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Q2 2019 Investor Presentation

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QTS' Second Quarter Presentation to Investors

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Q2 2019 Investor Presentation

  1. 1. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. Investor Presentation Second Quarter 2019
  2. 2. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 1 Forward Looking Statements Some of the statements contained in this presentation constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In particular, statements pertaining to our capital resources, portfolio performance results of operations, anticipated growth in our funds from operations and anticipated market conditions contain forward-looking statements. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. The forward-looking statements contained in this presentation reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:  adverse economic or real estate developments in our markets or the technology industry;  obsolescence or reduction in marketability of our infrastructure due to changing industry demands;  global, national and local economic conditions;  risks related to our international operations;  difficulties in identifying properties to acquire and completing acquisitions;  our failure to successfully develop, redevelop and operate acquired properties or lines of business;  significant increases in construction and development costs;  the increasingly competitive environment in which we operate;  defaults on, or termination or non-renewal of, leases by customers;  decreased rental rates or increased vacancy rates;  increased interest rates and operating costs, including increased energy costs;  financing risks, including our failure to obtain necessary outside financing;  dependence on third parties to provide Internet, telecommunications and network connectivity to our data centers;  our failure to qualify and maintain our qualification as a REIT;  environmental uncertainties and risks related to natural disasters;  financial market fluctuations;  changes in real estate and zoning laws, revaluations for tax purposes and increases in real property tax rates; and  limitations inherent in our current and any future joint venture investments, such as lack of sole decision-making authority and reliance on our partners’ financial condition. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. Any forward-looking statement speaks only as of the date on which it was made. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause our future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 (“10-K”) and in the other periodic reports we file with the Securities and Exchange Commission. This presentation includes measures not derived in accordance with generally accepted accounting principles (“GAAP”), such as FFO, operating FFO, adjusted Operating FFO, EBITDAre, adjusted EBITDA, NOI, ROIC and MRR. These measures should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP, and may also be inconsistent with similar measures presented by other companies. As used herein, “Core” refers to our business that primarily consists of our hyperscale and hybrid colocation leases. Reconciliation of these measures to the most closely comparable GAAP measures are presented in the attached pages. We refer you to the appendix of this presentation for reconciliations of these measures and to the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations--Non- GAAP Financial Measures" in our 10-K for further information regarding these measures.
  3. 3. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 2 QTS Key Investment Highlights Strong secular trends support continued growth Sector-leading and de-risked growth outlook for QTS Balanced capital allocation approach Fully funded 2019 capital plan ① ② ③ ④ JV provides incremental lever to fund hyperscale growth⑤
