Commitments and Contingencies

(a) Operating Leases

We lease space at certain of our data centers from third parties, primarily data centers acquired as part of the Telx Acquisition and European Portfolio Acquisition, and certain equipment under noncancelable operating lease agreements. The operating leases for our data centers expire at various dates through 2033 with renewal options available to us. The lease agreements typically provide for base rental rates that increase at defined intervals during the term of the lease.

As of December 31, 2017, certain of our data centers, primarily in Europe are subject to ground leases. The termination dates of these ground leases range from 2036 to 2981. These ground leases generally require us to make fixed annual rental payments. In addition, our corporate headquarters along with several regional office locations are subject to leases with termination dates ranging from 2018 to 2024. These office leases generally require us to make fixed annual rental payments plus pay our share of common area, real estate and utility expenses. Some of our ground and office leases include escalation clauses and renewal options.

Rental expense for our operating leases, including ground leases, was approximately $82.5 million, $83.6 million, and $24.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The minimum commitment under these leases, excluding fully prepaid ground leases, as of December 31, 2017 was as follows (in thousands):



2018	$	76,231
2019	81,051
2020	83,738
2021	82,243
2022	78,129
Thereafter	544,485
Total	$	945,877

(b) Capital Lease Obligations

Capital lease obligations are recorded for leases in which the Company was deemed to be the owner during the construction period under lease accounting guidance. Further, each lease contains provisions indicating continuing involvement with the property at the end of the construction period. As a result, in accordance with applicable accounting guidance, buildings and related assets subject to the leases are reflected in buildings and improvements and accumulated depreciation and amortization on the Company’s consolidated balance sheets and depreciated over their remaining useful lives. The present value of the lease payments associated with these buildings is recorded as capital lease obligations and is classified in accounts payable and other accrued liabilities in the consolidated balance sheets. The financing obligation is amortized using the effective interest method and the interest rate is determined in accordance with the requirements of sale-leaseback accounting.

Future minimum lease payments and their present value for property under capital lease obligations as of December 31, 2017, are as follows (in thousands):



2018	$	10,933
2019	12,738
2020	12,839
2021	12,941
2022	13,357
Thereafter	198,181
	260,989
Less amount representing interest	(90,178		)
Present value	$	170,811

Our properties require periodic investments of capital for tenant-related capital expenditures and for general capital improvements and from time to time in the normal course of our business, we enter into various construction contracts with third parties that may obligate us to make payments. At December 31, 2017, we had open commitments, including amounts reimbursable of approximately $6.3 million, related to construction contracts of approximately $317.3 million.

(d) Legal Proceedings

Although the Company is involved in legal proceedings arising in the ordinary course of business, as of December 31, 2017, the Company is not currently a party to any legal proceedings nor, to its knowledge, is any legal proceeding threatened against it that it believes would have a material adverse effect on its financial position, results of operations or liquidity.