date. The second grant also has a target value of $350,000 and will be made in accordance with the Company’s regular issuance schedule for 2016 LTI grants in the same form and terms as other QTS executives, the final design of this portion of your 2016 LTI grant is pending subject to the approval of our compensation committee.

 

Furthermore, you have been selected to participate in an Integration Bonus Plan with a target payout of $200,000. This target value will be granted to you within 10 days of closing in the form of Performance Based Restricted Stock Units (PBRSUs). This award has a one year performance period that begins on the day of closing. Specific objectives will be established with your input by the Integration Steering Committee. The degree to which we collectively achieve these objectives will determine the number of PBRSUs that actually vest, ranging from 0 to 150%. These shares will vest ratably over three years on the anniversary of the grant date and will vest 100% upon (i) your termination of employment by the Company without “Cause”; (ii) your resignation for “Good Reason” and (iii) the occurrence of a “Change in Control”, in each case, as such terms are defined in your employment agreement that was effective as of the closing. Stay tuned for more details about this exciting incentive program.

QTS offers a full range of benefits that include company-paid holidays, vacation time, sick leave, etc. You will be eligible to accrue 200 hours of personal time annually. A summary of other benefit offerings is as follows:

Employee Benefits

Health/ Dental / Vision/401k /Flex options

QTS sponsors a comprehensive, employee subsidized benefits package for employees classified as full-time. For employees who elect to participate, benefits commence on the first day of the month following the employee’s date of hire. Premium amounts are payroll-deducted in accordance with the semi-monthly pay cycle and are based on the selected level of coverage.

All employees who work over 1000 hours per year and are at least 21 years of age are eligible to participate in the 401K plan after a 90 day waiting period. QTS provides an employer match of 50% of employee deferral up to a contribution limit of 6% of eligible earnings. Eligible earnings includes base salary, and annual bonus or commission payments subject to IRS limitations.

Supplemental Insurance Options

Employees classified as full-time, are eligible to enroll in supplemental insurance benefits. The plans include basic life, AD&D insurance coverage in the amount of $100,000.00. As an eligible employee, you also may elect to enroll in additional supplemental coverage either for yourself and/or qualifying dependents. Employee coverage amount(s) up to $150,000.00 (self), $50,000.00 (spouse), and $10,000.00 (qualifying dependent), do not require completion of a personal health application. Amounts in excess of the listed amounts will require completion of a personal health application. Premium costs for any supplemental coverage are payroll-deducted in accordance with the semi-monthly pay cycle.

Continuation of Your Current Carpathia Benefit Elections

You will continue your current elections on your Carpathia benefit plans until the end of 2015. You will complete annual enrollment of benefits with QTS in the fall during our normal annual enrollment cycle.

I hope this letter provides you with a good overview of our customized compensation package for you. If you have questions, please do not hesitate to contact me directly at 913.802.6297.

Peter, we genuinely look forward to you joining QTS. Your leadership and continued outstanding contributions will be key to our collective success. We are “Powered by People”. This is how we deliver a premium customer experience and differentiate ourselves from the competition. With your help, we will build on the past successes of Carpathia and QTS to build an enduring company that makes a big difference in the world! We can’t wait to get started.

Sincerely,

/s/ Stan Sword

Stan Sword

Chief People Officer

Quality Technology Services, LLC (“QTS”)

Acceptance of Employment

By accepting employment with QTS, you acknowledge and understand that employment with QTS is “at-will,” meaning that either QTS, or you, may terminate employment at any time for any reason with or without notice. By signing and accepting this offer of employment, you acknowledge your agreement with the terms of employment set forth in this letter. You further acknowledge that you are not subject to any employment, non-compete or other agreement that would limit or prohibit your acceptance of employment with QTS. In addition to the previous background checks and screening, you acknowledge that QTS may require you to submit to additional background checks and screening depending upon the requirements of our customers or as otherwise required by applicable law. Please sign and date in the space below.

/s/ Peter Weber	5/5/2015
Executive Acceptance	Date

CC: HR file

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Chad L. Williams, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of QTS Realty Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2015

/s/ Chad L. Williams

Chad L. Williams

Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, William H. Schafer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of QTS Realty Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2015

/s/ William H. Schafer

William H. Schafer

Chief Financial Officer

EX-31.3

Exhibit 31.3

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Chad L. Williams, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of QualityTech, LP;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2015

/s/ Chad L. Williams

Chad L. Williams

Chairman and Chief Executive Officer

EX-31.4

Exhibit 31.4

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, William H. Schafer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of QualityTech, LP;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2015

/s/ William H. Schafer

William H. Schafer

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant To

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of QTS Realty Trust, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Chad L. Williams, Chairman and Chief Executive Officer of the Company, and I, William H. Schafer, Chief Financial Officer of the Company, certify, to our knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2015

/s/ Chad L. Williams

Chad L. Williams

Chairman and Chief Executive Officer

/s/ William H. Schafer

William H. Schafer

Chief Financial Officer

EX-32.2

Exhibit 32.2

Certification Pursuant To

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of QualityTech, LP (the “Company”) on Form 10-Q for the period ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Chad L. Williams, Chairman and Chief Executive Officer of the Company, and I, William H. Schafer, Chief Financial Officer of the Company, certify, to our knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2015

/s/ Chad L. Williams

Chad L. Williams

Chairman and Chief Executive Officer

/s/ William H. Schafer

William H. Schafer

Chief Financial Officer

XML

Acquisitions (Allocation of the Fair Value of Assets Acquired and Liabilities Assumed as of the Acquisition Date) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Jun. 16, 2015
Business Acquisition [Line Items]
Goodwill	$ 173,237
Carpathia Hosting, Inc. [Member]
Business Acquisition [Line Items]
Land		$ 1,130
Buildings		79,372
CIP		12,127
Acquired intangibles, net		89,847
Net working capital		2,569
Total identifiable assets acquired		185,045
Capital lease and lease financing obligations		43,832
Deferred income taxes		19,766
Total liabilities assumed		63,598
Net identifiable assets acquired		121,447
Goodwill	$ 173,000	173,237
Net assets acquired		$ 294,684

XML

Partners' Capital, Equity and Incentive Compensation Plans (Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted) (Details) - Jun. 30, 2015 - $ / shares	Total	Total
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	33.00%	33.00%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of restricted stock granted	$ 35.81	$ 35.81
Fair value of options granted	$ 8.00	$ 8.00
Expected term (years)	5 years 6 months	5 years 6 months
Expected dividend yield	3.50%	3.50%
Expected risk-free interest rates	1.67%	1.67%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of restricted stock granted	$ 37.64	$ 37.64
Fair value of options granted	$ 8.05	$ 8.05
Expected term (years)	6 years 1 month 6 days	6 years 1 month 6 days
Expected dividend yield	3.57%	3.57%
Expected risk-free interest rates	1.69%	1.69%

XML

Debt (Annual Remaining Principal Payment) (Details) $ in Thousands	Jun. 30, 2015 USD ($)
Debt [Abstract]
2015
2016
2017
2018	$ 230,000
2019	170,000
Thereafter	300,000
Total	$ 700,000

XML

Debt (Atlanta-Metro Equipment Loan Narrative) (Details) - Atlanta-Metro Equipment Loan [Member] - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2015	Apr. 09, 2010
Debt Instrument [Line Items]
Loan agreement amount of loan		$ 25
Loan agreement interest rate		6.85%
Member advances, maturity date	Jun. 01, 2020

XML

Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Summary Of Significant Accounting Policies [Line Items]
Useful life of property			40 years
Depreciation expense from operation	$ 14,100	$ 10,700	$ 26,900	$ 20,900
Real estate cost capitalized excluding interest cost	2,600	2,500	5,900	4,700
Real estate interest cost capitalized incurred	2,400	1,800	4,400	3,400
Annual amortization for intangible assets for 2015	10,900		10,900
Annual amortization for intangible assets for 2016	10,900		10,900
Amortization of the deferred financing costs			1,585	1,314
Deferred leasing costs, net	15,278		15,278		$ 16,469
Unamortized financing costs write down	100	100
In Place Leases [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization of lease costs	500	600	900	1,300
Tenant Relationship [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization of lease costs	600	300	900	700
Platform and Trade Names [Member]
Summary Of Significant Accounting Policies [Line Items]
Amoritzation of intangible assets	200	0	200	0
Qualitytech, LP [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization of the deferred financing costs			1,585	1,314
Real Estate Assets [Member]
Summary Of Significant Accounting Policies [Line Items]
Depreciation expense from operation	12,400	9,100	23,300	17,900
Non-Real Estate Assets [Member]
Summary Of Significant Accounting Policies [Line Items]
Depreciation expense from operation	$ 1,700	$ 1,600	$ 3,600	3,000
Minimum [Member] | Real Property [Member]
Summary Of Significant Accounting Policies [Line Items]
Useful life of property			20 years
Maximum [Member] | Real Property [Member]
Summary Of Significant Accounting Policies [Line Items]
Useful life of property			40 years
Maximum [Member] | Leasehold Improvements [Member]
Summary Of Significant Accounting Policies [Line Items]
Useful life of property			20 years
Unsecured Credit Facility [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization of the deferred financing costs			$ 1,600	$ 1,200
Senior Notes [Member]
Summary Of Significant Accounting Policies [Line Items]
Interest rate	5.875%		5.875%
Senior notes due			2022
Princeton Facility [Member]
Summary Of Significant Accounting Policies [Line Items]
Deferred leasing costs, net					$ 2,900

XML

Noncontrolling Interest (Narrative) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2015 shares	Mar. 31, 2015 shares	Jun. 30, 2015	Oct. 31, 2014
Quality Tech LP ownership percentage in operating partnership				21.20%
Stock conversion ratio			1
Qualitytech, LP [Member]
Quality Tech LP ownership percentage in operating partnership	14.60%		14.60%
Shares issued	5,750,000	5,000,000
Class A Units [Member]
Units redeemed for common stock	300,000	230,000

XML

Real Estate Assets and Construction in Progress (Tables)

6 Months Ended

Jun. 30, 2015

Real Estate Assets and Construction in Progress [Abstract]

Summary of Properties Owned or Leased by the Company

The following is a summary of properties owned or leased by the Company as of June 30, 2015 and December 31, 2014 (in thousands):

As of June 30, 2015 (unaudited):

Property Location		Land		Buildings and Improvements		Construction in Progress		Total Cost
Owned Properties
Suwanee, Georgia (Atlanta-Suwanee)	$	3,521	$	143,672	$	13,699	$	160,892
Atlanta, Georgia (Atlanta-Metro)		15,396		374,600		36,183		426,179
Santa Clara, California*		-		92,614		916		93,530
Richmond, Virginia		2,180		166,030		107,770		275,980
Sacramento, California		1,481		60,179		524		62,184
Princeton, New Jersey		20,700		32,572		272		53,544
Dallas-Fort Worth, Texas		5,808		61,863		111,247		178,918
Chicago, Illinois		-		-		35,491		35,491
Miami, Florida		1,777		28,875		1,192		31,844
Lenexa, Kansas		437		3,466		21		3,924
Wichita, Kansas		-		1,409		-		1,409
		51,300		965,280		307,315		1,323,895
Leased Properties
Carpathia properties ***		1,130		79,372		12,127		92,629
Jersey City, New Jersey		-		27,611		1,404		29,015
Overland Park, Kansas **		-		857		39		896
		1,130		107,840		13,570		122,540
	$	52,430	$	1,073,120	$	320,885	$	1,446,435

*    Owned facility subject to long-term ground sublease.
**   This does not include the portion of the business that is used for QTS office space or other real estate not used by customers.
*** Includes 13 facilities. All facilities are leased, including those subject to capital leases.

As of December 31, 2014:

Property Location		Land		Buildings and Improvements		Construction in Progress		Total Cost
Owned Properties
Suwanee, Georgia (Atlanta-Suwanee)	$	3,521	$	138,991	$	6,345	$	148,857
Atlanta, Georgia (Atlanta-Metro)		15,397		356,122		22,693		394,212
Santa Clara, California*		-		90,332		650		90,982
Richmond, Virginia		2,180		127,080		71,794		201,054
Sacramento, California		1,481		60,094		278		61,853
Princeton, New Jersey		17,976		35,951		90		54,017
Dallas-Fort Worth, Texas		5,808		44,053		89,982		139,843
Chicago, Illinois		-		-		21,786		21,786
Miami, Florida		1,777		28,786		129		30,692
Lenexa, Kansas		437		3,298		25		3,760
Wichita, Kansas		-		1,409		-		1,409
		48,577		886,116		213,772		1,148,465
Leased Properties
Jersey City, New Jersey		-		27,318		920		28,238
Overland Park, Kansas **		-		852		27		879
		-		28,170		947		29,117
	$	48,577	$	914,286	$	214,719	$	1,177,582

_____________________________

* Owned facility subject to long-term ground sublease.
** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers.

XML

Debt (Future Payment Obligations) (Details) $ in Thousands	Jun. 30, 2015 USD ($)
Debt [Abstract]
2015	$ 6,450
2016	12,558
2017	12,388
2018	8,804
2019	2,461
Thereafter	13,550
Total lease obligations	$ 56,211

XML

Real Estate Assets and Construction in Progress (Summary of Properties Owned or Leased by the Company) (Details) $ in Thousands		Jun. 30, 2015 USD ($) property	Dec. 31, 2014 USD ($)
Real Estate Properties [Line Items]
Land		$ 52,430	$ 48,577
Buildings and improvements		1,073,120	914,286
Construction in progress		320,885	214,719
Total cost		1,446,435	1,177,582
Owned Properties [Member]
Real Estate Properties [Line Items]
Land		51,300	48,577
Buildings and improvements		965,280	886,116
Construction in progress		307,315	213,772
Total cost		1,323,895	1,148,465
Owned Properties [Member] | Suwanee, Georgia (Atlanta-Suwanee) [Member]
Real Estate Properties [Line Items]
Land		3,521	3,521
Buildings and improvements		143,672	138,991
Construction in progress		13,699	6,345
Total cost		160,892	148,857
Owned Properties [Member] | Atlanta, Georgia (Atlanta-Metro) [Member]
Real Estate Properties [Line Items]
Land		15,396	15,397
Buildings and improvements		374,600	356,122
Construction in progress		36,183	22,693
Total cost		$ 426,179	$ 394,212
Owned Properties [Member] | Santa Clara, California [Member]
Real Estate Properties [Line Items]
Land	[1]
Buildings and improvements	[1]	$ 92,614	$ 90,332
Construction in progress	[1]	916	650
Total cost	[1]	93,530	90,982
Owned Properties [Member] | Richmond, Virginia [Member]
Real Estate Properties [Line Items]
Land		2,180	2,180
Buildings and improvements		166,030	127,080
Construction in progress		107,770	71,794
Total cost		275,980	201,054
Owned Properties [Member] | Sacramento, California [Member]
Real Estate Properties [Line Items]
Land		1,481	1,481
Buildings and improvements		60,179	60,094
Construction in progress		524	278
Total cost		62,184	61,853
Owned Properties [Member] | Princeton New Jersey [Member]
Real Estate Properties [Line Items]
Land		20,700	17,976
Buildings and improvements		32,572	35,951
Construction in progress		272	90
Total cost		53,544	54,017
Owned Properties [Member] | Dallas, Texas [Member]
Real Estate Properties [Line Items]
Land		5,808	5,808
Buildings and improvements		61,863	44,053
Construction in progress		111,247	89,982
Total cost		$ 178,918	$ 139,843
Owned Properties [Member] | Chicago, Illinois [Member]
Real Estate Properties [Line Items]
Land
Buildings and improvements
Construction in progress		$ 35,491	$ 21,786
Total cost		35,491	21,786
Owned Properties [Member] | Miami, Florida [Member]
Real Estate Properties [Line Items]
Land		1,777	1,777
Buildings and improvements		28,875	28,786
Construction in progress		1,192	129
Total cost		31,844	30,692
Owned Properties [Member] | Lenexa, Kansas [Member]
Real Estate Properties [Line Items]
Land		437	437
Buildings and improvements		3,466	3,298
Construction in progress		21	25
Total cost		$ 3,924	$ 3,760
Owned Properties [Member] | Wichita, Kansas [Member]
Real Estate Properties [Line Items]
Land
Buildings and improvements		$ 1,409	$ 1,409
Construction in progress
Total cost		$ 1,409	$ 1,409
Leased Properties [Member]
Real Estate Properties [Line Items]
Land		1,130
Buildings and improvements		107,840	$ 28,170
Construction in progress		13,570	947
Total cost		$ 122,540	$ 29,117
Leased Properties [Member] | Jersey City, New Jersey [Member]
Real Estate Properties [Line Items]
Land
Buildings and improvements		$ 27,611	$ 27,318
Construction in progress		1,404	920
Total cost		$ 29,015	$ 28,238
Leased Properties [Member] | Overland Park, Kansas [Member]
Real Estate Properties [Line Items]
Land	[2]
Buildings and improvements	[2]	$ 857	$ 852
Construction in progress	[2]	39	27
Total cost	[2]	896	$ 879
Leased Properties [Member] | Carpathia Properties [Member]
Real Estate Properties [Line Items]
Land	[3]	1,130
Buildings and improvements	[3]	79,372
Construction in progress	[3]	12,127
Total cost	[3]	$ 92,629
Number of facilities leased | property		13

[1] Owned facility subject to long-term ground sublease.

[2] This does not include the portion of the business that is used for QTS office space or other real estate not used by customers.

[3] Includes 13 facilities. All facilities are leased, including those subject to capital leases.

