0001144204-16-090612.txt : 20160328 0001144204-16-090612.hdr.sgml : 20160328 20160328160722 ACCESSION NUMBER: 0001144204-16-090612 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20160328 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20160328 DATE AS OF CHANGE: 20160328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QTS Realty Trust, Inc. CENTRAL INDEX KEY: 0001577368 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 462809094 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-36109 FILM NUMBER: 161532331 BUSINESS ADDRESS: STREET 1: 12851 FOSTER STREET, SUITE 205 CITY: OVERLAND PARK STATE: KS ZIP: 66213 BUSINESS PHONE: 913-814-9988 MAIL ADDRESS: STREET 1: 12851 FOSTER STREET, SUITE 205 CITY: OVERLAND PARK STATE: KS ZIP: 66213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QualityTech, LP CENTRAL INDEX KEY: 0001561164 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 270707288 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-201810 FILM NUMBER: 161532332 BUSINESS ADDRESS: STREET 1: 12851 FOSTER STREET CITY: OVERLAND PARK STATE: KS ZIP: 66213 BUSINESS PHONE: 877-787-3282 MAIL ADDRESS: STREET 1: 12851 FOSTER STREET CITY: OVERLAND PARK STATE: KS ZIP: 66213 8-K 1 v435410_8k.htm FORM 8-K

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): March 28, 2016

 

 

 

QTS Realty Trust, Inc.

QualityTech, LP

(Exact name of registrant as specified in its charter)

 

 

 

Maryland (QTS Realty Trust, Inc.)

Delaware (QualityTech, LP)

001-36109

333-201810

46-2809094

27-0707288

(State or other jurisdiction

of incorporation)

(Commission

File No.)

(I.R.S. Employer

Identification No.)

 

12851 Foster Street

Overland Park, KS

  66213
(Address of principal executive offices)   (Zip Code)

 

(913) 814-9988

Registrant’s telephone number, including area code:

Not Applicable

(Former name or former address, if changed since last report.)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

  

 

 

 

EXPLANATORY NOTE

 

This Current Report on Form 8-K is filed by QTS Realty Trust, Inc. (“QTS”) and QualityTech, LP to provide the unaudited pro forma condensed consolidated statement of operations of QTS for the year ended December 31, 2015, giving effect to the June 16, 2015 acquisition of Carpathia Acquisition, Inc. (the “Carpathia Acquisition”) as well as certain historical transactions further described in the notes to the statement of operations as if they had occurred on January 1, 2015.

 

Item 9.01.                      Financial Statements and Exhibits.

  

(b)Pro Forma financial information

 

The unaudited pro forma condensed consolidated statement of operations of QTS for the year ended December 31, 2015, giving effect to the Carpathia Acquisition as well as certain historical transactions further described in the notes to the statement of operations as if they had occurred on January 1, 2015, is filed herewith as Exhibit 99.1 and is incorporated herein by reference.

 

(d)Exhibits

 

Exhibit No.   Description
     
99.1   Unaudited pro forma condensed consolidated statement of operations of QTS Realty Trust, Inc. for the year ended December 31, 2015

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  QTS Realty Trust, Inc.
     
DATE: March 28, 2016   /s/ Shirley E. Goza
    Shirley E. Goza
    Secretary and General Counsel
     
     
  QualityTech, LP
     
  By: QTS Realty Trust, Inc.,
  its general partner
     
DATE: March 28, 2016   /s/ Shirley E. Goza
    Shirley E. Goza
    Secretary and General Counsel

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
     
99.1   Unaudited pro forma condensed consolidated statement of operations of QTS Realty Trust, Inc. for the year ended December 31, 2015

 

 

EX-99.1 2 v435410_ex99-1.htm EXHIBIT99.1

 

Exhibit 99.1

 

QTS Realty Trust, Inc.

QualityTech, LP

Unaudited Pro Forma Condensed Consolidated Statement of Operations

 

Throughout this report, the terms “the Company” or “QTS” refer to either QTS Realty Trust, Inc. or to QTS Realty Trust, Inc. and its operating subsidiaries collectively, as the context requires.

