10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________

(Mark One)

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

For the quarterly period ended March 31, 2021

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.

(Exact name of registrant as specified in its charter)

__________________________________________________________

Maryland

(State or other jurisdiction of

incorporation or organization)

12851 Foster Street, Overland Park, Kansas

(Address of principal executive offices)

46-2809094

(I.R.S. Employer

Identification No.)

66213

(Zip Code)

(913) 312-5503

(Registrant’s telephone number, including area code)

Not Applicable

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

__________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol	Name of each exchange on which registered:
Class A common stock, $0.01 par value	QTS	New York Stock Exchange
Preferred Stock, 7.125% Series A Cumulative Redeemable Perpetual, $0.01 par value	QTS PRA	New York Stock Exchange
Preferred Stock, 6.50% Series B Cumulative Convertible Perpetual, $0.01 par value	QTS PRB	New York Stock Exchange

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.

Yes  x     No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). 

Yes  x     No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

Yes  ☐     No  x

There were 68,777,469 shares of Class A common stock, $0.01 par value per share, and 124,481 shares of Class B common stock, $0.01 par value per share, of QTS Realty Trust, Inc. outstanding on April 29, 2021.

1

QTS Realty Trust, Inc.

Form 10-Q

For the Quarterly Period Ended March 31, 2021

INDEX

		Page
PART I.	FINANCIAL INFORMATION	2
ITEM 1.	Financial Statements	2
	Notes to the Financial Statements	8
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	45
ITEM 4.	Controls and Procedures	46
PART II.	OTHER INFORMATION	47
ITEM 1.	Legal Proceedings	47
ITEM 1A.	Risk Factors	47
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
ITEM 3.	Defaults Upon Senior Securities	47
ITEM 4.	Mine Safety Disclosures	47
ITEM 5.	Other Information	47
ITEM 6.	Exhibits	47
	Signatures	50

1

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

QTS REALTY TRUST, INC.

INTERIM CONSOLIDATED BALANCE SHEETS

(in thousands except share and per share data)

	March 31, 2021		December 31, 2020
	(unaudited)
ASSETS
Real Estate Assets
Land	$	164,822	$	165,109
Buildings, improvements and equipment	2,965,488		2,839,261
Less: Accumulated depreciation	(745,237)		(702,944)
	2,385,073		2,301,426
Construction in progress	1,119,749		1,028,765
Real Estate Assets, net	3,504,822		3,330,191
Investments in unconsolidated entity	25,858		22,608
Operating lease right-of-use assets, net	49,851		51,342
Cash and cash equivalents	14,652		22,775
Rents and other receivables, net	124,392		107,563
Acquired intangibles, net	64,934		68,090
Deferred costs, net	64,333		63,689
Prepaid expenses	14,147		10,253
Goodwill	173,843		173,843
Other assets, net	48,458		48,218
TOTAL ASSETS	$	4,085,290	$	3,898,572
LIABILITIES
Unsecured term loans and revolver, net	$	1,305,167	$	1,335,241
Senior notes, net of debt issuance costs	492,775		492,534
Finance leases	42,525		41,718
Operating lease liabilities	56,327		58,005
Accounts payable and accrued liabilities	202,552		187,270
Dividends and distributions payable	41,686		39,373
Advance rents, security deposits and other liabilities	23,506		19,850
Derivative liabilities	36,751		53,722
Deferred income taxes	826		810
Deferred income	93,495		85,351
TOTAL LIABILITIES	2,295,610		2,313,874
EQUITY
7.125% Series A cumulative redeemable perpetual preferred stock: $0.01 par value (liquidation preference $25.00 per share), 4,600,000 shares authorized, 4,280,000 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	103,212		103,212
6.50% Series B cumulative convertible perpetual preferred stock: $0.01 par value (liquidation preference $100.00 per share), 3,162,500 shares authorized, issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	304,223		304,223
Common stock: $0.01 par value, 450,133,000 shares authorized, 68,962,873 and 64,580,118 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	690		646
Additional paid-in capital	1,834,309		1,622,857
Accumulated other comprehensive loss	(35,181)		(50,451)
Accumulated dividends in excess of earnings	(536,031)		(504,313)
Total stockholders’ equity	1,671,222		1,476,174
Noncontrolling interests	118,458		108,524
TOTAL EQUITY	1,789,680		1,584,698
TOTAL LIABILITIES AND EQUITY	$	4,085,290	$	3,898,572

See accompanying notes to financial statements.

2

QTS REALTY TRUST, INC.

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands except per share data)

	Three Months Ended March 31,
	2021		2020
Revenues:
Rental	$	144,308	$	120,081
Other	4,424		6,211
Total revenues	148,732		126,292
Operating expenses:
Property operating costs	46,284		40,781
Real estate taxes and insurance	5,022		3,911
Depreciation and amortization	55,506		45,070
General and administrative	23,641		20,683
Transaction, integration, and impairment costs	1,516		216
Total operating expenses	131,969		110,661
Operating income	16,763		15,631
Other income and expense:
Interest expense	(8,148)		(7,162)
Other income	—		159
Equity in net loss of unconsolidated entity	(559)		(677)
Income before taxes	8,056		7,951
Tax benefit (expense)	(138)		169
Net income	7,918		8,120
Net income attributable to noncontrolling interests	(79)		(110)
Net income attributable to QTS Realty Trust, Inc.	$	7,839	$	8,010
Preferred stock dividends	(7,045)		(7,045)
Net income attributable to common stockholders	$	794	$	965
Net loss per share attributable to common shares
Basic	$	(0.07)	$	(0.01)
Diluted	$	(0.07)	$	(0.01)

See accompanying notes to financial statements.

3

QTS REALTY TRUST, INC.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited and in thousands)

	Three Months Ended March 31,
	2021		2020
Net income	$	7,918	$	8,120
Other comprehensive income (loss):
Foreign currency translation adjustment loss	(158)		(223)
Increase (decrease) in fair value of derivative contracts	17,253		(36,715)
Reclassification of other comprehensive income to utilities expense	(66)		354
Reclassification of other comprehensive income to interest expense	3,375		758
Comprehensive income (loss)	28,322		(27,706)
Comprehensive (income) loss attributable to noncontrolling interests	(2,558)		2,831
Comprehensive income (loss) attributable to QTS Realty Trust, Inc.	$	25,764	$	(24,875)

See accompanying notes to financial statements.

4

QTS REALTY TRUST, INC.

INTERIM CONSOLIDATED STATEMENTS OF EQUITY

(unaudited and in thousands)

The consolidated statement of equity for the three months ended March 31, 2021:

	Preferred Stock			Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated dividends in excess of earnings		Total stockholders' equity		Noncontrolling interests		Total
	Shares	Amount		Shares	Amount
Balance January 1, 2021	7,443	$	407,435	64,580	$	646	$	1,622,857	$	(50,451)	$	(504,313)	$	1,476,174	$	108,524	$	1,584,698
Net share activity through equity award plan	—	—		426	4		50		—		—		54		5		59
Conversion of Class A Partnership units to Class A common stock	—	—		92	1		2,040		—		—		2,041		(2,041)		—
Increase in fair value of derivative contracts	—	—		—	—		—		15,414		—		15,414		1,839		17,253
Foreign currency translation adjustments	—	—		—	—		—		(144)		—		(144)		(14)		(158)
Equity-based compensation expense	—	—		—	—		6,237		—		—		6,237		619		6,856
Proceeds net of fees from settlement of forward shares	—	—		3,865	39		203,125		—		—		203,164		12,682		215,846
Dividends declared on Series A Preferred Stock	—	—		—	—		—		—		(1,906)		(1,906)		—		(1,906)
Dividends declared on Series B Convertible Preferred Stock	—	—		—	—		—		—		(5,139)		(5,139)		—		(5,139)
Dividends declared to common stockholders	—	—		—	—		—		—		(32,512)		(32,512)		—		(32,512)
Dividends declared to noncontrolling interests	—	—		—	—		—		—		—		—		(3,235)		(3,235)
Net Income	—	—		—	—		—		—		7,839		7,839		79		7,918
Balance March 31, 2021	7,443	$	407,435	68,963	$	690	$	1,834,309	$	(35,181)	$	(536,031)	$	1,671,222	$	118,458	$	1,789,680

The consolidated statement of equity for the three months ended March 31, 2020:

	Preferred Stock			Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated dividends in excess of earnings		Total stockholders' equity		Noncontrolling interests		Total
	Shares	Amount		Shares	Amount
Balance January 1, 2020	7,443	$	407,435	58,228	$	582	$	1,330,444	$	(24,642)	$	(376,002)	$	1,337,817	$	106,634	$	1,444,451
Net share activity through equity award plan	—	—		240	3		(1,312)		—		—		(1,309)		(149)		(1,458)
Decrease in fair value of derivative contracts	—	—		—	—		—		(33,155)		—		(33,155)		(3,560)		(36,715)
Foreign currency translation adjustments	—	—		—	—		—		(201)		—		(201)		(22)		(223)
Equity-based compensation expense	—	—		—	—		4,377		—		—		4,377		498		4,875
Proceeds net of fees from settlement of forward shares	—	—		1,930	19		78,516		—		—		78,535		4,682		83,217
Dividends declared on Series A Preferred Stock	—	—		—	—		—		—		(1,906)		(1,906)		—		(1,906)
Dividends declared on Series B Convertible Preferred Stock	—	—		—	—		—		—		(5,139)		(5,139)		—		(5,139)
Dividends declared to common stockholders	—	—		—	—		—		—		(28,393)		(28,393)		—		(28,393)
Dividends declared to noncontrolling interests	—	—		—	—		—		—		—		—		(3,133)		(3,133)
Net income	—	—		—	—		—		—		8,010		8,010		110		8,120
Balance March 31, 2020	7,443	$	407,435	60,398	$	604	$	1,412,025	$	(57,998)	$	(403,430)	$	1,358,636	$	105,060	$	1,463,696

See accompanying notes to financial statements.

5

QTS REALTY TRUST, INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW

(unaudited and in thousands)

	Three Months Ended March 31,
	2021		2020
Cash flow from operating activities:
Net income	$	7,918	$	8,120
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	53,825		43,373
Amortization of above and below market leases	10		90
Amortization of deferred loan costs	1,130		987
Distributions from unconsolidated entity	569		300
Equity in net loss of unconsolidated entity	559		677
Equity-based compensation expense	6,856		4,875
Bad debt expense	1,013		3,719
Deferred tax expense (benefit)	18		(270)
Foreign currency remeasurement income	—		(159)
Changes in operating assets and liabilities
Rents and other receivables, net	(17,933)		2,888
Prepaid expenses	(3,914)		(3,164)
Due to/from affiliates, net	(4,095)		(4,428)
Other assets	(445)		(238)
Accounts payable and accrued liabilities	2,610		7,173
Advance rents, security deposits and other liabilities	3,771		6,727
Deferred income	8,203		392
Net cash provided by operating activities	60,095		71,062
Cash flow from investing activities:
Acquisitions, net of cash acquired	(401)		(1,797)
Additions to property and equipment	(214,279)		(171,218)
Net cash used in investing activities	(214,680)		(173,015)
Cash flow from financing activities:
Credit facility proceeds	253,000		212,917
Credit facility repayments	(280,000)		—
Payment of deferred financing costs	—		(5)
Payment of preferred stock dividends	(7,045)		(7,045)
Payment of common stock dividends	(30,352)		(25,627)
Distribution to noncontrolling interests	(3,082)		(2,934)
Proceeds from exercise of stock options	1,979		808
Payment of tax withholdings related to equity-based awards	(1,435)		(2,293)
Principal payments on finance lease obligations	(662)		(620)
Mortgage principal debt repayments	—		(12)
Common stock issuance proceeds, net of costs	215,923		83,260
Net cash provided by financing activities	148,326		258,449
Effect of foreign currency exchange rates on cash and cash equivalents	(1,864)		(192)
Net change in cash and cash equivalents	(8,123)		156,304
Cash and cash equivalents, beginning of period	22,775		15,653
Cash and cash equivalents, end of period	$	14,652	$	171,957

See accompanying notes to financial statements.

6

QTS REALTY TRUST, INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW (continued)

(unaudited and in thousands)

	Three Months Ended March 31,
	2021		2020
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	8,801	$	9,370
Noncash investing and financing activities:
Accrued capital additions	$	138,259	$	125,750
Net increase (decrease) in other assets/liabilities related to change in fair value of derivative contracts	$	17,253	$	(35,097)
Accrued equity issuance costs	$	75	$	44
Accrued preferred stock dividend	$	5,938	$	5,938

See accompanying notes to financial statements.

7

QTS REALTY TRUST, INC.

NOTES TO UNAUDITED INTERIM 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 its subsidiaries, the “Company,” “we,” “us,” or “our”) and the subsidiaries of the Operating Partnership, is engaged in the business of owning, acquiring, constructing, redeveloping and managing multi-tenant data centers. As of March 31, 2021, our portfolio consisted of 28 owned and leased properties, including a property owned by an unconsolidated entity, with data centers located throughout the United States, Canada and Europe.

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.

As of March 31, 2021, QTS owned approximately 91.4% of the interests in the Operating Partnership. Substantially all of QTS’ assets are held by, and all of QTS’ operations are conducted through, the Operating Partnership. QTS’ interest in the Operating Partnership entitles QTS to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to QTS’ percentage ownership. As the sole general partner of the Operating Partnership, QTS generally has the exclusive power under the partnership agreement of the Operating Partnership to manage and conduct the Operating Partnership’s business and QTS’ board of directors manages the Operating Partnership and 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”) for interim financial information and in compliance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes and management’s discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021. The consolidated balance sheet data included herein as of December 31, 2020 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

As outlined in our Annual Report on Form 10-K for the year ended December 31, 2020, the Operating Partnership meets the definition and criteria of a variable interest entity (“VIE”) in accordance with Accounting Standards Codification (“ASC”) Topic 810 Consolidation, and the Company is the primary beneficiary of the VIE. The Company’s only material asset is its ownership interest in the Operating Partnership, and consequently, all of its assets and liabilities represent those assets and liabilities of the Operating Partnership. The Company’s debt is an obligation of the Operating Partnership where the creditors may have recourse, under certain circumstances, against the credit of the Company.

Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals. The impacts of the COVID-19 pandemic increases uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates and judgments may be subject to greater volatility than has been the case in the past.

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

8

We evaluate our investments in less than wholly owned entities to determine whether they should be recorded on a consolidated basis. The percentage of ownership interest in the entity, an evaluation of control and whether a VIE exists are all considered in our consolidation assessment. Investments in real estate entities which we have the ability to exercise significant influence, but do not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, our share of the earnings or losses of these entities is included in consolidated net income (loss).

Variable Interest Entities (VIEs) – We determine whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. The determination of whether an entity in which we hold a direct or indirect variable interest is a VIE is based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, and then a quantitative analysis, if necessary.

We analyze any investments in VIEs to determine if we are the primary beneficiary. In evaluating whether we are the primary beneficiary, we evaluate our direct and indirect economic interests in the entity. Determining which reporting entity, if any, is the primary beneficiary of a VIE is primarily a qualitative approach focused on identifying which reporting entity has both (1) the power to direct the activities of a VIE that most significantly impact such entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgment.

We consider a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct financing, leasing, construction and other operating decisions and activities. In addition, we consider the rights of other investors to participate in those decisions, to replace the manager and to sell or liquidate the entity. We determine whether we are the primary beneficiary of a VIE at the time we become involved with a variable interest entity and reconsider that conclusion upon a reconsideration event. As of March 31, 2021, we had one unconsolidated entity that was considered a VIE for which we are not the primary beneficiary. Our maximum exposure to losses associated with this VIE is limited to our net investment, which was approximately $25.9 million as of March 31, 2021.

Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation for real estate assets is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended March 31, 2021, depreciation expense related to real estate assets and non-real estate assets was $42.7 million and $2.9 million, respectively, for a total of $45.6 million. For the three months ended March 31, 2020, depreciation expense related to real estate assets and non-real estate assets was $32.3 million and $3.4 million, respectively, for a total of $35.7 million. We capitalize certain real estate development costs, including internal costs incurred in connection with development. The capitalization of costs during the construction period (including interest and related loan fees, property taxes and other direct and indirect project costs) begins when development efforts commence and ends when the asset is ready for its intended use. The capitalization of internal costs increases construction in progress recognized during development of the related property and the cost of the real estate asset when placed into service and such costs are depreciated over its estimated useful life. Capitalization of such costs, excluding interest, aggregated to $5.5 million and $4.5 million for the three months ended March 31, 2021 and 2020, respectively. Interest is capitalized during the period of development by applying our weighted average effective borrowing rate to the actual development and other capitalized costs paid during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $7.0 million and $8.1 million for the three months ended March 31, 2021 and 2020, respectively.

Acquisitions and Sales – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances.

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

9

Impairment of Long-Lived Assets, Intangible Assets and Goodwill – We review our long-lived assets, intangible assets and equity method investments for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset group exceeds the value of the undiscounted cash flows, the fair value of the asset group is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three months ended March 31, 2021 and March 31, 2020.

The fair value of goodwill is the consideration transferred in a business combination which is not allocable to identifiable intangible and tangible assets. Goodwill is subject to at least an annual assessment for impairment. In connection with the goodwill impairment evaluation that we performed as of October 1, 2020, we determined qualitatively that it is not more likely than not that the fair value of our one reporting unit was less than the carrying amount, thus we did not perform a quantitative analysis. As we continue to operate and assess our goodwill at the consolidated level for our single reporting unit and our market capitalization significantly exceeds our net asset value, further analysis was not deemed necessary as of March 31, 2021.

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

Revenue Recognition – We derive our revenues from leases with customers for data center space which include lease components and nonlease revenue components, such as power, tenant recoveries, and managed services. We have elected the available practical expedient under ASC Topic 842, Leases, to combine our nonlease revenue components that have the same pattern of transfer as the related operating lease component into a single combined lease component. The single combined component is accounted for under ASC Topic 842 if the lease component is the predominant component and is accounted for under ASC Topic 606 if the nonlease components are the predominant components. In our contracts, the single combined component is accounted for under ASC Topic 842 as the lease component is the predominant component.

A description of each of our disaggregated revenue streams is as follows:

Rental Revenue

Our leases with customers are classified as operating leases and rental revenue is recognized on a straight-line basis over the customer lease term. Occasionally, customer leases include options to extend or terminate the lease agreements. We do not include any of these extension or termination options in a customer’s lease term for lease classification purposes or recognizing rental revenue unless it is reasonably certain the customer will exercise these extension or termination options.

Rental revenue also includes revenue from power delivery on fixed power arrangements, whereby customers are billed and pay a fixed monthly fee per committed available amount of connected power. These fixed power arrangements require us to provide a series of distinct services and to stand ready to deliver the power over the contracted term which is co-terminus with the lease. Customer fixed power arrangements have the same pattern of transfer over the lease term as the lease component and are therefore combined with the lease component to form a single lease component that is recognized over the term of the lease on a straight-line basis.

In addition, rental revenue includes straight-line rent. Straight-line rent represents the difference in rents recognized during the period versus amounts contractually due pursuant to the underlying leases and is recorded as deferred rent receivable/payable in the consolidated balance sheets. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheet included in rents and other receivables, net was $71.0 million and $63.6 million as of March 31, 2021 and December 31, 2020, respectively.

Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed below in the "Deferred Income" section.

Variable Lease Revenue from Recoveries

10

Certain customer leases contain provisions under which customers reimburse us for power and cooling-related charges as well as a portion of the property’s real estate taxes, insurance and other operating expenses. Recoveries of power and cooling-related expenses relate specifically to our variable power arrangements, whereby customers pay variable monthly fees for the specific amount of power utilized at the current utility rates. Our performance obligation is to stand ready to deliver power over the life of the customer contract up to a contracted power capacity. Customers have the flexibility to increase or decrease the amount of power consumed, and therefore sub-metered power revenue is constrained at contract inception. The reimbursements are included in revenue as recoveries from customers and are recognized each month as the uncertainty related to the consideration is resolved (i.e. we provide power to our customers) and customers utilize the power. Reimbursement of real estate taxes, insurance, common area maintenance, or other operating expenses are accounted for as variable payments under lease guidance pursuant to the practical expedient and are recognized as revenue in the period that the expenses are recognized. Variable lease revenue from recoveries discussed above, including power, common area maintenance or other operating costs, have the same pattern of transfer over the lease term as the lease component and are therefore combined with the lease component to form a single lease component. Variable lease revenue from recoveries is included within the “rental” line item on the statements of operations.

Other Revenue

Other revenue primarily consists of revenue from our managed service offerings, as well as revenue earned from partner channel, management and development fees. We, through our taxable REIT subsidiaries (“TRS”), may provide use of our managed services to our customers on an individual or combined basis. In our managed services offering, the TRS’s performance obligation is to provide services (e.g. cloud hosting, data backup, data storage or data center personnel labor hours) to facilitate a fully integrated information technology (“IT”) outsourcing environment over a contracted term. Although underlying services may vary, over the contracted term monthly service offerings are substantially the same and we account for the services as a series of distinct services in accordance with ASC Topic 606. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. As we have the right to consideration from customers in an amount that corresponds directly with the value to the customer of the TRS’s performance of providing continuous services, we recognize monthly revenue for the amount invoiced.

With respect to the transaction price allocated to remaining performance obligations within our managed service contracts, we have elected to use the optional exemption provided by ASC Topic 606 whereby we are not required to estimate the total transaction price allocated to remaining performance obligations as we apply the “right-to-invoice” practical expedient. As described above, the nature of our performance obligation in these contracts is to provide monthly services that are substantially the same and accounted for as a series of distinct services. These contracts generally have a remaining term ranging from month-to-month to three years.

Management fees and other revenues are generally received from our unconsolidated entity properties as well as third parties. Management fee revenue is earned based on a contractual percentage of unconsolidated entity property revenue. Development fee revenue is earned on a contractual percentage of hard costs to develop a property. We recognize revenue for these services provided when earned based on the performance criteria in ASC Topic 606, with such revenue recorded in “Other” revenue on the consolidated statements of operations.

Leases as Lessee – We determine if an arrangement is a lease at inception. If the contract is considered a lease, we evaluate leased property to determine whether the lease should be classified as a finance or operating lease in accordance with U.S. GAAP. We periodically enter into finance leases for certain data center facilities, equipment, and fiber optic transmission cabling. Finance lease assets are included within the “Buildings, improvements and equipment” line item of the consolidated balance sheets and finance lease liabilities are included within “Finance leases” line item of the consolidated balance sheets. In addition, we lease certain real estate (primarily land or real estate space) under operating lease agreements with such assets included within the “Operating lease right of use assets, net” line item of the consolidated balance sheets and the associated lease liabilities included within the “Operating lease liabilities” line item on the consolidated balance sheets.

11

Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases as lessee typically do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We assess multiple variables when determining the incremental borrowing rate, such as lease term, payment terms, collateral, economic conditions, and creditworthiness. ROU assets also include any lease payments made and exclude lease incentives. Many of our lease agreements include options to extend the lease, which we do not include in our expected lease terms unless they are reasonably certain to be exercised. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term.

Allowance for Uncollectible Accounts Receivable – We record a provision for uncollectible accounts if a receivable balance relating to lease components from an individual contract is considered by management not to be probable of collection, and this provision is recorded as a reduction to leasing revenues. We also record a general provision of estimated uncollectible tenant receivables based on general probability of collection in accordance with ASC 450-20 Loss Contingencies. This provision is recorded as bad debt expense and recorded within the “Property Operating Costs” line item of the consolidated statements of operations. The aggregate allowance for doubtful accounts on the consolidated balance sheets was $5.3 million and $5.4 million as of March 31, 2021 and December 31, 2020, respectively.

Deferred Income – Deferred income generally results from non-refundable charges paid by the customer at lease inception to prepare their space for occupancy. We record this initial payment, commonly referred to as set-up fees, as a deferred income liability which amortizes into rental revenue over the term of the related lease on a straight-line basis. Deferred income was $93.5 million and $85.4 million as of March 31, 2021 and December 31, 2020, respectively. Additionally, $6.4 million and $3.9 million of deferred income was amortized into revenue for the three months ended March 31, 2021 and 2020, respectively.

Equity-based Compensation – Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification and amortized ratably over their respective service periods. We have elected to account for forfeitures as they occur. Equity-based compensation expense was $6.9 million and $4.9 million for the three months ended March 31, 2021 and 2020, respectively.

Segment Information – We manage our business as one operating segment and thus one reportable segment consisting of a portfolio of investments in multiple data centers.

Customer Concentrations – During the three months ended March 31, 2021, one of our customers exceeded 10% of total revenues, representing approximately 11% of total revenues for the three months ended March 31, 2021.

As of March 31, 2021, three of our customers exceeded 5% of trade accounts receivable (which excludes straight-line rent receivables). In aggregate, these three customers accounted for approximately 53% of trade accounts receivable. One of these customers individually exceeded 10% of total trade accounts receivable representing 40% of total trade accounts receivable.

Income Taxes – We provide for income taxes during interim periods based on the estimated effective tax rate for the year and any discrete adjustments. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the taxable REIT subsidiaries, tax law changes, and future business acquisitions or divestitures. The taxable subsidiaries’ effective tax rates were (7.8)% and 13.0% for the three months ended March 31, 2021 and 2020, respectively.

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

12

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

As of March 31, 2021, we valued our derivative instruments primarily utilizing Level 2 inputs. See Note 14 – ‘Fair Value of Financial Instruments’ for additional details.

New Accounting Pronouncements

In January 2020, the FASB issued ASU 2020-1, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815, which clarifies the interaction between the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815. ASU 2020-1 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. We adopted this ASU effective January 1, 2021, and the provisions of the standard did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-4 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-4 is optional and may be elected over time as reference rate reform activities occur. The standard is effective for all entities as of March 12, 2020 through December 31, 2022. An entity can elect to apply the amendments as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to that date that the financial statements are available to be issued. In January 2021, the FASB issued ASU 2021-1 Reference Rate Reform (Topic 848): Scope, which updated the standard to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Beginning in the first quarter of 2020, we have applied the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance but we do not expect the provisions of the standard will have a material impact on our consolidated financial statements.

We determined all other recently issued accounting pronouncements will not have a material impact on our consolidated financial statements or do not materially apply to our operations.

13

3. Real Estate Assets and Construction in Progress

The following is a summary of our cost of owned or leased properties as of March 31, 2021 and December 31, 2020 (in thousands):

As of March 31, 2021 (unaudited):

Property Location	Land		Buildings, Improvements and Equipment		Construction in Progress		Total Cost
Ashburn, Virginia Campus (1)	$	16,476	$	391,247	$	219,065	$	626,788
Atlanta, Georgia Campus (2)	55,158		771,045		183,319		1,009,522
Chicago, Illinois	9,400		251,676		131,322		392,398
Dulles, Virginia	3,154		55,580		4,220		62,954
Eemshaven, Netherlands	5,153		20,991		47,859		74,003
Fort Worth, Texas	9,079		124,481		3,350		136,910
Groningen, Netherlands	1,821		11,324		3,249		16,394
Hillsboro, Oregon	18,414		47,364		72,033		137,811
Irving, Texas	8,606		409,565		89,516		507,687
Leased Facilities (3)	—		83,180		60		83,240
Manassas, Virginia Campus (4)	—		37		90,947		90,984
Phoenix, Arizona (5)	—		—		38,063		38,063
Piscataway, New Jersey	7,466		122,599		39,951		170,016
Princeton, New Jersey	20,700		35,267		9		55,976
Richmond, Virginia	2,180		235,381		128,911		366,472
Sacramento, California	1,481		66,304		125		67,910
Santa Clara, California (6)	—		117,522		16,871		134,393
Suwanee, Georgia (Atlanta-Suwanee)	3,521		184,975		7,607		196,103
Other (7)	2,213		36,950		43,272		82,435
	$	164,822	$	2,965,488	$	1,119,749	$	4,250,059

_______________________________

(1)The “Ashburn, Virginia Campus” includes both the existing data center Ashburn, VA (DC - 1) as well as new property development associated with the construction of a second data center Ashburn, VA (DC - 2).

(2)The “Atlanta, Georgia Campus” includes both the existing data center Atlanta (DC - 1) as well as the recently developed data center Atlanta, GA (DC - 2).

(3)Includes 7 facilities. All facilities are leased, including one subject to a finance lease.

(4)The “Manassas, Virginia Campus” includes new property development associated with the construction of a wholly owned data center in Manassas, Virginia as well as separate land purchases in Manassas, Virginia.

(5)Represents land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use.

(6)Owned facility subject to long-term ground sublease.

(7)Consists of Miami, FL; Lenexa, KS; Overland Park, KS and additional land.

14

As of December 31, 2020:

Property Location	Land		Buildings, Improvements and Equipment		Construction in Progress		Total Cost
Ashburn, Virginia Campus (1)	$	16,476	$	371,725	$	185,903	$	574,104
Atlanta, Georgia Campus (2)	55,157		700,142		191,072		946,371
Chicago, Illinois	9,400		250,336		104,117		363,853
Dulles, Virginia	3,154		54,323		4,148		61,625
Eemshaven, Netherlands	5,366		21,712		47,531		74,609
Fort Worth, Texas	9,079		124,054		1,064		134,197
Groningen, Netherlands	1,896		11,206		3,730		16,832
Hillsboro, Oregon	18,414		34,594		78,390		131,398
Irving, Texas	8,606		392,275		99,591		500,472
Leased Facilities (3)	—		82,759		225		82,984
Manassas, Virginia Campus (4)	—		25		67,073		67,098
Phoenix, Arizona (5)	—		—		37,729		37,729
Piscataway, New Jersey	7,466		122,176		30,401		160,043
Princeton, New Jersey	20,700		35,261		5		55,966
Richmond, Virginia	2,180		233,927		120,577		356,684
Sacramento, California	1,481		66,300		12		67,793
Santa Clara, California (6)	—		117,343		9,385		126,728
Suwanee, Georgia (Atlanta-Suwanee)	3,521		184,467		6,718		194,706
Other (7)	2,213		36,636		41,094		79,943
	$	165,109	$	2,839,261	$	1,028,765	$	4,033,135

_______________________________

(1)The “Ashburn, Virginia Campus” includes both the existing data center Ashburn, VA (DC - 1) as well as new property development associated with the construction of a second data center Ashburn, VA (DC - 2).