XML

Summary of Significant Accounting Policies (Additional Information 2) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2015 USD ($) segment	Dec. 31, 2014 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Capital lease obligations	$ 32,300	$ 13,100
Lease financing obligations	$ 23,900
Number of operating segments | segment	1
Number of reportable segments | segment	1
Financial assets	$ 0	0
Financial liability	0	0
Accounts Receivable [Member]
Summary Of Significant Accounting Policies [Line Items]
Aggregate allowance for doubtful accounts	$ 5,200	$ 3,700
Customer One [Member] | Rental Revenue [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of total revenue	7.30%
Customer Two [Member] | Accounts Receivable [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of total accounts receivable	10.00%
Three Customers [Member] | Accounts Receivable [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of total accounts receivable	5.00%
Other Customers [Member] | Rental Revenue [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of total revenue	5.00%
Five Customers [Member] | Accounts Receivable [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of total accounts receivable	36.00%
Carpathia Hosting, Inc. [Member]
Summary Of Significant Accounting Policies [Line Items]
Lease financing obligations	$ 2,600

XML

Partners' Capital, Equity and Incentive Compensation Plans (Narrative) (Details)				1 Months Ended		3 Months Ended					6 Months Ended
	Aug. 06, 2015 $ / shares	Jul. 08, 2015	Jul. 08, 2015 $ / shares	Jun. 30, 2015 USD ($) item shares	Mar. 31, 2015 shares	Jun. 30, 2015 USD ($) item $ / shares shares	Mar. 31, 2015 USD ($) $ / shares shares	Jun. 30, 2014 USD ($) $ / shares	Mar. 31, 2014 USD ($) $ / shares	Dec. 31, 2013 USD ($)	Jun. 30, 2015 USD ($) item security shares	Jun. 05, 2015 $ / shares shares	May. 03, 2015 shares	Mar. 02, 2015 $ / shares shares
Partners Capital And Distributions [Line Items]
Number of classes of partnership units outstanding | security											3
Stock transaction date							Mar. 02, 2015
Number of units issued														5,000,000
Proceeds from sale of stock | $							$ 166,400,000
Capital contributions | $							166,400,000
Number of votes per share | item				50		50					50
Equity based compensation expense unrecognized | $				$ 16,800,000		$ 16,800,000					$ 16,800,000
Equity based compensation expense vesting period											4 years
Equity based compensation awards intrinsic value | $				$ 44,100,000		44,100,000					$ 44,100,000
Aggregate distribution made to stockholders and partners | $						$ 13,400,000	$ 10,700,000	$ 10,700,000	$ 9,000,000
Dividend paid to common stockholders | $ / shares						$ 0.32	$ 0.29	$ 0.29	$ 0.24
Partnership distribution per unit | $ / shares						$ 0.32	$ 0.29	$ 0.29	$ 0.24
Dividends payable, date payable						Apr. 07, 2015	Jan. 07, 2015	Apr. 08, 2014	Jan. 07, 2014
Net proceeds from issuance of shares | $										$ 279,000,000
QTS Realty Trust, Inc. Employee Stock Purchase Plan [Member]
Partners Capital And Distributions [Line Items]
Shares reserved for purchase under plan				250,000		250,000					250,000
Underwriters [Member]
Partners Capital And Distributions [Line Items]
Shares issued				1,050,000
General Atlantic REIT, Inc. [Member]
Partners Capital And Distributions [Line Items]
Shares sold							4,350,000
Sale of stock, price per share | $ / shares														$ 34.75
Class O LTIP Holders [Member]
Partners Capital And Distributions [Line Items]
Aggregate distribution made to stockholders and partners | $								$ 200,000
Class O Units [Member]
Partners Capital And Distributions [Line Items]
Nonvested awards outstanding				600,000		600,000					600,000
Class RS Units [Member]
Partners Capital And Distributions [Line Items]
Nonvested awards outstanding				100,000		100,000					100,000
Common Class A [Member]
Partners Capital And Distributions [Line Items]
Sale of stock, price per share | $ / shares												$ 37.00
Shares issued				5,750,000
Net proceeds from issuance of shares | $				$ 203,700,000
Chief Executive Officer [Member]
Partners Capital And Distributions [Line Items]
Percentage of operating partnership unit exchanged											2.00%
Underwriters [Member] | General Atlantic REIT, Inc. [Member]
Partners Capital And Distributions [Line Items]
Option to purchase share of common stock							1,402,500
Qualitytech, LP [Member]
Partners Capital And Distributions [Line Items]
Dividends payable, date of record											Jun. 19, 2015
Qualitytech, LP [Member] | Subsequent Event [Member]
Partners Capital And Distributions [Line Items]
Dividend paid to common stockholders | $ / shares			$ 0.32
Dividends payable, date payable	Oct. 06, 2015	Jul. 08, 2015
Dividends payable, date declared	Aug. 06, 2015
Cash dividend payable per common share | $ / shares	$ 0.32
Dividends payable, date of record	Sep. 18, 2015
GA QTS Interholdco, LLC [Member] | Common Class A [Member]
Partners Capital And Distributions [Line Items]
Shares of stock sold by stockholder												1,250,000
Minimum [Member] | QTS Realty Trust, Inc. Employee Stock Purchase Plan [Member]
Partners Capital And Distributions [Line Items]
Monthly diduction from eligible employees for plan | $				40
Maximum [Member] | QTS Realty Trust, Inc. Employee Stock Purchase Plan [Member]
Partners Capital And Distributions [Line Items]
Monthly diduction from eligible employees for plan | $				$ 2,000
Restricted Class A Common Stock [Member]
Partners Capital And Distributions [Line Items]
Nonvested awards outstanding				400,000		400,000					400,000
Options to purchase Class A common stock [Member]
Partners Capital And Distributions [Line Items]
Nonvested awards outstanding				400,000		400,000					400,000
2013 Equity Incentive Plan [Member]
Partners Capital And Distributions [Line Items]
Authorized shares to be issued under the plan				4,750,000		4,750,000					4,750,000		1,750,000
Additional shares available for issuance under plan approved by Board of Directors					3,000,000

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Fair Value of Financial Instruments (Narrative) (Details) $ in Millions	Jun. 30, 2015 USD ($)
Senior Notes [Member] | Fair Value Measurements, Level 2 [Member]
Fair Value Of Financial Instruments [Line Items]
Fair value of loan based on current market rates	$ 299.3

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Debt (Outstanding Debt Including Capital Leases) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Capital lease and lease financing obligations	$ 56,211	$ 13,062
Total debt and lease obligations	754,063	637,229
Unsecured Credit Facility [Member]
Debt Instrument [Line Items]
Outstanding debt	330,000	239,838
Senior Notes Net of Discount [Member]
Debt Instrument [Line Items]
Outstanding debt	297,852	297,729
Richmond Credit Facility [Member]
Debt Instrument [Line Items]
Outstanding debt	70,000	70,000
Atlanta-Metro Equipment Loan [Member]
Debt Instrument [Line Items]
Outstanding debt		16,600
Capital Lease and Lease Financing Obligations [Member]
Debt Instrument [Line Items]
Capital lease and lease financing obligations	$ 56,211	$ 13,062

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Acquisitions

6 Months Ended

Jun. 30, 2015

Acquisitions [Abstract]

Acquisitions

3. Acquisitions

Carpathia Acquisition

On June 16, 2015, the Company completed the acquisition of 100% of the outstanding stock of Carpathia Hosting, Inc. (“Carpathia”), a Virginia-based colocation, cloud and managed services provider for approximately $326 million (as defined in the purchase and sale agreement). Upon completion of this acquisition, the Company assumed all of the assets and liabilities of Carpathia Acquisition, Inc. Carpathia Acquisition, Inc. and its subsidiaries, including Carpathia, became indirect, wholly-owned subsidiaries of the Company. Carpathia is  a  provider of colocation, hybrid cloud and Infrastructure-as-a-Service (IaaS) servicing enterprise customers and federal agencies, with a customer base of approximately 230 customers as of June 16, 2015.  Carpathia utilizes eight domestic data centers located in Dulles, Virginia; Phoenix, Arizona; San Jose, California; Harrisonburg, Virginia and Ashburn, Virginia; and five international data centers located in Toronto; Amsterdam; London; Hong Kong and Sydney.

The Company accounted for this acquisition in accordance with ASC 805, Business Combinations, as a business combination. The preliminary purchase price allocation was based on an assessment of the fair value of the assets acquired and liabilities assumed, and excludes acquisition-related costs which in accordance with ASC 805 were expensed as incurred. The Company is valuing the assets acquired and liabilities assumed using Level 3 inputs.

The following table summarizes the consideration for the Carpathia acquisition and the preliminary allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (in thousands). This allocation is subject to change pending the final valuation of these assets and liabilities:

	June 16, 2015
Land	$                1,130
Buildings and improvements	79,372
Construction in process	12,127
Acquired intangibles, net	89,847
Net working capital	2,569
Total identifiable assets acquired	185,045
Capital lease and lease financing obligations	43,832
Deferred income taxes	19,766
Total liabilities assumed	63,598
Net identifiable assets acquired	121,447
Goodwill	173,237
Net assets acquired	$           294,684

Goodwill recognized in the transaction relates primarily to anticipated operating synergies, Carpathia’s in-place workforce and access to Carpathia’s broader customer base. Based on the preliminary purchase price allocation, amortization expenses relative to the intangible assets acquired are expected to be approximately $5.9 million, $10.9 million, $10.9 million, $8.8 million and $6.6 million for the years ended December 31, 2015 through December 31, 2019, respectively.

The following table represents the pro forma condensed consolidated statements of operations for the three-month periods ended June 30, 2015 and 2014, and for the six-month periods ended June 30, 2015 and 2014 (in thousands):

	(Unaudited) Pro Forma Condensed Consolidated Statements of Operations
	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Revenue	$              90,984	$              75,493	$           174,309	$           147,877
Net income	$                9,363	$                4,804	$              16,500	$                8,766

These amounts have been calculated after applying the Company’s accounting policies, and give effect to the Carpathia acquisition, related issuance of equity and certain historical transactions as if they had occurred on January 1, 2014, including the acquisition of the Princeton, NJ facility discussed below, the issuance of $300 million of senior unsecured notes, the issuance of approximately $387 million of Class A common stock, the acquisition of the Chicago, IL facility and the modification of the unsecured credit facility and the credit facility secured by the Richmond Property resulting in decreased interest rates on both. The purchase price allocation for this acquisition has been prepared on a preliminary basis.  Accordingly, the purchase accounting adjustments made in connection with the development of the unaudited pro forma consolidated statements of operations are preliminary and subject to change.

The unaudited pro forma condensed consolidated financial information is for comparative purposes only and not necessarily indicative of what actual results of operations of the Company would have been had the transactions noted above been consummated on January 1, 2014, nor does it purport to represent the results of operations for future periods.

Revenue and net income generated by Carpathia subsequent to the Company’s acquisition from June 16, 2015 to June 30, 2015 were $3.7 million and $0.2 million, respectively.

Princeton Acquisition

On June 30, 2014, the Company completed the acquisition of a data center facility in New Jersey (the “Princeton facility”), from McGraw Hill Financial, Inc., for an aggregate cost of approximately $73.3 million. This facility is located on approximately 194 acres and consists of approximately 560,000 gross square feet, including approximately 58,000 square feet of raised floor, and 12 MW of gross power. This acquisition was funded with a draw on the unsecured revolving credit facility. Concurrently with acquiring this data center the Company entered into a 10 year lease for the facility’s 58,000 square feet of raised floor with Atos, an international information technology services company headquartered in Bezos, France. The lease includes, at the option of Atos, the ability to renew for up to 15 years.

The Company accounted for this acquisition in accordance with ASC 805, Business Combinations, as a business combination. The preliminary purchase price allocation was based on an assessment of the fair value of the assets acquired, and excludes acquisition-related costs which in accordance with ASC 805 were expensed as incurred.  The Company acquired the Princeton facility on June 30, 2014. The Company valued the assets acquired using Level 3 inputs.

In June 2015, the Company finalized the Princeton facility purchase price allocation. The following table summarizes the consideration for the Princeton facility and the final valuation of the fair value of assets acquired as of June 30, 2015 (in thousands):

	Princeton facility	Weighted average useful life
Buildings	$                     32,126	40
Land	20,700	N/A
Acquired intangibles	30,634	13
Deferred costs	3,290	10
Other assets	297	10
Intangible liabilities	(13,747)	17
Total purchase price	$                     73,300

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Condensed Consolidating Financial Information (Condensed Consolidating Balance Sheets) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Real Estate Assets
Land	$ 52,430	$ 48,577
Buildings and improvements	1,073,120	914,286
Less: Accumulated depreciation	(205,284)	(180,167)
Total real estate assets	920,266	782,696
Construction in progress	320,885	214,719
Real Estate Assets, net	1,241,151	997,415
Cash and cash equivalents	10,744	10,788	$ 7,489	$ 5,210
Rents and other receivables, net	30,548	15,579
Acquired intangibles, net	122,005	18,000
Deferred costs, net	38,013	37,058
Prepaid expenses	7,132	3,079
Goodwill	173,237
Other assets, net	29,198	24,640
TOTAL ASSETS	1,652,028	1,106,559
LIABILITIES
Mortgage notes payable	70,000	86,600
Unsecured credit facility	330,000	239,838
Senior notes, net of discount	297,852	297,729
Capital lease and lease financing obligations	56,211	13,062
Accounts payable and accrued liabilities	92,708	64,607
Dividends and distributions payable	15,322	10,705
Advance rents, security deposits and other liabilities	19,444	3,302
Deferred income taxes	16,449
Deferred income	19,557	10,531
TOTAL LIABILITIES	917,543	726,374
EQUITY
TOTAL LIABILITIES AND EQUITY	1,652,028	1,106,559
Eliminations [Member]
Real Estate Assets
Investment in subsidiaries	(294,858)
TOTAL ASSETS	(294,858)
EQUITY
Partners' capital	(294,858)
TOTAL LIABILITIES AND EQUITY	(294,858)
Qualitytech, LP [Member]
Real Estate Assets
Land	52,430	48,577
Buildings and improvements	1,073,120	914,286
Less: Accumulated depreciation	(205,284)	(180,167)
Total real estate assets	920,266	782,696
Construction in progress	320,885	214,719
Real Estate Assets, net	1,241,151	997,415
Cash and cash equivalents	10,744	10,788	$ 7,489	$ 5,210
Rents and other receivables, net	30,548	15,579
Acquired intangibles, net	122,005	18,000
Deferred costs, net	38,013	37,058
Prepaid expenses	7,132	3,079
Goodwill	173,237
Other assets, net	29,198	24,640
TOTAL ASSETS	1,652,028	1,106,559
LIABILITIES
Mortgage notes payable	70,000	86,600
Unsecured credit facility	330,000	239,838
Senior notes, net of discount	297,852	297,729
Capital lease and lease financing obligations	56,211	13,062
Accounts payable and accrued liabilities	92,708	64,607
Dividends and distributions payable	15,322	10,705
Advance rents, security deposits and other liabilities	19,444	3,302
Deferred income taxes	16,449
Deferred income	19,557	10,531
TOTAL LIABILITIES	917,543	726,374
EQUITY
Partners' capital	734,485	380,185
TOTAL LIABILITIES AND EQUITY	1,652,028	1,106,559
Guarantor Subsidiaries [Member]
Real Estate Assets
Land	51,300
Buildings and improvements	993,748
Less: Accumulated depreciation	(204,606)
Total real estate assets	840,442
Construction in progress	308,758
Real Estate Assets, net	1,149,200
Cash and cash equivalents	6,117	$ 10,788
Rents and other receivables, net	18,294
Acquired intangibles, net	30,158
Deferred costs, net	38,013
Prepaid expenses	5,534
Investment in subsidiaries	294,858
Other assets, net	28,563
TOTAL ASSETS	1,570,737
LIABILITIES
Mortgage notes payable	70,000
Unsecured credit facility	330,000
Senior notes, net of discount	297,852
Capital lease and lease financing obligations	12,379
Accounts payable and accrued liabilities	84,816
Dividends and distributions payable	15,322
Advance rents, security deposits and other liabilities	16,600
Deferred income taxes	(3,135)
Deferred income	12,418
TOTAL LIABILITIES	836,252
EQUITY
Partners' capital	734,485
TOTAL LIABILITIES AND EQUITY	1,570,737
Non-Guarantor Subsidiaries [Member]
Real Estate Assets
Land	1,130
Buildings and improvements	79,372
Less: Accumulated depreciation	(678)
Total real estate assets	79,824
Construction in progress	12,127
Real Estate Assets, net	91,951
Cash and cash equivalents	4,627
Rents and other receivables, net	12,254
Acquired intangibles, net	91,847
Prepaid expenses	1,598
Goodwill	173,237
Other assets, net	635
TOTAL ASSETS	376,149
LIABILITIES
Capital lease and lease financing obligations	43,832
Accounts payable and accrued liabilities	7,892
Advance rents, security deposits and other liabilities	2,844
Deferred income taxes	19,584
Deferred income	7,139
TOTAL LIABILITIES	81,291
EQUITY
Partners' capital	294,858
TOTAL LIABILITIES AND EQUITY	$ 376,149

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Debt (Unsecured Credit Facility Narrative) (Details) - USD ($) $ in Millions		1 Months Ended	6 Months Ended		12 Months Ended
	Dec. 31, 2014	Jul. 31, 2014	Jun. 30, 2015	Jun. 30, 2015	Dec. 31, 2013
Term Loan [Member]
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity		$ 150.0
Letter of credit outstanding			$ 100.0	$ 100.0
Repayment of term loan		$ 75.0
Letter of Credit [Member]
Debt Instrument [Line Items]
Letter of credit outstanding			2.5	2.5
Unsecured Credit Facility [Member]
Debt Instrument [Line Items]
Letter of credit outstanding			230.0	230.0
Unsecured Credit Facility [Member]
Debt Instrument [Line Items]
Credit facility agreement date					May 01, 2013
Credit facility maximum borrowing capacity			650.0	650.0	$ 575.0
Maximum the credit facility may be increased up until			$ 850.0	$ 850.0
Line of credit facility weighted average interest rate outstanding percentage			1.87%	1.87%
Unsecured Credit Facility [Member] | Term Loan [Member]
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity			$ 100.0	$ 100.0	$ 225.0
Unsecured credit facility term	5 years		5 years		5 years
Maturity date				Dec. 17, 2019
Unsecured Credit Facility [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity			$ 550.0	$ 550.0	$ 350.0
Unsecured credit facility term	4 years		4 years		4 years
Debt extension period	1 year		1 year		1 year
Line of credit facility accordion feature					$ 100.0
Maturity date				Dec. 17, 2018
Unsecured Credit Facility [Member] | Letter of Credit [Member]
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity			$ 30.0	$ 30.0
Unsecured Credit Facility [Member] | Minimum [Member] | Term Loan [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Leverage ratio			1.65%	1.65%
Unsecured Credit Facility [Member] | Minimum [Member] | Term Loan [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Leverage ratio			0.65%	0.65%
Unsecured Credit Facility [Member] | Minimum [Member] | Revolving Credit Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Leverage ratio			1.70%	1.70%
Unsecured Credit Facility [Member] | Minimum [Member] | Revolving Credit Facility [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Leverage ratio			0.70%	0.70%
Unsecured Credit Facility [Member] | Maximum [Member] | Term Loan [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Leverage ratio			2.20%	2.20%
Unsecured Credit Facility [Member] | Maximum [Member] | Term Loan [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Leverage ratio			1.20%	1.20%
Unsecured Credit Facility [Member] | Maximum [Member] | Revolving Credit Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Leverage ratio			2.25%	2.25%
Unsecured Credit Facility [Member] | Maximum [Member] | Revolving Credit Facility [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Leverage ratio			1.25%	1.25%

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Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2015

Earnings per Share [Abstract]

Summary of Basic and Diluted Earnings Per Share

Diluted income (loss) per share adjusts basic income (loss) per share for the effects of potentially dilutive common shares.

	Three Months Ended June 30,		Six Months Ended June 30,
(in thousands, except per share data)	2015	2014	2015	2014
Net income available to common stockholders	$               4,632	$               3,090	$               8,714	$               7,288
Weighted average shares outstanding—basic	36,669	29,017	33,996	29,001
Net income per share—basic	$                 0.13	$                 0.11	$                 0.26	$                 0.25
Net income	$               5,520	$               3,921	$             10,557	$               9,249
Weighted average shares outstanding—diluted (1)	44,444	37,010	41,868	36,934
Net income per share—diluted	$                 0.12	$                 0.11	$                 0.25	$                 0.25

(1) Includes 7,063 Class A and Class RS units, 492 “in the money” value of Class O units on an “as if” converted basis and 220 “in the money” value of options to purchase shares of Class A common stock on an “as if” converted basis as of the three months ended June 30, 2015, and 7,189 Class A and Class RS units, 464 “in the money” value of Class O units on an “as if” converted basis and 218 “in the money” value of options to purchase shares of Class A common stock on an “as if” converted basis as of the six months ended June 30, 2015.  As of the three months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 89 “in the money” value of Class O units on as “as if” converted basis and 107 “in the money” value options to purchase shares of Class A common stock on an “as if” converted basis, and as of the six months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 57 “in the money” value of Class O units on an “as if” converted basis and 79 “in the money” value options to purchase shares of Class A common stock on as “as if” converted basis.

