QTS Realty Trust, Inc....QTS Realty Trust, Inc. 5 Q4 2018 Hybrid Colocation Strength • Signed...

© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc.Fourth Quarter and Year-End 2018Earnings Presentation

February 25, 2019


QTS Realty Trust, Inc. 1

Forward Looking StatementsSome 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.


Fourth Quarter and Year-End

2018 Review



Strategic Growth Plan Execution Summary – Q4 ‘18

$

Accelerate Growth

and Leasing

Increase

Profitability

Enhance

Predictability

Highest core adjusted EBITDA margin

achieved in QTS history

Represents 250 basis points of core

margin expansion Y/Y

12%Q4 Revenue

Growth Y/Y*

17%Q4 Adj. EBITDA

Growth Y/Y*

$65MAnnualized Rent

Signed in ‘18*

* Reflects results for Core business only

52.8%Q4 Adj. EBITDA

Margin*

0.6%Q4 Rental

Churn*

Among the lowest churn rates in data center

industry

YTD core churn of 3.6% at the low end of 2018

churn guidance of 3-5%

2018 core churn less than half the churn QTS

experienced in consolidated business in 2017



2018 Year in Review

$370.4

$422.8

2017 2018

$179.1

$218.1

2017 2018

$2.43

$2.57

2017 2018

Adjusted EBITDA ($M)1 Operating FFO per Share1Revenue ($M)1

2018 Highlights

1.Reflects results for the Core business only

Opened newest

450,000 SF mega

data center in

Ashburn, VA

Gained significant

momentum with

QTS’ software-

defined data center

platform (SDP)

Completed

transition of certain

cloud & managed

services customers

to GDT

Signed 24MW

hyperscale lease

with global SaaS

provider

Achieved 9th

consecutive year of

99.999% or

greater facility

uptime

3rd consecutive

year QTS has led

data center industry

in customer

satisfaction



Q4 2018 Hybrid Colocation Strength

• Signed new/modified leases totaling $12.2M of core incremental annualized rent

Aggregate Q4 ’18 core net leasing represented a 43% increase vs. Q4 ‘17

$65M of core leasing in 2018 represents the highest annual leasing volume in QTS’ history

Represents 55%+ increase over 2017

Booked-not-billed backlog increased to a near record $63M of annualized rent

Provides strong visibility into future growth outlook

• Hybrid Colocation:

Hybrid colocation business contributed approximately 75% of core net leasing volume in Q4

and approximately 67% of core net leasing volume in 2018

Continue to see an overall increase in deal size within Enterprise vertical

QTS signed 9 leases of between 500kW – 2MW in 2018, including 5 during Q4;

compares to only 2 deals signed in that range during 2017

Positive enterprise demand backdrop

Differentiation enabled by software-defined data center platform



QTS Service Delivery Platform Remains Key Differentiator

Enhancements

& Features

872

246

2018

2017

27%annual increase in

SDP active user base

START FINISH

40%Improvement in

implementation

of cross connect orders

automated through SDP10%$700k+

Annualized Revenue

New power upgrades

representing

400%

20172018

CU

ST

OM

ER

-FA

CIN

G A

PI’

S

40

157

INCREASE

Service Delivery Platform 2018 Year in Review



Continued Traction in HyperscaleHyperscale provides an opportunity to strategically accelerate growth with the

largest and fastest growing technology companies in the world

Hyperscale:

Hyperscale vertical contributed

approximately 25% of core net leasing

volume in Q4 and approximately 33% of core

net leasing volume in 2018

Q4 hyperscale leasing volume comprised 3

MW between two customers in Atlanta and

Chicago

Several larger transactions that QTS had

anticipated potentially closing in 2018

ultimately pushed into 2019, but remain in

late stage deal pipeline

QTS continues to expect to sign 1-3 larger

hyperscale transactions each year


Financial Update



Balance Sheet and Liquidity Summary

Net Debt to LQA consolidated

adjusted EBITDA of 5.7x

No significant debt maturities

until 2022

$63M booked-not-billed

backlog of annualized

revenue

Extended $1.52 billion credit

facility with reduced pricing

and enhanced covenant

flexibility

Entered into additional

floating to fixed interest rate

swap agreements that

increase QTS’ pro forma fixed

rate debt exposure to 74% of

total debt

Market Cap$2,151M2

Series A Preferred Stock

$107M

Series B Convertible Preferred Stock

$316M

Senior Notes$400M

Unsecured Credit Facility$952M1

Capital Leases and Other$5M

1. Includes two term loans ($700 million in aggregate) and $252 million of borrowings on revolving credit facility as of December 31, 20182. Market Cap calculated as follows: total Class A and Class B common stock and OP units of 58.1 million, multiplied by the December 31, 2018 stock price of $37.05 per share.3. May not sum due to rounding