  4. 4. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 3 Driving Success in Both Hyperscale & Hybrid Colocation World-Class Infrastructure & Mega Data Centers Technology-Enabled Colocation Platform Hyperscale Hybrid Colocation 8% 6% 9% 77% $480B Market Size 12% 34% 11% 43% $668B Market Size On-Premise Managed Infrastructure Colocation Hyperscale/Cloud 2017 2022 IT Infrastructure Growing and Moving Off-Premise1 $39 $82 2017 2022 $31 $224 2017 2022 49% CAGR 16% CAGR Hyperscale/Cloud Market ($B) Colocation Market ($B) 1.Source: Structure Research High Credit Quality Tenants Growth Accelerant Longer Term Contracts Higher ROIC Customer Diversification Enhanced Capital Efficiency Higher Barriers to Entry
  5. 5. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 4 Sector-Leading and De-risked Growth Outlook in 2019 2019 Growth Outlook Summary2 1. Represents annualized MRR associated with leases that have been signed but have not yet commenced; may not sum due to rounding. 2. Reflects midpoint of 2019 guidance over 2018 results for Core business. Strong booked-not-billed backlog de-risks 2019 continued strong performance $55M Annualized Booked-Not-Billed MRR ($M)1 $54.8 $54.8 $54.8 $54.8 Q1 2019 2019 2020 2021+ $29.8 $12.3 $12.7 11% Revenue Growth Y/Y 150bp EBITDA Margin Growth Y/Y 14% Adjusted EBITDA Growth Y/Y
  6. 6. © 2019 QTS. All Rights Reserved. 5 QTS Driving Differentiation to Win in Hyperscale and Hybrid Colocation Balanced target of 1-3 deals per year 9 leases signed in ’18 between 500kW- 2MW Hyperscale Hybrid Colocation  Operating and Build Cost Advantage  Significant Growth Capacity  New Market Expansion in NoVA, Phoenix and Hillsboro and significant low basis capacity in Fort Worth  Enhanced Hybrid Solutions through Integrated Partners  Software-Defined Data Center Platform  SDN-enabled Universal Connectivity 34% of Revenue1 66% of Revenue1 Diversified Customer Base 1,100+ customers across 26 data centers QTS Realty Trust, Inc.  High-End Security and Compliance 1.Based on MRR as of March 31. 2019, including QTS’ 50% pro rata share of leases associated with the unconsolidated joint venture. Enhanced ROIC 12.4% annualized ROIC (Q1 ’19) Low Churn 4.5% MRR churn midpoint guidance for 2019, among the lowest in the industry  Premium Customer Experience
  7. 7. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 6 Balanced Approach to Capital Allocation Focused on delivering consistent OFFO/share growth while continuing to invest in long-term growth Strong value creation opportunity  Consistently able to generate ROIC of 12%+  Premium ROIC enabled by business approach that balances higher return hybrid colocation with select growth acceleration opportunities in hyperscale  ROIC represents significant spread relative to QTS cost of capital, among the widest in the real estate industry Flexible capital plan to drive near- and long-term OFFO/sh growth  Constantly evaluate priority of capital spend to balance the needs of customers with OFFO/share growth  Maintain thoughtful approach to not only the amount of capital spend, but also the source and timing of that capital Focused on funding capital plan in most shareholder-friendly means  Demonstrated track record of managing both timing and structure of capital to fund the business while minimizing near-term equity dilution  Recent examples include:  Two separate perpetual preferred equity raises in 2018  Joint venture agreement signed during Q1 2019
  8. 8. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 7 Disciplined Approach to Development Capital discipline and de-risked entry point  Continued focus on capital discipline to balance long-term growth with near-term results  De-risked approach to new market entry  Infrastructure designed to support multi-tenant environments to enable increased flexibility and drive valuable diversification of product and customer mix Greenfield Development with Visibility on Anchor Tenant Low-Basis, Infrastructure-Rich Development Repurposing Existing Assets Examples Richmond, VA Irving, TX Chicago, IL Atlanta, GA Suwanee, GA Piscataway, NJ Eemshaven (Netherlands) Groningen (Netherlands) Princeton, NJ Fort Worth, TX Ashburn, VA Manassas, VA Hillsboro, OR Phoenix, AZ Data Center Re-Focus Enterprise Sale-Leaseback Pre-Lease Greenfield
