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 June 30, 2018
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-36109
QTS Realty Trust, Inc.
QualityTech, LP
(Exact name of registrant as specified in its charter)
|
Maryland (QTS Realty Trust, Inc.) |
46-2809094 |
|
Delaware (QualityTech, LP) (State or other jurisdiction of incorporation or organization) |
27-0707288 (I.R.S. Employer Identification No.) |
|
|
|
|
12851 Foster Street, Overland Park, Kansas |
66213 |
|
(Address of principal executive offices) |
(Zip Code) |
(Registrant’s telephone number, including area code) (913) 312-5503
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
|
QTS Realty Trust, Inc. Yes ☒ No ☐ |
QualityTech, LP Yes ☒ No ☐ |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
|
QTS Realty Trust, Inc. Yes ☒ No ☐ |
QualityTech, LP Yes ☒ No ☐ |
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.
QTS Realty Trust, Inc.
|
Large accelerated filer |
☒ |
Accelerated filer |
☐ |
|
|
|
|
|
|
Non-accelerated filer |
☐ (Do not check if a smaller reporting company) |
Smaller reporting company |
☐ |
|
|
|
|
|
|
|
|
Emerging growth company |
☐ |
QualityTech, LP
|
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
|
|
|
|
|
|
Non-accelerated filer |
☒ (Do not check if a smaller reporting company) |
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. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
|
QTS Realty Trust, Inc. Yes ☐ No ☒ |
QualityTech, LP Yes ☐ No ☒ |
There were 51,018,919 shares of Class A common stock, $0.01 par value per share, and 128,408 shares of Class B common stock, $0.01 par value per share, of QTS Realty Trust, Inc. outstanding on August 1, 2018.
EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q of QTS Realty Trust, Inc. (“QTS”) and QualityTech, LP, a Delaware limited partnership, which is our operating partnership (the “Operating Partnership”). This report also includes the financial statements of QTS and those of the Operating Partnership, although it presents only one set of combined notes for QTS’ financial statements and those of the Operating Partnership.
Substantially all of QTS’s assets are held by, and its operations are conducted through, the Operating Partnership. QTS is the sole general partner of the Operating Partnership, and, as of June 30, 2018, its only material asset consisted of its ownership of approximately 88.5% of the Operating Partnership. Management operates QTS and the Operating Partnership as one business. The management of QTS consists of the same employees as the management of the Operating Partnership. QTS does not conduct business itself, other than acting as the sole general partner of the Operating Partnership and issuing public equity from time to time. QTS has not issued or guaranteed any indebtedness. Except for net proceeds from public equity issuances by QTS, which are contributed to the Operating Partnership in exchange for units of limited partnership interest of the Operating Partnership, the Operating Partnership generates all remaining capital required by our business through its operations, the direct or indirect incurrence of indebtedness, and the issuance of partnership units. Therefore, as general partner with voting control of the Operating Partnership, QTS consolidates the Operating Partnership for financial reporting purposes.
We believe, therefore, that a combined presentation with respect to QTS and the Operating Partnership, including providing one set of notes for the financial statements of QTS and the Operating Partnership, provides the following benefits:
|
· |
enhances investors’ understanding of QTS and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; |
|
· |
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure in this report applies to both QTS and the Operating Partnership; and |
|
· |
creates time and cost efficiencies through the preparation of one presentation instead of two separate presentations. |
In addition, in light of these combined disclosures, we believe it is important for investors to understand the few differences between QTS and the Operating Partnership in the context of how QTS and the Operating Partnership operate as a consolidated company. With respect to balance sheets, the presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated balance sheets of QTS and those of the Operating Partnership. On the Operating Partnership’s consolidated balance sheets, partners’ capital includes preferred partnership units and common partnership units as well as accumulated other comprehensive income (loss) that are owned by or attributable to QTS and other partners. On QTS’ consolidated balance sheets, stockholders’ equity includes preferred stock, common stock, additional paid-in capital, accumulated other comprehensive income (loss) and accumulated dividends in excess of earnings. The remaining equity reflected on QTS’ consolidated balance sheet is the portion of net assets that are retained by partners other than QTS, referred to as noncontrolling interests. With respect to statements of operations, the primary difference in QTS' Statements of Operations and Statements of Comprehensive Income (Loss) is that for net income (loss), QTS retains its proportionate share of the net income (loss) based on its ownership of the Operating Partnership, with the remaining balance being retained by the Operating Partnership.
