Property and equipment:

12 Months Ended

Dec. 31, 2021

Property and equipment:

Property and equipment:

2. Property and equipment:

Property and equipment consisted of the following (in thousands):

	December 31,
	2021		2020
Owned assets:
Network equipment	$	650,634	$	611,265
Leasehold improvements		250,623		241,379
System infrastructure		160,376		148,533
Software		11,028		10,609
Office and other equipment		20,999		19,611
Building		1,273		1,376
Land		107		116
		1,095,040		1,032,889
Less—Accumulated depreciation and amortization		(912,579)		(856,859)
		182,461		176,030
Assets under finance leases:
IRUs		524,475		482,978
Less—Accumulated depreciation and amortization		(249,056)		(228,673)
		275,419		254,305
Property and equipment, net	$	457,880	$	430,335

Depreciation and amortization expense related to property and equipment and finance leases was $89.2 million, $83.5 million and $80.2 million, for 2021, 2020 and 2019, respectively.

The Company capitalizes the compensation cost of employees directly involved with its construction activities. In 2021, 2020 and 2019, the Company capitalized compensation costs of $13.4 million, $12.1 million and $10.7 million, respectively. These amounts are included in system infrastructure costs.

Exchange agreement

In 2020 and 2019 the Company exchanged certain used network equipment and cash consideration for new network equipment. The fair value of the new network equipment received was estimated to be $1.1 million and $3.3 million, respectively, resulting in gains of $0.3 million and $1.0 million, respectively. The estimated fair value of the equipment received was based upon the cash consideration price the Company pays for the new network equipment on a standalone basis (Level 3). There were no exchange transactions in 2021.

Installment payment agreement

The Company has entered into an installment payment agreement (“IPA”) with a vendor. Under the IPA the Company was able to purchase network equipment in exchange for interest free note obligations each with a twenty-four month term. There are no payments under each note obligation for the first six months followed by eighteen equal installment payments for the remaining eighteen month term. As of December 31, 2021 and December 31, 2020, there was $0.8 million and $7.7 million, respectively, of note obligations outstanding under the IPA, secured by the related equipment. The Company recorded the assets purchased and the present value of the note obligation utilizing an imputed interest rate. The resulting discounts under the note obligations are being amortized over the note term using the effective interest rate method.