  9. 9. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 8 QTS Netherlands Acquisition Overview Transaction Summary  Acquired two data centers in the Netherlands on April 23, 2019 for $44M, including closing costs  Facilities acquired opportunistically from TCN  Approx. 158,000 SF of raised floor capacity and 30 gross MWs of combined power capacity built out currently  Initially expected to contribute approx. $3M of recurring revenue and $1M of adj. EBITDA on an annualized basis  Current built out capacity:  45,000 SF of raised floor / 10 gross MWs  Approximately 20 colocation tenants with weighted average tenant lease term of 3.5 years  Highly connected colocation facility with more than 10 network providers and internet exchanges  Current built out capacity:  113,000 SF of raised floor / 20 gross MWs  Originally constructed to support single hyperscale tenant and is currently fully available  Facility supports QTS’ hyperscale growth strategy  Adjacent to multiple hyperscale customer-owned facilities including 500+ MW hyperscale campus  Strategically located in close proximity to multiple transatlantic fiber cable landings Groningen Facility Eemshaven Facility
  10. 10. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 9 Netherlands Acquisition Accelerates Global Expansion De-risked entry into new international market with acquisition of large scale infrastructure at a low basis with significant capacity for growth Low basis: Purchase price represents ~$2M per MW2 which is materially below any reasonable average cost to build in the market Mega scale: 30 MWs of aggregate built out capacity, including 20 MWs in Eemshaven facility which is fully available and built out Platform for int’l expansion: Represents QTS’ first mega scale expansion outside U.S. De-risked execution strategy: Low basis new market entry leveraging local partnerships to de-risk execution in new international market P P P P Growth opportunity: According to CBRE, absorption in the top 4 European markets totaled ~190 MWs in 2018, +60% Y/Y driven in part by increased hyperscale leasing1 OFFO/share accretion opportunity: As a result of low basis purchase price combined with contracted in-place revenue, acquisition is breakeven to QTS’ 2019 OFFO/share, assuming no incremental leasing; opportunity to drive significant future accretion P P 1 CBRE Data Centre Marketview – Q3 2018 2 Including approximately $15M of additional capital spend related to recommissioning of the sites
  11. 11. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 10 Positioned for Continued Capital Efficient Growth 1.Full Buildout reflects our “Basis of Design” NRSF at full buildout; does not include additional development which could take place on adjacent, owned land. 2.Includes properties contributed to unconsolidated joint ventures at the JVs’ 100% share  Ability to double footprint in pre-built powered shell reduces future capital needs  Land available in majority of key hyperscale markets already acquired and pad- ready  Existing capacity in strategic hyperscale markets including Dallas and Ashburn to support capital efficient future growth 1.2M Sq. Ft. Additional Capacity in Existing Powered Shell 2,731 56% currently built out 1,519 Full Capacity As of Q1 ‘19 Full Buildout1,2 (RaisedFloorNRSFin000s) 2,731 1,211 As of IPO 1,805 41% built out 741 QTS’ powered shell capacity represents 5+ years of growth
  12. 12. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 11 Balance Sheet and Liquidity Summary  Net debt to LQA adjusted EBITDA of 4.9x, including forward equity proceeds  Raised $322M of gross equity proceeds during Q1 ’19, including $156M4 in a forward equity structure  2019 capital plan fully funded  $55M booked-not-billed backlog of annualized revenue  No significant debt maturities until beyond 2021  82% of debt is subject to a fixed rate, including interest rate swap agreements Market Cap $2,831M2 Series A Preferred Stock $107M Series B Convertible Preferred Stock $316M Senior Notes $400M Unsecured Credit Facility $816M1 Finance Leases and Other $49M Pro Rata Share of Unconsolidated JV Debt $27M 1. Includes two term loans ($700 million in aggregate) and $135 million of borrowings on revolving credit facility as of March 31, 2019, net of cash and cash equivalents 2. Market Cap calculated as follows: total Class A and Class B common stock and OP units of 62.9 million, multiplied by the March 31, 2019 stock price of $44.99 per share. 3. May not sum due to rounding 4. Reflects gross proceeds available at the Company’s election to physically settle the forward equity sale at or before March 1, 2020 $4.5B Enterprise Value $2 $3 $3 $140 $381 $784 2019 2020 2021 2022 2023 2024+ HighlightsCapital Structure Debt Maturities ($M)3