In order to highlight the few differences between QTS and the Operating Partnership, there are sections and disclosure in this report that discuss QTS and the Operating Partnership separately, including separate financial statements, separate audit reports, separate controls and procedures sections, separate Exhibit 31 and 32 certifications, and separate presentation of certain accompanying notes to the financial statements, including Note 8 – Partners’ Capital, Equity and Incentive Compensation Plans. In the sections that combine disclosure for QTS and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of “we,” “our,” “us,” “our company” and “the Company.” Although the Operating Partnership is generally the entity that enters into contracts, holds assets and issues debt, we believe that these general references to “we,” “our,” “us,” “our company” and “the Company” in this context are appropriate because the business is one enterprise operated through the Operating Partnership.
2
QTS Realty Trust, Inc.
QualityTech, LP
Form 10-Q
For the Quarterly Period Ended June 30, 2018
|
|
|
Page |
|
PART I. |
|
|
|
|
|
|
|
ITEM 1. |
4 | |
|
|
|
|
|
|
10 | |
|
|
|
|
|
|
Notes to QTS Realty Trust, Inc. and QualityTech, LP Financial Statements |
16 |
|
|
|
|
|
ITEM 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
39 |
|
|
|
|
|
ITEM 3. |
62 | |
|
|
|
|
|
ITEM 4. |
62 | |
|
|
|
|
|
PART II. |
|
|
|
ITEM 1. |
64 | |
|
|
|
|
|
ITEM 1A. |
64 | |
|
|
|
|
|
ITEM 2. |
64 | |
|
|
|
|
|
ITEM 3. |
65 | |
|
|
|
|
|
ITEM 4. |
65 | |
|
|
|
|
|
ITEM 5. |
65 | |
|
|
|
|
|
ITEM 6. |
65 | |
|
|
|
|
|
|
68 |
3
QTS REALTY TRUST, INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
BALANCE SHEETS
(in thousands except per share data)
|
|
|
June 30, 2018 |
|
December 31, 2017 |
||
|
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Real Estate Assets |
|
|
|
|
|
|
|
Land |
|
$ |
105,541 |
|
$ |
88,216 |
|
Buildings, improvements and equipment |
|
|
1,833,870 |
|
|
1,701,287 |
|
Less: Accumulated depreciation |
|
|
(434,565) |
|
|
(394,823) |
|
|
|
|
1,504,846 |
|
|
1,394,680 |
|
Construction in progress |
|
|
649,766 |
|
|
567,819 |
|
Real Estate Assets, net |
|
|
2,154,612 |
|
|
1,962,499 |
|
Cash and cash equivalents |
|
|
52,468 |
|
|
8,243 |
|
Rents and other receivables, net |
|
|
50,090 |
|
|
47,046 |
|
Acquired intangibles, net |
|
|
100,202 |
|
|
109,451 |
|
Deferred costs, net |
|
|
44,682 |
|
|
41,545 |
|
Prepaid expenses |
|
|
10,088 |
|
|
6,163 |
|
Goodwill |
|
|
173,843 |
|
|
173,843 |
|
Other assets, net |
|
|
68,880 |
|
|
66,266 |
|
TOTAL ASSETS |
|
$ |
2,654,865 |
|
$ |
2,415,056 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Unsecured credit facility, net |
|
$ |
694,751 |
|
$ |
825,186 |
|
Senior notes, net of debt issuance costs |
|
|
394,406 |
|
|
394,178 |
|
Capital lease, lease financing obligations and mortgage notes payable |
|
|
6,217 |
|
|
10,565 |
|
Accounts payable and accrued liabilities |
|
|
109,355 |
|
|
113,430 |
|
Dividends and distributions payable |
|
|
25,648 |
|
|
22,222 |
|
Advance rents, security deposits and other liabilities |
|
|
29,640 |
|
|
28,903 |
|
Deferred income taxes |
|
|
2,068 |
|
|
4,611 |
|
Deferred income |
|
|
32,870 |
|
|
25,305 |
|
TOTAL LIABILITIES |
|
|