(2)The “Atlanta, Georgia Campus” includes both the existing data center Atlanta (DC - 1) as well as the recently developed data center Atlanta, GA (DC - 2).

(3)Includes 7 facilities. All facilities are leased, including one subject to a finance lease.

(4)The “Manassas, Virginia Campus” includes new property development associated with the construction of a wholly owned data center in Manassas, Virginia as well as separate land purchases in Manassas, Virginia.

(5)Represents land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use.

(6)Owned facility subject to long-term ground sublease.

(7)Consists of Miami, FL; Lenexa, KS; Overland Park, KS and additional land.

4. Leases

Leases as Lessee

We use leasing as a source of financing for certain data center facilities and related equipment. We currently operate one data center facility, along with various equipment and fiber optic transmission cabling, that are subject to finance leases. The remaining terms of our finance leases range from approximately ten years to twenty years. Our finance lease associated with the data center includes multiple extension option periods, some of which were included in the lease term as we are reasonably certain to exercise those extension options. Our other finance leases typically do not have options to extend the initial lease term.

We currently lease six other facilities under operating lease agreements for various data centers, our corporate headquarters and additional office space. Our leases have remaining lease terms ranging from less than three years to six years. We have options to extend the initial lease term on nearly all of these leases. Additionally, we have one ground lease for our Santa Clara property that is an operating lease which is scheduled to expire in 2052.

15

Components of lease expense were as follows (unaudited and in thousands):

	Three months ended March 31,
	2021		2020
Finance lease cost:
Amortization of assets	$	1,013	$	1,038
Interest on lease liabilities	469		489
Operating lease expense:
Operating lease cost	2,232		2,263
Variable lease cost	270		264
Sublease income	(49)		(48)
Total lease costs	$	3,935	$	4,006

Leases as lessor

Our lease revenue contains both minimum lease payments as well as variable lease payments. See Note 2 ‘Summary of Significant Accounting Policies’ for further details of our revenue streams and associated accounting treatment. The components of our lease revenue were as follows (unaudited and in thousands):

	Three months ended March 31,
	2021		2020
Lease revenue:
Minimum lease revenue	$	127,706	$	107,485
Variable lease revenue (primarily recoveries from customers)	16,602		12,596
Total lease revenue	$	144,308	$	120,081

5. Investments in Unconsolidated Entity

During the three months ended March 31, 2019, we formed an unconsolidated entity with Alinda Capital Partners (“Alinda”), an infrastructure investment firm. We contributed a hyperscale data center under development in Manassas, Virginia to the entity. The facility, and the previously executed 10-year operating lease agreement with a global cloud-based software company, was contributed to the unconsolidated entity in exchange for cash and noncash consideration in the form of equity interest in the entity that was measured at fair value pursuant to Topic 820. The equity interest received and any amounts due from the unconsolidated entity are recorded within our consolidated balance sheets and totaled $25.9 million and $22.6 million as of March 31, 2021 and December 31, 2020, respectively. We and Alinda each own a 50% interest in the entity. As we are not the primary beneficiary of the arrangement but have the ability to exercise significant influence, we concluded that the investment should be accounted for as an unconsolidated entity using equity method investment accounting. As of March 31, 2021 and December 31, 2020, the total assets of the entity were $145.8 million and $141.5 million, respectively. As of March 31, 2021 and December 31, 2020, the total debt outstanding, net of deferred financing costs, was $92.2 million and $90.1 million, respectively.

16

6. Debt

Below is a listing of our outstanding debt, including finance leases, as of March 31, 2021 and December 31, 2020 (in thousands):

	Weighted Average Effective Interest Rate at March 31, 2021 (1)	Maturity Date	March 31, 2021		December 31, 2020
	(unaudited)		(unaudited)
Unsecured Credit Facility
Revolving Credit Facility	1.36%	December 17, 2023	$	361,877	$	392,337
Term Loan A	3.26%	December 17, 2024	225,000		225,000
Term Loan B	3.30%	April 27, 2025	225,000		225,000
Term Loan C	3.46%	October 18, 2026	250,000		250,000
Term Loan D	1.45%	January 15, 2026	250,000		250,000
3.875% Senior Notes	3.88%	October 1, 2028	500,000		500,000
Finance Leases	4.35%	2031 - 2040	42,525		41,718
	2.87%		1,854,402		1,884,055
Less net debt issuance costs			(13,935)		(14,562)
Total outstanding debt, net			$	1,840,467	$	1,869,493

_________________________

(1)The coupon interest rates associated with Term Loan A, Term Loan B, and Term Loan C incorporate the effects of our interest rate swaps in effect as of March 31, 2021.

The annual remaining principal payment requirements of our debt securities as of March 31, 2021 per the contractual maturities, excluding extension options and excluding operating and finance leases, are as follows (unaudited and in thousands):

2021 (April - December)	$	—
2022	—
2023	361,877
2024	225,000
2025	225,000
Thereafter	1,000,000
Total	$	1,811,877

As of March 31, 2021, we were in compliance with all of our covenants of our debt agreements.

7. Derivative Instruments

From time to time, we enter into derivative financial instruments to manage certain cash flow risks.

Derivatives designated and qualifying as a hedge of the exposure to variability in the cash flows of a specific asset or liability that is attributable to a particular risk, such as interest rate risk, are considered cash flow hedges.

Interest Rate Swaps

Our objectives in using interest rate swaps are to reduce variability in interest expense and to manage exposure to adverse interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

17

As of March 31, 2021, we had interest rate swap agreements in place with an aggregate notional amount of $700 million. The forward swap agreements effectively fix the interest rate on $700 million of term loan borrowings, $225 million of swaps allocated to Term Loan A, $225 million allocated to Term Loan B and $250 million allocated to Term Loan C, through the current maturity dates of the respective term loans.

We reflect our interest rate swap agreements, which are designated as cash flow hedges, at fair value as either assets or liabilities on the consolidated balance sheets within the “Other assets, net” or “Derivative liabilities” line items, as applicable. As of March 31, 2021 and December 31, 2020, the fair value of interest rate swaps represented an aggregate liability of $32.0 million and $49.8 million, respectively.

The forward interest rate swap agreements are derivatives that currently qualify for hedge accounting whereby we record the effective portion of changes in fair value of the interest rate swaps in accumulated other comprehensive income or loss on the consolidated balance sheets and statements of comprehensive income which is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Any ineffective portion of a derivative's change in fair value is immediately recognized within net income (loss). The amount reclassified from other comprehensive income to interest expense on the consolidated statements of operations was an increase to interest expense of $3.4 million and $0.8 million for the three months ended March 31, 2021, and 2020, respectively. There was no ineffectiveness recognized for the three months ended March 31, 2021, and 2020. During the subsequent twelve months, beginning April 1, 2021, we estimate that $13.7 million will be reclassified from other comprehensive income as an increase to interest expense.

Interest rate derivatives and their fair values as of March 31, 2021 and December 31, 2020 were as follows (unaudited and in thousands):

Notional Amount				Fixed One Month LIBOR rate per annum				Fair Value
March 31, 2021		December 31, 2020				Effective Date	Expiration Date	March 31, 2021		December 31, 2020
$	25,000	$	25,000	1.989	%	January 2, 2018	December 17, 2021	$	(334)	$	(447)
100,000		100,000		1.989	%	January 2, 2018	December 17, 2021	(1,333)		(1,788)
75,000		75,000		1.989	%	January 2, 2018	December 17, 2021	(1,001)		(1,342)
50,000		50,000		2.033	%	January 2, 2018	April 27, 2022	(1,017)		(1,248)
100,000		100,000		2.029	%	January 2, 2018	April 27, 2022	(2,027)		(2,490)
50,000		50,000		2.033	%	January 2, 2018	April 27, 2022	(1,016)		(1,248)
100,000		100,000		2.617	%	January 2, 2020	December 17, 2023	(6,144)		(7,191)
100,000		100,000		2.621	%	January 2, 2020	April 27, 2024	(6,722)		(8,000)
70,000		70,000		0.968	%	March 2, 2020	October 18, 2026	232		(2,174)
30,000		30,000		0.973	%	March 2, 2020	October 18, 2026	100		(938)
200,000		200,000		2.636	%	December 17, 2021	December 17, 2023	(8,781)		(9,648)
200,000		200,000		2.642	%	April 27, 2022	April 27, 2024	(8,162)		(9,500)
125,000		125,000		1.014	%	December 17, 2023	December 17, 2024	336		(704)
100,000		100,000		1.035	%	December 17, 2023	December 17, 2024	244		(584)
75,000		75,000		1.110	%	December 17, 2023	October 18, 2026	1,230		(866)
100,000		100,000		1.088	%	April 27, 2024	April 27, 2025	399		(540)
125,000		125,000		1.082	%	April 27, 2024	April 27, 2025	513		(666)
75,000		75,000		0.977	%	April 27, 2024	October 18, 2026	1,503		(422)
								$	(31,980)	$	(49,796)

Power Purchase Agreements

In March 2019, we entered into two 10-year agreements to purchase renewable energy equal to the expected electricity needs of our data centers in Chicago, Illinois and Piscataway, New Jersey. These arrangements currently qualify for hedge accounting whereby we record the changes in fair value of the instruments in “Accumulated other comprehensive income” or loss on the consolidated balance sheets and statements of comprehensive income which is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The amount reclassified from other comprehensive income to utilities expense on the consolidated statements of operations was a reduction to utilities expense of $0.1 million and an increase to utilities expense of $0.4 million for the three months ended March 31, 2021 and 2020, respectively. We currently reflect these agreements, which are designated as cash flow hedges, at fair value as liabilities on the consolidated balance sheets within the “Derivative liabilities” line item.

18

Power purchase agreement derivatives and their fair values as of March 31, 2021 and December 31, 2020 were as follows (unaudited and in thousands):

				Fair Value
Counterparty	Facility	Effective Date	Expiration Date	March 31, 2021		December 31, 2020
Calpine Energy Solutions, LLC	Piscataway	March 8, 2019	February 28, 2029	$	(2,534)	$	(2,162)
Calpine Energy Solutions, LLC	Chicago	March 8, 2019	February 28, 2029	(2,237)		(1,764)
				$	(4,771)	$	(3,926)

8. Commitments and Contingencies

We are subject to various routine legal proceedings and other matters in the ordinary course of business. We currently do not have any litigation that would have a material adverse impact on our financial statements.

9. 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 March 31, 2021, the Operating Partnership had four classes of limited partnership units outstanding: Series A Preferred Units, Series B Convertible Preferred Units, Class A units of limited partnership interest (“Class A units”) and Class O LTIP units of limited partnership units (“Class O units”). The Class A units currently outstanding are now redeemable on a one-for-one exchange rate at any time for cash or shares of Class A common stock of QTS. The Company may in its sole discretion elect to assume and satisfy the redemption amount with cash or its shares. Class O units were issued upon grants made under the QualityTech, LP 2010 Equity Incentive Plan (the “2010 Equity Incentive Plan”). Class O units are pari passu with Class A units. Each Class O unit is convertible into Class A units by the Operating Partnership at any time or by the holder at any time based on formulas contained in the partnership agreement.

QTS Realty Trust, Inc.

In connection with its initial public offering on October 13, 2013 ("IPO"), QTS issued Class A common stock and Class B common stock. Class B common stock entitles the holder to 50 votes per share and was issued to enable our Chief Executive Officer to exchange 2% of his Operating Partnership units so he may have a vote proportionate to his economic interest in the Company. Also in connection with its IPO, QTS adopted the QTS Realty Trust, Inc. 2013 Equity Incentive Plan (the “2013 Equity Incentive Plan”), pursuant to which the Company may issue shares of Class A common stock pursuant to various types of awards. As of March 31, 2021, 5.9 million shares of Class A common stock were authorized and available for issuance under the 2013 Equity Incentive Plan. On March 4, 2021, the Board of Directors approved an amendment and restatement of the 2013 Equity Incentive Plan, to among other things, increase the number of shares available for issuance under the plan by an additional 2.0 million shares, which amendment is expected to be approved at our 2021 Annual Meeting of Stockholders on May 4, 2021.

In March 2019, the Compensation Committee completed a redesign of the long-term incentive program for executive officers to include the following types of awards:

a.Performance-Based FFO Unit Awards — performance-based restricted share unit awards, which may be earned based on Operating Funds From Operations (“OFFO”) per diluted share measured over a two-year performance period (performance-based FFO units or “FFO Units”), with two-thirds of the earned FFO Units vesting and settling in shares of Class A common stock on the date that performance is certified following the end of the performance period and the remaining one-third of the FFO Units vesting and settling at the end of three years from the award grant date. The number of shares of Class A common stock subject to the awards that can be earned ranges from 0% to 200% of the target award based on actual performance over the performance period, with the number of shares to be determined based on a linear interpolation basis between threshold and target and target and maximum performance.

19

b.Performance-Based Relative TSR Unit Awards — performance-based restricted share unit awards, which may be earned based on total stockholder return (“TSR”) as compared to the MSCI U.S. REIT Index (the “Index”) over a three-year performance period (the performance-based relative TSR units or “TSR Units”). The number of shares of Class A common stock subject to the awards that can be earned ranges from 0% to 200% of the target award based on our TSR compared to the Index. In addition, award payouts will be determined on a linear interpolation basis between threshold and target and target and maximum performance; and will be capped at the target performance level if our TSR is negative.

c.Restricted Stock Awards — the restricted stock awards vest as to 33% of the shares subject to awards on the first anniversary of the date of grant and as to 8.375% of the shares subject to the awards each quarter-end thereafter, subject to the named executive officer’s continued service as an employee as of each vesting date.

The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the three months ended March 31, 2021 (unaudited):

	2010 Equity Incentive Plan					2013 Equity Incentive Plan
	Numbers of Class O units	Weighted average exercise price		Weighted average fair value		Options	Weighted average exercise price		Weighted average fair value		Restricted Stock / Deferred Stock	Weighted average fair value at grant date		TSR Units	Weighted average fair value at grant date		FFO Units	Weighted average fair value at grant date
Outstanding at December 31, 2020	75,435	$	25.00	$	6.11	1,936,407	$	38.55	$	7.26	416,496	$	52.20	168,552	$	66.90	132,267	$	51.45
Granted	—	—		—		96,366	59.06		10.53		270,464	59.07		105,402	64.72		105,402	59.06
Exercised/Vested (1)	—	—		—		(51,220)	38.63		7.91		(123,438)	54.57		—	—		—	—
Cancelled/Expired	—	—		—		—	—		—		(3,716)	57.24		—	—		—	—
Outstanding at March 31, 2021	75,435	$	25.00	$	6.11	1,981,553	$	39.55	$	7.40	559,806	$	54.96	273,954	$	66.06	237,669	$	54.82

____________________

(1)Represents (i) Class O units which were converted to Class A units, (ii) options to purchase Class A common stock which were exercised, and (iii) the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock, with respect to the applicable column.

The assumptions and fair values for restricted stock and options to purchase shares of Class A common stock granted for the three months ended March 31, 2021 are included in the following table on a per unit basis (unaudited). Options to purchase shares of Class A common stock were valued using the Black-Scholes model and TSR Units were valued using a Monte-Carlo simulation that leveraged similar assumptions to those used to value the Class A common stock and FFO Units.

	Three Months Ended March 31, 2021
Fair value of FFO units and restricted stock granted	$	59.06		-	$	61.17
Fair value of TSR units granted					$	64.72
Fair value of options granted	$	3.79		-	$	11.36
Expected term (years)	0.4			-	5.5
Expected volatility	28		%	-	31		%
Expected dividend yield	3.39						%
Expected risk-free interest rates	0.06		%	-	0.90		%

The following tables summarize information about awards outstanding as of March 31, 2021 (unaudited).

	Operating Partnership Awards Outstanding
	Exercise prices		Awards outstanding	Weight average remaining vesting period  (years)
Class O Units	$	25.00	75,435	—
Total Operating Partnership awards outstanding			75,435

20

	QTS Realty Trust, Inc. Awards Outstanding
	Exercise prices					Awards outstanding	Weight average remaining vesting period  (years)
Restricted stock	$	—				559,806	1.1
TSR units	—					273,954	1.1
FFO units	—					237,669	0.8
Options to purchase Class A common stock	$	21.00	-	$	59.06	1,981,553	0.9
Total QTS Realty Trust, Inc. awards outstanding						3,052,982

Any awards outstanding as of the end of the period have been valued as of the grant date and generally vest ratably over a defined service period. As of March 31, 2021, all restricted Class A common stock, TSR units, and FFO units outstanding were unvested and approximately 0.1 million options to purchase Class A common stock were outstanding and unvested. As of March 31, 2021, we had $51.4 million of unrecognized equity-based compensation expense which will be recognized over a remaining weighted-average vesting period of approximately 1 year. The total intrinsic value of Class O units and options to purchase Class A common stock outstanding at March 31, 2021 was $47.5 million.

Dividends and Distributions

The following tables present quarterly cash dividends and distributions paid to our common and preferred stockholders for the three months ended March 31, 2021 and 2020 (unaudited):

Three Months Ended March 31, 2021
Record Date	Payment Date	Per Share Rate		Aggregate Dividend/Distribution Amount (in millions)
Common Stock
December 22, 2020	January 7, 2021	$	0.47	$	33.4
				$	33.4
Series A Preferred Stock
December 31, 2020	January 15, 2021	$	0.45	$	1.9
				$	1.9
Series B Preferred Stock
December 31, 2020	January 15, 2021	$	1.63	$	5.1
				$	5.1

Three Months Ended March 31, 2020
Record Date	Payment Date	Per Share Rate		Aggregate Dividend/Distribution Amount (in millions)
Common Stock
December 20, 2019	January 7, 2020	$	0.44	$	28.6
				$	28.6
Series A Preferred Stock
December 31, 2019	January 15, 2020	$	0.45	$	1.9
				$	1.9
Series B Preferred Stock
December 31, 2019	January 15, 2020	$	1.63	$	5.1
				$	5.1

21

Additionally, subsequent to March 31, 2021, we paid the following dividends:

•On April 6, 2021, we paid our regular quarterly cash dividend of $0.50 per common share to stockholders of record as of the close of business on March 19, 2021.

•On April 15, 2021, we paid a quarterly cash dividend of approximately $0.45 per share on our Series A Preferred Stock to holders of Series A Preferred Stock of record as of the close of business on March 31, 2021.

•On April 15, 2021, we paid a quarterly cash dividend of approximately $1.63 per share on our Series B Preferred Stock to holders of Series B Preferred Stock of record as of the close of business on March 31, 2021.

Equity Issuances

Class A Common Stock

In June 2019, we established an “at-the-market” equity offering program (the “Prior ATM Program”) pursuant to which we could issue, from time to time, up to $400 million of our Class A common stock, $0.01 par value per share (the “Class A common stock”), which could include shares to be sold on a forward basis. During the three months ended March 31, 2021, we settled the remaining shares subject to the forward sale agreements.

Because we had utilized substantially all of the offering capacity of the Prior ATM Program, in May 2020, we established a new “at-the-market” equity offering program (the “Current ATM Program”) pursuant to which we may issue, from time to time, up to $500 million of our Class A common stock, which may include shares to be sold on a forward basis. As under the Prior ATM Program, the use of forward sales under the Current ATM Program generally allows us to lock in a price on the sale of shares of our Class A common stock when sold by the forward sellers, but defer receiving the net proceeds from such sales until the shares of our Class A common stock are issued at settlement on a later date. We expect to physically settle (by delivering shares of common stock) the forward sales under the Current ATM Program prior to the first anniversary date of each respective transaction. We have concluded that the forward sale agreements meet the derivative scope exception for certain contracts involving an entity’s own equity. Our earnings per share dilution resulting from the forward sale agreements, if any, is determined using the two-class method.

In June 2020, we conducted an underwritten offering of 4,400,000 shares of our common stock on a forward basis. During the three months ended March 31, 2021 we settled a portion of the 4,400,000 shares subject to the forward sales agreements. We expect to physically settle the remaining forward sale agreements (by the delivery of shares of common stock) and receive proceeds, subject to certain adjustments, from the sale of those shares of common stock by June 30, 2021, although we have the right to elect settlement prior to that time. We have concluded that the forward sale agreements meet the derivative scope exception for certain contracts involving an entity’s own equity. Our earnings per share dilution resulting from the forward sale agreements, if any, is determined using the two-class method.

The following table represents a summary of our aggregate forward equity activity under the Prior ATM Program, Current ATM Program and our underwritten offerings from December 31, 2020 through March 31, 2021:

Offering Program	Forward Shares Sold/(Settled)		Net Proceeds Available/(Received) (1)
Shares and net proceeds available as of December 31, 2020	9,961		$	581,598	(2)
Forward Equity - Sales	1,504		91,620
Forward Equity - Settlements	(3,865)	(3)	(215,964)
Shares and net proceeds available as of March 31, 2021	7,600		$	457,254

____________________

(1)Net Proceeds Available remain subject to certain adjustments until settled.

(2)Proceeds available reported in the Form 10-K for the period ended December 31, 2020 were $587.6 million. The $6 million decrease is primarily due to QTS’ declared dividends, which reduces cash expected to be received upon full physical settlement of the forward shares.

(3)Represents the number of forward shares we elected to physically settle during the period.

22

Preferred Stock

As of March 31, 2021, we had outstanding 4,280,000 shares of 7.125% Series A Cumulative Redeemable Perpetual Preferred Stock ("Series A Preferred Stock") with a liquidation preference of $25.00 per share as well as 3,162,500 shares of 6.50% Series B Cumulative Convertible Perpetual Preferred Stock (“Series B Preferred Stock”) with a liquidation preference of $100.00 per share. Dividends on the Series A Preferred Stock and Series B Preferred Stock are payable quarterly in arrears on or about the 15th day of each January, April, July and October.

The Series A Preferred Stock does not have a stated maturity date. On and after March 15, 2023, the Company may, at its option, redeem the Series A Preferred Stock, in whole, at any time, or in part, from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but not including, the date of redemption. Under certain conditions, upon the occurrence of a change of control, we may redeem the Series A Preferred Stock in whole, at any time, or in part, from time to time within 120 days after the occurrence of such event and the holders will have the right to convert their Series A Preferred Stock to Class A common stock in accordance with the terms of the Series A Preferred Stock.

The Series B Preferred Stock does not have a stated maturity date. The Series B Preferred Stock is convertible by holders into shares of Class A common stock at any time at the then-prevailing conversion rate. The conversion rate as of March 31, 2021 is 2.1436 shares of the Company’s Class A common stock per share of Series B Preferred Stock. The Series B Preferred Stock is not redeemable by the Company. At any time on or after July 20, 2023, the Company may at its option cause all (but not less than all) outstanding shares of the Series B Preferred Stock to be automatically converted into the Company’s Class A common stock at the then-prevailing conversion rate if the closing sale price of the Company’s Class A common stock is equal to or exceeds 150% of the then-prevailing conversion price for at least 20 trading days in a period of 30 consecutive trading days, including the last trading day of such 30-day period, ending on the trading day prior to the issuance of a press release announcing the mandatory conversion.

10. Related Party Transactions

As described further in Note 5 ‘Investments in Unconsolidated Entity’, during the three months ended March 31, 2019, we formed an unconsolidated entity with Alinda, an infrastructure investment firm. We contributed a hyperscale data center under development in Manassas, Virginia to the entity. The facility, and the previously executed operating lease to a global cloud-based software company pursuant to a 10-year lease agreement, was contributed in exchange for cash and noncash consideration in the form of equity interest in the entity that was measured at fair value pursuant to ASC Topic 820. We and Alinda each own a 50% interest in the entity.

Under the unconsolidated entity operating agreement, we serve as the entity’s operating member, subject to authority and oversight of a board appointed by us and Alinda, and separately we serve as manager and developer of the facility in exchange for management and development fees. During the three months ended March 31, 2021 and 2020, we received $0.3 million and $0.5 million in development fees from the unconsolidated entity, respectively, as well as $0.3 million and $0.2 million in management fees from the unconsolidated entity, respectively.

In addition, we periodically execute transactions with entities affiliated with our Chairman and Chief Executive Officer. Such transactions include building operating lease payments and receipts as well as reimbursement for the use of a private aircraft service by our officers and directors.

The transactions which occurred during the three months ended March 31, 2021 and 2020 are outlined below (unaudited and in thousands):

	Three Months Ended March 31,
	2021		2020
Tax, utility, insurance and other reimbursement	$	169	$	176
Rent expense	260		257
Total	$	429	$	433

23

11. Noncontrolling Interest

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

Commencing at any time beginning November 1, 2014, at the election of the holders of the noncontrolling interest, the currently outstanding Class A units of the Operating Partnership are redeemable for cash or, at the election of the Company, Class A common stock of the Company on a one-for-one basis. As of March 31, 2021, the noncontrolling ownership interest percentage of QualityTech, LP was 8.6%.

12. Earnings per share

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 per share for the effects of potentially dilutive common shares. Unvested restricted stock awards and our forward sale contracts described in Note 9 contain non-forfeitable rights to dividends and thus are participating securities and are included in the computation of basic earnings per share pursuant to the two-class method for all periods presented. The two-class method is an earnings allocation formula that treats a participating security as having rights to undistributed earnings that would otherwise have been available to common stockholders. Accordingly, service-based restricted stock awards and the forward sale contracts were included in the calculation of basic earnings per share using the two-class method for all periods presented to the extent outstanding during the period.

The computation of basic and diluted net income (loss) per share is as follows (in thousands, except per share data, and unaudited):

	Three Months Ended March 31,
	2021		2020
Numerator:
Net income	$	7,918	$	8,120
Income attributable to noncontrolling interests	(79)		(110)
Preferred stock dividends	(7,045)		(7,045)
Earnings attributable to participating securities	(5,285)		(1,596)
Net loss available to common stockholders after allocation to participating securities	$	(4,491)	$	(631)
Denominator:
Weighted average shares outstanding - basic	64,442		58,038
Effect of Class O units, TSR units, FFO units and options to purchase Class A common stock on an "as if" converted basis	—		—
Weighted average shares outstanding - diluted	64,442		58,038
Basic net loss per share *	$	(0.07)	$	(0.01)
Diluted net loss per share *	$	(0.07)	$	(0.01)

______________________________

*Note: The calculations of basic and diluted net income (loss) per share above do not include the following number of Class A partnership units, Class O units, TSR units, FFO units and options to purchase common stock on an “as if” converted basis, and the effects of Series B Convertible preferred stock on an “as if” converted basis, as their respective inclusions would have been antidilutive:

	Three Months Ended March 31,
	2021	2020
Class A Partnership units	6,466	6,671
Class O units, TSR units, FFO units and options to purchase common stock on an "as if" converted basis	1,212	655
Series B Convertible preferred stock on an "as if" converted basis	6,779	6,749

24

13. Contracts with Customers

Future minimum payments to be received under non-cancelable customer contracts including both lease rental revenue components and non-lease revenue components that are accounted for as a combined lease component in accordance with the practical expedient provided by ASC Topic 842 which is discussed in Note 2 above (inclusive of payments for contracts which have not yet commenced, and exclusive of variable lease revenue such as recoveries of operating costs from customers) are as follows for the years ending December 31 (unaudited and in thousands):

2021 (April - December)	$	349,511
2022	394,619
2023	296,826
2024	240,951
2025	186,194
Thereafter	554,414
Total	$	2,022,515

14. Fair Value of Financial Instruments

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

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

Derivative Contracts:

Interest rate swaps

Currently, we use interest rate swaps to manage our interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of fair value accounting guidance, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of March 31, 2021, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. We do not have any fair value measurements on a recurring basis using significant unobservable inputs (Level 3) as of March 31, 2021 or December 31, 2020.

Power Purchase Agreements

25

In March 2019, we began using energy hedges to manage risk related to energy prices. The inputs used to value the derivatives primarily fall within Level 2 of the fair value hierarchy, and valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including futures curves. The fair values of the energy hedges are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future energy rates (forward curves) derived from observable market futures curves. To comply with the provisions of fair value accounting guidance, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Unsecured Credit facility, Term Loan D and 3.875% Senior Notes: As market interest rates have fluctuated compared to contracted interest rates, the fair value of our unsecured credit facility approximated the carrying value of the credit facility less the fair value of the interest rate swap liability. Our Term Loan D did not have interest rates which were materially different than current market conditions and therefore, the fair value approximated the carrying value. The fair value of our 3.875% Senior Notes was estimated using Level 2 “significant other observable inputs,” primarily based on quoted market prices for the same or similar issuances. At March 31, 2021, the fair value of the 3.875% Senior Notes was approximately $500.0 million.

Finance Leases: The fair value of our finance leases was estimated in the same manner as the unsecured credit facility above. Similarly, each of these instruments did not have interest rates which were materially different than current market conditions and therefore, the fair value of each instrument approximated the respective carrying values.

15. Subsequent Events

In April 2021, we paid our regular quarterly cash dividends on our common stock, Series A Preferred Stock and Series B Preferred Stock. See the ‘Dividends and Distributions’ section of Note 9 for additional details.