  13. 13. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 12 QTS - Alinda Joint Venture Overview Joint Venture Overview Partner  Alinda Capital Partners (“Alinda”) Data Center  Manassas, VA – 118,000 SF data center under development; 10-year lease with hyperscale SaaS co. Size1  $240 million Effective Date  February 22, 2019 Ownership  QTS: 50%  Alinda: 50% Cap Rate2  6.75% Net Proceeds at Closing/Stabilized3  ~$53 million / ~$87 million Financing  Up to approximately $165 million secured credit facility provided by TD Securities, SunTrust and Regions  LIBOR + 225 bps Additional QTS Fee Streams  Development fee  Management fee Exit Mechanism  Provides opportunity for QTS to retain full ownership of the asset Strategic Partnership Opportunity  Outlines Alinda’s initial capacity to potentially contribute up to $500 million of capital over 5-year period  Establishes programmatic framework under which Alinda will be given the opportunity to partner with QTS and contribute equity capital for specific data center developments at terms comparable to initial JV 1.Fully stabilized 2.Set rate for all development in Manassas in first three years of development 3.Includes QTS’ share of joint venture debt  Reduced capital investment in Manassas development by approximately $120 million  While maintaining 50% ownership of the NOI from the facility, plus management & development fees  Results in increasing QTS’ facility-level ROIC from approximately 9% to approximately 12% and  Drives future accretion of $0.02 - $0.03 of reported annual OFFO/share upon full stabilization
  14. 14. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 13 Benefits of Joint Venture Agreement to QTS Multiple drivers of incremental value Outlines a programmatic framework under which Alinda will be given opportunity to contribute equity capital for specific data center projects in support of QTS’ hyperscale growth strategy Reduces QTS’ reliance on public markets and leverages low cost of capital from sophisticated private investor with large capacity to fund capital development plans Reduces QTS’ capital deployment requirements in Manassas development by approximately $120 million while retaining 50% proportionate share of NOI generated by facility Enhances QTS’ overall ROIC based on cap rates below the ROIC of development projects combined with incremental fee streams (development & management fees) P P P P Highlights strong underlying value of QTS’ strategic data center assets at 6.75% cap rate Manassas joint venture delivers immediate enhanced value by locking in cap rate well below the ROIC of Manassas data center development and accretion upon stabilization P P Joint venture factors in asset valuation of Manassas data center with cap rate value at full stabilization, thereby not sacrificing future value from the joint venture’s expected growthP
  15. 15. © 2019 QTS. All Rights Reserved. Q1 2019 Performance Review
  16. 16. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 15 Q1 2019 Review $100.4 $112.7 Q1 2018 Q1 2019 $50.2 $58.8 Q1 2018 Q1 2019 50.0% 52.2% Q1 2018 Q1 2019 Adjusted EBITDA ($M)1,2 Adj. EBITDA Margin1,2Revenue ($M)1 Q1 2019 Leasing Summary 1.Reflects results for the Core business only in Q1 2018 2.Includes QTS’ pro rata share of unconsolidated JV’s • Signed new/modified leases totaling $11.3M of incremental annualized rent  Q1 ’19 net leasing consistent with Q4 ’18 leasing level  Leasing results reflect healthy balance across QTS platform  Booked-not-billed backlog remained strong at $55M2 of annualized rent as of Q1 ’19 vs. near record $63M backlog as of Q4 ‘18  Continues to de-risk financial performance in 2019