$3.9B Enterprise

Value

$1 $0 $0

$254$350

$752

2019 2020 2021 2022 2023 2024+

HighlightsCapital Structure

Debt Maturities ($M)3



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



Benefits of Joint Venture Agreement to QTSMultiple 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



Summary of 2019 Development Plan

1.Reflects cash capital expenditures and excludes acquisitions. Also includes QTS’

proportionate share of cash expenditures in Manassas joint venture

Currently anticipate bringing online approximately 154,000 square feet of raised floor capacity in

2019 including:

51,000 SF in Dallas-Fort Worth between QTS’ Irving and Fort Worth data centers

Approximately 32,000 SF in Ashburn, VA

Additional capacity in Manassas, Chicago, Atlanta, Piscataway and Santa Clara

QTS expects capital expenditures in 2019 of $450 - $500 million1, in line with 2018 capital

expenditures

Atlanta, GA (Metro) 477,986 20,000 29,200 527,186

Irving, TX 6,000 174,160 25,000 76,541 275,701

Chicago, IL 6,000 46,000 20,000 149,855 215,855

Ashburn, VA 14,230 31,971 131,799 178,000

Piscataway, NJ 5,000 98,820 5,000 72,180 176,000

Fort Worth, TX 10,600 26,000 43,400 80,000

Santa Clara, CA 55,905 4,000 21,035 80,940

Manassas, VA - 22,400 43,924 66,324

Other 602,531 - 528,337 1,130,868

Total 17,000 1,480,232 154,371 1,096,271 2,730,874

Future

Available Total

Q4 2018

Expansion

Q4 2018 Raised

FloorUnder Construction

(through 12/31/19)

1. Reflects cash capital expenditures and excludes acquisitions. Also includes QTS’

proportionate share of cash expenditures in Manassas joint venture



Full Year 2019 Guidance Summary

1. Consistent with GAAP accounting standards, QTS expects the closing of the JV will result in a reduction in FY 2019 reported revenue of approx. $12 million, representing 100% of the expected revenue from the Manassas facility.

2. Consistent with GAAP accounting and NAREIT-defined standards, QTS expects to include its proportionate ownership of EBITDAre in its reported EBITDAre and adjusted EBITDA results. QTS expects the closing of the JV will

result in an approximately $3 million reduction in reported 2019 adjusted EBITDA to reflect the impact from QTS’ 50% reduced proportionate ownership in the Manassas facility contributed to the unconsolidated joint venture.

3. Consistent with GAAP accounting and NAREIT-defined standards, QTS expects to include its proportionate ownership of Funds from Operations from the joint venture in its reported Funds from Operations, Operating Funds from

Operations and Operating Funds from Operations per diluted share results.

4. Fully diluted shares

5. Reflects cash capital expenditures and excludes acquisitions. Also includes QTS’ proportionate share of cash expenditures in Manassas joint venture

2019 core rental churn guidance: 3% - 6%

2019 capital expenditure guidance: $450 - $500 million5, in line with 2018 capital expenditures

2019 Operating FFO per share guidance assumes:

QTS maintains net debt to annualized adjusted EBITDA leverage in the mid to high 5x range,

including QTS’ proportionate share of joint venture debt

Guidance reflects the full financing cost associated with 2019 capital development plan

As the joint venture provides the opportunity for QTS to balance a higher return on capital, against

reduced capital spending, QTS does not anticipate the closing of the joint venture will have a

material impact on its 2019 reported Operating FFO per share

At full stabilization, QTS expects the Manassas JV to result in approximately $0.02 - $0.03 of

reported annual OFFO/share accretion

$ in millions except per share values

2019 Guidance

(excluding JV impact)

Less: JV

Impact1,2,3

2019 Guidance

(including JV impact)

Low High Low High

Revenue $471 $485 ($12) $459 $473

Adjusted EBITDA $246 $256 ($3) $243 $253

Operating FFO per Share4 $2.61 $2.71 - $2.61 $2.71


Closing Remarks



Accelerated Performance in 2018

Accelerated Leasing Adjusted EBITDA

Margin Expansion

MRR Churn

Reduction

39.6 48.0

41.7

64.5

2015 2016 2017 2018

43.1M

Avg.

