Exhibit 99.2

Table of Contents

Overview

3

Company Profile

Financial Statements

4

Consolidated Balance Sheets

Consolidated Statements of Operations

5

Consolidated Statements of Comprehensive Income

6

Summary of Financial Data

7

Reconciliations of Return on Invested Capital (ROIC)

9

Implied Enterprise Value and Weighted Average Shares

10

Operating Portfolio

11

Data Center Properties

Development Costs Summary

12

Development Summary

13

NOI by Facility and Capital Expenditure Summary

14

Leasing Statistics - Signed Leases

16

Leasing Statistics - Renewed and Rental Churn

17

Lease Expirations

18

Largest Customers

19

Product & Industry Diversification

20

Capital Structure

21

Debt Summary and Debt Maturities

Interest Summary

23

Appendix

24

1 QTS Q3 Earnings 2020

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Forward Looking Statements

Some of the statements contained in this document 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 the Company and the Company's response thereto and to the Company's 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 document reflect the Company's current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ significantly from those expressed in any forward-looking statement. The Company does 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 the Company's 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 the Company's customers' businesses that could affect their ability to make rental payments to the Company, supply chain disruptions and delays in the construction or development of the Company's data centers; risks related to our international operations; difficulties in identifying properties to acquire and completing acquisitions; the Company's 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 the Company operates; 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 the Company's failure to obtain necessary outside financing; dependence on third parties to provide Internet, telecommunications and network connectivity to the Company's data centers; the Company's failure to qualify and maintain its qualification as a real estate investment trust; 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 the Company's 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. The Company disclaims 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 the Company's future results to differ materially from any forward-looking statements, see the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, as well as other periodic reports the Company files 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.

2 QTS Q3 Earnings 2020

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Company Profile

3 QTS Q3 Earnings 2020

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Consolidated Balance Sheets

(unaudited and in thousands except share data)

ASSETS

September 30, 2020 (1)

December 31, 2019 (1)

Real Estate Assets

Land

$

164,816

$

130,605

Buildings, improvements and equipment

2,681,827

2,178,901

Less: Accumulated depreciation

(662,454)

(558,560)

Construction in progress (2)

2,184,189

1,750,946

957,592

920,922

Real Estate Assets, net

3,141,781

2,671,868

Investments in unconsolidated entity

22,883

30,218

Operating lease right-of-use assets, net

52,816

57,141

Cash and cash equivalents

21,998

15,653

Rents and other receivables, net

87,479

81,181

Acquired intangibles, net

71,367

81,679

Deferred costs, net (3)

57,058

52,363

Prepaid expenses

11,281

10,586

Goodwill

173,843

173,843

Other assets, net (4)

49,046

49,001

TOTAL ASSETS

$

3,689,552

$

3,223,533

LIABILITIES

Unsecured credit facility, net (5)

$

1,217,356

$

1,010,640

Senior notes, net of debt issuance costs (5)

396,121

395,549

Finance leases and mortgage notes payable

44,911

46,876

Operating lease liabilities

59,642

64,416

Accounts payable and accrued liabilities

173,793

142,547

Dividends and distributions payable

37,969

34,500

Advance rents, security deposits and other liabilities

21,833

18,027

Derivative liabilities

60,032

26,609

Deferred income taxes

637

749

Deferred income

55,422

39,169

TOTAL LIABILITIES

2,067,716

1,779,082

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 September 30,

2020 and December 31, 2019, respectively (6)

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 September 30, 2020 and

December 31, 2019, respectively (7)

304,223

304,223

Common stock: $0.01 par value, 450,133,000 shares authorized, 64,442,343 and 58,227,523 shares issued

and outstanding as of September 30, 2020 and December 31, 2019, respectively

644

582

Additional paid-in capital

1,614,508

1,330,444

Accumulated other comprehensive income (loss)

(56,480)

(24,642)

Accumulated dividends in excess of earnings

(457,993)

(376,002)

Total stockholders' equity

1,508,114

1,337,817

Noncontrolling interests

113,722

106,634

TOTAL EQUITY

1,621,836

1,444,451

TOTAL LIABILITIES AND EQUITY

$

3,689,552

$

3,223,533

_______________________________________________________

  1. The balance sheet at September 30, 2020 and December 31, 2019, has been derived from the consolidated financial statements at that date, but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements.
  2. As of September 30, 2020, construction in progress included $199.5 million related to land acquisitions whereby the initiation of development activities has begun to prepare the property for its intended use.
  3. As of September 30, 2020 and December 31, 2019, deferred costs, net included $6.5 million and $8.0 million of deferred financing costs net of amortization, respectively, and $50.5 million and $44.3 million of deferred leasing costs net of amortization, respectively.
  4. As of September 30, 2020 and December 31, 2019, other assets, net included $44.0 million and $45.8 million of corporate fixed assets, respectively, primarily relating to corporate offices, leasehold improvements and product related assets.
  5. Debt issuance costs, net related to the Senior Notes and term loan portion of the Company's unsecured credit facility aggregating $9.5 million and $10.8 million at September 30, 2020 and December 31, 2019, respectively, have been netted against the related debt liability line items for both periods presented.
  6. As of September 30, 2020, the total liquidation preference of the Series A Preferred Stock was $107.0 million, calculated as $25.00 liquidation preference per share times 4,280,000 shares outstanding.
  7. As of September 30, 2020, the total liquidation preference of the Series B Preferred Stock was $316.3 million, calculated as $100.00 liquidation preference per share times 3,162,500 shares outstanding.

4 QTS Q3 Earnings 2020

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Consolidated Statements of Operations

(unaudited and in thousands except share and per share data)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Revenues:

Rental (1)

$

133,782

$

125,996

$

121,475

$

379,860

$

345,841

Other (2)

3,756

5,644

3,780

15,611

11,270

Total revenues

137,538

131,640

125,255

395,471

357,111

Operating expenses:

Property operating costs

43,979

40,349

44,730

125,109

117,403

Real estate taxes and insurance

4,005

4,106

3,713

12,023

10,435

Depreciation and amortization

51,378

47,554

42,875

144,002

123,144

General and administrative (3)

22,082

21,391

19,504

64,156

59,519

Transaction, integration, and impairment costs

1,078

381

827

1,675

3,080

Total operating expenses

122,522

113,781

111,649

346,965

313,581

Gain on sale of real estate, net

-

-

-

-

13,408

Operating income

15,016

17,859

13,606

48,506

56,938

Other income and expense:

Interest income

-

2

22

2

103

Interest expense

(7,516)

(6,924)

(6,724)

(21,602)

(20,329)

Other income (expense)

-

-

370

159

330

Equity in net loss of unconsolidated entity

(366)

(590)

(317)

(1,633)

(992)

Income before taxes

7,134

10,347

6,957

25,432

36,050

Tax benefit (expense) of taxable REIT subsidiaries

(227)

(138)

(369)

(196)

(779)

Net income

6,907

10,209

6,588

25,236

35,271

Net (income) loss attributable to noncontrolling

interests (4)

18

(317)

49

(408)

(1,593)

Net income attributable to QTS Realty Trust, Inc.

$

6,925

$

9,892

$

6,637

$

24,828

$

33,678

Preferred stock dividends

(7,045)

(7,045)

(7,045)

(21,135)

(21,135)

Net income (loss) attributable to common stockholders

$

(120)

$

2,847

$

(408)

$

3,693

$

12,543

Net income (loss) per share attributable to common

shares:

Basic (5)

$

(0.07)

$

(0.05)

$

(0.05)

$

(0.13)

$

0.12

Diluted (5)

(0.07)

(0.05)

(0.05)

(0.13)

0.12

________________________________________________________

  1. Represents lease revenue, inclusive of recoveries from customers as well as straight line rent. Recoveries from customers was $14.9 million, $12.5 million, and $17.6 million for the three months ended September 30, 2020, June 30, 2020, and September 30, 2019, respectively, and $39.7 million and $41.0 million for the nine months ended September 30, 2020 and 2019, respectively. Straight line rent was $7.4 million, $5.8 million and $2.3 million for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively, and $17.0 million and $4.8 million for the nine months ended September 30, 2020 and 2019, respectively.
  2. Includes revenue from managed services, sales of scrap metals and other unused materials, management fees, service fees, development fees and various other non-rental revenue items.
  3. Includes personnel costs, sales and marketing costs, professional fees, travel costs, product investment costs and other corporate general and administrative expenses. General and administrative expenses were 16.1%, 16.2%, and 15.6% of total revenues for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively, and 16.2% and 16.7% of total revenues for the nine months ended September 30, 2020 and 2019, respectively.
  4. The weighted average noncontrolling ownership interest of QualityTech, LP was 9.7%, 9.9% and 10.7% for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively, and 10.0% and 10.9% for the nine months ended September 30, 2020 and 2019, respectively.
  5. Basic and diluted net income (loss) per share were calculated using the two-class method.