  17. 17. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 16 Hybrid Colocation Continues to Drive Consistent Growth • Hybrid Colocation:  Hybrid colocation business contributed the majority of net leasing volume in Q1  Strength in hybrid colocation performance is a function of:  Strengthening economic backdrop  QTS signed 47 new logos in Q1 2019, +15% year-over-year  New logo growth remains a key initiative for QTS sales team given ongoing growth potential of embedded customer base  Continue to see an increase in overall deal size within Enterprise funnel  Increasing contribution from channel partnerships  Nearly 50% of hybrid colocation leasing was sourced through a channel partner in Q1 2019 vs. approximately 15% of leasing three years ago  Differentiation enabled by software-defined data center platform  Industry’s first software-defined orchestration platform  Empowers customers to interact with data and QTS services by providing real- time visibility and control of critical metrics across hybrid IT environments
  18. 18. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 17 Strategic Growth Acceleration Opportunities in Hyperscale Hyperscale:  During Q1, QTS signed a 3 MW lease in its Fort Worth mega data center with a new hyperscale logo  Leverages low basis asset acquired in 2016 which enables an ROIC above the typical hyperscale return expectation in the market  Able to support initial 3 MW deployment in existing Fort Worth facility with limited incremental capital, further supporting QTS’ capital efficient approach  Establishes new relationship with one of the industry’s fastest growing consumers of hyperscale data center capacity  Initial commitment is expected to scale substantially at the site over time  Several larger potential opportunities remain in pipeline that QTS continues to actively pursue with both new and existing customers across multiple markets QTS establishes new relationship with one of the largest and fastest growing consumers of hyperscale data center capacity
  19. 19. © 2019 QTS. All Rights Reserved. QTS Overview
  20. 20. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 19 Broad Footprint Focused On Top Data Center Markets 2.9 million sq.ft.of raised floor capacity1 and 700+ MW of available utility power2 1. Represents basis-of-design floor space as of March 31, 2019. Basis-of-design floor space defined as the total data center raised floor potential of existing data center facilities. 2. Represents installed utility power and transformation capacity that is available for use by the facility as of March 31, 2019, including power capacity at two Netherlands data centers acquired in April 2019 3. Based on data center raised floor. Includes Santa Clara, CA which is subject to a long-term ground lease and excludes data centers subject to capital lease obligations. 26 DATA CENTERS MARKETS OWNED3 14 96%
  21. 21. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 20 Best-in-Class “Mega” Data Centers 205,608 Sq. Ft. 100% Built Out 205,608 Sq. Ft. ROIC: 27.7%2 Occupied: 93.4% 486,706 Sq. Ft. 92% Built Out 527,186 Sq. Ft. ROIC: 18.4%2 Occupied: 97.9% 167,309 Sq. Ft. 30% Built Out 557,309 Sq. Ft. ROIC: 13.7%2 Occupied: 70.9% Atlanta-Suwanee, GA 36MW Atlanta-Metro, GA 120MW1 Richmond, VA 110MW 174,160 Sq. Ft. 63% Built Out 275,701 Sq. Ft. ROIC: 12.8%2 Occupied: 94.7% 98,820 Sq. Ft. 56% Built Out 176,000 Sq. Ft. ROIC: 12.3%2 Occupied: 88.9% 56,000 Sq. Ft. 26% Built Out 215,855 Sq. Ft. ROIC: 7.3%2 Occupied: 84.0% Piscataway, NJ 111MW Chicago, IL 55MW3 Irving, TX 140MW Note: Square footage reflects current Raised Floor Operating Net Rentable Square Feet (“NRSF”) as of March 31, 2019 (red shaded bars) and “Basis of Design” Raised Floor NRSF at full buildout. MW denotes available utility power as of March 31, 2019. Occupied percentage as of March 31, 2019. 1. Atlanta -Metro currently has 72 MW of available utility power based on current agreements with its utility provider but has transformer capacity for 120 MW. 2. ROIC calculated by dividing annualized core NOI for the quarter ended March 31, 2019 by the average total cost, less construction in progress for the quarters ended March 31, 2019 and December 31, 2018. 3. 24MW available utility power as of March 31, 2019, with an additional 31 MW available upon QTS request.