45.0% 45.8% 46.6%

51.6%

2015 2016 2017 2018

45.8%

Avg.

4.0%

5.6%

8.4%

3.6%

2015 2016 2017 2018

6.0%

Avg.

1

1 1

1.2018 reflects results for the Core business only. 2015-2017 reflects results for consolidated business including Core and Non-Core

Annualized Rent Signed ($M)

Ended 2018 with near-record booked-not-billed backlog of $63M, de-risking

2019 continued strong performance


Thank [email protected]


Appendix



NOI Reconciliation

$ in thousands

Net Operating Income (NOI)

Net income (loss) $ 10,474 $ (4,072) $ 6,402 $ 7,576 $ (14,468) $ (6,892) $ (11,009) $ (5,104) $ (16,113)

Interest income (58) — (58) (66) — (66) (1) — (1)

Interest expense 6,050 — 6,050 6,384 2 6,386 8,049 — 8,049

Depreciation and amortization 38,259 — 38,259 36,693 1,206 37,899 34,247 2,893 37,140

Debt restructuring costs 605 — 605 — — — 19,992 — 19,992

Tax expense (benefit) of taxable REIT subsidiaries 38 (161) (123) (409) (571) (980) (3,879) (495) (4,374)

Transaction, integration and impairment costs 269 — 269 901 — 901 302 9,147 9,449

General and administrative expenses 17,551 118 17,669 17,732 2,191 19,923 16,762 4,058 20,820

Restructuring 138 4,108 4,246 — 13,737 13,737 — — —

NOI $ 73,326 $ (7) $ 73,319 $ 68,811 $ 2,097 $ 70,908 $ 64,463 $ 10,499 $ 74,962

December 31, 2018 September 30, 2018 December 31, 2017

Three Months Ended

Total Core Non-Core TotalCore Non-Core Total Core Non-Core

$ in thousands

Net Operating Income (NOI)

Net income (loss) $ 28,530 $ (35,705) $ (7,175) $ (4,611) $ 6,068 $ 1,457

Interest income (150) — (150) (67) — (67)

Interest expense 28,736 13 28,749 30,497 26 30,523

Depreciation and amortization 143,525 6,366 149,891 128,823 12,101 140,924

Debt restructuring costs 605 — 605 19,992 — 19,992

Tax benefit of taxable REIT subsidiaries (960) (2,408) (3,368) (9,655) (123) (9,778)

Transaction, integration and impairment costs 2,743 — 2,743 1,913 9,147 11,060

General and administrative expenses 71,401 9,456 80,857 67,740 19,491 87,231

Restructuring 138 37,805 37,943 — — —

NOI $ 274,568 $ 15,527 $ 290,095 $ 234,632 $ 46,710 $ 281,342

December 31, 2018 December 31, 2017

Core Non-Core Total

Year Ended

Core Non-Core Total



EBITDAre & Adjusted EBITDA Reconciliation

$ in thousands

EBITDAre and Adjusted EBITDA

Net income (loss) $ 10,474 $ (4,072) $ 6,402 $ 7,576 $ (14,468) $ (6,892) $ (11,009) $ (5,104) $ (16,113)

Interest income (58) — (58) (66) — (66) (1) — (1)


Tax expense (benefit) of taxable REIT subsidiaries 38 (161) (123) (409) (571) (980) (3,879) (495) (4,374)

Depreciation and amortization 38,259 — 38,259 36,693 1,206 37,899 34,247 2,893 37,140

Loss on disposition of depreciated property and impairment write-downs of depreciated property — 1,288 1,288 — 7,409 7,409 — 4,219 4,219