5 QTS Q3 Earnings 2020

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Consolidated Statements of Comprehensive Income (Loss)

(unaudited and in thousands)

Net income

Other comprehensive income (loss):

Foreign currency translation adjustment gain (loss) Increase (decrease) in fair value of derivative contracts Reclassification of other comprehensive income to utilities expense Reclassification of other comprehensive income to interest expense

Comprehensive income (loss)

Comprehensive (income) loss attributable to noncontrolling interests

Comprehensive income (loss) attributable to QTS Realty Trust, Inc.

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2019

2020

2020

2019

$

6,907

$

10,209

$

6,588

$

25,236

$

35,271

166

64

(426)

7

(360)

5,500

(3,641)

(5,733)

(34,856)

(34,192)

197

410

-

961

-

3,352

2,703

(235)

6,813

(1,200)

16,122

9,745

194

(1,839)

(481)

(1,626)

(1,022)

(22)

183

52

$

14,496

$

8,723

$

172

$

(1,656)

$

(429)

6 QTS Q3 Earnings 2020

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Summary of Financial Data

(unaudited and in thousands, except operating portfolio statistics data and per share data)

This summary includes certain non-GAAP financial measures that management believes are helpful in understanding the Company's business as further described in the Appendix. The Company does not, nor does it suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information or as an expectation of future performance of the Company's business. The Company believes that the presentation of non-GAAP financial measures provide meaningful supplemental information to both management and investors that is indicative of the Company's current operations and its business. The Company has included a reconciliation of this additional information to the most comparable GAAP measure in the summary financial information below.

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

Summary of Results

2020

2020

2019

2020

2019

Total revenue (1)

$

137,538

$

131,640

$

125,255

$

395,471

$

357,111

Net income

$

6,907

$

10,209

$

6,588

$

25,236

$

35,271

Net income (loss) attributable to common stockholders

$

(120)

$

2,847

$

(408)

$

3,693

$

12,543

Net income (loss) per share attributable to basic common shares (2)

$

(0.07)

$

(0.05)

$

(0.05)

$

(0.13)

$

0.12

Net income (loss) per share attributable to diluted common shares (2)

$

(0.07)

$

(0.05)

$

(0.05)

$

(0.13)

$

0.12

FFO available to common stockholders & OP unit holders (3)

$

48,620

$

48,349

$

40,198

$

140,699

$

116,914

Note: All metrics in the following tables include QTS' pro rata share of results from the unconsolidated joint venture.

Three Months Ended

Nine Months Ended

Other Data (including QTS' pro rata share of

September 30,

June 30,

September 30,

September 30,

unconsolidated JV, excl. total revenue)

2020

2020

2019

2020

2019

Total revenue (1)

$

137,538

$

131,640

$

125,255

$

395,471

$

357,111

MRR (at period end)

$

36,913

$

36,091

$

32,979

$

36,913

$

32,979

NOI

$

90,734

$

88,112

$

77,684

$

261,289

$

231,221

NOI as a % of revenue

66.0%

66.9%

62.0%

66.1%

64.7%

Adjusted EBITDA

$

75,986

$

72,800

$

63,001

$

215,555

$

184,081

Adjusted EBITDA as a % of revenue

55.2%

55.3%

50.3%

54.5%

51.5%

Operating FFO available to common stockholders & OP

$

49,698

$

48,730

$

41,025

$

142,374

$

119,994

unit holders

Operating FFO per diluted share

$

0.70

$

0.70

$

0.65

$

2.06

$

1.93

Annualized ROIC

11.6%

11.9%

11.9%

11.8%

12.2%

Balance Sheet Data (including QTS' pro rata share of unconsolidated JV) (4)

September 30,

December 31,

2020

2019

Total indebtedness, net of cash and cash equivalents

$1,690,497

$1,482,260

Indebtedness to last quarter annualized Adjusted EBITDA

5.6x

5.6x

Indebtedness to last quarter annualized Adjusted EBITDA pro forma for the effects of forward equity sales

4.1x (5)

4.8x (6)

Indebtedness to undepreciated real estate assets

43.7 %

45.3 %

Indebtedness to Implied Enterprise Value

25.2 %

27.0 %

________________________________________________________

  1. Excludes QTS' pro rata share of the unconsolidated joint venture revenue. Total unconsolidated JV revenue at the JV's 100% share was $4.1 million, $3.4 million and $2.3 million for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019 respectively, and $10.6 million and $5.9 million for the nine months ended September 30, 2020 and 2019, respectively. QTS' 50% pro rata share of unconsolidated JV revenue was $2.0 million, $1.8 million and $1.2 million for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively, and $5.3 million and $2.9 million for the nine months ended September 30, 2020 and 2019, respectively.
  2. Basic and diluted net income (loss) per share were calculated using the two-class method.
  3. Includes QTS' pro rata share of results from its unconsolidated entity.
  4. The Company has excluded associated debt issuance costs from the Total indebtedness line item for both periods presented. Therefore, the total debt amount, as well as calculations based on the total debt amount, represents the full amount of debt that will be repaid less the amount of cash and cash equivalents on hand.
  5. Represents the Company's leverage ratio pro forma for the effects of approximately $456 million in net proceeds available under forward equity agreements executed through October 26, 2020, the date of this report. The Company expects to use proceeds from these forward equity agreements to fund future capital expenditures.
  6. Represented the Company's leverage ratio pro forma for the effects of approximately $220 million in net proceeds available under forward equity agreements executed through February 18, 2020, the release date of the December 31, 2019 earnings report.

7 QTS Q3 Earnings 2020

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Operating Portfolio Statistics

September 30,

December 31,

(including unconsolidated JV at the JV's 100% share)

2020

2019

Built out square footage:

Raised floor

1,890,570

1,659,137

Leasable raised floor

1,514,153

1,340,755

Leased raised floor

1,419,599

1,226,188

Data center % occupied

93.8%

91.5%

Total Raw Shell:

Total

7,497,195

7,188,833

Basis-of-design raised floor space (1)

3,384,578

3,213,799

Data center properties

27

24

Basis of design raised floor % developed

55.9%

51.6%

Data center raised floor % owned (2)

96.6%

96.0%

_________________________________________________

  1. See definition in Appendix.
  2. Includes the Santa Clara facility which is subject to a long-term ground lease, includes the unconsolidated JV property at the JV's 100% share, and excludes facilities subject to finance lease obligations. Had the Santa Clara facility been excluded as an owned facility, the owned data center raised floor percentage would be 93.4% and 92.4% at September 30, 2020 and December 31, 2019, respectively.

2020 Guidance

2020 Revised Guidance

Previous 2020 Guidance

Original 2020 Guidance

($ in millions except per share amounts)

Low

High

Low

High

Low

High

Revenue

$

531

$

537

$

523

$

537

$

523

$

537

Adjusted EBITDA

$

288

$

293

$

280

$

290

$

275

$

285

Operating FFO per fully diluted share

$

2.75

$

2.83

$

2.73

$

2.83

$

2.69

$

2.83

As a result of strong year to date leasing activity, the Company has outperformed its initial expectations for recurring revenue and is increasing its previously announced revenue guidance range of $523 million - $537 million to a new range of $531 million - $537 million, which assumes annual rental churn as previously announced of between 3% and 5%.

Due to continued outperformance in recurring revenue and successful cost management, the Company is increasing its 2020 Adjusted EBITDA guidance from a previous range of $280 million - $290 million to a new range of $288 million - $293 million. As disclosed in the previous quarter, the Company's revised Adjusted EBITDA outlook includes a full-year aggregate benefit of approximately $2 million - $3 million related to lower than expected corporate travel and utility expense as a result of the ongoing effects of COVID-19.

The Company is increasing its 2020 OFFO per fully diluted share guidance from a previous range of $2.73 - $2.83 per share to a new range of $2.75 - $2.83 per share to reflect its higher Adjusted EBITDA outlook and updated capital development plan.

The Company is increasing its 2020 cash paid for capital expenditures guidance (excluding acquisitions and including its proportionate share of cash capital expenditures associated with the unconsolidated entity) as a result of strong year to date signed leasing activity that has resulted in a $130.6 million booked-not-billed annualized MRR backlog as of September 30, 2020. The Company is increasing its 2020 cash paid for capital expenditures guidance from a previous range of $650 million - $750 million to a new range of $700 million - $800 million.

The Company's 2020 guidance assumes, among other things, that its facilities continue to operate and it does not experience significant work stoppages or closures, it is able to mitigate any supply chain disruptions for its development activities, and it is able to collect revenues in line with current expectations. While these are the Company's current assumptions, this is an evolving situation and these assumptions could change, including if the duration of the pandemic is extended, which could affect outlook.

QTS does not provide reconciliations for the non-GAAP financial measures included in its guidance provided above due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for restructuring costs, transaction costs, lease exit costs, asset impairments and gain

(loss) on disposals and other charges as those amounts are subject to significant variability based on future transactions that are not yet known, the amount of which, based on historical experience, could be significant.