  22. 22. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 21 The QTS Hyperscale Advantage * JLL Global Data Center Outlook 2018
  23. 23. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 22 Service Delivery Platform Differentiates QTS Colocation Over 16,000 SDP Users | 15+ Integrated Partners | 90M Data Points Collected Per Day Service Delivery Platform provides QTS the first true Software Defined Data Center
  24. 24. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 23 QTS Service Delivery Platform - Third Party Feedback On how they leverage SDP Today: “SDP allowed us to review over and under-subscribed cabinets in real-time, enabling us to shift infrastructure or increase our density.” VP of IT (Multi-National Bank) IT Director (Clean Energy Automotive Manufacturer) Product Manager (Communications Service Provider Partner) Customers and Partners Industry Analysts On using SDP for their Customers: “The Power Analytics App is a game-changer. Most of your competitors take 3 weeks to provide this data to our Customers.” On how SDP drove the selection of QTS: “There was not a close 2nd in our evaluation. The innovation of SDP combined with Solution Portability and NPS made this an easy decision.” “ ” You are showing things that have been on my clients’ wish list for quite some time….mostly what they get from your competitors is a really limited subset of what you’ve just shown On QTS’ Power & Sensor Real-Time Analytics Research Vice President, Infrastructure Strategies Group – Industry Leading Research & Advisory Firm “ ” The API and programmatic approach, being able to bridge into the physical world is very attractive…. I see differentiation here On how QTS’ SDP Platform Interacts with Customers Research Director, Cloud Service Provider Group – Industry Leading Research & Advisory Firm “ ” You have cemented yourselves as the provider that is pushing the boundaries in development and service delivery. It’s clear you are more than just a colo provider On QTS’ vision for Hybrid Colocation Research Vice President, Technology Service Provider Group – Industry Leading Research & Advisory Firm
  25. 25. © 2019 QTS. All Rights Reserved. Thank You! ir@qtsdatacenters.com
  26. 26. © 2019 QTS. All Rights Reserved. Appendix
  27. 27. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 26 NOI Reconciliation $ in thousands Net Operating Income (NOI) Net income (loss) $ 21,148 $ 10,474 $ (4,072) $ 6,402 5,083 $ (5,335) $ (252) Equity in net (income) loss of unconsolidated entity 274 — — — — — — Interest income (45) (58) — (58) (1) — (1) Interest expense 7,146 6,050 — 6,050 8,103 7 8,110 Depreciation and amortization 38,788 38,259 — 38,259 33,340 2,574 35,914 Debt restructuring costs — 605 — 605 — — — Tax expense (benefit) of taxable REIT subsidiaries 211 38 (161) (123) (767) (1,635) (2,402) Transaction, integration and impairment costs 1,214 269 — 269 920 — 920 General and administrative expenses 19,891 17,551 118 17,669 18,114 4,119 22,233 Gain on sale of real estate, net (13,408) — — — — — — Restructuring — 138 4,108 4,246 — 8,530 8,530 NOI from consolidated operations $ 75,219 $ 73,326 $ (7) $ 73,319 $ 64,792 $ 8,260 $ 73,052 Pro rata share of NOI from unconsolidated entity 234 — — — — — — Total NOI $ 75,453 $ 73,326 $ (7) $ 73,319 $ 64,792 $ 8,260 $ 73,052 TotalNon-Core Three Months Ended March 31, 2019 December 31, 2018 March 31, 2018 CoreTotalNon-CoreTotal Core
  28. 28. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 27 EBITDAre & Adjusted EBITDA Reconciliation $ in thousands EBITDAre and Adjusted EBITDA Net income (loss) $ 21,148 $ 10,474 $ (4,072) $ 6,402 5,083 $ (5,335) $ (252) Equity in net (income) loss of unconsolidated entity 274 — — — — — — Interest income (45) (58) — (58) (1) — (1) Interest expense 7,146 6,050 — 6,050 8,103 7 8,110 Tax expense (benefit) of taxable REIT subsidiaries 211 38 (161) (123) (767) (1,635) (2,402) Depreciation and amortization 38,788 38,259 — 38,259 33,340 2,574 35,914 (Gain) loss on disposition of depreciated property and impairment write-downs of depreciated property (13,408) — 1,288 1,288 — 4,017 4,017 EBITDAre from unconsolidated entity 215 — — — — — — EBITDAre $ 54,329 $ 54,763 $ (2,945) $ 51,818 $ 45,758 $ (372) $ 45,386 Debt restructuring costs — 605 — 605 — — — Equity-based compensation expense 3,300 3,531 — 3,531 3,481 — 3,481 Restructuring costs — 138 2,820 2,958 — 4,513 4,513 Transaction, integration and impairment costs 1,214 269 — 269 920 — 920 Adjusted EBITDA $ 58,843 $ 59,306 $ (125) $ 59,181 $ 50,159 $ 4,141 $ 54,300 TotalNon-Core Three Months Ended March 31, 2018March 31, 2019 Total Core CoreTotalNon-Core December 31, 2018
