D a t a C e n t e r M a r k e t O v e r v i e w. produced by

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1 D a t a C e n t e r M a r k e t O v e r v i e w produced by

2 Understanding the ecosystem and language of the core infrastructure driving our digital economy has thus become a unique and strategic advantage. Sean Patrick Tario, CEO, OSI 2

3 Tax Incentives *source: Lenio, John and Lynch, Patrick, Impact of Taxes & Incentives on Data Center Incentives, CBRE, July Sales and use taxes, property taxes, and real estate taxes all play a role in the total operating costs of data centers. Some states, however, offer incentives that lower the operating cost, or Total Cost of Occupancy (TCO) for both data center developers and clients installing infrastructure within these facilities. Texas currently DOES offer sales tax incentives that may affect data center owner/operators or their clients installing hardware and related infrastructure. 3

4 National Industry Trends *source: IDC trends, ,940,000: Number of data centers in the USA* Expected to DECREASE year over year 2,500: Number of commercial data center facilities within the USA Expected to INCREASE year over year 611,400,000: Total data center sq. ft. within the USA* Expected to INCREASE year over year 90%: Amount of data generated within the past two years as a % of whole Expected to INCREASE year over year 4

5 National Industry Trends *source: Akamai s State Of The Internet, Q Report, V7, #1. As worldwide internet access increases, IPv6 traffic percentage, top network providers by volume the number of total data centers in the US decreases, but square footage of data centers increases. Cost of energy varies wildly across the nation. Country Network Provider Q1 14 ipv6 traffic % United States Comcast Cable 13% United States Verizon Wireless 45% United States AT&T 11% United States Time Warner Cable 4.7% France Proxad/Free 19% Q1 14 Unique ipv4 Addresses Germany Deutsche Telekom 9.2% Q1 14 Unique Q over Q Y Over Y Change Romania RCS & RDS 17% ipv4 Addresses Change Germany Kabel Deutschland 30% Global 795,443, % 7.8% 1 United States 162,676,451 (1.4%) 8.6% 2 China 123,526, % 11% 3 Brazil 41,298,964 12% 50% 4 Japan 40,042,679 (0.8%) (3.3%) 5 Germany 37,176,442 (0.1%) (2.4%) 6 United Kingdom 28,509,857 (0.6%) (1.2%) 7 France 28,451, % 5.7% 8 South Korea 20,987,274 3% (1.6%) 9 Italy 20,021,068 1% (2.4%) 10 Russia 18,752, % 3.3% Belgium Telenet 24% Peru Telefonica Del Peru 7.4% Switzerland Swisscom 20% Japan KDDI Corporation 12% Germany Unitymedia KabelBW 19% United States Hughes Network Systems (DISH Network) 22% Belgium Brutele 24% United States T-Mobile 6.2% Belgium Belgacom 5.9% Malaysia Telekom Malaysia 1.2% Czech Republic o2 (Telefonica) 6.3% Norway Get AS 16% 5

6 National Industry Trends *source: Telegeography, copyright 2014 PriMetrica, Inc. Retail Operators with Largest Amount of New Colocation Site Capacity, (million sq ft) Largest Colocation Providers by Gross Floor Space 2014 **A number of notable providers are missing from these graphs, such as: QTS = 1M+ sq. ft. NEW and 3M+ sq. ft. GROSS Digital Realty Trust = 1M+ sq. ft. NEW and 24.5M sq. ft. GROSS SABEY = 500K+ sq. ft. NEW and 3M sq. ft. GROSS Coresite Realty Corp = 556K sq. ft. NEW and 3.2M sq. ft. GROSS 6

