16/02/2021 - QTS Realty Trust Inc.: 2020 Q4 Supplemental

Exhibit 99.2

Table of Contents

Overview

Company Profile 3

Financial Statements

Consolidated Balance Sheets 4

Consolidated Statements of Operations 5

Consolidated Statements of Comprehensive Income (Loss) 6

Summary of Financial Data 7

Reconciliations of Return on Invested Capital (ROIC) 9

Implied Enterprise Value and Weighted Average Shares 10

Operating Portfolio

Data Center Properties 11

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 18

Lease Expirations 19

Largest Customers 20

Product & Industry Diversification 21

Capital Structure

Debt Summary and Debt Maturities 22

Interest Summary 23

Appendix 24

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 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, 2020, and 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.

Company Profile

Consolidated Balance Sheets

(unaudited and in thousands except share data)

December 31, 2020 (1)December 31, 2019 (1)ASSETS

Real Estate Assets

Buildings, improvements and equipment Less: Accumulated depreciation

2,839,261

2,178,901

(702,944)

(558,560)

2,301,426

1,750,946

Construction in progress (2) Real Estate Assets, net

1,028,765

920,922

3,330,191 2,671,868

Investments in unconsolidated entity Operating lease right-of-use assets, net Cash and cash equivalents

51,342 57,141

Rents and other receivables, net Acquired intangibles, net Deferred costs, net (3) Prepaid expenses Goodwill

107,563 81,181

63,689 52,363

173,843 173,843

TOTAL ASSETS

$

3,898,572

$ 3,223,533

LIABILITIES

Unsecured term loans and revolver, net (5)

$

1,335,241

$ 1,010,640

Senior notes, net of debt issuance costs (5) Finance leases and mortgage notes payable Operating lease liabilities

41,718 46,876

Accounts payable and accrued liabilities Dividends and distributions payable

187,270 142,547

Advance rents, security deposits and other liabilities Derivative liabilities

19,850 18,027

Deferred income taxes Deferred income

TOTAL LIABILITIES

810 85,351 2,313,874

749 39,169 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 December 31, 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 December 31, 2020 and December 31, 2019, respectively (7)

304,223 304,223

Common stock: $0.01 par value, 450,133,000 shares authorized, 64,580,118 and 58,227,523 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively

646 1,622,857

582 1,330,444

Accumulated other comprehensive loss Accumulated dividends in excess of earnings

(50,451) (24,642)

Total stockholders' equity Noncontrolling interests

1,476,174 108,524

1,337,817 106,634

TOTAL EQUITY

1,584,698 1,444,451

_______________________________________________________

Consolidated Statements of Operations

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

Three Months EndedDecember 31, 2020

September 30, 2020

December 31, 2019

Year Ended December 31,2020

2019

Revenues:

Rental (1)

$

Other (2)

Total revenues Operating expenses:

• 139,998 $ 3,899 143,897

• 133,782 $ 3,756 137,538

• 119,282 $ 4,425 123,707

519,858 $ 465,123 19,510 15,695 539,368 480,818

Property operating costs

43,388

43,979

38,645

• 168,497 156,048

  Real estate taxes and insurance

  3,997

  4,005

  4,068

• 16,020 14,503

• Depreciation and amortization

  55,887

  51,378

  45,161

• 199,889 168,305

  General and administrative (3)

  20,809

  22,082

  20,866

• 84,965 80,385

• Transaction, integration, and impairment costs

  2,665

  1,078

  12,110

• 4,340 15,190

Gain on sale of real estate, net Operating income

126,746 -

122,522 -

17,151

15,016

1,361 4,218

- 14,769 65,657 61,156

Other income and expense:

Interest expense

(9,122)

(7,516)

Other income (expense)

-

- -

8 (6,264) (1,523)

• (30,724) (26,593)

  (380)

  159

  (411)

  (366)

  • (481) (2,044)

  Equity in net loss of unconsolidated entity Income (loss) before taxes

  (10,418)

  7,134

  (4,422)

  15,014

  Tax benefit (expense) Net income (loss)

  (242)

  (227)

  816

  (438)

  (50) (1,473) 31,628 37

  (10,660)

  6,907

  (3,606) 14,576 31,665

  1,738

  18

  1,095

  1,330 (374)

  (28,180) (28,180)

  Net (income) loss attributable to noncontrolling interests (4) Net income (loss) attributable to QTS Realty Trust, Inc. Preferred stock dividends