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

Summary of Related Party Transactions

The transactions which occurred during the three and six months ended June 30, 2015 and 2014 are outlined below (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(dollars in thousands)	2015		2014		2015		2014
Tax, utility, insurance and other reimbursement	$	65	$	115	$	145	$	167
Rent expense		254		257		507		519
Capital assets acquired		26		27		125		74
Total	$	345	$	399	$	777	$	760

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Related Party Transactions (Summary of Related Party Transactions) (Details) - Affiliated Entity [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Related Party Transaction [Line Items]
Tax, utility, insurance and other reimbursement	$ 65	$ 115	$ 145	$ 167
Rent expense	254	257	507	519
Capital assets acquired	26	27	125	74
Total	$ 345	$ 399	$ 777	$ 760

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Debt (Senior Notes) (Details) - USD ($)	6 Months Ended		11 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2015	Jul. 23, 2014
Unsecured Credit Facility [Member] | Term Loan [Member]
Debt Instrument [Line Items]
Maturity date		Dec. 17, 2019
Unsecured term loan outstanding	$ 75,000,000	$ 75,000,000	$ 75,000,000
Senior Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount				$ 300,000,000
Interest rate	5.875%	5.875%	5.875%
Senior notes due	2022
Maturity date	Aug. 01, 2022
Percentage of issued price equal to face value	99.211%	99.211%	99.211%
Notes issuance date			Jul. 23, 2014

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Customer Leases, as Lessor (Tables)

6 Months Ended

Jun. 30, 2015

Customer Leases, as Lessor [Abstract]

Future Minimum Lease Payments to be Received Under Non-Cancelable Operating Customer Leases

Future minimum lease payments to be received under non-cancelable operating customer leases (inclusive of payments for contracts which have not yet commenced, and exclusive of recoveries of operating costs from customers) are as follows for the years ending December 31 (in thousands):

Period Ending December 31,
2015 (July - December)	$	153,057
2016		266,881
2017		204,361
2018		135,643
2019		86,934
Thereafter		247,162
Total	$	1,094,038

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Condensed Consolidating Financial Information (Tables)

6 Months Ended

Jun. 30, 2015

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Balance Sheet

Interim Condensed Consolidating Balance Sheet
June 30, 2015
(in thousands)

	Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Eliminations	Consolidated
ASSETS
Real Estate Assets
Land	$                    51,300	$                      1,130	$                        -	$              52,430
Buildings and improvements	993,748	79,372	-	1,073,120
Less: Accumulated depreciation	(204,606)	(678)	-	(205,284)
	840,442	79,824	-	920,266
Construction in progress	308,758	12,127	-	320,885
Real Estate Assets, net	1,149,200	91,951	-	1,241,151
Cash and cash equivalents	6,117	4,627	-	10,744
Rents and other receivables, net	18,294	12,254		30,548
Acquired intangibles, net	30,158	91,847	-	122,005
Deferred costs, net	38,013	-	-	38,013
Prepaid expenses	5,534	1,598	-	7,132
Goodwill	-	173,237	-	173,237
Investment in subsidiaries	294,858	-	(294,858)	-
Other assets, net	28,563	635	-	29,198
TOTAL ASSETS	$               1,570,737	$                  376,149	$           (294,858)	$         1,652,028
LIABILITIES
Mortgage notes payable	$                    70,000	$                              -	$                        -	$              70,000
Unsecured credit facility	330,000	-	-	330,000
Senior notes, net of discount	297,852	-	-	297,852
Capital lease and lease financing obligations	12,379	43,832	-	56,211
Accounts payable and accrued liabilities	84,816	7,892	-	92,708
Dividends and distributions payable	15,322	-	-	15,322
Advance rents, security deposits and other liabilities	16,600	2,844	-	19,444
Deferred income taxes	(3,135)	19,584	-	16,449
Deferred income	12,418	7,139	-	19,557
TOTAL LIABILITIES	836,252	81,291	-	917,543
PARTNERS' CAPITAL
Partners' capital	734,485	294,858	(294,858)	734,485
TOTAL LIABILITIES AND PARTNERS' CAPITAL	$               1,570,737	$                  376,149	$           (294,858)	$         1,652,028

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Interim Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Three Months Ended June 30, 2015
(in thousands)

	Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Eliminations	Consolidated
Revenues:
Rental	$                  50,740	$                    1,453	$                       -	$                  52,193
Recoveries from customers	5,582	-	-	5,582
Cloud and managed services	5,958	2,262	-	8,220
Other	2,120	2	-	2,122
Total revenues	64,400	3,717	-	68,117
Operating Expenses:
Property operating costs	20,564	1,467	-	22,031
Real estate taxes and insurance	1,474	-	-	1,474
Depreciation and amortization	16,876	1,186	-	18,062
General and administrative	13,781	834	-	14,615
Restructuring	-	-	-	-
Transaction and integration costs	4,669	-	-	4,669
Total operating expenses	57,364	3,487	-	60,851
Operating income	7,036	230	-	7,266
Other income and expenses:
Interest income	1	-	-	1
Interest expense	(4,743)	(56)	-	(4,799)
Other (expense) income, net	(83)	-	-	(83)
Equity in net income of subsidiaries	174	-	(174)	-
Income (loss) before taxes	2,385	174	(174)	2,385
Tax benefit of taxable REIT subsidiaries	3,135	-	-	3,135
Net income (loss)	$                    5,520	$                       174	$                 (174)	$                    5,520

Interim Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Six Months Ended June 30, 2015
(in thousands)

	Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Eliminations	Consolidated
Revenues:
Rental	$                100,073	$                    1,453	$                            -	$                101,526
Recoveries from customers	11,246	-	-	11,246
Cloud and managed services	11,753	2,262	-	14,015
Other	2,714	2	-	2,716
Total revenues	125,786	3,717	-	129,503
Operating Expenses:
Property operating costs	39,900	1,467	-	41,367
Real estate taxes and insurance	2,959	-	-	2,959
Depreciation and amortization	33,119	1,186	-	34,305
General and administrative	27,619	834	-	28,453
Restructuring		-	-	-
Transaction and integration costs	4,774	-	-	4,774
Total operating expenses	108,371	3,487	-	111,858
Operating income	17,415	230	-	17,645
Other income and expenses:
Interest income	1	-	-	1
Interest expense	(10,085)	(56)	-	(10,141)
Other (expense) income, net	(83)	-	-	(83)
Equity in net income of subsidiaries	174	-	(174)	-
Income (loss) before taxes	7,422	174	(174)	7,422
Tax benefit of taxable REIT subsidiaries	3,135	-	-	3,135
Net income (loss)	$                  10,557	$                       174	$                     (174)	$                  10,557

Condensed Consolidating Statement of Cash Flows

Interim Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2015
(in thousands)

	Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidated
Net cash provided by operating activities	$	36,534	$	4,627	$	41,161
Cash flow from investing activities:
Acquisitions, net of cash acquired		(288,865)		-		(288,865)
Additions to property and equipment		(170,150)		-		(170,150)
Cash used in investing activities		(459,015)		-		(459,015)
Cash flow from financing activities:
Credit facility proceeds		350,162		-		350,162
Debt repayment		(260,000)		-		(260,000)
Payment of deferred financing costs		(512)		-		(512)
Payment of cash dividends		(19,673)		-		(19,673)
Partnership distributions		(4,414)		-		(4,414)
Principal payments on capital lease obligations		(1,227)		-		(1,227)
Scheduled mortgage principal debt repayments		(16,600)		-		(16,600)
Equity proceeds, net of costs		370,074		-		370,074
Net cash provided by financing activities		417,810		-		417,810
Net (decrease) increase in cash and cash equivalents		(4,671)		4,627		(44)
Cash and cash equivalents, beginning of period		10,788		-		10,788
Cash and cash equivalents, end of period	$	6,117	$	4,627	$	10,744

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

The accompanying financial statements are presented for both QTS Realty Trust, Inc. and QualityTech, LP. References to “QTS” mean QTS Realty Trust, Inc. and its controlled subsidiaries; and references to the “Operating Partnership” mean QualityTech, LP and its controlled subsidiaries.

Management operates QTS and the Operating Partnership as one business. The management of QTS consists of the same employees as the management of the Operating Partnership. QTS is the sole general partner of the Operating Partnership, and its only material asset consists of its ownership interest in the Operating Partnership. QTS does not conduct business itself, other than acting as the sole general partner of the Operating Partnership and issuing public equity from time to time. QTS has not issued or guaranteed any indebtedness. Except for net proceeds from public equity issuances by QTS, which are contributed to the Operating Partnership in exchange for units of limited partnership interest of the Operating Partnership, the Operating Partnership generates all remaining capital required by the business through its operations, the direct or indirect incurrence of indebtedness, and the issuance of partnership units. As general partner with control of the Operating Partnership, QTS consolidates the Operating Partnership for financial reporting purposes.

The Company believes, therefore, that providing one set of notes for the financial statements of QTS and the Operating Partnership provides the following benefits:

· enhances investors’ understanding of QTS and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

· eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both QTS and the Operating Partnership; and

· creates time and cost efficiencies through the preparation of one set of notes instead of two separate sets of notes.

In addition, in light of these combined notes, the Company believes it is important for investors to understand the few differences between QTS and the Operating Partnership in the context of how QTS and the Operating Partnership operate as a consolidated company. The presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated balance sheets of QTS and those of the Operating Partnership. The Operating Partnership’s capital includes general and limited common units that are owned by QTS and the other partners. QTS' stockholders’ equity includes common stock, additional paid in capital, accumulated other comprehensive income (loss) and accumulated dividends in excess of earnings. The remaining equity is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. The primary difference in QTS' Statements of Operations and Comprehensive Income (Loss) is that for net income (loss), QTS retains its proportionate share of the net income (loss) based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership. These combined notes refer to actions or holdings as being actions or holdings of “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, management believes that these general references to “the Company” in this context is appropriate because the business is one enterprise operated through the Operating Partnership.

As discussed above, QTS owns no operating assets and has no operations independent of the Operating Partnership and its subsidiaries. Also, the Operating Partnership owns no operating assets and has no operations independent of its subsidiaries. Obligations under the 5.875% Senior Notes due 2022 and the unsecured credit facility, both discussed in Note 5, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries, other than QTS Finance Corporation, the co-issuer of the 5.875% Senior Notes due 2022, and entities related to Carpathia Hosting, Inc. The indenture governing the 5.875% Senior Notes due 2022 restricts the ability of the Operating Partnership to make distributions to QTS, subject to certain exceptions, including distributions required in order for QTS to maintain its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended.

The interim condensed consolidated financial statements of QTS Realty Trust, Inc. for the three and six months ended June 30, 2015 and 2014, and as of June 30, 2015 and December 31, 2014 present the accounts of QTS Realty Trust, Inc. and its majority owned subsidiaries. This includes the operating results of the Operating Partnership for all periods presented. 

Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals.

Principles of Consolidation – The consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority-owned subsidiaries. The consolidated financial statements of QualityTech, LP include the accounts of QualityTech, LP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in the financial statements.

Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended June 30, 2015, depreciation expense related to real estate assets and non-real estate assets was $12.4 million and $1.7 million, respectively, for a total of $14.1 million.  For thethree months ended June 30, 2014, depreciation expense related to real estate assets and non-real estate assets was $9.1 million and $1.6 million, respectively, for a total of $10.7 million. For the six months ended June 30, 2015, depreciation expense related to real estate assets and non-real estate assets was $23.3 million and $3.6 million, respectively, for a total of $26.9 million.  For the six months ended June 30, 2014, depreciation expense related to real estate assets and non-real estate assets was $17.9 million and $3.0 million, respectively, for a total of $20.9 million. The Company capitalizes certain development costs, including internal costs incurred in connection with development. The capitalization of costs during the construction period (including interest and related loan fees, property taxes and other direct and indirect costs) begins when development efforts commence and ends when the asset is ready for its intended use. Capitalization of such costs, excluding interest, aggregated to $2.6 million and$2.5 million for thethree months ended June 30, 2015 and 2014, respectively, and  $5.9 million and$4.7 million for the six months ended June 30, 2015 and 2014, respectively. Interest is capitalized during the period of development by first applying the Company’s actual borrowing rate on the related asset and second, to the extent necessary, by applying the Company’s weighted average effective borrowing rate to the actual development and other costs expended during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $2.4 million and $1.8 million for the three months ended June 30, 2015 and 2014, respectively,  and $4.4 million and $3.4 million for the six months ended June 30, 2015 and 2014, respectively.  

Acquisitions – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances. Purchase accounting is applied to the assets and liabilities related to all real estate investments acquired in accordance with the accounting requirements of ASC 805, Business Combinations, which requires the recording of net assets of acquired businesses at fair value. The fair value of the consideration transferred is allocated to the acquired tangible assets, consisting primarily of land, building and improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases, value of customer relationships, trade names, software intangibles and capital leases.  The excess of the fair value of liabilities assumed, common stock issued and cash paid over the fair value of identifiable assets acquired is allocated to goodwill, which is not amortized by the Company.

In developing estimates of fair value of acquired assets and assumed liabilities, management analyzed a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets.

Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. Amortization of acquired in place lease costs totaled $0.5 million and$0.6 million for the three months ended June 30, 2015 and 2014, respectively, and $0.9 million and$1.3 million for thesix months ended June 30, 2015 and 2014, respectively.  This amortization expense is accounted for as real estate amortization expense.

Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. Amortization of acquired customer relationships totaled $0.6 million and$0.3 million for the three months ended June 30, 2015 and 2014, respectively,  and $0.9 million and$0.7 million for the six months ended June 30, 2015 and 2014, respectively.  This amortization expense is accounted for as real estate amortization expense.

Other acquired intangible assets, which includes platform, above or below market leases, and tradename intangibles, are amortized on a straight-line basis over their respective expected lives. Platform and trade name intangibles are amortized as amortization expense, which totaled $0.2 million for the three and six months ended June 30, 2015. Above or below market leases are amortized as rent expense, which was immaterial for the three and six months ended June 30, 2015. There was no amortization expense related to platform and trade name intangibles for the three and six months ended June 30, 2014. The expense associated with above and below market leases is accounted for as real estate expense, whereas the expense associated with the amortization of platform and trade name intangibles is accounted for as non-real estate expense.

See Note 3 for discussion of the preliminary purchase price allocation for the acquisition of Carpathia Hosting, Inc. on June 16, 2015, as well as the final purchase price allocation for the Princeton facility that the Company acquired on June 30, 2014.

Impairment of Long-Lived and Intangible Assets – The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is generally measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset exceeds the value of the undiscounted cash flows, the fair value of the asset is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three and six months ended June 30, 2015 and 2014, respectively.

As a result of the Carpathia acquisition in June 2015, the Company recognized approximately $173 million in goodwill.  The fair value of goodwill is the consideration transferred which is not allocable to identifiable intangible and tangible assets.  The Company believes that it has one reporting unit for goodwill purposes, thus will assess goodwill for impairment at least annually on that basis.  Based on the initial purchase price allocation, the Company does not believe there is any immediate impairment that would need to be recognized in relation to goodwill.

Cash and Cash Equivalents – The Company considers all demand deposits and money market accounts purchased with a maturity date of three months or less at the date of purchase to be cash equivalents. The Company’s account balances at one or more institutions periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is concentration of credit risk related to amounts on deposit in excess of FDIC coverage. The Company mitigates this risk by depositing a majority of its funds with several major financial institutions. The Company also has not experienced any losses and, therefore, does not believe that the risk is significant.

Deferred Costs – Deferred costs, net, on the Company’s balance sheets include both financing costs and leasing costs.

Deferred financing costs represent fees and other costs incurred in connection with obtaining debt and are amortized over the term of the loan and are included in interest expense. Amortization of the deferred financing costs was $0.8 million and $0.6 million for the three months ended June 30, 2015 and 2014, respectively, and $1.6 million and$1.2 million for the six months ended June 30, 2015 and 2014, respectively. During the three months ended June 30, 2015, the Company wrote off unamortized financing costs of $0.1 million in connection with the repayment of the Atlanta Metro equipment loan, as discussed in Note 5. During the three months ended June 30, 2014, the Company wrote off unamortized financing costs of $0.1 million in connection with the modification of its credit facility that is secured by the Richmond data center. Deferred financing costs, net of accumulated amortization are as follows:

	June 30,			December 31,
(dollars in thousands)	2015		2014
	(unaudited)
Deferred financing costs	$	18,581	$	18,152
Accumulated amortization		(3,303)		(1,683)
Deferred financing costs, net	$	15,278	$	16,469

Deferred leasing costs consist of external fees and internal costs incurred in the successful negotiations of leases and are deferred and amortized over the terms of the related leases on a straight-line basis. If an applicable lease terminates prior to the expiration of its initial term, the carrying amount of the costs are written off to amortization expense. Amortization of deferred leasing costs totaled $2.8 million and $2.1 million for the three months ended June 30, 2015 and 2014, respectively, and $5.5 million and$4.2 million for thesix months ended June 30, 2015 and 2014, respectively.Deferred leasing costs, net of accumulated amortization are as follows (excluding $2.9 million, net of amortization, related to a leasing arrangement at the Company’s Princeton facility in 2014):

	June 30,		December 31,
(dollars in thousands)	2015		2014
	(unaudited)
Deferred leasing costs	$	33,154	$	26,799
Accumulated amortization		(13,380)		(9,378)
Deferred leasing costs, net	$	19,774	$	17,421

Advance Rents and Security Deposits – Advance rents, typically prepayment of the following month’s rent, consist of payments received from customers prior to the time they are earned and are recognized as revenue in subsequent periods when earned. Security deposits are collected from customers at the lease origination and are generally refunded to customers upon lease expiration.

Deferred Income – Deferred income generally results from non-refundable charges paid by the customer at lease inception to prepare their space for occupancy. The Company records this initial payment, commonly referred to as set-up fees, as a deferred income liability which amortizes into rental revenue over the term of the related lease on a straight-line basis. Deferred income was $19.6 million and $10.5 million as of June 30, 2015 and December 31, 2014, respectively. Additionally, $1.4 million and$1.2 million of deferred income was amortized into revenue for the three months ended June 30, 2015 and 2014, respectively, and $2.7 million and$2.4 million for thesix months ended June 30, 2015 and 2014, respectively.

Interest Rate Derivative Instruments – The Company utilizes derivatives to manage its interest rate exposure. During February 2012, the Company entered into interest rate swaps with a notional amount of $150 million which were cash flow hedges and qualified for hedge accounting. For these hedges, the effective portion of the change in fair value was recognized through other comprehensive income or loss. Amounts were reclassified out of other comprehensive income (loss) as the hedged item was recognized in earnings, either for ineffectiveness or for amounts paid relating to the hedge. The Company reflected all changes in the fair value of the swaps in other comprehensive income (loss) during the three and six months ended June 30, 2014, as there was no ineffectiveness recorded in that period.  The Company had no interest rate swaps outstanding at June 30, 2015 and December 31, 2014.

Equity-based Compensation – All equity-based compensation is measured at fair value on the grant date or date of modification, as applicable, and recognized in earnings over the requisite service period. Depending upon the settlement terms of the awards, all or a portion of the fair value of equity-based awards may be presented as a liability or as equity in the consolidated balance sheets. Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification. Equity-based compensation expense net of forfeited and repurchased awards was $1.8 million and $1.1 million for the three months ended June 30, 2015 and 2014, respectively, and $3.1 million and $2.0 million for the six months ended June 30, 2015 and 2014,  respectively.

Rental Revenue – The Company, as a lessor, has retained substantially all of the risks and benefits of ownership and accounts for its leases as operating leases. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net was $5.8 million and $4.0 million as of June 30, 2015 and December 31, 2014, respectively. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed above.

Cloud and Managed Services Revenue – The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided.

Allowance for Uncollectible Accounts Receivable – Rents receivable are recognized when due and are carried at cost, less an allowance for doubtful accounts. The Company records a provision for losses on rents receivable equal to the estimated uncollectible accounts, which is based on management’s historical experience and a review of the current status of the Company’s receivables. As necessary, the Company also establishes an appropriate allowance for doubtful accounts for receivables arising from the straight-lining of rents. The aggregate allowance for doubtful accounts was $5.2 million and $3.7 million as of June 30, 2015 and December 31, 2014, respectively.

Capital Leases and Lease Financing Obligations – The Company evaluates leased real estate to determine whether the lease should be classified as a capital or operating lease in accordance with U.S GAAP.

The Company periodically enters into capital leases for certain equipment.  In addition, through its acquisition of Carpathia Hosting, Inc. (“Carpathia”) on June 16, 2015, the Company is now party to capital leases for property and equipment, as well as financing obligations related to a sale-leaseback transaction.The outstanding liabilities for the capital leases were $32.3 million and $13.1 million as of June 30, 2015 and December 31, 2014, respectively.  The outstanding liabilities for the lease financing obligations were $23.9 million as of June 30, 2015.  The value of the assets associated with these leases approximates the outstanding obligations as of June 30, 2015 and December 31, 2014, respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income.  

See Note 3 for further discussion of the acquisition of Carpathia and Note 5 for further discussion of capital leases and lease financing obligations.

Recoveries from Customers – Certain customer leases contain provisions under which the customers reimburse the Company for a portion of the property’s real estate taxes, insurance and other operating expenses, which include certain power and cooling-related charges. The reimbursements are included in revenue as recoveries from customers in the Statements of Operations and Comprehensive Income in the period the applicable expenditures are incurred. Certain customer leases are structured to provide a fixed monthly billing amount that includes an estimate of various operating expenses, with all revenue from such leases included in rental revenues.

Segment Information – The Company manages its business as one operating segment and thus one reportable segment consisting of a portfolio of investments in data centers located in the United States, Canada, Europe and the Asia-Pacific region.  

