Leases

12 Months Ended

Dec. 31, 2020

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 2069. As of December 31, 2020, certain of our data centers, primarily in Europe and Singapore, are subject to ground leases. As of December 31, 2020, the termination dates of these ground leases range from 2041 to 2981. In addition, our corporate headquarters along with several regional office locations are subject to leases with termination dates ranging from 2021 to 2028. 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.

In July 2020, we acquired the freehold to the land under the Hanauer Landstraße campus in Frankfurt along with leasehold agreements to nine of our data centers within the campus (see Note 5) and, as a result, the leases were terminated and right-of-use assets and related lease liabilities of approximately $24.7 million were written off.

Supplemental balance sheet information related to leases as of December 31, 2020 and 2019 was as follows (in thousands):

	Balance Sheet	Balance as of
	Classification	December 31, 2020		December 31, 2019
Assets:
Operating lease assets	Operating lease right-of-use assets, net (1)	$	1,386,959	$	628,681
Finance lease assets	Buildings and improvements, net (2)		181,753		131,072
Total leased assets		$	1,568,712	$	759,753
Liabilities:
Operating lease liabilities	Operating lease liabilities	$	1,468,712	$	693,539
Finance lease liabilities	Accounts payable and other accrued liabilities		233,350		178,086
Total lease liabilities		$	1,702,062	$	871,625

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(1) Net of accumulated depreciation and amortization of $148.4 million and $51.7 million as of December 31, 2020 and 2019, respectively.

(2) Net of accumulated depreciation and amortization of $12.5 million and $4.9 million as of December 31, 2020 and 2019, respectively.

The components of lease expense for the years ended December 31, 2020 and 2019 were as follows (in thousands):

		Years Ended
Lease cost	Income Statement Classification	December 31, 2020		December 31, 2019
Finance lease cost:
Amortization of right-of-use assets	Depreciation and amortization	$	7,222	$	5,074
Interest on lease liabilities	Interest expense		7,060		6,044
Operating lease cost	Rental property operating and maintenance / General and administrative		129,399		90,980
Total lease cost		$	143,681	$	102,098

As of December 31, 2020, the weighted average remaining lease term for our operating leases and finance leases was 13 years and 22 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 2.8% for operating leases and 3.2% for finance leases at December 31, 2020. 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.

Maturities of lease liabilities as of December 31, 2020 were as follows (in thousands):

	Operating		Finance
	lease liabilities		lease liabilities
2021	$	137,324	$	12,578
2022		143,183		13,099
2023		143,606		33,288
2024		144,303		12,039
2025		145,162		12,094
Thereafter		1,046,233		244,675
Total undiscounted future cash flows		1,759,811		327,773
Less: Imputed interest		(291,099)		(94,423)
Present value of undiscounted future cash flows	$	1,468,712	$	233,350

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, 2020 (in thousands):

	Operating leases
2021	$	2,874,204
2022		2,126,375
2023		1,760,337
2024		1,457,784
2025		1,155,144
Thereafter		3,907,635
Total	$	13,281,479

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 lessee has the sole ability to exercise the option. We exclude reimbursements of operating expenses and rental increases that are not fixed.