provisions set forth in the Code, all of our taxable income would
be subject to federal income tax at regular corporate rates.
To maintain REIT status, we must distribute a minimum of 90% of our
taxable income. However, it is our policy and intent, subject to
change, to distribute 100% of our taxable income and therefore, no
provision is required in the accompanying condensed consolidated
financial statements for federal income taxes with regard to our
activities and our subsidiary pass-through entities. The allocable
share of taxable income is included in the income tax returns of
its stockholders. We are subject to the statutory requirements of
the locations in which we conduct business. State and local income
taxes are accrued as deemed required in the best judgment of
management based on analysis and interpretation of respective tax
We have elected to treat certain subsidiaries as taxable REIT
subsidiaries (“TRS”). Certain activities that we undertake must be
conducted by a TRS, such as services for our tenants that could be
considered otherwise impermissible for us to perform and holding
assets that we cannot hold directly. A TRS is subject to corporate
level federal and state income taxes.
Deferred income taxes are recognized in certain taxable entities.
Deferred income tax generally is a function of the period’s
temporary differences (items that are treated differently for tax
purposes than for financial reporting purposes), the utilization of
tax net operating losses generated in prior years that previously
had been recognized as deferred income tax assets and the reversal
of any previously recorded deferred income tax liabilities. A
valuation allowance for deferred income tax assets is provided if
we believe all or some portion of the deferred income tax asset may
more likely than not be realized. Any increase or decrease in the
valuation allowance resulting from a change in circumstances that
causes a change in the estimated realizability of the related
deferred income tax asset is included in deferred tax expense. As
of March 31, 2021, and December 31, 2020, the gross deferred income
taxes were not material.
We currently have no liabilities for uncertain income tax
positions. As of March 31, 2021, the earliest tax year for which we
are subject to examination is 2017.
Our cash and cash equivalents are maintained in various financial
institutions, which, at times, may exceed federally insured limits.
We have not experienced any losses in such accounts, and management
believes that the Company is not exposed to any significant credit
risk in this area. We have no off-balance sheet concentrations of
credit risk, such as foreign exchange contracts, option contracts,
or foreign currency hedging arrangements.
We manage our business as one reportable segment consisting of
investments in data centers located in the United States. Although
we provide services in several markets, these operations have been
aggregated into one reportable segment based on the similar
economic characteristics amongst all markets, including the nature
of the services provided and the type of customers purchasing these
The full impact of the ongoing COVID-19 pandemic to our business
and our customers’ ability to comply with rent obligations remains
dependent on future developments, including, among other factors,
the duration of the pandemic, along with related
government-mandated business shutdowns, travel advisories and
restrictions on movement, the effectiveness of efforts to vaccinate
in the United States and globally, the recovery time of general
employment levels, disrupted supply chains, potentially material
staffing shortages, construction and development delays, and
uncertainty with respect to accessibility of additional funding
sources. As of March 31, 2021, we have not recognized a material
loss, impairment, or contingency within our condensed consolidated
financial statements as a result of the COVID-19 pandemic.