© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc.Investor Presentation
First Quarter 2019
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 1
Forward Looking Statements
Some of the statements contained in this presentation constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations,
beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In particular, statements pertaining to our
capital resources, portfolio performance 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. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
The forward-looking statements contained in this presentation 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 our international operations;
our ability to successfully execute our strategic growth plan and realize its expected benefits;
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 our qualification as a REIT;
environmental uncertainties and risks related to natural disasters;
financial market fluctuations; and
changes in real estate and zoning laws, revaluations for tax purposes and increases in real property tax rates.
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, 2017 (“10-K”) and in the other periodic reports we file with the Securities and Exchange Commission.
This presentation includes measures not derived in accordance with generally accepted accounting principles (“GAAP”), such as FFO, operating FFO, adjusted Operating FFO, EBITDA,
adjusted EBITDA, NOI, ROIC and MRR. These measures should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP, and may also be
inconsistent with similar measures presented by other companies. Reconciliation of these measures to the most closely comparable GAAP measures are presented in the attached pages. We
refer you to the appendix of this presentation for reconciliations of these measures and to the section entitled "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Non-GAAP Financial Measures" in our 10-K for further information regarding these measures..
© 2018 QTS. All Rights Reserved.
Strategic Growth Acceleration Plan
Execution Summary
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 3
Strategic Growth Plan Execution Summary – Q3 ‘18
$
Accelerate Growth
and Leasing
Increase
Profitability
Enhance
Predictability
Highest YTD adjusted EBITDA margin
achieved in QTS history
Represents 250 basis points of margin
expansion Y/Y
14%Q3 Revenue
Growth Y/Y*
20%Q3 Adj. EBITDA
Growth Y/Y*
$52M+Annualized Rent
Signed YTD*
* Reflects results for Core business only
51.2%Q3 Adj. EBITDA
Margin*
1.1%Q3 Rental
Churn*
Among the lowest churn rates in data center
industry
YTD churn of 3.0% in line with 2018 churn
guidance of 3-5%
Churn on track to be approx. half the churn QTS
experienced in consolidated business in 2017
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 4
QTS Growth Acceleration Plan on Track
Accelerated Leasing Adjusted EBITDA
Margin Expansion
MRR Churn
Reduction
9.9 12.0
10.4
17.4
2015 2016 2017 2018 YTD
10.8M
Avg.
45.0% 45.8% 46.6%
51.2%
2015 2016 2017 2018 YTD
45.8%
Avg.
4.0%
5.6%
8.4%
4.0%
2015 2016 2017 2018 YTD
6.0%
Avg.
2
1
11
1.2018 reflects results for the Core business only. 2015-2017 reflects results for consolidated business including Core and Non-Core
2.Reflects midpoint of 2018 annual churn guidance of 3-5%
Average Quarterly Incremental
Rent Signed ($M)
Completed migration of non-core customers and services to GDT ahead of schedule with
increased contribution to growth in 2019
Broad-based strength across hyperscale and hybrid colocation verticals, with hyperscale
pipeline continuing to expand
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 5
GDT Migration Positions QTS to Accelerate Core Growth
QTS completed migration of non-core customers to GDT during Q3 ’18, with
strong success and ahead of schedule
Migration was completed ahead of schedule
QTS retained approximately 85% of
customers originally identified whose services
and support would be migrated to GDT’s
platform
Estimated core revenue contribution in 2019
from migration: $10M+
Represents an increase from expectation in Q2
of $8M+ and original stated assumption of $5M+
Completion of the customer migration de-
risks growth expectations for 2019 and
positions QTS’ platform to accelerate into a
growing opportunity within hyperscale and
hybrid colocation
© 2018 QTS. All Rights Reserved.