  $

  (8,922) $ (7,045)

  6,925 (7,045)

  $

  (2,511) $ (7,045)

  15,906

  $ 31,291

  Net income (loss) attributable to common stockholders

  $

  (15,967) $

  (120) $

  (9,556) $

  (12,274) $ 3,111

  Net loss per share attributable to common shares:

  Basic (5)

  $

  (0.47) $ (0.09)

  Diluted (5)

  (0.33) $ (0.33)

  (0.07) $ (0.07)

  (0.20) $ (0.20)

  (0.47) (0.09)

  ________________________________________________________

  • (1) Represents lease revenue, inclusive of recoveries from customers as well as straight line rent. Recoveries from customers was $14.6 million, $14.9 million, and $14.0 million for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively, and $54.3 million and $55.0 million for the years ended December 31, 2020 and 2019, respectively. Straight line rent was $8.7 million, $7.4 million and $3.3 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and $25.7 million and $8.1 million for the years ended December 31, 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 14.5%, 16.1%, and 16.9% of total revenues for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and 15.8% and 16.7% of total revenues for the years ended December 31, 2020 and 2019, respectively.

  • (4) The weighted average noncontrolling ownership interest of QualityTech, LP was 9.3%, 9.7% and 10.3% for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and 9.8% and 10.7% for the years ended December 31, 2020 and 2019, respectively.

  • (5) Basic and diluted net income (loss) per share were calculated using the two-class method.

Consolidated Statements of Comprehensive Income (Loss)

(unaudited and in thousands)

Three Months Ended

Year Ended December 31,

September 30, 2020

December 31, 2019

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

Year Ended December 31,

December 31, 2020

September 30, 2020

2020

2019

123,707$ 539,368$ 480,818

35,964

$

48,620

$

43,562

$ 176,663

$ 160,476

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

Three Months Ended

Other Data (including QTS' pro rata share of unconsolidated JV, excl. total revenue)

Year Ended December 31,

December 31, 2020

September 30, 2020

December 31, 2019

2020

2019

Total revenue (1)

MRR (at period end) NOI

$ $ $

NOI as a % of revenue Adjusted EBITDA

143,897 38,539 97,684 67.9%

$ $ $

137,538 36,913 90,734 66.0%

$ $ $

123,707 34,034 81,835 66.2%

$ $ $

539,368 38,539 358,973 66.6%

• $ 480,818

• $ 34,034

• $ 313,056

  65.1%

  Adjusted EBITDA as a % of revenue

  • $ 83,732 58.2%

    • $ 75,986 55.2%

      • $ 66,299 53.6%

        • $ 299,287 55.5%

• $ 250,380

  52.1%

  Operating FFO available to common stockholders & OP unit holders

  • $ 56,665

    • $ 49,698

      • $ 45,734

        • $ 199,039

• $ 165,728

  Operating FFO per diluted share Annualized ROIC

  • $ 0.78

  • $ 0.70

  • $ 0.69

  11.8%

  11.6%

  12.3%

  • $ 2.84 11.8%

• $ 2.63 12.3%

(5)

Leasable raised floor 1,581,997

1,340,755

Data center % occupied 92.6%

91.5%

Basis-of-design raised floor space (1) 3,542,348

3,213,799

Data center properties 28

24

Operating Portfolio Statistics	December 31,	December 31,
(including unconsolidated JV at the JV's 100% share)	2020	2019
Built out square footage:
Raised floor	1,957,825	1,659,137
Leased raised floor	1,465,537	1,226,188
Total Raw Shell:
Total	7,813,618	7,188,833
Basis of design raised floor % developed	55.3%	51.6%
Data center raised floor % owned (2)	96.9%	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 93.8% and 92.4% at December 31, 2020 and December 31, 2019, respectively.

2021 Guidance

2021 Guidance

($ in millions except per share amounts)

2020 Actuals

Low

High

Adjusted EBITDA

$ $ $

299

$

330

$ 340

The Company's 2021 guidance assumes rental churn for the full year of between 3% and 6%. In addition, for the full-year 2021, QTS expects to spend between $800 million and $900 million in cash capital expenditures, including approximately $50 million related to customer specific capital. The Company's 2021 capital expenditure guidance includes its proportionate share of cash capital expenditures associated with the unconsolidated joint venture. The Company's 2021 guidance excludes the impact of any acquisitions.