8 QTS Q3 Earnings 2020

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Reconciliations of Return on Invested Capital (ROIC)

(unaudited and in thousands)

Return on Invested Capital ("ROIC") is a non-GAAP measure that provides additional information to users of the financial statements. Management believes ROIC is a helpful metric for users of the financial statements to gauge the Company's performance of its business against the capital it has invested in the business.

ROIC (including QTS' pro rata share of unconsolidated JV)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

NOI (1) (2)

$

90,734

$ 88,112

$

77,684

$ 261,289

$ 231,221

Annualized NOI

362,936

352,448

310,736

348,385

308,295

Average undepreciated real estate assets and other net

3,117,375

2,962,995

2,612,180

2,957,637

2,519,579

fixed assets placed in service

Annualized ROIC

11.6%

11.9%

11.9%

11.8%

12.2%

________________________________________________________

  1. Includes facility level G&A expense allocation charges of 4% of cash revenue for all facilities. These allocated charges aggregated to $5.1 million, $4.8 million and $4.8 million for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019 respectively, and $14.6 million and $13.9 million for the nine months ended September 30, 2020 and 2019, respectively.
  2. NOI includes QTS' pro rata share of NOI from the unconsolidated joint venture.

As of

As of

Calculation of Average Undepreciated Real Estate Assets and

September 30,

June 30,

September 30,

September 30,

Other Net Fixed Assets Placed in Service

2020

2020

2019

2020

2019

Real Estate Assets, net

$

3,141,781

$2,988,744

$

2,571,589

$

3,141,781

$

2,571,589

Less: Construction in progress

(957,592)

(976,257)

(843,754)

(957,592)

(843,754)

Plus: Accumulated depreciation

662,454

623,915

555,562

662,454

555,562

Plus: Goodwill

173,843

173,843

173,843

173,843

173,843

Plus: Other fixed assets, net

36,940

38,495

44,789

36,940

44,789

Plus: Acquired intangibles, net (1)

60,723

63,925

72,455

60,723

72,455

Plus: Leasing Commissions, net

50,526

47,741

42,082

50,526

42,082

Plus: Assets placed in service in unconsolidated

JV (2)

53,991

51,678

42,439

53,991

42,439

Total as of period end

$

3,222,666

$3,012,084

$

2,659,005

$

3,222,666

$

2,659,005

Average undepreciated real estate assets and other

net fixed assets as of reporting period (3)

$

3,117,375

$2,962,995

$

2,612,180

$

2,957,637

$

2,519,579

________________________________________________________

  1. Net of acquired intangible liabilities and deferred tax liabilities.
  2. Represents QTS' basis in the assets in the JV which were $54.0 million as of September 30, 2020 (calculated as the cost basis of the assets contributed for in serviced phases of $109.2 million less the equity contribution of the JV partner and the JV partner's portion of debt of $55.2 million), $51.7 million as of June 30, 2020 (calculated as the cost basis of the assets contributed for in serviced phases of $104.6 million less the equity contribution of the JV partner and the JV partner's portion of debt of $52.9 million) and $42.4 million as of September 30, 2019 (calculated as the cost basis of the assets contributed for in serviced phases of $86.1 million less the equity contribution of the JV partner and the JV partner's portion of debt of $43.7 million).
  3. Calculated by using average quarterly balance of each account.

9 QTS Q3 Earnings 2020

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Implied Enterprise Value and Weighted Average Shares

Shares or

Market Price or

Market

Implied Enterprise Value as of September 30, 2020:

Equivalents

Liquidation Value as of

Capitalization (in

Outstanding

September 30, 2020

thousands)

Class A Common Stock

64,313,935

$

63.02

$

4,053,064

Class B Common Stock

128,408

63.02

8,092

Total Shares Outstanding

64,442,343

Units of Limited Partnership Interest (1)

6,708,799

63.02

422,789

Options to purchase Class A Common Stock and performance

units (2)

1,078,132

63.02

67,944

Effect of Class A common stock associated with forward

equity sale (3)

478,623

63.02

30,163

Fully Diluted Total Shares and Units of Limited Partnership

72,707,897

Interest outstanding as of September 30, 2020:

Liquidation value of Series A Preferred Stock

4,280,000

25.00

107,000

Liquidation value of Series B Convertible Preferred Stock

3,162,500

100.00

316,250

Total Equity

$

5,005,302

Total Indebtedness (4)

1,690,497

Implied Enterprise Value

$

6,695,799

________________________________________________________

  1. Includes 50,600 of operating partnership units representing the "in the money" value of Class O LTIP units on an "as if" converted basis as of September 30, 2020.
  2. Represents options to purchase shares of Class A Common Stock of QTS Realty Trust, Inc. representing the "in the money" value of options on an "as if" converted basis and the value of performance awards on an "as if" converted basis as of September 30, 2020.
  3. Represents the "in the money" value of the forward equity shares on an "as if" converted basis as of September 30, 2020.
  4. Excludes all debt issuance costs reflected as a reduction to liabilities at September 30, 2020 representing the full amount of debt that will be repaid, less the amount of cash and cash equivalents on hand. This also includes the Company's pro rata share of unconsolidated joint venture debt, net of its pro rata share of cash on hand at the joint venture.

The following table presents the weighted average fully diluted shares for the three and six months ended September 30, 2020:

Three Months Ended

Nine Months Ended

September 30, 2020

September 30, 2020

Weighted average shares outstanding - basic

61,634,637

60,258,796

Effect of Class A partnership units (1)

6,658,199

6,666,578

Effect of Class O units on an "as if" converted basis (1)

50,600

44,815

Effect of options to purchase Class A common stock and performance units on an "as

1,135,884

1,020,560

if" converted basis (2)

Effect of Class A common stock associated with forward equity sale (3)

1,451,412

1,050,479

Weighted average shares outstanding - diluted (4)

70,930,732

69,041,228

________________________________________________________

  1. The Class A units and Class O units represent limited partnership interests in the Operating Partnership.
  2. The average share price for the three and nine months ended September 30, 2020 was $66.24 and $61.43, respectively.
  3. Represents the weighted average "in the money" value of the forward equity shares on an "as if" converted basis.
  4. Series B Convertible Preferred stock was not incorporated on an "as if" converted basis as the conversion would have been antidilutive for the period presented.

10 QTS Q3 Earnings 2020

Contact: IR@qtsdatacenters.com

Data Center Properties

The table below presents an overview of the portfolio of data center properties that the Company owns or leases, referred to herein as our data center properties, based on information as of September 30, 2020.

Net Rentable Square Feet (Operating NRSF) (1)

Gross

Available

Basis of

Current

Year

Raised

Office &

Supporting

%

Annualized

Utility

Design

Raised

Properties

Square

Total

Power

("BOD")

Floor as a

Acquired(2)

Feet (3)

Floor (4)

Other (5)

Infrastructure (6)

Occupied(7)

Rent (8)

(MW) (9)

NRSF

% of BOD

Richmond, VA

2010

1,318,353

117,309

51,093

131,654

300,056

85.1%

$

35,021,750

110

557,309

21.0%

Atlanta, GA (DC - 1) (10)

2006

968,695

527,186

36,953

364,815

928,954

98.8%

122,157,934

72

527,186

100.0%

Irving, TX

2013

698,000

208,114

15,300

228,656

452,070

95.1%

54,226,439

140

275,701

75.5%

Princeton, NJ

2014

553,930

58,157

2,229

111,405

171,791

100.0%

10,514,807

22

158,157

36.8%

Atlanta, GA (DC-2)(11)

2018

495,000

37,839

9,250

34,698

81,787

100.0%

604,800

100

240,000

15.8%

Chicago, IL

2014

474,979

87,500

3,508

88,422

179,430

91.0%

23,393,455

56

215,855

40.5%

Ashburn, VA (DC-1)(12)

2017

445,000

140,586

13,199

145,936

299,721

96.0%

10,710,780

50

178,000

79.0%

Suwanee, GA

2005

369,822

212,975

8,697

107,128

328,800

91.0%

60,483,084

36

212,975

100.0%

Piscataway, NJ

2016

360,000

111,263

19,243

110,479

240,985

94.9%

22,364,575

111

176,000

63.2%

Fort Worth, TX

2016

261,836

71,147

17,232

125,794

214,173

96.3%

5,854,763

50

80,000

88.9%

Hillsboro, OR

2017

158,000

16,563

1,000

14,228

31,791

100.0%

1,511,964

30

85,000

19.5%

Santa Clara, CA (13)

2007

135,322

59,905

1,238

45,094

106,237

90.2%

23,547,632

11

80,940

74.0%

Sacramento, CA

2012

92,644

54,595

2,794

23,916

81,305

45.2%

11,102,123

8

54,595

100.0%

Dulles, VA (14)

2017

87,159

30,545

5,997

32,892

69,434

93.4%

18,052,231

13

48,270

63.3%

Leased facilities (15)

2006 & 2015

190,875

62,274

18,650

41,901

122,825

83.8%

23,863,584

14

82,886

75.1%

Other (16)

Misc.