• Signed new/modified leases totaling $18.1M of core incremental annualized rent
20%+ above prior four quarter average leasing of $15.0M
Strongest leasing volume through first three quarters of year in QTS’ history
Booked-not-billed backlog increased to $59M of core annualized rent as of Q3 ‘18
Core renewal rates up 2.1%, consistent with expectation for low to mid-single digit percent
price increases
• Hybrid Colocation:
Hybrid colocation business contributed approximately 2/3 of net leasing volume in Q3
Seeing uptick in hybrid colocation performance driven by:
Increase in deal size
Differentiation enabled by software-defined data center platform
Positive enterprise demand backdrop
Sales team productivity
Hybrid colocation demand strength in Atlanta, Piscataway, and Richmond
QTS Realty Trust, Inc. 6
Q3 2018 Operating Performance Review
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 7
Momentum Building in Growing Hyperscale Opportunity
• Hyperscale:
Hyperscale vertical contributed approximately 1/3 of net leasing volume in Q3
Q3 hyperscale leasing volume represented 7MW between two strategic customers
Includes incremental 4MW expansion by leading SaaS customer in Manassas, VA
Continue to expect customer to ramp into full 24MW deployment over approximately
two year period
Several larger potential opportunities in pipeline that QTS is actively pursuing with both new
and existing customers
Continue to anticipate signing at least one additional larger hyperscale transaction by the
end of 2018
Manassas, VA
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 8
Improving Credit Profile and Business Visibility
Weighted Average Remaining
Customer Lease Term (Months)
Weighted Average Remaining
Top 10 Customer Lease Term (Months)
Forward Two Year Lease Expirations
as a % of Total Annualized MRR1
Signed Backlog as a % of Total
Annualized MRR
Annual Churn2
Consolidated
(Core + Non-Core)
Q4 ‘17
26
38
12%
8.4%
60%
31
47
16%
4.0%
39%
Core Business
Only
Q3 ‘18
1. Forward two year lease expirations as of Q4 ’17 reflects 2018 and 2019 for consolidated business. Forward two year lease exp irations as of Q3 ’18 reflects 2019 and 2020 for core business.2.Q4 ’17 reflects full-year 2017 reported results for consolidated business (core + non-core); Q3 ’18 reflects midpoint of 2018 annual churn guidance for core business of 3-5%
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 9
Visibility Into Future Growth Remains Strong
$59.0 $59.0 $59.0 $59.0
Q3 2018 2018 2019 2020+
$10.3
$31.6
$17.0
$59M Annualized Booked-Not-Billed Core MRR ($M)1
1. Represents annualized MRR associated with leases that have been signed but have not yet commenced; may not sum due to rounding
Highlights
Annualized booked-not-
billed core MRR from signed
but not yet commenced
leases was $59.0 million as
of September 30, 2018
Of the $10.3 million in
2018, approximately $1.7
million is expected to be
recognized in 2018 revenue
Of the $31.6 million in
2019, approximately $21.9
million is expected to be
recognized in 2019 revenue
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 10
Balance Sheet and Liquidity Summary
Net Debt to LQA
consolidated adjusted
EBITDA of 5.3x
Approximately $750 million
of liquidity, including cash
and availability under
revolving credit facility
No significant debt
maturities before 2022
$59M booked-not-billed
backlog of annualized core
revenue
More than 75% of capital
stack subject to a fixed
rate4
Market Cap$2,484M2
Series A Preferred Stock
$107M
Series B Preferred Stock
$316M
Senior Notes$400M
Unsecured Credit Facility$781M1
Capital Leases and Other$6M
1. Includes two term loans ($700 million in aggregate) and $81 million of borrowings on revolving credit facility as of September 30, 20182. Market Cap calculated as follows: total Class A and Class B common stock and OP units of 58.2 million, multiplied by the September 30, 2018 stock price of $42.67 per share.3. May not sum due to rounding4. Including Series A and Series B Preferred Stock
$4.1B Enterprise
Value
$2 $1 $0 $81
$350
$753
2018 2019 2020 2021 2022 2023+
HighlightsCapital Structure
Debt Maturities ($M)3
© 2018 QTS. All Rights Reserved.