The Company's 2021 guidance includes the effects of the Company's joint venture, which is reflected as an unconsolidated joint venture on QTS' reported financial statements. Consistent with GAAP accounting standards, revenue from the unconsolidated joint venture is not included in QTS' reported consolidated GAAP financial statements. Also consistent with NAREIT-defined standards, QTS includes its proportionate ownership of non-GAAP measures such as EBITDAre and FFO from the joint venture in its reported EBITDAre and FFO results, respectively.

The Company's 2021 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, the COVID-19 pandemic is a continuously 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.

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

Year Ended December 31,

December 31, 2020

September 30, 2020

December 31, 2019

2020

2019

NOI (1) (2)

$

Annualized NOI

Annualized ROIC

97,684 390,736 3,303,987 11.8%

$

90,734 362,936 3,117,375 11.6%

$

81,835 327,340 2,670,448 12.3%

$ 358,973 358,973 3,043,171 11.8%

$ 313,056 313,056 2,552,041 12.3%

________________________________________________________

• (1) Includes facility level general and administrative allocation charges of 4% of cash revenue for all facilities. These allocated charges aggregated to $5.2 million, $5.1 million and $4.7 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and $19.8 million and $18.6 million for the years ended December 31, 2020 and 2019, respectively.

• (2) NOI includes QTS' pro rata share of NOI from the unconsolidated joint venture.

As of

As of December 31,

Calculation of Average Undepreciated Real Estate Assets and Other Net Fixed Assets Placed in Service

December 31, 2020

Real Estate Assets, net

$ 3,330,191$ 3,141,781$

Less: Construction in progress

(1,028,765)

• Plus: Accumulated depreciation 702,944662,454

• Plus: Goodwill 173,843 173,843

• Plus: Other fixed assets, net 37,44136,940

• Plus: Acquired intangibles, net (1) 57,531 60,723

• Plus: Leasing Commissions, net 57,65550,526

  Plus: Assets placed in service in unconsolidated

• JV (2)

  Total as of period end

  $

  Average undepreciated real estate assets and other net fixed assets as of reporting period (3)

  $

  2020	2019
  2,671,868$	3,330,191$	2,671,868
  (920,922)	(1,028,765)	(920,922)
  558,560	702,944	558,560
  173,843	173,843	173,843
  40,509	37,441	40,509
  70,036	57,531	70,036
  44,330	57,655	44,330
  43,668	54,469	43,668
  3,385,309$ 3,222,666$	2,681,892$	3,385,309$	2,681,892
  3,303,987$ 3,117,375$	2,670,448$	3,043,171$	2,552,041

  September 30, 2020

  December 31, 2019

  (957,592)

• 54,469 53,991

• ________________________________________________________

  • (1) Net of acquired intangible liabilities and deferred tax liabilities.

  • (2) Represents QTS' basis in the assets in the JV which were $54.5 million as of December 31, 2020 (calculated as the cost basis of the assets contributed for in serviced phases of $110.2 million less the equity contribution of the JV partner and the JV partner's portion of debt of $55.7 million), $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) and $43.7 million as of December 31, 2019 (calculated as the cost basis of the assets contributed for in serviced phases of $88.6 million less the equity contribution of the JV partner and the JV partner's portion of debt of $44.9 million).

  • (3) Calculated by using average quarterly balance of each account.

Implied Enterprise Value and Weighted Average Shares

Implied Enterprise Value as of December 31, 2020:

Class A Common Stock

Class B Common Stock

61.88$ 61.88

Total Shares Outstanding 64,580,118

Units of Limited Partnership Interest (1)

Options to purchase Class A Common Stock and performance

units (2)

Effect of Class A common stock associated with forward

equity sale (3)

6,605,158	61.88	408,727
1,288,237	61.88	79,716
479,973	61.88	29,701

Fully Diluted Total Shares and Units of Limited Partnership

Interest outstanding as of December 31, 2020: 72,953,486

Liquidation value of Series A Preferred Stock Liquidation value of Series B Convertible Preferred Stock Total Equity

4,280,000 3,162,500

25.00 107,000

100.00316,250

$ 4,937,612

Total Indebtedness (4) 1,905,889

Implied Enterprise Value

$ 6,843,501

________________________________________________________

• (1) Includes 47,459 operating partnership units representing the "in the money" value of Class O LTIP units on an "as if" converted basis as of December 31,

  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 December 31, 2020.

• (3) Represents the "in the money" value of the forward equity shares on an "as if" converted basis as of December 31, 2020.