Customer Concentrations – As of June 30, 2015, one of the Company’s customers represented 7.3% of its total monthly rental revenue. No other customers exceeded 5% of total monthly rental revenue.

As of June 30, 2015,  three of the Company’s customers exceeded 5% of total accounts receivable.  In aggregate, these three customers accounted for 36% of total accounts receivable.  Two of these three customers individually exceeded 10% of total accounts receivable.

Income Taxes  –The Company elected for one of its existing subsidiaries to be taxed as a taxable REIT subsidiary pursuant to the REIT rules of the U.S. Internal Revenue Code.

For the taxable REIT subsidiary, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

As of December 31, 2014, the taxable REIT subsidiary’s deferred tax assets were primarily the result of U.S. net operating loss carryforwards. A valuation allowance was recorded against its gross deferred tax asset balance as of December 31, 2014.  As a result of the acquisition of Carpathia, the Company has determined that it is more likely than not that pre-existing deferred tax assets will be realized by the combined entity, and the valuation allowance should be eliminated.  The change in the valuation allowance resulting from the change in circumstances is included in income, recognized in deferred income tax benefit in the three and sixth months ended June 30, 2015.

Fair Value Measurements – ASC Topic 820, Fair Value Measurements, emphasizes that fair-value is a market-based measurement, not an entity-specific measurement. Therefore, a fair-value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, a fair-value hierarchy is established that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the level in the fair-value hierarchy within which the entire fair-value measurement falls is based on the lowest level input that is significant to the fair-value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

As the Company’s previous interest rate swaps matured on September 28, 2014, there are no financial assets or liabilities measured at fair value on a recurring basis on the consolidated balance sheets as of June 30, 2015 and December 31, 2014.

New Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. The new guidance narrows the definition of discontinued operations to disposals that represent a strategic shift in operations and requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in the ASU are effective for annual and interim reporting periods beginning on and after December 15, 2014. Early adoption is permitted. Adoption of this standard did not have any effect on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the current revenue recognition requirements in ASC 606, Revenue Recognition. Under this new guidance, entities should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This ASU also requires enhanced disclosures. In July 2015, the FASB finalized its decision to delay the effective date of the amendments in this ASU by one year, and as such, they are effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted; however, entities are not permitted to adopt the standard earlier than December 15, 2016, the original effective date. Retrospective and modified retrospective application is allowed. The Company is currently assessing the impact of this standard on its consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, and not as a separate deferred charge. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. In June 2015, the Securities and Exchange Commission (“SEC”) stated that given the absence of authoritative guidance within this ASU for debt issuance costs related to revolving debt arrangements, the SEC staff would not object to an entity deferring and presenting such costs as an asset and subsequently amortizing them ratably over the term of the revolving debt arrangement. This announcement confirms that revolver arrangement costs are not within the scope of this ASU. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The amendments are required to be applied on a retrospective basis, and upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. Adoption of this standard will affect the Company’s Consolidated Balance Sheets.  

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Description of Business (Narrative) (Details) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended
	Jun. 30, 2015 USD ($) property $ / shares shares	Dec. 31, 2013 USD ($)	Dec. 31, 2014 $ / shares shares	Oct. 15, 2013 $ / shares shares
Organization And Description Of Business [Line Items]
Number of properties | property	25
Common stock, par value	$ 0.01		$ 0.01
Common stock, shares issued | shares	40,881,002		29,408,138
Net proceeds from issuance of shares | $		$ 279.0
Ownership interest	85.40%
Common Class A [Member]
Organization And Description Of Business [Line Items]
Common stock, par value				$ 0.01
Common stock, shares issued | shares				14,087,500
Net proceeds from issuance of shares | $	$ 203.7

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Acquisitions (Schedule of Pro Forma Information Related to Acquisition) (Details) - Carpathia Hosting, Inc. [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Pro forma revenue	$ 90,984	$ 75,493	$ 174,309	$ 147,877
Pro forma net income (loss)	$ 9,363	$ 4,804	$ 16,500	$ 8,766

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Partners' Capital, Equity and Incentive Compensation Plans (Summary of Award Activity Under 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and Related Information) (Details) - 6 months ended Jun. 30, 2015 - $ / shares		Total
2013 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance, Weighted average exercise price units		$ 22.87
Weighted average exercise price units, Granted		36.14
Weighted average exercise price units, Exercised	[1]	$ 21.80
Weighted average exercise price units, Released from restriction	[2]
Weighted average exercise price units, Cancelled/Expired	[3]	$ 21.00
Ending balance, Weighted average exercise price units		27.61
Beginning balance, Weighted average fair value		4.10
Weighted average fair value, Granted		8.02
Weighted average fair value, Exercised	[1]	$ 3.80
Weighted average fair value, Released from restriction	[2]
Weighted average fair value, Cancelled/Expired	[3]	$ 3.52
Ending balance, Weighted average fair value		5.50
Beginning balance, Weighted average exercise price options outstanding		29.13
Weighted average exercise price options outstanding, Granted		35.95
Weighted average exercise price options outstanding, Exercised	[1]	$ 23.26
Weighted average exercise price options outstanding, Released from restriction	[2]
Weighted average exercise price options outstanding, Cancelled/Expired	[3]	$ 23.92
Ending balance, Weighted average exercise price options outstanding		$ 32.70
2013 Equity Incentive Plan [Member] | Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance, Number of units		584,949
Number of units, granted		312,997
Number of units, Exercised	[1]	(8,843)
Number of units, Released from restriction	[2]
Number of units, Cancelled/Expired	[3]	(8,594)
Ending balance, Number of units		880,509
2013 Equity Incentive Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance, Options Outstanding		246,785
Options, Granted		186,070
Options, Exercised	[1]	(20,453)
Options, Released from restriction	[2]
Options, Cancelled/Expired	[3]	(9,625)
Ending balance, Options Outstanding		402,777
2010 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance, Weighted average exercise price units		$ 23.49
Weighted average exercise price units, Granted
Weighted average exercise price units, Exercised	[1]	$ 20.62
Weighted average exercise price units, Released from restriction	[2]
Weighted average exercise price units, Cancelled/Expired	[3]
Ending balance, Weighted average exercise price units		$ 23.58
Beginning balance, Weighted average fair value		$ 3.75
Weighted average fair value, Granted
Weighted average fair value, Exercised	[1]	$ 4.74
Weighted average fair value, Released from restriction	[2]
Weighted average fair value, Cancelled/Expired	[3]
Ending balance, Weighted average fair value		$ 3.72
Beginning balance, Weighted average exercise price options outstanding		$ 23.49
Weighted average exercise price options outstanding, Granted
Weighted average exercise price options outstanding, Exercised	[1]
Weighted average exercise price options outstanding, Released from restriction	[2]	$ 25.00
Weighted average exercise price options outstanding, Cancelled/Expired	[3]
Ending balance, Weighted average exercise price options outstanding		$ 23.03
Restricted Class A Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units surrendered		9,625
Class O Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ending balance, Number of units		600,000
Class O Units [Member] | 2010 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance, Number of units		1,518,717
Number of units, granted
Number of units, Exercised	[1]	(46,170)
Number of units, Released from restriction	[2]
Number of units, Cancelled/Expired	[3]
Ending balance, Number of units		1,472,547
Class RS Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ending balance, Number of units		100,000
Class RS Units [Member] | 2010 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance, Options Outstanding		74,625
Options, Granted
Options, Exercised	[1]
Options, Released from restriction	[2]	(17,375)
Options, Cancelled/Expired	[3]
Ending balance, Options Outstanding		57,250

[1] This represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock.

[2] This represents Class RS units that upon vesting have converted to Operating Partnership units.

[3] Includes 9,625 restricted Class A common stock surrendered by certain employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock.

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BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Real Estate Assets
Land	$ 52,430	$ 48,577
Buildings and improvements	1,073,120	914,286
Less: Accumulated depreciation	(205,284)	(180,167)
Total real estate assets	920,266	782,696
Construction in progress	320,885	214,719
Real Estate Assets, net	1,241,151	997,415
Cash and cash equivalents	10,744	10,788
Rents and other receivables, net	30,548	15,579
Acquired intangibles, net	122,005	18,000
Deferred costs, net	38,013	37,058
Prepaid expenses	7,132	3,079
Goodwill	173,237
Other assets, net	29,198	24,640
TOTAL ASSETS	1,652,028	1,106,559
LIABILITIES
Mortgage notes payable	70,000	86,600
Unsecured credit facility	330,000	239,838
Senior notes, net of discount	297,852	297,729
Capital lease and lease financing obligations	56,211	13,062
Accounts payable and accrued liabilities	92,708	64,607
Dividends and distributions payable	15,322	10,705
Advance rents, security deposits and other liabilities	19,444	3,302
Deferred income taxes	16,449
Deferred income	19,557	10,531
TOTAL LIABILITIES	917,543	726,374
EQUITY
Common stock, $0.01 par value, 450,133,000 shares authorized, 40,881,002 and 29,408,138 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively	409	294
Additional paid-in capital	664,751	324,917
Accumulated dividends in excess of earnings	(38,014)	(22,503)
Total stockholders' equity	627,146	302,708
Noncontrolling interests	107,339	77,477
TOTAL EQUITY	734,485	380,185
TOTAL LIABILITIES AND EQUITY	1,652,028	1,106,559
Qualitytech, LP [Member]
Real Estate Assets
Land	52,430	48,577
Buildings and improvements	1,073,120	914,286
Less: Accumulated depreciation	(205,284)	(180,167)
Total real estate assets	920,266	782,696
Construction in progress	320,885	214,719
Real Estate Assets, net	1,241,151	997,415
Cash and cash equivalents	10,744	10,788
Rents and other receivables, net	30,548	15,579
Acquired intangibles, net	122,005	18,000
Deferred costs, net	38,013	37,058
Prepaid expenses	7,132	3,079
Goodwill	173,237
Other assets, net	29,198	24,640
TOTAL ASSETS	1,652,028	1,106,559
LIABILITIES
Mortgage notes payable	70,000	86,600
Unsecured credit facility	330,000	239,838
Senior notes, net of discount	297,852	297,729
Capital lease and lease financing obligations	56,211	13,062
Accounts payable and accrued liabilities	92,708	64,607
Dividends and distributions payable	15,322	10,705
Advance rents, security deposits and other liabilities	19,444	3,302
Deferred income taxes	16,449
Deferred income	19,557	10,531
TOTAL LIABILITIES	917,543	726,374
EQUITY
Partners' capital	734,485	380,185
TOTAL LIABILITIES AND EQUITY	$ 1,652,028	$ 1,106,559

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Debt (Richmond Credit Facility Narrative) (Details) - Jun. 30, 2015 - Richmond Credit Facility [Member] - USD ($) $ in Millions	Total
Debt Instrument [Line Items]
Credit facility, maturity date	Jun. 30, 2019
Current revolving credit facility	$ 120
Line of credit facility weighted average interest rate outstanding percentage	2.29%
Maximum [Member]
Debt Instrument [Line Items]
Increased borrowing capacity after considering accordion feature	$ 200
Maximum [Member] | Libor Rate [Member]
Debt Instrument [Line Items]
Leverage ratio	2.85%
Maximum [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Leverage ratio	1.85%
Minimum [Member] | Libor Rate [Member]
Debt Instrument [Line Items]
Leverage ratio	2.10%
Minimum [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Leverage ratio	1.10%

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STATEMENTS OF CASH FLOW (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flow from operating activities:
Net income	$ 10,557	$ 9,249
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	33,475	25,668
Amortization of deferred loan costs	1,585	1,314
Amortization of senior notes discount	123
Equity-based compensation expense	3,138	1,976
Bad debt expense	366	269
Write off of deferred loan costs	83	110
Deferred tax benefit	(3,135)
Changes in operating assets and liabilities
Rents and other receivables, net	(1,556)	1,592
Prepaid expenses	(2,760)	(2,501)
Other assets	(326)	(252)
Accounts payable and accrued liabilities	(1,823)	(7,996)
Advance rents, security deposits and other liabilities	(454)	(64)
Deferred income	1,888	285
Net cash provided by operating activities	41,161	29,650
Cash flow from investing activities:
Acquisitions, net of cash acquired	(288,865)	(73,300)
Additions to property and equipment	(170,150)	(114,157)
Cash used in investing activities	(459,015)	(187,457)
Cash flow from financing activities:
Credit facility proceeds	350,162	182,500
Debt repayment	(260,000)
Payment of deferred financing costs	(512)	(924)
Payment of cash dividend	(19,673)	(15,368)
Distribution to noncontrolling interest	(4,414)	(4,654)
Principal payments on capital lease obligation	(1,227)	(367)
Scheduled mortgage principal debt repayments	(16,600)	(1,100)
Equity proceeds, net of costs	370,074
Net cash provided by financing activities	417,810	160,087
Net (decrease) increase in cash and cash equivalents	(44)	2,279
Cash and cash equivalents, beginning of period	10,788	5,210
Cash and cash equivalents, end of period	10,744	7,489
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest (excluding deferred financing costs and amounts capitalized)	8,866	2,973
Noncash investing and financing activities:
Accrued capital additions	56,366	32,638
Capital lease and lease financing obligations acquired	43,832
Qualitytech, LP [Member]
Cash flow from operating activities:
Net income	10,557	9,249
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	33,475	25,668
Amortization of deferred loan costs	1,585	1,314
Amortization of senior notes discount	123
Equity-based compensation expense	3,138	1,976
Bad debt expense	366	269
Write off of deferred loan costs	83	110
Deferred tax benefit	(3,135)
Changes in operating assets and liabilities
Rents and other receivables, net	(1,556)	1,592
Prepaid expenses	(2,760)	(2,501)
Other assets	(326)	(252)
Accounts payable and accrued liabilities	(1,823)	(7,996)
Advance rents, security deposits and other liabilities	(454)	(64)
Deferred income	1,888	285
Net cash provided by operating activities	41,161	29,650
Cash flow from investing activities:
Acquisitions, net of cash acquired	(288,865)	(73,300)
Additions to property and equipment	(170,150)	(114,157)
Cash used in investing activities	(459,015)	(187,457)
Cash flow from financing activities:
Credit facility proceeds	350,162	182,500
Debt repayment	(260,000)
Payment of deferred financing costs	(512)	(924)
Payment of cash dividend	(19,673)	(15,368)
Partnership distributions	(4,414)	(4,654)
Principal payments on capital lease obligation	(1,227)	(367)
Scheduled mortgage principal debt repayments	(16,600)	$ (1,100)
Equity proceeds, net of costs	370,074
Net cash provided by financing activities	417,810	$ 160,087
Net (decrease) increase in cash and cash equivalents	(44)	2,279
Cash and cash equivalents, beginning of period	10,788	5,210
Cash and cash equivalents, end of period	10,744	7,489
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest (excluding deferred financing costs and amounts capitalized)	8,866	2,973
Noncash investing and financing activities:
Accrued capital additions	56,366	$ 32,638
Capital lease and lease financing obligations acquired	$ 43,832

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Earnings per Share (Summary of Basic and Diluted Earnings per Share Footnote) (Details) - shares		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Weighted average shares outstanding-diluted	[1]	44,444,104	37,009,746	41,867,944	36,934,210
Class A Units [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Weighted average shares outstanding-diluted		7,063,000	7,797,000	7,189,000	7,797,000
Class O Units [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Weighted average shares outstanding-diluted		492,000	89,000	464,000	57,000
Class RS Units [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Weighted average shares outstanding-diluted		7,063,000	7,797,000	7,189,000	7,797,000
Options to purchase Class A common stock [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Weighted average shares outstanding-diluted		220,000	107,000	218,000	79,000

[1] Includes 7,063 Class A and Class RS units, 492 "in the money" value of Class O units on an "as if" converted basis and 220 "in the money" value of options to purchase shares of Class A common stock on an "as if" converted basis as of the three months ended June 30, 2015, and 7,189 Class A and Class RS units, 464 "in the money" value of Class O units on an "as if" converted basis and 218 "in the money" value of options to purchase shares of Class A common stock on an "as if" converted basis as of the six months ended June 30, 2015. As of the three months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 89 "in the money" value of Class O units on as "as if" converted basis and 107 "in the money" value options to purchase shares of Class A common stock on an "as if" converted basis, and as of the six months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 57 "in the money" value of Class O units on an "as if" converted basis and 79 "in the money" value options to purchase shares of Class A common stock on as "as if" converted basis.

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Summary of Significant Accounting Policies (Deferred Financing Costs, Net of Accumulated Amortization) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Summary of Significant Accounting Policies [Abstract]
Deferred financing costs	$ 18,581	$ 18,152
Accumulated amortization	(3,303)	(1,683)
Deferred financing costs, net	$ 15,278	$ 16,469

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Subsequent Events (Narrative) (Details) - $ / shares				3 Months Ended				6 Months Ended
	Aug. 06, 2015	Jul. 08, 2015	Jul. 08, 2015	Jun. 30, 2015	Mar. 31, 2015	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2015
Subsequent Event [Line Items]
Dividend paid to common stockholders				$ 0.32	$ 0.29	$ 0.29	$ 0.24
Dividends payable, date payable				Apr. 07, 2015	Jan. 07, 2015	Apr. 08, 2014	Jan. 07, 2014
Qualitytech, LP [Member]
Subsequent Event [Line Items]
Dividends payable, date of record								Jun. 19, 2015
Subsequent Event [Member] | Qualitytech, LP [Member]
Subsequent Event [Line Items]
Dividend paid to common stockholders			$ 0.32
Cash dividend payable per common share	$ 0.32
Dividends payable, date declared	Aug. 06, 2015
Dividends payable, date of record	Sep. 18, 2015
Dividends payable, date payable	Oct. 06, 2015	Jul. 08, 2015

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

The accompanying financial statements are presented for both QTS Realty Trust, Inc. and QualityTech, LP. References to “QTS” mean QTS Realty Trust, Inc. and its controlled subsidiaries; and references to the “Operating Partnership” mean QualityTech, LP and its controlled subsidiaries.

Management operates QTS and the Operating Partnership as one business. The management of QTS consists of the same employees as the management of the Operating Partnership. QTS is the sole general partner of the Operating Partnership, and its only material asset consists of its ownership interest in the Operating Partnership. QTS does not conduct business itself, other than acting as the sole general partner of the Operating Partnership and issuing public equity from time to time. QTS has not issued or guaranteed any indebtedness. Except for net proceeds from public equity issuances by QTS, which are contributed to the Operating Partnership in exchange for units of limited partnership interest of the Operating Partnership, the Operating Partnership generates all remaining capital required by the business through its operations, the direct or indirect incurrence of indebtedness, and the issuance of partnership units. As general partner with control of the Operating Partnership, QTS consolidates the Operating Partnership for financial reporting purposes.

The Company believes, therefore, that providing one set of notes for the financial statements of QTS and the Operating Partnership provides the following benefits:

· enhances investors’ understanding of QTS and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

· eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both QTS and the Operating Partnership; and

· creates time and cost efficiencies through the preparation of one set of notes instead of two separate sets of notes.

In addition, in light of these combined notes, the Company believes it is important for investors to understand the few differences between QTS and the Operating Partnership in the context of how QTS and the Operating Partnership operate as a consolidated company. The presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated balance sheets of QTS and those of the Operating Partnership. The Operating Partnership’s capital includes general and limited common units that are owned by QTS and the other partners. QTS' stockholders’ equity includes common stock, additional paid in capital, accumulated other comprehensive income (loss) and accumulated dividends in excess of earnings. The remaining equity is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. The primary difference in QTS' Statements of Operations and Comprehensive Income (Loss) is that for net income (loss), QTS retains its proportionate share of the net income (loss) based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership. These combined notes refer to actions or holdings as being actions or holdings of “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, management believes that these general references to “the Company” in this context is appropriate because the business is one enterprise operated through the Operating Partnership.

As discussed above, QTS owns no operating assets and has no operations independent of the Operating Partnership and its subsidiaries. Also, the Operating Partnership owns no operating assets and has no operations independent of its subsidiaries. Obligations under the 5.875% Senior Notes due 2022 and the unsecured credit facility, both discussed in Note 5, are fully, unconditionally, and jointly and severally guaranteed by the Operating Partnership’s existing subsidiaries, other than QTS Finance Corporation, the co-issuer of the 5.875% Senior Notes due 2022, and entities related to Carpathia Hosting, Inc. The indenture governing the 5.875% Senior Notes due 2022 restricts the ability of the Operating Partnership to make distributions to QTS, subject to certain exceptions, including distributions required in order for QTS to maintain its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended.

