3. Acquisitions

Piscataway Acquisition

On June 6, 2016, the Company completed the acquisition of the Piscataway facility for approximately $125.8 million (based on the preliminary assessment of the fair value of assets acquired and liabilities assumed). This facility is located in the New York metro area on 38 acres and consists of 360,000 gross square feet, including approximately 89,000 square feet of raised floor, and approximately 18 MW of critical power. The Piscataway facility supports future growth with space for an additional approximately 87,000 square feet of raised floor in the existing structure, as well as capacity for over 8 MW of additional critical power. This acquisition was funded with a draw on the unsecured revolving credit facility.

The Company accounted for this acquisition in accordance with ASC 805, Business Combinations, as a business combination. The Company is generally valuing the assets acquired and liabilities assumed using Level 3 inputs.

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


	Piscataway Allocation as of September 30, 2016		Original Allocation Reported as of June 30, 2016			Adjusted Fair Value
Land	$	7,440	$	7,440	$		—
Buildings and improvements		80,391		78,370			2,021
Construction in progress		13,900		13,900			—
Acquired intangibles		19,581		21,668			(2,087)
Deferred costs		4,391		4,084			307
Other assets		106		106			—
Total identifiable assets acquired		125,809		125,568			241

Acquired below market lease		809		568			241
Net working capital		2,019		2,019			—
Total liabilities assumed		2,828		2,587			241

Net identifiable assets acquired	$	122,981	$	122,981	$		—

Acquired intangibles are amortized as both amortization expense as well as offsets to rental revenue. Based on the preliminary purchase price allocation, amortization expenses relative to acquired in place leases are expected to be approximately $3.0 million, $4.0 million, $2.9 million, $2.3 million and $1.7 million for the years ended December 31, 2016 through December 31, 2020, respectively. Additionally, based on the preliminary purchase price allocation, amortization expenses relative to acquired above and below market leases recorded as net offsets to rental revenue are expected to be approximately $0.9 million, $1.1 million, $0.7 million, $0.5 million and $0.6 million for the years ended December 31, 2016 through December 31, 2020, respectively.

Carpathia Acquisition

On June 16, 2015, the Company completed the acquisition of 100% of the outstanding stock of Carpathia Hosting, Inc., a Virginia-based colocation, cloud and managed services provider for approximately $373.6 million (based on the final assessment of the fair value of assets acquired and liabilities assumed). 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 was 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 utilized 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, Canada; Amsterdam, Netherlands; London, United Kingdom; Hong Kong, China and Sydney, Australia. The Company no longer leases the Sydney, Australia data center.

The Company accounted for this acquisition in accordance with ASC 805, Business Combinations, as a business combination. The Company generally valued the assets acquired and liabilities assumed using Level 3 inputs.

In June 2016, the Company finalized the Carpathia purchase price allocation. The following table summarizes the consideration for the Carpathia acquisition and the final allocation of the fair value of assets acquired and liabilities assumed at the acquisition date (unaudited and in thousands):


	Final Carpathia Allocation as of June 30, 2016
Land	$	1,130
Buildings and improvements		78,898
Construction in progress		12,127
Acquired intangibles		108,100
Net working capital		2,851
Total identifiable assets acquired		203,106

Capital lease and lease financing obligations		43,832
Deferred income taxes		35,980
Acquired above market lease		2,453
Total liabilities assumed		82,265

Net identifiable assets acquired		120,841
Goodwill		173,843
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 customer pipeline. For tax purposes, the Company acquired goodwill with a tax basis of $16.6 million, which is deductible in subsequent periods. Based on the final purchase price allocation, amortization expenses relative to the intangible assets acquired are expected to be approximately $12.2 million, $12.2 million, $10.1 million, $8.0 million and $8.0 million for the years ended December 31, 2016 through December 31, 2020, respectively.

The following table represents the pro forma condensed consolidated statement of operations of the combined entities for the nine months ended September 30, 2015 (in thousands):


	(Unaudited) Pro Forma Condensed Consolidated Statements of Operations
	Nine Months Ended
	September 30, 2015
Revenue	$	285,769
Net income	$	10,901

These amounts have been calculated after applying the Company’s accounting policies, and give effect to the Carpathia acquisition.

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 transaction noted above been consummated on January 1, 2015, nor does it purport to represent the results of operations for future periods.