Commitments and Contingencies

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies

Commitments and Contingencies

12. Commitments and Contingencies

As of September 30, 2013, the Company, as lessee, leases data center space under noncancelable operating lease agreements at LA1, DC1, DE1, DE2 and NY1, and its headquarters located in Denver, Colorado, under noncancelable operating lease agreements. The lease agreements provide for base rental rate increases at defined intervals during the terms of the leases. 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 terms of the leases. The difference between the straight-line expense and the cash payment is recorded as deferred rent payable. Rent expense on operating leases for the three months ended September 30, 2013, and 2012, was $5.1 million and $4.7 million, respectively, and for the nine months ended September 30, 2013, and 2012 was $14.6 million and $14.0 million, respectively. 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 following table summarizes our contractual obligations as of September 30, 2013 (in thousands):

	Remainder of
Obligation	2013		2014		2015		2016		2017		Thereafter		Total
Operating leases	$	4,644	$	18,902	$	19,258	$	18,942	$	17,503	$	80,893	$	160,142
Credit Facility(1)	588		2,353		2,353		2,353		108,000		—		115,647
Mortgages payable (2)	913		59,843		—		—		—		—		60,756
Construction Contracts (3)	75,808		429		—		—		—		—		76,237
Other (4)	1,441		1,536		1,071		564		176		1,484		6,272
Total	$	83,394	$	83,063	$	22,682	$	21,859	$	125,679	$	82,377	$	419,054

(1) Includes $108.0 million outstanding and estimated annual interest payments assuming no draws or payments on the revolving credit facility through the maturity date of January 3, 2017. The revolving credit facility is subject to variable rates and we estimated interest payments based on the interest rate as of September 30, 2013.

(2) Includes $58.6 million of mortgage principal payments and estimated interest payments until debt maturity on October 9, 2014. We estimated interest payments of $0.5 million for the remainder of 2013 and $1.6 million in 2014. The mortgage payable is subject to variable rates and we estimated interest payments based on the interest rate as of September 30, 2013.

(3) Obligations for construction contracts for properties under construction, tenant related capital expenditures, and other capital improvements.

(4) Obligations for power contracts, telecommunications leases, and internal system development.

From time to time, we are party to a variety of legal proceedings arising in the ordinary course of business. We believe that, with respect to any such matters to which we currently are a party, the ultimate disposition of any such matter will not result in a material adverse effect on our business, financial condition, cash flows or results of operations.