7 National Industry Trends *source: source: CBRE Data Center Solutions Group, Q4 2014, and Akamai s State Of The Internet, Q Report, V7, #1. Q primary wholesale colocation "metered power" market snapshot Average Cost By Location AVE COST/kW Market Inventory Vacancy Rental Rates (kw/mo) HOUR North Bay Area, CA $0.12 South Bay Area, CA $0.10 Northern Virginia 402 MW 27 MW / 6.7% $135-$150 Phoenix 213 MW 4.1 MW / 1.9% $145-$165 Atlanta 127 MW 26.2 MW / 20.7% $120-$150 Silicon Valley 116 MW 15.9 MW / 13.7% $140-$150 NYC/NJ 122 MW 20.4 MW / 16.7% $145-$160** Chicago 115 MW 3.6 MW / 3.2% $145-$165 Dallas/Fort Worth 113 MW 12.1 MW / 10.7% $140-$150 **Quoted rates are outside of NYC proper. NYC (Manhattan) wholesale rates average $225-$300/kW/mo. Sacramento, CA $0.10 Los Angeles, CA $0.13 Seattle, WA $0.06 Quincy, WA $0.03 Portland, OR $0.07 Las Vegas, NV $0.08 Phoenix, AZ $0.06 Salt Lake City, UT $0.05 Denver, CO $0.07 Dallas, TX $0.08 Austin, TX $0.06 Chicago, IL $0.08 Philadelphia, PA $0.10 Miami, FL $0.08 Atlanta, GA $0.06 Richmond, VA $0.06 NYC, NY $ $0.18 Secaucus, NJ $0.13 7

8 National Industry Trends *source: Data Center Journal, Volume 32, June, Demand is now booming for the core storage and compute resources required to run the digital economy, with elastic compute IaaS providers making it easier for any programmer with an internet connection and a credit card to start and manage a business online. This has meant great things for those working directly in, or indirectly supporting, the IT industry. Sean Patrick Tario Data Center Journal s Top 5 DC Trends of 2014: 1. Virtualization 2. Smart device mobility 3. Software-defined networks 1% 4. Exponential increase in data to be stored 5. Consumers still think there s a cloud 8

9 DFW Industry Trends *source: **source: ***source: Rackspace Expanding Data Center Capacity Globally Rackspace is also growing its data center footprint across multiple major markets on its home turf in the U.S. It has recently taken down an additional 8 megawatts of capacity at the DuPont Fabros campus in Ashburn, Virginia, as it prepares to bring online between 3 megawatts and 6 megawatts in the Dallas market and weighs expansion options on the west coast. * Retail-Colocation Startup Patronus Planning $250M Data Center Campus A new company called Patronus is developing a greenfield site in Frisco, Texas, into a four-building data center campus, expecting to invest more than $250 million in the project. ** QTS Reports Strong Sales Momentum in Upcoming Dallas Data Center QTS Realty Trust has pre-sold about 26,000 square feet of space in its Dallas-Fort Worth data center ahead of launch, expected this quarter. Construction began in late *** 9

10 DFW Industry Trends 28 commercial data centers house 30 different providers within the Dallas - Fort Worth region 10

11 Network IXP s *source: peeringdb.com. Accessed April 2, List of Interconnection Facilities in and around DFW Exchange Name Long Name City/Region Participants Equinix Dallas Equinix Dallas Exchange Dallas 176 Telx Dallas TIE:Dallas, Telx Internet Exchange Dallas Dallas 8 CyrusOne IX Dallas CyrusOne Internet Exchange Dallas 4 11

12 Austin Houston New Orleans Kansas City Atlanta Denver Chicago Charlotte Phoenix Orlando Minneapolis Las Vegas Los Angeles Cincinnati Ashburn - POP Miami Washington DC San Diego Manhattan San Francisco Portland Seattle Honolulu London, UK Aterdam, Netherlands Amazon, Japan Hong Kong, China Shanghai, China Brisbane, AU South Africa Network Latency *source: twtelecom.com on 6/30/2014. International data from dotcom-monitor.com, accessed 7/18/2014. Latency in milliseconds, from Dallas