• (4) Excludes all debt issuance costs reflected as a reduction to liabilities at December 31, 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 months and year ended December 31, 2020:

Three Months Ended	Year Ended
December 31, 2020	December 31, 2020
Weighted average shares outstanding - basic	64,563,277	61,345,676
Effect of Class A partnership units (1)	6,594,656	6,648,487
Effect of Class O units on an "as if" converted basis (1)	47,459	45,492
Effect of options to purchase Class A common stock and performance units on an "as	1,293,066	1,089,358
if" converted basis (2)
Effect of Class A common stock associated with forward equity sale (3)	444,453	899,071
Weighted average shares outstanding - diluted (4)	72,942,911	70,028,084
________________________________________________________

• (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 months and year ended December 31, 2020 was $62.13 and $61.61, 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.

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 December 31, 2020.

Net Rentable Square Feet (Operating NRSF) (1)

Total Properties

7,813,618

________________________________________________________

• (1) Represents the total square feet of a building that is currently leased or available for lease plus developed supporting infrastructure, based on engineering drawings and estimates, but does not include space held for redevelopment or space used for our own office space.

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

• (3) With respect to our owned properties, gross square feet represents the entire building area. With respect to leased properties, gross square feet represents that portion of the gross square feet subject to our lease. Gross square feet includes 424,246 square feet of our office and support space, which is not included in operating NRSF.

• (4) Represents management's estimate of the portion of NRSF of the facility with available power and cooling capacity that is currently leased or readily available to be leased to customers as data center space based on engineering drawings.

• (5) Represents the operating NRSF of the facility other than data center space (typically office and storage space) that is currently leased or available to be leased..

• (6) Represents required data center support space, including mechanical, telecommunications and utility rooms, as well as building common areas.

• (7) Calculated as data center raised floor that is subject to a signed lease for which billing has commenced divided by leasable raised floor based on the current configuration of the properties, expressed as a percentage.

• (8) We define annualized rent as MRR multiplied by 12. We calculate MRR as monthly contractual revenue under executed contracts as of a particular date, which includes revenue from our rental and cloud and managed services activities, but excludes customer recoveries, deferred set-up fees, variable related revenues, non-cash revenues and other one-time revenues. MRR does not include the impact from booked-not-billed contracts (as defined below) as of a particular date, unless otherwise specifically noted, nor does it reflect the accounting associated with any free rent, rent abatements or future scheduled rent increases..

• (9) Represents installed utility power and transformation capacity that is available for use by the facility as of December 31, 2020.

• (10) 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.

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

• (12) Subject to long-term ground lease.

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

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

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

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

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

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

Development Costs Summary

(in millions, except NRSF data)

During the fourth quarter of 2020, the Company brought online approximately 20 megawatts of gross power and approximately 74,000 net rentable square feet ("NRSF") of raised floor at its Richmond, Atlanta (DC-2), Chicago, Ashburn (DC-1), Piscataway and Hillsboro facilities at an aggregate cost of approximately $120.8 million (excluding customer specific capital and leasing commissions).

For the year ended December 31, 2020, excluding the Company's share of capital at the joint venture, the Company brought online approximately 72 megawatts of gross power and approximately 296,000 NRSF of raised floor at its Ashburn (DC-1), Atlanta (DC-1), Atlanta (DC-2), Irving, Fort Worth, Atlanta-Suwanee, Hillsboro, Chicago, Piscataway, Richmond and Netherlands facilities at an aggregate cost of approximately $605.3 million (excluding customer specific capital and leasing commissions).

Additionally, during the year ended December 31, 2020, the joint venture brought online the third phase at the Manassas (DC-1) 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, 2021, which includes development costs and soft cost capitalization, but excludes customer specific capital costs and leasing commissions (in millions).

Under Construction Costs (1)Properties

Actual (2)

Estimated Cost to Completion (3) Total

Expected Completion date

Atlanta, GA (DC - 2) Richmond, VA Piscataway, NJ Irving, TX

30

7

37

Q3 2021

7

27

34

Q2 & Q4 2021

24

10

34

Q1 & Q2 2021

Ashburn, VA (DC - 1) (4) Hillsboro, OR

10

21

31

Q1 2021

12

15

27

Q1 & Q2 2021

Chicago, IL Santa Clara, CA Totals

7

19

26

Q2 2021

7

11

18

Q2 2021

$

160

$

203

$

363

Ashburn, VA (DC - 2) (5)

45 5

109 90

• 154 Q2, Q3 & Q4 2021

Manassas, VA (DC - 1)

2

11

13

Q3 2021

Totals

$

212

$

413

$

625

________________________________________________________

• (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 December 31, 2020. In addition to the $212 million of construction costs incurred through December 31, 2020 for development expected to be completed by December 31, 2021, as of December 31, 2020 the Company had incurred $817 million of additional costs (including acquisition costs and other capitalized costs) for other development projects that are expected to be completed after December 31, 2021.