 

Set forth below is QTS’ unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2015 which reflects the acquisition of Carpathia Acquisition, Inc. (the entity, “Carpathia” and the acquisition, the “Carpathia Acquisition”) as well as certain historical transactions further described in the notes. The pro forma condensed consolidated statement of operations for the year ended December 31, 2015 gives effect to the Carpathia Acquisition and certain historical transactions as if they had occurred on January 1, 2015, including the issuance of $165 million of Class A common stock, the issuance of $203 million of Class A Common Stock and the modification of the unsecured credit facility to eliminate the credit facility secured by the Richmond property and add $200 million of term loans which also resulted in decreased interest rates.

 

The unaudited pro forma condensed consolidated statement of operations was prepared using the acquisition method of accounting, with QTS considered the acquirer of Carpathia. The purchase price is allocated to the underlying Carpathia tangible assets acquired and liabilities assumed, acquired intangibles are all based on current estimates of their respective fair values.

 

The pro forma adjustments and the purchase price allocation as presented are based on estimates and certain limited information that is currently available. Therefore, the provisional measurements of fair value reflected have not yet been finalized and are subject to change. A final determination of the fair value of Carpathia’s assets and liabilities, including intangibles, will be made within the measurement period, not to exceed one year from the acquisition date. The pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analyses are performed. The preliminary pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma condensed consolidated statement of operations presented below. QTS estimated the fair value of Carpathia’s assets and liabilities based on discussions with Carpathia’s management and preliminary valuation studies. Any increases or decreases in the fair value of relevant balance sheet amounts upon completion of the final valuations will result in adjustments to the pro forma condensed consolidated statement of operations. The final purchase price allocation may be different than that reflected in the pro forma purchase price allocation presented herein.

 

Assumptions and estimates underlying the unaudited adjustments to the unaudited pro forma condensed consolidated statement of operations are described in the accompanying notes. The historical consolidated statement of operations has been adjusted in the unaudited pro forma condensed consolidated statement of operations to give pro forma effect to events that are: (1) directly attributable to the Carpathia Acquisition and 2015 equity and debt transactions, (2) factually supportable, and (3) expected to have a continuing impact on the results of operations of the consolidated results of QTS. This information is presented for illustrative purposes only and is not indicative of the consolidated operating results that would have occurred if such transactions had occurred on the dates and in accordance with the assumptions described herein, nor is it indicative of future operating results.

 

The unaudited pro forma condensed consolidated statement of operations, although helpful in illustrating the financial characteristics of QTS under one set of assumptions, does not reflect opportunities to earn additional revenue, or other factors that may result from the Carpathia Acquisition or 2015 equity issuances and do not attempt to predict or suggest future results. The unaudited pro forma condensed consolidated statement of operations excludes the effects of costs associated with any restructuring or integration activities, because they are expected to be non-recurring. However, such costs could affect QTS following the acquisition in the period the costs are incurred or recorded. Further, the unaudited pro forma condensed consolidated statement of operations does not reflect the effect of any regulatory actions that may impact the results of QTS following the Carpathia Acquisition and 2015 equity issuances.

 

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   QTS Historical (A)   Carpathia Transaction   2015 Equity and Debt Transactions   QTS Pro Forma 
                     
Revenues:                    
     Rental  $230,510   $15,962(B)  $-   $246,472 
     Recoveries from customers   22,581    -    -    22,581 
     Cloud and managed services   51,994    24,423(B)   -    76,417 
     Other   5,998    704(B)   -    6,702 
     Total revenues   311,083    41,089    -    352,172 
Operating Expenses:                    
     Property operating costs   104,355    18,356(B)   -    122,711 
     Real estate taxes and insurance   5,869    -    -    5,869 
     Depreciation and amortization   85,811    12,242(C)   -    98,053 
     General and administrative   67,783    8,055(B)   -    75,838 
     Transaction and integration costs   11,282    (11,282)(D)   -    - 
     Total operating expenses   275,100    27,371    -    302,471 
Operating income   35,983    13,718    -    49,701 
                     