1,294,955 |
|
|
1,424,400 |
|
|
|
|
|
|
|
|
|
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 June 30, 2018; zero shares authorized, issued and outstanding as of December 31, 2017 |
|
|
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 June 30, 2018; zero shares authorized, issued and outstanding as of December 31, 2017 |
|
|
304,426 |
|
|
— |
|
Common stock: $0.01 par value, 450,133,000 shares authorized, 51,140,798 and 50,701,795 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively |
|
|
511 |
|
|
507 |
|
Additional paid-in capital |
|
|
1,056,667 |
|
|
1,049,176 |
|
Accumulated other comprehensive income |
|
|
8,840 |
|
|
1,283 |
|
Accumulated dividends in excess of earnings |
|
|
(223,724) |
|
|
(173,552) |
|
Total stockholders’ equity |
|
|
1,249,932 |
|
|
877,414 |
|
Noncontrolling interests |
|
|
109,978 |
|
|
113,242 |
|
TOTAL EQUITY |
|
|
1,359,910 |
|
|
990,656 |
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
2,654,865 |
|
$ |
2,415,056 |
See accompanying notes to financial statements.
4
QTS REALTY TRUST, INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
(unaudited and in thousands except share and per share data)
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
|
$ |
89,232 |
|
$ |
80,793 |
|
$ |
174,945 |
|
$ |
159,910 |
|
Recoveries from customers |
|
|
10,444 |
|
|
8,774 |
|
|
21,957 |
|
|
17,135 |
|
Cloud and managed services |
|
|
10,974 |
|
|
16,856 |
|
|
24,155 |
|
|
33,821 |
|
Other |
|
|
1,627 |
|
|
1,445 |
|
|
4,917 |
|
|
2,966 |
|
Total revenues |
|
|
112,277 |
|
|
107,868 |
|
|
225,974 |
|
|
213,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating costs |
|
|
36,558 |
|
|
36,846 |
|
|
74,298 |
|
|
72,267 |
|
Real estate taxes and insurance |
|
|
2,903 |
|
|
2,946 |
|
|
5,808 |
|
|
6,093 |
|
Depreciation and amortization |
|
|
37,820 |
|
|
34,527 |
|
|
73,733 |
|
|
68,475 |
|
General and administrative |
|
|
21,031 |
|
|
22,562 |
|
|
43,265 |
|
|
44,759 |
|
Transaction, integration and impairment costs |
|
|
653 |
|
|
161 |
|
|
1,573 |
|
|
497 |
|
Restructuring |
|
|
11,430 |
|
|
— |
|
|
19,960 |
|
|
— |
|
Total operating expenses |
|
|
110,395 |
|
|
97,042 |
|
|
218,637 |
|
|
192,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
1,882 |
|
|
10,826 |
|
|
7,337 |
|
|
21,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
25 |
|
|
— |
|
|
26 |
|
|
1 |
|
Interest expense |
|
|
(8,203) |
|
|
(7,647) |
|
|
(16,313) |
|
|
(14,516) |
|
Income (loss) before taxes |
|
|
(6,296) |
|
|
3,179 |
|
|
(8,950) |
|
|
7,226 |
|
Tax benefit (expense) of taxable REIT subsidiaries |
|
|
(137) |
|
|
1,429 |
|
|
2,265 |
|
|
2,950 |
|
Net income (loss) |
|
|
(6,433) |
|
|
4,608 |
|
|
(6,685) |
|
|
10,176 |
|
Net (income) loss attributable to noncontrolling interests |
|
|
1,002 |
|
|
(568) |
|
|
1,031 |
|
|
(1,259) |
|
Net income (loss) attributable to QTS Realty Trust, Inc. |
|
$ |
(5,431) |
|
$ |
4,040 |
|
$ |
(5,654) |
|
$ |
8,917 |
|
Preferred stock dividends |
|
|
(2,248) |
|
|
— |
|
|
(2,576) |
|
|
— |
|
Net income (loss) attributable to common stockholders |
|
$ |
(7,679) |
|
$ |
4,040 |
|
$ |
(8,230) |
|
$ |
8,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.16) |
|
$ |
0.08 |
|
$ |
(0.17) |
|
$ |
0.18 |
|
Diluted |
|
|
(0.16) |
|
|
0.08 |
|
|
(0.17) |