459,549

61,012

49,337

77,441

187,790

78.7%

14,621,632

97

180,380

33.8%

7,069,164

1,856,970

255,720

1,684,459

3,797,149

93.6%

$

438,031,553

920

3,153,254

58.9%

New Property Development

Ashburn, VA (DC - 2) (17)

2017

310,000

-

-

-

-

-%

-

-

165,000

-%

Unconsolidated Properties - at the Entity's 100% Share (18)

Manassas, VA

2018

118,031

33,600

12,663

39,044

85,307

100.0%

$

9,856,599

135

66,324

50.7%

Total Properties

7,497,195

1,890,570

268,383

1,723,503

3,882,456

93.8%

$

447,888,152

1,055

3,384,578

55.9%

________________________________________________________

  1. Operating NRSF 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 the Company's own office space.
  2. Represents the year a property was acquired or, in the case of a property under lease, the year the Company's initial lease commenced for the property.
  3. With respect to the Company's owned properties, gross square feet represents the entire building area. With respect to leased properties, gross square feet represents that portion of the gross square feet subject to our lease. This includes 424,773 square feet of QTS office and support space, which is not included in operating NRSF.
  4. Represents management's estimate of the portion of net rentable square feet ("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. The Company defines annualized rent as MRR multiplied by 12. The Company calculates MRR as monthly contractual revenue under executed contracts as of a particular date, but excludes customer recoveries, deferred set up fees, variable related revenues, non-cash revenues and other one-time revenues. MRR does not include the impact from booked- not-billed contracts as of a particular date, unless otherwise specifically noted. This amount reflects the annualized cash rental payments. It does not reflect the accounting associated with any free rent, rent abatements or future scheduled rent increases and also excludes operating expense and power reimbursements.
  9. Represents installed utility power and transformation capacity that is available for use by the facility as of September 30, 2020.
  10. This property was formerly known as "Atlanta, GA (Metro)" but has been renamed "Atlanta, GA (DC-1)" to distinguish between the existing data center and the recently developed data center shown as "Atlanta, GA (DC - 2)".
  11. Represents the newly developed data center building at our Atlanta, GA campus.
  12. 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.
  13. Subject to long-term ground lease.
  14. The Dulles campus has two data center buildings and the Company is currently relocating customers from the smaller and older facility to the newer facility in an effort to optimize its operating cost structure.
  15. Includes 7 facilities. All facilities are leased, including those subject to finance leases.
  16. Consists of Miami, FL; Lenexa, KS; Overland Park, KS; Eemshaven, Netherlands and Groningen, Netherlands facilities.
  17. Represents the development of a new data center building in our Ashburn, VA market.
  18. Represents the Company's unconsolidated joint venture at the JV's 100% share. QTS' pro rata share of the JV is 50%.

11 QTS Q3 Earnings 2020

Contact: IR@qtsdatacenters.com

Development Costs Summary

(in millions, except NRSF data)

During the third quarter of 2020, the Company brought online approximately 26 megawatts of gross power and approximately 120,000 net rentable square feet ("NRSF") of raised floor and customer specific capital at its Atlanta (DC - 2), Ashburn (DC - 1), Irving, Fort Worth, Atlanta-Suwanee and Netherlands facilities at an aggregate cost of approximately $188.1 million.

For the nine months ended September 30, 2020, excluding the Company's share of capital at the joint venture, the Company brought online approximately 53 megawatts of gross power and approximately 222,000 NRSF of raised floor and customer specific capital at its Ashburn (DC -1), Atlanta (DC - 1), Atlanta (DC - 2), Irving, Fort Worth, Atlanta-Suwanee, Hillsboro, Chicago, Piscataway and Netherlands facilities at an aggregate cost of approximately $484.6 million.

Additionally, during the nine months ended September 30, 2020, the joint venture brought online the third phase at the Manassas facility, representing approximately four megawatts of gross power and approximately 11,000 NRSF of raised floor at an aggregate cost of approximately $22 million at the joint venture's 100% share, of which the Company's pro rata share was approximately $11 million. The joint venture intends to bring additional space and power into service as incremental development at the Manassas facility takes place and future phases are delivered to the customer.

The under construction table below summarizes the Company's outlook for development projects which it expects to complete by December 31, 2020 (in millions).

Under Construction Costs (1)

Properties

Actual (2)

Estimated Cost

Total

Expected

to Completion (3)

Completion date

Atlanta, GA (DC - 2) (4)

$

42

$

8

$

50

Q4 2020

Richmond, VA

32

5

37

Q4 2020

Ashburn, VA (DC - 1) (5)

33

2

35

Q4 2020

Hillsboro, OR

11

2

13

Q4 2020

Chicago, IL

6

3

9

Q4 2020

Piscataway, NJ

4

2

6

Q4 2020

Totals

$

128

$

22

$

150

________________________________________________________

  1. In addition to projects currently under construction, the Company's near-term development projects are expected to be delivered in a modular manner, and the Company currently expects to invest additional capital to complete these near term projects. The ultimate timing and completion of, and the commitment of capital to, the Company's future development projects are within the Company's discretion and will depend upon a variety of factors, including the actual contracts executed, availability of financing and the Company's estimation of the future market for data center space in each particular market.
  2. Represents actual costs under construction through September 30, 2020. In addition to the $128 million of construction costs incurred through September 30, 2020 for development expected to be completed by December 31, 2020, as of September 30, 2020 the Company had incurred $830 million of additional costs (including acquisition costs and other capitalized costs) for other development projects that are expected to be completed after December 31, 2020.
  3. Represents management's estimate of the additional costs required to complete the current NRSF under development. There may be an increase in costs if customers' requirements exceed the Company's current basis of design.
  4. Represents development associated with the newly developed data center building at our Atlanta, GA campus.
  5. 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 labeled "Ashburn, VA (DC - 2)" depicted in other places within this document.

12 QTS Q3 Earnings 2020

Contact: IR@qtsdatacenters.com

Development Summary

(in millions, except NRSF data)

The following development table presents an overview of the Company's development pipeline, based on information as of September 30, 2020. This table shows the Company's ability to increase its raised floor of 1.9 million square feet as of September 30, 2020 to 3.4 million square feet, exclusive of development capacity on adjacent land holdings.

Raised Floor NRSF

Overview as of September 30, 2020

Current

Approximate

Under

Future

Basis of

Adjacent Acreage

Properties

NRSF in

Service

Construction (1)

Available (2)

Design NRSF

of Land (3)

Richmond, VA

117,309

22,342

417,658

557,309

182.2

Atlanta, GA (DC - 1) (4)

527,186

-

-

527,186

-

Irving, TX

208,114

-

67,587

275,701

29.4

Princeton, NJ

58,157

-

100,000

158,157

65.0

Atlanta, GA (DC - 2) (5)

37,839

18,000

184,161

240,000

50.3

Chicago, IL

87,500

10,000

118,355

215,855

23.0

Ashburn, VA (DC - 1) (6)

140,586

14,000

23,414

178,000

34.9

Suwanee, GA

212,975

-

-

212,975

15.4

Piscataway, NJ

111,263

7,000

57,737

176,000

-

Fort Worth, TX

71,147

-

8,853

80,000

26.5

Hillsboro, OR

16,563

7,000

61,437

85,000

82.7

Santa Clara, CA

59,905

-

21,035

80,940

-

Sacramento, CA

54,595

-

-

54,595

-

Dulles, VA

30,545

-

17,725

48,270

-

Leased facilities (7)

62,274

-

20,612

82,886

-

Phoenix, AZ

-

-

-

-

84.2

Manassas, VA

-

-

-

-

87.1

Other (8)

61,012

-

119,368

180,380

23.5

1,856,970

78,342

1,217,942

3,153,254

704.2

New Property Development

Ashburn, VA (DC - 2) (9)

-

-

165,000

165,000

28.0

Unconsolidated JV Properties - at the JV's 100% Share (10)

Manassas, VA

33,600

-

32,724

66,324

-

1,890,570

78,342

1,415,666

3,384,578

732.2

________________________________________________________

  1. Reflects NRSF at a facility for which the initiation of substantial activities has begun to prepare the property for its intended use on or before December 31, 2020.
  2. Reflects NRSF at a facility for which the initiation of substantial activities has begun to prepare the property for its intended use after December 31, 2020.
  3. The total cost basis of adjacent land, which is land available for the future development, is approximately $231.6 million, of which approximately $198.4 million is included in Construction in Progress on the consolidated balance sheet. The Basis of Design NRSF does not include any build-out on the available land.
  4. This property was formerly known as "Atlanta, GA (Metro)" but has been renamed "Atlanta, GA (DC-1)" to distinguish between the existing data center and the newly developed data center shown as "Atlanta, GA (DC - 2)."
  5. Represents the newly developed data center building at our Atlanta, GA campus.
  6. 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.
  7. Includes 7 facilities. All facilities are leased, including those subject to finance leases.
  8. Consists of Miami, FL; Lenexa, KS; Overland Park, KS; Eemshaven, Netherlands and Groningen, Netherlands facilities.
  9. Represents the development of a new data center building in our Ashburn, VA market.
  10. Represents the Company's unconsolidated joint venture at the JV's 100% share. QTS' pro rata share of the JV is 50%.