• (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) 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)" within the New Property Development section.

• (5) Represents the development of a new data center building in our Ashburn, VA market.

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

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

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 December 31, 2020. This table shows the Company's ability to increase its raised floor of approximately 2.0 million square feet as of December 31, 2020 to approximately 3.5 million square feet, exclusive of development capacity on adjacent land holdings.

Raised Floor NRSF

Overview as of December 31, 2020

• (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,

  2021.

• (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, 2021.

• (3) The total cost basis of available land, which is land available for future development, is approximately $253.0 million, of which approximately $214.6 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 "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.

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

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

• (7) Consists of Miami, FL; Lenexa, KS; and Overland Park, KS facilities as well as land holdings in Texas.

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

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

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

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

Year EndedDecember 31, 2020

September 30, 2020

December 31, 2019

December 31, 2020

2019

Breakdown of NOI by facility: Atlanta (DC - 1) data center Atlanta-Suwanee data center Irving data center Richmond data center Chicago data center Piscataway data center Ashburn data center Dulles data center Princeton data center Fort Worth data center Santa Clara data center Leased data centers (1) Sacramento data center Atlanta (DC - 2) data center Netherlands data centers (2) Hillsboro data center Other facilities (3)

$

• 26,675 $

• 26,579 $

• 25,094 $

106,199 $ 96,196

11,512

11,361

11,450

45,318 45,484

5,333

4,759

3,889

18,444 13,104

6,620

4,679

2,392

17,704 4,698

2,546

2,622

2,549

10,149 9,977

2,077

2,289

2,095

9,352 7,549

1,345

1,515

3,718

1,503

1,547 -

5,879 6,204

1,475

1,144

155

24

764 -

5,216 4,341 270

- 2,041 -

2,598

1,893

1,690

8,725 5,203

Pro rata share of NOI from unconsolidated entity (5)

96,512 1,172

89,554 1,180

80,994 841

4,122 2,789

________________________________________________________

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

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

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

• (4) Includes facility level general and administrative allocation charges of 4% of cash revenue for all facilities. These allocated charges aggregated to

  $5.2 million, $5.1 million and $4.7 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and

  $19.8 million and $18.6 million for the years ended December 31, 2020 and 2019, respectively.

• (5) QTS' pro rata share of the JV is 50%.

Our cash paid for capital expenditures is summarized as follows:

Three Months Ended

Year Ended December 31,

September 30, 2020

December 31, 2019

• (1) Includes customer specific capital as well as QTS' pro rata share of capital expenditures associated with the unconsolidated joint venture. Total capital expenditures of the joint venture were less than $1 million for the three months ended December 31, 2020. 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 $3 million (of which $1 million was our pro rata share) for the three months ended December 31, 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 year ended December 31, 2020, less the 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 $41 million (of which $20 million was our pro rata share) for the year ended December 31, 2019, less the equity contribution of the JV partner and the JV partners' portion of debt of $21 million.

• (2) Cash paid for acquisitions during the year ended December 31, 2020 relate to various land holdings in Texas, Virginia and Georgia.

• (3) 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.

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 18 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 fourth quarter of 2020, the Company entered into 519 new and modified leases aggregating to $40.3 million of incremental annualized rent. Incremental annualized rent from new and modified renewal leases signed in the fourth quarter of 2020 of $40.3 million represents the largest quarterly leasing result QTS has achieved as a public company and represents a nearly 70% increase relative to the Company's prior four quarter average. The Company's fourth quarter leasing performance was driven by a strong mix of leasing across QTS' customer verticals of hyperscale, hybrid colocation and federal. Highlights of the fourth quarter leasing performance include a 12 megawatt expansion with an existing hyperscale customer in the Company's Atlanta, Georgia (DC - 2) facility, a previously announced 5+ megawatt lease signed with a hyperscale customer supporting federal requirements, as well as an incremental approximate 5 megawatt lease signed with a leading software-as-a-service hyperscale customer in Manassas, Virginia (which is part of the unconsolidated entity and reported in net leasing results at QTS' 50% pro rata share). Pricing on new and modified leases signed during the fourth quarter was higher than the prior four quarter average reflecting a balanced mix of leasing across the Company's customer verticals, including steady performance within its hybrid colocation vertical and an acceleration in both its hyperscale and federal verticals.

