Related Party Transactions

6 Months Ended

Jun. 30, 2011

Related Party Transactions

Related Party Transactions

15. Related Party Transactions

In December 2006, we entered into ten leases with tel(x), pursuant to which tel(x) provides enhanced meet-me-room services to our customers. The initial terms of these leases expire in 2026, and tel(x) has options to extend them through 2046. tel(x) was acquired by GI Partners Fund II, LLP in November 2006, which, collectively with GI Partners Side Fund II, L.P., owns the majority of the outstanding stock of tel(x) as of June 30, 2011. Richard Magnuson, our director, Chairman and employee, is the chief executive officer of the advisor to GI Partners Fund II, LLP and GI Partners Side Fund II, L.P. Our condensed consolidated statements of operations include rental revenues of approximately $10.7 million and $5.8 million from tel(x) for the three months ended June 30, 2011 and 2010, respectively, and approximately $19.5 million and $10.9 million for the six months ended June 30, 2011 and 2010, respectively. Our condensed consolidated balance sheet includes deferred rent and unamortized deferred leasing costs of approximately $28.3 million and $21.0 million as of June 30, 2011 and December 31, 2010, respectively. In connection with the lease agreements, we entered into an operating agreement with tel(x), effective as of December 1, 2006, with respect to joint sales and marketing efforts, designation of representatives to manage the national relationship between us and tel(x) and future meet-me-room facilities. Under the operating agreement, tel(x) has a sixty-day option to enter into a meet-me-room lease for certain future meet-me-room buildings acquired by us or any buildings currently owned by us that are converted into a meet-me-room building. As of June 30, 2011, tel(x) leases 254,314 square feet of net rentable space from us under 39 lease agreements and as of December 31, 2010, tel(x) leased 202,987 square feet of net rentable space from us under 31 lease agreements.

We also entered into an agreement with tel(x), effective as of December 1, 2006, with respect to percentage rent arising out of potential future lease agreements for rentable space in buildings covered by the meet-me-room lease agreements. Percentage rent earned during the three months ended June 30, 2011 and 2010 amounted to approximately $0.6 million and $0.4 million, respectively, and $0.7 million and $0.4 million during the six months ended June 30, 2011 and 2010, respectively.

In addition, in connection with the lease agreements, we entered into a management agreement with tel(x), effective as of December 1, 2007, pursuant to which tel(x) agreed to provide us with certain management services in exchange for a management fee of one percent of rents actually collected by tel(x).

We are party to seven leases with SoftLayer, of which six are in place as of June 30, 2011 and the remaining one will commence in future periods. The initial terms of these leases expire from 2013 to 2025, and SoftLayer has options to extend them from 2018 through 2035. On August 3, 2010, GI Partners Fund III, L.P. acquired a controlling interest in SoftLayer. Richard Magnuson, our Chairman, is also a manager of the general partner to GI Partners Fund III, L.P. Our condensed consolidated statements of operations include rental revenues of approximately $4.6 million and $6.9 million from SoftLayer for the three and six months ended June 30, 2011, respectively. Our condensed consolidated statements of operations include rental revenues of approximately $0.4 million from SoftLayer for the three and six months ended June 30, 2010.