26

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

The following discussion and analysis covers the financial condition and results of operations of QTS Realty Trust, Inc., for the three months ended March 31, 2021 and 2020. You should read the following discussion and analysis in conjunction with QTS’s accompanying consolidated financial statements and related notes and “Risk Factors” contained elsewhere in this Form 10-Q.

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 the COVID-19 pandemic, its impact on us and our response thereto, and our strategy, plans, intentions, capital resources, liquidity, portfolio performance, results of operations, anticipated growth in our funds from operations and anticipated market conditions contain 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. 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;

•obsolescence or reduction in marketability of our infrastructure due to changing industry demands;

•global, national and local economic conditions;

•risks related to the COVID-19 pandemic, including, but not limited to, the risk of business and/or operational disruptions, disruption of our customers’ businesses that could affect their ability to make rental payments to us, supply chain disruptions and delays in the construction or development of our data centers;

•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 or lines of business

•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;

•decreased rental rates or increased vacancy rates;

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

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

•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;

•changes in real estate and zoning laws, revaluations for tax purposes and increases in real property tax rates; and;

•limitations inherent in our current and any future joint venture investments, such as lack of sole-decision making authority and reliance on our partners’ financial condition

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. Any forward-looking statement speaks only as of the date on which it was made. 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, 2020, and Item 1A. “Risk Factors” of this Form 10-Q, as well as other periodic reports that we file with the Securities and Exchange Commission, many of which should be interpreted as being heightened as a result of the ongoing COVID-19 pandemic and the actions taken to contain the pandemic or mitigate its impact.

27

Overview

QTS is a leading provider of data center solutions to the world’s largest and most sophisticated hyperscale technology companies, enterprises and government agencies. Through our technology-enabled platform, delivered across mega scale data center infrastructure, we offer a comprehensive portfolio of secure and compliant IT solutions. Our data centers are facilities that power and support our customers’ IT infrastructure equipment and provide seamless access and connectivity to a range of communications and IT services providers. Across our broad footprint of strategically located data centers, we provide flexible, scalable and secure IT solutions, including data center space, power and cooling, connectivity and value-add managed services for more than 1,200 customers in the financial services, healthcare, retail, government, technology and various other industries. We build out our data center facilities depending on the needs of our customers to accommodate both multi-tenant environments (hybrid colocation) and customers that require significant amounts of space and power (hyperscale), including federal customers. 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 significantly expand our sellable data center raised floor space without constructing or acquiring any new buildings. In addition, we own approximately 785 acres of land that is available at our data center properties that provides us with the opportunity to significantly expand our capacity to further support future demand from current and new potential customers.

As of March 31, 2021, we operated a portfolio of 28 data center properties located throughout the United States, Canada and Europe. Within the United States, our data centers are concentrated in the markets which we believe offer the highest growth opportunities. Our data centers are highly specialized, mission-critical facilities utilized by our customers to store, power and cool the server, storage, and networking equipment that support their most critical business systems and 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 the largest companies and organizations in the world. We have demonstrated a strong operating track record of “five-nines” (99.999%) reliability since QTS’ inception.

Novel Coronavirus (COVID-19)

We continue to actively monitor developments with respect to COVID-19 and have taken numerous actions based on corporate policies specifically focusing on the safety and wellness of our customers, partners, and employees, as well as providing continuous and resilient services. Although the COVID-19 pandemic has caused significant disruptions to the United States and global economy and has contributed to significant volatility in financial markets, as of the date of this report, these developments have not had a known material adverse effect on our business. As of the date of this report, each of our data centers in North America and Europe are fully operational and operating in accordance with our business continuity plans. Across each of the respective jurisdictions in which we operate, our business has been deemed an essential operation, which has allowed us to remain fully staffed with critical personnel in place to continue to provide service and support for our customers.

The extent to which COVID-19 may impact our and our customers’ operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, new information that may emerge concerning the severity, variants or mutations of COVID-19, vaccine efficacy and rollout and other actions taken to contain COVID-19 or treat its impact, among others. The COVID-19 pandemic presents material uncertainty and risk with respect to our business, financial performance, and results of operations and may exacerbate many of the risks identified under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.

Our Customer Base

Our data center facilities are designed with the flexibility to support a diverse set of solutions and customers. Our customer base is comprised of more than 1,200 different 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, retail companies, government agencies, communications service providers, software companies and global Internet companies.

We have customers that range from large enterprise and technology companies with significant IT expertise and data center requirements, including financial institutions, “Big Four” accounting firms, government agencies and the world’s largest global Internet and cloud companies, to major healthcare, telecommunications and software and web-based companies.

28

As a result of our diverse customer base, customer concentration in our portfolio is limited. As of March 31, 2021, only six of our more than 1,200 customers individually accounted for more than 3% of our monthly recurring revenue (“MRR”) (as defined below), with the largest customer accounting for approximately 14.0% of our MRR and the next largest customer accounting for 5.4% of our MRR.

Our Portfolio

As of March 31, 2021, our portfolio consisted of 28 owned and leased properties, including a property owned by an unconsolidated entity, with data centers located throughout the United States, Canada and Europe. The following table presents an overview of our portfolio of operating properties, based on information as of March 31, 2021:

			Net Rentable Square Feet (Operating NRSF) (1)
Properties	Year Acquired (2)	Gross Square Feet (3)	Raised Floor (4)	Office & Other (5)	Supporting Infrastructure (6)	Total	% Occupied (7)		Annualized Rent (8)		Available Utility Power (MW) (9)	Basis of Design ("BOD") NRSF (10)	Current  Raised Floor as a % of BOD
Richmond, VA	2010	1,318,353	140,398	51,093	153,450	344,941	79.6	%	$	31,792,898	110	557,309	25.2	%
Atlanta, GA (DC - 1)	2006	968,695	527,186	36,953	364,815	928,954	98.2	%	122,570,381		72	527,186	100.0	%
Irving, TX	2013	698,000	224,605	15,300	252,733	492,638	94.7	%	56,031,686		140	275,701	81.5	%
Princeton, NJ	2014	553,930	58,157	2,229	111,405	171,791	100.0	%	10,558,271		22	158,157	36.8	%
Atlanta, GA (DC - 2)	2020	495,000	81,268	9,250	74,508	165,026	94.7	%	20,202,698		100	240,000	33.9	%
Chicago, IL	2014	474,979	98,500	4,931	98,022	201,453	93.1	%	26,130,724		56	215,855	45.6	%
Ashburn, VA (DC - 1) (11)	2018	445,000	163,125	13,199	169,319	345,643	99.6	%	21,005,283		50	178,000	91.6	%
Suwanee, GA	2005	369,822	212,975	8,697	107,128	328,800	87.5	%	59,486,041		36	212,975	100.0	%
Piscataway, NJ	2016	360,000	118,263	19,243	116,289	253,795	92.1	%	24,807,716		111	176,000	67.2	%
Netherlands facilities (12)	2019	312,114	38,632	—	47,367	85,999	78.5	%	5,847,527		92	158,000	24.5	%
Fort Worth, TX	2016	261,836	71,147	17,232	125,794	214,173	67.0	%	7,941,415		50	80,000	88.9	%
Hillsboro, OR	2020	158,000	23,563	1,000	20,240	44,803	81.3	%	2,242,164		30	85,000	27.7	%
Santa Clara, CA (13)	2007	135,322	59,905	1,238	45,094	106,237	88.5	%	23,334,870		11	80,940	74.0	%
Sacramento, CA	2012	92,644	54,595	2,794	23,916	81,305	46.1	%	11,197,637		8	54,595	100.0	%
Dulles, VA (14)	2017	66,751	26,625	—	22,206	48,831	86.7	%	16,964,565		13	44,545	59.8	%
Leased facilities (15)	2006 & 2015	187,706	59,065	18,650	41,901	119,616	85.6	%	22,506,983		10	79,717	74.1	%
Other (16)	Misc.	147,435	22,380	98,674	30,074	151,128	74.3	%	9,420,734		5	22,380	100.0	%
		7,045,587	1,980,389	300,483	1,804,259	4,085,131	91.4	%	$	472,041,593	916	3,146,360	62.9	%
New Property Development
Ashburn, VA (DC - 2) (17)	2021	310,000	—	—	—	—	—	%	—		—	169,664	—	%
Manassas, VA (DC - 2) (18)	2021	340,000	—	—	—	—	—	%	—		—	160,000	—	%
Unconsolidated Properties - at the Entity's 100% Share (19)
Manassas, VA (DC - 1)	2018	118,031	33,600	12,663	39,044	85,307	1.0%		11,336,918		135	66,324	0.5%
Total Properties		7,813,618	2,013,989	313,146	1,843,303	4,170,438	91.5	%	$	483,378,511	1,051	3,542,348	56.9	%

_______________________

(1)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.

(2)With respect to acquisitions, represents the year a property was acquired. With respect to properties under lease, represents the year our initial lease commenced for the property. With respect to new data center construction, represents the year the facility was opened or expected to be opened.

(3)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. Gross square feet includes 424,246 square feet of our office and support space, which is not included in operating NRSF.

(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 divided by leasable raised floor based on the current configuration of the properties, 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 rental 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 backlog contracts (as defined below) as of a particular date, unless otherwise specifically noted, nor does it reflect the accounting associated with any free rent, rent abatements or future scheduled rent increases.

(9)Represents installed utility power and transformation capacity that is available for use by the facility as of March 31, 2021.

(10)Represents the total sellable data center raised floor potential of the existing data center facility.

(11)This property was formerly known as “Ashburn, VA” but has been renamed “Ashburn, VA (DC - 1)” to distinguish between the existing data center and the new property development shown as “Ashburn, VA (DC - 2)” within the New Property Development section.

29

(12)Consists of two data centers located in Eemshaven, Netherlands and Groningen, Netherlands.

(13)Subject to long-term ground lease.

(14)Consists of one data center in Dulles, Virginia. The Dulles campus previously consisted of two data center buildings, however as of December 31, 2020, the Company relocated customers from the smaller and older facility to the new facility in order to optimize its operating cost structure.

(15)Includes 7 facilities. All facilities are leased, including one subject to a finance lease.

(16)Consists of Miami, FL; Lenexa, KS; and Overland Park, KS facilities.

(17)Represents the development of a new data center building at our Ashburn, VA campus.

(18)Represents the development of a new data center building at our Manassas, VA campus. The Manassas, VA (DC - 2) data center is 100% owned and consolidated by QTS and is separate from the Manassas, VA (DC - 1) data center that is owned by the unconsolidated entity.

(19)Represents our unconsolidated entity at 100% share. Our equity ownership of the unconsolidated entity is 50%.

As of March 31, 2021, we had approximately 1.5 million square feet of additional raised floor in our development pipeline, of which approximately 0.3 million raised floor square feet is expected to become operational by December 31, 2021. Of the total 1.5 million raised floor square feet in our development pipeline, approximately 0.2 million square feet was related to customer leases which had been executed as of March 31, 2021 but 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 March 31, 2021, we had in place customer leases generating revenue for approximately 92% of our leasable raised floor. Our ability to grow revenue also will be affected by our ability to maintain or increase rental and managed services rates at our properties. In addition, 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 March 31, 2021, approximately 52% of our MRR was attributable 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 March 31, 2021, the remaining approximately 48% of our MRR was attributable to the gross lease or managed service model. Under this model, the customer pays us a fixed amount 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 incur more utility costs than their leases permit, we are able to charge these customers for overages. For leases under the gross lease or managed service 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 gross leases and managed services contracts generally have a term of three years or less.

Scheduled Lease Expirations. Our ability to minimize rental churn (which we define as MRR lost in the period from a customer intending to fully exit our platform in the near-term compared to the total MRR at the beginning of the period) and customer downgrades at renewal, combined with our ability to renew, lease and re-lease expiring space, will impact our results of operations and cash flows. Leases which have commenced billing representing approximately 18% and 25% of our total leased raised floor are scheduled to expire during the years ending December 31, 2021 (including all month-to-month leases) and 2022, respectively. These leases also represented approximately 25% and 28%, respectively, of our annualized rent as of March 31, 2021. Given that our average rent for larger contracts tend to be at or below market rent at expiration, as a general matter, based on current market conditions, we expect that expiring rents will generally be at or below the then-current market rents.

Acquisitions, Development, and Financing. Our revenue growth also will depend on our ability to acquire and redevelop and/or construct and subsequently lease data center space at favorable rates. We generally fund the cost of data center acquisition, construction and/or redevelopment from our net cash provided by operations, revolving credit facility, other unsecured and secured borrowings, joint ventures and/or the issuance of additional equity. We believe that we have sufficient access to capital from our current cash and cash equivalents, borrowings under our revolving credit facility and forward equity transactions to fund our development that is under construction.

30

Unconsolidated Entity. On February 22, 2019, we entered into an agreement with Alinda, an infrastructure investment firm, with respect to our Manassas data center. At closing, we contributed cash and our Manassas data center (a hyperscale data center under development in Manassas, Virginia), and Alinda contributed cash, in each case in exchange for a 50% interest in the unconsolidated entity. The Manassas data center, which is currently leased to a global cloud-based software company pursuant to a 10-year lease agreement, was contributed at an expected stabilized value upon completion of approximately $240 million. Under the agreement, we will receive additional distributions in the future as and when we complete development of each phase of the Manassas data center and place it into service, which allows us to receive distributions for Alinda’s share of the unconsolidated entity based on the expected full stabilization of the asset. These distributions will be based on a 6.75% capitalization rate for each phase delivered during the first three years of the agreement. Under the agreement, we serve as the unconsolidated entity’s operating member, subject to authority and oversight of a board appointed by Alinda and us, and separately we serve as manager and developer of the facility in exchange for management and development fees. The agreement includes various transfer restrictions and rights of first offer that will allow us to repurchase Alinda’s interest should Alinda wish to exit in the future. In addition, we have agreed to provide Alinda an opportunity to invest in future similar entities based on similar terms and at a comparable capitalization rate. This agreement has been reflected as an unconsolidated entity on our reported financial statements beginning in the first quarter of 2019.

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 a significant portion 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. Increases or decreases in our operating expenses will impact our results of operations and cash flows and we expect to incur additional operating expenses as we continue to expand.

General Leasing Activity

Information is provided in the tables below for both our leasing activity as well as backlog balances.

For new/modified leases signed, “Incremental Annualized Rent, Net of Downgrades” reflect net incremental MRR signed during the period for purposes of tracking incremental revenue contribution. The amounts include renewals when there was a change in square footage rented, but exclude renewals where square footage remained consistent before and after renewal. (See “Renewed Leases” table below for such renewals.) Annualized rent per leased square foot is computed using the total MRR associated with all new and modified leases for the respective periods.

In regard to renewed leases signed, consistent with our strategy and business model, the renewal rates below reflect total MRR per square foot including all subscribed services. For comparability, we include only those leases where the square footage remained consistent before and after renewal. All customers with space changes are incorporated into new/modified leasing statistics and rates.

The following leasing and backlog statistics include results of the consolidated business as well as QTS’ 50% share of revenue from the unconsolidated entity, if any.

	Period	Number of Leases	Annualized rent per leased sq ft (1)		Incremental Annualized Rent (1), Net of Downgrades
New/modified leases signed	Three Months Ended March 31, 2021	519	$	345	$	20,605,393
	Period	Number of Renewed Leases	Annualized rent (1)  per leased sq ft		Annualized Rent (2)		Rent Change
Renewed Leases (2)	Three Months Ended March 31, 2021	128	$	508	$	22,992,912	2.2	%

_______________________

(1)We define annualized rent as MRR as of March 31, 2021, multiplied by 12.

(2)We define renewals as leases where the customer retains the same amount of space before and after renewals, which facilitates rate comparability.

31

The following tables outline the Company’s backlog (which represents MRR, excluding cost recoveries, for customer leases that have been signed but have not yet commenced as of period end) as of March 31, 2021, both on a GAAP rent and cash rent basis:

Backlog - GAAP rent (1)	2021		2022		Thereafter		Total
MRR	$	2,986,284	$	1,687,421	$	2,063,390	$	6,737,095
Incremental revenue (2)	16,461,435		15,071,785		24,760,680
Annualized revenue (3)	$	35,835,408	$	20,249,052	$	24,760,680	$	80,845,140

Backlog - Cash rent (1)	2021		2022		Thereafter		Total
MRR	$	6,081,608	$	2,534,379	$	4,077,889	$	12,693,876
Incremental revenue (2)	29,286,486		19,719,547		48,934,668
Annualized revenue (3)	$	72,979,296	$	30,412,548	$	48,934,668	$	152,326,512

______________________

(1)Includes our consolidated backlog balance in addition to backlog associated with the unconsolidated entity at QTS’ pro rata share of the backlog revenue. Of the $80.8 million backlog of annualized GAAP rent, approximately $1.7 million related to QTS’ pro rata share of backlog revenue associated with the unconsolidated entity. Of the $152.3 million backlog of annualized cash rent, approximately $2.1 million related to QTS’ pro rata share of backlog revenue associated with the unconsolidated entity.

(2)Incremental revenue represents the expected amount of recognized MRR for the business in the period based on when the backlog leases commence throughout the period.

(3)Annualized revenue represents the backlog MRR multiplied by 12, demonstrating how much recognized MRR would have been recognized if the backlog leases commencing in the period were in place for an entire year.

We estimate the remaining cost to provide the space, power, connectivity and other services to the customer contracts which had not billed as of March 31, 2021 to be approximately $460 million. This estimate generally includes customers with newly contracted space of more than 3,300 square feet of raised floor space. The space, power, connectivity and other services provided to customers that contract for smaller amounts of space is generally provided by utilizing existing space which was previously developed.

32

Results of Operations

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

Changes in revenues and expenses for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 are summarized below (unaudited and in thousands):

	Three Months Ended March 31,
	2021		2020		$ Change		% Change
Revenues:
Rental	$	144,308	$	120,081	$	24,227	20	%
Other	4,424		6,211		(1,787)		(29)	%
Total revenues	148,732		126,292		22,440		18	%
Operating expenses:
Property operating costs	46,284		40,781		5,503		13	%
Real estate taxes and insurance	5,022		3,911		1,111		28	%
Depreciation and amortization	55,506		45,070		10,436		23	%
General and administrative	23,641		20,683		2,958		14	%
Transaction, integration, and impairment costs	1,516		216		1,300		602	%
Total operating expenses	131,969		110,661		21,308		19	%
Operating income	16,763		15,631		1,132		7	%
Other income and expense:
Interest expense	(8,148)		(7,162)		986		14	%
Other income	—		159		(159)		(100)	%
Equity in net loss of unconsolidated entity	(559)		(677)		(118)		(17)	%
Income before taxes	8,056		7,951		105		1	%
Tax benefit (expense)	(138)		169		307		(182)	%
Net income	$	7,918	$	8,120	$	(202)	(2)	%

Revenues. Total revenues for the three months ended March 31, 2021 were $148.7 million compared to $126.3 million for the three months ended March 31, 2020. The increase of $22.4 million, or 18%, was largely attributable to growth in our hyperscale and hybrid colocation offerings primarily through increases in revenues at our Ashburn (DC - 1), Irving and Atlanta (DC - 1) facilities, as well as the opening of our Atlanta (DC - 2) facility.

Property Operating Costs. Property operating costs for the three months ended March 31, 2021 were $46.3 million compared to property operating costs of $40.8 million for the three months ended March 31, 2020, an increase of $5.5 million, or 13%.

The breakdown of our property operating costs is summarized in the table below (unaudited and in thousands):

	Three Months Ended March 31,
	2021		2020		$ Change		% Change
Property operating costs:
Direct payroll	$	6,991	$	6,528	$	463	7	%
Rent	2,399		2,748		(349)		(13)	%
Repairs and maintenance	4,412		3,339		1,073		32	%
Utilities	20,980		14,988		5,992		40	%
Management fee allocation	5,477		4,676		801		17	%
Other	6,025		8,502		(2,476)		(29)	%
Total property operating costs	$	46,284	$	40,781	$	5,503	13	%

33

The increase in total property operating costs was primarily due to increased utilities expense, repairs and maintenance expense, management fee allocation and direct payroll costs resulting from ongoing company growth. The increase in utility costs was primarily driven by increased power usage primarily at the Atlanta (DC - 1), Piscataway and Chicago facilities, as well as the opening of our Atlanta (DC - 2) facility. Offsetting these increases was a reduction in general bad debt reserves attributable to a higher level of bad debt expense in the prior year associated with the risk of a loss across our portfolio of lease receivables primarily related to customers that experienced business disruptions due to COVID-19 in the first quarter of 2020, which is included in the “Other” line item of the property operating costs table, as well as a reduction in rent expense primarily related to the exit of portions of leased facilities as customers churned, downgraded or migrated to our owned facilities.

Real Estate Taxes and Insurance. Real estate taxes and insurance for the three months ended March 31, 2021 were $5.0 million compared to $3.9 million for the three months ended March 31, 2020. The increase of $1.1 million, or 28%, was primarily attributable to an increase in real estate taxes associated with increased assessed property values at our Irving, Ashburn (DC - 1) and Atlanta (DC - 1) facilities.

Depreciation and Amortization. Depreciation and amortization for the three months ended March 31, 2021 was $55.5 million compared to $45.1 million for the three months ended March 31, 2020. The increase of $10.4 million, or 23%, was primarily due to additional depreciation expense relating to an increase in assets placed in service at our Ashburn (DC - 1), Chicago, and Atlanta (DC - 1), as well as the opening of our Atlanta (DC - 2) facility.

General and Administrative Expenses. General and administrative expenses were $23.6 million for the three months ended March 31, 2021 compared to general and administrative expenses of $20.7 million for the three months ended March 31, 2020, an increase of $3.0 million, or 14%. The increase was primarily attributable to an increase in total compensation expense, the majority of which related to increased equity-based compensation expense associated with the growth of the Company and anticipated achievement of certain performance metrics, partially offset by a reduction in employee travel-related expenses primarily associated with reduced travel as a result of the COVID-19 pandemic.

Transaction, Integration and Impairment Costs. Transaction and integration costs were $1.5 million for the three months ended March 31, 2021, compared to $0.2 million for the three months ended March 31, 2020. The increase of $1.3 million was attributable to an increase in costs associated with the assessment of actual and potential acquisitions and other similar costs during the three months ended March 31, 2021.

Interest Expense. Interest expense for the three months ended March 31, 2021 was $8.1 million compared to $7.2 million for the three months ended March 31, 2020. The increase in interest expense was primarily attributable to an increase in our average total debt balance from the prior period as well as a lower level of capitalized interest during the current period, which was driven by a reduction in interest rates.

Other Income. Other income represents the impact of foreign currency exchange rate fluctuations on the value of our net investments in foreign subsidiaries whose functional currencies are other than the U.S. Dollar. We recognized no foreign currency gain (loss) related to our investment in the Netherlands facilities during the three months ended March 31, 2021. Prior to February 2020, gains or losses from foreign currency transactions related to our investment in the Netherlands facilities were included in determining net income (loss). In February 2020, we entered into a net investment hedge which resulted in gains or losses subsequently being recognized in Other Comprehensive Income (Loss).

Equity in net loss of unconsolidated entity. This represents equity in earnings (loss) of our unconsolidated entity formed during the first quarter of 2019 that owns our Manassas (DC - 1) data center. Equity in net loss was $0.6 million for the three months ended March 31, 2021, which remained consistent with a net loss of $0.7 million for the three months ended March 31, 2020.

Tax Benefit (Expense). Tax expense for the three months ended March 31, 2021 was $0.1 million which remained consistent when compared to $0.2 million of tax benefit for the three months ended March 31, 2020.

34

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 and Recognized MRR; (5) NOI; (6) EBITDAre; 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. FFO, Operating FFO, Adjusted Operating FFO, MRR, NOI, EBITDAre and Adjusted EBITDA, as calculated by us, may not be comparable to similarly titled measures as reported by other companies that do not use the same definition or implementation guidelines or interpret the standards differently from us.

We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. We believe the presentation of non-GAAP financial measures provide meaningful supplemental information to both management and investors that is indicative of our operations. We have included a reconciliation of this additional information to the most comparable GAAP measure below.

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. 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 depreciable real estate related to our primary business, impairment write-downs of depreciable real estate related to our primary business, real estate-related depreciation and amortization, and similar adjustments for unconsolidated entities. To the extent we incur gains or losses from the sale of assets that are incidental to our primary business, or incur impairment write-downs associated with assets that are incidental to our primary business, we include such amounts in our calculation of FFO. Our management uses FFO as a supplemental operating performance measure because, in excluding real estate-related depreciation and amortization, impairment write-downs of depreciable real estate and gains and losses from property dispositions related to our primary business, 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 operating performance, management computes an adjusted measure of FFO, which we refer to as Operating funds from operations (“Operating FFO”). Operating FFO is a non-GAAP measure that is used as a supplemental operating measure and to provide additional information to users of the financial statements. We generally calculate Operating FFO as FFO excluding certain non-routine 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 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 and to provide additional information to users of the financial statements. 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, non-real estate depreciation and amortization, straight-line rent adjustments, income taxes, equity-based compensation and similar adjustments for unconsolidated entities.

35

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 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 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 similarly titled measures 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 (unaudited and in thousands):

	Three Months Ended
	March 31,
	2021		2020
FFO
Net income	$	7,918	$	8,120
Equity in net loss of unconsolidated entity	559		677
Real estate depreciation and amortization	52,629		41,700
Pro rata share of FFO from unconsolidated entity	457		278
FFO (1)	61,563		50,775
Preferred stock dividends	(7,045)		(7,045)
FFO available to common stockholders & OP unit holders	54,518		43,730
Transaction and integration costs	1,516		216
Operating FFO available to common stockholders & OP unit holders (2)	56,034		43,946
Maintenance capital expenditures	(1,704)		(1,662)
Leasing commissions paid	(9,460)		(8,998)
Amortization of deferred financing costs	1,130		987
Non real estate depreciation and amortization	2,876		3,370
Straight-line rent revenue and expense and other	(7,609)		(3,755)
Tax expense (benefit) from operating results	138		(169)
Equity-based compensation expense	6,856		4,875
Adjustments for unconsolidated entity	46		66
Adjusted Operating FFO available to common stockholders & OP unit holders (2)	$	48,307	$	38,660

_______________________

(1)No gains, losses or impairment write-downs associated with assets incidental to our primary business were incurred during the three months ended March 31, 2021 and March 31, 2020.

(2)Our calculations of Operating FFO and Adjusted Operating FFO may not be comparable to Operating FFO and Adjusted Operating FFO as calculated by other REITs that do not use the same definition.

Monthly Recurring Revenue (MRR) and Recognized MRR

36

We calculate MRR as monthly contractual revenue under signed leases as of a particular date, which includes revenue from our rental and managed services activities, but excludes customer recoveries, deferred set-up fees, variable related revenues, non-cash revenues and other one-time revenues. MRR is also calculated to include our pro rata share of monthly contractual revenue under signed leases as of a particular date associated with unconsolidated entities, which includes revenue from the unconsolidated entity’s rental and managed services activities, but excludes the unconsolidated entity’s customer recoveries, deferred set-up fees, variable related revenues, non-cash revenues and other one-time revenues. MRR reflects the annualized cash rental payments. It does not include the impact from backlog 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 rental 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 and customer leases attributable to our business. 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 GAAP revenues to recognized MRR in the period and MRR at period end is presented below (unaudited and in thousands):

	Three Months Ended
	March 31,
	2021		2020
Recognized MRR in the period
Total period revenues (GAAP basis)	$	148,732	$	126,292
Less: Total period variable lease revenue from recoveries	(16,128)		(12,275)
Total period deferred setup fees	(6,436)		(3,924)
Total period straight-line rent and other	(11,623)		(8,032)
Recognized MRR in the period	$	114,545	$	102,061
MRR at period end
Total period revenues (GAAP basis)	$	148,732	$	126,292
Less: Total revenues excluding last month	(99,683)		(82,446)
Total revenues for last month of period	49,049		43,846
Less: Last month variable lease revenue from recoveries	(5,163)		(4,156)
Last month deferred setup fees	(2,179)		(1,410)
Last month straight-line rent and other	(2,370)		(3,669)
Add: Pro rata share of MRR at period end of unconsolidated entity	472		352
MRR at period end (1)	$	39,809	$	34,963

_______________________

(1)Does not include our backlog of cash rent balance, which was $6.7 million and $8.4 million as of March 31, 2021 and 2020, respectively.

Net Operating Income (NOI)

37

We calculate net operating income (“NOI”) as net income (loss) (computed in accordance with GAAP), excluding: interest expense, interest income, tax expense (benefit), depreciation and amortization, write off of unamortized deferred financing costs, other (income) expense, debt restructuring costs, transaction, integration and impairment costs, gain (loss) on sale of real estate, restructuring costs, general and administrative expenses and similar adjustments for unconsolidated entities. We allocate a management fee charge of 4% of cash revenues for all facilities 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 is reflected as a reduction to net operating income.

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 (loss) 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 (loss) as computed in accordance with GAAP.

A reconciliation of net income to NOI is presented below (unaudited and in thousands):

	Three Months Ended
	March 31,
	2021		2020
Net Operating Income (NOI)
Net income	$	7,918	$	8,120
Equity in net loss of unconsolidated entity	559		677
Interest expense	8,148		7,162
Depreciation and amortization	55,506		45,070
Other (income) expense	—		(159)
Tax expense (benefit)	138		(169)
Transaction and integration costs	1,516		216
General and administrative expenses	23,641		20,683
NOI from consolidated operations (1)	$	97,426	$	81,600
Pro rata share of NOI from unconsolidated entity	1,133		844
Total NOI (1)	$	98,559	$	82,444

_______________________

(1)Includes facility level general and administrative allocation charges of 4% of cash revenue for all facilities. These allocated charges aggregated to $5.5 million and $4.7 million for the three month periods ended March 31, 2021 and 2020, respectively.