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

New/modified leases signed

Q4 2020

452$ 40,272,870

P4QA (2)

475

436 24,155,560

Q3 2020

540

390 (3) 26,002,722

Q2 2020

499

548 21,044,584

Q1 2020

486

38821,832,767

Q4 2019

373

465 27,742,166

________________________________________________________

• (1) Amounts include incremental MRR only, net of downgrades. Figures do not include cost recoveries.

• (2) Average of prior four quarters.

• (3) Pricing on new and modified renewal leases during the third 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.

The following table outlines the booked-not-billed ("BNB") balance as of December 31, 2020 and how it is expected to affect revenue in 2021 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.

Thereafter

Total

• (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 $154.4 million annualized BNB revenue, approximately $2.8 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 December 31, 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 $87.1 million, of which $49.0 million was attributable to 2021, $14.3 million was attributable to 2022, and $23.8 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 December 31, 2020 to be approximately $520 million, of which the majority relates to the Company's construction of new data center facilities in Atlanta, Georgia and Manassas, Virginia. 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.

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 fourth quarter of 2020 was 1.5% lower than the rates for those customers immediately prior to renewal. The decline in the renewal rate of 1.5% was largely due to a single customer renewal downgrade that occurred as part of a broader multi-site expansion plan. Excluding this customer lease from the renewal base, QTS' renewal rates on a per square foot basis for the quarter ended December 31, 2020, would have represented a 2.3% increase relative to pre-renewal rates. The Company expects 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 0.8% for the fourth quarter of 2020. Rental Churn was 3.7% for the year ended December 31, 2020.

Annualized

Number ofrent per leasedAnnualizedPeriodrenewed leases

sq ft

RentRent Change (1)

Renewed Leases

Q4 2020

99$

553$ 22,462,764

(1.5%) (2)

P4Q avg (3)

93

632

14,221,876 1.8%

Q3 2020

91

609

14,530,0201.8%

Q2 2020

112

509

19,555,593 2.6%

Q1 2020

78

871

11,279,3855.0%

Q4 2019

90

777

11,522,508 (2.2%)

________________________________________________________

• (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) The decline in the renewal rate of 1.5% was largely due to a single customer renewal downgrade that occurred as part of a broader multi-site expansion plan. Excluding this customer lease from the renewal base, QTS' renewal rates on a per square foot basis would have represented a 2.3% increase relative to pre-renewal rates.

• (3) Average of prior four quarters.

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 December 31, 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 RaisedNumber ofYear of Lease

Expiration

Leases Expiring (1)

Floor of Expiring Leases

Month-to-Month (3)

761

31,512

2021

1,952

315,377 22%

2022

1,278

356,41125%

2023

836

140,732 10%

2024

340

179,77312%

After 2024

384

425,156 29%

Portfolio Total

5,551

1,448,961

Hybrid
Hyperscale as	Colocation as
% of Portfolio	% of Portfolio	% of Portfolio
Annualized	Annualized	Annualized
Rent	Rent	Rent

100%$

________________________________________________________

• (1) Represents each agreement with a customer signed as of December 31, 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 approximately $13.8 million of annualized rent associated with customer leases whose original contract terms ended on December 31, 2020 and have signed a renewal or are eligible for renewal as well as $10.2 million of annualized rent associated with customers whose leases expired prior to December 31, 2020 and have continued on a month-to-month basis.

Largest Customers

As of December 31, 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 December 31, 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%.

• (1) Annualized rent is presented for leases commenced as of December 31, 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 December 31, 2020.