|
|
0.17 |
See accompanying notes to financial statements.
5
QTS REALTY TRUST, INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited and in thousands)
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
||||
|
Net income (loss) |
|
$ |
(6,433) |
|
$ |
4,608 |
|
$ |
(6,685) |
|
$ |
10,176 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in fair value of interest rate swaps |
|
|
2,563 |
|
|
(1,499) |
|
|
8,545 |
|
|
(1,499) |
|
Reclassification of other comprehensive income to interest expense |
|
|
91 |
|
|
— |
|
|
493 |
|
|
— |
|
Comprehensive income (loss) |
|
|
(3,779) |
|
|
3,109 |
|
|
2,353 |
|
|
8,677 |
|
Comprehensive (income) loss attributable to noncontrolling interests |
|
|
431 |
|
|
(385) |
|
|
(271) |
|
|
(1,076) |
|
Comprehensive income (loss) attributable to QTS Realty Trust, Inc. |
|
$ |
(3,348) |
|
$ |
2,724 |
|
$ |
2,082 |
|
$ |
7,601 |
See accompanying notes to financial statements.
6
QTS REALTY TRUST, INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF EQUITY
(unaudited and in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other |
|
Accumulated |
|
Total |
|
|
|
|
|
|
|||
|
|
Preferred Stock |
|
Common stock |
|
Additional |
|
comprehensive |
|
dividends in |
|
stockholders' |
|
Noncontrolling |
|
|
|
|||||||||||
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
paid-in capital |
|
income |
|
excess of earnings |
|
equity |
|
interests |
|
Total |
||||||||
|
Balance January 1, 2018 |
— |
|
$ |
— |
|
50,702 |
|
$ |
507 |
|
$ |
1,049,176 |
|
$ |
1,283 |
|
$ |
(173,552) |
|
$ |
877,414 |
|
$ |
113,242 |
|
$ |
990,656 |
|
Net share activity through equity award plan |
— |
|
|
— |
|
439 |
|
|
4 |
|
|
(1,897) |
|
|
— |
|
|
— |
|
|
(1,893) |
|
|
1,031 |
|
|
(862) |
|
Increase in fair value of interest rate swaps |
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
7,557 |
|
|
— |
|
|
7,557 |
|
|
988 |
|
|
8,545 |
|
Equity-based compensation expense |
— |
|
|
— |
|
— |
|
|
— |
|
|
9,388 |
|
|
— |
|
|
— |
|
|
9,388 |
|
|
1,220 |
|
|
10,608 |
|
Net proceeds from Series A Preferred Stock offering |
4,280 |
|
|
103,212 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
103,212 |
|
|
— |
|
|
103,212 |
|
Net proceeds from Series B Preferred Stock offering |
3,163 |
|
|
304,426 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
304,426 |
|
|
— |
|
|
304,426 |
|
Dividends declared on the Series A Preferred Stock |
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,233) |
|
|
(2,233) |
|
|
— |
|
|
(2,233) |
|
Dividends declared on the Series B Convertible Preferred Stock |
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(343) |
|
|
(343) |
|
|
— |
|
|
(343) |
|
Dividends to common stockholders |
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(41,942) |
|
|
(41,942) |
|
|
— |
|
|
(41,942) |
|
Distributions to noncontrolling interests |
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(5,472) |
|
|
(5,472) |
|
Net loss |
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(5,654) |
|
|
(5,654) |
|
|
(1,031) |
|
|
(6,685) |
|
Balance June 30, 2018 |
7,443 |
|
$ |
407,638 |
|
51,141 |
|
$ |
511 |
|
$ |
1,056,667 |
|
$ |
8,840 |
|
$ |
(223,724) |
|
$ |
1,249,932 |
|
$ |
109,978 |
|
$ |
1,359,910 |
See accompanying notes to financial statements.