QTS Overview
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 12
Differentiated Capability to Drive Success in Both
Hyperscale and Hybrid Colocation
Significant Growth Capacity – 1.3M sq. ft. of
powered shell capacity in top U.S. markets with
ability to scale quickly and efficiently
Operating and Build Cost Advantage – Low basis
focus & mega scale approach provide permanent
cost advantage
New Market Expansion in NoVA, Phoenix and
Hillsboro – Provides future growth capacity in
markets where hyperscale customers want to be
Premium Customer Experience and Service
Delivery – Software-defined platform and service
delivery track record provide further differentiation
for hyperscale customers
Software-Defined Data Center Platform – Provides
infrastructure visibility and dynamic control to customers
Enhanced Hybrid Solutions through Integrated
Partners – Strategic partnerships with technology and IT
services providers expand hybrid colocation opportunity
Seamless Connectivity – SDN-enabled universal
connectivity to carriers, service providers and CSP’s
High-End Security and Compliance – Dedicated team
to help enterprises mitigate cybersecurity risks
Premium Customer Experience – Portfolio of managed
services and industry-leading net promoter scores
World-Class Infrastructure & Mega Data Centers Hybrid Colocation Platform
Customers Need
Scale
QTS Solutions QTS Solutions
Speed Economics Secure &
Compliant
HyperscaleCustomers Need
Hybrid Colocation
Integrated
Hybrid Solutions
Seamless
Connectivity
Premium
Customer Service
Secure &
Compliant
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 13
Uniquely Positioned Where CIOs Are Investing The Most
Top Technology Areas Attracting New SpendingWhat are the technology areas where your organization will be spending
the highest amount of new or additional funding in 2018?*
QTS is able to solve
Enterprises’ top IT needs
Hybrid Cloud Solutions
Data Center Infrastructure
Cybersecurity
SOFTWARE-DEFINED DATA
CENTER PLATFORM
delivers flexibility and product
capability to provide hybrid data
center solutions
WORLD-CLASS
MEGA DATA CENTERS
provide visibility into significant
future growth capacity
INDUSTRY-LEADING
SECURITY & COMPLIANCE
capabilities enable QTS to be
customers’ trusted partner to help
manage risk
1.
2.
3.
*Reflects results from Gartner survey of 2,496 Enterprise CIOs published March 9, 2018 entitled, “2018 CIO Agenda: A U.S. Perspective.”
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 14
Broad Footprint Focused On Top Data Center Markets
2.7 million sq. ft. of raised floor capacity1 and 670+ MW of available utility power2
1. Represents basis-of-design floor space as of September 30, 2018. The Company defines basis-of-design floor space as the total data center raised floor potential of its existing data center facilities.
2. Represents installed utility power and transformation capacity that is available for use by the facility as of September 30, 2018.
3. Based on data center raised floor. Does not include data centers subject to capital lease obligations. Includes Santa Clara, CA which is subject to a long-term ground lease.
26 DATA CENTERS MARKETS WHOLLY-OWNED314 95%
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 15
Powered Shell Capacity Represents 5+ Years of Growth
1. Full Buildout reflects our “Basis of Design” NRSF at full buildout, including 66,324 basis-of-design square feet currently in development in Manassas, VA; does not include additional development
which could take place on adjacent, owned land.
Capacity to nearly double
raised floor in existing
powered shell and current
developments
Able to approximately double
raised floor capacity again
through development on 600+
acres of adjacent, owned land
and real estate
De-risks future growth path at
known build costs and higher
incremental returns
1.3M Sq. Ft. Additional Capacity
in Existing Powered Shell
2,744
54%currently
built out
1,476Full
Capacity
As of Q3 ‘18 Full Buildout1
(Rais
ed F
loor
NR
SF
in
000s)
2,744
1,268
As of IPO
1,805
41%built out
741
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 16
Best-in-Class “Mega” Data Centers
205,608 Sq. Ft.
100% Built Out
205,608 Sq. Ft.
ROIC: 27.2%2 Occupied: 94.1%
477,986 Sq. Ft.
91% Built Out
527,186 Sq. Ft.
ROIC: 17.2%2 Occupied: 97.6%
167,309 Sq. Ft.
30% Built Out
557,309 Sq. Ft.
ROIC: 12.1%2 Occupied: 72.4%
Atlanta-Suwanee, GA
36MW
Atlanta-Metro, GA
120MW1
Richmond, VA
110MW
168,160 Sq. Ft.
61% Built Out
275,701 Sq. Ft.