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDA

We calculate EBITDAre in accordance with the standards established by NAREIT. EBITDAre represents net income (computed in accordance with GAAP) adjusted to exclude gains (or losses) from sales of depreciated property related to our primary business, income tax expense (or benefit), interest expense, depreciation and amortization, impairments of depreciated property related to our primary business, and similar adjustments for unconsolidated entities. Management uses EBITDAre as a supplemental performance measure because it provides performance measures that, when compared year over year, captures the performance of our operations by removing the impact of our capital structure (primarily interest expense) and asset base charges (primarily depreciation and amortization) from our operating results.

38

Due to the volatility and nature of certain significant charges and gains recorded in our operating results that management believes are not reflective of operating performance, we compute an adjusted measure of EBITDAre, which we refer to as Adjusted EBITDA. We calculate Adjusted EBITDA as EBITDAre excluding certain non-routine charges, write off of unamortized deferred financing costs, gains (losses) on extinguishment of debt, restructuring costs, and transaction and integration costs, as well as our pro-rata share of each of those respective adjustments associated with the unconsolidated entity aggregated into one line item categorized as “Adjustments for the unconsolidated entity.” In addition, we calculate Adjusted EBITDA excluding certain non-cash recurring costs such as equity-based compensation. We believe that Adjusted EBITDA provides investors with another financial measure that may facilitate comparisons of operating performance between periods and, to the extent other REITs calculate Adjusted EBITDA on a comparable basis, between REITs.

Management uses EBITDAre and Adjusted EBITDA as supplemental performance measures as they provide useful measures of assessing our operating results. Other companies may not calculate EBITDAre or Adjusted EBITDA in the same manner. Accordingly, our EBITDAre and Adjusted EBITDA may not be comparable to others. EBITDAre 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 EBITDAre and Adjusted EBITDA is presented below (unaudited and in thousands):

	Three Months Ended
	March 31,
	2021		2020
EBITDAre and Adjusted EBITDA
Net income	$	7,918	$	8,120
Equity in net loss of unconsolidated entity	559		677
Interest expense	8,148		7,162
Tax expense (benefit)	138		(169)
Depreciation and amortization	55,506		45,070
Pro rata share of EBITDAre from unconsolidated entity	1,106		819
EBITDAre (1)	73,375		61,679
Equity-based compensation expense	6,856		4,875
Transaction, integration and implementation costs	1,516		216
Adjusted EBITDA	$	81,747	$	66,770

_______________________

(1)No gains, losses or impairment write-downs associated with assets incidental to our primary business were incurred during the three months ended March 31, 2021 and March 31, 2020.

Liquidity and Capital Resources

Short-Term Liquidity

Our short-term liquidity needs include funding capital expenditures for the development of data center space (a significant portion of which is discretionary), meeting debt service and debt maturity obligations, funding payments for finance leases, funding distributions to our common and preferred 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.

39

In addition to the $214.3 million of capital expenditures incurred in the three months ended March 31, 2021, we expect that we will incur approximately $660 million to $760 million in additional capital expenditures through December 31, 2021 in connection with the development of our data center facilities, which excludes acquisitions and excludes our 50% proportionate share of capital expenditures at the Manassas facility that was contributed to an unconsolidated entity. We expect to spend approximately $550 million to $650 million of capital expenditures with vendors on development, and the remainder on other capital expenditures and capitalized internal project costs (including capitalized interest, commissions, payroll and other similar costs), personal property and other less material capital projects. A significant portion of these expenditures are discretionary in nature and we may ultimately determine not to make these expenditures or the timing of expenditures may vary.

We expect to meet these costs and our other short-term liquidity needs through operating cash flow, cash and cash equivalents, borrowings under our credit facilities, proceeds from the forward equity transactions discussed below, additional equity issuances through our Current ATM program or other capital markets activity including debt issuances. We may also sell an interest in certain projects into unconsolidated entities as another source of capital.

Our cash paid for capital expenditures for the three months ended March 31, 2021 and 2020 are summarized in the table below (unaudited and in thousands):

	Three Months Ended March 31,
	2021		2020
Development	$	183,836	$	143,153
Acquisitions	401		1,797
Maintenance capital expenditures	1,704		1,662
Other capital expenditures (1)	28,739		26,403
Total capital expenditures	$	214,680	$	173,015

_______________________

(1)Represents capital expenditures for capitalized interest, commissions, personal property, overhead costs and corporate fixed assets. Corporate fixed assets primarily relate to construction of corporate offices, leasehold improvements and product related assets.

Long-Term Liquidity

Our long-term liquidity needs primarily consist of funds for property acquisitions, scheduled debt maturities and interest payments, funding payments for finance leases, recurring and non-recurring capital expenditures, and dividend payments on our common stock, Series A Preferred Stock and Series B Preferred Stock. We may also pursue new developments and additional redevelopment of our data centers and future redevelopment of other space in our portfolio. We may also pursue development on land we own that is available at multiple data center properties in our portfolio. The development and/or 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 revolving credit facility, distributions from our unconsolidated entity, settlement of forward equity shares and issuance of additional equity (including forward equity transactions) or debt securities, subject to prevailing market conditions, as discussed below. We may also sell an interest in certain projects into unconsolidated entities as another source of capital.

Equity

In June 2019, we established an “at-the-market” equity offering program (the “Prior ATM Program”) pursuant to which we could issue, from time to time, up to $400 million of our Class A common stock, $0.01 par value per share (the “Class A common stock”), which could include shares to be sold on a forward basis. During the three months ended March 31, 2021, we settled the remaining shares subject to the forward sale agreements.

40

Because we had utilized substantially all of the offering capacity of the Prior ATM Program, in May 2020, we established a new “at-the-market” equity offering program (the “Current ATM Program”) pursuant to which we may issue, from time to time, up to $500 million of our Class A common stock, which may include shares to be sold on a forward basis. As under the Prior ATM Program, the use of forward sales under the Current ATM Program generally allows us to lock in a price on the sale of shares of our Class A common stock when sold by the forward sellers, but defer receiving the net proceeds from such sales until the shares of our Class A common stock are issued at settlement on a later date. We expect to physically settle (by delivering shares of common stock) the forward sales under the Current ATM Program prior to the first anniversary date of each respective transaction. As of May 3, 2021, we had approximately $277 million of capacity remaining in our Current ATM Program.

In June 2020, we conducted an underwritten offering of 4,400,000 shares of our common stock on a forward basis. During the three months ended March 31, 2021 we settled a portion of the 4,400,000 shares subject to the forward sales agreements. We expect to physically settle the remaining forward sale agreements (by the delivery of shares of common stock) and receive proceeds, subject to certain adjustments, from the sale of those shares of common stock by June 30, 2021, although we have the right to elect settlement prior to that time.

The following table represents a summary of our aggregate forward equity activity under the Prior ATM Program, Current ATM Program and our underwritten offerings during the three months ended March 31, 2021, as well as through May 3, 2021 (unaudited and in thousands):

Offering Program	Forward Shares Sold/(Settled)		Net Proceeds Available/(Received) (1)
Shares and net proceeds available as of December 31, 2020	9,961		$	581,598	(2)
Forward Equity - Sales	1,504		91,620
Forward Equity - Settlements	(3,865)	(3)	(215,964)
Shares and net proceeds available as of March 31, 2021	7,600		457,254
Forward Equity - Sales	573		35,727
Shares and net proceeds available as of May 3, 2021	8,173		$	492,981

_______________________

(1)Net Proceeds Available remain subject to certain adjustments until settled.

(2)Proceeds available reported in the Form 10-K for the period ended December 31, 2020 were $587.6 million. The $6 million decrease is due primarily to QTS’ declared dividends, which reduces cash expected to be received upon full physical settlement of the forward shares.

(3)Represents the number of forward shares we elected to physically settle during the period.

As shown in the table above, as of May 3, 2021, we had access to approximately $493.0 million of net proceeds through forward stock sales (subject to a decrease in the forward sale price as described in the forward sale agreements). We view forward equity sales as an important capital raising tool that we expect to continue to strategically and selectively use, subject to market conditions and overall availability under the Current ATM Program.

Manassas Unconsolidated Entity

On February 22, 2019, we entered into an agreement with Alinda, an infrastructure investment firm, with respect to our Manassas (DC - 1) data center, as described above under “Factors That May Influence Future Results of Operations and Cash Flows.” Under the agreement, we will receive additional proceeds in the future as and when we complete development of each phase of the Manassas data center and place it into service, which allows us to receive proceeds for Alinda’s share of the unconsolidated entity based on the expected full stabilization of the asset. These proceeds will be based on a 6.75% capitalization rate for each phase delivered during the first three years of the agreement.

Cash

As of March 31, 2021, our cash and cash equivalents balance was $14.7 million.

41

Dividends and Distributions

The following tables present quarterly cash dividends and distributions paid to our common and preferred stockholders for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, 2021
Record Date	Payment Date	Per Share Rate		Aggregate Dividend/Distribution Amount (in millions)
Common Stock
December 22, 2020	January 7, 2021	$	0.47	33.4
				$	33.4
Series A Preferred Stock
December 31, 2020	January 15, 2021	$	0.45	1.9
				$	1.9
Series B Preferred Stock
December 31, 2020	January 15, 2021	$	1.63	5.1
				$	5.1

Three Months Ended March 31, 2020
Record Date	Payment Date	Per Share Rate		Aggregate Dividend/Distribution Amount (in millions)
Common Stock
December 20, 2019	January 7, 2020	$	0.44	28.6
				$	28.6
Series A Preferred Stock
December 31, 2019	January 15, 2020	$	0.45	1.9
				$	1.9
Series B Preferred Stock
December 31, 2019	January 15, 2020	$	1.63	5.1
				$	5.1

Additionally, subsequent to March 31, 2021, we paid the following dividends:

•On April 6, 2021, we paid our regular quarterly cash dividend of $0.50 per common share to stockholders of record as of the close of business on March 19, 2021.

•On April 15, 2021, we paid a quarterly cash dividend of approximately $0.45 per share on our Series A Preferred Stock to holders of Series A Preferred Stock of record as of the close of business on March 31, 2021.

•On April 15, 2021, we paid a quarterly cash dividend of approximately $1.63 per share on our Series B Preferred Stock to holders of Series B Preferred Stock of record as of the close of business on March 31, 2021.

Indebtedness

Below is a listing of our outstanding debt, including finance leases, as of March 31, 2021 and December 31, 2020 (in thousands):

42

	Weighted Average Effective Interest Rate at March 31, 2021 (1)	Maturity Date	March 31, 2021		December 31, 2020
	(unaudited)		(unaudited)
Unsecured Credit Facility
Revolving Credit Facility	1.36%	December 17, 2023	$	361,877	$	392,337
Term Loan A	3.26%	December 17, 2024	225,000		225,000
Term Loan B	3.30%	April 27, 2025	225,000		225,000
Term Loan C	3.46%	October 18, 2026	250,000		250,000
Term Loan D	1.45%	January 15, 2026	250,000		250,000
3.875% Senior Notes	3.88%	October 1, 2028	500,000		500,000
Finance Leases	4.35%	2031 - 2040	42,525		41,718
	2.87%		1,854,402		1,884,055
Less net debt issuance costs			(13,935)		(14,562)
Total outstanding debt, net			$	1,840,467	$	1,869,493

_________________________

(1)The coupon interest rates associated with Term Loan A, Term Loan B, and Term Loan C incorporate the effects of our interest rate swaps in effect as of March 31, 2021.

As of March 31, 2021, we had availability under our $1.0 billion revolving credit facility of $638.1 million, excluding $500.0 million of availability through the unsecured credit facility's accordion feature.

As of March 31, 2021, we were in compliance with all of our covenants of our debt agreements.

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.

Contractual Obligations

The following table summarizes our contractual obligations as of March 31, 2021 including the future non-cancellable minimum rental payments required under operating leases and the maturities and scheduled principal repayments of indebtedness and other agreements (unaudited and in thousands):

Obligations (1)	2021		2022		2023		2024		2025		Thereafter		Total
Operating Leases	$	7,393	$	10,266	$	10,393	$	8,317	$	8,036	$	40,872	$	85,277
Finance Leases	2,074		2,987		3,260		3,550		3,856		26,798		42,525
Future Principal Payments of Indebtedness (2)	—		—		361,877		225,000		225,000		1,000,000		1,811,877
Total (3)	$	9,467	$	13,253	$	375,530	$	236,867	$	236,892	$	1,067,670	$	1,939,679

_______________________

(1)Contractual obligations do not include our energy power purchase agreements as QTS has the ability to sell unused capacity back to the utility provider.

(2)Does not include the related debt issuance costs on the 3.875% Senior Notes nor the related debt issuance costs on the term loans reflected at March 31, 2021. Also does not include letters of credit outstanding aggregating to $3.5 million as of March 31, 2021 under our unsecured credit facility.

(3)Total obligations amount does not include contractual interest that we are required to pay on our long-term debt obligations.

Off-Balance Sheet Arrangements

43

On February 22, 2019, we entered into an agreement with Alinda, an infrastructure investment firm, with respect to our Manassas (DC - 1) data center, as described above under “Factors That May Influence Future Results of Operations and Cash Flows.” As of March 31, 2021, our pro rata share of mortgage debt of the unconsolidated entity, excluding deferred financing costs, was approximately $46.7 million, all of which is subject to forward interest rate swap agreements. See Item 3, Quantitative and Qualitative Disclosures About Market Risk, for information on the Company’s interest rate swaps.

The Company has various forward equity contracts, described above, that provide for the ability to raise capital and issue common stock at varying prices and future dates. As of March 31, 2021, the Company had access to approximately $457.3 million of net proceeds through forward stock sales (subject to further adjustment as described above under the heading “Equity Capital”). The Company views forward equity sales as an important capital raising tool that it expects to continue to strategically and selectively use, subject to market conditions and overall availability under the Current ATM Program. See the section above titled “Equity Capital” for additional information related to our forward stock sales.

Cash Flows

Cash flow for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 are summarized below (unaudited and in thousands):

	Three Months Ended March 31,
	2021		2020
Cash flow provided by (used for):
Operating activities	$	60,095	$	71,062
Investing activities	(214,680)		(173,015)
Financing activities	148,326		258,449

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

Cash flow provided by operating activities was $60.1 million for the three months ended March 31, 2021 compared to $71.1 million for the three months ended March 31, 2020. There was a decrease in cash flow associated with net changes in working capital of $21.2 million primarily related to changes in rents and other receivables, partially offset by an increase in cash operating income of $10.2 million from the prior period primarily related to our expansion of certain data centers and leasing activity.

Cash flow used for investing activities increased by $41.7 million to $214.7 million for the three months ended March 31, 2021, compared to $173.0 million for the three months ended March 31, 2020. The increase was due primarily to an increase in additions to property and equipment of $43.1 million.

Cash flow provided by financing activities decreased by $110.1 million to $148.3 million for the three months ended March 31, 2021, compared to $258.4 million for the three months ended March 31, 2020. The decrease was primarily due to lower net borrowings under our unsecured credit facility of $239.9 million, partially offset by higher net equity proceeds received of $132.7 million.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our financial statements which have been prepared in accordance with GAAP. The preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates. We have provided a summary of our significant accounting policies in Note 2 of our unaudited financial statements included elsewhere in this Form 10-Q.

Inflation

44

A significant portion 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.

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 allocations of taxable income or distributions were made to these partners during the periods presented.

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 March 31, 2021, we had interest rate swap agreements in place with an aggregate notional amount of $700 million. The forward swap agreements effectively fix the interest rate on $700 million of term loan borrowings, $225 million of swaps allocated to Term Loan A, $225 million allocated to Term Loan B and $250 million allocated to Term Loan C, through the current maturity dates of the respective term loans.

As of March 31, 2021, after consideration of interest rate swaps in effect, we had outstanding $611.9 million of consolidated indebtedness that bore interest at variable rates, which was comprised of the revolving portion of the unsecured credit facility as well as Term Loan D.

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. A 1% increase in interest rates would increase the interest costs on the $611.9 million of variable indebtedness outstanding as of March 31, 2021 by approximately $5.8 million annually. Conversely, a decrease in the LIBOR rate to 0.00% would decrease the interest costs on this $611.9 million of variable indebtedness outstanding by approximately $0.4 million annually based on the one month LIBOR rate of approximately 0.11% as of March 31, 2021.

45

In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee (“ARRC”) which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. The Company has contracts consisting of the unsecured credit facility and the forward interest rate swap agreements, described above, that are indexed to LIBOR and is monitoring and evaluating the related risks, which may include higher interest on loans and amounts received and paid on derivative instruments. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

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

Disclosure Controls and Procedures

Based on an evaluation of disclosure controls and procedures for the period ended March 31, 2021, 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 March 31, 2021, that have materially affected, or are reasonably likely to materially affect, QTS’ internal control over financial reporting.

46

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

There have been no material changes to the risk factors disclosed in our Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2021, which is accessible on the SEC’s website at www.sec.gov.

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

Unregistered Sales of Equity Securities

QTS did not sell any securities during the three months ended March 31, 2021 that were not registered under the Securities Act of 1933, as amended (the “Securities Act”).

Repurchases of Equity Securities

During the three months ended March 31, 2021, certain of our employees surrendered Class A common stock owned by them to satisfy their 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 three months ended March 31, 2021:

Period	Total number of shares purchased (1)	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, 2021 through January 31, 2021	—	$	—	N/A	N/A
February 1, 2021 through February 28, 2021	—	—		N/A	N/A
March 1, 2021 through March 31, 2021	23,905	60.04		N/A	N/A
Total	23,905	$	60.04

_______________________

(1)The number of shares purchased represents shares of Class A common stock surrendered by certain of our employees to satisfy their 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 federal income tax.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

ITEM 6. Exhibits

47

Exhibit Number	Exhibit Description
3.1	Articles of Amendment and Restatement of QTS Realty Trust, Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 17, 2013 (Commission File No. 001-36109).
3.2	Second Amended and Restated Bylaws of QTS Realty Trust, Inc., as amended, incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 3, 2020 (Commission File No. 001-36109).
3.3	Articles Supplementary designating QTS Realty Trust, Inc.’s 7.125% Series A Cumulative Redeemable Perpetual Preferred Stock, liquidation preference $25.00 per share, $0.01 par value per share, incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 8-A filed with the SEC on March 15, 2018 (Commission File No. 001-36109).
3.4	Articles Supplementary designating QTS Realty Trust, Inc.’s 6.50% Series B Cumulative Convertible Perpetual Preferred Stock, liquidation preference $100.00 per share, $0.01 par value per share, incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form 8-A filed with the SEC on June 25, 2018 (Commission File No. 001-36109).
3.5	Articles Supplementary opting out of the Maryland Unsolicited Takeovers Act, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 25, 2018 (Commission File No. 001-36109).
3.6	Articles of Amendment to the Articles of Amendment and Restatement of QTS Realty Trust, Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 10, 2019 (Commission File No. 001-36109).
4.1	Form of Specimen Class A Common Stock Certificate, incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-11/A filed with the SEC on September 26, 2013 (Commission File No. 333-190675).
4.2	Indenture, dated October 7, 2020, by and among QualityTech, LP, QTS Finance Corporation, QTS Realty Trust, Inc., certain subsidiaries of QualityTech, LP and Deutsche Bank Trust Company Americas, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 7, 2020 (Commission File No. 001-36109).
4.3	Form of 3.875% Senior Notes due 2028 (included as Exhibit A to Exhibit 4.2 hereof).
4.4	Form of stock certificate evidencing the 7.125% Series A Cumulative Redeemable Perpetual Preferred Stock, liquidation preference $25.00 per share, $0.01 par value per share, incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement Form 8-A filed with the SEC on March 15, 2018 (Commission File No. 001-36109).
4.5	Form of stock certificate evidencing the 6.50% Series B Cumulative Convertible Perpetual Preferred Stock, liquidation preference $100.00 per share, $0.01 par value per share, incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 8-A filed with the SEC on June 25, 2018 (Commission File No. 001-36109).

48

10.1	Employment Agreement, dated January 13, 2021, among Jon D. Greaves and QTS Realty Trust, Inc., QualityTech, LP and Quality Technology Services, LLC, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on January 13, 2021 (Commission File No. 001-36109).†
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.). +
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.). +

101

The following materials from QTS Realty Trust, Inc.’s and QualityTech, LP’s Quarterly Report on Form 10-Q for the period ended March 31, 2021, formatted in iXBRL (inline 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.

104

Cover Page Interactive Data File (formatted in iXBRL (inline eXtensible Business Reporting Language) and contained in Exhibit 101).

_______________________

+ Filed herewith.

† Denotes a management contract or compensatory plan, contract or arrangement.

49

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.

DATE: May 3, 2021	/s/ Chad L. Williams
	Chad L. Williams
	Chairman and Chief Executive Officer
DATE: May 3, 2021	/s/ William H. Schafer
	William H. Schafer
	Executive Vice President – Finance and Accounting
	(Principal Accounting Officer)
DATE: May 3, 2021	/s/ Jeffrey H. Berson
	Jeffrey H. Berson
	Chief Financial Officer
	(Principal Financial Officer)

50

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: May 3, 2021
	/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, Jeffrey H. Berson, 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: May 3, 2021
	/s/ Jeffrey H. Berson
	Jeffrey H. Berson
	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 March 31, 2021 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, Jeffrey H. Berson, 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: May 3, 2021
	/s/ Chad L. Williams
	Chad L. Williams
	Chairman and Chief Executive Officer
	/s/ Jeffrey H. Berson
	Jeffrey H. Berson
	Chief Financial Officer

XML

Cover - shares	3 Months Ended
	Mar. 31, 2021	Apr. 29, 2021
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	001-36109
Entity Registrant Name	QTS Realty Trust, Inc.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	46-2809094
Entity Address, Address Line One	12851 Foster Street
Entity Address, City or Town	Overland Park
Entity Address, State or Province	KS
Entity Address, Postal Zip Code	66213
City Area Code	913
Local Phone Number	312-5503
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001577368
Amendment Flag	false
Class A Common Stock
Document Information [Line Items]
Title of 12(b) Security	Class A common stock, $0.01 par value
Trading Symbol	QTS
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding		68,777,469
Class B Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		124,481
Series A Redeemable Perpetual Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	Preferred Stock, 7.125% Series A Cumulative Redeemable Perpetual, $0.01 par value
Trading Symbol	QTS PRA
Security Exchange Name	NYSE
Series B Convertible Perpetual Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	Preferred Stock, 6.50% Series B Cumulative Convertible Perpetual, $0.01 par value
Trading Symbol	QTS PRB
Security Exchange Name	NYSE

XML

INTERIM CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Real Estate Assets
Land	$ 164,822	$ 165,109
Buildings, improvements and equipment	2,965,488	2,839,261
Less: Accumulated depreciation	(745,237)	(702,944)
Total real estate assets	2,385,073	2,301,426
Construction in progress	1,119,749	1,028,765
Real Estate Assets, net	3,504,822	3,330,191
Investments in unconsolidated entity	25,858	22,608
Operating lease right-of-use assets, net	49,851	51,342
Cash and cash equivalents	14,652	22,775
Rents and other receivables, net	124,392	107,563
Acquired intangibles, net	64,934	68,090
Deferred costs, net	64,333	63,689
Prepaid expenses	14,147	10,253
Goodwill	173,843	173,843
Other assets, net	48,458	48,218
TOTAL ASSETS	4,085,290	3,898,572
LIABILITIES
Unsecured term loans and revolver, net	1,305,167	1,335,241
Senior notes, net of debt issuance costs	492,775	492,534
Finance leases	42,525	41,718
Operating lease liabilities	56,327	58,005
Accounts payable and accrued liabilities	202,552	187,270
Dividends and distributions payable	41,686	39,373
Advance rents, security deposits and other liabilities	23,506	19,850
Derivative liabilities	36,751	53,722
Deferred income taxes	826	810
Deferred income	93,495	85,351
TOTAL LIABILITIES	2,295,610	2,313,874
EQUITY
Common stock/units	690	646
Additional paid-in capital	1,834,309	1,622,857
Accumulated other comprehensive loss	(35,181)	(50,451)
Accumulated dividends in excess of earnings	(536,031)	(504,313)
Total stockholders’ equity	1,671,222	1,476,174
Noncontrolling interests	118,458	108,524
TOTAL EQUITY	1,789,680	1,584,698
TOTAL LIABILITIES AND EQUITY	4,085,290	3,898,572
Series A Redeemable Perpetual Preferred Stock
EQUITY
Cumulative redeemable perpetual preferred stock / units	103,212	103,212
Series B Convertible Perpetual Preferred Stock
EQUITY
Cumulative redeemable perpetual preferred stock / units	$ 304,223	$ 304,223

XML

INTERIM CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	450,133,000	450,133,000
Common stock, shares issued (in shares)	68,962,873	64,580,118
Common stock, shares outstanding (in shares)	68,962,873	64,580,118
Series A Redeemable Perpetual Preferred Stock
Dividend rate (as a percent)	7.125%
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25.00
Preferred stock, shares authorized (in shares)	4,600,000	4,600,000
Preferred stock, shares issued (in shares)	4,280,000	4,280,000
Preferred stock, shares outstanding (in shares)	4,280,000	4,280,000
Series B Convertible Perpetual Preferred Stock
Dividend rate (as a percent)	6.50%
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, liquidation preference (in dollars per share)	$ 100.00	$ 100.00
Preferred stock, shares authorized (in shares)	3,162,500	3,162,500
Preferred stock, shares issued (in shares)	3,162,500	3,162,500
Preferred stock, shares outstanding (in shares)	3,162,500	3,162,500

XML

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenues:
Rental	$ 144,308	$ 120,081
Other	4,424	6,211
Total revenues	148,732	126,292
Operating expenses:
Property operating costs	46,284	40,781
Real estate taxes and insurance	5,022	3,911
Depreciation and amortization	55,506	45,070
General and administrative	23,641	20,683
Transaction, integration, and impairment costs	1,516	216
Total operating expenses	131,969	110,661
Operating income	16,763	15,631
Other income and expense:
Interest expense	(8,148)	(7,162)
Other income	0	159
Equity in net loss of unconsolidated entity	(559)	(677)
Income before taxes	8,056	7,951
Tax benefit (expense)	(138)	169
Net income	7,918	8,120
Net income attributable to noncontrolling interests	(79)	(110)
Net income attributable to QTS Realty Trust, Inc.	7,839	8,010
Preferred stock dividends	(7,045)	(7,045)
Net income attributable to common stockholders	$ 794	$ 965
Net loss per share attributable to common shares
Basic (in dollars per share)	$ (0.07)	$ (0.01)
Diluted (in dollars per share)	$ (0.07)	$ (0.01)

XML

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Net income	$ 7,918	$ 8,120
Other comprehensive income (loss):
Foreign currency translation adjustment loss	(158)	(223)
Increase (decrease) in fair value of derivative contracts	17,253	(36,715)
Reclassification of other comprehensive income to utilities expense	(66)	354
Reclassification of other comprehensive income to interest expense	3,375	758
Comprehensive income (loss)	28,322	(27,706)
Comprehensive (income) loss attributable to noncontrolling interests	(2,558)	2,831
Comprehensive income (loss) attributable to QTS Realty Trust, Inc.	$ 25,764	$ (24,875)

XML

INTERIM CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Series A Preferred Stock	Series B Preferred Stock	Total stockholders' equity	Total stockholders' equity Series A Preferred Stock	Total stockholders' equity Series B Preferred Stock	Preferred Stock	Common stock	Additional paid-in capital	Accumulated other comprehensive income (loss)	Accumulated dividends in excess of earnings	Accumulated dividends in excess of earnings Series A Preferred Stock	Accumulated dividends in excess of earnings Series B Preferred Stock	Noncontrolling interests
Beginning balance (in shares) at Dec. 31, 2019							7,443	58,228
Beginning balance at Dec. 31, 2019	$ 1,444,451			$ 1,337,817			$ 407,435	$ 582	$ 1,330,444	$ (24,642)	$ (376,002)			$ 106,634
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net share activity through equity award plan (in shares)								240
Net share activity through equity award plan	(1,458)			(1,309)				$ 3	(1,312)					(149)
Increase (decrease) in fair value of derivative contracts	(36,715)			(33,155)						(33,155)				(3,560)
Foreign currency translation adjustments	(223)			(201)						(201)				(22)
Equity-based compensation expense	4,875			4,377					4,377					498
Proceeds net of fees from settlement of forward shares (in shares)								1,930
Proceeds net of fees from settlement of forward shares	83,217			78,535				$ 19	78,516					4,682
Dividends declared on Preferred Stock	(7,045)	$ (1,906)	$ (5,139)		$ (1,906)	$ (5,139)						$ (1,906)	$ (5,139)
Dividends declared to common stockholders	(28,393)			(28,393)							(28,393)
Dividends declared to noncontrolling interests	(3,133)			0										(3,133)
Net income	8,120			8,010							8,010			110
Ending balance (in shares) at Mar. 31, 2020							7,443	60,398
Ending balance at Mar. 31, 2020	1,463,696			1,358,636			$ 407,435	$ 604	1,412,025	(57,998)	(403,430)			105,060
Beginning balance (in shares) at Dec. 31, 2020							7,443	64,580
Beginning balance at Dec. 31, 2020	1,584,698			1,476,174			$ 407,435	$ 646	1,622,857	(50,451)	(504,313)			108,524
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net share activity through equity award plan (in shares)								426
Net share activity through equity award plan	59			54				$ 4	50					5
Conversion of Class A Partnership units to Class A common stock (in shares)								92
Conversion of Class A Partnership units to Class A common stock	0			2,041				$ 1	2,040					(2,041)
Increase (decrease) in fair value of derivative contracts	17,253			15,414						15,414				1,839
Foreign currency translation adjustments	(158)			(144)						(144)				(14)
Equity-based compensation expense	6,856			6,237					6,237					619
Proceeds net of fees from settlement of forward shares (in shares)								3,865
Proceeds net of fees from settlement of forward shares	215,846			203,164				$ 39	203,125					12,682
Dividends declared on Preferred Stock	(7,045)	$ (1,906)	$ (5,139)		$ (1,906)	$ (5,139)						$ (1,906)	$ (5,139)
Dividends declared to common stockholders	(32,512)			(32,512)							(32,512)
Dividends declared to noncontrolling interests	(3,235)			0										(3,235)
Net income	7,918			7,839							7,839			79
Ending balance (in shares) at Mar. 31, 2021							7,443	68,963
Ending balance at Mar. 31, 2021	$ 1,789,680			$ 1,671,222			$ 407,435	$ 690	$ 1,834,309	$ (35,181)	$ (536,031)			$ 118,458

XML

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flow from operating activities:
Net income	$ 7,918	$ 8,120
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	53,825	43,373
Amortization of above and below market leases	10	90
Amortization of deferred loan costs	1,130	987
Distributions from unconsolidated entity	569	300
Equity in net loss of unconsolidated entity	559	677
Equity-based compensation expense	6,856	4,875
Bad debt expense	1,013	3,719
Deferred tax expense (benefit)	18	(270)
Foreign currency remeasurement income	0	(159)
Changes in operating assets and liabilities
Rents and other receivables, net	(17,933)	2,888
Prepaid expenses	(3,914)	(3,164)
Due to/from affiliates, net	(4,095)	(4,428)
Other assets	(445)	(238)
Accounts payable and accrued liabilities	2,610	7,173
Advance rents, security deposits and other liabilities	3,771	6,727
Deferred income	8,203	392
Net cash provided by operating activities	60,095	71,062
Cash flow from investing activities:
Acquisitions, net of cash acquired	(401)	(1,797)
Additions to property and equipment	(214,279)	(171,218)
Net cash used in investing activities	(214,680)	(173,015)
Cash flow from financing activities:
Credit facility proceeds	253,000	212,917
Credit facility repayments	(280,000)	0
Payment of deferred financing costs	0	(5)
Payment of preferred stock dividends	(7,045)	(7,045)
Payment of common stock dividends	(30,352)	(25,627)
Distribution to noncontrolling interests	(3,082)	(2,934)
Proceeds from exercise of stock options	1,979	808
Payment of tax withholdings related to equity-based awards	(1,435)	(2,293)
Principal payments on finance lease obligations	(662)	(620)
Mortgage principal debt repayments	0	(12)
Common stock issuance proceeds, net of costs	215,923	83,260
Net cash provided by financing activities	148,326	258,449
Effect of foreign currency exchange rates on cash and cash equivalents	(1,864)	(192)
Net change in cash and cash equivalents	(8,123)	156,304
Cash and cash equivalents, beginning of period	22,775	15,653
Cash and cash equivalents, end of period	14,652	171,957
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	8,801	9,370
Noncash investing and financing activities:
Accrued capital additions	138,259	125,750
Net increase (decrease) in other assets/liabilities related to change in fair value of derivative contracts	17,253	(35,097)
Accrued equity issuance costs	75	44
Accrued preferred stock dividend	$ 5,938	$ 5,938

XML

Description of Business

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

Description of Business

QTS Realty Trust, Inc. (“QTS”), through its controlling interest in QualityTech, LP (the “Operating Partnership” and collectively with QTS and its subsidiaries, the “Company,” “we,” “us,” or “our”) and the subsidiaries of the Operating Partnership, is engaged in the business of owning, acquiring, constructing, redeveloping and managing multi-tenant data centers. As of March 31, 2021, our portfolio consisted of 28 owned and leased properties, including a property owned by an unconsolidated entity, with data centers located throughout the United States, Canada and Europe.