13 QTS Q3 Earnings 2020

Contact: IR@qtsdatacenters.com

NOI by Facility and Capital Expenditure Summary

(unaudited and in thousands)

The Company calculates net operating income, or NOI, as net income (loss) (computed in accordance with GAAP), excluding: interest expense, interest income, tax expense (benefit) of taxable REIT subsidiaries, depreciation and amortization, write-off of unamortized deferred financing costs, other (income) expense, debt restructuring costs, transaction and integration costs, gain (loss) on sale of real estate, restructuring costs, general and administrative expenses and similar adjustments for unconsolidated entities. The Company believes that NOI is another metric that is often utilized to evaluate returns on operating real estate from period to period and also, in part, to assess the value of the operating real estate.

The breakdown of NOI by facility is shown below:

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Breakdown of NOI by facility:

Atlanta (DC - 1) data center (1)

$

26,579

$

26,843

$

23,967

$

79,524

$

71,102

Atlanta-Suwanee data center

12,084

12,592

11,852

37,478

35,835

Richmond data center

6,657

6,436

8,195

19,369

26,674

Irving data center

11,361

11,033

11,250

33,806

34,034

Dulles data center

3,217

3,188

2,890

9,563

8,652

Leased data centers (2)

1,697

1,818

2,273

5,398

6,908

Santa Clara data center

2,289

2,391

1,640

7,275

5,454

Piscataway data center

4,530

4,204

3,139

12,369

10,077

Princeton data center

2,622

2,476

2,481

7,603

7,428

Sacramento data center

1,515

1,422

1,535

4,534

4,657

Chicago data center

4,759

4,460

3,410

13,111

9,215

Ashburn data center

4,679

3,799

1,454

11,084

2,306

Fort Worth data center

3,001

2,296

1,115

6,619

2,141

Atlanta (DC - 2) data center (3)

1,503

-

-

1,498

-

Other facilities (4)

3,061

4,227

1,611

9,108

4,790

NOI from consolidated operations (5)

$

89,554

$

87,185

$

76,812

$

258,339

$

229,273

Pro rata share of NOI from unconsolidated entity (6)

1,180

927

872

2,950

1,948

Total NOI

$

90,734

$

88,112

$

77,684

$

261,289

$

231,221

________________________________________________________

  1. This property was formerly known as "Atlanta, GA (Metro)" but has been renamed "Atlanta, GA (DC-1)" to distinguish between the existing data center and the newly developed data center shown as "Atlanta, GA (DC - 2)."
  2. Includes 7 facilities. All facilities are leased, including those subject to finance leases.
  3. Represents the newly developed data center building at our Atlanta, GA campus.
  4. Consists of Miami, FL; Lenexa, KS; Overland Park, KS; Eemshaven, Netherlands and Groningen, Netherlands facilities. In addition, includes management fees and development fees.
  5. Includes facility level G&A expense allocation charges of 4% of cash revenue for all facilities. These allocated charges aggregated to $5.1 million, $4.8 million and $4.8 million for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively, and $14.6 million and $13.9 million for the nine months ended September 30, 2020 and 2019, respectively.
  6. QTS' pro rata share of the JV is 50%.

14 QTS Q3 Earnings 2020

Contact: IR@qtsdatacenters.com

Our cash paid for capital expenditures is summarized as follows:

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Development (1)

$

171,350

$

187,824

$

39,043

$

503,654

$

175,039

Acquisitions

10,831

-

22,362

12,628

68,517

Maintenance capital expenditures

2,268

4,220

381

8,150

3,323

Other capital expenditures (2)

27,116

23,731

24,484

77,250

75,952

Total capital expenditures

$

211,565

$

215,775

$

86,270

$

601,682

$

322,831

________________________________________________________

  1. Includes QTS' pro rata share of capital expenditures associated with the unconsolidated joint venture. Total capital expenditures of the joint venture were approximately $3 million (of which $1 million was our pro rata share) for the three months ended September 30, 2020, less the equity contribution of the JV partner and the JV partners' portion of debt of $2 million. Total capital expenditures of the joint venture were approximately $12 million (of which $5 million was our pro rata share) for the three months ended June 30, 2020, less the equity contribution of the JV partner and the JV partners' portion of debt of $7 million. Total capital expenditures of the joint venture were approximately $4 million (of which $2 million was our pro rata share) for the three months ended September 30, 2019, less the equity contribution of the JV partner and the JV partners' portion of debt of $2 million. Total capital expenditures of the joint venture were approximately $16 million (of which $7 million was our pro rata share) for the nine months ended September 30, 2020, less equity contribution of the JV partner and the JV partners' portion of debt of $9 million. Total capital expenditures of the joint venture were approximately $38 million (of which $18 million was our pro rata share) for the nine months ended September 30, 2019, less equity contribution of the JV partner and the JV partners' portion of debt of $20 million.
  2. 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.

15 QTS Q3 Earnings 2020

Contact: IR@qtsdatacenters.com

Leasing Statistics - Signed Leases

Incremental Annualized Rent, Net of Downgrades reflects net incremental MRR signed during the period for purposes of tracking incremental revenue contribution. The amounts below include renewals when there was a change in square footage rented, but exclude renewals where square footage remained consistent before and after renewal. (See renewal table on page 17 for such renewals). The amounts below include results of the consolidated business as well as QTS' 50% pro rata share of the leasing activity attributable to the JV, if any.

During the third quarter of 2020, the Company entered into 540 new and modified leases aggregating to $26.0 million of incremental annualized rent. The Company's third quarter leasing performance was driven by several multi-megawatt deals signed in both its Hyperscale and Federal product offerings, combined with continued steady performance in its Hybrid Colocation product offering. Pricing on new and modified renewal leases was $390 annualized rent per leased square foot, which was below the Company's trailing four quarter average pricing per square foot of $447. Lower annualized rent per leased square foot in the third quarter was primarily driven by a larger hyperscale lease which was structured as a triple-net lease, whereby certain QTS operating costs associated with the customer's deployment are recovered from the customer and not directly factored into the base rent. Excluding the impact of this lease, pricing during the third quarter would have been approximately $432 annualized rent per leased square foot which is consistent with the Company's prior four quarter average.

The pricing on new and modified leases signed varies quarter to quarter based on the mix of deals leased, as hyperscale and hybrid colocation leases vary on a rate per square foot basis. Annualized rent per leased square foot is computed using the total rent associated with all new and modified leases for the respective periods.

Period

Number of

Annualized rent

Incremental Annualized

Leases

per leased sq ft

Rent, Net of Downgrades (1)

New/modified leases signed

Q3 2020

540

390

(2)

26,002,722

P4QA (3)

451

447

22,001,246

Q2 2020

499

548

21,044,584

Q1 2020

486

388

21,832,767

Q4 2019

373

465

27,742,166

Q3 2019

444

404

17,385,468

________________________________________________________

  1. Amounts include incremental MRR only, net of downgrades. Figures do not include cost recoveries.
  2. Pricing on new and modified renewal leases during the quarter reflects a larger hyperscale contract signed during the quarter which was structured as a triple-net lease. Excluding the impact of this lease, pricing during the third quarter would have been approximately $432 annualized rent per leased square foot.
  3. Average of prior four quarters.

The following table outlines the booked-not-billed ("BNB") balance as of September 30, 2020 and how it is expected to affect revenue in 2020 and subsequent years based on the current terms of the applicable contracts.

Note: The following table includes QTS' 50% pro rata share of BNB revenue from the unconsolidated joint venture.

Booked-not-billed ("BNB") (1)

2020

2021

Thereafter

Total

MRR

Incremental revenue Annualized revenue

(2)

(3) (4)

$

1,955,937

$

6,017,948

$

2,908,504

$

10,882,389

4,464,483

39,872,683

34,902,048

$

23,471,244

$

72,215,376

$

34,902,048

$

130,588,668

________________________________________________________

  1. Includes the Company's consolidated booked-not-billed balance in addition to booked-not-billed revenue associated with the unconsolidated JV at QTS' pro rata share of the booked-not-billed revenue. Of the $130.6 million annualized BNB revenue, approximately $1.1 million related to QTS' pro rata share of booked-not-billed revenue associated with the unconsolidated JV.
  2. Incremental revenue represents the expected amount of recognized MRR for the business in the period based on when the booked-not-billed leases commence throughout the period.
  3. Annualized revenue represents the booked-not-billed MRR multiplied by 12, demonstrating how much recognized MRR might have been recognized if the booked-not-billed leases commencing in the period were in place for an entire year.
  4. As of September 30, 2020, adjusting booked-not-billed revenue for the effects of revenue which had begun recognition via straight line rent, the Company's annualized booked-not-billed balance was $76.6 million, of which $15.4 million was attributable to 2020, $45.8 million was attributable to 2021, and $15.5 million was attributable to years thereafter.