The interim condensed consolidated financial statements of QTS Realty Trust, Inc. for the three and six months ended June 30, 2015 and 2014, and as of June 30, 2015 and December 31, 2014 present the accounts of QTS Realty Trust, Inc. and its majority owned subsidiaries. This includes the operating results of the Operating Partnership for all periods presented. 

Use of Estimates

Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals.

Principles of Consolidation

Principles of Consolidation – The consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its majority-owned subsidiaries. The consolidated financial statements of QualityTech, LP include the accounts of QualityTech, LP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in the financial statements.

Real Estate Assets

Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended June 30, 2015, depreciation expense related to real estate assets and non-real estate assets was $12.4 million and $1.7 million, respectively, for a total of $14.1 million.  For thethree months ended June 30, 2014, depreciation expense related to real estate assets and non-real estate assets was $9.1 million and $1.6 million, respectively, for a total of $10.7 million. For the six months ended June 30, 2015, depreciation expense related to real estate assets and non-real estate assets was $23.3 million and $3.6 million, respectively, for a total of $26.9 million.  For the six months ended June 30, 2014, depreciation expense related to real estate assets and non-real estate assets was $17.9 million and $3.0 million, respectively, for a total of $20.9 million. The Company capitalizes certain development costs, including internal costs incurred in connection with development. The capitalization of costs during the construction period (including interest and related loan fees, property taxes and other direct and indirect costs) begins when development efforts commence and ends when the asset is ready for its intended use. Capitalization of such costs, excluding interest, aggregated to $2.6 million and$2.5 million for thethree months ended June 30, 2015 and 2014, respectively, and  $5.9 million and$4.7 million for the six months ended June 30, 2015 and 2014, respectively. Interest is capitalized during the period of development by first applying the Company’s actual borrowing rate on the related asset and second, to the extent necessary, by applying the Company’s weighted average effective borrowing rate to the actual development and other costs expended during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $2.4 million and $1.8 million for the three months ended June 30, 2015 and 2014, respectively,  and $4.4 million and $3.4 million for the six months ended June 30, 2015 and 2014, respectively.

Acquisitions

Acquisitions – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances. Purchase accounting is applied to the assets and liabilities related to all real estate investments acquired in accordance with the accounting requirements of ASC 805, Business Combinations, which requires the recording of net assets of acquired businesses at fair value. The fair value of the consideration transferred is allocated to the acquired tangible assets, consisting primarily of land, building and improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, value of in-place leases, value of customer relationships, trade names, software intangibles and capital leases.  The excess of the fair value of liabilities assumed, common stock issued and cash paid over the fair value of identifiable assets acquired is allocated to goodwill, which is not amortized by the Company.

In developing estimates of fair value of acquired assets and assumed liabilities, management analyzed a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets.

Acquired in-place leases are amortized as amortization expense on a straight-line basis over the remaining life of the underlying leases. Amortization of acquired in place lease costs totaled $0.5 million and$0.6 million for the three months ended June 30, 2015 and 2014, respectively, and $0.9 million and$1.3 million for thesix months ended June 30, 2015 and 2014, respectively.  This amortization expense is accounted for as real estate amortization expense.

Acquired customer relationships are amortized as amortization expense on a straight-line basis over the expected life of the customer relationship. Amortization of acquired customer relationships totaled $0.6 million and$0.3 million for the three months ended June 30, 2015 and 2014, respectively,  and $0.9 million and$0.7 million for the six months ended June 30, 2015 and 2014, respectively.  This amortization expense is accounted for as real estate amortization expense.

Other acquired intangible assets, which includes platform, above or below market leases, and tradename intangibles, are amortized on a straight-line basis over their respective expected lives. Platform and trade name intangibles are amortized as amortization expense, which totaled $0.2 million for the three and six months ended June 30, 2015. Above or below market leases are amortized as rent expense, which was immaterial for the three and six months ended June 30, 2015. There was no amortization expense related to platform and trade name intangibles for the three and six months ended June 30, 2014. The expense associated with above and below market leases is accounted for as real estate expense, whereas the expense associated with the amortization of platform and trade name intangibles is accounted for as non-real estate expense.

See Note 3 for discussion of the preliminary purchase price allocation for the acquisition of Carpathia Hosting, Inc. on June 16, 2015, as well as the final purchase price allocation for the Princeton facility that the Company acquired on June 30, 2014.

Impairment of Long-Lived and Intangible Assets

Impairment of Long-Lived and Intangible Assets – The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is generally measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset exceeds the value of the undiscounted cash flows, the fair value of the asset is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three and six months ended June 30, 2015 and 2014, respectively.

As a result of the Carpathia acquisition in June 2015, the Company recognized approximately $173 million in goodwill.  The fair value of goodwill is the consideration transferred which is not allocable to identifiable intangible and tangible assets.  The Company believes that it has one reporting unit for goodwill purposes, thus will assess goodwill for impairment at least annually on that basis.  Based on the initial purchase price allocation, the Company does not believe there is any immediate impairment that would need to be recognized in relation to goodwill.

Cash and Cash Equivalents

Cash and Cash Equivalents – The Company considers all demand deposits and money market accounts purchased with a maturity date of three months or less at the date of purchase to be cash equivalents. The Company’s account balances at one or more institutions periodically exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is concentration of credit risk related to amounts on deposit in excess of FDIC coverage. The Company mitigates this risk by depositing a majority of its funds with several major financial institutions. The Company also has not experienced any losses and, therefore, does not believe that the risk is significant.

Deferred Costs

Deferred Costs – Deferred costs, net, on the Company’s balance sheets include both financing costs and leasing costs.

Deferred financing costs represent fees and other costs incurred in connection with obtaining debt and are amortized over the term of the loan and are included in interest expense. Amortization of the deferred financing costs was $0.8 million and $0.6 million for the three months ended June 30, 2015 and 2014, respectively, and $1.6 million and$1.2 million for the six months ended June 30, 2015 and 2014, respectively. During the three months ended June 30, 2015, the Company wrote off unamortized financing costs of $0.1 million in connection with the repayment of the Atlanta Metro equipment loan, as discussed in Note 5. During the three months ended June 30, 2014, the Company wrote off unamortized financing costs of $0.1 million in connection with the modification of its credit facility that is secured by the Richmond data center. Deferred financing costs, net of accumulated amortization are as follows:

	June 30,			December 31,
(dollars in thousands)	2015		2014
	(unaudited)
Deferred financing costs	$	18,581	$	18,152
Accumulated amortization		(3,303)		(1,683)
Deferred financing costs, net	$	15,278	$	16,469

Deferred leasing costs consist of external fees and internal costs incurred in the successful negotiations of leases and are deferred and amortized over the terms of the related leases on a straight-line basis. If an applicable lease terminates prior to the expiration of its initial term, the carrying amount of the costs are written off to amortization expense. Amortization of deferred leasing costs totaled $2.8 million and $2.1 million for the three months ended June 30, 2015 and 2014, respectively, and $5.5 million and$4.2 million for thesix months ended June 30, 2015 and 2014, respectively.Deferred leasing costs, net of accumulated amortization are as follows (excluding $2.9 million, net of amortization, related to a leasing arrangement at the Company’s Princeton facility in 2014):

	June 30,		December 31,
(dollars in thousands)	2015		2014
	(unaudited)
Deferred leasing costs	$	33,154	$	26,799
Accumulated amortization		(13,380)		(9,378)
Deferred leasing costs, net	$	19,774	$	17,421

Advance Rents and Security Deposits

Advance Rents and Security Deposits – Advance rents, typically prepayment of the following month’s rent, consist of payments received from customers prior to the time they are earned and are recognized as revenue in subsequent periods when earned. Security deposits are collected from customers at the lease origination and are generally refunded to customers upon lease expiration.

Deferred Income

Deferred Income – Deferred income generally results from non-refundable charges paid by the customer at lease inception to prepare their space for occupancy. The Company records this initial payment, commonly referred to as set-up fees, as a deferred income liability which amortizes into rental revenue over the term of the related lease on a straight-line basis. Deferred income was $19.6 million and $10.5 million as of June 30, 2015 and December 31, 2014, respectively. Additionally, $1.4 million and$1.2 million of deferred income was amortized into revenue for the three months ended June 30, 2015 and 2014, respectively, and $2.7 million and$2.4 million for thesix months ended June 30, 2015 and 2014, respectively.

Interest Rate Derivative Instruments

Interest Rate Derivative Instruments – The Company utilizes derivatives to manage its interest rate exposure. During February 2012, the Company entered into interest rate swaps with a notional amount of $150 million which were cash flow hedges and qualified for hedge accounting. For these hedges, the effective portion of the change in fair value was recognized through other comprehensive income or loss. Amounts were reclassified out of other comprehensive income (loss) as the hedged item was recognized in earnings, either for ineffectiveness or for amounts paid relating to the hedge. The Company reflected all changes in the fair value of the swaps in other comprehensive income (loss) during the three and six months ended June 30, 2014, as there was no ineffectiveness recorded in that period.  The Company had no interest rate swaps outstanding at June 30, 2015 and December 31, 2014.

Equity-based Compensation

Equity-based Compensation – All equity-based compensation is measured at fair value on the grant date or date of modification, as applicable, and recognized in earnings over the requisite service period. Depending upon the settlement terms of the awards, all or a portion of the fair value of equity-based awards may be presented as a liability or as equity in the consolidated balance sheets. Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification. Equity-based compensation expense net of forfeited and repurchased awards was $1.8 million and $1.1 million for the three months ended June 30, 2015 and 2014, respectively, and $3.1 million and $2.0 million for the six months ended June 30, 2015 and 2014,

Rental Revenue

Rental Revenue – The Company, as a lessor, has retained substantially all of the risks and benefits of ownership and accounts for its leases as operating leases. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheets included in rents and other receivables, net was $5.8 million and $4.0 million as of June 30, 2015 and December 31, 2014, respectively. Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed above.

Cloud and Managed Services Revenue – The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided.

Cloud and Managed Services Revenue

Cloud and Managed Services Revenue – The Company may provide both its cloud product and use of its managed services to its customers on an individual or combined basis. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided.

Allowance for Uncollectible Accounts Receivable

Allowance for Uncollectible Accounts Receivable – Rents receivable are recognized when due and are carried at cost, less an allowance for doubtful accounts. The Company records a provision for losses on rents receivable equal to the estimated uncollectible accounts, which is based on management’s historical experience and a review of the current status of the Company’s receivables. As necessary, the Company also establishes an appropriate allowance for doubtful accounts for receivables arising from the straight-lining of rents. The aggregate allowance for doubtful accounts was $5.2 million and $3.7 million as of June 30, 2015 and December 31, 2014, respectively.

Capital Leases and Lease Financing Obligations

Capital Leases and Lease Financing Obligations – The Company evaluates leased real estate to determine whether the lease should be classified as a capital or operating lease in accordance with U.S GAAP.

The Company periodically enters into capital leases for certain equipment.  In addition, through its acquisition of Carpathia Hosting, Inc. (“Carpathia”) on June 16, 2015, the Company is now party to capital leases for property and equipment, as well as financing obligations related to a sale-leaseback transaction.The outstanding liabilities for the capital leases were $32.3 million and $13.1 million as of June 30, 2015 and December 31, 2014, respectively.  The outstanding liabilities for the lease financing obligations were $23.9 million as of June 30, 2015.  The value of the assets associated with these leases approximates the outstanding obligations as of June 30, 2015 and December 31, 2014, respectively. Depreciation related to the associated assets is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income.  

See Note 3 for further discussion of the acquisition of Carpathia and Note 5 for further discussion of capital leases and lease financing obligations.

Recoveries from Customers

Recoveries from Customers – Certain customer leases contain provisions under which the customers reimburse the Company for a portion of the property’s real estate taxes, insurance and other operating expenses, which include certain power and cooling-related charges. The reimbursements are included in revenue as recoveries from customers in the Statements of Operations and Comprehensive Income in the period the applicable expenditures are incurred. Certain customer leases are structured to provide a fixed monthly billing amount that includes an estimate of various operating expenses, with all revenue from such leases included in rental revenues.

Segment Information

Segment Information – The Company manages its business as one operating segment and thus one reportable segment consisting of a portfolio of investments in data centers located in the United States, Canada, Europe and the Asia-Pacific region.  

Customer Concentrations

Customer Concentrations – As of June 30, 2015, one of the Company’s customers represented 7.3% of its total monthly rental revenue. No other customers exceeded 5% of total monthly rental revenue.

As of June 30, 2015,  three of the Company’s customers exceeded 5% of total accounts receivable.  In aggregate, these three customers accounted for 36% of total accounts receivable.  Two of these three customers individually exceeded 10% of total accounts receivable.

Income Taxes

Income Taxes  –The Company elected for one of its existing subsidiaries to be taxed as a taxable REIT subsidiary pursuant to the REIT rules of the U.S. Internal Revenue Code.

For the taxable REIT subsidiary, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

As of December 31, 2014, the taxable REIT subsidiary’s deferred tax assets were primarily the result of U.S. net operating loss carryforwards. A valuation allowance was recorded against its gross deferred tax asset balance as of December 31, 2014.  As a result of the acquisition of Carpathia, the Company has determined that it is more likely than not that pre-existing deferred tax assets will be realized by the combined entity, and the valuation allowance should be eliminated.  The change in the valuation allowance resulting from the change in circumstances is included in income, recognized in deferred income tax benefit in the three and sixth months ended June 30, 2015.

Fair Value Measurements

Fair Value Measurements – ASC Topic 820, Fair Value Measurements, emphasizes that fair-value is a market-based measurement, not an entity-specific measurement. Therefore, a fair-value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, a fair-value hierarchy is established that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the level in the fair-value hierarchy within which the entire fair-value measurement falls is based on the lowest level input that is significant to the fair-value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

As the Company’s previous interest rate swaps matured on September 28, 2014, there are no financial assets or liabilities measured at fair value on a recurring basis on the consolidated balance sheets as of June 30, 2015 and December 31, 2014.

New Accounting Pronouncements

New Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. The new guidance narrows the definition of discontinued operations to disposals that represent a strategic shift in operations and requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in the ASU are effective for annual and interim reporting periods beginning on and after December 15, 2014. Early adoption is permitted. Adoption of this standard did not have any effect on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the current revenue recognition requirements in ASC 606, Revenue Recognition. Under this new guidance, entities should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This ASU also requires enhanced disclosures. In July 2015, the FASB finalized its decision to delay the effective date of the amendments in this ASU by one year, and as such, they are effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted; however, entities are not permitted to adopt the standard earlier than December 15, 2016, the original effective date. Retrospective and modified retrospective application is allowed. The Company is currently assessing the impact of this standard on its consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, and not as a separate deferred charge. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. In June 2015, the Securities and Exchange Commission (“SEC”) stated that given the absence of authoritative guidance within this ASU for debt issuance costs related to revolving debt arrangements, the SEC staff would not object to an entity deferring and presenting such costs as an asset and subsequently amortizing them ratably over the term of the revolving debt arrangement. This announcement confirms that revolver arrangement costs are not within the scope of this ASU. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The amendments are required to be applied on a retrospective basis, and upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. Adoption of this standard will affect the Company’s Consolidated Balance Sheets

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Summary of Significant Accounting Policies (Deferred Leasing Costs, Net of Accumulated Amortization) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Summary of Significant Accounting Policies [Abstract]
Deferred leasing costs	$ 33,154	$ 26,799
Accumulated amortization	(13,380)	(9,378)
Deferred leasing costs, net	$ 19,774	$ 17,421

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2015

Acquisitions [Abstract]

Schedule of the Preliminary Allocation of the Fair Value of Assets Acquired and Liabilities Assumed in Acquisition

The following table summarizes the consideration for the Carpathia acquisition and the preliminary allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (in thousands). This allocation is subject to change pending the final valuation of these assets and liabilities:

	June 16, 2015
Land	$                1,130
Buildings and improvements	79,372
Construction in process	12,127
Acquired intangibles, net	89,847
Net working capital	2,569
Total identifiable assets acquired	185,045
Capital lease and lease financing obligations	43,832
Deferred income taxes	19,766
Total liabilities assumed	63,598
Net identifiable assets acquired	121,447
Goodwill	173,237
Net assets acquired	$           294,684

Pro Forma Consolidated Statements of Operations Including Acquisition

The following table represents the pro forma condensed consolidated statements of operations for the three-month periods ended June 30, 2015 and 2014, and for the six-month periods ended June 30, 2015 and 2014 (in thousands):

	(Unaudited) Pro Forma Condensed Consolidated Statements of Operations
	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Revenue	$              90,984	$              75,493	$           174,309	$           147,877
Net income	$                9,363	$                4,804	$              16,500	$                8,766

Consideration for the New Jersey Facility and the Preliminary Allocation of the Fair Value of Assets Acquired

In June 2015, the Company finalized the Princeton facility purchase price allocation. The following table summarizes the consideration for the Princeton facility and the final valuation of the fair value of assets acquired as of June 30, 2015 (in thousands):

	Princeton facility	Weighted average useful life
Buildings	$                     32,126	40
Land	20,700	N/A
Acquired intangibles	30,634	13
Deferred costs	3,290	10
Other assets	297	10
Intangible liabilities	(13,747)	17
Total purchase price	$                     73,300

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Description of Business

6 Months Ended

Jun. 30, 2015

Description of Business [Abstract]

Description of Business

1. Description of Business

QTS Realty Trust, Inc. (“QTS”) through its controlling interest in QualityTech, LP (the “Operating Partnership” and collectively with QTS and their subsidiaries, the “Company”) and the subsidiaries of the Operating Partnership, is engaged in the business of owning, acquiring, redeveloping and managing multi-tenant data centers. The Company’s portfolio consists of 25wholly-owned and leased properties with data centers located throughout the United States, Canada, Europe and the Asia-Pacific region.

QTS was formed as a Maryland corporation on May 17, 2013. On October 15, 2013, QTS completed its initial public offering of 14,087,500shares of Class A common stock, $0.01 par value per share (the “IPO”), including shares issued pursuant to the underwriters’ option to purchase additional shares, which was exercised in full, and received net proceeds of approximately $279 million. QTS elected to be taxed as a real estate investment trust (“REIT”), for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2013. As a REIT, QTS generally is not required to pay federal corporate income taxes on its taxable income to the extent it is currently distributed to its stockholders.

Concurrently with the completion of the IPO, the Company consummated a series of transactions, including the merger of General Atlantic REIT, Inc. with the Company, pursuant to which the Company became the sole general partner and majority owner of QualityTech, LP, the Operating Partnership. QTS contributed the net proceeds received from the IPO to the Operating Partnership in exchange for partnership units therein. As of June 30, 2015, QTS owned approximately 85.4% of the interests in the Operating Partnership. Substantially all of QTS’ assets are held by, and QTS’ operations are conducted through, the Operating Partnership. QTS’ interest in the Operating Partnership entitles QTS to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to QTS’ percentage ownership. As the sole general partner of the Operating Partnership, QTS generally has the exclusive power under the partnership agreement to manage and conduct the Operating Partnership’s business and affairs, subject to certain limited approval and voting rights of the limited partners. QTS’ board of directors manages the Company’s business and affairs.

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BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	450,133,000	450,133,000
Common stock, shares issued	40,881,002	29,408,138
Common stock, shares outstanding	40,881,002	29,408,138

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Earnings per Share

6 Months Ended

Jun. 30, 2015

Earnings per Share [Abstract]

Earnings per Share

11.  Earnings per share of QTS Realty Trust, Inc.

Basic income (loss) per share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share adjusts basic income (loss) per share for the effects of potentially dilutive common shares.