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.

As of March 31, 2021, QTS owned approximately 91.4% of the interests in the Operating Partnership. Substantially all of QTS’ assets are held by, and all of QTS’ operations are conducted through, the Operating Partnership. QTS’ interest in the Operating Partnership entitles QTS to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to QTS’ percentage ownership. As the sole general partner of the Operating Partnership, QTS generally has the exclusive power under the partnership agreement of the Operating Partnership to manage and conduct the Operating Partnership’s business and QTS’ board of directors manages the Operating Partnership and the Company’s business and affairs.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in compliance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes and management’s discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021. The consolidated balance sheet data included herein as of December 31, 2020 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

As outlined in our Annual Report on Form 10-K for the year ended December 31, 2020, the Operating Partnership meets the definition and criteria of a variable interest entity (“VIE”) in accordance with Accounting Standards Codification (“ASC”) Topic 810 Consolidation, and the Company is the primary beneficiary of the VIE. The Company’s only material asset is its ownership interest in the Operating Partnership, and consequently, all of its assets and liabilities represent those assets and liabilities of the Operating Partnership. The Company’s debt is an obligation of the Operating Partnership where the creditors may have recourse, under certain circumstances, against the credit of the Company.

Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals. The impacts of the COVID-19 pandemic increases uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates and judgments may be subject to greater volatility than has been the case in the past.

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

We evaluate our investments in less than wholly owned entities to determine whether they should be recorded on a consolidated basis. The percentage of ownership interest in the entity, an evaluation of control and whether a VIE exists are all considered in our consolidation assessment. Investments in real estate entities which we have the ability to exercise significant influence, but do not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, our share of the earnings or losses of these entities is included in consolidated net income (loss).

Variable Interest Entities (VIEs) – We determine whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. The determination of whether an entity in which we hold a direct or indirect variable interest is a VIE is based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, and then a quantitative analysis, if necessary.

We analyze any investments in VIEs to determine if we are the primary beneficiary. In evaluating whether we are the primary beneficiary, we evaluate our direct and indirect economic interests in the entity. Determining which reporting entity, if any, is the primary beneficiary of a VIE is primarily a qualitative approach focused on identifying which reporting entity has both (1) the power to direct the activities of a VIE that most significantly impact such entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgment.

We consider a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct financing, leasing, construction and other operating decisions and activities. In addition, we consider the rights of other investors to participate in those decisions, to replace the manager and to sell or liquidate the entity. We determine whether we are the primary beneficiary of a VIE at the time we become involved with a variable interest entity and reconsider that conclusion upon a reconsideration event. As of March 31, 2021, we had one unconsolidated entity that was considered a VIE for which we are not the primary beneficiary. Our maximum exposure to losses associated with this VIE is limited to our net investment, which was approximately $25.9 million as of March 31, 2021.

Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation for real estate assets is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended March 31, 2021, depreciation expense related to real estate assets and non-real estate assets was $42.7 million and $2.9 million, respectively, for a total of $45.6 million. For the three months ended March 31, 2020, depreciation expense related to real estate assets and non-real estate assets was $32.3 million and $3.4 million, respectively, for a total of $35.7 million. We capitalize certain real estate development costs, including internal costs incurred in connection with development. The capitalization of costs during the construction period (including interest and related loan fees, property taxes and other direct and indirect project costs) begins when development efforts commence and ends when the asset is ready for its intended use. The capitalization of internal costs increases construction in progress recognized during development of the related property and the cost of the real estate asset when placed into service and such costs are depreciated over its estimated useful life. Capitalization of such costs, excluding interest, aggregated to $5.5 million and $4.5 million for the three months ended March 31, 2021 and 2020, respectively. Interest is capitalized during the period of development by applying our weighted average effective borrowing rate to the actual development and other capitalized costs paid during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $7.0 million and $8.1 million for the three months ended March 31, 2021 and 2020, respectively.

Acquisitions and Sales – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances.

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

Impairment of Long-Lived Assets, Intangible Assets and Goodwill – We review our long-lived assets, intangible assets and equity method investments for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset group exceeds the value of the undiscounted cash flows, the fair value of the asset group is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three months ended March 31, 2021 and March 31, 2020.

The fair value of goodwill is the consideration transferred in a business combination which is not allocable to identifiable intangible and tangible assets. Goodwill is subject to at least an annual assessment for impairment. In connection with the goodwill impairment evaluation that we performed as of October 1, 2020, we determined qualitatively that it is not more likely than not that the fair value of our one reporting unit was less than the carrying amount, thus we did not perform a quantitative analysis. As we continue to operate and assess our goodwill at the consolidated level for our single reporting unit and our market capitalization significantly exceeds our net asset value, further analysis was not deemed necessary as of March 31, 2021.

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

Revenue Recognition – We derive our revenues from leases with customers for data center space which include lease components and nonlease revenue components, such as power, tenant recoveries, and managed services. We have elected the available practical expedient under ASC Topic 842, Leases, to combine our nonlease revenue components that have the same pattern of transfer as the related operating lease component into a single combined lease component. The single combined component is accounted for under ASC Topic 842 if the lease component is the predominant component and is accounted for under ASC Topic 606 if the nonlease components are the predominant components. In our contracts, the single combined component is accounted for under ASC Topic 842 as the lease component is the predominant component.

A description of each of our disaggregated revenue streams is as follows:

Rental Revenue

Our leases with customers are classified as operating leases and rental revenue is recognized on a straight-line basis over the customer lease term. Occasionally, customer leases include options to extend or terminate the lease agreements. We do not include any of these extension or termination options in a customer’s lease term for lease classification purposes or recognizing rental revenue unless it is reasonably certain the customer will exercise these extension or termination options.

Rental revenue also includes revenue from power delivery on fixed power arrangements, whereby customers are billed and pay a fixed monthly fee per committed available amount of connected power. These fixed power arrangements require us to provide a series of distinct services and to stand ready to deliver the power over the contracted term which is co-terminus with the lease. Customer fixed power arrangements have the same pattern of transfer over the lease term as the lease component and are therefore combined with the lease component to form a single lease component that is recognized over the term of the lease on a straight-line basis.

In addition, rental revenue includes straight-line rent. Straight-line rent represents the difference in rents recognized during the period versus amounts contractually due pursuant to the underlying leases and is recorded as deferred rent receivable/payable in the consolidated balance sheets. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheet included in rents and other receivables, net was $71.0 million and $63.6 million as of March 31, 2021 and December 31, 2020, respectively.

Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed below in the "Deferred Income" section.

Variable Lease Revenue from Recoveries

Certain customer leases contain provisions under which customers reimburse us for power and cooling-related charges as well as a portion of the property’s real estate taxes, insurance and other operating expenses. Recoveries of power and cooling-related expenses relate specifically to our variable power arrangements, whereby customers pay variable monthly fees for the specific amount of power utilized at the current utility rates. Our performance obligation is to stand ready to deliver power over the life of the customer contract up to a contracted power capacity. Customers have the flexibility to increase or decrease the amount of power consumed, and therefore sub-metered power revenue is constrained at contract inception. The reimbursements are included in revenue as recoveries from customers and are recognized each month as the uncertainty related to the consideration is resolved (i.e. we provide power to our customers) and customers utilize the power. Reimbursement of real estate taxes, insurance, common area maintenance, or other operating expenses are accounted for as variable payments under lease guidance pursuant to the practical expedient and are recognized as revenue in the period that the expenses are recognized. Variable lease revenue from recoveries discussed above, including power, common area maintenance or other operating costs, have the same pattern of transfer over the lease term as the lease component and are therefore combined with the lease component to form a single lease component. Variable lease revenue from recoveries is included within the “rental” line item on the statements of operations.

Other Revenue

Other revenue primarily consists of revenue from our managed service offerings, as well as revenue earned from partner channel, management and development fees. We, through our taxable REIT subsidiaries (“TRS”), may provide use of our managed services to our customers on an individual or combined basis. In our managed services offering, the TRS’s performance obligation is to provide services (e.g. cloud hosting, data backup, data storage or data center personnel labor hours) to facilitate a fully integrated information technology (“IT”) outsourcing environment over a contracted term. Although underlying services may vary, over the contracted term monthly service offerings are substantially the same and we account for the services as a series of distinct services in accordance with ASC Topic 606. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. As we have the right to consideration from customers in an amount that corresponds directly with the value to the customer of the TRS’s performance of providing continuous services, we recognize monthly revenue for the amount invoiced.

With respect to the transaction price allocated to remaining performance obligations within our managed service contracts, we have elected to use the optional exemption provided by ASC Topic 606 whereby we are not required to estimate the total transaction price allocated to remaining performance obligations as we apply the “right-to-invoice” practical expedient. As described above, the nature of our performance obligation in these contracts is to provide monthly services that are substantially the same and accounted for as a series of distinct services. These contracts generally have a remaining term ranging from month-to-month to three years.

Management fees and other revenues are generally received from our unconsolidated entity properties as well as third parties. Management fee revenue is earned based on a contractual percentage of unconsolidated entity property revenue. Development fee revenue is earned on a contractual percentage of hard costs to develop a property. We recognize revenue for these services provided when earned based on the performance criteria in ASC Topic 606, with such revenue recorded in “Other” revenue on the consolidated statements of operations.

Leases as Lessee – We determine if an arrangement is a lease at inception. If the contract is considered a lease, we evaluate leased property to determine whether the lease should be classified as a finance or operating lease in accordance with U.S. GAAP. We periodically enter into finance leases for certain data center facilities, equipment, and fiber optic transmission cabling. Finance lease assets are included within the “Buildings, improvements and equipment” line item of the consolidated balance sheets and finance lease liabilities are included within “Finance leases” line item of the consolidated balance sheets. In addition, we lease certain real estate (primarily land or real estate space) under operating lease agreements with such assets included within the “Operating lease right of use assets, net” line item of the consolidated balance sheets and the associated lease liabilities included within the “Operating lease liabilities” line item on the consolidated balance sheets.

Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases as lessee typically do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We assess multiple variables when determining the incremental borrowing rate, such as lease term, payment terms, collateral, economic conditions, and creditworthiness. ROU assets also include any lease payments made and exclude lease incentives. Many of our lease agreements include options to extend the lease, which we do not include in our expected lease terms unless they are reasonably certain to be exercised. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term.

Allowance for Uncollectible Accounts Receivable – We record a provision for uncollectible accounts if a receivable balance relating to lease components from an individual contract is considered by management not to be probable of collection, and this provision is recorded as a reduction to leasing revenues. We also record a general provision of estimated uncollectible tenant receivables based on general probability of collection in accordance with ASC 450-20 Loss Contingencies. This provision is recorded as bad debt expense and recorded within the “Property Operating Costs” line item of the consolidated statements of operations. The aggregate allowance for doubtful accounts on the consolidated balance sheets was $5.3 million and $5.4 million as of March 31, 2021 and December 31, 2020, respectively.

Deferred Income – Deferred income generally results from non-refundable charges paid by the customer at lease inception to prepare their space for occupancy. We record this initial payment, commonly referred to as set-up fees, as a deferred income liability which amortizes into rental revenue over the term of the related lease on a straight-line basis. Deferred income was $93.5 million and $85.4 million as of March 31, 2021 and December 31, 2020, respectively. Additionally, $6.4 million and $3.9 million of deferred income was amortized into revenue for the three months ended March 31, 2021 and 2020, respectively.

Equity-based Compensation – Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification and amortized ratably over their respective service periods. We have elected to account for forfeitures as they occur. Equity-based compensation expense was $6.9 million and $4.9 million for the three months ended March 31, 2021 and 2020, respectively.

Segment Information – We manage our business as one operating segment and thus one reportable segment consisting of a portfolio of investments in multiple data centers.

Customer Concentrations – During the three months ended March 31, 2021, one of our customers exceeded 10% of total revenues, representing approximately 11% of total revenues for the three months ended March 31, 2021.

As of March 31, 2021, three of our customers exceeded 5% of trade accounts receivable (which excludes straight-line rent receivables). In aggregate, these three customers accounted for approximately 53% of trade accounts receivable. One of these customers individually exceeded 10% of total trade accounts receivable representing 40% of total trade accounts receivable.

Income Taxes – We provide for income taxes during interim periods based on the estimated effective tax rate for the year and any discrete adjustments. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the taxable REIT subsidiaries, tax law changes, and future business acquisitions or divestitures. The taxable subsidiaries’ effective tax rates were (7.8)% and 13.0% for the three months ended March 31, 2021 and 2020, respectively.

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

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

As of March 31, 2021, we valued our derivative instruments primarily utilizing Level 2 inputs. See Note 14 – ‘Fair Value of Financial Instruments’ for additional details.

New Accounting Pronouncements

In January 2020, the FASB issued ASU 2020-1, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815, which clarifies the interaction between the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815. ASU 2020-1 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. We adopted this ASU effective January 1, 2021, and the provisions of the standard did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-4 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-4 is optional and may be elected over time as reference rate reform activities occur. The standard is effective for all entities as of March 12, 2020 through December 31, 2022. An entity can elect to apply the amendments as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to that date that the financial statements are available to be issued. In January 2021, the FASB issued ASU 2021-1 Reference Rate Reform (Topic 848): Scope, which updated the standard to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Beginning in the first quarter of 2020, we have applied the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance but we do not expect the provisions of the standard will have a material impact on our consolidated financial statements.

We determined all other recently issued accounting pronouncements will not have a material impact on our consolidated financial statements or do not materially apply to our operations.

XML

Real Estate Assets and Construction in Progress

3 Months Ended

Mar. 31, 2021

Real Estate [Abstract]

Real Estate Assets and Construction in Progress

Real Estate Assets and Construction in Progress

The following is a summary of our cost of owned or leased properties as of March 31, 2021 and December 31, 2020 (in thousands):

As of March 31, 2021 (unaudited):

Property Location	Land		Buildings, Improvements and Equipment		Construction in Progress		Total Cost
Ashburn, Virginia Campus (1)	$	16,476	$	391,247	$	219,065	$	626,788
Atlanta, Georgia Campus (2)	55,158		771,045		183,319		1,009,522
Chicago, Illinois	9,400		251,676		131,322		392,398
Dulles, Virginia	3,154		55,580		4,220		62,954
Eemshaven, Netherlands	5,153		20,991		47,859		74,003
Fort Worth, Texas	9,079		124,481		3,350		136,910
Groningen, Netherlands	1,821		11,324		3,249		16,394
Hillsboro, Oregon	18,414		47,364		72,033		137,811
Irving, Texas	8,606		409,565		89,516		507,687
Leased Facilities (3)	—		83,180		60		83,240
Manassas, Virginia Campus (4)	—		37		90,947		90,984
Phoenix, Arizona (5)	—		—		38,063		38,063
Piscataway, New Jersey	7,466		122,599		39,951		170,016
Princeton, New Jersey	20,700		35,267		9		55,976
Richmond, Virginia	2,180		235,381		128,911		366,472
Sacramento, California	1,481		66,304		125		67,910
Santa Clara, California (6)	—		117,522		16,871		134,393
Suwanee, Georgia (Atlanta-Suwanee)	3,521		184,975		7,607		196,103
Other (7)	2,213		36,950		43,272		82,435
	$	164,822	$	2,965,488	$	1,119,749	$	4,250,059

_______________________________

(1)The “Ashburn, Virginia Campus” includes both the existing data center Ashburn, VA (DC - 1) as well as new property development associated with the construction of a second data center Ashburn, VA (DC - 2).

(2)The “Atlanta, Georgia Campus” includes both the existing data center Atlanta (DC - 1) as well as the recently developed data center Atlanta, GA (DC - 2).

(3)Includes 7 facilities. All facilities are leased, including one subject to a finance lease.

(4)The “Manassas, Virginia Campus” includes new property development associated with the construction of a wholly owned data center in Manassas, Virginia as well as separate land purchases in Manassas, Virginia.

(5)Represents land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use.

(6)Owned facility subject to long-term ground sublease.

(7)Consists of Miami, FL; Lenexa, KS; Overland Park, KS and additional land.

As of December 31, 2020:

Property Location	Land		Buildings, Improvements and Equipment		Construction in Progress		Total Cost
Ashburn, Virginia Campus (1)	$	16,476	$	371,725	$	185,903	$	574,104
Atlanta, Georgia Campus (2)	55,157		700,142		191,072		946,371
Chicago, Illinois	9,400		250,336		104,117		363,853
Dulles, Virginia	3,154		54,323		4,148		61,625
Eemshaven, Netherlands	5,366		21,712		47,531		74,609
Fort Worth, Texas	9,079		124,054		1,064		134,197
Groningen, Netherlands	1,896		11,206		3,730		16,832
Hillsboro, Oregon	18,414		34,594		78,390		131,398
Irving, Texas	8,606		392,275		99,591		500,472
Leased Facilities (3)	—		82,759		225		82,984
Manassas, Virginia Campus (4)	—		25		67,073		67,098
Phoenix, Arizona (5)	—		—		37,729		37,729
Piscataway, New Jersey	7,466		122,176		30,401		160,043
Princeton, New Jersey	20,700		35,261		5		55,966
Richmond, Virginia	2,180		233,927		120,577		356,684
Sacramento, California	1,481		66,300		12		67,793
Santa Clara, California (6)	—		117,343		9,385		126,728
Suwanee, Georgia (Atlanta-Suwanee)	3,521		184,467		6,718		194,706
Other (7)	2,213		36,636		41,094		79,943
	$	165,109	$	2,839,261	$	1,028,765	$	4,033,135

_______________________________

(1)The “Ashburn, Virginia Campus” includes both the existing data center Ashburn, VA (DC - 1) as well as new property development associated with the construction of a second data center Ashburn, VA (DC - 2).

(2)The “Atlanta, Georgia Campus” includes both the existing data center Atlanta (DC - 1) as well as the recently developed data center Atlanta, GA (DC - 2).

(3)Includes 7 facilities. All facilities are leased, including one subject to a finance lease.

(4)The “Manassas, Virginia Campus” includes new property development associated with the construction of a wholly owned data center in Manassas, Virginia as well as separate land purchases in Manassas, Virginia.

(5)Represents land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use.

(6)Owned facility subject to long-term ground sublease.

(7)Consists of Miami, FL; Lenexa, KS; Overland Park, KS and additional land.

XML

Leases

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

Leases

Leases as Lessee

We use leasing as a source of financing for certain data center facilities and related equipment. We currently operate one data center facility, along with various equipment and fiber optic transmission cabling, that are subject to finance leases. The remaining terms of our finance leases range from approximately ten years to twenty years. Our finance lease associated with the data center includes multiple extension option periods, some of which were included in the lease term as we are reasonably certain to exercise those extension options. Our other finance leases typically do not have options to extend the initial lease term.

We currently lease six other facilities under operating lease agreements for various data centers, our corporate headquarters and additional office space. Our leases have remaining lease terms ranging from less than three years to six years. We have options to extend the initial lease term on nearly all of these leases. Additionally, we have one ground lease for our Santa Clara property that is an operating lease which is scheduled to expire in 2052.

Components of lease expense were as follows (unaudited and in thousands):

	Three months ended March 31,
	2021		2020
Finance lease cost:
Amortization of assets	$	1,013	$	1,038
Interest on lease liabilities	469		489
Operating lease expense:
Operating lease cost	2,232		2,263
Variable lease cost	270		264
Sublease income	(49)		(48)
Total lease costs	$	3,935	$	4,006

Leases as lessor

Our lease revenue contains both minimum lease payments as well as variable lease payments. See Note 2 ‘Summary of Significant Accounting Policies’ for further details of our revenue streams and associated accounting treatment. The components of our lease revenue were as follows (unaudited and in thousands):

	Three months ended March 31,
	2021		2020
Lease revenue:
Minimum lease revenue	$	127,706	$	107,485
Variable lease revenue (primarily recoveries from customers)	16,602		12,596
Total lease revenue	$	144,308	$	120,081

Leases

Leases

Leases as Lessee

We use leasing as a source of financing for certain data center facilities and related equipment. We currently operate one data center facility, along with various equipment and fiber optic transmission cabling, that are subject to finance leases. The remaining terms of our finance leases range from approximately ten years to twenty years. Our finance lease associated with the data center includes multiple extension option periods, some of which were included in the lease term as we are reasonably certain to exercise those extension options. Our other finance leases typically do not have options to extend the initial lease term.

We currently lease six other facilities under operating lease agreements for various data centers, our corporate headquarters and additional office space. Our leases have remaining lease terms ranging from less than three years to six years. We have options to extend the initial lease term on nearly all of these leases. Additionally, we have one ground lease for our Santa Clara property that is an operating lease which is scheduled to expire in 2052.

Components of lease expense were as follows (unaudited and in thousands):

	Three months ended March 31,
	2021		2020
Finance lease cost:
Amortization of assets	$	1,013	$	1,038
Interest on lease liabilities	469		489
Operating lease expense:
Operating lease cost	2,232		2,263
Variable lease cost	270		264
Sublease income	(49)		(48)
Total lease costs	$	3,935	$	4,006

Leases as lessor

Our lease revenue contains both minimum lease payments as well as variable lease payments. See Note 2 ‘Summary of Significant Accounting Policies’ for further details of our revenue streams and associated accounting treatment. The components of our lease revenue were as follows (unaudited and in thousands):

	Three months ended March 31,
	2021		2020
Lease revenue:
Minimum lease revenue	$	127,706	$	107,485
Variable lease revenue (primarily recoveries from customers)	16,602		12,596
Total lease revenue	$	144,308	$	120,081

Leases

Leases

Leases as Lessee

We use leasing as a source of financing for certain data center facilities and related equipment. We currently operate one data center facility, along with various equipment and fiber optic transmission cabling, that are subject to finance leases. The remaining terms of our finance leases range from approximately ten years to twenty years. Our finance lease associated with the data center includes multiple extension option periods, some of which were included in the lease term as we are reasonably certain to exercise those extension options. Our other finance leases typically do not have options to extend the initial lease term.

We currently lease six other facilities under operating lease agreements for various data centers, our corporate headquarters and additional office space. Our leases have remaining lease terms ranging from less than three years to six years. We have options to extend the initial lease term on nearly all of these leases. Additionally, we have one ground lease for our Santa Clara property that is an operating lease which is scheduled to expire in 2052.

Components of lease expense were as follows (unaudited and in thousands):

	Three months ended March 31,
	2021		2020
Finance lease cost:
Amortization of assets	$	1,013	$	1,038
Interest on lease liabilities	469		489
Operating lease expense:
Operating lease cost	2,232		2,263
Variable lease cost	270		264
Sublease income	(49)		(48)
Total lease costs	$	3,935	$	4,006

Leases as lessor

Our lease revenue contains both minimum lease payments as well as variable lease payments. See Note 2 ‘Summary of Significant Accounting Policies’ for further details of our revenue streams and associated accounting treatment. The components of our lease revenue were as follows (unaudited and in thousands):

	Three months ended March 31,
	2021		2020
Lease revenue:
Minimum lease revenue	$	127,706	$	107,485
Variable lease revenue (primarily recoveries from customers)	16,602		12,596
Total lease revenue	$	144,308	$	120,081

XML

Investments in Unconsolidated Entity	3 Months Ended
	Mar. 31, 2021
Equity Method Investments and Joint Ventures [Abstract]
Investments in Unconsolidated Entity	Investments in Unconsolidated EntityDuring the three months ended March 31, 2019, we formed an unconsolidated entity with Alinda Capital Partners (“Alinda”), an infrastructure investment firm. We contributed a hyperscale data center under development in Manassas, Virginia to the entity. The facility, and the previously executed 10-year operating lease agreement with a global cloud-based software company, was contributed to the unconsolidated entity in exchange for cash and noncash consideration in the form of equity interest in the entity that was measured at fair value pursuant to Topic 820. The equity interest received and any amounts due from the unconsolidated entity are recorded within our consolidated balance sheets and totaled $25.9 million and $22.6 million as of March 31, 2021 and December 31, 2020, respectively. We and Alinda each own a 50% interest in the entity. As we are not the primary beneficiary of the arrangement but have the ability to exercise significant influence, we concluded that the investment should be accounted for as an unconsolidated entity using equity method investment accounting. As of March 31, 2021 and December 31, 2020, the total assets of the entity were $145.8 million and $141.5 million, respectively. As of March 31, 2021 and December 31, 2020, the total debt outstanding, net of deferred financing costs, was $92.2 million and $90.1 million, respectively.

XML

Debt

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Debt

Debt

Below is a listing of our outstanding debt, including finance leases, as of March 31, 2021 and December 31, 2020 (in thousands):

	Weighted Average Effective Interest Rate at March 31, 2021 (1)	Maturity Date	March 31, 2021		December 31, 2020
	(unaudited)		(unaudited)
Unsecured Credit Facility
Revolving Credit Facility	1.36%	December 17, 2023	$	361,877	$	392,337
Term Loan A	3.26%	December 17, 2024	225,000		225,000
Term Loan B	3.30%	April 27, 2025	225,000		225,000
Term Loan C	3.46%	October 18, 2026	250,000		250,000
Term Loan D	1.45%	January 15, 2026	250,000		250,000
3.875% Senior Notes	3.88%	October 1, 2028	500,000		500,000
Finance Leases	4.35%	2031 - 2040	42,525		41,718
	2.87%		1,854,402		1,884,055
Less net debt issuance costs			(13,935)		(14,562)
Total outstanding debt, net			$	1,840,467	$	1,869,493

_________________________

(1)The coupon interest rates associated with Term Loan A, Term Loan B, and Term Loan C incorporate the effects of our interest rate swaps in effect as of March 31, 2021.

The annual remaining principal payment requirements of our debt securities as of March 31, 2021 per the contractual maturities, excluding extension options and excluding operating and finance leases, are as follows (unaudited and in thousands):

2021 (April - December)	$	—
2022	—
2023	361,877
2024	225,000
2025	225,000
Thereafter	1,000,000
Total	$	1,811,877

As of March 31, 2021, we were in compliance with all of our covenants of our debt agreements.