The Company estimates the remaining cost to provide the space, power, connectivity and other services to the customer contracts which had not billed as of September 30, 2020 to be approximately $197 million. This estimate generally includes customers with newly contracted space of more than 3,300 square feet of raised floor space. The space, power and other services provided to customers that contract for smaller amounts of space is generally provided by existing space which was previously developed.

16 QTS Q3 Earnings 2020

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Leasing Statistics - Renewed Leases and Rental Churn

The mix of leasing activity has a significant impact on quarterly rates, both within major product segments and for overall blended renewal rates. The Company's rate performance will vary quarter to quarter based on the mix of deals leased as hyperscale and hybrid colocation vary on a rate per square foot basis.

Consistent with the Company's strategy and business model, the renewal rates below reflect total MRR per square foot including all subscribed services. For comparability, the Company includes only those customers that have maintained consistent space footprints in the computations below. All customers with space changes are incorporated into new/modified leasing statistics and rates. The amounts below include results of the consolidated business as well as QTS' 50% pro rata share of the renewal leasing activity attributable to the JV, if any.

The average rent per square foot for renewals signed in the third quarter of 2020 was 1.8% higher than the rates for those customers immediately prior to renewal, which is consistent with the Company's expectation that renewal rates will generally increase in the low to mid-single digits.

Rental Churn (which the Company defines as MRR lost in the period to a customer intending to fully exit the QTS platform in the near term compared to total MRR at the beginning of the period) was 1.7% for the third quarter of 2020. Rental Churn was 2.9% for the nine months ended September 30, 2020, which remains consistent with the Company's expectation for full year churn guidance of 3-5%. The Company's 1.7% churn during the three months ended September 30, 2020 represented an increase quarter-over-quarter, however this was largely driven by timing as customer attrition in the first half of the year generally trended better than initially anticipated with some churn events getting pushed from the first half of the year into the second half of the year.

Number of

Annualized

Annualized

Rent

Period

rent per leased

renewed leases

sq ft

Rent

Change (1)

Renewed Leases

Q3 2020

91

$

609

$ 14,530,020

1.8%

P4Q avg (2)

92

598

17,054,884

1.9%

Q2 2020

112

509

19,555,593

2.6%

Q1 2020

78

871

11,279,385

5.0%

Q4 2019

90

777

11,522,508

(2.2%)

Q3 2019

88

541

25,862,052

2.0%

________________________________________________________

  1. Calculated as the percentage change of the rent per square foot immediately before renewal when compared to the rent per square foot immediately after renewal.
  2. Average of prior four quarters.

17 QTS Q3 Earnings 2020

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Lease Expirations

Hyperscale leases are typically 5-10 years with the majority of hyperscale lease expirations occurring in 2022 and beyond. Hybrid colocation leases are typically 3 years in duration, with the majority of hybrid colocation lease expirations occurring between 2021 and 2023. The following table sets forth a summary schedule of the lease expirations as of September 30, 2020. Unless otherwise stated in the footnotes, the information set forth in the table assumes that customers exercise no renewal options and all early termination rights are exercised.

Note: The table below includes the Company's pro rata share of leases associated with the unconsolidated joint venture. QTS' pro rata share of the JV is 50%.

Total Raised

Hyperscale as

Hybrid

Number of

Colocation as

Floor of

% of Portfolio

% of Portfolio

% of Portfolio

% of Portfolio

Year of Lease

Leases

Annualized

Expiring

Leased Raised

Annualized

Annualized

Annualized

Expiration

Expiring (1)

Leases

Floor

Rent (2)

Rent

Rent

Rent

Month-to-Month(3)

975

10,659

1%

$

9,136,059

2%

-%

2%

2020

743

89,694

6%

44,064,909

10%

2%

8%

2021

1,624

306,530

22%

117,510,610

27%

7%

20%

2022

1,145

348,715

25%

120,039,065

27%

12%

15%

2023

666

139,689

10%

63,826,055

14%

2%

12%

After 2023

598

508,037

36%

88,383,153

20%

11%

9%

Portfolio Total

5,751

1,403,324

100%

$

442,959,851

100%

34%

66%

________________________________________________________

  1. Represents each agreement with a customer signed as of September 30, 2020 for which billing has commenced; a lease agreement could include multiple spaces and a customer could have multiple leases.
  2. The Company defines annualized rent as MRR multiplied by 12. The Company calculates MRR as monthly contractual revenue under executed contracts as of a particular date, but excludes customer recoveries, deferred set up fees, variable related revenues, non-cash revenues and other one-time revenues. MRR does not include the impact from booked-not-billed contracts as of a particular date, unless otherwise specifically noted. This amount reflects the annualized cash rental payments.
  3. Consists of customer leases whose original contract terms ended and have continued on a month-to-month basis.

18 QTS Q3 Earnings 2020

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Largest Customers

As of September 30, 2020, the Company's portfolio was leased to over 1,200 customers comprised of companies of all sizes representing an array of industries, each with unique and varied business models and needs. The following table sets forth information regarding the ten largest customers in the portfolio based on annualized rent as of September 30, 2020 (does not include rents or maturities associated with booked-not-billed customers or ramps for existing customers which have not yet commenced billing).

Note: The table below includes the Company's pro rata share of leases associated with the unconsolidated joint venture. QTS' pro rata share of the JV is 50%.

% of Portfolio

Weighted Average

Number of

Annualized

Remaining Lease

Principal Customer Industry

Annualized

Locations

Rent (1)

Rent

Term (months) (2)

Content & Digital Media

2

$ 47,141,653

10.6%

20

Cloud & IT Services

4

24,616,977

5.6%

54

Cloud & IT Services

1

19,241,485

4.3%

18

Content & Digital Media

4

15,696,327

3.5%

22

Cloud & IT Services

9

14,430,999

3.3%

41

Cloud & IT Services

3

10,534,631

2.4%

43

Cloud & IT Services

5

7,319,088

1.7%

12

Government & Security

1

6,977,837

1.6%

30

Retail

1

6,612,304

1.5%

21

Other

2

6,294,326

1.4%

19

Total / Weighted Average

$158,865,627

35.9%

29

________________________________________________________

  1. Annualized rent is presented for leases commenced as of September 30, 2020. We define annualized rent as MRR multiplied by 12. We calculate MRR as monthly contractual revenue under signed leases as of a particular date, but excludes customer recoveries, deferred set-up fees, variable related revenues, non-cash revenues and other one-time revenues. MRR does not include the impact from booked-not-billed leases (which represent customer leases that have been executed but for which lease payments have not commenced) as of a particular date. This amount reflects the annualized cash rental payments. It does not reflect any free rent, rent abatements or future scheduled rent increases and also excludes operating expense and power reimbursements.
  2. Weighted average based on customer's percentage of total annualized rent expiring and is as of September 30, 2020.

19 QTS Q3 Earnings 2020

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Product & Industry Diversification

The following table sets forth information relating to the distribution of leases at the properties, by type of product offering, as of September 30, 2020:

September 30, 2020

December 31, 2019

Annualized Rent (1)

% of Portfolio

Annualized Rent (1)

% of Portfolio

Hyperscale

$

151,107,398

34%

$

136,232,356

33%

Hybrid Colocation

291,852,453

66%

272,170,874

67%

Portfolio Total

$

442,959,851

100%

$

408,403,230

100%

________________________________________________________

  1. Includes the Company's pro rata share of leases associated with the unconsolidated joint venture. QTS' pro rata share of the JV is 50%

The following table sets forth information relating to the industry segmentation as a percentage of annualized rent of customers as of September 30, 2020:

As of September 30, 2020

Industry Segmentation - % of Annualized Rent

Financial Servies

Government & Security

15.1%

5.1%

Network

7.1%

Cloud & IT Services

Health Care

7.2%

33.1%

Retail

4.9%

Other 9.3%

Content & Digital Media 18.2%

The following table sets forth information relating to the industry segmentation as a percentage of annualized rent of customers as of December 31, 2019:

As of December 30, 2019

Industry Segmentation - % of Annualized Rent

Financial Servies

15.3%Government & Security

5.3%

Network 7.2%

Cloud & IT Services

Health Care

31.5%

7.1%

Retail 5.6%

Other 8.8%

Content & Digital Media 19.2%

20 QTS Q3 Earnings 2020

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Debt Summary and Debt Maturities

(unaudited and in thousands)

The following tables set forth a summary of the Company's debt instruments:

Weighted Average

Outstanding Balance as of:

Effective Interest

Pro Forma

September 30,

December 31,

Rate at

Maturity Date

September 30,

September 30, 2020

(1)

2020 (2)

2020

2019

Unsecured Credit Facility (3)

