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Leases - As a Lessee

3 Months Ended

Mar. 31, 2020

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Variable lease payments consisting of non-lease components and services are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation is incurred.

The new accounting standard for leases defines initial direct costs as only the incremental costs of signing a lease. Initial direct costs related to leasing that are not incremental are expensed as general and administrative expense in our Condensed Consolidated Statements of Operations. As a result of electing the package of practical expedients, initial direct costs incurred prior to the effective date have not been reassessed.

Our operating lease agreements primarily consist of leased real estate and are included within Operating lease ROU assets and Operating lease liabilities on the Condensed Consolidated Balance Sheets. Many of our lease agreements include options to extend the lease, which are not included in our minimum lease payments unless they are reasonably certain to be exercised at lease commencement. Rental expense related to operating leases is recognized on a straight-line basis over the lease term.

We operate five data center facilities and have a data center under development subject to finance leases. The remaining term of our data center finance leases range from two to twenty-one years with options to extend the initial lease term on all but one lease. As a result of electing the package of practical expedients, data center finance leases are included in Buildings and improvements, Equipment and Finance lease liabilities in our Condensed Consolidated Balance Sheets consistent with the presentation under ASC 840 in the prior year. In addition, we lease 13 data centers and 4 offices supporting our sales and corporate activities under operating lease agreements. Our operating leases have remaining lease terms ranging from one to 25 years and one ground lease in Houston has a lease term that expires in 2066.

The components of lease expense are as follows (in millions):



	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Operating lease cost	$	6.2	$	5.0
Finance lease cost:
Amortization of assets	0.4		0.6
Interest on lease liabilities	0.4		0.5
Total net lease cost	$	7.0	$	6.1

Supplemental balance sheet information related to leases is as follows (in millions, except lease term and discount rate):



	March 31, 2020			December 31, 2019
Operating leases:
Operating lease right-of-use assets	$	208.6		$	161.9
Operating lease liabilities	$	243.0		$	195.8
Finance leases:
Property and equipment, at cost	$	32.0		$	34.9
Accumulated amortization	(5.3		)	(5.0		)
Property and equipment, net	$	26.7		$	29.9
Finance lease liabilities	$	29.4		$	31.8

Weighted average remaining lease term (in years):
Operating leases	17.4			15.8
Finance leases^(a)	18.1			18.1

Weighted average discount rate:
Operating leases	3.8		%	3.9		%
Finance leases^(a)	4.9		%	4.9		%

(a) Excludes a 999-year ground lease in Dublin, The Republic of Ireland entered into during the third quarter of 2019. The Dublin finance lease was capitalized as land and included in Construction in progress, including land under development on the consolidated balance sheets.

Supplemental cash flow and other information related to leases is as follows (in millions):



	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5.6	$	5.1
Operating cash flows from finance leases	0.4		0.5
Financing cash flows from finance leases	0.7		0.6

Non-cash right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	50.6	$	87.0
Finance leases	—		—

Maturities of lease liabilities were as follows as of March 31, 2020 (in millions):



	Operating Leases			Finance Leases
2020	$	16.8		$	3.6
2021	25.2			4.0
2022	26.7			2.8
2023	23.0			1.8
2024	18.5			1.3
2025	17.0			1.3
Thereafter	205.5			27.9
Total lease payments	$	332.7		$	42.7
Less: Imputed interest	(89.7		)	(13.3		)
Total lease obligations	$	243.0		$	29.4

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



	Operating Leases			Finance Leases
2020	$	22.4		$	5.0
2021	21.0			4.1
2022	22.4			2.9
2023	18.5			1.9
2024	13.9			1.4
Thereafter	165.4			31.1
Total lease payments	$	263.6		$	46.4
Less: Imputed interest	(67.8		)	(14.6		)
Total lease obligations	$	195.8		$	31.8

Leases - As a Lessee

The components of lease expense are as follows (in millions):



	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Operating lease cost	$	6.2	$	5.0
Finance lease cost:
Amortization of assets	0.4		0.6
Interest on lease liabilities	0.4		0.5
Total net lease cost	$	7.0	$	6.1

Supplemental balance sheet information related to leases is as follows (in millions, except lease term and discount rate):



	March 31, 2020			December 31, 2019
Operating leases:
Operating lease right-of-use assets	$	208.6		$	161.9
Operating lease liabilities	$	243.0		$	195.8
Finance leases:
Property and equipment, at cost	$	32.0		$	34.9
Accumulated amortization	(5.3		)	(5.0		)
Property and equipment, net	$	26.7		$	29.9
Finance lease liabilities	$	29.4		$	31.8

Weighted average remaining lease term (in years):
Operating leases	17.4			15.8
Finance leases^(a)	18.1			18.1

Weighted average discount rate:
Operating leases	3.8		%	3.9		%
Finance leases^(a)	4.9		%	4.9		%

Supplemental cash flow and other information related to leases is as follows (in millions):



	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5.6	$	5.1
Operating cash flows from finance leases	0.4		0.5
Financing cash flows from finance leases	0.7		0.6

Non-cash right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	50.6	$	87.0
Finance leases	—		—

Maturities of lease liabilities were as follows as of March 31, 2020 (in millions):



	Operating Leases			Finance Leases
2020	$	16.8		$	3.6
2021	25.2			4.0
2022	26.7			2.8
2023	23.0			1.8
2024	18.5			1.3
2025	17.0			1.3
Thereafter	205.5			27.9
Total lease payments	$	332.7		$	42.7
Less: Imputed interest	(89.7		)	(13.3		)
Total lease obligations	$	243.0		$	29.4

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



	Operating Leases			Finance Leases
2020	$	22.4		$	5.0
2021	21.0			4.1
2022	22.4			2.9
2023	18.5			1.9
2024	13.9			1.4
Thereafter	165.4			31.1
Total lease payments	$	263.6		$	46.4
Less: Imputed interest	(67.8		)	(14.6		)
Total lease obligations	$	195.8		$	31.8