	Three Months Ended June 30,		Six Months Ended June 30,
(in thousands, except per share data)	2015	2014	2015	2014
Net income available to common stockholders	$               4,632	$               3,090	$               8,714	$               7,288
Weighted average shares outstanding—basic	36,669	29,017	33,996	29,001
Net income per share—basic	$                 0.13	$                 0.11	$                 0.26	$                 0.25
Net income	$               5,520	$               3,921	$             10,557	$               9,249
Weighted average shares outstanding—diluted (1)	44,444	37,010	41,868	36,934
Net income per share—diluted	$                 0.12	$                 0.11	$                 0.25	$                 0.25

(1) Includes 7,063 Class A and Class RS units, 492 “in the money” value of Class O units on an “as if” converted basis and 220 “in the money” value of options to purchase shares of Class A common stock on an “as if” converted basis as of the three months ended June 30, 2015, and 7,189 Class A and Class RS units, 464 “in the money” value of Class O units on an “as if” converted basis and 218 “in the money” value of options to purchase shares of Class A common stock on an “as if” converted basis as of the six months ended June 30, 2015.  As of the three months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 89 “in the money” value of Class O units on as “as if” converted basis and 107 “in the money” value options to purchase shares of Class A common stock on an “as if” converted basis, and as of the six months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 57 “in the money” value of Class O units on an “as if” converted basis and 79 “in the money” value options to purchase shares of Class A common stock on as “as if” converted basis.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 06, 2015
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Entity Registrant Name	QTS Realty Trust, Inc.
Entity Central Index Key	0001577368
Entity Filer Category	Accelerated Filer
Current Fiscal Year End Date	--12-31
Qualitytech, LP [Member]
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Entity Registrant Name	QualityTech, LP
Entity Central Index Key	0001561164
Entity Filer Category	Non-accelerated Filer
Current Fiscal Year End Date	--12-31
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		40,825,412
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		133,000

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Customer Leases, as Lessor

6 Months Ended

Jun. 30, 2015

Customer Leases, as Lessor [Abstract]

Customer Leases, as Lessor

12.  Customer Leases, as Lessor

Future minimum lease payments to be received under non-cancelable operating customer leases (inclusive of payments for contracts which have not yet commenced, and exclusive of recoveries of operating costs from customers) are as follows for the years ending December 31 (in thousands):

Period Ending December 31,
2015 (July - December)	$	153,057
2016		266,881
2017		204,361
2018		135,643
2019		86,934
Thereafter		247,162
Total	$	1,094,038

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STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME UNAUDITED) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues:
Rental		$ 52,193	$ 41,966	$ 101,526	$ 82,545
Recoveries from customers		5,582	3,852	11,246	7,543
Cloud and managed services		8,220	4,970	14,015	9,201
Other		2,122	550	2,716	992
Total revenues		68,117	51,338	129,503	100,281
Operating Expenses:
Property operating costs		22,031	16,529	41,367	32,752
Real estate taxes and insurance		1,474	1,118	2,959	2,336
Depreciation and amortization		18,062	13,817	34,305	27,064
General and administrative		14,615	11,473	28,453	22,251
Restructuring			1,046		1,046
Transaction and integration costs		4,669	1,089	4,774	1,153
Total operating expenses		60,851	45,072	111,858	86,602
Operating income		7,266	6,266	17,645	13,679
Other income and expenses:
Interest income		1		1	8
Interest expense		(4,799)	(2,208)	(10,141)	(4,273)
Other (expense) income, net		(83)	(110)	(83)	(110)
Income before taxes		2,385	3,948	7,422	9,304
Tax benefit (expense) of taxable REIT subsidiaries		3,135	(27)	3,135	(55)
Net income		5,520	3,921	10,557	9,249
Net income attributable to noncontrolling interests		(888)	(831)	(1,843)	(1,961)
Net income		4,632	3,090	8,714	7,288
Unrealized gain on swap			127		232
Comprehensive income		$ 4,632	$ 3,217	$ 8,714	$ 7,520
Net income per share attributable to common shares:
Basic		$ 0.13	$ 0.11	$ 0.26	$ 0.25
Diluted		$ 0.12	$ 0.11	$ 0.25	$ 0.25
Weighted average common shares outstanding:
Basic		36,668,755	29,016,774	33,996,467	29,001,374
Diluted	[1]	44,444,104	37,009,746	41,867,944	36,934,210
Qualitytech, LP [Member]
Revenues:
Rental		$ 52,193	$ 41,966	$ 101,526	$ 82,545
Recoveries from customers		5,582	3,852	11,246	7,543
Cloud and managed services		8,220	4,970	14,015	9,201
Other		2,122	550	2,716	992
Total revenues		68,117	51,338	129,503	100,281
Operating Expenses:
Property operating costs		22,031	16,529	41,367	32,752
Real estate taxes and insurance		1,474	1,118	2,959	2,336
Depreciation and amortization		18,062	13,817	34,305	27,064
General and administrative		14,615	11,473	$ 28,453	22,251
Restructuring			1,046		1,046
Transaction and integration costs		4,669	1,089	$ 4,774	1,153
Total operating expenses		60,851	45,072	111,858	86,602
Operating income		7,266	6,266	17,645	13,679
Other income and expenses:
Interest income		1		1	8
Interest expense		(4,799)	(2,208)	(10,141)	(4,273)
Other (expense) income, net		(83)	(110)	(83)	(110)
Income before taxes		2,385	3,948	7,422	9,304
Tax benefit (expense) of taxable REIT subsidiaries		3,135	(27)	3,135	(55)
Net income		5,520	3,921	10,557	9,249
Unrealized gain on swap			127		232
Comprehensive income		$ 5,520	$ 4,048	$ 10,557	$ 9,481

[1] Includes 7,063 Class A and Class RS units, 492 "in the money" value of Class O units on an "as if" converted basis and 220 "in the money" value of options to purchase shares of Class A common stock on an "as if" converted basis as of the three months ended June 30, 2015, and 7,189 Class A and Class RS units, 464 "in the money" value of Class O units on an "as if" converted basis and 218 "in the money" value of options to purchase shares of Class A common stock on an "as if" converted basis as of the six months ended June 30, 2015. As of the three months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 89 "in the money" value of Class O units on as "as if" converted basis and 107 "in the money" value options to purchase shares of Class A common stock on an "as if" converted basis, and as of the six months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 57 "in the money" value of Class O units on an "as if" converted basis and 79 "in the money" value options to purchase shares of Class A common stock on as "as if" converted basis.

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Interest Rate Derivative Instruments

6 Months Ended

Jun. 30, 2015

Interest Rate Derivative Instruments [Abstract]

Interest Rate Derivative Instruments

6. Interest Rate Derivative Instruments

The Company entered into interest rate swap agreements with a notional amount of $150 million on February 8, 2012, which were designated as cash flow hedges for hedge accounting, and matured on September 28, 2014.  For derivative instruments that are accounted for as hedges, the change in fair value for the effective portions of qualifying hedges is recorded through other comprehensive income (loss). The total amount of unrealized gains recorded in other comprehensive income (loss) for the six months ended June 30, 2014 was $0.2 million, with no unrealized gains or losses recorded for the six months ended June 30, 2015.  Interest expense related to payments on interest rate swaps for the three and six months ended June 30, 2014 was $0.2 million and $0.3 million, respectively, with no interest expense recorded for the three and six months ended June 30, 2015.

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Debt

6 Months Ended

Jun. 30, 2015

Debt [Abstract]

Debt

5. Debt

Below is a listing of the Company’s outstanding debt, including capital leases and lease financing obligations, as of June 30, 2015 and December 31, 2014 (in thousands):

	June 30,		December 31,
	2015		2014
	(Unaudited)
Unsecured Credit Facility	$	330,000	$	239,838
Senior Notes, net of discount		297,852		297,729
Richmond Credit Facility		70,000		70,000
Atlanta-Metro Equipment Loan		-		16,600
Capital Lease and Lease Financing Obligations		56,211		13,062
Total	$	754,063	$	637,229

Credit Facilities, Senior Notes and Mortgage Notes Payable

(a) Unsecured Credit Facility – On May 1, 2013, the Company entered into a $575 million unsecured credit facility comprised of a five-year $225 million term loan and a four-year $350 million revolving credit facility with a one year extension, subject to satisfaction of certain conditions, and had the ability to expand the total credit facility by an additional $100 million subject to certain conditions set forth in the credit agreement. In July 2014, the Company’s term loan was reduced by $75 million to $150 million in connection with the issuance of the Senior Notes. On December 17, 2014, the Company amended and restated its unsecured credit facility to provide for a $650 million unsecured credit facility comprised of a five-year $100 million term loan maturing December 17, 2019 and a four-year $550 million revolving credit facility maturing December 17, 2018, with the option to extend one year until December 17, 2019, subject to the satisfaction of certain conditions. The lenders under the unsecured credit facility may issue up to $30 million in letters of credit subject to the satisfaction of certain conditions.  The total unsecured credit facility may be increased from the current capacity of $650 million to up to $850 million subject to certain conditions set forth in the credit agreement, including the consent of the administrative agent and obtaining necessary commitments. As of June 30, 2015, borrowings under the unsecured credit facility consisted of $230.0 million outstanding under the revolving credit facility and $100.0 million outstanding under the term loan.

The unsecured credit facility requires monthly interest payments and requires the Company to comply with various customary affirmative and negative covenants and quarterly financial covenant requirements relating to the debt service coverage ratio, fixed charge ratio, leverage ratio and tangible net worth and various other operational requirements.  In connection with the unsecured credit facility, as of June 30, 2015, the Company had an additional $2.5 million letter of credit outstanding.

Amounts outstanding under the unsecured credit facility bear interest at a variable rate equal to, at the Company’s election, LIBOR or a base rate, plus a spread that will vary depending upon the Company’s leverage ratio.  For revolving credit loans, the spread ranges from 1.70% to 2.25% for LIBOR loans and 0.70% to 1.25% for base rate loans.  For term loans, the spread ranges from 1.65% to 2.20% for LIBOR loans and 0.65% to 1.20% for base rate loans. As of June 30, 2015, the weighted average interest rate for amounts outstanding under the unsecured credit facility was 1.87%.  

(b) Senior Notes – On July 23, 2014, the Operating Partnership and QTS Finance Corporation, a subsidiary of the Operating Partnership formed solely for the purpose of facilitating the offering of the notes described below (collectively, the “Issuers”), issued $300 million aggregate principal amount of 5.875% Senior Notes due 2022 (the “Senior Notes”). The Senior Notes have an interest rate of 5.875% per annum, were issued at a price equal to 99.211% of their face value and mature on August 1, 2022. The proceeds from the offering were used to repay amounts outstanding under the unsecured credit facility, including $75 million outstanding under the term loan. The Senior Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Operating Partnership’s existing subsidiaries (other than foreign subsidiaries, Carpathia related subsidiaries and receivables entities) and future subsidiaries that guarantee any indebtedness of QTS Realty Trust, Inc., the Issuers or any other subsidiary guarantor. The Company will not initially guarantee the Senior Notes and will not be required to guarantee the Senior Notes except under certain circumstances. The offering was conducted pursuant to Rule 144A of the Securities Act of 1933, as amended, and the Senior Notes were issued pursuant to an indenture, dated as of July 23, 2014, among the Operating Partnership, QTS Finance Corporation, the Company, the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee (the “Indenture”).

On March 23, 2015, the SEC declared effective the Operating Partnership and QTS Finance Corporation’s registration statement on Form S-4 pursuant to which the issuers exchanged the originally issued Senior Notes for $300 million of 5.875% Senior Notes due 2022 (the “Exchange Notes”) that are registered under the Securities Act of 1933, as amended. The exchange offer was completed on April 23, 2015, and all outstanding originally issued Senior Notes were tendered. The Exchange Notes did not provide the Company with any additional proceeds and satisfied its obligations under a registration rights agreement entered into in connection with the issuance of the Senior Notes. 

(c) Richmond Credit Facility – In December 2012, the Company entered into a credit facility secured by the Company’s Richmond data center (the “Richmond Credit Facility”). As of June 30, 2015, the Richmond Credit Facility had capacity of $120 million and includes an accordion feature that allows the Company to increase the size of the credit facility up to $200 million.  The Richmond Credit Facility matures June 30, 2019.  The Richmond Credit Facility requires the Company to comply with covenants similar to the unsecured credit facility.

Amounts outstanding under the Richmond Credit Facility bear interest at a variable rate equal to, at the Company’s election, LIBOR or a base rate, plus a spread that will range, depending upon the Company’s leverage ratio, from 2.10% to 2.85% for LIBOR loans or 1.10% to 1.85% for base rate loans. As of June 30, 2015, the interest rate for amounts outstanding under the Richmond Credit Facility was 2.29%.  

On December 17, 2014, the Company further amended the Richmond Credit Facility to, among other things, conform certain terms of the Richmond Credit Facility to the unsecured credit facility and allow two subsidiaries of the Operating Partnership that were parties to the Richmond Credit Facility to guarantee unsecured obligations of the Operating Partnership and its subsidiaries, including the unsecured credit facility and the Senior Notes.

(d) Atlanta-Metro Equipment Loan – On April 9, 2010, the Company entered into a $25 million loan to finance equipment related to an expansion project at the Company’s Atlanta-Metro data center (the “Atlanta-Metro Equipment Loan”). The loan originally required monthly interest-only payments and subsequently required monthly interest and principal payments. The loan bore interest at 6.85%and was scheduled to mature on June 1, 2020. This debt was repaid in June 2015 when its prepayment penalties expired.

The annual remaining principal payment requirements as of June 30, 2015 per the contractual maturities and excluding extension options, capital leases and lease financing obligations, are as follows (in thousands):

2015	$	-
2016		-
2017		-
2018		230,000
2019		170,000
Thereafter		300,000
Total	$	700,000

As of June 30, 2015, the Company was in compliance with all of its covenants.

Capital Leases

The Company has historically entered into capital leases for certain equipment.  In addition, through its acquisition of Carpathia on June 16, 2015, the Company acquired capital leases of both equipment and certain properties. Total outstanding liabilities for capital leaseswere  $32.3 million as of June 30, 2015, of which $19.6 million were assumed through the Carpathia acquisition, $19.2 million of which was related to the lease of real property.  Carpathia had entered into capital lease arrangements for datacenter space under two lease agreements expiring in 2018 and 2019 at its Harrisonburg, Virginia and Ashburn, Virginia locations. Total recurring monthly payments range from approximately $0.2 million to $0.5 million during the terms of the leases, in addition to payments made for utilities. Depreciation related to the associated assets for the capital leases is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income.  

Lease Financing Obligations

Through the acquisition of Carpathia, the Company acquired lease financing obligations totaling$23.9 million at June 30, 2015, of which $21.3 million related to a sale-leaseback transaction where Carpathia has continuing involvement. On December 23, 2011, Carpathia sold the shell of a building and the associated land to an unrelated third party. Carpathia leases the property back and is a party to an agreement with the same third party to construct a new building on the adjoining property for use as a data center. Carpathia is primarily responsible for financing the improvements and outfitting the building with the necessary equipment. The third party leases back the new building in stages to Carpathia as the various stages are completed. In accordance with ASC 840-40, Leases, Carpathia has continuing involvement with the related leased assets; therefore, the Company will continue to account for the existing building shell and the associated land as fixed assets and will capitalize the construction costs of the new building. The financing obligation related to the building and equipment was $19.6 million at June 30, 2015. In addition, due to Carpathia’s continuing involvement, it was required to defer a gain on the sale of the assets. The deferred gain was $1.7 million at June 30, 2015, and is also included in lease financing obligations.

Thefinancing obligation is reduced as rental payments are made on the existing building, which payments started in January 2012. Rental payments, which include amounts attributable to both principal and interest, increased to approximately $0.2 million per month in March 2013, which is when the newly constructed building was inhabited by Carpathia. Depreciation expense on the related asset is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income.  

The Company, through its acquisition of Carpathia, also has a lease financing agreement in connection with a  $4.8 million tenant improvement allowance on one of its datacenter lease agreements. The financing requires monthly payments of principal and interest of less than $0.1 million through February 2019.  The outstanding balance on the financing agreement was $2.6 million as of June 30, 2015.  Depreciation expense on the related leasehold improvements is included in depreciation and amortization expense in the Statements of Operations and Comprehensive Income.  

The following table summarizes the Company’s combined future payment obligations, excluding interest, as of June 30, 2015, on the capital leases and lease financing obligations above (in thousands):

2015	$	6,450
2016		12,558
2017		12,388
2018		8,804
2019		2,461
Thereafter		13,550
Total	$	56,211

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2015

Summary of Significant Accounting Policies [Abstract]

Deferred Financing Costs, Net of Accumulated Amortization

Deferred financing costs, net of accumulated amortization are as follows:

	June 30,			December 31,
(dollars in thousands)	2015		2014
	(unaudited)
Deferred financing costs	$	18,581	$	18,152
Accumulated amortization		(3,303)		(1,683)
Deferred financing costs, net	$	15,278	$	16,469

Deferred Leasing Costs, Net of Accumulated Amortization

Deferred leasing costs, net of accumulated amortization are as follows (excluding $2.9 million, net of amortization, related to a leasing arrangement at the Company’s Princeton facility in 2014):

	June 30,		December 31,
(dollars in thousands)	2015		2014
	(unaudited)
Deferred leasing costs	$	33,154	$	26,799
Accumulated amortization		(13,380)		(9,378)
Deferred leasing costs, net	$	19,774	$	17,421

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2015

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

13.  Fair Value of Financial Instruments

ASC Topic 825 requires disclosure of fair value information about financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows based upon market yields or by using other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts.

Short-term instruments: The carrying amounts of cash and cash equivalents and restricted cash approximate fair value.

Credit facilities, Senior Notes and mortgage notes payable: The fair value of the Company’s floating rate mortgage loans was estimated using Level 2 “significant other observable inputs” such as available market information based on borrowing rates that the Company believes it could obtain with similar terms and maturities.  The Company’s unsecured credit facility and Richmond Credit Facility did not have interest rates which were materially different than current market conditions and therefore, the fair value of each of the credit facilities approximated the carrying value of each note.  The fair value of the Company’s Senior Notes was estimated using Level 2 “significant other observable inputs,” primarily based on quoted market prices for the same or similar issuances. At June 30, 2015, the fair value of the Senior Notes was approximately $299.3 million.

Other debt instruments: The fair value of the Company’s other debt instruments (including capital leases and lease financing obligations) were estimated in the same manner as the credit facilities and mortgage notes payable above. Similarly, because each of these instruments did not have interest rates which were materially different than current market conditions and therefore, the fair value of each instrument approximated the respective carrying values.

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Related Party Transactions

6 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions

9.  Related Party Transactions

The Company periodically executes transactions with entities affiliated with its Chairman and Chief Executive Officer. Such transactions include automobile, furniture and equipment purchases as well as building operating lease payments and receipts, and reimbursement for the use of a private aircraft service by the Company’s officers and directors.

The transactions which occurred during the three and six months ended June 30, 2015 and 2014 are outlined below (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(dollars in thousands)	2015		2014		2015		2014
Tax, utility, insurance and other reimbursement	$	65	$	115	$	145	$	167
Rent expense		254		257		507		519
Capital assets acquired		26		27		125		74
Total	$	345	$	399	$	777	$	760

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Customer Leases, as Lessor (Future Minimum Lease Payments to be Received Under Non-Cancelable Operating Customer Leases) (Details) $ in Thousands	Jun. 30, 2015 USD ($)
Customer Leases, as Lessor [Abstract]
2015 (July - December)	$ 153,057
2016	266,881
2017	204,361
2018	135,643
2019	86,934
Thereafter	247,162
Total	$ 1,094,038

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies [Abstract]

Commitments and Contingencies

7.  Commitments and Contingencies

The Company is subject to various routine legal proceedings and other matters in the ordinary course of business. The Company does not currently have any litigation that would have a material adverse impact on the Company’s financial statements.

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Partners' Capital, Equity and Incentive Compensation Plans

6 Months Ended

Jun. 30, 2015

Partners' Capital, Equity and Incentive Compensation Plans [Abstract]

Partners' Capital, Equity and Incentive Compensation Plans

8.  Partners’ Capital, Equity and Incentive Compensation Plans

QualityTech, LP

QTS has the full power and authority to do all the things necessary to conduct the business of the Operating Partnership.

