Commitments and Contingencies

6 Months Ended

Jun. 30, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

The Company currently leases the data center space under noncancelable operating lease agreements at 32 Avenue of the Americas, One Wilshire and 1275 K Street, and the Company leases its headquarters located in Denver, Colorado under a noncancelable operating lease agreement. The lease agreements provide for base rental rate increases at defined intervals during the term of the lease. In addition, the Company has negotiated rent abatement periods to better match the phased build-out of the data center space. The Company accounts for such abatements and increasing base rentals using the straight-line method over the noncancelable term of the lease. The difference between the straight-line expense and the cash payment is recorded as deferred rent payable.

Additionally, the Company has commitments related to telecommunications capacity used to connect data centers located within the same market or geographical area and power usage.

The future minimum payments to be made under noncancelable leases, telecommunications capacity commitments and power usage commitments as of June 30, 2011 are as follows (in thousands):

	Remainder of
	2011		2012		2013		2014		2015		Thereafter		Total
Operating leases	$	8,400	$	17,044	$	17,457	$	17,742	$	17,620	$	44,255	$	122,518
Other(1)		2,617		4,174		615		204		157		1,035		8,802
Total	$	11,017	$	21,218	$	18,072	$	17,946	$	17,777	$	45,290	$	131,320

(1) Obligations for tenant improvement work at 55 S. Market Street, power contracts and telecommunications leases.

Rent expense for the three months ended June 30, 2011 and 2010 was $4.6 million and $0.7 million, respectively, and for the six months ended June 30, 2011 and 2010 rent expense was $9.2 million and $1.4 million, respectively.

Our properties require periodic investments of capital for general capital improvements and for tenant related capital expenditures. Additionally, the Company enters into various construction contracts with third parties for the development and redevelopment of our properties. At June 30, 2011, we had open commitments related to construction contracts of approximately $33.2 million.

As previously disclosed, the Company is involved in litigation in Colorado District Court in Denver with Ari Brumer, the former general counsel of its affiliate CoreSite, LLC, arising out of the termination of Mr. Brumer’s employment. The allegations made by Mr. Brumer against the Company in his complaint and by the Company against him in its counterclaims have also been previously reported. The Court recently granted Mr. Brumer leave to amend his complaint to add a claim for defamation against the Company relating to its disclosure of the allegations it made against him in its counterclaims. The Court also ruled that all filings in the case be filed under seal. The Company continues to believe that this litigation will not have a material adverse effect on its business, financial position or liquidity.

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. Management believes that the resolution of such matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company.