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© 2019 QTS. All Rights Reserved. QTS Realty Trust, Inc. Investor Presentation First Quarter 2019

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Page 1: QTS Realty Trust, Inc.filecache.investorroom.com/mr5ir_qualitytech/382...QTS Realty Trust, Inc. 10 QTS - Alinda Joint Venture Overview Joint Venture Overview Partner Alinda Capital

© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc.Investor Presentation

First Quarter 2019

Page 2: QTS Realty Trust, Inc.filecache.investorroom.com/mr5ir_qualitytech/382...QTS Realty Trust, Inc. 10 QTS - Alinda Joint Venture Overview Joint Venture Overview Partner Alinda Capital

© 2019 QTS. All Rights Reserved.

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.

Page 3: QTS Realty Trust, Inc.filecache.investorroom.com/mr5ir_qualitytech/382...QTS Realty Trust, Inc. 10 QTS - Alinda Joint Venture Overview Joint Venture Overview Partner Alinda Capital

© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc. 2

QTS Key Investment Highlights

Strong secular trends support continued growth

Sector-leading and de-risked growth outlook for QTS

Balanced capital allocation approach

Fully funded 2019 capital plan

JV provides incremental lever to fund hyperscale growth⑤

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© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc. 3

Driving Success in Both Hyperscale & Hybrid Colocation

Significant Growth Capacity – 1.3M sq. ft. of

powered shell capacity in top U.S. markets

Operating and Build Cost Advantage – Low basis &

mega scale approach provide permanent cost

advantage

New Market Expansion in NoVA, Phoenix and

Hillsboro and significant low basis capacity in Fort

Worth – Provides future growth capacity in markets

where hyperscale customers want to be

Software-Defined Data Center Platform – Provides

infrastructure visibility and dynamic control to customers

Enhanced Hybrid Solutions through Integrated Partners –

Strategic partnerships expand hybrid colocation opportunity

Seamless Connectivity – SDN-enabled universal

connectivity to carriers, service providers and CSP’s

High-End Security and Compliance – Dedicated team to

help enterprises mitigate cybersecurity risks

Premium Customer Experience – Portfolio of managed

services and industry-leading net promoter scores

World-Class Infrastructure & Mega Data Centers Technology-Enabled Colocation Platform

Hyperscale Hybrid Colocation

8%

6%

9%

77%

$480B Market

Size

12%

34%

11%

43%

$668B Market

Size

On-Premise Managed Infrastructure Colocation Hyperscale/Cloud

2017 2022

IT Infrastructure Growing and Moving Off-Premise1

$39

$82

2017 2022

$31

$224

2017 2022

49%CAGR

16%CAGR

Hyperscale/Cloud Market ($B) Colocation Market ($B)

1.Source: Structure Research

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© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc. 4

Sector-Leading and De-risked Growth Outlook in 2019

Record leasing performance in 2018

1

1. 2018 reflects results for the Core business only. 2015-2017 reflects results for consolidated business including Core and Non-Core

2. Represents annualized MRR associated with leases that have been signed but have not yet commenced; may not sum due to rounding

Incremental Annualized Rent

Signed, Net of Downgrades ($M)

Ended 2018 with near-record booked-not-billed backlog, de-risking 2019

continued strong performance

$63M Annualized Booked-Not-

Billed MRR ($M)2

39.6 48.0

41.7

64.5

2015 2016 2017 2018

43.1M

Avg.

$62.6 $62.6 $62.6 $62.6

Q4 2018 2019 2020 2021+

$40.3

$10.7

$11.6

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© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc. 5

Balanced Approach to Capital Allocation

Strong Value Creation Opportunity

Focused on delivering consistent OFFO/share growth while continuing to invest

in long-term growth

Balanced Approach to Funding Operations

Perpetual preferred equity

Manassas joint venture

Balanced capex decisions Balance both near and long term return horizons

Minimize equity dilution

Bring capital into the business via shareholder-

friendly means

Convertible preferred equity

QTS ’18 Annualized Core ROIC: 12.3%

Estimated QTS Cost of Capital: 7% - 8%

Value Creation: 4% – 5%

Significantly above average

return spread vs. cost of capital

in other Real Estate sectors

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© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc. 6

Disciplined Approach to DevelopmentCapital discipline and de-risked entry point

Continued focus on capital discipline to balance long-term growth with near-term results