As of June 30, 2015, the Operating Partnership had three classes of limited partnership units outstanding: Class A units of limited partnership interest (“Class A units”), Class RS LTIP units of limited partnership interest (“Class RS units”) and Class O LTIP units of limited partnership units (“Class O units”). The Class A Units are redeemable at any time on or after one year following the later of November 1, 2013 (which is the beginning of the first full calendar month following the completion of the IPO) or the date of initial issuance. The Company may in its sole discretion elect to assume and satisfy the redemption amount with cash or its shares. Class RS units or Class O units were issued upon grants made under the QualityTech, LP 2010 Equity Incentive Plan (the “2010 Equity Incentive Plan”). Class RS units and Class O units may be subject to vesting and are pari passu with Class A units. Each Class RS unit and Class O unit is convertible into Class A units by the Operating Partnership at any time or by the holder at any time following full vesting (if such unit is subject to vesting) based on formulas contained in the partnership agreement. In addition, upon certain circumstances set forth in the partnership agreement, vested Class RS units automatically convert into Class A units of the Operating Partnership.

QTS Realty Trust, Inc.

In connection with its IPO, QTS issued Class A common stock and Class B common stock. Class B common stock entitles the holder to 50 votes per share and was issued to enable the Company’s Chief Executive Officer to exchange 2% of his Operating Partnership units so he may have a vote proportionate to his economic interest in the Company. Also in connection with its IPO, QTS adopted the QTS Realty Trust, Inc. 2013 Equity Incentive plan (the “2013 Equity Incentive Plan”), which authorized 1.75 million shares of Class A common stock to be issued under the plan, including options to purchase Class A common stock, restricted Class A common stock, Class O units, and Class RS units. In March 2015, the Board of Directors approved an amendment to the 2013 Equity Incentive Plan to, among other things, increase the number of shares available for issuance under the plan by 3,000,000, subject to stockholder approval.  The stockholders approved the amendment at the annual meeting of stockholders held on May 4, 2015, increasing the total number of shares available for issuance under the 2013 Equity Incentive Plan to 4,750,000.

The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the six months ended June 30, 2015:  

	2010 Equity Incentive Plan					2013 Equity Incentive Plan
	Number of Class O units	Weighted average exercise price	Weighted average fair     value	Number of Class RS units	Weighted average grant date value	Options	Weighted average exercise price	Weighted average fair     value	Restricted Stock	Weighted average grant date value
Outstanding at December 31, 2014	1,518,717	$ 23.49	$ 3.75	74,625	$ 23.49	584,949	$ 22.87	$ 4.10	246,785	$ 29.13
Granted	—	—	—	—	—	312,997	36.14	8.02	186,070	35.95
Exercised/Vested (2)	(46,170)	20.62	4.74	—	—	(8,843)	21.80	3.80	(20,453)	23.26
Released from restriction (1)	—	—	—	(17,375)	25.00	—	—	—	—	—
Cancelled/Expired (3)	—	—	—	—	—	(8,594)	21.00	3.52	(9,625)	23.92
Outstanding at June 30, 2015	1,472,547	$ 23.58	$ 3.72	57,250	$ 23.03	880,509	$ 27.61	$ 5.50	402,777	$ 32.70

(1) This represents Class RS units that upon vesting have converted to Operating Partnership units.

(2) This represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock.

(3) Includes 9,625 restricted Class A common stock surrendered by certain employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock.

The assumptions and fair values for restricted stock and options to purchase shares of Class A common stock granted for the six months ended June 30, 2015 are included in the following table on a per unit basis. Class O units and options to purchase shares of Class A common stock were valued using the Black-Scholes model.

	Three and Six Months Ended June 30, 2015
Fair value of restricted stock granted	$35.81-$37.64
Fair value of options granted	$8.00-$8.05
Expected term (years)	5.5-6.1
Expected volatility	33%
Expected dividend yield	3.50-3.57%
Expected risk-free interest rates	1.67-1.69%

The following table summarizes information about awards outstanding as of June 30, 2015.

		Operating Partnership Awards Outstanding
	Exercise prices		Awards outstanding	Weighted average remaining vesting period (years)
Class RS Units	$	-	57,250	2
Class O Units	$	20-25	1,472,547	1
Total Operating Partnership awards outstanding			1,529,797

		QTS Realty Trust, Inc. Awards Outstanding
	Exercise prices		Awards outstanding	Weighted average remaining vesting period (years)
Restricted stock	$	-	402,777	3
Options to purchase Class A common stock	$	21-36.54	880,509	1
Total QTS Realty Trust, Inc. awards outstanding			1,283,286

All nonvested LTIP unit awards are valued as of the grant date and generally vest ratably over a defined service period. Certain nonvested LTIP unit awards vest on the earlier of achievement by the Company of various performance goals or specified dates in 2015 and 2016. As of June 30, 2015 there were 0.6 million, 0.1 million, 0.4 million and 0.4 million nonvested Class O units, Class RS units, restricted Class A common stock and options to purchase Class A common stock outstanding, respectively. As of June 30, 2015 the Company had $16.8 million ofunrecognized equity-based compensation expense which will be recognized over the remaining vesting period of up to 4 years. The total intrinsic value of the awards outstanding at June 30, 2015was $44.1 million.

On January 7, 2014, the Company paid its first and prorated dividend to common stockholders of $0.24 per common share and the Operating Partnership made a distribution to its partners of $0.24 per unit in an aggregate amount of $9.0 million. On April 8, 2014, the Company paid its regular quarterly cash dividend of $0.29 per common share and the Operating Partnership made a distribution to its partners of $0.29 per unit in an aggregate amount of $10.7 million.  Additionally, a distribution of approximately $200,000 was made to Class O LTIP holders during the three months ended June 30, 2014 to cover federal, state and local taxes on the allocated taxable income of the O LTIPs.

On January 7, 2015, the Company paid its regular quarterly cash dividend of $0.29 per common share and the Operating Partnership made a distribution to its partners of $0.29 per unit in an aggregate amount of $10.7 million. On April 7, 2015, the Company paid its regular quarterly cash dividend of $0.32 per common share and the Operating Partnership made a distribution to its partners of $0.32 per unit in an aggregate amount of $13.4 million.

On March 2, 2015, the Company issued 5,000,000 shares of QTS’ Class A common stock and GA QTS Interholdco, LLC, a selling stockholder and an affiliate of General Atlantic LLC, sold 4,350,000 shares of QTS’ Class A common stock at a price of $34.75 per share. The selling stockholder granted the underwriters a 30-day option to purchase an aggregate of up to an additional 1,402,500 shares of QTS’ Class A common stock at the public offering price, which the underwriters exercised. The Company used the net proceeds of approximately $166.4 million to repay amounts outstanding under its unsecured revolving credit facility. The Company did not receive any proceeds from the offering of shares by the selling stockholder.

On June 5, 2015, the Company issued 5,750,000 shares of QTS’ Class A common stock and GA QTS Interholdco, LLC, a selling stockholder, sold 1,250,000 shares of QTS’ Class A common stock at a price of $37.00 per share. The selling stockholder granted the underwriters a 30-day option to purchase an aggregate of up to an additional 1,050,000 shares of QTS’ Class A common stock at the public offering price, which the underwriters exercised. The Company used the net proceeds of approximately $203.7 million to fund a portion of the cash consideration payable by the Company in the Carpathia acquisition, and prior to such use, it used a portion of the net proceeds to repay amounts outstanding under its unsecured revolving credit facility and to pay off its Atlanta-Metro Equipment Loan. The Company did not receive any proceeds from the offering of shares by the selling stockholder.

QTS Realty Trust, Inc. Employee Stock Purchase Plan

In June 2015, the Company established the QTS Realty Trust, Inc. Employee Stock Purchase Plan (the “Plan”) to give eligible employees the opportunity to purchase, through payroll deductions, shares of the Company’s Class A common stock in the open market by an independent broker selected by the Company’s Board of Directors (the “Board”) or the plan’s administrator.  Eligible employees include all employees of the Company and its majority-owned subsidiaries (excluding executives) who have been employed for at least thirty days and who perform at least thirty hours of service per week for the Company.  The Plan will be effective July 1, 2015 and will be administered by the Board or by a committee of one or more persons appointed by the Board.  The Company has reserved 250,000 shares for purchase under the Plan and has also agreed to pay the brokerage commissions and fees associated with a Plan participant's purchase of shares.  An eligible employee may deduct a minimum of $40 per month and a maximum of $2,000 per month towards the purchase of shares. On June 17, 2015, the Company filed a registration statement on Form S-8 to register the 250,000 shares of the Company’s Class A common stock related to the Plan.

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Noncontrolling Interest

6 Months Ended

Jun. 30, 2015

Noncontrolling Interest [Abstract]

Noncontrolling Interest

10.  Noncontrolling Interest

Concurrently with the completion of the IPO, QTS consummated a series of transactions pursuant to which QTS became the sole general partner and majority owner of QualityTech, LP, which then became its operating partnership. The previous owners of QualityTech, LP retained 21.2% ownership of the Operating Partnership.

Commencing at any time beginning November 1, 2014, at the election of the holders of the noncontrolling interest, the Class A units are redeemable for cash or, at the election of the Company, common stock of the Company on a one-for-one basis. During the first and second quarters of 2015, approximately 230,000and 300,000 Class A units, respectively, were redeemed for the Company’s Class A common stock. As a result, the noncontrolling ownership interest of QualityTech, LP, after taking into account the Class A units redeemed, the grant of equity awards and the issuance of 5,000,000and 5,750,000shares of common stock in March and June 2015, respectively, was 14.6% at June 30, 2015.

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Condensed Consolidating Financial Information (Condensed Consolidating Statements of Cash Flow) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	$ 41,161	$ 29,650
Cash flow from investing activities:
Acquisitions, net of cash acquired	(288,865)	(73,300)
Additions to property and equipment	(170,150)	(114,157)
Cash used in investing activities	(459,015)	(187,457)
Cash flow from financing activities:
Credit facility proceeds	350,162	182,500
Debt repayment	(260,000)
Payment of deferred financing costs	(512)	(924)
Payment of cash dividend	(19,673)	(15,368)
Principal payments on capital lease obligation	(1,227)	(367)
Scheduled mortgage principal debt repayments	(16,600)	(1,100)
Equity proceeds, net of costs	370,074
Net cash provided by financing activities	417,810	160,087
Net (decrease) increase in cash and cash equivalents	(44)	2,279
Cash and cash equivalents, beginning of period	10,788	5,210
Cash and cash equivalents, end of period	10,744	7,489
Qualitytech, LP [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	41,161	29,650
Cash flow from investing activities:
Acquisitions, net of cash acquired	(288,865)	(73,300)
Additions to property and equipment	(170,150)	(114,157)
Cash used in investing activities	(459,015)	(187,457)
Cash flow from financing activities:
Credit facility proceeds	350,162	182,500
Debt repayment	(260,000)
Payment of deferred financing costs	(512)	(924)
Payment of cash dividend	(19,673)	(15,368)
Partnership distributions	(4,414)	(4,654)
Principal payments on capital lease obligation	(1,227)	(367)
Scheduled mortgage principal debt repayments	(16,600)	$ (1,100)
Equity proceeds, net of costs	370,074
Net cash provided by financing activities	417,810	$ 160,087
Net (decrease) increase in cash and cash equivalents	(44)	2,279
Cash and cash equivalents, beginning of period	10,788	5,210
Cash and cash equivalents, end of period	10,744	$ 7,489
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	36,534
Cash flow from investing activities:
Acquisitions, net of cash acquired	(288,865)
Additions to property and equipment	(170,150)
Cash used in investing activities	(459,015)
Cash flow from financing activities:
Credit facility proceeds	350,162
Debt repayment	(260,000)
Payment of deferred financing costs	(512)
Payment of cash dividend	(19,673)
Partnership distributions	(4,414)
Principal payments on capital lease obligation	(1,227)
Scheduled mortgage principal debt repayments	(16,600)
Equity proceeds, net of costs	370,074
Net cash provided by financing activities	417,810
Net (decrease) increase in cash and cash equivalents	(4,671)
Cash and cash equivalents, beginning of period	10,788
Cash and cash equivalents, end of period	6,117
Non-Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash provided by operating activities	4,627
Cash flow from financing activities:
Net (decrease) increase in cash and cash equivalents	4,627
Cash and cash equivalents, end of period	$ 4,627

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Condensed Consolidating Financial Information (Condensed Consolidating Statement of Operations and Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues:
Rental	$ 52,193	$ 41,966	$ 101,526	$ 82,545
Recoveries from customers	5,582	3,852	11,246	7,543
Cloud and managed services	8,220	4,970	14,015	9,201
Other	2,122	550	2,716	992
Total revenues	68,117	51,338	129,503	100,281
Operating Expenses:
Property operating costs	22,031	16,529	41,367	32,752
Real estate taxes and insurance	1,474	1,118	2,959	2,336
Depreciation and amortization	18,062	13,817	34,305	27,064
General and administrative	14,615	11,473	28,453	22,251
Restructuring		1,046		1,046
Transaction and integration costs	4,669	1,089	4,774	1,153
Total operating expenses	60,851	45,072	111,858	86,602
Operating income	7,266	6,266	17,645	13,679
Other income and expenses:
Interest income	1		1	8
Interest expense	(4,799)	(2,208)	(10,141)	(4,273)
Other (expense) income, net	(83)	(110)	(83)	(110)
Income before taxes	2,385	3,948	7,422	9,304
Tax benefit (expense) of taxable REIT subsidiaries	3,135	(27)	3,135	(55)
Net income	5,520	3,921	10,557	9,249
Qualitytech, LP [Member]
Revenues:
Rental	52,193	41,966	101,526	82,545
Recoveries from customers	5,582	3,852	11,246	7,543
Cloud and managed services	8,220	4,970	14,015	9,201
Other	2,122	550	2,716	992
Total revenues	68,117	51,338	129,503	100,281
Operating Expenses:
Property operating costs	22,031	16,529	41,367	32,752
Real estate taxes and insurance	1,474	1,118	2,959	2,336
Depreciation and amortization	18,062	13,817	34,305	27,064
General and administrative	14,615	11,473	$ 28,453	22,251
Restructuring		1,046		1,046
Transaction and integration costs	4,669	1,089	$ 4,774	1,153
Total operating expenses	60,851	45,072	111,858	86,602
Operating income	7,266	6,266	17,645	13,679
Other income and expenses:
Interest income	1		1	8
Interest expense	(4,799)	(2,208)	(10,141)	(4,273)
Other (expense) income, net	(83)	(110)	(83)	(110)
Income before taxes	2,385	3,948	7,422	9,304
Tax benefit (expense) of taxable REIT subsidiaries	3,135	(27)	3,135	(55)
Net income	5,520	$ 3,921	10,557	$ 9,249
Guarantor Subsidiaries [Member]
Revenues:
Rental	50,740		100,073
Recoveries from customers	5,582		11,246
Cloud and managed services	5,958		11,753
Other	2,120		2,714
Total revenues	64,400		125,786
Operating Expenses:
Property operating costs	20,564		39,900
Real estate taxes and insurance	1,474		2,959
Depreciation and amortization	16,876		33,119
General and administrative	13,781		$ 27,619
Restructuring
Transaction and integration costs	4,669		$ 4,774
Total operating expenses	57,364		108,371
Operating income	7,036		17,415
Other income and expenses:
Interest income	1		1
Interest expense	(4,743)		(10,085)
Other (expense) income, net	(83)		(83)
Equity in net income of subsidiaries	174		174
Income before taxes	2,385		7,422
Tax benefit (expense) of taxable REIT subsidiaries	3,135		3,135
Net income	5,520		10,557
Non-Guarantor Subsidiaries [Member]
Revenues:
Rental	1,453		1,453
Cloud and managed services	2,262		2,262
Other	2		2
Total revenues	3,717		3,717
Operating Expenses:
Property operating costs	1,467		1,467
Depreciation and amortization	1,186		1,186
General and administrative	834		$ 834
Restructuring
Total operating expenses	3,487		$ 3,487
Operating income	230		230
Other income and expenses:
Interest expense	(56)		(56)
Income before taxes	174		174
Net income	174		$ 174
Eliminations [Member]
Operating Expenses:
Restructuring
Other income and expenses:
Equity in net income of subsidiaries	(174)		$ (174)
Income before taxes	(174)		(174)
Net income	$ (174)		$ (174)

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Summary of Significant Accounting Policies (Additional Information 1) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Jun. 16, 2015	Dec. 31, 2014	Feb. 29, 2012	Feb. 08, 2012
Summary Of Significant Accounting Policies [Line Items]
Impairment losses	$ 0	$ 0	$ 0	$ 0
Goodwill	173,237		173,237
Amortization of the deferred financing costs			1,585	1,314
Amortization of deferred leasing costs totaled	2,800	2,100	5,500	4,200
Deferred income	19,557		19,557			$ 10,531
Amortization of deferred revenue	1,400	1,200	2,700	2,400
Company recorded equity-based compensation expense net of repurchased awards and forfeits	1,800	1,100	3,100	2,000
Amount of the straight-line rent receivable on the balance sheets included in rents and other receivables	5,800		5,800			$ 4,000
Unsecured Revolving Credit Facility [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization of the deferred financing costs	800	600
Interest Rate Swap [Member]
Summary Of Significant Accounting Policies [Line Items]
Notional amount of derivative	0		0
Derivative ineffectiveness		$ 0		$ 0
Interest Rate Swap [Member] | Cash Flow Hedging [Member]
Summary Of Significant Accounting Policies [Line Items]
Notional amount of derivative							$ 150,000	$ 150,000
Carpathia Hosting, Inc. [Member]
Summary Of Significant Accounting Policies [Line Items]
Goodwill	$ 173,000		$ 173,000		$ 173,237

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Interest Rate Derivative Instruments (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Feb. 29, 2012	Feb. 08, 2012
Derivative [Line Items]
Unrealized gains or losses on cash flow hedge derivative effective portion			$ 0	$ 200
Interest expense related to payments on interest rate swaps	$ 4,799	$ 2,208	10,141	4,273
Interest Rate Swap [Member]
Derivative [Line Items]
Derivative instruments, notional amount	0		0
Interest expense related to payments on interest rate swaps	$ 0	$ 200	$ 0	$ 300
Cash Flow Hedging [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Derivative inception date			Feb. 08, 2012
Derivative maturity date			Sep. 28, 2014
Derivative instruments, notional amount					$ 150,000	$ 150,000

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Subsequent Events

6 Months Ended

Jun. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

15. Subsequent Events

On July 8, 2015, the Company paid its regular quarterly cash dividend of $0.32 per common share and per unit in the Operating Partnership to stockholders and unit holders of record as of the close of business on June 19, 2015.  

On August 6, 2015, the Company declared its cash dividend for the third quarter of 2015 of $0.32 per common share and per unit in the Operating Partnership. The dividend is payable on October 6, 2015 to stockholders and unit holders of record as of the close of business on September 18, 2015.