Other income and expenses:                    
     Interest income   2    -    -    2 
     Interest expense   (21,289)   (2,985)(E)   9,062(H)   (15,212)
     Other (expense) income, net   (468)   -    468(I)   - 
Income before taxes   14,228    10,733    9,530    34,491 
     Tax benefit (expense)   10,065    (3,023)(F)   -   7,042 
     Loss on sale of real estate   (164)   -    -    (164)
Net income   24,129    7,710    9,530    41,369 
Net income attributable to noncontrolling interests   (3,803)   (1,133)(G)   (1,142)(J)   (6,078)
Net income attributable to QTS Realty Trust, Inc  $20,326   $6,577   $8,388   $35,291 
                     
Net income per share attributable to common shares:                    
     Basic  $0.54             $0.86 
     Diluted   0.53              0.85 
                     
Weighted average common shares outstanding:                    
     Basic   37,568,109         3,277,397(K)   40,845,506 
     Diluted   45,353,170         3,277,397(K)   48,630,567 

 

Pro Forma Condensed Consolidated Statement of Operations

 

(A)Reflects QTS’ condensed consolidated statement of operations for the year ended December 31, 2015.

 

(B)Reflects Carpathia’s condensed consolidated statement of operations for the period from January 1, 2015 through June 15, 2015.

 

(C)Reflects pro forma adjustments of Carpathia’s depreciation and amortization expense assuming the acquired buildings and improvements and intangibles were recorded at their preliminary fair value on January 1, 2015.

 

(D)Pro forma adjustment reflects the elimination of $4.9 million of transaction costs incurred by QTS primarily related to the Carpathia Acquisition and $6.3 million of integration costs incurred subsequent to the Carpathia Acquisition.

 

(E)Reflects pro forma adjustments to interest expense to reflect approximately $289 million of borrowings necessary for the Carpathia Acquisition, and the revised capital lease interest for Carpathia Acquisition properties as if they occurred at January 1, 2015.

 

(F)Reflects the application of the QTS effective tax rate for the year ended December 31, 2015 of 34.75% to Carpathia’s taxable income. This amount is then reduced by the tax benefit related to transaction and integration costs.

 

(G)Reflects the share of net income attributable to the noncontrolling interest of QTS Realty Trust, Inc. resulting from the Carpathia Acquisition.

 

(H)Reflects pro forma adjustments to interest expense as if the following transactions occurred at January 1, 2015:

 

·March 2, 2015 equity issuance net proceeds of approximately $165 million used to reduce revolving credit facility debt outstanding;
·June 5, 2015 equity issuance net proceeds of approximately $203 million used to reduce revolving credit facility debt outstanding;
·modifications to QTS’ unsecured credit facility to eliminate the credit facility secured by its Richmond property (the “Richmond Credit Facility”) in 2015, with the addition of $200 million of additional term loans with decreased interest rates.

 

Amortization of deferred financing costs has been calculated using an approximate five year term on the term loans, an approximate four year term on the revolving credit facility and an eight year term on the senior notes. Capitalized interest has been adjusted to the weighted average interest rate considering the modifications to the credit agreement for all periods presented. The adjustments to interest expense set forth in the pro forma condensed consolidated statement of operations are based upon estimates and assumptions that QTS believes to be reasonable at this time and are subject to change in the future. Any cash retained after consideration of all the transactions was utilized to fund development in subsequent periods. The effect of an increase or decrease in interest rates of 1/8% on pro forma interest expense is $1.0 million for the year ended December 31, 2015.

 

2 

 

 

(I)Reflects the elimination of the write off of deferred finance costs related to the modifications to the credit agreements for the unsecured credit facility as they were non-recurring in nature and deemed to have occurred at January 1, 2015 for purposes of the pro forma condensed consolidated statement of operations.

 

(J)Reflects the change in the share of net income attributable to the noncontrolling interest of QTS Realty Trust, Inc. resulting from the 2015 equity issuances as discussed in note (H).

 

(K)Reflects the increase in QTS’ Class A common shares due to the equity issuances in 2015. The total shares outstanding are then accounted for as if they were outstanding as of January 1, 2015 and for the periods thereafter.

 

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