EBITDAre $ 54,763 $ (2,945) $ 51,818 $ 50,178 $ (6,422) $ 43,756 $ 27,407 $ 1,513 $ 28,920


Equity-based compensation expense 3,531 — 3,531 3,961 — 3,961 2,933 423 3,356

Restructuring costs 138 2,820 2,958 — 6,328 6,328 — — —


Adjusted EBITDA $ 59,306 $ (125) $ 59,181 $ 55,040 $ (94) $ 54,946 $ 50,634 $ 6,864 $ 57,498

Three Months Ended

Core Non-Core Total Core Non-Core Total

December 31, 2017

Core Non-Core Total

December 31, 2018 September 30, 2018

$ in thousands

EBITDAre and Adjusted EBITDA

Net income (loss) $ 28,530 $ (35,705) $ (7,175) $ (4,611) $ 6,068 $ 1,457

Interest income (150) — (150) (67) — (67)


Tax benefit of taxable REIT subsidiaries (960) (2,408) (3,368) (9,655) (123) (9,778)

Depreciation and amortization 143,525 6,366 149,891 128,823 12,101 140,924

Loss on disposition of depreciated property and impairment write-downs of depreciated property — 15,836 15,836 — 4,219 4,219

EBITDAre $ 199,681 $ (15,898) $ 183,783 $ 144,987 $ 22,291 $ 167,278


Equity-based compensation expense 14,972 — 14,972 12,191 1,672 13,863

Restructuring costs 138 21,969 22,107 — — —


Adjusted EBITDA $ 218,139 $ 6,071 $ 224,210 $ 179,083 $ 28,891 $ 207,974

Year Ended


TotalCore Non-Core Total Core Non-Core



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) $ 10,474 $ (4,072) $ 6,402 $ 7,576 $ (14,468) $ (6,892) $ (11,009) $ (5,104) $ (16,113)

Real estate depreciation and amortization 35,640 — 35,640 34,023 556 34,579 31,676 863 32,539

FFO 46,114 (4,072) 42,042 41,599 (13,912) 27,687 20,667 (4,241) 16,426

Preferred stock dividends (7,045) — (7,045) (7,045) — (7,045) — — —

FFO available to common stockholders & OP unit holders 39,069 (4,072) 34,997 34,554 (13,912) 20,642 20,667 (4,241) 16,426


Restructuring costs 138 4,108 4,246 — 13,737 13,737 — — —


Tax benefit associated with restructuring, transaction and integration costs — (161) (161) — (571) (571) — — —

Operating FFO available to common stockholders & OP unit holders* 40,081 (125) 39,956 35,455 (746) 34,709 40,961 4,906 45,867

Maintenance Capex (1,460) — (1,460) (1,660) — (1,660) (848) — (848)

Leasing commissions paid (5,204) — (5,204) (5,212) (249) (5,461) (5,840) (459) (6,299)

Amortization of deferred financing costs and bond discount 974 — 974 959 — 959 925 — 925

Non real estate depreciation and amortization 2,619 — 2,619 2,670 650 3,320 2,571 2,030 4,601

Straight line rent revenue and expense and other (1,958) 6 (1,952) (1,013) (54) (1,067) (1,329) (725) (2,054)

Tax expense (benefit) from operating results 38 — 38 (409) — (409) (3,879) (495) (4,374)


Adjusted Operating FFO available to common stockholders & OP unit holders* $ 38,621 $ (119) $ 38,502 $ 34,751 $ (399) $ 34,352 $ 35,494 $ 5,680 $ 41,174

TotalTotal

Three Months Ended

December 31, 2018 September 30, 2018 December 31, 2017

Core Core Non-CoreNon-CoreNon-Core Total Core

$ in thousands

FFO

Net income (loss) $ 28,530 $ (35,705) $ (7,175) $ (4,611) $ 6,068 $ 1,457

Real estate depreciation and amortization 133,948 2,171 136,119 120,188 3,367 123,555

FFO 162,478 (33,534) 128,944 115,577 9,435 125,012

Preferred stock dividends (16,666) — (16,666) — — —

FFO available to common stockholders & OP unit holders 145,812 (33,534) 112,278 115,577 9,435 125,012