XML

Derivative Instruments

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

From time to time, we enter into derivative financial instruments to manage certain cash flow risks.

Derivatives designated and qualifying as a hedge of the exposure to variability in the cash flows of a specific asset or liability that is attributable to a particular risk, such as interest rate risk, are considered cash flow hedges.

Interest Rate Swaps

Our objectives in using interest rate swaps are to reduce variability in interest expense and to manage exposure to adverse interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

As of March 31, 2021, we had interest rate swap agreements in place with an aggregate notional amount of $700 million. The forward swap agreements effectively fix the interest rate on $700 million of term loan borrowings, $225 million of swaps allocated to Term Loan A, $225 million allocated to Term Loan B and $250 million allocated to Term Loan C, through the current maturity dates of the respective term loans.

We reflect our interest rate swap agreements, which are designated as cash flow hedges, at fair value as either assets or liabilities on the consolidated balance sheets within the “Other assets, net” or “Derivative liabilities” line items, as applicable. As of March 31, 2021 and December 31, 2020, the fair value of interest rate swaps represented an aggregate liability of $32.0 million and $49.8 million, respectively.

The forward interest rate swap agreements are derivatives that currently qualify for hedge accounting whereby we record the effective portion of changes in fair value of the interest rate swaps in accumulated other comprehensive income or loss on the consolidated balance sheets and statements of comprehensive income which is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Any ineffective portion of a derivative's change in fair value is immediately recognized within net income (loss). The amount reclassified from other comprehensive income to interest expense on the consolidated statements of operations was an increase to interest expense of $3.4 million and $0.8 million for the three months ended March 31, 2021, and 2020, respectively. There was no ineffectiveness recognized for the three months ended March 31, 2021, and 2020. During the subsequent twelve months, beginning April 1, 2021, we estimate that $13.7 million will be reclassified from other comprehensive income as an increase to interest expense.

Interest rate derivatives and their fair values as of March 31, 2021 and December 31, 2020 were as follows (unaudited and in thousands):

Notional Amount				Fixed One Month LIBOR rate per annum				Fair Value
March 31, 2021		December 31, 2020				Effective Date	Expiration Date	March 31, 2021		December 31, 2020
$	25,000	$	25,000	1.989	%	January 2, 2018	December 17, 2021	$	(334)	$	(447)
100,000		100,000		1.989	%	January 2, 2018	December 17, 2021	(1,333)		(1,788)
75,000		75,000		1.989	%	January 2, 2018	December 17, 2021	(1,001)		(1,342)
50,000		50,000		2.033	%	January 2, 2018	April 27, 2022	(1,017)		(1,248)
100,000		100,000		2.029	%	January 2, 2018	April 27, 2022	(2,027)		(2,490)
50,000		50,000		2.033	%	January 2, 2018	April 27, 2022	(1,016)		(1,248)
100,000		100,000		2.617	%	January 2, 2020	December 17, 2023	(6,144)		(7,191)
100,000		100,000		2.621	%	January 2, 2020	April 27, 2024	(6,722)		(8,000)
70,000		70,000		0.968	%	March 2, 2020	October 18, 2026	232		(2,174)
30,000		30,000		0.973	%	March 2, 2020	October 18, 2026	100		(938)
200,000		200,000		2.636	%	December 17, 2021	December 17, 2023	(8,781)		(9,648)
200,000		200,000		2.642	%	April 27, 2022	April 27, 2024	(8,162)		(9,500)
125,000		125,000		1.014	%	December 17, 2023	December 17, 2024	336		(704)
100,000		100,000		1.035	%	December 17, 2023	December 17, 2024	244		(584)
75,000		75,000		1.110	%	December 17, 2023	October 18, 2026	1,230		(866)
100,000		100,000		1.088	%	April 27, 2024	April 27, 2025	399		(540)
125,000		125,000		1.082	%	April 27, 2024	April 27, 2025	513		(666)
75,000		75,000		0.977	%	April 27, 2024	October 18, 2026	1,503		(422)
								$	(31,980)	$	(49,796)

Power Purchase Agreements

In March 2019, we entered into two 10-year agreements to purchase renewable energy equal to the expected electricity needs of our data centers in Chicago, Illinois and Piscataway, New Jersey. These arrangements currently qualify for hedge accounting whereby we record the changes in fair value of the instruments in “Accumulated other comprehensive income” or loss on the consolidated balance sheets and statements of comprehensive income which is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The amount reclassified from other comprehensive income to utilities expense on the consolidated statements of operations was a reduction to utilities expense of $0.1 million and an increase to utilities expense of $0.4 million for the three months ended March 31, 2021 and 2020, respectively. We currently reflect these agreements, which are designated as cash flow hedges, at fair value as liabilities on the consolidated balance sheets within the “Derivative liabilities” line item.

Power purchase agreement derivatives and their fair values as of March 31, 2021 and December 31, 2020 were as follows (unaudited and in thousands):

				Fair Value
Counterparty	Facility	Effective Date	Expiration Date	March 31, 2021		December 31, 2020
Calpine Energy Solutions, LLC	Piscataway	March 8, 2019	February 28, 2029	$	(2,534)	$	(2,162)
Calpine Energy Solutions, LLC	Chicago	March 8, 2019	February 28, 2029	(2,237)		(1,764)
				$	(4,771)	$	(3,926)

XML

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and ContingenciesWe are subject to various routine legal proceedings and other matters in the ordinary course of business. We currently do not have any litigation that would have a material adverse impact on our financial statements.

XML

Partners' Capital, Equity and Incentive Compensation Plans

3 Months Ended

Mar. 31, 2021

Equity [Abstract]

Partners' Capital, Equity and Incentive Compensation Plans

Partners’ Capital, Equity and Incentive Compensation Plans

QualityTech, LP

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

As of March 31, 2021, the Operating Partnership had four classes of limited partnership units outstanding: Series A Preferred Units, Series B Convertible Preferred Units, Class A units of limited partnership interest (“Class A units”) and Class O LTIP units of limited partnership units (“Class O units”). The Class A units currently outstanding are now redeemable on a one-for-one exchange rate at any time for cash or shares of Class A common stock of QTS. The Company may in its sole discretion elect to assume and satisfy the redemption amount with cash or its shares. Class O units were issued upon grants made under the QualityTech, LP 2010 Equity Incentive Plan (the “2010 Equity Incentive Plan”). Class O units are pari passu with Class A units. Each Class O unit is convertible into Class A units by the Operating Partnership at any time or by the holder at any time based on formulas contained in the partnership agreement.

QTS Realty Trust, Inc.

In connection with its initial public offering on October 13, 2013 ("IPO"), QTS issued Class A common stock and Class B common stock. Class B common stock entitles the holder to 50 votes per share and was issued to enable our Chief Executive Officer to exchange 2% of his Operating Partnership units so he may have a vote proportionate to his economic interest in the Company. Also in connection with its IPO, QTS adopted the QTS Realty Trust, Inc. 2013 Equity Incentive Plan (the “2013 Equity Incentive Plan”), pursuant to which the Company may issue shares of Class A common stock pursuant to various types of awards. As of March 31, 2021, 5.9 million shares of Class A common stock were authorized and available for issuance under the 2013 Equity Incentive Plan. On March 4, 2021, the Board of Directors approved an amendment and restatement of the 2013 Equity Incentive Plan, to among other things, increase the number of shares available for issuance under the plan by an additional 2.0 million shares, which amendment is expected to be approved at our 2021 Annual Meeting of Stockholders on May 4, 2021.

In March 2019, the Compensation Committee completed a redesign of the long-term incentive program for executive officers to include the following types of awards:

a.Performance-Based FFO Unit Awards — performance-based restricted share unit awards, which may be earned based on Operating Funds From Operations (“OFFO”) per diluted share measured over a two-year performance period (performance-based FFO units or “FFO Units”), with two-thirds of the earned FFO Units vesting and settling in shares of Class A common stock on the date that performance is certified following the end of the performance period and the remaining one-third of the FFO Units vesting and settling at the end of three years from the award grant date. The number of shares of Class A common stock subject to the awards that can be earned ranges from 0% to 200% of the target award based on actual performance over the performance period, with the number of shares to be determined based on a linear interpolation basis between threshold and target and target and maximum performance.

b.Performance-Based Relative TSR Unit Awards — performance-based restricted share unit awards, which may be earned based on total stockholder return (“TSR”) as compared to the MSCI U.S. REIT Index (the “Index”) over a three-year performance period (the performance-based relative TSR units or “TSR Units”). The number of shares of Class A common stock subject to the awards that can be earned ranges from 0% to 200% of the target award based on our TSR compared to the Index. In addition, award payouts will be determined on a linear interpolation basis between threshold and target and target and maximum performance; and will be capped at the target performance level if our TSR is negative.

c.Restricted Stock Awards — the restricted stock awards vest as to 33% of the shares subject to awards on the first anniversary of the date of grant and as to 8.375% of the shares subject to the awards each quarter-end thereafter, subject to the named executive officer’s continued service as an employee as of each vesting date.

The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the three months ended March 31, 2021 (unaudited):

	2010 Equity Incentive Plan					2013 Equity Incentive Plan
	Numbers of Class O units	Weighted average exercise price		Weighted average fair value		Options	Weighted average exercise price		Weighted average fair value		Restricted Stock / Deferred Stock	Weighted average fair value at grant date		TSR Units	Weighted average fair value at grant date		FFO Units	Weighted average fair value at grant date
Outstanding at December 31, 2020	75,435	$	25.00	$	6.11	1,936,407	$	38.55	$	7.26	416,496	$	52.20	168,552	$	66.90	132,267	$	51.45
Granted	—	—		—		96,366	59.06		10.53		270,464	59.07		105,402	64.72		105,402	59.06
Exercised/Vested (1)	—	—		—		(51,220)	38.63		7.91		(123,438)	54.57		—	—		—	—
Cancelled/Expired	—	—		—		—	—		—		(3,716)	57.24		—	—		—	—
Outstanding at March 31, 2021	75,435	$	25.00	$	6.11	1,981,553	$	39.55	$	7.40	559,806	$	54.96	273,954	$	66.06	237,669	$	54.82

____________________

(1)Represents (i) Class O units which were converted to Class A units, (ii) options to purchase Class A common stock which were exercised, and (iii) the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock, with respect to the applicable column.

The assumptions and fair values for restricted stock and options to purchase shares of Class A common stock granted for the three months ended March 31, 2021 are included in the following table on a per unit basis (unaudited). Options to purchase shares of Class A common stock were valued using the Black-Scholes model and TSR Units were valued using a Monte-Carlo simulation that leveraged similar assumptions to those used to value the Class A common stock and FFO Units.

	Three Months Ended March 31, 2021
Fair value of FFO units and restricted stock granted	$	59.06		-	$	61.17
Fair value of TSR units granted					$	64.72
Fair value of options granted	$	3.79		-	$	11.36
Expected term (years)	0.4			-	5.5
Expected volatility	28		%	-	31		%
Expected dividend yield	3.39						%
Expected risk-free interest rates	0.06		%	-	0.90		%

The following tables summarize information about awards outstanding as of March 31, 2021 (unaudited).

	Operating Partnership Awards Outstanding
	Exercise prices		Awards outstanding	Weight average remaining vesting period  (years)
Class O Units	$	25.00	75,435	—
Total Operating Partnership awards outstanding			75,435

	QTS Realty Trust, Inc. Awards Outstanding
	Exercise prices					Awards outstanding	Weight average remaining vesting period  (years)
Restricted stock	$	—				559,806	1.1
TSR units	—					273,954	1.1
FFO units	—					237,669	0.8
Options to purchase Class A common stock	$	21.00	-	$	59.06	1,981,553	0.9
Total QTS Realty Trust, Inc. awards outstanding						3,052,982

Any awards outstanding as of the end of the period have been valued as of the grant date and generally vest ratably over a defined service period. As of March 31, 2021, all restricted Class A common stock, TSR units, and FFO units outstanding were unvested and approximately 0.1 million options to purchase Class A common stock were outstanding and unvested. As of March 31, 2021, we had $51.4 million of unrecognized equity-based compensation expense which will be recognized over a remaining weighted-average vesting period of approximately 1 year. The total intrinsic value of Class O units and options to purchase Class A common stock outstanding at March 31, 2021 was $47.5 million.

Dividends and Distributions

The following tables present quarterly cash dividends and distributions paid to our common and preferred stockholders for the three months ended March 31, 2021 and 2020 (unaudited):

Three Months Ended March 31, 2021
Record Date	Payment Date	Per Share Rate		Aggregate Dividend/Distribution Amount (in millions)
Common Stock
December 22, 2020	January 7, 2021	$	0.47	$	33.4
				$	33.4
Series A Preferred Stock
December 31, 2020	January 15, 2021	$	0.45	$	1.9
				$	1.9
Series B Preferred Stock
December 31, 2020	January 15, 2021	$	1.63	$	5.1
				$	5.1

Three Months Ended March 31, 2020
Record Date	Payment Date	Per Share Rate		Aggregate Dividend/Distribution Amount (in millions)
Common Stock
December 20, 2019	January 7, 2020	$	0.44	$	28.6
				$	28.6
Series A Preferred Stock
December 31, 2019	January 15, 2020	$	0.45	$	1.9
				$	1.9
Series B Preferred Stock
December 31, 2019	January 15, 2020	$	1.63	$	5.1
				$	5.1

Additionally, subsequent to March 31, 2021, we paid the following dividends:

•On April 6, 2021, we paid our regular quarterly cash dividend of $0.50 per common share to stockholders of record as of the close of business on March 19, 2021.

•On April 15, 2021, we paid a quarterly cash dividend of approximately $0.45 per share on our Series A Preferred Stock to holders of Series A Preferred Stock of record as of the close of business on March 31, 2021.

•On April 15, 2021, we paid a quarterly cash dividend of approximately $1.63 per share on our Series B Preferred Stock to holders of Series B Preferred Stock of record as of the close of business on March 31, 2021.

Equity Issuances

Class A Common Stock

In June 2019, we established an “at-the-market” equity offering program (the “Prior ATM Program”) pursuant to which we could issue, from time to time, up to $400 million of our Class A common stock, $0.01 par value per share (the “Class A common stock”), which could include shares to be sold on a forward basis. During the three months ended March 31, 2021, we settled the remaining shares subject to the forward sale agreements.

Because we had utilized substantially all of the offering capacity of the Prior ATM Program, in May 2020, we established a new “at-the-market” equity offering program (the “Current ATM Program”) pursuant to which we may issue, from time to time, up to $500 million of our Class A common stock, which may include shares to be sold on a forward basis. As under the Prior ATM Program, the use of forward sales under the Current ATM Program generally allows us to lock in a price on the sale of shares of our Class A common stock when sold by the forward sellers, but defer receiving the net proceeds from such sales until the shares of our Class A common stock are issued at settlement on a later date. We expect to physically settle (by delivering shares of common stock) the forward sales under the Current ATM Program prior to the first anniversary date of each respective transaction. We have concluded that the forward sale agreements meet the derivative scope exception for certain contracts involving an entity’s own equity. Our earnings per share dilution resulting from the forward sale agreements, if any, is determined using the two-class method.

In June 2020, we conducted an underwritten offering of 4,400,000 shares of our common stock on a forward basis. During the three months ended March 31, 2021 we settled a portion of the 4,400,000 shares subject to the forward sales agreements. We expect to physically settle the remaining forward sale agreements (by the delivery of shares of common stock) and receive proceeds, subject to certain adjustments, from the sale of those shares of common stock by June 30, 2021, although we have the right to elect settlement prior to that time. We have concluded that the forward sale agreements meet the derivative scope exception for certain contracts involving an entity’s own equity. Our earnings per share dilution resulting from the forward sale agreements, if any, is determined using the two-class method.

The following table represents a summary of our aggregate forward equity activity under the Prior ATM Program, Current ATM Program and our underwritten offerings from December 31, 2020 through March 31, 2021:

Offering Program	Forward Shares Sold/(Settled)		Net Proceeds Available/(Received) (1)
Shares and net proceeds available as of December 31, 2020	9,961		$	581,598	(2)
Forward Equity - Sales	1,504		91,620
Forward Equity - Settlements	(3,865)	(3)	(215,964)
Shares and net proceeds available as of March 31, 2021	7,600		$	457,254

____________________

(1)Net Proceeds Available remain subject to certain adjustments until settled.

(2)Proceeds available reported in the Form 10-K for the period ended December 31, 2020 were $587.6 million. The $6 million decrease is primarily due to QTS’ declared dividends, which reduces cash expected to be received upon full physical settlement of the forward shares.

(3)Represents the number of forward shares we elected to physically settle during the period.

Preferred Stock

As of March 31, 2021, we had outstanding 4,280,000 shares of 7.125% Series A Cumulative Redeemable Perpetual Preferred Stock ("Series A Preferred Stock") with a liquidation preference of $25.00 per share as well as 3,162,500 shares of 6.50% Series B Cumulative Convertible Perpetual Preferred Stock (“Series B Preferred Stock”) with a liquidation preference of $100.00 per share. Dividends on the Series A Preferred Stock and Series B Preferred Stock are payable quarterly in arrears on or about the 15th day of each January, April, July and October.

The Series A Preferred Stock does not have a stated maturity date. On and after March 15, 2023, the Company may, at its option, redeem the Series A Preferred Stock, in whole, at any time, or in part, from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but not including, the date of redemption. Under certain conditions, upon the occurrence of a change of control, we may redeem the Series A Preferred Stock in whole, at any time, or in part, from time to time within 120 days after the occurrence of such event and the holders will have the right to convert their Series A Preferred Stock to Class A common stock in accordance with the terms of the Series A Preferred Stock.

The Series B Preferred Stock does not have a stated maturity date. The Series B Preferred Stock is convertible by holders into shares of Class A common stock at any time at the then-prevailing conversion rate. The conversion rate as of March 31, 2021 is 2.1436 shares of the Company’s Class A common stock per share of Series B Preferred Stock. The Series B Preferred Stock is not redeemable by the Company. At any time on or after July 20, 2023, the Company may at its option cause all (but not less than all) outstanding shares of the Series B Preferred Stock to be automatically converted into the Company’s Class A common stock at the then-prevailing conversion rate if the closing sale price of the Company’s Class A common stock is equal to or exceeds 150% of the then-prevailing conversion price for at least 20 trading days in a period of 30 consecutive trading days, including the last trading day of such 30-day period, ending on the trading day prior to the issuance of a press release announcing the mandatory conversion.

XML

Related Party Transactions

3 Months Ended

Mar. 31, 2021

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

As described further in Note 5 ‘Investments in Unconsolidated Entity’, during the three months ended March 31, 2019, we formed an unconsolidated entity with Alinda, an infrastructure investment firm. We contributed a hyperscale data center under development in Manassas, Virginia to the entity. The facility, and the previously executed operating lease to a global cloud-based software company pursuant to a 10-year lease agreement, was contributed in exchange for cash and noncash consideration in the form of equity interest in the entity that was measured at fair value pursuant to ASC Topic 820. We and Alinda each own a 50% interest in the entity.

Under the unconsolidated entity operating agreement, we serve as the entity’s operating member, subject to authority and oversight of a board appointed by us and Alinda, and separately we serve as manager and developer of the facility in exchange for management and development fees. During the three months ended March 31, 2021 and 2020, we received $0.3 million and $0.5 million in development fees from the unconsolidated entity, respectively, as well as $0.3 million and $0.2 million in management fees from the unconsolidated entity, respectively.

In addition, we periodically execute transactions with entities affiliated with our Chairman and Chief Executive Officer. Such transactions include building operating lease payments and receipts as well as reimbursement for the use of a private aircraft service by our officers and directors.

The transactions which occurred during the three months ended March 31, 2021 and 2020 are outlined below (unaudited and in thousands):

	Three Months Ended March 31,
	2021		2020
Tax, utility, insurance and other reimbursement	$	169	$	176
Rent expense	260		257
Total	$	429	$	433

XML

Noncontrolling Interest

3 Months Ended

Mar. 31, 2021

Noncontrolling Interest [Abstract]

Noncontrolling Interest

Noncontrolling Interest

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

Commencing at any time beginning November 1, 2014, at the election of the holders of the noncontrolling interest, the currently outstanding Class A units of the Operating Partnership are redeemable for cash or, at the election of the Company, Class A common stock of the Company on a one-for-one basis. As of March 31, 2021, the noncontrolling ownership interest percentage of QualityTech, LP was 8.6%.

XML

Earnings per share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Earnings per share

Earnings per share

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 per share for the effects of potentially dilutive common shares. Unvested restricted stock awards and our forward sale contracts described in Note 9 contain non-forfeitable rights to dividends and thus are participating securities and are included in the computation of basic earnings per share pursuant to the two-class method for all periods presented. The two-class method is an earnings allocation formula that treats a participating security as having rights to undistributed earnings that would otherwise have been available to common stockholders. Accordingly, service-based restricted stock awards and the forward sale contracts were included in the calculation of basic earnings per share using the two-class method for all periods presented to the extent outstanding during the period.

The computation of basic and diluted net income (loss) per share is as follows (in thousands, except per share data, and unaudited):

	Three Months Ended March 31,
	2021		2020
Numerator:
Net income	$	7,918	$	8,120
Income attributable to noncontrolling interests	(79)		(110)
Preferred stock dividends	(7,045)		(7,045)
Earnings attributable to participating securities	(5,285)		(1,596)
Net loss available to common stockholders after allocation to participating securities	$	(4,491)	$	(631)
Denominator:
Weighted average shares outstanding - basic	64,442		58,038
Effect of Class O units, TSR units, FFO units and options to purchase Class A common stock on an "as if" converted basis	—		—
Weighted average shares outstanding - diluted	64,442		58,038
Basic net loss per share *	$	(0.07)	$	(0.01)
Diluted net loss per share *	$	(0.07)	$	(0.01)

______________________________

*Note: The calculations of basic and diluted net income (loss) per share above do not include the following number of Class A partnership units, Class O units, TSR units, FFO units and options to purchase common stock on an “as if” converted basis, and the effects of Series B Convertible preferred stock on an “as if” converted basis, as their respective inclusions would have been antidilutive:

	Three Months Ended March 31,
	2021	2020
Class A Partnership units	6,466	6,671
Class O units, TSR units, FFO units and options to purchase common stock on an "as if" converted basis	1,212	655
Series B Convertible preferred stock on an "as if" converted basis	6,779	6,749

XML

Contracts with Customers

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Contracts with Customers

Contracts with Customers

Future minimum payments to be received under non-cancelable customer contracts including both lease rental revenue components and non-lease revenue components that are accounted for as a combined lease component in accordance with the practical expedient provided by ASC Topic 842 which is discussed in Note 2 above (inclusive of payments for contracts which have not yet commenced, and exclusive of variable lease revenue such as recoveries of operating costs from customers) are as follows for the years ending December 31 (unaudited and in thousands):

2021 (April - December)	$	349,511
2022	394,619
2023	296,826
2024	240,951
2025	186,194
Thereafter	554,414
Total	$	2,022,515

XML

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

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

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

Derivative Contracts:

Interest rate swaps

Currently, we use interest rate swaps to manage our interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of fair value accounting guidance, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of March 31, 2021, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. We do not have any fair value measurements on a recurring basis using significant unobservable inputs (Level 3) as of March 31, 2021 or December 31, 2020.

Power Purchase Agreements

In March 2019, we began using energy hedges to manage risk related to energy prices. The inputs used to value the derivatives primarily fall within Level 2 of the fair value hierarchy, and valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including futures curves. The fair values of the energy hedges are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future energy rates (forward curves) derived from observable market futures curves. To comply with the provisions of fair value accounting guidance, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Unsecured Credit facility, Term Loan D and 3.875% Senior Notes: As market interest rates have fluctuated compared to contracted interest rates, the fair value of our unsecured credit facility approximated the carrying value of the credit facility less the fair value of the interest rate swap liability. Our Term Loan D did not have interest rates which were materially different than current market conditions and therefore, the fair value approximated the carrying value. The fair value of our 3.875% Senior Notes was estimated using Level 2 “significant other observable inputs,” primarily based on quoted market prices for the same or similar issuances. At March 31, 2021, the fair value of the 3.875% Senior Notes was approximately $500.0 million.

Finance Leases: The fair value of our finance leases was estimated in the same manner as the unsecured credit facility above. Similarly, each of these instruments did not have interest rates which were materially different than current market conditions and therefore, the fair value of each instrument approximated the respective carrying values.

XML

Subsequent Events	3 Months Ended
	Mar. 31, 2021
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsIn April 2021, we paid our regular quarterly cash dividends on our common stock, Series A Preferred Stock and Series B Preferred Stock. See the ‘Dividends and Distributions’ section of Note 9 for additional details.

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation – The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in compliance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes and management’s discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021. The consolidated balance sheet data included herein as of December 31, 2020 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

As outlined in our Annual Report on Form 10-K for the year ended December 31, 2020, the Operating Partnership meets the definition and criteria of a variable interest entity (“VIE”) in accordance with Accounting Standards Codification (“ASC”) Topic 810 Consolidation, and the Company is the primary beneficiary of the VIE. The Company’s only material asset is its ownership interest in the Operating Partnership, and consequently, all of its assets and liabilities represent those assets and liabilities of the Operating Partnership. The Company’s debt is an obligation of the Operating Partnership where the creditors may have recourse, under certain circumstances, against the credit of the Company.

Use of Estimates

Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowances for doubtful accounts and deferred tax assets and the valuation of derivatives, real estate assets, acquired intangible assets and certain accruals. The impacts of the COVID-19 pandemic increases uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates and judgments may be subject to greater volatility than has been the case in the past.

Principles of Consolidation

Principles of Consolidation – The consolidated financial statements of QTS Realty Trust, Inc. include the accounts of QTS Realty Trust, Inc. and its controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated in the financial statements.We evaluate our investments in less than wholly owned entities to determine whether they should be recorded on a consolidated basis. The percentage of ownership interest in the entity, an evaluation of control and whether a VIE exists are all considered in our consolidation assessment. Investments in real estate entities which we have the ability to exercise significant influence, but do not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, our share of the earnings or losses of these entities is included in consolidated net income (loss).

Variable Interest Entities (VIEs)

Variable Interest Entities (VIEs) – We determine whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. The determination of whether an entity in which we hold a direct or indirect variable interest is a VIE is based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, and then a quantitative analysis, if necessary.

We analyze any investments in VIEs to determine if we are the primary beneficiary. In evaluating whether we are the primary beneficiary, we evaluate our direct and indirect economic interests in the entity. Determining which reporting entity, if any, is the primary beneficiary of a VIE is primarily a qualitative approach focused on identifying which reporting entity has both (1) the power to direct the activities of a VIE that most significantly impact such entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgment.

We consider a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct financing, leasing, construction and other operating decisions and activities. In addition, we consider the rights of other investors to participate in those decisions, to replace the manager and to sell or liquidate the entity. We determine whether we are the primary beneficiary of a VIE at the time we become involved with a variable interest entity and reconsider that conclusion upon a reconsideration event. As of March 31, 2021, we had one unconsolidated entity that was considered a VIE for which we are not the primary beneficiary. Our maximum exposure to losses associated with this VIE is limited to our net investment, which was approximately $25.9 million as of March 31, 2021.

Real Estate Assets

Real Estate Assets – Real estate assets are reported at cost. All capital improvements for the income-producing properties that extend their useful lives are capitalized to individual property improvements and depreciated over their estimated useful lives. Depreciation for real estate assets is generally provided on a straight-line basis over 40 years from the date the property was placed in service. Property improvements are depreciated on a straight-line basis over the life of the respective improvement ranging from 20 to 40 years from the date the components were placed in service. Leasehold improvements are depreciated over the lesser of 20 years or through the end of the respective life of the lease. Repairs and maintenance costs are expensed as incurred. For the three months ended March 31, 2021, depreciation expense related to real estate assets and non-real estate assets was $42.7 million and $2.9 million, respectively, for a total of $45.6 million. For the three months ended March 31, 2020, depreciation expense related to real estate assets and non-real estate assets was $32.3 million and $3.4 million, respectively, for a total of $35.7 million. We capitalize certain real estate development costs, including internal costs incurred in connection with development. The capitalization of costs during the construction period (including interest and related loan fees, property taxes and other direct and indirect project costs) begins when development efforts commence and ends when the asset is ready for its intended use. The capitalization of internal costs increases construction in progress recognized during development of the related property and the cost of the real estate asset when placed into service and such costs are depreciated over its estimated useful life. Capitalization of such costs, excluding interest, aggregated to $5.5 million and $4.5 million for the three months ended March 31, 2021 and 2020, respectively. Interest is capitalized during the period of development by applying our weighted average effective borrowing rate to the actual development and other capitalized costs paid during the construction period. Interest is capitalized until the property is ready for its intended use. Interest costs capitalized totaled $7.0 million and $8.1 million for the three months ended March 31, 2021 and 2020, respectively.

Acquisitions and Sales

Acquisitions and Sales – Acquisitions of real estate and other entities are either accounted for as asset acquisitions or business combinations depending on facts and circumstances.

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

Impairment of Long-Lived Assets, Intangible Assets and Goodwill -

Impairment of Long-Lived Assets, Intangible Assets and Goodwill – We review our long-lived assets, intangible assets and equity method investments for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset group. If the net carrying value of the asset group exceeds the value of the undiscounted cash flows, the fair value of the asset group is assessed and may be considered impaired. An impairment loss is recognized based on the excess of the carrying amount of the impaired asset over its fair value. No impairment losses were recorded for the three months ended March 31, 2021 and March 31, 2020.