ROIC: 12.6%2 Occupied: 97.4%
93,820 Sq. Ft.
53% Built Out
176,000 Sq. Ft.
ROIC: 10.9%2 Occupied: 83.2%
40,000 Sq. Ft.
19% Built Out
215,855 Sq. Ft.
ROIC: 7.6%2 Occupied: 64.0%
Piscataway, NJ
111MWChicago, IL
55MW3
Irving, TX
140MW
Note: Square footage reflects current Raised Floor Operating Net Rentable Square Feet (“NRSF”) as of September 30, 2018 (red shaded bars) and “Basis of Design” Raised Floor NRSF at full buildout. MW denotes
available utility power as of September 30, 2018. Occupied percentage as of September 30, 2018.
1. Atlanta -Metro currently has 72 MW of available utility power based on current agreements with its utility provider but has transformer capacity for 120 MW.
2. ROIC calculated by dividing annualized core NOI for the quarter ended September 30, 2018 by the average total cost, less construction in progress for the quarters ended September 30, 2018 and June 30, 2018.
3. 8MW available utility power as of September 30, 2018, with an additional 47 MW available upon QTS request.
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 17
Mega Scale & Hybrid Colocation Platform Enable
Premium ROIC Potential
Irving, TX
4 Years
Richmond, VA
7 Years
Atlanta, GA
11 YearsSuwanee, GA
12 Years
Years in Operation
12.6%ROIC
17.2%ROIC
27.2%ROIC
Piscataway, NJ
2 Years
10.9%ROIC
ROIC
12.1%
Chicago, IL
2 Years
7.6%ROIC
% OF
CAPACITY
BUILT OUT
91% Built Out30% Built Out61% Built Out53% Built Out19% Built Out 100% Built Out
Mega Data Center Lifecycle
Note: ROIC calculated by dividing annualized core NOI for the quarter ended September 30, 2018 by the average total cost, less construction in progress for the quarters ended September 30, 2018 and June 30, 2018.
Combination
of operating
leverage +
higher Hybrid
Colocation
penetration
over the life
of a mega
scale data
center drives
higher ROIC
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 18
Strong Competitive Positioning in Atlanta
Atlanta market strengthening
Atlanta continues to build momentum as Tier 1 market based on low power cost, low natural disaster
risk, fiber availability and concentration of corporate HQ’s
New legislation outlining tax incentives for data centers – Georgia House Bill 696
- Culmination of four years of work by QTS, in coordination with Technology Association of Georgia
- Further establishes Atlanta as destination for data center deployment
- Will provide incremental economic incentives to QTS as well as existing and new customers
In October 2018, QTS closed on the acquisition of 55 acres adjacent to existing Atlanta-Metro site
- Enables QTS to expand downtown Atlanta campus by an incremental 150+ megawatts
Incumbent competitive advantage with significant growth opportunity
670k sq. ft. of raised floor capacity built
enables significant operating leverage
120MW owned substation enables QTS to
offer the lowest cost of power in Atlanta
540+ embedded customer base
Atlanta generating 20%+ average ROIC 87 acres of adjacent owned land enables
future growth capacity
Atlanta-Metro site is one of the most
strategic, interconnected in Southeast
Capacity to expand to 733k sq. ft. of
raised floor under existing powered shell
2,000+
cross connects
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 19
The QTS Hyperscale Advantage
* JLL Global Data Center Outlook 2018
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 20
QTS Software Defined Data Center Platform
Over 15,000 SDP Users | 15+ Integrated Partners | 90M Data Points Collected Per Day
Service Delivery Platform provides QTS the
first true Software Defined Data Center
QTS building with our partners,
taking neutral approach
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 21
QTS Service Delivery Platform - Third Party Feedback
On how they leverage SDP Today:
“SDP allowed us to review over and under-subscribed
cabinets in real-time, enabling us to shift infrastructure
or increase our density.”
VP of IT(Multi-National Bank)
IT Director(Clean Energy Automotive
Manufacturer)
Product Manager(Communications Service
Provider Partner)
Customers and Partners Industry Analysts
On using SDP for their Customers:
“The Power Analytics App is a game-changer. Most of
your competitors take 3 weeks to provide this data
to our Customers.”