Restructuring costs 138 37,805 37,943 — — —


Tax benefit associated with restructuring, transaction and integration costs — (2,408) (2,408) — — —

Operating FFO available to common stockholders & OP unit holders* 149,298 1,863 151,161 137,482 18,582 156,064

Maintenance Capex (6,662) — (6,662) (5,009) — (5,009)

Leasing commissions paid (23,855) (391) (24,246) (14,732) (5,383) (20,115)

Amortization of deferred financing costs and bond discount 3,856 — 3,856 3,868 — 3,868

Non real estate depreciation and amortization 9,577 4,195 13,772 8,635 8,734 17,369

Straight line rent revenue and expense and other (6,780) 10 (6,770) (3,717) (1,250) (4,967)

Tax expense (benefit) from operating results (960) — (960) (9,655) (123) (9,778)

Equity-based compensation expense 14,972 — 14,972 12,191 1,672 13,863 Adjusted Operating FFO available to common stockholders & OP unit holders* $ 139,446 $ 5,677 $ 145,123 $ 129,063 $ 22,232 $ 151,295

Year Ended





MRR Reconciliation

$ in thousands

Recognized MRR in the period

Total period revenues $ 112,334 $ 3 $ 112,337 $ 107,513 $ 4,700 $ 112,213 $ 100,617 $ 18,294 $ 118,911

Less: Total period recoveries (11,629) — (11,629) (11,800) — (11,800) (11,053) — (11,053)

Total period deferred setup fees (3,104) — (3,104) (3,174) (101) (3,275) (2,714) (265) (2,979)

Total period straight line rent and other (4,465) (34) (4,499) (1,701) (2,171) (3,872) (7,551) (1,891) (9,442)

Recognized MRR in the period 93,136 (31) 93,105 90,838 2,428 93,266 79,299 16,138 95,437

MRR at period end

Total period revenues $ 112,334 $ 3 $ 112,337 $ 107,513 $ 4,700 $ 112,213 $ 100,617 $ 18,294 $ 118,911

Less: Total revenues excluding last month (73,852) (2) (73,854) (71,443) (4,416) (75,859) (66,550) (12,196) (78,746)

Total revenues for last month of period 38,482 1 38,483 36,070 284 36,354 34,067 6,098 40,165

Less: Last month recoveries (3,822) — (3,822) (3,896) — (3,896) (3,175) — (3,175)

Last month deferred setup fees (1,015) — (1,015) (1,095) — (1,095) (1,035) (88) (1,123)

Last month straight line rent and other (2,504) (1) (2,505) (979) 356 (623) (2,682) (1,477) (4,159)

MRR at period end $ 31,141 $ — $ 31,141 $ 30,100 $ 640 $ 30,740 $ 27,175 $ 4,533 $ 31,708

Three Months Ended

December 31, 2017

Core Non-Core TotalTotal

December 31, 2018

Total Non-CoreCore

September 30, 2018

Core Non-Core

$ in thousands

Recognized MRR in the period

Total period revenues $ 422,786 $ 27,738 $ 450,524 $ 370,392 $ 76,118 $ 446,510

Less: Total period recoveries (45,386) — (45,386) (37,797) (89) (37,886)

Total period deferred setup fees (12,239) (236) (12,475) (9,726) (964) (10,690)

Total period straight line rent and other (12,087) (5,061) (17,148) (17,358) (5,490) (22,848)

Recognized MRR in the period 353,074 22,441 375,515 305,511 69,575 375,086

MRR at period end

Total period revenues $ 422,786 $ 27,738 $ 450,524 $ 370,392 $ 76,118 $ 446,510

Less: Total revenues excluding last month (384,304) (27,737) (412,041) (336,325) (70,020) (406,345)

Total revenues for last month of period 38,482 1 38,483 34,067 6,098 40,165

Less: Last month recoveries (3,822) — (3,822) (3,175) — (3,175)

Last month deferred setup fees (1,015) — (1,015) (1,035) (88) (1,123)

Last month straight line rent and other (2,504) (1) (2,505) (2,682) (1,477) (4,159)