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 December 31, 2020:

December 31, 2020

Annualized Rent (1)

% of PortfolioDecember 31, 2019

Annualized Rent (1)

% of Portfolio

136,232,356 33%Hyperscale Hybrid Colocation Portfolio Total

170,692,207 291,770,198

• 37% $ 63%

272,170,874 67%

________________________________________________________

(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 December 31, 2020:

As of December 31, 2020

Industry Segmentation - % of Annualized Rent (1)

(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 December 31, 2019:

As of December 31, 2019

Industry Segmentation - % of Annualized Rent (1)

(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%

Debt Summary and Debt Maturities

(unaudited and in thousands)

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

Outstanding Balance as of:Weighted Average Effective Interest

Rate at December 31, 2020 (1)Maturity DateDecember 31, 2020

December 31, 2019

Unsecured Credit Facility (2)

Revolving Credit Facility Term Loan A

1.41%

December 17, 2023

$

392,337 $ 317,028

• 3.26%December 17, 2024

  225,000225,000

  Term Loan B Term Loan C

  Term Loan D (2) 2025 Senior Notes (2) 2028 Senior Notes (2) Lenexa Mortgage Finance Leases

  3.30% 3.46% 1.45%

  April 27, 2025

  225,000 225,000

  October 18, 2026

  250,000250,000

  January 15, 2026

• 4.75%November 15, 2025

Total consolidated debt

QTS' Pro Rata Share of Unconsolidated JV Debt (2) Total consolidated and unconsolidated debt

3.88% 4.10% 4.33% 2.85% 4.47%

October 1, 2028

250,000 -500,000

- 400,000 -

May 1, 2022 2021 - 2038

-1,736

41,718 45,140

1,884,055

1,463,904

February 22, 2023

45,813

$

1,929,868

$

35,166 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 December 31, 2020.

• (2) Balances exclude debt issuance costs reflected as offsets to liabilities.

A summary of the Company's fixed versus floating rate debt:

Outstanding Balance as of December 31, 2020 (1)

% of total

Outstanding Balance as of

December 31, 2019 (1)

% of total

Fixed Rate Debt Floating Rate Debt

$

1,287,531642,337

• 66.7% $ 33.3%

1,082,04272.2%

417,028 27.8%

$

1,929,868

100.0%

$

1,499,070100.0%

________________________________________________________

(1) As of December 31, 2020, the entire balance of term loan debt associated with Term Loan A, Term Loan B, Term Loan C was swapped to a fixed rate. As of

December 31, 2020, the calculation also includes the effects of $92 million of debt at the joint venture (of which $46 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 adjusted 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.

Scheduled debt maturities as of December 31, 2020:

Debt instruments Unsecured Credit Facility (1) Term Loan D (1)

2021

2022

2023

2024

2025

ThereafterTotal

Senior Notes (1) Finance Leases

• - $ - - 2,693 2,693

- - 2,937 2,937

- - 3,205 395,542

$ 225,000 - - 3,489 228,489

$ 225,000 - - 3,790 228,790

250,000 250,000 500,000 500,000 25,604 41,718

QTS' Pro Rata Share of Unconsolidated JV Debt (1) Total consolidated and unconsolidated debt

3

4

45,704

5

5

92

$

2,696

$

2,941

$ 441,246

$ 228,494

$ 228,795

$ 1,025,696

$

45,813 1,929,868

________________________________________________________

(1) Balances excludes debt issuance costs reflected as offsets to liabilities.

Interest Summary

(unaudited and in thousands)

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

2020

2019

507	2,404	1,697
6,771$	33,128$	28,290

The weighted average interest rate, including the effects of interest rate swaps, was 3.60%, 3.37%, and 4.04% for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively, and 3.59% and 4.24% for the year ended December 31, 2020 and December 31, 2019, respectively.

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) FFO, Operating FFO and Adjusted Operating FFO; (2) MRR and Recognized MRR; (3) NOI; and (4) 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. 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-design raised 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").

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.

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

Three Months Ended

Year EndedDecember 31, 2020

September 30, 2020

December 31, 2019

December 31, 2020

2019

FFO

Net income (loss)

$

(10,660) $

• 6,907 $

Equity in net loss of unconsolidated entity Real estate depreciation and amortization Gain on sale of real estate, net Impairments of depreciated property

52,763 - -

47,880 - -

(3,606) $ 481 41,947

14,576 $ 31,665

186,539 156,387

11,461 - 11,461

FFO (1)

43,009

55,665

FFO available to common stockholders & OP unit holders

35,964

48,620

324 50,607 (7,045) 43,562

204,843 (28,180)

188,656 (28,180)

176,663 160,476

Debt restructuring costs

18,036 2,665

- 1,078

1,523

18,036 1,523

Operating FFO available to common stockholders & OP unit holders (2)