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Debt (Tables)

6 Months Ended

Jun. 30, 2015

Debt [Abstract]

Outstanding Debt Excluding Capital Leases

Below is a listing of the Company’s outstanding debt, including capital leases and lease financing obligations, as of June 30, 2015 and December 31, 2014 (in thousands):

	June 30,		December 31,
	2015		2014
	(Unaudited)
Unsecured Credit Facility	$	330,000	$	239,838
Senior Notes, net of discount		297,852		297,729
Richmond Credit Facility		70,000		70,000
Atlanta-Metro Equipment Loan		-		16,600
Capital Lease and Lease Financing Obligations		56,211		13,062
Total	$	754,063	$	637,229

Annual Remaining Principal Payment

The annual remaining principal payment requirements as of June 30, 2015 per the contractual maturities and excluding extension options, capital leases and lease financing obligations, are as follows (in thousands):

2015	$	-
2016		-
2017		-
2018		230,000
2019		170,000
Thereafter		300,000
Total	$	700,000

Schedule of Combined Future Payment Obligations, Excluding Interest

The following table summarizes the Company’s combined future payment obligations, excluding interest, as of June 30, 2015, on the capital leases and lease financing obligations above (in thousands):

2015	$	6,450
2016		12,558
2017		12,388
2018		8,804
2019		2,461
Thereafter		13,550
Total	$	56,211

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Debt (Lease Narrative) (Details) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended	28 Months Ended
	Jun. 30, 2015 USD ($) agreement	Jun. 30, 2015 USD ($) agreement	Jun. 30, 2015 USD ($) agreement	Jun. 30, 2015 USD ($) agreement	Dec. 31, 2014 USD ($)
Capital Leased Assets [Line Items]
Capital lease and lease financing obligations	$ 56,211	$ 56,211	$ 56,211	$ 56,211	$ 13,062
Capital lease and lease financing obligations acquired			43,832
Lease financing obligations	23,900	23,900	23,900	23,900
Real Property [Member]
Capital Leased Assets [Line Items]
Capital lease and lease financing obligations	19,200	19,200	19,200	19,200
Carpathia Hosting, Inc. [Member]
Capital Leased Assets [Line Items]
Capital lease and lease financing obligations	$ 32,300	32,300	$ 32,300	$ 32,300
Capital lease and lease financing obligations acquired		$ 19,600
Number of lease agreements | agreement	2	2	2	2
Oustandind financing agreement	$ 2,600	$ 2,600	$ 2,600	$ 2,600
Proceeds of lease financing obligations			$ 1,700
Lease financing monthly principal and interest payment				200
Lease financing expiration date			Feb. 28, 2019
Carpathia Hosting, Inc. [Member] | Sale-Leaseback Transaction [Member]
Capital Leased Assets [Line Items]
Capital lease and lease financing obligations acquired		21,300
Carpathia Hosting, Inc. [Member] | Tenant Improvement Allowance [Member]
Capital Leased Assets [Line Items]
Lease financing obligations	$ 4,800	$ 4,800	$ 4,800	$ 4,800
Minimum [Member] | Carpathia Hosting, Inc. [Member]
Capital Leased Assets [Line Items]
Lease expiration year	2018
Monthly lease payment	$ 200
Maximum [Member] | Carpathia Hosting, Inc. [Member]
Capital Leased Assets [Line Items]
Lease expiration year	2019
Monthly lease payment	$ 500
Lease financing monthly principal and interest payment			$ 100

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Acquisitions (Consideration for the New Jersey Facility and the Preliminary Allocation of the Fair Value of Assets Acquired) (Details) - Jun. 30, 2015 - Princeton Facility [Member] - USD ($) $ in Thousands	Total
Business Acquisition [Line Items]
Buildings	$ 32,126
Land	20,700
Acquired intangibles	30,634
Deferred costs	3,290
Other	297
Intangible liabilities	(13,747)
Total purchase price	$ 73,300
Buildings, Weighted average useful life	40 years
Intangible liabilities, Weighted average useful life	17 years
Deferred Costs [Member]
Business Acquisition [Line Items]
Deferred costs, Weighted average useful life	10 years
Other [Member]
Business Acquisition [Line Items]
Other assets, Weighted average useful life	10 years
Acquisition Related Intangibles [Member]
Business Acquisition [Line Items]
Intangible assets, Weighted average useful life	13 years

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CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) - 6 months ended Jun. 30, 2015 - USD ($) shares in Thousands, $ in Thousands	Qualitytech, LP [Member] Partnership Units [Member] General Partner [Member]	Qualitytech, LP [Member] Partnership Units [Member] Limited Partner [Member]	Qualitytech, LP [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Dividends in Excess of Earnings [Member]	Total stockholders' Equity [Member]	Noncontrolling Interest [Member]	Total
Beginning balance at Dec. 31, 2014				$ 294	$ 324,917	$ (22,503)	$ 302,708	$ 77,477	$ 380,185
Beginning balance at Dec. 31, 2014		$ 380,185	$ 380,185
Beginning balance, shares at Dec. 31, 2014				29,408
Beginning balance, shares at Dec. 31, 2014	1	36,935
Issuance of shares through equity award plan				$ 2	(2)
Issuance of shares through equity award plan, shares		193		193
Net proceeds from equity offering		$ 369,309	$ 369,309	$ 108	331,050		331,158	38,151	369,309
Net proceeds from equity offering, shares		10,750		10,750
Reclassification of noncontrolling interest to APIC upon conversion of partnership units to common stock				$ 5	6,196		6,201	(6,201)
Reclassification of noncontrolling interest to APIC upon conversion of partnership units to common stock, shares				530
Equity-based compensation expense		$ 3,138	3,138		2,590		2,590	548	3,138
Dividend to shareholders		(24,225)	(24,225)			(24,225)	(24,225)		(24,225)
Distribution to noncontrolling interests								(4,479)	(4,479)
Partnership distribution		(4,479)	(4,479)
Net income		10,557	10,557			8,714	8,714	1,843	10,557
Ending balance at Jun. 30, 2015				$ 409	$ 664,751	$ (38,014)	$ 627,146	$ 107,339	$ 734,485
Ending balance at Jun. 30, 2015		$ 734,485	$ 734,485
Ending balance, shares at Jun. 30, 2015				40,881
Ending balance, shares at Jun. 30, 2015	1	47,878

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Real Estate Assets and Construction in Progress

6 Months Ended

Jun. 30, 2015

Real Estate Assets and Construction in Progress [Abstract]

Real Estate Assets and Construction in Progress

4. Real Estate Assets and Construction in Progress

The following is a summary of properties owned or leased by the Company as of June 30, 2015 and December 31, 2014 (in thousands):

As of June 30, 2015 (unaudited):

Property Location		Land		Buildings and Improvements		Construction in Progress		Total Cost
Owned Properties
Suwanee, Georgia (Atlanta-Suwanee)	$	3,521	$	143,672	$	13,699	$	160,892
Atlanta, Georgia (Atlanta-Metro)		15,396		374,600		36,183		426,179
Santa Clara, California*		-		92,614		916		93,530
Richmond, Virginia		2,180		166,030		107,770		275,980
Sacramento, California		1,481		60,179		524		62,184
Princeton, New Jersey		20,700		32,572		272		53,544
Dallas-Fort Worth, Texas		5,808		61,863		111,247		178,918
Chicago, Illinois		-		-		35,491		35,491
Miami, Florida		1,777		28,875		1,192		31,844
Lenexa, Kansas		437		3,466		21		3,924
Wichita, Kansas		-		1,409		-		1,409
		51,300		965,280		307,315		1,323,895
Leased Properties
Carpathia properties ***		1,130		79,372		12,127		92,629
Jersey City, New Jersey		-		27,611		1,404		29,015
Overland Park, Kansas **		-		857		39		896
		1,130		107,840		13,570		122,540
	$	52,430	$	1,073,120	$	320,885	$	1,446,435

*    Owned facility subject to long-term ground sublease.
**   This does not include the portion of the business that is used for QTS office space or other real estate not used by customers.
*** Includes 13 facilities. All facilities are leased, including those subject to capital leases.

As of December 31, 2014:

Property Location		Land		Buildings and Improvements		Construction in Progress		Total Cost
Owned Properties
Suwanee, Georgia (Atlanta-Suwanee)	$	3,521	$	138,991	$	6,345	$	148,857
Atlanta, Georgia (Atlanta-Metro)		15,397		356,122		22,693		394,212
Santa Clara, California*		-		90,332		650		90,982
Richmond, Virginia		2,180		127,080		71,794		201,054
Sacramento, California		1,481		60,094		278		61,853
Princeton, New Jersey		17,976		35,951		90		54,017
Dallas-Fort Worth, Texas		5,808		44,053		89,982		139,843
Chicago, Illinois		-		-		21,786		21,786
Miami, Florida		1,777		28,786		129		30,692
Lenexa, Kansas		437		3,298		25		3,760
Wichita, Kansas		-		1,409		-		1,409
		48,577		886,116		213,772		1,148,465
Leased Properties
Jersey City, New Jersey		-		27,318		920		28,238
Overland Park, Kansas **		-		852		27		879
		-		28,170		947		29,117
	$	48,577	$	914,286	$	214,719	$	1,177,582

_____________________________

* Owned facility subject to long-term ground sublease.
** This does not include the portion of the business that is used for QTS office space or other real estate not used by customers.

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Earnings per Share (Summary of Basic and Diluted Earnings per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings per Share [Abstract]
Net income available to common stockholders		$ 4,632	$ 3,090	$ 8,714	$ 7,288
Weighted average shares outstanding-basic		36,668,755	29,016,774	33,996,467	29,001,374
Net income per share-basic		$ 0.13	$ 0.11	$ 0.26	$ 0.25
Net income		$ 5,520	$ 3,921	$ 10,557	$ 9,249
Weighted average shares outstanding-diluted	[1]	44,444,104	37,009,746	41,867,944	36,934,210
Net income per share-diluted		$ 0.12	$ 0.11	$ 0.25	$ 0.25

[1] Includes 7,063 Class A and Class RS units, 492 "in the money" value of Class O units on an "as if" converted basis and 220 "in the money" value of options to purchase shares of Class A common stock on an "as if" converted basis as of the three months ended June 30, 2015, and 7,189 Class A and Class RS units, 464 "in the money" value of Class O units on an "as if" converted basis and 218 "in the money" value of options to purchase shares of Class A common stock on an "as if" converted basis as of the six months ended June 30, 2015. As of the three months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 89 "in the money" value of Class O units on as "as if" converted basis and 107 "in the money" value options to purchase shares of Class A common stock on an "as if" converted basis, and as of the six months ended June 30, 2014, this amount included 7,797 Class A and Class RS units, 57 "in the money" value of Class O units on an "as if" converted basis and 79 "in the money" value options to purchase shares of Class A common stock on as "as if" converted basis.

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Partners' Capital, Equity and Incentive Compensation Plans (Tables)

6 Months Ended

Jun. 30, 2015

Partners' Capital, Equity and Incentive Compensation Plans [Abstract]

Summary of Award Activity Under 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and Related Information

The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the six months ended June 30, 2015:  

	2010 Equity Incentive Plan					2013 Equity Incentive Plan
	Number of Class O units	Weighted average exercise price	Weighted average fair     value	Number of Class RS units	Weighted average grant date value	Options	Weighted average exercise price	Weighted average fair     value	Restricted Stock	Weighted average grant date value
Outstanding at December 31, 2014	1,518,717	$ 23.49	$ 3.75	74,625	$ 23.49	584,949	$ 22.87	$ 4.10	246,785	$ 29.13
Granted	—	—	—	—	—	312,997	36.14	8.02	186,070	35.95
Exercised/Vested (2)	(46,170)	20.62	4.74	—	—	(8,843)	21.80	3.80	(20,453)	23.26
Released from restriction (1)	—	—	—	(17,375)	25.00	—	—	—	—	—
Cancelled/Expired (3)	—	—	—	—	—	(8,594)	21.00	3.52	(9,625)	23.92
Outstanding at June 30, 2015	1,472,547	$ 23.58	$ 3.72	57,250	$ 23.03	880,509	$ 27.61	$ 5.50	402,777	$ 32.70

(1) This represents Class RS units that upon vesting have converted to Operating Partnership units.

(2) This represents the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock.

(3) Includes 9,625 restricted Class A common stock surrendered by certain employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock.

Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted

Class O units and options to purchase shares of Class A common stock were valued using the Black-Scholes model.

	Three and Six Months Ended June 30, 2015
Fair value of restricted stock granted	$35.81-$37.64
Fair value of options granted	$8.00-$8.05
Expected term (years)	5.5-6.1
Expected volatility	33%
Expected dividend yield	3.50-3.57%
Expected risk-free interest rates	1.67-1.69%

Summary of Information About Awards Outstanding

The following table summarizes information about awards outstanding as of June 30, 2015.

		Operating Partnership Awards Outstanding
	Exercise prices		Awards outstanding	Weighted average remaining vesting period (years)
Class RS Units	$	-	57,250	2
Class O Units	$	20-25	1,472,547	1
Total Operating Partnership awards outstanding			1,529,797

		QTS Realty Trust, Inc. Awards Outstanding
	Exercise prices		Awards outstanding	Weighted average remaining vesting period (years)
Restricted stock	$	-	402,777	3
Options to purchase Class A common stock	$	21-36.54	880,509	1
Total QTS Realty Trust, Inc. awards outstanding			1,283,286

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Acquisitions (Narrative) (Details)			6 Months Ended		12 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 16, 2015 USD ($) property customer	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($) ft² a MW	Dec. 31, 2014 USD ($)	Jul. 23, 2014 USD ($)
Business Acquisition [Line Items]
Ownership interest	85.40%		85.40%
Amoritization of intangible assets in the remainder of the year	$ 5,900,000		$ 5,900,000
Amoritization of intangible assets in 2016	10,900,000		10,900,000
Amoritization of intangible assets in 2017	10,900,000		10,900,000
Amoritization of intangible assets in 2018	8,800,000		8,800,000
Amoritization of intangible assets in 2019	6,600,000		6,600,000
Cash consideration paid for acquisition			$ 170,150,000	$ 114,157,000
Carpathia Hosting, Inc. [Member]
Business Acquisition [Line Items]
Ownership interest		100.00%
Acquisition costs		$ 326,000,000
Number of customers of acquired entity | customer		230
Number of domestic data centers acquired | property		8
Number of international data centers acquired | property		5
Issuance of common stock					$ 300,000,000
Revenue since acquisition	3,700,000
Net income since acquisition	$ 200,000
Princeton Facility [Member]
Business Acquisition [Line Items]
Aggregate costs related to acquisition				$ 73,300,000
Acres of real estate property | a				194
Area of facility (in square feet) | ft²				560,000
Lease period			10 years
Renewal of lease period, maximum			15 years
Princeton Facility [Member] | Raised Floor With Twelve MW Gross Power [Member]
Business Acquisition [Line Items]
Area of facility (in square feet) | ft²				58,000
Capacity of the plant (in MW) | MW				12
Common Class A [Member] | Carpathia Hosting, Inc. [Member]
Business Acquisition [Line Items]
Notes issued					$ 387,000,000
Senior Notes [Member]
Business Acquisition [Line Items]
Notes issued						$ 300,000,000

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Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2015

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

14. Condensed Consolidating Financial Information

QualityTech, LP has no significant operations independent of its subsidiaries. Obligations under the Senior Notes are jointly and severally guaranteed by substantially all of our restricted subsidiaries, except for Carpathia Hosting, Inc. and its subsidiaries (the “Non-Guarantor Subsidiaries”).

The tables below present condensed consolidating financial statements for QualityTech, LP and its subsidiaries that guarantee the Senior Notes (the “Guarantor Subsidiaries”), and the Non-Guarantor Subsidiaries as of June 30, 2015, and for the three and six months ended June 30, 2015.  As there were no Non-Guarantor Subsidiaries as of December 31, 2014 or for the three and six months ended June 30, 2014, no condensed consolidating financial statements are presented for those respective periods or dates. The financial information may not necessarily be indicative of the results of operations, cash flows or financial position had the subsidiaries operated as independent entities.

Interim Condensed Consolidating Balance Sheet
June 30, 2015
(in thousands)

	Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Eliminations	Consolidated
ASSETS
Real Estate Assets
Land	$                    51,300	$                      1,130	$                        -	$              52,430
Buildings and improvements	993,748	79,372	-	1,073,120
Less: Accumulated depreciation	(204,606)	(678)	-	(205,284)
	840,442	79,824	-	920,266
Construction in progress	308,758	12,127	-	320,885
Real Estate Assets, net	1,149,200	91,951	-	1,241,151
Cash and cash equivalents	6,117	4,627	-	10,744
Rents and other receivables, net	18,294	12,254		30,548
Acquired intangibles, net	30,158	91,847	-	122,005
Deferred costs, net	38,013	-	-	38,013
Prepaid expenses	5,534	1,598	-	7,132
Goodwill	-	173,237	-	173,237
Investment in subsidiaries	294,858	-	(294,858)	-
Other assets, net	28,563	635	-	29,198
TOTAL ASSETS	$               1,570,737	$                  376,149	$           (294,858)	$         1,652,028
LIABILITIES
Mortgage notes payable	$                    70,000	$                              -	$                        -	$              70,000
Unsecured credit facility	330,000	-	-	330,000
Senior notes, net of discount	297,852	-	-	297,852
Capital lease and lease financing obligations	12,379	43,832	-	56,211
Accounts payable and accrued liabilities	84,816	7,892	-	92,708
Dividends and distributions payable	15,322	-	-	15,322
Advance rents, security deposits and other liabilities	16,600	2,844	-	19,444
Deferred income taxes	(3,135)	19,584	-	16,449
Deferred income	12,418	7,139	-	19,557
TOTAL LIABILITIES	836,252	81,291	-	917,543
PARTNERS' CAPITAL
Partners' capital	734,485	294,858	(294,858)	734,485
TOTAL LIABILITIES AND PARTNERS' CAPITAL	$               1,570,737	$                  376,149	$           (294,858)	$         1,652,028

Interim Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Three Months Ended June 30, 2015
(in thousands)

	Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Eliminations	Consolidated
Revenues:
Rental	$                  50,740	$                    1,453	$                       -	$                  52,193
Recoveries from customers	5,582	-	-	5,582
Cloud and managed services	5,958	2,262	-	8,220
Other	2,120	2	-	2,122
Total revenues	64,400	3,717	-	68,117
Operating Expenses:
Property operating costs	20,564	1,467	-	22,031
Real estate taxes and insurance	1,474	-	-	1,474
Depreciation and amortization	16,876	1,186	-	18,062
General and administrative	13,781	834	-	14,615
Restructuring	-	-	-	-
Transaction and integration costs	4,669	-	-	4,669
Total operating expenses	57,364	3,487	-	60,851
Operating income	7,036	230	-	7,266
Other income and expenses:
Interest income	1	-	-	1
Interest expense	(4,743)	(56)	-	(4,799)
Other (expense) income, net	(83)	-	-	(83)
Equity in net income of subsidiaries	174	-	(174)	-
Income (loss) before taxes	2,385	174	(174)	2,385
Tax benefit of taxable REIT subsidiaries	3,135	-	-	3,135
Net income (loss)	$                    5,520	$                       174	$                 (174)	$                    5,520

Interim Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Six Months Ended June 30, 2015
(in thousands)

	Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Eliminations	Consolidated
Revenues:
Rental	$                100,073	$                    1,453	$                            -	$                101,526
Recoveries from customers	11,246	-	-	11,246
Cloud and managed services	11,753	2,262	-	14,015
Other	2,714	2	-	2,716
Total revenues	125,786	3,717	-	129,503
Operating Expenses:
Property operating costs	39,900	1,467	-	41,367
Real estate taxes and insurance	2,959	-	-	2,959
Depreciation and amortization	33,119	1,186	-	34,305
General and administrative	27,619	834	-	28,453
Restructuring		-	-	-
Transaction and integration costs	4,774	-	-	4,774
Total operating expenses	108,371	3,487	-	111,858
Operating income	17,415	230	-	17,645
Other income and expenses:
Interest income	1	-	-	1
Interest expense	(10,085)	(56)	-	(10,141)
Other (expense) income, net	(83)	-	-	(83)
Equity in net income of subsidiaries	174	-	(174)	-
Income (loss) before taxes	7,422	174	(174)	7,422
Tax benefit of taxable REIT subsidiaries	3,135	-	-	3,135
Net income (loss)	$                  10,557	$                       174	$                     (174)	$                  10,557

Interim Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2015
(in thousands)

	Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidated
Net cash provided by operating activities	$	36,534	$	4,627	$	41,161
Cash flow from investing activities:
Acquisitions, net of cash acquired		(288,865)		-		(288,865)
Additions to property and equipment		(170,150)		-		(170,150)
Cash used in investing activities		(459,015)		-		(459,015)
Cash flow from financing activities:
Credit facility proceeds		350,162		-		350,162
Debt repayment		(260,000)		-		(260,000)
Payment of deferred financing costs		(512)		-		(512)
Payment of cash dividends		(19,673)		-		(19,673)
Partnership distributions		(4,414)		-		(4,414)
Principal payments on capital lease obligations		(1,227)		-		(1,227)
Scheduled mortgage principal debt repayments		(16,600)		-		(16,600)
Equity proceeds, net of costs		370,074		-		370,074
Net cash provided by financing activities		417,810		-		417,810
Net (decrease) increase in cash and cash equivalents		(4,671)		4,627		(44)
Cash and cash equivalents, beginning of period		10,788		-		10,788
Cash and cash equivalents, end of period	$	6,117	$	4,627	$	10,744
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