7
QTS REALTY TRUST, INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
STATEMENTS OF CASH FLOW
(unaudited and in thousands)
For the six months ended June 30, 2018 and 2017
|
|
|
2018 |
|
2017 |
||
|
Cash flow from operating activities: |
|
|
|
|
||
|
Net income (loss) |
|
$ |
(6,685) |
|
$ |
10,176 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
70,804 |
|
|
66,443 |
|
Amortization of above and below market leases |
|
|
270 |
|
|
479 |
|
Amortization of deferred loan costs |
|
|
1,923 |
|
|
1,815 |
|
Amortization of senior notes discount |
|
|
— |
|
|
136 |
|
Equity-based compensation expense |
|
|
7,480 |
|
|
6,815 |
|
Bad debt expense |
|
|
(1,230) |
|
|
1,105 |
|
Deferred tax benefit |
|
|
(2,443) |
|
|
(2,979) |
|
Loss on sale of equipment |
|
|
2,846 |
|
|
— |
|
Restructuring costs, net of cash paid |
|
|
10,065 |
|
|
— |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
Rents and other receivables, net |
|
|
(1,914) |
|
|
(3,599) |
|
Prepaid expenses |
|
|
(3,925) |
|
|
(1,957) |
|
Other assets |
|
|
1,867 |
|
|
(595) |
|
Accounts payable and accrued liabilities |
|
|
3,535 |
|
|
(7,640) |
|
Advance rents, security deposits and other liabilities |
|
|
1,369 |
|
|
5,745 |
|
Deferred income |
|
|
7,564 |
|
|
1,440 |
|
Net cash provided by operating activities |
|
|
91,526 |
|
|
77,384 |
|
|
|
|
|
|
|
|
|
Cash flow from investing activities: |
|
|
|
|
|
|
|
Proceeds from sale of property |
|
|
1,496 |
|
|
— |
|
Acquisitions, net of cash acquired |
|
|
(24,626) |
|
|
(5,019) |
|
Additions to property and equipment |
|
|
(248,852) |
|
|
(139,818) |
|
Net cash used in investing activities |
|
|
(271,982) |
|
|
(144,837) |
|
|
|
|
|
|
|
|
|
Cash flow from financing activities: |
|
|
|
|
|
|
|
Credit facility proceeds |
|
|
231,000 |
|
|
109,000 |
|
Credit facility repayments |
|
|
(362,000) |
|
|
— |
|
Debt proceeds |
|
|
— |
|
|
1,920 |
|
Payment of deferred financing costs |
|
|
(606) |
|
|
(38) |
|
Payment of preferred stock dividends |
|
|
(635) |
|
|
— |
|
Payment of common stock dividends |
|
|
(40,641) |
|
|
(35,958) |
|
Distribution to noncontrolling interests |
|
|
(5,289) |
|
|
(5,087) |
|
Proceeds from exercise of stock options |
|
|
18 |
|
|
662 |
|
Payment of tax withholdings related to equity-based awards |
|
|
(1,233) |
|
|
(2,464) |
|
Principal payments on capital lease obligations |
|
|
(4,316) |
|
|
(6,547) |
|
Mortgage principal debt repayments |
|
|
(32) |
|
|
(22) |
|
Preferred stock issuance proceeds, net of costs |
|
|
408,415 |
|
|
— |
|
Common stock issuance proceeds, net of costs |
|
|
— |
|
|
39,011 |
|
Net cash provided by financing activities |
|
|
224,681 |
|
|
100,477 |
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
44,225 |
|
|
33,024 |
|
Cash and cash equivalents, beginning of period |
|
|
8,243 |
|
|
9,580 |
|
Cash and cash equivalents, end of period |
|
$ |
52,468 |
|
$ |
42,604 |
See accompanying notes to financial statements.