MRR at period end $ 31,141 $ — $ 31,141 $ 27,175 $ 4,533 $ 31,708

Year Ended

December 31, 2017


December 31, 2018



Core & Non-Core Reconciliation$ in thousands except per share values

Selected Income Statement Data

Total Revenues $ 112,334 $ 3 $ 112,337 $ 107,513 $ 4,700 $ 112,213 $ 100,617 $ 18,294 $ 118,911

Less: Operating costs 39,008 10 39,018 38,702 2,603 41,305 36,154 7,795 43,949

Net operating income 73,326 (7) 73,319 68,811 2,097 70,908 64,463 10,499 74,962

Less: General & administrative expenses (excluding equity-based compensation expense) 14,020 118 14,138 13,771 2,191 15,962 13,829 3,635 17,464

Adjusted EBITDA 59,306 (125) 59,181 55,040 (94) 54,946 50,634 6,864 57,498

Less:


Interest income (58) — (58) (66) — (66) (1) — (1)


Tax expense (benefit) from operating results 38 — 38 (409) — (409) (3,879) (495) (4,374)

Non real estate depreciation and amortization 2,619 — 2,619 2,670 650 3,320 2,571 2,030 4,601

Preferred stock dividends 7,045 — 7,045 7,045 — 7,045 — — —

Operating FFO available to common stockholders & OP unit holders 40,081 (125) 39,956 35,455 (746) 34,709 40,961 4,906 45,867

OFFO per share 0.69 (0.00) 0.69 0.61 (0.01) 0.60 0.71 0.08 0.79

Adjustments:

Transaction, integration and impairment costs (269) — (269) (901) — (901) (302) (9,147) (9,449)

Restructuring costs (138) (4,108) (4,246) — (13,737) (13,737) — — —

Debt restructuring costs (605) — (605) — — — (19,992) — (19,992)

Tax benefit associated with restructuring, transaction and integration costs — 161 161 — 571 571 — — —

Real estate depreciation and amortization (35,640) — (35,640) (34,023) (556) (34,579) (31,676) (863) (32,539)

Preferred stock dividends 7,045 — 7,045 7,045 — 7,045 — — —

Net income (loss) $ 10,474 $ (4,072) $ 6,402 $ 7,576 $ (14,468) $ (6,892) $ (11,009) $ (5,104) $ (16,113)

Non-Core Total

Three Months Ended

December 31, 2017

Core

Three Months Ended

December 31, 2018

TotalCore Non-Core Core Non-CoreTotal

Three Months Ended

September 30, 2018

$ in thousands except per share values

Selected Income Statement Data

Total Revenues $ 422,786 $ 27,738 $ 450,524 $ 370,392 $ 76,118 $ 446,510

Less: Operating costs 148,218 12,211 160,429 135,760 29,408 165,168

Net operating income 274,568 15,527 290,095 234,632 46,710 281,342

Less: General & administrative expenses (excluding equity-based compensation expense) 56,429 9,456 65,885 55,549 17,819 73,368

Adjusted EBITDA 218,139 6,071 224,210 179,083 28,891 207,974

Less:

Equity-based compensation expense 14,972 — 14,972 12,191 1,672 13,863

Interest income (150) — (150) (67) — (67)


Tax benefit from operating results (960) — (960) (9,655) (123) (9,778)

Non real estate depreciation and amortization 9,577 4,195 13,772 8,635 8,734 17,369

Preferred stock dividends 16,666 — 16,666 — — —

Operating FFO available to common stockholders & OP unit holders 149,298 1,863 151,161 137,482 18,582 156,064

OFFO per share 2.57 0.03 2.60 2.43 0.33 2.76

Adjustments:

Transaction, integration and impairment costs (2,743) — (2,743) (1,913) (9,147) (11,060)

Restructuring costs (138) (37,805) (37,943) — — —

Debt restructuring costs (605) — (605) (19,992) — (19,992)

Tax benefit associated with restructuring, transaction and integration costs — 2,408 2,408 — — —

Real estate depreciation and amortization (133,948) (2,171) (136,119) (120,188) (3,367) (123,555)

Preferred stock dividends 16,666 — 16,666 — — —

Net income (loss) $ 28,530 $ (35,705) $ (7,175) $ (4,611) $ 6,068 $ 1,457

Year Ended Year Ended


TotalCore Non-Core Total Core Non-Core

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