56,665

49,698

45,734

199,039 165,728

Maintenance capital expenditures Leasing commissions paid Amortization of deferred financing costs Non real estate depreciation and amortization Straight line rent revenue and expense and other Tax expense (benefit) from operating results Equity-based compensation expense Adjustments for unconsolidated entity

(2,000)

(2,268)

(910)

(10,150) (4,233)

1,180

990

982

4,148 3,917

(8,748)

(7,196)

(3,243)

(25,401) (7,922)

6,862

7,315

4,360

25,133 16,412

Adjusted Operating FFO available to common stockholders & OP unit holders (2)

$

45,982

$

42,383

$

38,639

$

169,509

$

154,799

________________________________________________________

• (1) FFO for the three months and year ended December 31, 2019 includes a $1.4 million gain on sale of real estate related to certain assets considered incidental to our primary business and was included in the "Gain on sale of real estate, net" line item of the consolidated statement of operations. No gains, losses or impairment write-downs associated with assets incidental to our primary business were incurred during the year ended December 31, 2020.

• (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.

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

Year EndedDecember 31, 2020

September 30, 2020

December 31, 2019

December 31,2020

2019

Total period revenues (GAAP basis)

$

143,897

$

137,538

$

123,707

$

539,368

$

480,818

Total period deferred setup fees

(6,585)

(5,300)

(4,062)

(20,330) (15,156)

Recognized MRR in the period

112,463

108,167

100,471

427,957 390,267

MRR at period end

Total period revenues (GAAP basis) Less: Total revenues excluding last month Total revenues for last month of period

$

143,897

$

137,538

$

123,707

$

(96,260)

(91,485)

(81,699)

539,368 (491,731)

$ 480,818 (438,810)

Less: Last month variable lease revenue from recoveries

(4,953)

(4,643)

(4,578)

(4,953) (4,578)

Last month straight line rent and other

(2,349)

(3,044)

(2,413)

(2,349) (2,413)

MRR at period end

$

38,539

$

36,913

$

34,034

$

38,539

$

350 34,034

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

Year EndedDecember 31, 2020

September 30, 2020

December 31, 2019

December 31, 2020

2019

EBITDAre and Adjusted EBITDA Net income (loss)

$

(10,660) $

6,907

$

(3,606) $

14,576 $ 31,665

Equity in net loss of unconsolidated entity Interest income

411 -

366 -

(8)

(2) (111)

Tax expense (benefit) Depreciation and amortization

242

227

(816)

438 (37)

Gain on disposition of depreciated property Impairments of depreciated property

55,887 - -

51,378 - -

45,161

199,889

168,305

- - (13,408)

Pro rata share of EBITDAre from unconsolidated entity

1,167

1,178

830

4,088 2,775

Debt restructuring costs Equity-based compensation expense

Transaction, integration and implementation costs Adjusted EBITDA

18,036 6,862 2,665

- 7,315 1,099

1,523 4,360 649

25,133 16,412

$

83,732

$

75,986

$

66,299

$

299,287

$ 250,380

________________________________________________________

(1) EBITDAre for the three months and year ended December 31, 2019, includes a $1.4 million gain on sale of real estate related to certain assets considered incidental to our primary business and was included in the "Gain on sale of real estate, net" line item of the consolidated statement of operations. No gains, losses or impairment write-downs associated with assets incidental to our primary business were included in EBITDAre during the year ended December 31, 2020.

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

Year EndedDecember 31, 2020

September 30, 2020

December 31, 2019

December 31, 2020

2019

Net income (loss)

$

(10,660) $

6,907

$

(3,606) $

14,576 $ 31,665

Equity in net loss of unconsolidated entity Interest income

411 -

366 -

(8)

(2) (111)

Depreciation and amortization Debt restructuring costs Other (income) expense Tax expense (benefit)

55,887

18,036 -

51,378 - -

45,161

199,889 168,305

380

(159) 50

Transaction, integration and impairment costs General and administrative expenses

2,665

1,078

12,110

4,340 15,190

Gain on sale of real estate, net

20,809 -

22,082 -

(1,361)

-

(14,769)

Pro rata share of NOI from unconsolidated entity (2)

96,512 1,172

89,554 1,180

80,994 841

4,122 2,789

________________________________________________________

• (1) Includes facility level general and administrative allocation charges of 4% of cash revenue for all facilities. These allocated charges aggregated to $5.2 million, $5.1 million and $4.7 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and $19.8 million and $18.6 million for the years ended December 31, 2020 and 2019, respectively.

• (2) QTS' pro rata share of the JV is 50%.