The fair value of goodwill is the consideration transferred in a business combination which is not allocable to identifiable intangible and tangible assets. Goodwill is subject to at least an annual assessment for impairment. In connection with the goodwill impairment evaluation that we performed as of October 1, 2020, we determined qualitatively that it is not more likely than not that the fair value of our one reporting unit was less than the carrying amount, thus we did not perform a quantitative analysis. As we continue to operate and assess our goodwill at the consolidated level for our single reporting unit and our market capitalization significantly exceeds our net asset value, further analysis was not deemed necessary as of March 31, 2021.

Cash and Cash Equivalents

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

Revenue Recognition

Revenue Recognition – We derive our revenues from leases with customers for data center space which include lease components and nonlease revenue components, such as power, tenant recoveries, and managed services. We have elected the available practical expedient under ASC Topic 842, Leases, to combine our nonlease revenue components that have the same pattern of transfer as the related operating lease component into a single combined lease component. The single combined component is accounted for under ASC Topic 842 if the lease component is the predominant component and is accounted for under ASC Topic 606 if the nonlease components are the predominant components. In our contracts, the single combined component is accounted for under ASC Topic 842 as the lease component is the predominant component.

A description of each of our disaggregated revenue streams is as follows:

Rental Revenue

Our leases with customers are classified as operating leases and rental revenue is recognized on a straight-line basis over the customer lease term. Occasionally, customer leases include options to extend or terminate the lease agreements. We do not include any of these extension or termination options in a customer’s lease term for lease classification purposes or recognizing rental revenue unless it is reasonably certain the customer will exercise these extension or termination options.

Rental revenue also includes revenue from power delivery on fixed power arrangements, whereby customers are billed and pay a fixed monthly fee per committed available amount of connected power. These fixed power arrangements require us to provide a series of distinct services and to stand ready to deliver the power over the contracted term which is co-terminus with the lease. Customer fixed power arrangements have the same pattern of transfer over the lease term as the lease component and are therefore combined with the lease component to form a single lease component that is recognized over the term of the lease on a straight-line basis.

In addition, rental revenue includes straight-line rent. Straight-line rent represents the difference in rents recognized during the period versus amounts contractually due pursuant to the underlying leases and is recorded as deferred rent receivable/payable in the consolidated balance sheets. For lease agreements that provide for scheduled rent increases, rental income is recognized on a straight-line basis over the non-cancellable term of the leases, which commences when control of the space has been provided to the customer. The amount of the straight-line rent receivable on the balance sheet included in rents and other receivables, net was $71.0 million and $63.6 million as of March 31, 2021 and December 31, 2020, respectively.

Rental revenue also includes amortization of set-up fees which are amortized over the term of the respective lease as discussed below in the "Deferred Income" section.

Variable Lease Revenue from Recoveries

Certain customer leases contain provisions under which customers reimburse us for power and cooling-related charges as well as a portion of the property’s real estate taxes, insurance and other operating expenses. Recoveries of power and cooling-related expenses relate specifically to our variable power arrangements, whereby customers pay variable monthly fees for the specific amount of power utilized at the current utility rates. Our performance obligation is to stand ready to deliver power over the life of the customer contract up to a contracted power capacity. Customers have the flexibility to increase or decrease the amount of power consumed, and therefore sub-metered power revenue is constrained at contract inception. The reimbursements are included in revenue as recoveries from customers and are recognized each month as the uncertainty related to the consideration is resolved (i.e. we provide power to our customers) and customers utilize the power. Reimbursement of real estate taxes, insurance, common area maintenance, or other operating expenses are accounted for as variable payments under lease guidance pursuant to the practical expedient and are recognized as revenue in the period that the expenses are recognized. Variable lease revenue from recoveries discussed above, including power, common area maintenance or other operating costs, have the same pattern of transfer over the lease term as the lease component and are therefore combined with the lease component to form a single lease component. Variable lease revenue from recoveries is included within the “rental” line item on the statements of operations.

Other Revenue

Other revenue primarily consists of revenue from our managed service offerings, as well as revenue earned from partner channel, management and development fees. We, through our taxable REIT subsidiaries (“TRS”), may provide use of our managed services to our customers on an individual or combined basis. In our managed services offering, the TRS’s performance obligation is to provide services (e.g. cloud hosting, data backup, data storage or data center personnel labor hours) to facilitate a fully integrated information technology (“IT”) outsourcing environment over a contracted term. Although underlying services may vary, over the contracted term monthly service offerings are substantially the same and we account for the services as a series of distinct services in accordance with ASC Topic 606. Service fee revenue is recognized as the revenue is earned, which generally coincides with the services being provided. As we have the right to consideration from customers in an amount that corresponds directly with the value to the customer of the TRS’s performance of providing continuous services, we recognize monthly revenue for the amount invoiced.

With respect to the transaction price allocated to remaining performance obligations within our managed service contracts, we have elected to use the optional exemption provided by ASC Topic 606 whereby we are not required to estimate the total transaction price allocated to remaining performance obligations as we apply the “right-to-invoice” practical expedient. As described above, the nature of our performance obligation in these contracts is to provide monthly services that are substantially the same and accounted for as a series of distinct services. These contracts generally have a remaining term ranging from month-to-month to three years.

Management fees and other revenues are generally received from our unconsolidated entity properties as well as third parties. Management fee revenue is earned based on a contractual percentage of unconsolidated entity property revenue. Development fee revenue is earned on a contractual percentage of hard costs to develop a property. We recognize revenue for these services provided when earned based on the performance criteria in ASC Topic 606, with such revenue recorded in “Other” revenue on the consolidated statements of operations.

Leases as Lessee – We determine if an arrangement is a lease at inception. If the contract is considered a lease, we evaluate leased property to determine whether the lease should be classified as a finance or operating lease in accordance with U.S. GAAP. We periodically enter into finance leases for certain data center facilities, equipment, and fiber optic transmission cabling. Finance lease assets are included within the “Buildings, improvements and equipment” line item of the consolidated balance sheets and finance lease liabilities are included within “Finance leases” line item of the consolidated balance sheets. In addition, we lease certain real estate (primarily land or real estate space) under operating lease agreements with such assets included within the “Operating lease right of use assets, net” line item of the consolidated balance sheets and the associated lease liabilities included within the “Operating lease liabilities” line item on the consolidated balance sheets.

Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases as lessee typically do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We assess multiple variables when determining the incremental borrowing rate, such as lease term, payment terms, collateral, economic conditions, and creditworthiness. ROU assets also include any lease payments made and exclude lease incentives. Many of our lease agreements include options to extend the lease, which we do not include in our expected lease terms unless they are reasonably certain to be exercised. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term.

Allowance for Uncollectible Accounts Receivable

Allowance for Uncollectible Accounts Receivable – We record a provision for uncollectible accounts if a receivable balance relating to lease components from an individual contract is considered by management not to be probable of collection, and this provision is recorded as a reduction to leasing revenues. We also record a general provision of estimated uncollectible tenant receivables based on general probability of collection in accordance with ASC 450-20 Loss Contingencies. This provision is recorded as bad debt expense and recorded within the “Property Operating Costs” line item of the consolidated statements of operations. The aggregate allowance for doubtful accounts on the consolidated balance sheets was $5.3 million and $5.4 million as of March 31, 2021 and December 31, 2020, respectively.

Deferred Income

Deferred Income – Deferred income generally results from non-refundable charges paid by the customer at lease inception to prepare their space for occupancy. We record this initial payment, commonly referred to as set-up fees, as a deferred income liability which amortizes into rental revenue over the term of the related lease on a straight-line basis. Deferred income was $93.5 million and $85.4 million as of March 31, 2021 and December 31, 2020, respectively. Additionally, $6.4 million and $3.9 million of deferred income was amortized into revenue for the three months ended March 31, 2021 and 2020, respectively.

Equity-based Compensation

Equity-based Compensation – Equity-based compensation costs are measured based upon their estimated fair value on the date of grant or modification and amortized ratably over their respective service periods. We have elected to account for forfeitures as they occur. Equity-based compensation expense was $6.9 million and $4.9 million for the three months ended March 31, 2021 and 2020, respectively.

Segment Information

Segment Information – We manage our business as one operating segment and thus one reportable segment consisting of a portfolio of investments in multiple data centers.

Customer Concentrations

Customer Concentrations – During the three months ended March 31, 2021, one of our customers exceeded 10% of total revenues, representing approximately 11% of total revenues for the three months ended March 31, 2021.

As of March 31, 2021, three of our customers exceeded 5% of trade accounts receivable (which excludes straight-line rent receivables). In aggregate, these three customers accounted for approximately 53% of trade accounts receivable. One of these customers individually exceeded 10% of total trade accounts receivable representing 40% of total trade accounts receivable.

Income Taxes

Income Taxes – We provide for income taxes during interim periods based on the estimated effective tax rate for the year and any discrete adjustments. The effective tax rate is subject to change in the future due to various factors such as the operating performance of the taxable REIT subsidiaries, tax law changes, and future business acquisitions or divestitures. The taxable subsidiaries’ effective tax rates were (7.8)% and 13.0% for the three months ended March 31, 2021 and 2020, respectively.

Fair Value Measurements

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

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

As of March 31, 2021, we valued our derivative instruments primarily utilizing Level 2 inputs. See Note 14 – ‘Fair Value of Financial Instruments’ for additional details.

New Accounting Pronouncements

New Accounting Pronouncements

In January 2020, the FASB issued ASU 2020-1, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815, which clarifies the interaction between the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815. ASU 2020-1 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. We adopted this ASU effective January 1, 2021, and the provisions of the standard did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-4 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-4 is optional and may be elected over time as reference rate reform activities occur. The standard is effective for all entities as of March 12, 2020 through December 31, 2022. An entity can elect to apply the amendments as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to that date that the financial statements are available to be issued. In January 2021, the FASB issued ASU 2021-1 Reference Rate Reform (Topic 848): Scope, which updated the standard to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Beginning in the first quarter of 2020, we have applied the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance but we do not expect the provisions of the standard will have a material impact on our consolidated financial statements.

We determined all other recently issued accounting pronouncements will not have a material impact on our consolidated financial statements or do not materially apply to our operations.

XML

Real Estate Assets and Construction in Progress (Tables)

3 Months Ended

Mar. 31, 2021

Real Estate [Abstract]

Summary of Cost of Owned and Leased Properties by the Company

The following is a summary of our cost of owned or leased properties as of March 31, 2021 and December 31, 2020 (in thousands):

As of March 31, 2021 (unaudited):

Property Location	Land		Buildings, Improvements and Equipment		Construction in Progress		Total Cost
Ashburn, Virginia Campus (1)	$	16,476	$	391,247	$	219,065	$	626,788
Atlanta, Georgia Campus (2)	55,158		771,045		183,319		1,009,522
Chicago, Illinois	9,400		251,676		131,322		392,398
Dulles, Virginia	3,154		55,580		4,220		62,954
Eemshaven, Netherlands	5,153		20,991		47,859		74,003
Fort Worth, Texas	9,079		124,481		3,350		136,910
Groningen, Netherlands	1,821		11,324		3,249		16,394
Hillsboro, Oregon	18,414		47,364		72,033		137,811
Irving, Texas	8,606		409,565		89,516		507,687
Leased Facilities (3)	—		83,180		60		83,240
Manassas, Virginia Campus (4)	—		37		90,947		90,984
Phoenix, Arizona (5)	—		—		38,063		38,063
Piscataway, New Jersey	7,466		122,599		39,951		170,016
Princeton, New Jersey	20,700		35,267		9		55,976
Richmond, Virginia	2,180		235,381		128,911		366,472
Sacramento, California	1,481		66,304		125		67,910
Santa Clara, California (6)	—		117,522		16,871		134,393
Suwanee, Georgia (Atlanta-Suwanee)	3,521		184,975		7,607		196,103
Other (7)	2,213		36,950		43,272		82,435
	$	164,822	$	2,965,488	$	1,119,749	$	4,250,059

_______________________________

(1)The “Ashburn, Virginia Campus” includes both the existing data center Ashburn, VA (DC - 1) as well as new property development associated with the construction of a second data center Ashburn, VA (DC - 2).

(2)The “Atlanta, Georgia Campus” includes both the existing data center Atlanta (DC - 1) as well as the recently developed data center Atlanta, GA (DC - 2).

(3)Includes 7 facilities. All facilities are leased, including one subject to a finance lease.

(4)The “Manassas, Virginia Campus” includes new property development associated with the construction of a wholly owned data center in Manassas, Virginia as well as separate land purchases in Manassas, Virginia.

(5)Represents land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use.

(6)Owned facility subject to long-term ground sublease.

(7)Consists of Miami, FL; Lenexa, KS; Overland Park, KS and additional land.

As of December 31, 2020:

Property Location	Land		Buildings, Improvements and Equipment		Construction in Progress		Total Cost
Ashburn, Virginia Campus (1)	$	16,476	$	371,725	$	185,903	$	574,104
Atlanta, Georgia Campus (2)	55,157		700,142		191,072		946,371
Chicago, Illinois	9,400		250,336		104,117		363,853
Dulles, Virginia	3,154		54,323		4,148		61,625
Eemshaven, Netherlands	5,366		21,712		47,531		74,609
Fort Worth, Texas	9,079		124,054		1,064		134,197
Groningen, Netherlands	1,896		11,206		3,730		16,832
Hillsboro, Oregon	18,414		34,594		78,390		131,398
Irving, Texas	8,606		392,275		99,591		500,472
Leased Facilities (3)	—		82,759		225		82,984
Manassas, Virginia Campus (4)	—		25		67,073		67,098
Phoenix, Arizona (5)	—		—		37,729		37,729
Piscataway, New Jersey	7,466		122,176		30,401		160,043
Princeton, New Jersey	20,700		35,261		5		55,966
Richmond, Virginia	2,180		233,927		120,577		356,684
Sacramento, California	1,481		66,300		12		67,793
Santa Clara, California (6)	—		117,343		9,385		126,728
Suwanee, Georgia (Atlanta-Suwanee)	3,521		184,467		6,718		194,706
Other (7)	2,213		36,636		41,094		79,943
	$	165,109	$	2,839,261	$	1,028,765	$	4,033,135

_______________________________

(1)The “Ashburn, Virginia Campus” includes both the existing data center Ashburn, VA (DC - 1) as well as new property development associated with the construction of a second data center Ashburn, VA (DC - 2).

(2)The “Atlanta, Georgia Campus” includes both the existing data center Atlanta (DC - 1) as well as the recently developed data center Atlanta, GA (DC - 2).

(3)Includes 7 facilities. All facilities are leased, including one subject to a finance lease.

(4)The “Manassas, Virginia Campus” includes new property development associated with the construction of a wholly owned data center in Manassas, Virginia as well as separate land purchases in Manassas, Virginia.

(5)Represents land purchases. Land acquisition costs, as well as subsequent development costs, are included within construction in progress until development on the land has ended and the asset is ready for its intended use.

(6)Owned facility subject to long-term ground sublease.

(7)Consists of Miami, FL; Lenexa, KS; Overland Park, KS and additional land.

XML

Leases (Tables)

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Schedule of components of lease expenses

Components of lease expense were as follows (unaudited and in thousands):

	Three months ended March 31,
	2021		2020
Finance lease cost:
Amortization of assets	$	1,013	$	1,038
Interest on lease liabilities	469		489
Operating lease expense:
Operating lease cost	2,232		2,263
Variable lease cost	270		264
Sublease income	(49)		(48)
Total lease costs	$	3,935	$	4,006

Schedule of components of lease revenue

The components of our lease revenue were as follows (unaudited and in thousands):

	Three months ended March 31,
	2021		2020
Lease revenue:
Minimum lease revenue	$	127,706	$	107,485
Variable lease revenue (primarily recoveries from customers)	16,602		12,596
Total lease revenue	$	144,308	$	120,081

XML

Debt (Tables)

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Outstanding Debt Including Capital Leases and Lease Financing Obligations

Below is a listing of our outstanding debt, including finance leases, as of March 31, 2021 and December 31, 2020 (in thousands):

	Weighted Average Effective Interest Rate at March 31, 2021 (1)	Maturity Date	March 31, 2021		December 31, 2020
	(unaudited)		(unaudited)
Unsecured Credit Facility
Revolving Credit Facility	1.36%	December 17, 2023	$	361,877	$	392,337
Term Loan A	3.26%	December 17, 2024	225,000		225,000
Term Loan B	3.30%	April 27, 2025	225,000		225,000
Term Loan C	3.46%	October 18, 2026	250,000		250,000
Term Loan D	1.45%	January 15, 2026	250,000		250,000
3.875% Senior Notes	3.88%	October 1, 2028	500,000		500,000
Finance Leases	4.35%	2031 - 2040	42,525		41,718
	2.87%		1,854,402		1,884,055
Less net debt issuance costs			(13,935)		(14,562)
Total outstanding debt, net			$	1,840,467	$	1,869,493

_________________________

(1)The coupon interest rates associated with Term Loan A, Term Loan B, and Term Loan C incorporate the effects of our interest rate swaps in effect as of March 31, 2021.

Annual Remaining Principal Payment

The annual remaining principal payment requirements of our debt securities as of March 31, 2021 per the contractual maturities, excluding extension options and excluding operating and finance leases, are as follows (unaudited and in thousands):

2021 (April - December)	$	—
2022	—
2023	361,877
2024	225,000
2025	225,000
Thereafter	1,000,000
Total	$	1,811,877

XML

Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of interest rate derivatives and their fair values

Interest rate derivatives and their fair values as of March 31, 2021 and December 31, 2020 were as follows (unaudited and in thousands):

Notional Amount				Fixed One Month LIBOR rate per annum				Fair Value
March 31, 2021		December 31, 2020				Effective Date	Expiration Date	March 31, 2021		December 31, 2020
$	25,000	$	25,000	1.989	%	January 2, 2018	December 17, 2021	$	(334)	$	(447)
100,000		100,000		1.989	%	January 2, 2018	December 17, 2021	(1,333)		(1,788)
75,000		75,000		1.989	%	January 2, 2018	December 17, 2021	(1,001)		(1,342)
50,000		50,000		2.033	%	January 2, 2018	April 27, 2022	(1,017)		(1,248)
100,000		100,000		2.029	%	January 2, 2018	April 27, 2022	(2,027)		(2,490)
50,000		50,000		2.033	%	January 2, 2018	April 27, 2022	(1,016)		(1,248)
100,000		100,000		2.617	%	January 2, 2020	December 17, 2023	(6,144)		(7,191)
100,000		100,000		2.621	%	January 2, 2020	April 27, 2024	(6,722)		(8,000)
70,000		70,000		0.968	%	March 2, 2020	October 18, 2026	232		(2,174)
30,000		30,000		0.973	%	March 2, 2020	October 18, 2026	100		(938)
200,000		200,000		2.636	%	December 17, 2021	December 17, 2023	(8,781)		(9,648)
200,000		200,000		2.642	%	April 27, 2022	April 27, 2024	(8,162)		(9,500)
125,000		125,000		1.014	%	December 17, 2023	December 17, 2024	336		(704)
100,000		100,000		1.035	%	December 17, 2023	December 17, 2024	244		(584)
75,000		75,000		1.110	%	December 17, 2023	October 18, 2026	1,230		(866)
100,000		100,000		1.088	%	April 27, 2024	April 27, 2025	399		(540)
125,000		125,000		1.082	%	April 27, 2024	April 27, 2025	513		(666)
75,000		75,000		0.977	%	April 27, 2024	October 18, 2026	1,503		(422)
								$	(31,980)	$	(49,796)

Schedule of power purchase agreement derivatives

Power purchase agreement derivatives and their fair values as of March 31, 2021 and December 31, 2020 were as follows (unaudited and in thousands):

				Fair Value
Counterparty	Facility	Effective Date	Expiration Date	March 31, 2021		December 31, 2020
Calpine Energy Solutions, LLC	Piscataway	March 8, 2019	February 28, 2029	$	(2,534)	$	(2,162)
Calpine Energy Solutions, LLC	Chicago	March 8, 2019	February 28, 2029	(2,237)		(1,764)
				$	(4,771)	$	(3,926)

XML

Partners' Capital, Equity and Incentive Compensation Plans (Tables)

3 Months Ended

Mar. 31, 2021

Equity [Abstract]

Summary of Award Activity Under 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and Related Information

The following is a summary of award activity under the 2010 Equity Incentive Plan and 2013 Equity Incentive Plan and related information for the three months ended March 31, 2021 (unaudited):

	2010 Equity Incentive Plan					2013 Equity Incentive Plan
	Numbers of Class O units	Weighted average exercise price		Weighted average fair value		Options	Weighted average exercise price		Weighted average fair value		Restricted Stock / Deferred Stock	Weighted average fair value at grant date		TSR Units	Weighted average fair value at grant date		FFO Units	Weighted average fair value at grant date
Outstanding at December 31, 2020	75,435	$	25.00	$	6.11	1,936,407	$	38.55	$	7.26	416,496	$	52.20	168,552	$	66.90	132,267	$	51.45
Granted	—	—		—		96,366	59.06		10.53		270,464	59.07		105,402	64.72		105,402	59.06
Exercised/Vested (1)	—	—		—		(51,220)	38.63		7.91		(123,438)	54.57		—	—		—	—
Cancelled/Expired	—	—		—		—	—		—		(3,716)	57.24		—	—		—	—
Outstanding at March 31, 2021	75,435	$	25.00	$	6.11	1,981,553	$	39.55	$	7.40	559,806	$	54.96	273,954	$	66.06	237,669	$	54.82

____________________

(1)Represents (i) Class O units which were converted to Class A units, (ii) options to purchase Class A common stock which were exercised, and (iii) the Class A common stock that has been released from restriction and which was not surrendered by the holder to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common stock, with respect to the applicable column.

Summary of Assumptions and Fair Values for Restricted Stock and Options to Purchase Shares of Class A Common Stock Granted

The assumptions and fair values for restricted stock and options to purchase shares of Class A common stock granted for the three months ended March 31, 2021 are included in the following table on a per unit basis (unaudited). Options to purchase shares of Class A common stock were valued using the Black-Scholes model and TSR Units were valued using a Monte-Carlo simulation that leveraged similar assumptions to those used to value the Class A common stock and FFO Units.

	Three Months Ended March 31, 2021
Fair value of FFO units and restricted stock granted	$	59.06		-	$	61.17
Fair value of TSR units granted					$	64.72
Fair value of options granted	$	3.79		-	$	11.36
Expected term (years)	0.4			-	5.5
Expected volatility	28		%	-	31		%
Expected dividend yield	3.39						%
Expected risk-free interest rates	0.06		%	-	0.90		%

Summary of Information About Awards Outstanding

The following tables summarize information about awards outstanding as of March 31, 2021 (unaudited).

	Operating Partnership Awards Outstanding
	Exercise prices		Awards outstanding	Weight average remaining vesting period  (years)
Class O Units	$	25.00	75,435	—
Total Operating Partnership awards outstanding			75,435

	QTS Realty Trust, Inc. Awards Outstanding
	Exercise prices					Awards outstanding	Weight average remaining vesting period  (years)
Restricted stock	$	—				559,806	1.1
TSR units	—					273,954	1.1
FFO units	—					237,669	0.8
Options to purchase Class A common stock	$	21.00	-	$	59.06	1,981,553	0.9
Total QTS Realty Trust, Inc. awards outstanding						3,052,982

Schedule of Quarterly Cash Dividends

The following tables present quarterly cash dividends and distributions paid to our common and preferred stockholders for the three months ended March 31, 2021 and 2020 (unaudited):

Three Months Ended March 31, 2021
Record Date	Payment Date	Per Share Rate		Aggregate Dividend/Distribution Amount (in millions)
Common Stock
December 22, 2020	January 7, 2021	$	0.47	$	33.4
				$	33.4
Series A Preferred Stock
December 31, 2020	January 15, 2021	$	0.45	$	1.9
				$	1.9
Series B Preferred Stock
December 31, 2020	January 15, 2021	$	1.63	$	5.1
				$	5.1

Three Months Ended March 31, 2020
Record Date	Payment Date	Per Share Rate		Aggregate Dividend/Distribution Amount (in millions)
Common Stock
December 20, 2019	January 7, 2020	$	0.44	$	28.6
				$	28.6
Series A Preferred Stock
December 31, 2019	January 15, 2020	$	0.45	$	1.9
				$	1.9
Series B Preferred Stock
December 31, 2019	January 15, 2020	$	1.63	$	5.1
				$	5.1

Summary of Equity Issued

The following table represents a summary of our aggregate forward equity activity under the Prior ATM Program, Current ATM Program and our underwritten offerings from December 31, 2020 through March 31, 2021:

Offering Program	Forward Shares Sold/(Settled)		Net Proceeds Available/(Received) (1)
Shares and net proceeds available as of December 31, 2020	9,961		$	581,598	(2)
Forward Equity - Sales	1,504		91,620
Forward Equity - Settlements	(3,865)	(3)	(215,964)
Shares and net proceeds available as of March 31, 2021	7,600		$	457,254

____________________

(1)Net Proceeds Available remain subject to certain adjustments until settled.

(2)Proceeds available reported in the Form 10-K for the period ended December 31, 2020 were $587.6 million. The $6 million decrease is primarily due to QTS’ declared dividends, which reduces cash expected to be received upon full physical settlement of the forward shares.

(3)Represents the number of forward shares we elected to physically settle during the period.

XML

Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2021

Related Party Transactions [Abstract]

Summary of Related Party Transactions

The transactions which occurred during the three months ended March 31, 2021 and 2020 are outlined below (unaudited and in thousands):

	Three Months Ended March 31,
	2021		2020
Tax, utility, insurance and other reimbursement	$	169	$	176
Rent expense	260		257
Total	$	429	$	433

XML

Earnings per share (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Summary of Basic and Diluted Earnings Per Share

The computation of basic and diluted net income (loss) per share is as follows (in thousands, except per share data, and unaudited):

	Three Months Ended March 31,
	2021		2020
Numerator:
Net income	$	7,918	$	8,120
Income attributable to noncontrolling interests	(79)		(110)
Preferred stock dividends	(7,045)		(7,045)
Earnings attributable to participating securities	(5,285)		(1,596)
Net loss available to common stockholders after allocation to participating securities	$	(4,491)	$	(631)
Denominator:
Weighted average shares outstanding - basic	64,442		58,038
Effect of Class O units, TSR units, FFO units and options to purchase Class A common stock on an "as if" converted basis	—		—
Weighted average shares outstanding - diluted	64,442		58,038
Basic net loss per share *	$	(0.07)	$	(0.01)
Diluted net loss per share *	$	(0.07)	$	(0.01)

______________________________

*Note: The calculations of basic and diluted net income (loss) per share above do not include the following number of Class A partnership units, Class O units, TSR units, FFO units and options to purchase common stock on an “as if” converted basis, and the effects of Series B Convertible preferred stock on an “as if” converted basis, as their respective inclusions would have been antidilutive:

	Three Months Ended March 31,
	2021	2020
Class A Partnership units	6,466	6,671
Class O units, TSR units, FFO units and options to purchase common stock on an "as if" converted basis	1,212	655
Series B Convertible preferred stock on an "as if" converted basis	6,779	6,749

XML

Contracts with Customers (Table)

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Schedule of Future minimum payments to be received under non-cancelable customer contracts

Future minimum payments to be received under non-cancelable customer contracts including both lease rental revenue components and non-lease revenue components that are accounted for as a combined lease component in accordance with the practical expedient provided by ASC Topic 842 which is discussed in Note 2 above (inclusive of payments for contracts which have not yet commenced, and exclusive of variable lease revenue such as recoveries of operating costs from customers) are as follows for the years ending December 31 (unaudited and in thousands):

2021 (April - December)	$	349,511
2022	394,619
2023	296,826
2024	240,951
2025	186,194
Thereafter	554,414
Total	$	2,022,515

XML

Description of Business (Details)	3 Months Ended
	Mar. 31, 2021 property
Organization And Description Of Business [Line Items]
Number of properties	28
QualityTech LP
Organization And Description Of Business [Line Items]
Ownership interest	91.40%

XML

Summary of Significant Accounting Policies - Basis of Presentation to Real Estate Assets (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Summary Of Significant Accounting Policies [Line Items]
Maximum exposure to losses	$ 25.9
Depreciation expense from operation	45.6	$ 35.7
Real estate cost capitalized excluding interest cost	5.5	4.5
Real estate interest cost capitalized incurred	$ (7.0)	(8.1)
Real Property
Summary Of Significant Accounting Policies [Line Items]
Useful life of property	40 years
Real Property | Minimum
Summary Of Significant Accounting Policies [Line Items]
Useful life of property	20 years
Real Property | Maximum
Summary Of Significant Accounting Policies [Line Items]
Useful life of property	40 years
Leasehold Improvements | Maximum
Summary Of Significant Accounting Policies [Line Items]
Useful life of property	20 years
Real Estate Assets
Summary Of Significant Accounting Policies [Line Items]
Depreciation expense from operation	$ 42.7	32.3
Non-Real Estate Assets
Summary Of Significant Accounting Policies [Line Items]
Depreciation expense from operation	$ 2.9	$ 3.4

XML

Summary of Significant Accounting Policies - Impairment to Equity-based Compensation (Details)	3 Months Ended
	Mar. 31, 2021 USD ($) item	Mar. 31, 2020 USD ($)
Accounting Policies [Abstract]
Impairment losses | $	$ 0	$ 0
Number of reporting units | item	1

XML

Summary of Significant Accounting Policies - Revenue and Deferred Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Accounting Policies [Abstract]
Deferred rent receivables	$ 71,000		$ 63,600
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Aggregate allowance for doubtful accounts	5,300	$ 5,400
Deferred income	93,495	85,400	$ 85,351
Amortization of deferred revenue	6,400	3,900
Company recorded equity-based compensation expense net of repurchased awards and forfeits	$ 6,900	$ 4,900
Cloud and managed services | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining term	3 years