On how SDP drove the selection of QTS:
“There was not a close 2nd in our evaluation. The
innovation of SDP combined with Solution Portability
and NPS made this an easy decision.”
“”
You are showing things that have been on
my clients’ wish list for quite some
time….mostly what they get from your
competitors is a really limited subset of
what you’ve just shown
On QTS’ Power & Sensor
Real-Time Analytics
Research Vice President, Infrastructure Strategies
Group – Industry Leading Research & Advisory Firm
“”
The API and programmatic approach,
being able to bridge into the physical world
is very attractive…. I see differentiation
here
On how QTS’ SDP Platform
Interacts with Customers
Research Director, Cloud Service Provider Group –
Industry Leading Research & Advisory Firm
“”
You have cemented yourselves as the
provider that is pushing the boundaries in
development and service delivery. It’s
clear you are more than just a colo provider
On QTS’ vision for Hybrid Colocation
Research Vice President, Technology Service Provider
Group – Industry Leading Research & Advisory Firm
© 2018 QTS. All Rights Reserved.
Appendix
© 2018 QTS. All Rights Reserved.© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 23
Seamless Connectivity to Hyperscale CSP’s and
Network Providers
Access to 500+
carriers and all major
public clouds
Peering Exchanges On-Net Carriers On-Net Hyperscalers SD-WAN Providers
~13,000
cross connects
Connectivity = 8% of
revenue and growing
15%+ year-over-year
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 24
Robust Security & Compliance Capabilities
The cyber threat landscape continues to grow with an
increasing number and severity of attacks1
Differentiated QTS Approach is an Advantage
LOGICAL SECURITY PHYSICAL SECURITY
Data: Encryption, policy
enforcement and security intelligence.
Network: Best-of-breed network
infrastructure.
Host: Strict security policies, cutting-edge
technology and premium support.
Site access and monitoring
systems.
24x7x365 on-site security
professionals
Premium, state-of-the-art owned
and operated data centers.
Integrated compliance coverage over a breadth of regulations
53%cyber attacks
resulting in
damages
$500K+
55%companies
managing public
scrutiny of a
BREACH
32%of companies
reporting breaches
affecting
50%+ OF
SYSTEMS
1. Reflects results from the Cisco 2018 Annual Cybersecurity Report.
Breadth of compliance
certifications &
security capabilities
enables QTS to be a
trusted partner to
Enterprises and
Government entities
looking to manage
increasing cyber risks
against their critical
systems and data
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 25
NOI Reconciliation
Three Months Ended
September 30, 2018 June 30, 2018 September 30, 2017
$ in thousands Core Non-Core Total Core Non-Core Total Core Non-Core Total
Net Operating Income (NOI)
Net income (loss) $ 7,576 $ (14,468) $ (6,892) $ 5,397 $ (11,830) $ (6,433) $ 3,790 $ 3,604 $ 7,394
Interest income (66) — (66) (25) — (25) (65) — (65)
Interest expense 6,384 2 6,386 8,199 4 8,203 7,946 12 7,958
Depreciation and amortization 36,693 1,206 37,899 35,233 2,586 37,819 32,299 3,010 35,309
Tax expense (benefit) of taxable REIT subsidiaries (409) (571) (980) 178 (41) 137 (2,454) — (2,454)
Transaction, integration and impairment costs 901 — 901 653 — 653 1,114 — 1,114
General and administrative expenses 17,732 2,191 19,923 18,004 3,028 21,032 16,076 5,576 21,652
Restructuring — 13,737 13,737 — 11,430 11,430 — — —