  29. 29. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 28 FFO, Operating FFO and Adjusted Operating FFO Reconciliation *The company’s calculations of Operating FFO and Adjusted Operating FFO may not be comparable to Operating FFO and Adjusted Operating FFO as calculated by other REITs that do not use the same definition $ in thousands FFO Net income (loss) $ 21,148 $ 10,474 $ (4,072) $ 6,402 5,083 $ (5,335) $ (252) Equity in net (income) loss of unconsolidated entity 274 — — — — — — Real estate depreciation and amortization 35,927 35,640 — 35,640 31,192 865 32,057 Gain on sale of real estate, net (13,408) — — — — — — Pro rata share of FFO from unconsolidated entity 41 — — — — — — FFO 43,982 46,114 (4,072) 42,042 36,275 (4,470) 31,805 Preferred stock dividends (7,045) (7,045) — (7,045) (328) — (328) FFO available to common stockholders & OP unit holders 36,937 39,069 (4,072) 34,997 35,947 (4,470) 31,477 Debt restructuring costs — 605 — 605 — — — Restructuring costs — 138 4,108 4,246 — 8,530 8,530 Transaction, integration and impairment costs 1,214 269 — 269 920 — 920 Tax benefit associated with restructuring, transaction and integration costs — — (161) (161) — (1,635) (1,635) Operating FFO available to common stockholders & OP unit holders* 38,151 40,081 (125) 39,956 36,867 2,425 39,292 Maintenance Capex (709) (1,460) — (1,460) (930) — (930) Leasing commissions paid (6,515) (5,204) — (5,204) (5,839) (71) (5,910) Amortization of deferred financing costs and bond discount 978 974 — 974 962 — 962 Non real estate depreciation and amortization 2,861 2,619 — 2,619 2,148 1,709 3,857 Straight line rent revenue and expense and other (1,422) (1,958) 6 (1,952) (2,509) (9) (2,518) Tax expense (benefit) from operating results 211 38 — 38 (767) — (767) Equity-based compensation expense 3,300 3,531 — 3,531 3,481 — 3,481 Adjustments for unconsolidated entity 22 — — — — — — Adjusted Operating FFO available to common stockholders & OP unit holders* $ 36,877 $ 38,621 $ (119) $ 38,502 $ 33,413 $ 4,054 $ 37,467 Core March 31, 2019 Total Core December 31, 2018 TotalNon-Core TotalNon-Core March 31, 2018 Three Months Ended
  30. 30. © 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. 29 MRR Reconciliation $ in thousands Recognized MRR in the period Total period revenues $ 112,689 $ 112,334 $ 3 $ 112,337 $ 100,390 $ 13,307 $ 113,697 Less: Total period recoveries (10,793) (11,629) — (11,629) (11,513) — (11,513) Total period deferred setup fees (3,232) (3,104) — (3,104) (2,888) (5) (2,893) Total period straight line rent and other (3,942) (4,465) (34) (4,499) (3,899) (552) (4,451) Recognized MRR in the period 94,722 93,136 (31) 93,105 82,090 12,750 94,840 MRR at period end Total period revenues $ 112,689 $ 112,334 $ 3 $ 112,337 $ 100,390 $ 13,307 $ 113,697 Less: Total revenues excluding last month (73,809) (73,852) (2) (73,854) (66,790) (8,871) (75,661) Total revenues for last month of period 38,880 38,482 1 38,483 33,600 4,436 38,036 Less: Last month recoveries (3,871) (3,822) — (3,822) (3,107) — (3,107) Last month deferred setup fees (1,242) (1,015) — (1,015) (962) (2) (964) Last month straight line rent and other (2,068) (2,504) (1) (2,505) (1,669) (382) (2,051) Add: Pro rata share of MRR at period end of unconsolidated entity 253 — — — — — — MRR at period end $ 31,952 $ 31,141 $ — $ 31,141 $ 27,862 $ 4,052 $ 31,914 March 31, 2019 Total Core CoreTotalNon-Core December 31, 2018 Non-Core March 31, 2018 Three Months Ended Total

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