De-risked approach to new market entry

Infrastructure designed to support multi-tenant environments to enable increased flexibility and drive

valuable diversification of product and customer mix

Greenfield Development

with Visibility on

Anchor Tenant

Low-Basis,

Infrastructure-Rich

Development

Repurposing

Existing Assets

Examples

Richmond, VA

Irving, TX

Chicago, IL

Atlanta, GA

Suwanee, GA

Piscataway, NJ

Princeton, NJ

Fort Worth, TX

Ashburn, VA

Manassas, VA

Hillsboro, OR

Phoenix, AZ

Data Center

Re-Focus

Enterprise

Sale-Leaseback

Pre-Lease

Greenfield

Page 8: QTS Realty Trust, Inc.filecache.investorroom.com/mr5ir_qualitytech/382...QTS Realty Trust, Inc. 10 QTS - Alinda Joint Venture Overview Joint Venture Overview Partner Alinda Capital

© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc. 7

Positioned for Continued Capital Efficient Growth

1.Full Buildout reflects our “Basis of Design” NRSF at full buildout; does not include additional development which could take place on adjacent, owned land.

Ability to double footprint in

pre-built powered shell

reduces future capital needs

Land available in majority of

key hyperscale markets

already acquired and pad-

ready

Existing capacity in strategic

hyperscale markets including

Dallas and Ashburn to support

capital efficient future growth

1.3M Sq. Ft. Additional Capacity in Existing Powered Shell

2,730

54%

currently

built out

1,480Full

Capacity

As of Q4 ‘18 Full Buildout1

(Rais

ed F

loor

NR

SF

in

000s)

2,730

1,250

As of IPO

1,805

41%built out

741

QTS’ powered shell capacity represents 5+ years of growth

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© 2019 QTS. All Rights Reserved.

8

Balanced Business Approach Optimizes QTS’ Performance

Balanced target of 1-3 deals per year 9 leases signed in ’18 between 500kW- 2MW

Hyperscale Hybrid Colocation

High Credit Quality Tenants

Growth Accelerant

Longer Term Contracts

Higher ROIC

Customer Diversification

Enhanced Capital Efficiency

34%of Revenue1

66%of Revenue1

Diversified

Customer Base1,100+ customers across

25 data centers

QTS Realty Trust, Inc.

Higher Barriers to Entry

1.Based on MRR as of December 31. 2018.

Enhanced

ROIC12.3% core ROIC

in 2018

Low Churn3.6% core MRR churn

in 2018, among the

lowest in the industry

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© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc. 9

Balance Sheet and Liquidity Summary

Net Debt to LQA consolidated

adjusted EBITDA of 5.7x as of

year-end 2018

Raised $308.8M of net equity

proceeds in Feb. 2019, reducing

pro forma leverage to 4.4x

2019 capital plan fully funded

$63M booked-not-billed backlog

of annualized revenue

During 2018, extended $1.52B

credit facility with reduced pricing

and enhanced covenant

flexibility

Including forward swaps and

excluding Feb. 2019 equity raise,

QTS has effectively fixed the rate

on 74% of its debt outstanding

as of December 31, 2018

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

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QTS Realty Trust, Inc. 10

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

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QTS Realty Trust, Inc. 11

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

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© 2019 QTS. All Rights Reserved.

Strategic Growth Acceleration Plan

Execution Summary

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© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc. 13

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

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© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc. 14

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)

Execution on strategic growth plan sets up strong growth in 2019

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© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc. 15

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

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© 2019 QTS. All Rights Reserved.

QTS Realty Trust, Inc. 16

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

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QTS Overview

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QTS Realty Trust, Inc. 18

Broad Footprint Focused On Top Data Center Markets

2.7 million sq. ft. of raised floor capacity1 and 690+ MW of available utility power2

1. Represents basis-of-design floor space as of December 31, 2018. The Company defines basis-of-design floor space as the total data center raised floor potential of its existing data center facilities.

2. Represents installed utility power and transformation capacity that is available for use by the facility as of December 31, 2018.

3. Based on data center raised floor. Does not include data centers subject to capital lease obligations. Includes Santa Clara, CA which is subject to a long-term ground lease.

25 DATA CENTERS MARKETS WHOLLY-OWNED314 96%

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QTS Realty Trust, Inc. 19

Best-in-Class “Mega” Data Centers

205,608 Sq. Ft.

100% Built Out

205,608 Sq. Ft.

ROIC: 27.6%2 Occupied: 91.9%

477,986 Sq. Ft.

91% Built Out

527,186 Sq. Ft.

ROIC: 17.7%2 Occupied: 99.2%

167,309 Sq. Ft.