NOI $ 68,811 $ 2,097 $ 70,908 $ 67,639 $ 5,177 $ 72,816 $ 58,706 $ 12,202 $ 70,908
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 26
EBITDAre & Adjusted EBITDA Reconciliation
Three Months Ended
September 30, 2018 June 30, 2018 September 30, 2017
$ in thousands Core Non-Core Total Core Non-Core Total Core Non-Core Total
EBITDAre and Adjusted EBITDA
Net income (loss) $ 7,576 $ (14,468) $ (6,892) $ 5,397 $ (11,830) $ (6,433) $ 3,790 $ 3,604 $ 7,394
Interest income (66) — (66) (25) — (25) (65) — (65)
Interest expense 6,384 2 6,386 8,199 4 8,203 7,946 12 7,958
Tax expense (benefit) of taxable REIT subsidiaries (409) (571) (980) 178 (41) 137 (2,454) — (2,454)
Depreciation and amortization 36,693 1,206 37,899 35,233 2,586 37,819 32,299 3,010 35,309
Loss on disposition of depreciated property and impairment write-downs of depreciated property — 7,409 7,409 — 3,122 3,122 — — —
EBITDAre $ 50,178 $ (6,422) $ 43,756 $ 48,982 $ (6,159) $ 42,823 $ 41,516 $ 6,626 $ 48,142
Equity-based compensation expense 3,961 — 3,961 3,999 — 3,999 3,245 448 3,693
Restructuring costs — 6,328 6,328 — 8,308 8,308 — — —
Transaction, integration and impairment costs 901 — 901 653 — 653 1,114 — 1,114
Adjusted EBITDA $ 55,040 $ (94) $ 54,946 $ 53,634 $ 2,149 $ 55,783 $ 45,875 $ 7,074 $ 52,949
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 27
FFO, Operating FFO and Adjusted Operating
FFO Reconciliation
*The company’s 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
Three Months Ended
September 30, 2018 June 30, 2018 September 30, 2017
$ in thousands Core Non-Core Total Core Non-Core Total Core Non-Core Total
FFO
Net income (loss) $ 7,576 $ (14,468) $ (6,892) $ 5,397 $ (11,830) $ (6,433) $ 3,790 $ 3,604 $ 7,394
Real estate depreciation and amortization 34,023 556 34,579 33,093 750 33,843 30,385 852 31,237
FFO 41,599 (13,912) 27,687 38,490 (11,080) 27,410 34,175 4,456 38,631
Preferred stock dividends (7,045) — (7,045) (2,248) — (2,248) — — —
FFO available to common shareholders & OP unit holders 34,554 (13,912) 20,642 36,242 (11,080) 25,162 34,175 4,456 38,631
Debt restructuring costs — — — — — — — — —
Restructuring costs — 13,737 13,737 — 11,430 11,430 — — —
Transaction, integration and impairment costs 901 — 901 653 — 653 1,114 — 1,114
Tax benefit associated with restructuring, transaction and integration costs — (571) (571) — (41) (41) — — —
Operating FFO available to common shareholders & OP unit holders* 35,455 (746) 34,709 36,895 309 37,204 35,289 4,456 39,745
Maintenance Capex (1,660) — (1,660) (2,612) — (2,612) (2,194) — (2,194)
Leasing commissions paid (5,212) (249) (5,461) (7,600) (71) (7,671) (1,726) (3,866) (5,592)
Amortization of deferred financing costs and bond discount 959 — 959 961 — 961 992 — 992
Non real estate depreciation and amortization 2,670 650 3,320 2,140 1,836 3,976 1,914 2,158 4,072
Straight line rent revenue and expense and other (1,013) (54) (1,067) (1,300) 67 (1,233) (695) (454) (1,149)
Tax expense (benefit) from operating results (409) — (409) 178 — 178 (2,454) — (2,454)
Equity-based compensation expense 3,961 — 3,961 3,999 — 3,999 3,245 448 3,693
Adjusted Operating FFO available to common shareholders & OP unit holders* $ 34,751 $ (399) $ 34,352 $ 32,661 $ 2,141 $ 34,802 $ 34,371 $ 2,742 $ 37,113
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 28
MRR Reconciliation
Three Months Ended
September 30, 2018 June 30, 2018 September 30, 2017