XML

Summary of Significant Accounting Policies - Segment Information to Taxes and Accounting Pronouncements (Details)	3 Months Ended
	Mar. 31, 2021 segment customer	Mar. 31, 2020
Summary Of Significant Accounting Policies [Line Items]
Number of operating segments | segment	1
Number of reportable segments | segment	1
Taxable REIT Subsidiaries
Summary Of Significant Accounting Policies [Line Items]
Effective tax rate	(7.80%)	13.00%
Customer One | Rental Revenue
Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage	11.00%
Number of customers | customer	1
Customer One | Accounts Receivable
Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage	40.00%
Number of customers | customer	1
Three Customers | Accounts Receivable | Trade Accounts Receivable
Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage	53.00%
Three Customers | Accounts Receivable | Minimum | Trade Accounts Receivable
Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage	5.00%

XML

Real Estate Assets and Construction in Progress (Details) $ in Thousands	Mar. 31, 2021 USD ($) facility	Dec. 31, 2020 USD ($) facility
Real Estate Properties [Line Items]
Land	$ 164,822	$ 165,109
Buildings, Improvements and Equipment	2,965,488	2,839,261
Construction in progress	1,119,749	1,028,765
Owned Properties
Real Estate Properties [Line Items]
Land	164,822	165,109
Buildings, Improvements and Equipment	2,965,488	2,839,261
Construction in progress	1,119,749	1,028,765
Total cost	4,250,059	4,033,135
Owned Properties | Ashburn, Virginia Campus
Real Estate Properties [Line Items]
Land	16,476	16,476
Buildings, Improvements and Equipment	391,247	371,725
Construction in progress	219,065	185,903
Total cost	626,788	574,104
Owned Properties | Atlanta, Georgia Campus
Real Estate Properties [Line Items]
Land	55,158	55,157
Buildings, Improvements and Equipment	771,045	700,142
Construction in progress	183,319	191,072
Total cost	1,009,522	946,371
Owned Properties | Chicago, Illinois
Real Estate Properties [Line Items]
Land	9,400	9,400
Buildings, Improvements and Equipment	251,676	250,336
Construction in progress	131,322	104,117
Total cost	392,398	363,853
Owned Properties | Dulles, Virginia
Real Estate Properties [Line Items]
Land	3,154	3,154
Buildings, Improvements and Equipment	55,580	54,323
Construction in progress	4,220	4,148
Total cost	62,954	61,625
Owned Properties | Eemshaven, Netherlands
Real Estate Properties [Line Items]
Land	5,153	5,366
Buildings, Improvements and Equipment	20,991	21,712
Construction in progress	47,859	47,531
Total cost	74,003	74,609
Owned Properties | Fort Worth, Texas
Real Estate Properties [Line Items]
Land	9,079	9,079
Buildings, Improvements and Equipment	124,481	124,054
Construction in progress	3,350	1,064
Total cost	136,910	134,197
Owned Properties | Groningen, Netherlands
Real Estate Properties [Line Items]
Land	1,821	1,896
Buildings, Improvements and Equipment	11,324	11,206
Construction in progress	3,249	3,730
Total cost	16,394	16,832
Owned Properties | Hillsboro, Oregon
Real Estate Properties [Line Items]
Land	18,414	18,414
Buildings, Improvements and Equipment	47,364	34,594
Construction in progress	72,033	78,390
Total cost	137,811	131,398
Owned Properties | Irving, Texas
Real Estate Properties [Line Items]
Land	8,606	8,606
Buildings, Improvements and Equipment	409,565	392,275
Construction in progress	89,516	99,591
Total cost	507,687	500,472
Owned Properties | Manassas, Virginia
Real Estate Properties [Line Items]
Land	0	0
Buildings, Improvements and Equipment	37	25
Construction in progress	90,947	67,073
Total cost	90,984	67,098
Owned Properties | Phoenix, Arizona
Real Estate Properties [Line Items]
Land	0	0
Buildings, Improvements and Equipment	0	0
Construction in progress	38,063	37,729
Total cost	38,063	37,729
Owned Properties | Piscataway, New Jersey
Real Estate Properties [Line Items]
Land	7,466	7,466
Buildings, Improvements and Equipment	122,599	122,176
Construction in progress	39,951	30,401
Total cost	170,016	160,043
Owned Properties | Princeton, New Jersey
Real Estate Properties [Line Items]
Land	20,700	20,700
Buildings, Improvements and Equipment	35,267	35,261
Construction in progress	9	5
Total cost	55,976	55,966
Owned Properties | Richmond, Virginia
Real Estate Properties [Line Items]
Land	2,180	2,180
Buildings, Improvements and Equipment	235,381	233,927
Construction in progress	128,911	120,577
Total cost	366,472	356,684
Owned Properties | Sacramento, California
Real Estate Properties [Line Items]
Land	1,481	1,481
Buildings, Improvements and Equipment	66,304	66,300
Construction in progress	125	12
Total cost	67,910	67,793
Owned Properties | Santa Clara, California
Real Estate Properties [Line Items]
Land	0	0
Buildings, Improvements and Equipment	117,522	117,343
Construction in progress	16,871	9,385
Total cost	134,393	126,728
Owned Properties | Suwanee, Georgia (Atlanta-Suwanee)
Real Estate Properties [Line Items]
Land	3,521	3,521
Buildings, Improvements and Equipment	184,975	184,467
Construction in progress	7,607	6,718
Total cost	196,103	194,706
Owned Properties | Other
Real Estate Properties [Line Items]
Land	2,213	2,213
Buildings, Improvements and Equipment	36,950	36,636
Construction in progress	43,272	41,094
Total cost	82,435	79,943
Leased Properties
Real Estate Properties [Line Items]
Land	0	0
Buildings, Improvements and Equipment	83,180	82,759
Construction in progress	60	225
Total cost	$ 83,240	$ 82,984
Number of facilities leased | facility	7	7
Leased Properties | Finance Leases
Real Estate Properties [Line Items]
Number of facilities leased | facility	1	1

XML

Leases - Finance leases (Details)	3 Months Ended
	Mar. 31, 2021 item
Lease as Lessee
Number of finance leases	1
Minimum
Lease as Lessee
Remaining lease term	10 years
Maximum
Lease as Lessee
Remaining lease term	20 years

XML

Leases - Operating leases (Details)	3 Months Ended
	Mar. 31, 2021 item
Lease as Lessee
Number of operating leases	6
Number of ground leases under operating leases	1
Minimum
Lease as Lessee
Remaining lease term	3 years
Maximum
Lease as Lessee
Remaining lease term	6 years

XML

Leases - Components of lease expenses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Finance lease cost:
Amortization of assets	$ 1,013	$ 1,038
Interest on lease liabilities	469	489
Operating lease expense:
Operating lease cost	2,232	2,263
Variable lease cost	270	264
Sublease income	(49)	(48)
Total lease costs	$ 3,935	$ 4,006

XML

Leases - Leases as lessor (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Lease revenue:
Minimum lease revenue	$ 127,706	$ 107,485
Variable lease revenue (primarily recoveries from customers)	16,602	12,596
Total lease revenue	$ 144,308	$ 120,081

XML

Investments in Unconsolidated Entity (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Sep. 30, 2019
Investments in Unconsolidated Joint Ventures
Assets	$ 4,085,290	$ 3,898,572
Liabilities	2,295,610	2,313,874
Joint venture with Alinda
Investments in Unconsolidated Joint Ventures
Equity method investments	$ 25,900	22,600
Ownership interest (as a percent)	50.00%
Joint venture with Alinda
Investments in Unconsolidated Joint Ventures
Lease term of facility with global cloud-based software company			10 years
Assets	$ 145,800	141,500
Liabilities	$ 92,200	$ 90,100

XML

Debt - Outstanding Debt Including Finance Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Weighted average effective interest rate (as a percent)	2.87%
Outstanding debt	$ 1,854,402	$ 1,884,055
Less net debt issuance costs	(13,935)	(14,562)
Total outstanding debt, net	$ 1,840,467	1,869,493
Unsecured Credit Facility, Revolving Credit Facility, Matures on December 17, 2023
Debt Instrument [Line Items]
Weighted average effective interest rate (as a percent)	1.36%
Outstanding debt	$ 361,877	392,337
Unsecured Credit Facility, Term Loan A, Matures on December 17, 2024
Debt Instrument [Line Items]
Weighted average effective interest rate (as a percent)	3.26%
Outstanding debt	$ 225,000	225,000
Unsecured Credit Facility, Term Loan B, Matures on April 27 2025
Debt Instrument [Line Items]
Weighted average effective interest rate (as a percent)	3.30%
Outstanding debt	$ 225,000	225,000
Unsecured Credit Facility, Term Loan C, Matures on October 18 2026
Debt Instrument [Line Items]
Weighted average effective interest rate (as a percent)	3.46%
Outstanding debt	$ 250,000	250,000
Term Loan D
Debt Instrument [Line Items]
Weighted average effective interest rate (as a percent)	1.45%
Outstanding debt	$ 250,000	250,000
3.875% Senior Notes
Debt Instrument [Line Items]
Weighted average effective interest rate (as a percent)	3.88%
Outstanding debt	$ 500,000	500,000
Finance Leases
Debt Instrument [Line Items]
Weighted average effective interest rate (as a percent)	4.35%
Total debt and lease obligations	$ 42,525	$ 41,718

XML

Debt - Annual Remaining Principal Payment (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Debt Disclosure [Abstract]
2021 (April - December)	$ 0
2022	0
2023	361,877
2024	225,000
2025	225,000
Thereafter	1,000,000
Total	$ 1,811,877

XML

Derivative Instruments - Interest rate swaps (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2022	Dec. 31, 2020
Derivative [Line Items]
Reclassification of other comprehensive income to interest expense	$ 3,400	$ 800
Forecast
Derivative [Line Items]
Reclassification of other comprehensive income to interest expense			$ 13,700
Interest Rate Swap
Derivative [Line Items]
Derivative instruments, notional amount	700,000
Interest Rate Swap | Cash flow hedging
Derivative [Line Items]
Fair value	(31,980)			$ (49,796)
Interest Rate Swap | Unsecured Credit Facility, Term Loan
Derivative [Line Items]
Aggregate principal amount	700,000
Interest Rate Swap | Unsecured Credit Facility, Term Loan A, Matures on December 17, 2024
Derivative [Line Items]
Aggregate principal amount	225,000
Interest Rate Swap | Unsecured Credit Facility, Term Loan B, Matures on April 27 2025
Derivative [Line Items]
Aggregate principal amount	225,000
Interest Rate Swap | Unsecured Credit Facility, Term Loan C, Matures on October 18 2026
Derivative [Line Items]
Aggregate principal amount	$ 250,000

XML

Derivative Instruments - Interest rate derivatives and their fair values (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Interest Rate Swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 700,000,000
Interest Rate Swap | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Fair value	(31,980,000)	$ (49,796,000)
Swap instrument one matures on December 17, 2021 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 25,000,000	25,000,000
Fixed rate per annum	1.989%
Fair value	$ (334,000)	(447,000)
Swap instrument two matures on December 17, 2021 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 100,000,000	100,000,000
Fixed rate per annum	1.989%
Fair value	$ (1,333,000)	(1,788,000)
Swap instrument three matures on December 17, 2021 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 75,000,000	75,000,000
Fixed rate per annum	1.989%
Fair value	$ (1,001,000)	(1,342,000)
Swap instrument one matures on April 27, 2022 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 50,000,000	50,000,000
Fixed rate per annum	2.033%
Fair value	$ (1,017,000)	(1,248,000)
Swap instrument two matures on April 27, 2022 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 100,000,000	100,000,000
Fixed rate per annum	2.029%
Fair value	$ (2,027,000)	(2,490,000)
Swap instrument three matures on April 27, 2022 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 50,000,000	50,000,000
Fixed rate per annum	2.033%
Fair value	$ (1,016,000)	(1,248,000)
Swap instrument one matures on December 17, 2023 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 100,000,000	100,000,000
Fixed rate per annum	2.617%
Fair value	$ (6,144,000)	(7,191,000)
Swap instrument one matures on April 27, 2024 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 100,000,000	100,000,000
Fixed rate per annum	2.621%
Fair value	$ (6,722,000)	(8,000,000)
Swap instrument one matures on October 18, 2026 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 70,000,000	70,000,000
Fixed rate per annum	0.968%
Fair value	$ 232,000	(2,174,000)
Swap instrument two matures on October 18, 2026 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 30,000,000	30,000,000
Fixed rate per annum	0.973%
Fair value	$ 100,000	(938,000)
Swap instrument two matures on December 17, 2023 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 200,000,000	200,000,000
Fixed rate per annum	2.636%
Fair value	$ (8,781,000)	(9,648,000)
Swap instrument two matures on April 27, 2024 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 200,000,000	200,000,000
Fixed rate per annum	2.642%
Fair value	$ (8,162,000)	(9,500,000)
Swap instrument one matures on December 17, 2024 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 125,000,000	125,000,000
Fixed rate per annum	1.014%
Fair value	$ 336,000	(704,000)
Swap instrument two matures on December 17, 2024 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 100,000,000	100,000,000
Fixed rate per annum	1.035%
Fair value	$ 244,000	(584,000)
Swap instrument three matures on October 18, 2026 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 75,000,000	75,000,000
Fixed rate per annum	1.11%
Fair value	$ 1,230,000	(866,000)
Swap instrument one matures on April 27, 2025 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 100,000,000	100,000,000
Fixed rate per annum	1.088%
Fair value	$ 399,000	(540,000)
Swap instrument two matures on April 27, 2025 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 125,000,000	125,000,000
Fixed rate per annum	1.082%
Fair value	$ 513,000	(666,000)
Swap instrument four matures on October 18, 2026 | Cash flow hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative	$ 75,000,000	75,000,000
Fixed rate per annum	0.977%
Fair value	$ 1,503,000	$ (422,000)

XML

Derivative Instruments - Power Purchase Agreements (Details) $ in Thousands	1 Months Ended	3 Months Ended
	Mar. 31, 2019 agreement	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)
Derivative [Line Items]
Increase (decrease) in utilities expense		$ (100)	$ 400
Power Purchase Agreements
Derivative [Line Items]
Number of agreements | agreement	2
Term of agreement	10 years
Cash flow hedging | Power Purchase Agreements
Derivative [Line Items]
Fair value		(4,771)		$ (3,926)
Cash flow hedging | Piscataway | Calpine Energy Solutions, LLC
Derivative [Line Items]
Fair value		(2,534)		(2,162)
Cash flow hedging | Chicago | Calpine Energy Solutions, LLC
Derivative [Line Items]
Fair value		$ (2,237)		$ (1,764)

XML

Partners' Capital, Equity and Incentive Compensation Plans - Additional Information (Details) $ in Millions			1 Months Ended	3 Months Ended
	Mar. 04, 2021 shares	Oct. 13, 2013 Vote	Mar. 31, 2019	Mar. 31, 2021 USD ($) class shares	Dec. 31, 2020 shares
Partners Capital And Distributions [Line Items]
Options outstanding (in shares)				100,000
Equity based compensation expense unrecognized | $				$ 51.4
Equity based compensation expense vesting period				1 year
Class O Units and Options
Partners Capital And Distributions [Line Items]
Equity based compensation awards intrinsic value | $				$ 47.5
First portion | Performance-Based FFO Units
Partners Capital And Distributions [Line Items]
Vesting period			2 years
Second portion | Performance-Based FFO Units
Partners Capital And Distributions [Line Items]
Vesting period			3 years
Second portion | Restricted Class A Common Stock
Partners Capital And Distributions [Line Items]
Vesting percentage, per quarter				8.375%
Vesting percentage				33.00%
2013 Equity Incentive Plan | Performance-Based FFO Units
Partners Capital And Distributions [Line Items]
Options outstanding (in shares)				237,669	132,267
2013 Equity Incentive Plan | Performance-Based Relative TSR Units
Partners Capital And Distributions [Line Items]
Options outstanding (in shares)				273,954	168,552
QualityTech, LP
Partners Capital And Distributions [Line Items]
Number of classes of partnership units outstanding | class				4
Class B Common Stock
Partners Capital And Distributions [Line Items]
Number of votes per share | Vote		50
Class B Common Stock | Chief Executive Officer
Partners Capital And Distributions [Line Items]
Percentage of operating partnership unit exchanged		2.00%
Class A Common Stock | Performance-Based FFO Units | Minimum
Partners Capital And Distributions [Line Items]
Percentage of target award			0.00%
Class A Common Stock | Performance-Based FFO Units | Maximum
Partners Capital And Distributions [Line Items]
Percentage of target award			200.00%
Class A Common Stock | Performance-Based Relative TSR Units
Partners Capital And Distributions [Line Items]
Performance period				3 years
Class A Common Stock | Performance-Based Relative TSR Units | Minimum
Partners Capital And Distributions [Line Items]
Percentage of target award			0.00%
Class A Common Stock | Performance-Based Relative TSR Units | Maximum
Partners Capital And Distributions [Line Items]
Percentage of target award			200.00%
Class A Common Stock | 2013 Equity Incentive Plan
Partners Capital And Distributions [Line Items]
Authorized shares to be issued under the plan				5,900,000
Additional shares available for issuance under plan approved by stockholders	2,000,000.0
Preferred Units Series A [Member] | QualityTech, LP
Partners Capital And Distributions [Line Items]
Exchange rate for cash or shares				1

XML

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)	3 Months Ended
	Mar. 31, 2021 $ / shares shares
Options
Ending balance (in shares) | shares	100,000
2010 Equity Incentive Plan | Class O Units
Numbers of Class O units
Granted (in shares) | shares	0
Cancelled/Expired (in shares) | shares	0
Weighted average exercise price
Granted (in dollars per share)	$ 0
Cancelled/Expired (in dollars per share)	0
Weighted average fair value
Granted (in dollars per share)	0
Cancelled/Expired (in dollars per share)	$ 0
2010 Equity Incentive Plan | Class O Units
Numbers of Class O units
Beginning balance (in shares) | shares	75,435
Exercised/Vested (in shares) | shares	0
Ending balance (in shares) | shares	75,435
Weighted average exercise price
Beginning balance (in dollars per share)	$ 25.00
Exercised/Vested (in dollars per share)	0
Ending balance (in dollars per share)	25.00
Weighted average fair value
Beginning balance (in dollars per share)	6.11
Exercised/Vested (in dollars per share)	0
Ending balance (in dollars per share)	$ 6.11
2013 Equity Incentive Plan | Options
Options
Beginning balance (in shares) | shares	1,936,407
Granted (in shares) | shares	96,366
Exercised/Vested (in shares) | shares	(51,220)
Cancelled/Expired (in shares) | shares	0
Ending balance (in shares) | shares	1,981,553
Weighted average exercise price
Beginning balance (in dollars per share)	$ 38.55
Granted (in dollars per share)	59.06
Exercised/Vested (in dollars per share)	38.63
Cancelled/Expired (in dollars per share)	0
Ending balance (in dollars per share)	39.55
Weighted average fair value
Beginning balance (in dollars per share)	7.26
Granted (in dollars per share)	10.53
Exercised/Vested (in dollars per share)	7.91
Cancelled/Expired (in dollars per share)	0
Ending balance (in dollars per share)	$ 7.40
2013 Equity Incentive Plan | Restricted Stock
Options
Beginning balance (in shares) | shares	416,496
Granted (in shares) | shares	270,464
Exercised/Vested (in shares) | shares	(123,438)
Cancelled/Expired (in shares) | shares	(3,716)
Ending balance (in shares) | shares	559,806
Weighted average fair value
Beginning balance (in dollars per share)	$ 52.20
Granted (in dollars per share)	59.07
Exercised/Vested (in dollars per share)	54.57
Cancelled/Expired (in dollars per share)	57.24
Ending balance (in dollars per share)	$ 54.96
2013 Equity Incentive Plan | Performance-Based Relative TSR Units
Numbers of Class O units
Cancelled/Expired (in shares) | shares	0
Weighted average exercise price
Exercised/Vested (in dollars per share)	$ 0
Options
Beginning balance (in shares) | shares	168,552
Granted (in shares) | shares	105,402
Ending balance (in shares) | shares	273,954
Weighted average fair value
Beginning balance (in dollars per share)	$ 66.90
Granted (in dollars per share)	$ 64.72
Exercised/Vested (in dollars per share) | shares	0
Cancelled/Expired (in dollars per share)	$ 0
Ending balance (in dollars per share)	$ 66.06
2013 Equity Incentive Plan | Performance-Based FFO Units
Numbers of Class O units
Cancelled/Expired (in shares) | shares	0
Weighted average exercise price
Exercised/Vested (in dollars per share)	$ 0
Options
Beginning balance (in shares) | shares	132,267
Granted (in shares) | shares	105,402
Ending balance (in shares) | shares	237,669
Weighted average fair value
Beginning balance (in dollars per share)	$ 51.45
Granted (in dollars per share)	$ 59.06
Exercised/Vested (in dollars per share) | shares	0
Cancelled/Expired (in dollars per share)	$ 0
Ending balance (in dollars per share)	$ 54.82

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)	3 Months Ended
	Mar. 31, 2021 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of TSR units granted (in dollars per share)	64.72
Expected volatility, minimum	28.00%
Expected volatility, maximum	31.00%
Expected dividend yield	3.39%
Expected risk-free interest rates, minimum	0.06%
Expected risk-free interest rates, maximum	0.90%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of FFO units and restricted stock granted (in dollars per share)	59.06
Fair value of options granted (in dollars per share)	$ 3.79
Expected term (years)	4 months 24 days
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of FFO units and restricted stock granted (in dollars per share)	61.17
Fair value of options granted (in dollars per share)	$ 11.36
Expected term (years)	5 years 6 months

XML

Partners' Capital, Equity and Incentive Compensation Plans - Summary of Information About Awards Outstanding (Details)	3 Months Ended
	Mar. 31, 2021 $ / shares shares
QualityTech LP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards outstanding	75,435
QualityTech LP | Class O Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise prices (in dollars per share) | $ / shares	$ 25.00
Awards outstanding	75,435
QTS Realty Trust, Inc.
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards outstanding	3,052,982
QTS Realty Trust, Inc. | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards outstanding	559,806
Remaining term of awards	1 year 1 month 6 days
QTS Realty Trust, Inc. | Performance-Based Relative TSR Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards outstanding	273,954
Remaining term of awards	1 year 1 month 6 days
QTS Realty Trust, Inc. | Performance-Based FFO Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards outstanding	237,669
Remaining term of awards	9 months 18 days
QTS Realty Trust, Inc. | Options to purchase Class A common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Lower limit of exercise price (in dollars per share) | $ / shares	$ 21.00
Upper limit of exercise price (in dollars per share) | $ / shares	$ 59.06
Awards outstanding	1,981,553
Remaining term of awards	10 months 24 days

XML

Partners' Capital, Equity and Incentive Compensation Plans - Schedule of Quarterly Cash Dividends (Details) - USD ($) $ / shares in Units, $ in Millions							3 Months Ended
	Apr. 15, 2021	Apr. 06, 2021	Jan. 15, 2021	Jan. 07, 2021	Jan. 15, 2020	Jan. 07, 2020	Mar. 31, 2021	Mar. 31, 2020
Series A Preferred Stock
Per Share and Per Unit Rate (in dollars per share)			$ 0.45		$ 0.45
Aggregate Dividend/Distribution Amount			$ 1.9		$ 1.9		$ 1.9	$ 1.9
Series A Preferred Stock | Subsequent Event
Per Share and Per Unit Rate (in dollars per share)	$ 0.45
Series B Preferred Stock
Per Share and Per Unit Rate (in dollars per share)			$ 1.63		$ 1.63
Aggregate Dividend/Distribution Amount			$ 5.1		$ 5.1		5.1	5.1
Series B Preferred Stock | Subsequent Event
Per Share and Per Unit Rate (in dollars per share)	$ 1.63
Common stock
Per Share and Per Unit Rate (in dollars per share)				$ 0.47		$ 0.44
Aggregate Dividend/Distribution Amount				$ 33.4		$ 28.6	$ 33.4	$ 28.6
Common stock | Subsequent Event
Per Share and Per Unit Rate (in dollars per share)		$ 0.50

XML

Partners' Capital, Equity and Incentive Compensation Plans - Equity Issuance (Details) - USD ($)		3 Months Ended
	Mar. 15, 2023	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020	Jun. 30, 2020	May 31, 2020	Jun. 30, 2019
Partners Capital And Distributions [Line Items]
Common stock, par value (in dollars per share)		$ 0.01		$ 0.01
Common stock, shares authorized (in shares)		450,133,000		450,133,000
Forecast
Partners Capital And Distributions [Line Items]
Preferred stock, redemption price per share (in dollars per share)	$ 25.00
Underwritten Offering | Common stock | Maximum
Partners Capital And Distributions [Line Items]
Common stock, shares authorized (in shares)					4,400,000
Class A Common Stock | Prior ATM Program
Partners Capital And Distributions [Line Items]
Common stock, maximum value authorized							$ 400,000,000
Common stock, par value (in dollars per share)							$ 0.01
Class A Common Stock | ATM
Partners Capital And Distributions [Line Items]
Common stock, maximum value authorized						$ 500,000,000
Series A Redeemable Perpetual Preferred Stock
Partners Capital And Distributions [Line Items]
Preferred stock, shares outstanding (in shares)		4,280,000		4,280,000
Dividend rate (as a percent)		7.125%	7.125%
Preferred stock, liquidation preference (in dollars per share)		$ 25.00		$ 25.00
Series A Redeemable Perpetual Preferred Stock | Forecast
Partners Capital And Distributions [Line Items]
Threshold period of redemption of preferred stock	120 days
Series B Convertible Perpetual Preferred Stock
Partners Capital And Distributions [Line Items]
Preferred stock, shares outstanding (in shares)		3,162,500		3,162,500
Dividend rate (as a percent)		6.50%	6.50%
Preferred stock, liquidation preference (in dollars per share)		$ 100.00		$ 100.00
Series B Preferred Stock
Partners Capital And Distributions [Line Items]
Conversion rate		2.1436
Minimum percentage of closing sale price of common stock under preferred stock conversion (as a percent)		150.00%
Minimum trading days of closing sale price of common stock under preferred stock conversion (in days)		20 days
Maximum trading days of closing sale price of common stock under preferred stock conversion including the last trading day (in days)		30 days

XML

Partners' Capital, Equity and Incentive Compensation Plans - Summary of Equity Issued (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Forward Shares Sold/(Settled)
Shares and net proceeds available, beginning balance (in shares)	9,961
Forward Equity - Sales (in shares)	1,504
Forward Equity - Settlement (in shares)	(3,865)
Shares and net proceeds available, ending balance (in shares)	7,600
Net Proceeds Available/(Received)
Shares and net proceeds available, beginning balance	$ 581,598
Forward Equity - Sales	91,620
Forward Equity - Settlements	(215,964)
Shares and net proceeds available, ending balance	457,254
Proceeds from issuance or sale of equity, excluding dividends		$ 587,600
Dividends declared	$ 6,000

XML

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Related Party Transaction [Line Items]
Revenue	$ 4,424	$ 6,211
Affiliated Entity
Related Party Transaction [Line Items]
Term of contract	10 years
Ownership interest (as a percent)	50.00%
Tax, utility, insurance and other reimbursement	$ 169	176
Rent expense	260	257
Total	429	433
Development Fees | Affiliated Entity
Related Party Transaction [Line Items]
Revenue	300	500
Management Fees | Affiliated Entity
Related Party Transaction [Line Items]
Revenue	$ 300	$ 200

XML

Noncontrolling Interest (Details)	Nov. 01, 2014	Mar. 31, 2021	Oct. 13, 2013
Stock conversion ratio	1
Previous Owners of QualityTech, LP | QualityTech, LP
QualityTech, LP ownership percentage in operating partnership		8.60%	21.20%

XML

Earnings per share - Computation of Basic and Diluted Net Income per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share [Abstract]
Net income	$ 7,918	$ 8,120
Income attributable to noncontrolling interests	(79)	(110)
Preferred stock dividends	(7,045)	(7,045)
Earnings attributable to participating securities	(5,285)	(1,596)
Net loss available to common stockholders after allocation to participating securities	$ (4,491)	$ (631)
Weighted average shares outstanding - basic (in shares)	64,442	58,038
Effect of Class O units, TSR units, FFO units and options to purchase Class A common stock on an "as if" converted basis (in shares)	0	0
Weighted average shares outstanding - diluted (in shares)	64,442	58,038
Basic net loss per share (in dollars per share)	$ (0.07)	$ (0.01)
Diluted net loss per share (in dollars per share)	$ (0.07)	$ (0.01)

XML

Earnings per share - Antidilutive (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Class A Partnership units
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive shares excluded from the computation of diluted net earning per share	6,466	6,671
Class O units, TSR units, FFO units and options to purchase common stock on an "as if" converted basis
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive shares excluded from the computation of diluted net earning per share	1,212	655
Series B Convertible preferred stock on an "as if" converted basis
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive shares excluded from the computation of diluted net earning per share	6,779	6,749

XML

Contracts with Customers (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Revenue from Contract with Customer [Abstract]
2021 (April - December)	$ 349,511
2021	394,619
2022	296,826
2023	240,951
2024	186,194
Thereafter	554,414
Total	$ 2,022,515

XML

Fair Value of Financial Instruments (Details) - 3.875% Senior Notes $ in Millions	Mar. 31, 2021 USD ($)
Fair Value Of Financial Instruments [Line Items]
Interest rate	3.875%
Fair Value Measurements, Level 2
Fair Value Of Financial Instruments [Line Items]
Fair value of loan based on current market rates	$ 500.0