Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

Leases

Significant Lease Transactions

The following table summarizes the significant lease transactions during the year ended December 31, 2021 (in thousands):

			Renewal/Termination Options Excluded (1)		Net Incremental (2)
Lease	Quarter	Transaction		Lease Classification	ROU assets	ROU liabilities
Silicon Valley 8 ("SV8") data center lease extended (3)	Q1	Extended lease term by 16 years	Two 10-year renewal options	Finance Lease	$98,141	$100,043
				Operating Lease	(13,685)	(15,586)
Hong Kong 3 ("HK3") data center lease extended (3)	Q1	Extended lease by 10 years, which included a 5-year renewal option	N/A	Finance Lease - Building	37,987	37,987
				Operating Lease - Land	6,592	6,592
Osaka 3 ("OS3") new data center and office lease	Q2	New lease-15 year term	2-year renewal option on a rolling basis	Finance Lease	144,122	144,122

(1) These renewal/termination options are not included in determining the lease terms as we are not reasonably certain to exercise them at this time.

(2) The net incremental amounts represent the adjustments to the right of use ("ROU") assets and liabilities recorded during the quarter that the transactions were entered.

(3) These leases had components previously classified as operating leases.

Lease Expenses

The components of lease expenses are as follows (in thousands):

	Years Ended December 31,
	2021		2020
Finance lease cost
Amortization of right-of-use assets (1)	$	157,057	$	120,169
Interest on lease liabilities	117,896		113,699
Total finance lease cost	274,953		233,868
Operating lease cost	221,776		217,299
Variable lease cost	33,066		13,588
Total lease cost	$	529,795	$	464,755

(1) Amortization of right-of-use assets is included within depreciation expense, and is recorded within cost of revenues, sales and marketing and general and administrative expenses in the consolidated statements of operations.

Other Information

Other information related to leases is as follows (in thousands, except years and percent):

	Years Ended December 31,
	2021			2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	113,571		$	109,558
Operating cash flows from operating leases	258,719			206,512
Financing cash flows from finance leases	165,539			115,288
Right-of-use assets obtained in exchange for lease obligations: (1)
Finance leases	$	412,214		$	487,592
Operating leases	10,446			108,797
	As of December 31,
	2021			2020
Weighted-average remaining lease term - finance leases (2)	14 years			14 years
Weighted-average remaining lease term - operating leases (2)	12 years			12 years
Weighted-average discount rate - finance leases	7		%	7		%
Weighted-average discount rate - operating leases	4		%	4		%
Finance lease ROU assets (3)	$	1,875,696		$	1,688,032

(1) Represents all non-cash changes in ROU assets.

(2) Includes lease renewal options that are reasonably certain to be exercised.

(3) As of December 31, 2021 and December 31, 2020, we recorded accumulated amortization of finance lease assets of $726.4 million and $604.1 million, respectively. Finance lease assets are recorded within property, plant and equipment, net on the consolidated balance sheets.

Maturities of Lease Liabilities

Maturities of lease liabilities as of December 31, 2021 are as follows (in thousands):

Year ended December 31,	Operating Leases		Finance Leases		Total
2022	$	181,810	$	252,670	$	434,480
2023	181,480		239,268		420,748
2024	165,689		240,696		406,385
2025	155,642		237,107		392,749
2026	145,578		227,262		372,840
Thereafter	847,168		1,979,654		2,826,822
Total lease payments	1,677,367		3,176,657		4,854,024
Less imputed interest	(426,158)		(1,039,148)		(1,465,306)
Total	$	1,251,209	$	2,137,509	$	3,388,718

We entered into agreements with various landlords primarily to lease data center spaces and ground leases which have not yet commenced as of December 31, 2021. These leases will commence between year 2022 and 2024, with lease terms of 3 to 27 years and total lease commitments of approximately $915.6 million.

Leases

Leases

Significant Lease Transactions

The following table summarizes the significant lease transactions during the year ended December 31, 2021 (in thousands):

			Renewal/Termination Options Excluded (1)		Net Incremental (2)
Lease	Quarter	Transaction		Lease Classification	ROU assets	ROU liabilities
Silicon Valley 8 ("SV8") data center lease extended (3)	Q1	Extended lease term by 16 years	Two 10-year renewal options	Finance Lease	$98,141	$100,043
				Operating Lease	(13,685)	(15,586)
Hong Kong 3 ("HK3") data center lease extended (3)	Q1	Extended lease by 10 years, which included a 5-year renewal option	N/A	Finance Lease - Building	37,987	37,987
				Operating Lease - Land	6,592	6,592
Osaka 3 ("OS3") new data center and office lease	Q2	New lease-15 year term	2-year renewal option on a rolling basis	Finance Lease	144,122	144,122

(1) These renewal/termination options are not included in determining the lease terms as we are not reasonably certain to exercise them at this time.

(2) The net incremental amounts represent the adjustments to the right of use ("ROU") assets and liabilities recorded during the quarter that the transactions were entered.

(3) These leases had components previously classified as operating leases.

Lease Expenses

The components of lease expenses are as follows (in thousands):

	Years Ended December 31,
	2021		2020
Finance lease cost
Amortization of right-of-use assets (1)	$	157,057	$	120,169
Interest on lease liabilities	117,896		113,699
Total finance lease cost	274,953		233,868
Operating lease cost	221,776		217,299
Variable lease cost	33,066		13,588
Total lease cost	$	529,795	$	464,755

(1) Amortization of right-of-use assets is included within depreciation expense, and is recorded within cost of revenues, sales and marketing and general and administrative expenses in the consolidated statements of operations.

Other Information

Other information related to leases is as follows (in thousands, except years and percent):

	Years Ended December 31,
	2021			2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	113,571		$	109,558
Operating cash flows from operating leases	258,719			206,512
Financing cash flows from finance leases	165,539			115,288
Right-of-use assets obtained in exchange for lease obligations: (1)
Finance leases	$	412,214		$	487,592
Operating leases	10,446			108,797
	As of December 31,
	2021			2020
Weighted-average remaining lease term - finance leases (2)	14 years			14 years
Weighted-average remaining lease term - operating leases (2)	12 years			12 years
Weighted-average discount rate - finance leases	7		%	7		%
Weighted-average discount rate - operating leases	4		%	4		%
Finance lease ROU assets (3)	$	1,875,696		$	1,688,032

(1) Represents all non-cash changes in ROU assets.

(2) Includes lease renewal options that are reasonably certain to be exercised.

(3) As of December 31, 2021 and December 31, 2020, we recorded accumulated amortization of finance lease assets of $726.4 million and $604.1 million, respectively. Finance lease assets are recorded within property, plant and equipment, net on the consolidated balance sheets.

Maturities of Lease Liabilities

Maturities of lease liabilities as of December 31, 2021 are as follows (in thousands):

Year ended December 31,	Operating Leases		Finance Leases		Total
2022	$	181,810	$	252,670	$	434,480
2023	181,480		239,268		420,748
2024	165,689		240,696		406,385
2025	155,642		237,107		392,749
2026	145,578		227,262		372,840
Thereafter	847,168		1,979,654		2,826,822
Total lease payments	1,677,367		3,176,657		4,854,024
Less imputed interest	(426,158)		(1,039,148)		(1,465,306)
Total	$	1,251,209	$	2,137,509	$	3,388,718

We entered into agreements with various landlords primarily to lease data center spaces and ground leases which have not yet commenced as of December 31, 2021. These leases will commence between year 2022 and 2024, with lease terms of 3 to 27 years and total lease commitments of approximately $915.6 million.