Leases

12 Months Ended

Dec. 31, 2019

Leases

Leases

4. Leases

Lessee accounting

We lease space at certain of our data centers from third parties and certain equipment under noncancelable lease agreements. Leases for our data centers expire at various dates through 2048. As of December 31, 2019 and 2018, certain of our data centers, primarily in Europe and Singapore, are subject to ground leases. As of December 31, 2019, the termination dates of these ground leases range from 2024 to 2981. In addition, our corporate headquarters along with several regional office locations are subject to leases with termination dates ranging from 2021 to 2027.

The leases may contain renewal and/or early termination options that are not reasonably certain of exercise as of December 31, 2019. Also, the leases generally require us to make fixed rental payments that increase at defined intervals during the term of the lease plus pay our share of common area, real estate and utility expenses as incurred. The leases neither contain residual value guarantees nor impose material restrictions or covenants on us. Further, the leases have been classified and accounted for as either operating or finance leases.

Supplemental balance sheet information related to leases as of December 31, 2019 was as follows (in thousands):

	Balance Sheet	Balance as of
	Classification	December 31, 2019
Assets:
Operating lease assets	Operating lease right-of-use assets, net (1)	$	628,681
Finance lease assets	Buildings and improvements, net (2)		131,072
Total leased assets		$	759,753
Liabilities:
Operating lease liabilities	Operating lease liabilities	$	693,539
Finance lease liabilities	Accounts payable and other accrued liabilities		178,086
Total lease liabilities		$	871,625

_________________________

(1) Net of accumulated depreciation and amortization of $51.7 million as of December 31, 2019.

(2) Net of accumulated depreciation and amortization of $4.9 million as of December 31, 2019.

The components of lease expense for the year ended December 31, 2019 were as follows (in thousands):

		Year Ended
Lease cost	Income Statement Classification	December 31, 2019
Finance lease cost:
Amortization of right-of-use assets	Depreciation and amortization	$	5,074
Interest on lease liabilities	Interest expense		6,044
Operating lease cost	Rental property operating and maintenance / General and administrative		90,980
Total lease cost		$	102,098

As of December 31, 2019, the weighted average remaining lease term for our operating leases and finance leases was 12 years and 24 years, respectively. We do not include renewal options in the lease term for calculating the lease liability unless we are reasonably certain we will exercise the option or the lessor has the sole ability to exercise the option. The weighted average incremental borrowing rate was 4.1% for operating leases and 3.5% for finance leases at December 31, 2019. We assigned a collateralized interest rate to each lease based on the term of the lease and the currency in which the lease is denominated.

The minimum commitment under operating leases, excluding fully prepaid ground leases, as of December 31, 2018 was as follows (in thousands):

2019	$	84,712
2020		87,396
2021		86,212
2022		81,976
2023		80,707
Thereafter		539,047
Total	$	960,050

Future minimum lease payments and their present value for property under capital lease obligations as of December 31, 2018, are as follows (in thousands):

2019	$	11,657
2020		13,108
2021		13,207
2022		13,706
2023		14,219
Thereafter		285,774
		351,671
Less amount representing interest		(137,827)
Present value	$	213,844

Maturities of lease liabilities as of December 31, 2019 were as follows (in thousands):

	Operating		Finance
	lease liabilities		lease liabilities
2020	$	85,277	$	8,881
2021		84,796		8,927
2022		81,021		9,399
2023		79,751		9,865
2024		73,612		9,914
Thereafter		478,241		226,261
Total undiscounted future cash flows		882,698		273,247
Less: Imputed interest		(189,159)		(95,161)
Present value of undiscounted future cash flows	$	693,539	$	178,086

Lessor accounting

The following table summarizes the minimum lease payments due from our customers on leases with lease periods greater than one year for space in our operating properties, prestabilized development properties and leases of land subject to ground leases at December 31, 2019 (in thousands):

	Operating leases
2020	$	2,810,508
2021		1,947,216
2022		1,552,045
2023		1,333,620
2024		1,089,305
Thereafter		4,091,199
Total	$	12,823,893

These amounts do not reflect future rental revenues from the renewal or replacement of existing leases unless we are reasonably certain we will exercise the option or the lessor has the sole ability to exercise the option. We exclude reimbursements of operating expenses and rental increases that are not fixed.