Revolving Credit Facility

1.38%

December 17, 2023

$

172,951

$

522,951

$

317,028

Term Loan A

3.26%

December 17, 2024

225,000

225,000

225,000

Term Loan B

3.30%

April 27, 2025

225,000

225,000

225,000

Term Loan C

3.46%

October 18, 2026

250,000

250,000

250,000

Term Loan D (4)

1.45%

January 15, 2026

250,000

-

-

Senior Notes (3)

4.75%

November 15, 2025

-

400,000

400,000

2028 Senior Notes (4)

3.88%

October 1, 2028

500,000

-

-

Lenexa Mortgage

4.10%

May 1, 2022

1,689

1,689

1,736

Finance Leases

4.36%

2021 - 2038

43,222

43,222

45,140

Total consolidated debt

3.09%

(5)

1,667,862

1,667,862

1,463,904

QTS' Pro Rata Share of Unconsolidated JV Debt (3)

4.47%

February 22, 2023

45,314

45,314

35,166

Total consolidated and unconsolidated debt

$

1,713,176

$

1,713,176

$

1,499,070

________________________________________________________

  1. The coupon interest rates associated with Term Loan A, Term Loan B, Term Loan C and debt at the unconsolidated JV level incorporate the effects of interest rate swaps in effect as of September 30, 2020.
  2. Balances include the pro forma effects of the Company's issuance of $500 million 2028 Senior Notes and $250 million Term Loan D which were both issued subsequent to September 30, 2020. Pro forma balances assume the proceeds generated from the aforementioned debt issuances were used to fund the redemption of the existing Senior Notes (excluding the impact of early redemption fees) as well as pay down the Company's unsecured revolving credit facility.
  3. Balances exclude debt issuance costs reflected as offsets to liabilities.
  4. Entered into, or issued, as applicable, subsequent to September 30, 2020. The interest rate on Term Loan D consists of a 1.2% spread plus 0.25% LIBOR floor.
  5. The total consolidated weighted average effective interest rate at September 30, 2020 is calculated excluding the pro forma effects of Term Loan D and the 2028 Senior Notes.

Pro Forma September 30,

% of

Outstanding Balance as

% of

Outstanding Balance as of:

% of

2020

(1)

total

of: September 30, 2020 (2)

total

December 31, 2019 (2)

total

Fixed Rate Debt

$

1,290,225

75.3%

$

1,190,225

69.5%

$

1,082,042

72.2%

Floating Rate Debt

422,951

24.7%

522,951

30.5%

417,028

27.8%

$

1,713,176

100.0%

$

1,713,176

100.0%

$

1,499,070

100.0%

________________________________________________________

  1. Balances include the pro forma effects of the Company's issuance of $500 million 2028 Senior Notes and $250 million Term Loan D which were both issued subsequent to September 30, 2020. Pro forma balances assume the proceeds generated from the aforementioned debt issuances were used to fund the redemption of the existing Senior Notes as well as pay down the Company's unsecured revolving credit facility.
  2. As of September 30, 2020, the entire balance of all term loan debt is swapped to a fixed rate. As of September 30, 2020, the calculation includes the effects of $90 million of debt at the joint venture (of which $45 million is QTS' share) that is swapped to a fixed rate. As of December 31, 2019, the calculation included all debt that was currently at a fixed rate and pro forma for an additional $200 million of debt that was swapped to a fixed rate that became effective January 2, 2020. As of December 31, 2019, the calculation also included the effects of $70 million of debt at the joint venture (of which $35 million is QTS' share) that was swapped to a fixed rate.

21 QTS Q3 Earnings 2020

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Scheduled debt maturities as of September 30, 2020:

Debt instruments

2020

2021

2022

2023

2024

Thereafter

Total

Unsecured Credit Facility (1)

$

-

$

-

$

-

$

522,951

$

225,000

$

475,000

$

1,222,951

Senior Notes (1)

-

-

-

-

-

400,000

400,000

Lenexa Mortgage

18

72

1,599

-

-

-

1,689

Finance Leases

660

2,713

2,958

3,229

3,516

30,146

43,222

Total consolidated debt

678

2,785

4,557

526,180

228,516

905,146

1,667,862

QTS' Pro Rata Share of Unconsolidated JV Debt (1)

1

4

4

45,204

5

96

45,314

Total consolidated and unconsolidated debt

$

679

$

2,789

$

4,561

$

571,384

$

228,521

$

905,242

$

1,713,176

Pro forma total consolidated and unconsolidated debt (2)

$

679

$

2,789

$

4,561

$

221,384

$

228,521

$

1,255,242

$

1,713,176

________________________________________________________

  1. Balances excludes debt issuance costs reflected as offsets to liabilities.
  2. Balances include the pro forma effects of the Company's issuance of $500 million 2028 Senior Notes and $250 million Term Loan D which were both issued subsequent to September 30, 2020. Pro forma balances assume the proceeds generated from the aforementioned debt issuances were used to fund the redemption of the existing Senior Notes as well as pay down the Company's unsecured revolving credit facility.

22 QTS Q3 Earnings 2020

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Interest Summary

(unaudited and in thousands)

A summary of the Company's interest expense is as follows:

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Interest costs and fees

$

13,664

$

13,627

$

14,409

$

41,567

$

42,246

Amortization of deferred financing costs

990

991

978

2,968

2,935

Capitalized interest (1)

(7,138)

(7,694)

(8,663)

(22,933)

(24,852)

Total consolidated interest expense

7,516

6,924

6,724

21,602

20,329

QTS' pro rata share of unconsolidated JV interest expense

666

526

478

1,733

1,190

Total consolidated and unconsolidated interest expense

$

8,182

$

7,450

$

7,202

$

23,335

$

21,519

________________________________________________________

  1. The weighted average interest rate, including the effects of interest rate swaps, for the three months ended September 30, 2020, June 30, 2020, and September 30, 2019 was 3.09%, 3.12%, and 4.27%, respectively.

23 QTS Q3 Earnings 2020

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Appendix

Non-GAAP Financial Measures

This document includes certain non-GAAP financial measures that management believes are helpful in understanding the Company's business, as further described below.

The Company considers the following non-GAAP financial measures to be useful to investors as key supplemental measures of the Company's performance: (1) Revenue; (2) FFO, Operating FFO and Adjusted Operating FFO; (3) MRR and Recognized MRR; (4) NOI; and (5) EBITDAre and 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 the Company's operating performance. Revenue, FFO, Operating FFO, Adjusted Operating FFO, MRR, NOI, EBITDA and Adjusted EBITDA, as calculated by us may not be comparable to FFO, Operating FFO, Adjusted Operating FFO, MRR, NOI, EBITDA and Adjusted EBITDA as reported by other companies that do not use the same definition or implementation guidelines or interpret the standards differently from us.

Definitions

Booked-not-billed("BNB"). The Company defines booked-not-billed as customer leases that have been signed, but for which lease payments have not yet commenced.

Leasable raised floor. The Company defines leasable raised floor as the amount of raised floor square footage that the Company has leased plus the available capacity of raised floor square footage that is in a leasable format as of a particular date and according to a particular product configuration. The amount of leasable raised floor may change even without completion of new development projects due to changes in the Company's configuration of product space.

Basis-of-designraised floor space. The Company defines basis-of-design raised floor space as the total data center raised floor potential of its existing data center facilities.

Operating NRSF. 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 development or space used for the Company's own office space.

The Company. Refers to QTS Realty Trust, Inc., a Maryland corporation, together with its consolidated subsidiaries, including QualityTech, LP (the "Operating Partnership" or "OP").

24 QTS Q3 Earnings 2020

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FFO, Operating FFO, and Adjusted Operating FFO

The Company considers funds from operations ("FFO"), to be a supplemental measure of its 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. The Company calculates 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 its primary business, impairment write-downs of depreciable real estate related to its primary business, real estate-related depreciation and amortization and similar adjustments for unconsolidated entities. To the extent the Company incurs gains or losses from the sale of assets that are incidental to its primary business, or incurs impairment write-downs associated with assets that are incidental to its primary business, it includes such charges in its calculation of FFO. The Company's 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, 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 the Company's operating results that management believes are not reflective of its operating performance, management computes an adjusted measure of FFO, which the Company refers 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. The Company generally calculates Operating FFO as FFO excluding certain non-routine charges and gains and losses that management believes are not indicative of the results of the Company's operating real estate portfolio. The Company believes 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. The Company calculates 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.

The Company offers these measures because it recognizes that FFO, Operating FFO and Adjusted Operating FFO will be used by investors as a basis to compare its 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 the Company's 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 its properties, all of which have real economic effect and could materially impact its financial condition, cash flows and results of operations, the utility of FFO, Operating FFO and Adjusted Operating FFO as measures of its operating performance is limited. The Company's 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, the Company's calculations of FFO, Operating FFO and Adjusted Operating FFO are not necessarily comparable to FFO, Operating FFO and Adjusted Operating FFO as calculated by other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us. FFO, Operating FFO and Adjusted Operating FFO are non-GAAP measures and should not be considered a measure of the Company's 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 its cash needs, including its ability to make distributions to its stockholders.