8
QTS REALTY TRUST, INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
STATEMENTS OF CASH FLOW (continued)
(unaudited and in thousands)
For the six months ended June 30, 2018 and 2017
|
|
|
2018 |
|
2017 |
||
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
Cash paid for interest (excluding deferred financing costs and amounts capitalized) |
|
$ |
14,265 |
|
$ |
11,517 |
|
Noncash investing and financing activities: |
|
|
|
|
|
|
|
Accrued capital additions |
|
$ |
67,708 |
|
$ |
46,894 |
|
Increase in other assets related to change in fair value of interest rate swaps |
|
$ |
8,545 |
|
$ |
1,499 |
|
Accrued equity issuance costs |
|
$ |
777 |
|
$ |
— |
|
Accrued preferred stock dividend |
|
$ |
2,576 |
|
$ |
— |
|
Accrued deferred financing costs |
|
$ |
14 |
|
$ |
— |
See accompanying notes to financial statements.
9
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
BALANCE SHEETS
(in thousands)
|
|
|
June 30, 2018 |
|
December 31, 2017 |
||
|
|
|
(unaudited) |
|
|
||
|
ASSETS |
|
|
|
|
|
|
|
Real Estate Assets |
|
|
|
|
|
|
|
Land |
|
$ |
105,541 |
|
$ |
88,216 |
|
Buildings, improvements and equipment |
|
|
1,833,870 |
|
|
1,701,287 |
|
Less: Accumulated depreciation |
|
|
(434,565) |
|
|
(394,823) |
|
|
|
|
1,504,846 |
|
|
1,394,680 |
|
Construction in progress |
|
|
649,766 |
|
|
567,819 |
|
Real Estate Assets, net |
|
|
2,154,612 |
|
|
1,962,499 |
|
Cash and cash equivalents |
|
|
52,468 |
|
|
8,243 |
|
Rents and other receivables, net |
|
|
50,090 |
|
|
47,046 |
|
Acquired intangibles, net |
|
|
100,202 |
|
|
109,451 |
|
Deferred costs, net |
|
|
44,682 |
|
|
41,545 |
|
Prepaid expenses |
|
|
10,088 |
|
|
6,163 |
|
Goodwill |
|
|
173,843 |
|
|
173,843 |
|
Other assets, net |
|
|
68,880 |
|
|
66,266 |
|
TOTAL ASSETS |
|
$ |
2,654,865 |
|
$ |
2,415,056 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Unsecured credit facility, net |
|
$ |
694,751 |
|
$ |
825,186 |
|
Senior notes, net of debt issuance costs |
|
|
394,406 |
|
|
394,178 |
|
Capital lease, lease financing obligations and mortgage notes payable |
|
|
6,217 |
|
|
10,565 |
|
Accounts payable and accrued liabilities |
|
|
109,355 |
|
|
113,430 |
|
Dividends and distributions payable |
|
|
25,648 |
|
|
22,222 |
|
Advance rents, security deposits and other liabilities |
|
|
29,640 |
|
|
28,903 |
|
Deferred income taxes |
|
|
2,068 |
|
|
4,611 |
|
Deferred income |
|
|
32,870 |
|
|
25,305 |
|
TOTAL LIABILITIES |
|
|
1,294,955 |
|
|
1,424,400 |
|
|
|
|
|
|
|
|
|
PARTNERS' CAPITAL |
|
|
|
|
|
|
|