30% Built Out

557,309 Sq. Ft.

ROIC: 14.9%2 Occupied: 74.0%

Atlanta-Suwanee, GA

36MW

Atlanta-Metro, GA

120MW1

Richmond, VA

110MW

174,160 Sq. Ft.

63% Built Out

275,701 Sq. Ft.

ROIC: 13.1%2 Occupied: 94.7%

98,820 Sq. Ft.

56% Built Out

176,000 Sq. Ft.

ROIC: 11.8%2 Occupied: 88.4%

46,000 Sq. Ft.

21% Built Out

215,855 Sq. Ft.

ROIC: 6.3%2 Occupied: 77.6%

Piscataway, NJ

111MWChicago, IL

55MW3

Irving, TX

140MW

Note: Square footage reflects current Raised Floor Operating Net Rentable Square Feet (“NRSF”) as of December 31, 2018 (red shaded bars) and “Basis of Design” Raised Floor NRSF at full buildout. MW denotes

available utility power as of December 31, 2018. Occupied percentage as of December 31, 2018.

1. Atlanta -Metro currently has 72 MW of available utility power based on current agreements with its utility provider but has transformer capacity for 120 MW.

2. ROIC calculated by dividing annualized core NOI for the quarter ended December 31, 2018 by the average total cost, less construction in progress for the quarters ended December 31, 2018 and September 30, 2018.

3. 24MW available utility power as of December 31, 2018, with an additional 31 MW available upon QTS request.

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QTS Realty Trust, Inc. 20

The QTS Hyperscale Advantage

* JLL Global Data Center Outlook 2018

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QTS Realty Trust, Inc. 21

Service Delivery Platform Differentiates QTS Colocation

Over 16,000 SDP Users | 15+ Integrated Partners | 90M Data Points Collected Per Day

Service Delivery Platform provides QTS the first true Software Defined Data Center

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QTS Realty Trust, Inc. 22

QTS Service Delivery Platform - Third Party Feedback

On how they leverage SDP Today:

“SDP allowed us to review over and under-subscribed

cabinets in real-time, enabling us to shift infrastructure

or increase our density.”

VP of IT(Multi-National Bank)

IT Director(Clean Energy Automotive

Manufacturer)

Product Manager(Communications Service

Provider Partner)

Customers and Partners Industry Analysts

On using SDP for their Customers:

“The Power Analytics App is a game-changer. Most of

your competitors take 3 weeks to provide this data

to our Customers.”

On how SDP drove the selection of QTS:

“There was not a close 2nd in our evaluation. The

innovation of SDP combined with Solution Portability

and NPS made this an easy decision.”

“”

You are showing things that have been on

my clients’ wish list for quite some

time….mostly what they get from your

competitors is a really limited subset of

what you’ve just shown

On QTS’ Power & Sensor

Real-Time Analytics

Research Vice President, Infrastructure Strategies

Group – Industry Leading Research & Advisory Firm

“”

The API and programmatic approach,

being able to bridge into the physical world

is very attractive…. I see differentiation

here

On how QTS’ SDP Platform

Interacts with Customers

Research Director, Cloud Service Provider Group –

Industry Leading Research & Advisory Firm

“”

You have cemented yourselves as the

provider that is pushing the boundaries in

development and service delivery. It’s

clear you are more than just a colo provider

On QTS’ vision for Hybrid Colocation

Research Vice President, Technology Service Provider

Group – Industry Leading Research & Advisory Firm

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© 2019 QTS. All Rights Reserved.

Thank [email protected]

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© 2019 QTS. All Rights Reserved.

Appendix

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QTS Realty Trust, Inc. 25

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

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QTS Realty Trust, Inc. 26

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)

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

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

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

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 — — —

Transaction, integration and impairment costs 269 — 269 901 — 901 302 4,928 5,230

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)

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

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

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

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

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

Transaction, integration and impairment costs 2,743 — 2,743 1,913 4,928 6,841

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

Year Ended

December 31, 2018 December 31, 2017

TotalCore Non-Core Total Core Non-Core

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QTS Realty Trust, Inc. 27

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

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

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

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

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)

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

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

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

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

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

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

December 31, 2018 December 31, 2017

Core Non-Core Total Core Non-Core Total

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QTS Realty Trust, Inc. 28

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

Core Non-Core Total Core Non-Core Total

December 31, 2018

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QTS Realty Trust, Inc. 29

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:

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

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

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

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)

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

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

December 31, 2018 December 31, 2017

TotalCore Non-Core Total Core Non-Core