COMMITMENTS AND CONTINGENCIES

Environmental Matters

Substantially all of the Company's properties and land were subject to Phase I Environmental Assessments and when appropriate Phase II Environmental Assessments (collectively, the “Environmental Assessments”) obtained in contemplation of their acquisition by the Company or obtained by predecessor owners prior to the sale of the property or land to the Company. The Environmental Assessments did not reveal, nor is the Company aware of, any non-compliance with environmental laws, environmental liability or other environmental claim that the Company believes would likely have a material adverse effect on the Company.

Operating Ground Lease Agreements

Future minimum rental payments under the terms of all non-cancelable operating ground leases under which the Company is the lessee, as of December 31, 2017, were as follows (in thousands):



Year	Amount
2018	$	1,771
2019	1,766
2020	1,766
2021	1,766
2022	1,720
2023 though 2067	33,160
Total	$	41,949

Operating ground lease expense incurred by the Company during the years December 31, 2017, 2016 and 2015 totaled $102,000, $1.0 million and $815,000, respectively.

Legal Matters

From time to time, the Company is a party to a variety of legal proceedings, claims and assessments arising in the normal course of business. The Company believes that as of December 31, 2017 there were no legal proceedings, claims or assessments expected to have a material adverse effect on the Company’s business or financial statements.

Other

As of December 31, 2017, the Company had letter of credit obligations of $5.1 million related to development requirements. The Company believes that it is remote that there will be a draw upon these letter of credit obligations.

As of December 31, 2017, the Company had 20 buildings under development. These buildings are expected to contain a total of 5.6 million square feet of leaseable space and represent an anticipated aggregate investment of $526.7 million. At December 31, 2017, Development in Progress totaled $378.5 million. In addition, as of December 31, 2017, the Company had invested $13.9 million in deferred leasing costs related to these development buildings.

As of December 31, 2017, the Company was committed to $10.5 million in improvements on certain buildings and land parcels.

As of December 31, 2017, the Company was obligated to pay for tenant improvements not yet completed for a maximum of $18.6 million.

As of December 31, 2017, the Company was committed to $60.9 million in future land purchases. The Company expects to complete $32.9 million in future land purchases during the year ended December 31, 2018, with the remaining $28.0 million complete during 2019. In addition, pursuant to a 140,000 square foot lease that the Company has executed, the Company has agreed to start the development of a 140,000 square foot industrial building.

Unconsolidated joint ventures in which the Company holds an interest, and, in another case, an unrelated third party, have engaged the Company as the developer of their development properties pursuant to development agreements. Under these agreements, the Company agrees, in consideration for a development fee, to be responsible for all aspects of the development of the properties and to guarantee the timely lien-free completion of construction of the properties as well as the payment, subject to certain exceptions, of any cost overruns incurred in the development of the properties. To mitigate its risk, in each case, the Company entered into guaranteed maximum price contracts with a third party contractor to construct the properties. The Company believes it has applied reasonable estimates and judgments in determining the amount of estimated development costs for the properties. As discussed in Note 7, however, the Company has recently been notified that there are additional construction costs in connection with one of the development properties held in unconsolidated joint ventures in which it holds an interest. Until such time as the Company receives appropriate information concerning the amount and nature of these additional costs and has an opportunity to investigate them, it is not possible to estimate the amount of possible additional costs, if any, that the Company may incur in connection with its guarantee beyond the obligations of the contractor under its guaranteed maximum price contracts.

As of December 31, 2017, the Company was developing three buildings for its unconsolidated joint ventures which represented an anticipated aggregate investment by the joint ventures of $375.2 million. As of December 31, 2017, the Company was also committed to approximately $176.9 million in costs related to its agreement to develop, on a fee basis, an office building and infrastructure improvements for American Water Works in Camden, New Jersey. As of December 31, 2017, $102.9 million of these costs had been incurred.

The Company maintains cash and cash equivalents at financial institutions. The combined account balances at each institution typically exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes the risk is not significant.