25 QTS Q3 Earnings 2020

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A reconciliation of net income to FFO, Operating FFO and Adjusted Operating FFO is presented below (unaudited and in thousands):

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

FFO

Net income

$

6,907

$

10,209

$

6,588

$

25,236

$

35,271

Equity in net loss of unconsolidated entity

366

590

317

1,633

992

Real estate depreciation and amortization

47,880

44,196

39,969

133,776

114,440

Gain on sale of real estate, net

-

-

-

-

(13,408)

Pro rata share of FFO from unconsolidated entity

512

399

369

1,189

754

FFO (1)

55,665

55,394

47,243

161,834

138,049

Preferred stock dividends

(7,045)

(7,045)

(7,045)

(21,135)

(21,135)

FFO available to common stockholders & OP unit holders

48,620

48,349

40,198

140,699

116,914

Transaction and integration costs

1,078

381

827

1,675

3,080

Operating FFO available to common stockholders & OP

unit holders (2)

49,698

48,730

41,025

142,374

119,994

Maintenance capital expenditures

(2,268)

(4,220)

(381)

(8,150)

(3,323)

Leasing commissions paid

(9,670)

(6,805)

(7,302)

(25,473)

(20,345)

Amortization of deferred financing costs

990

991

978

2,968

2,935

Non real estate depreciation and amortization

3,498

3,358

2,906

10,226

8,704

Straight line rent revenue and expense and other

(7,196)

(5,702)

(2,278)

(16,653)

(4,679)

Tax expense from operating results

227

138

369

196

779

Equity-based compensation expense

7,315

6,082

4,456

18,271

12,052

Adjustments for unconsolidated entity

(211)

(88)

63

(232)

43

Adjusted Operating FFO available to common stockholders

& OP unit holders (2)

$

42,383

$

42,484

$

39,836

$

123,527

$

116,160

________________________________________________________

  1. No gains, losses or impairment write-downs associated with assets incidental to our primary business were incurred during the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, nor were any gains, losses or impairment write-downs associated with assets incidental to our primary business incurred during the nine months ended September 30, 2020 and 2019.
  2. 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.

26 QTS Q3 Earnings 2020

Contact: IR@qtsdatacenters.com

Monthly Recurring Revenue (MRR) and Recognized MRR

The Company calculates MRR as monthly contractual revenue under signed leases as of a particular date, which includes revenue from its 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 the Company's 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 booked-not-billed leases as of a particular date, unless otherwise specifically noted.

Separately, the Company calculates recognized MRR as the recurring revenue recognized during a given period, which includes revenue from its 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 the Company's customer leases and customer leases attributable to the Company's 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, the Company's 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 its performance. MRR and recognized MRR should not be used as measures of the Company's results of operations or liquidity, nor is it indicative of funds available to meet its cash needs, including its ability to make distributions to its stockholders.

A reconciliation of total revenues to recognized MRR in the period and MRR at period-end is presented below (unaudited and in thousands):

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Recognized MRR in the period

Total period revenues (GAAP basis)

$

137,538

$

131,640

$

125,255

$

395,471

$

357,111

Less: Total period variable lease revenue from recoveries

(14,887)

(12,528)

(17,563)

(39,689)

(41,028)

Total period deferred setup fees

(5,300)

(4,520)

(4,041)

(13,745)

(11,095)

Total period straight line rent and other

(9,184)

(9,327)

(4,768)

(26,543)

(14,195)

Recognized MRR in the period

108,167

105,265

98,883

315,494

290,793

MRR at period end

Total period revenues (GAAP basis)

$

137,538

$

131,640

$

125,255

$

395,471

$

357,111

Less: Total revenues excluding last month

(91,485)

(87,538)

(81,114)

(349,418)

(312,970)

Total revenues for last month of period

46,053

44,102

44,141

46,053

44,141

Less: Last month variable lease revenue from recoveries

(4,643)

(4,350)

(6,369)

(4,643)

(6,369)

Last month deferred setup fees

(1,864)

(1,533)

(1,684)

(1,864)

(1,684)

Last month straight line rent and other

(3,044)

(2,480)

(3,452)

(3,044)

(3,452)

Add: Pro rata share of MRR at period end of unconsolidated entity

411

352

343

411

343

MRR at period end

$

36,913

$

36,091

$

32,979

$

36,913

$

32,979

27 QTS Q3 Earnings 2020

Contact: IR@qtsdatacenters.com

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

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

Due to the volatility and nature of certain significant charges and gains recorded in the Company's operating results that management believes are not reflective of its operating performance, management computes an adjusted measure of EBITDAre, which the Company refers to as Adjusted EBITDA. The Company generally calculates Adjusted EBITDA 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 the Company's pro-rata share of each of those respective expenses associated with the unconsolidated entity aggregated into one line item categorized as "Adjustments for the unconsolidated entity." In addition, the Company calculates Adjusted EBITDA excluding certain non-cash recurring costs such as equity-based compensation. The Company believes 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 the Company's operating results. Other companies may not calculate EBITDAre or Adjusted EBITDA in the same manner. Accordingly, the Company's 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 the Company's performance and should not be used as substitutes for net income (loss), as measures of its results of operations or liquidity or as an indications of funds available to meet its cash needs, including its ability to make distributions to its stockholders.

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

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

EBITDAre and Adjusted EBITDA

Net income

$

6,907

$

10,209

$

6,588

$

25,236

$

35,271

Equity in net loss of unconsolidated entity

366

590

317

1,633

992

Interest income

-

(2)

(22)

(2)

(103)

Interest expense

7,516

6,924

6,724

21,602

20,329

Tax expense of taxable REIT subsidiaries

227

138

369

196

779

Depreciation and amortization

51,378

47,554

42,875

144,002

123,144

Gain on disposition of depreciated property

-

-

-

-

(13,408)

Pro rata share of EBITDAre from unconsolidated entity

1,178

924

867

2,921

1,945

EBITDAre (1)

$

67,572

$

66,337

$

57,718

$

195,588

$

168,949

Equity-based compensation expense

7,315

6,082

4,456

18,271

12,052

Transaction, integration and implementation costs

1,099

381

827

1,696

3,080

Adjusted EBITDA

$

75,986

$

72,800

$

63,001

$

215,555

$

184,081

________________________________________________________

  1. No gains, losses or impairment write-downs associated with assets incidental to our primary business were incurred during the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, nor were any gains, losses or impairment write-downs associated with assets incidental to our primary business incurred during the nine months ended September 30, 2020 and 2019.

28 QTS Q3 Earnings 2020

Contact: IR@qtsdatacenters.com

Net Operating Income (NOI)

The Company calculates net operating income ("NOI") as net income (loss) (computed in accordance with GAAP), excluding: interest expense, interest income, tax expense (benefit) of taxable REIT subsidiaries, 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. The Company allocates 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 its customer leases. In addition, management believes it is useful to investors in evaluating and comparing the operating performance of its properties and to compute the fair value of its properties. The Company's NOI may not be comparable to other REITs' NOI as other REITs may not calculate NOI in the same manner. NOI should be considered only as a supplement to net income as a measure of the Company's performance and should not be used as a measure of results of operations or liquidity or as an indication of funds available to meet cash needs, including the ability to make distributions to stockholders. NOI is a measure of the operating performance of the Company's properties and not of the Company's 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

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Net Operating Income (NOI)

Net income

$

6,907

$

10,209

$

6,588

$

25,236

$

35,271

Equity in net loss of unconsolidated entity

366

590

317

1,633

992

Interest income

-

(2)

(22)

(2)

(103)

Interest expense

7,516

6,924

6,724

21,602

20,329

Depreciation and amortization

51,378

47,554

42,875

144,002

123,144

Other (income) expense

-

-

(370)

(159)

(330)

Tax expense of taxable REIT subsidiaries

227

138

369

196

779

Transaction and integration costs

1,078

381

827

1,675

3,080

General and administrative expenses

22,082

21,391

19,504

64,156

59,519

Gain on sale of real estate, net

-

-

-

-

(13,408)

NOI from consolidated operations (1)

$

89,554

$

87,185

$

76,812

$

258,339

$

229,273

Pro rata share of NOI from unconsolidated entity

1,180

927

872

2,950

1,948

Total NOI (1)

$

90,734

$

88,112

$

77,684

$

261,289

$

231,221

________________________________________________________

  1. Includes facility level general and administrative allocation charges of 4% of cash revenue for all facilities. These allocated charges aggregated to $5.1 million, $4.8 million and $4.8 million for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively, and $14.6 million and $13.9 million for the nine months ended September 30, 2020 and 2019, respectively.

29 QTS Q3 Earnings 2020

Contact: IR@qtsdatacenters.com

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QTS Realty Trust Inc. published this content on 26 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 October 2020 21:09:05 UTC