13 DC Directory Name Retail Wholesale Hosting Location(s) TYPE (TICKER: EXCHANGE) Address City Alpheus #1 x Local PE Backed 2323 Bryan Ste 850 Dallas Alpheus #2 x Local PE Backed W 7th St Fort Worth AT&T x x Global Public 800 Venture Drive Dallas CenturyLink #1 x x Global Public (CTL: NYSE) 1950 N Stemmons Frwy Dallas CenturyLink #2 x x Global Public (CTL: NYSE) FAA Blvd Bld 2 Fort Worth Colo@ x National Private 1009 Jupiter Rd Dallas Cologix x Continental Private 1950 N Stemmons Frwy Dallas CoreSpace x x x National Private 750 John W Carpenter Frwy Dallas CyrusOne #1 x National Public REIT (CONE: NASDAQ) 1649 W Frankford Rd Carrollton CyrusOne #2 x National Public REIT (CONE: NASDAQ) 2501 Bus Hwy 121 Loisville Bld 5 Dallas DataBank DFW-1 x x Regional Private 400 S Akard Ste 100 Dallas DataBank DFW-2 x x Regional Private 904 Quality Way Richardson DataPipe x x Regional Private 400 S Akard St Dallas Digital Realty Trust #1 x Global Public REIT (DLR: NYSE) 1830 Webb Chapel Rd North Dallas Digital Realty Trust #2 x Global Public REIT (DLR: NYSE) 2323 Bryan St Dallas 1% Digital Realty Trust #3 x Global Public REIT (DLR: NYSE) 1232 Alma Rd Richardson Digital Realty Trust #4 x Global Public REIT (DLR: NYSE) 850 E Collins Blvd Richardson Equinix x Global Public (EQIX: NASDAQ) 1950 N Stemmons Fwy Ste 1034 Dallas Global IP Networks x Local Private 1009 Jupiter Rd Ste 500 Plano Global Net Access x x Regional Private 8435 Stemmons Frwy Dallas Hosting.com x x National Private 1807 Ross Ave Ste 300 Dallas 13

14 DC Directory Name Retail Wholesale Hosting Location(s) TYPE (TICKER: EXCHANGE) Address City InfoRelay DFW1 x x National Private 1950 N Stemmons Frwy Dallas Internap DAL-EXT1 x x x Global Public (INAP: NASDAQ) 1950 N Stemmons Frwy Dallas Negma Business x x Regional Private 4215 N Beltwood Parkway Farmers Branch Opus Interactive x x National Private 400 S Akard Street Dallas QTS x x x National Public REIT (QTS: NYSE) 6431 Longhorn Dr Irving Quadranet x x National Private 3004 Irving Blvd Dallas Stream x x Regional Private 2115 East Renner Rd Richardson SunGard DAL-1001 x x Global Private 1001 Campbell Rd Dallas T5 Data Centers x x National Private 6653 Pinecrest Dr Plano Telx - DAL1 x National PE Backed 2323 Bryan St Dallas Telx - DAL2 x National PE Backed 8435 Stemmons Frwy Dallas Terremark DC-05 x x x Global Sub of Verizon (VZ: NYSE) 2222 E Grauwyler Rd Irving Terremark DC-04 x x x Global Sub of Verizon (VZ: NYSE) 400 International Pkwy Richardson TierPoint x x National PE Backed 3004 Irving Blvd Dallas Vazata #1 x x Regional Private 4025 Midway Rd Carrollton 1% Vazata #2 x x Regional Private 2440 Marsh Ln Carrollton ViaWest #1 x x National Sub of Shaw (SJR: NYSE) 1950 N Stemmons Frwy Dallas ViaWest #2 x x National Sub of Shaw (SJR: NYSE) 3000 Waterview Pkwy Richardson XO #1 x National Private 1300 W MockingBird Ln Dallas XO #2 x National Private 1950 N Stemmons Frwy Dallas 14

15 DC Directory Name Retail Wholesale Hosting Location(s) TYPE (TICKER: EXCHANGE) Address City zcolo Zayo #1 x x x National PE Backed (division of Zayo) 1950 N Stemmons Frwy Dallas zcolo Zayo #2 x x x National PE Backed (division of Zayo) 2323 Bryan St Dallas zcolo Zayo #3 x x x National PE Backed (division of Zayo) 8600 Harry Hines Blvd Dallas 1% 15