$ in thousands Core Non-Core Total Core Non-Core Total Core Non-Core Total
Recognized MRR in the period
Total period revenues $ 107,513 $ 4,700 $ 112,213 $ 102,549 $ 9,728 $ 112,277 $ 94,159 $ 19,608 $ 113,767
Less: Total period recoveries (11,800) — (11,800) (10,444) — (10,444) (9,690) (8) (9,698)
Total period deferred setup fees (3,174) (101) (3,275) (3,073) (130) (3,203) (2,424) (235) (2,659)
Total period straight line rent and other (1,701) (2,171) (3,872) (2,022) (2,304) (4,326) (5,222) (1,760) (6,982)
Recognized MRR in the period 90,838 2,428 93,266 87,010 7,294 94,304 76,823 17,605 94,428
MRR at period end
Total period revenues $ 107,513 $ 4,700 $ 112,213 $ 102,549 $ 9,728 $ 112,277 $ 94,159 $ 19,608 $ 113,767
Less: Total revenues excluding last month (71,443) (4,416) (75,859) (67,701) (6,861) (74,562) (63,840) (13,072) (76,912)
Total revenues for last month of period 36,070 284 36,354 34,848 2,867 37,715 30,319 6,536 36,855
Less: Last month recoveries (3,896) — (3,896) (3,597) — (3,597) (2,626) (5) (2,631)
Last month deferred setup fees (1,095) — (1,095) (984) (99) (1,083) (736) (157) (893)
Last month straight line rent and other (979) 356 (623) (745) (1,139) (1,884) (366) (1,338) (1,704)
MRR at period end $ 30,100 $ 640 $ 30,740 $ 29,522 $ 1,629 $ 31,151 $ 26,591 $ 5,036 $ 31,627
© 2018 QTS. All Rights Reserved.
QTS Realty Trust, Inc. 29
Core & Non-Core Reconciliation
Note: Per share values may not sum due to rounding
Three Months Ended Three Months Ended Three Months Ended
$ in thousands except per share values September 30, 2018 June 30, 2018 September 30, 2017
Selected Income Statement Data Core Non-Core Total Core Non-Core Total Core Non-Core TotalTotal Revenues $ 107,513 $ 4,700 $ 112,213 $ 102,549 $ 9,728 $ 112,277 $ 94,159 $ 19,608 $ 113,767 Less: Operating costs 38,702 2,603 41,305 34,910 4,551 39,461 35,453 7,406 42,859 Net operating income 68,811 2,097 70,908 67,639 5,177 72,816 58,706 12,202 70,908
Less: General & administrative expenses (excluding equity-based compensation expense) 13,771 2,191 15,962 14,005 3,028 17,033 12,831 5,128 17,959 Adjusted EBITDA 55,040 (94) 54,946 53,634 2,149 55,783 45,875 7,074 52,949
Less:
Equity-based compensation expense 3,961 — 3,961 3,999 — 3,999 3,245 448 3,693 Interest income (66) — (66) (25) — (25) (65) — (65)Interest expense 6,384 2 6,386 8,199 4 8,203 7,946 12 7,958 Tax expense (benefit) from operating results (409) — (409) 178 — 178 (2,454) — (2,454)Non real estate depreciation and amortization 2,670 650 3,320 2,140 1,836 3,976 1,914 2,158 4,072 Preferred stock dividends 7,045 — 7,045 2,248 — 2,248 — — —Operating FFO available to common shareholders & OP unit holders 35,455 (746) 34,709 36,895 309 37,204 35,289 4,456 39,745
OFFO per share 0.61 (0.01) 0.60 0.64 0.01 0.64 0.62 0.08 0.70
Fully diluted weighted average shares outstanding 58,251 58,251 58,251 58,080 58,080 58,080 56,833 56,833 56,833
Adjustments:Transaction, integration and impairment costs (901) — (901) (653) — (653) (1,114) — (1,114)Restructuring costs — (13,737) (13,737) — (11,430) (11,430) — — —Debt restructuring costs — — — — — — — — —
Tax benefit associated with restructuring, transaction and integration costs — 571 571 — 41 41 — — —Real estate depreciation and amortization (34,023) (556) (34,579) (33,093) (750) (33,843) (30,385) (852) (31,237)Preferred stock dividends 7,045 — 7,045 2,248 — 2,248 — — —Net income (loss) $ 7,576 $ (14,468) $ (6,892) $ 5,397 $ (11,830) $ (6,433) $ 3,790 $ 3,604 $ 7,394