7.125% Series A cumulative redeemable perpetual preferred units: $0.01 par value (liquidation preference $25.00 per unit), 4,600,000 units authorized, 4,280,000 units issued and outstanding as of June 30, 2018; zero units authorized, issued and outstanding as of December 31, 2017 |
|
|
103,212 |
|
|
— |
|
6.50% Series B cumulative convertible perpetual preferred units: $0.01 par value (liquidation preference $100.00 per unit), 3,162,500 units authorized, issued and outstanding as of June 30, 2018; zero units authorized, issued and outstanding as of December 31, 2017 |
|
|
304,426 |
|
|
— |
|
Common units: $0.01 par value, 450,133,000 units authorized, 57,818,242 and 57,245,524 units issued and outstanding as of June 30, 2018 and December 31, 2017, respectively |
|
|
942,278 |
|
|
989,207 |
|
Accumulated other comprehensive income |
|
|
9,994 |
|
|
1,449 |
|
TOTAL PARTNERS' CAPITAL |
|
|
1,359,910 |
|
|
990,656 |
|
TOTAL LIABILITIES AND PARTNERS' CAPITAL |
|
$ |
2,654,865 |
|
$ |
2,415,056 |
See accompanying notes to financial statements.
10
QUALITYTECH, LP
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
(unaudited and in thousands)
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
||||
|
Revenues: |
|
|
|
|
|
|
|
|
||||
|
Rental |
|
$ |
89,232 |
|
$ |
80,793 |
|
$ |
174,945 |
|
$ |
159,910 |
|
Recoveries from customers |
|
|
10,444 |
|
|
8,774 |
|
|
21,957 |
|
|
17,135 |
|
Cloud and managed services |
|
|
10,974 |
|
|
16,856 |
|
|
24,155 |
|
|
33,821 |
|
Other |
|
|
1,627 |
|
|
1,445 |
|
|
4,917 |
|
|
2,966 |
|
Total revenues |
|
|
112,277 |
|
|
107,868 |
|
|
225,974 |
|
|
213,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating costs |
|
|
36,558 |
|
|
36,846 |
|
|
74,298 |
|
|
72,267 |
|
Real estate taxes and insurance |
|
|
2,903 |
|
|
2,946 |
|
|
5,808 |
|
|
6,093 |
|
Depreciation and amortization |
|
|
37,820 |
|
|
34,527 |
|
|
73,733 |
|
|
68,475 |
|
General and administrative |
|
|
21,031 |
|
|
22,562 |
|
|
43,265 |
|
|
44,759 |
|
Transaction, integration and impairment costs |
|
|
653 |
|
|
161 |
|
|
1,573 |
|
|
497 |
|
Restructuring |
|
|
11,430 |
|
|
— |
|
|
19,960 |
|
|
— |
|
Total operating expenses |
|
|
110,395 |
|
|
97,042 |
|
|
218,637 |
|
|
192,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
1,882 |
|
|
10,826 |
|
|
7,337 |
|
|
21,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
25 |
|
|
— |
|
|
26 |
|
|
1 |
|
Interest expense |
|
|
(8,203) |
|
|
(7,647) |
|
|
(16,313) |
|
|
(14,516) |
|
Income (loss) before taxes |
|
|
(6,296) |
|
|
3,179 |
|
|
(8,950) |
|
|
7,226 |
|
Tax benefit (expense) of taxable REIT subsidiaries |
|
|
(137) |
|
||||||||