16 The last few years have brought a myriad of new private and multi-tenant 1M+ and 100K+ sq. ft. data center development projects in and around DFW. This uptick in development supplements healthy existing local infrastructure, including the 1.5M sq. ft. Infomart technology landmark in Dallas. Increased investment by some of the biggest names in the IT infrastructure space calling Texas home (Rackspace, Softlayer, CyrusOne), is testament to both the digital demands and prime economic conditions boasted by the region. All expectations are that this trend will continue for many years to come. 16

17 Local Geological Factors *source: Matthew Erickson, Joe Burgess, and Bill Marsh of The New York Times, April 30, Accessed online, nationalatlas.gov data range = No hurricane risk Moderate precipitation Hurricane Risk Average Annual Precipitation (in inches)

18 Local Geological Factors *source: FEMA Earthquake Hazard Maps, Accessed July 11, Low earthquake risk SDC EARTHQUAKE HAZARD A Very small probability of experiencing damaging earthquake effects. B Could experience shaking of moderate intensity. C Could experience strong shaking. D0 D1 Could experience very strong shaking (the darker the color, the stronger the shaking). D2 E Near major active faults capable of producing the most intense shaking. 18

19 Local Geological Factors *source: nationalatlas.gov data range = and nationalatlas.gov data range = High thunderstorm risk Moderate wildfire risk Thunderstor Number of damage-causing events Wildfires Number of events that resulted in damage 11 or Greater or Greater

20 Local Geological Factors *source: nationalatlas.gov data range = and Matthew Erickson, Joe Burgess, and Bill Marsh of The New York Times, April 30, Accessed online High lightning risk Moderate tornado risk Tornado Risk Lightning Number of events that resulted in damage 45 or Greater No Events 20

21 Utility Service Territories *source: accessed August 20, DFW Energy Service Area Map 1% 21

22 Energy Fuel Mix *source: data. DFW Utilities Average Fuel Mix Coal 37% Renewa ble Natural Gas Nuclear 10% 2% Other Gas 2% 49% 22

23 Power Rates *source: eia.gov, Electric Power Monthly. Accessed August 12, 2014 Dallas: Average Retail Price of Electricity to Ultimate Consumers by End-Use Sector Residential Commercial Cents per Kilowatthour 23

24 National Power Connections *source: Accessed June 30,

25 National Energy Projections *source: AEO2014 Early Release Rollout Presentation Paul J. Nitze School of Advanced International Studies, Johns Hopkins University December 16, 2013, Washington, DC, by Adam Sieminsky, December 16, 2013 Non-hydro renewable generation more than doubles between 2012 and 2040 Non-hydro renewable generation, billion kilowatt-hours per year Historical Projections 25

26 National Energy Projections *source: U.S. EIA, Annual Energy Outlook 2014 Early Release Overview Delivery Energy Consumption By Sector (quadrillion Btu) U.S. Primary Energy Consumption by Fuel By Sector (quadrillion Btu) 40 History 2012 Projections 120 History 2012 Projections

27 National Economic Trends *source: CBRE Research and Bureau of Labor Statistics. *Job growth vs and rent growth Q vs. Q Office Rental Growth Overall Market Tech Services Job and Office Rent Growth % 0% 10% 20% 30% 40% 50% 27

28 Leading Businesses *source: Fortune 500 Companies in Texas AMR Energy Transfer Equity Phillips 66 Anadarko Petroleum Enterprise Products Partnets Plains All American Pipeline Apache EOG Resources Quanta Services, Inc. AT&T Exxon Mobil Southwest Airlines Baker Hughes FMC Technologies Spectra Energy Calpine GameStop Susser Holdings Cameron International Group 1 Automotive Sysco CC Media Holdings Halliburton Targa Resources Celanese Holly Tenet Healthcare CenterPoint Energy J.C. Penney Tesoro Petroleum Commercial Metals KBR Texas Instruments ConocoPhillips Kimberly-Clark United Services Automobile Dean Foods Dell Computer Kinder Morgan 1% Marathon Oil Association Valero Energy Dr Pepper Snapple Group Metro PCS Communications Waste Management El Paso Corp. MRC Global Western Refining Enbridge Energy Partners National Oilwell Varco Whole Foods Market Energy Future Holdings Nustar Energy 28

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