Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

19. Commitments and Contingencies

Litigation

The Company may be involved in litigation in the ordinary course of business. As of December 31, 2022, the Company was not involved in any legal proceedings that are expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.

Leases

As lessee, the Company's leasing arrangements are composed of (i) leases on investment properties, consisting primarily of finance and operating leases on powered shell spaces for data centers, an air rights operating lease, lease on data center equipment, and operating ground leases; and (ii) operating leases for corporate offices.

The weighted average remaining lease term based upon outstanding lease liability balances at December 31, 2022, excluding leases on investment properties held for disposition, was 10.4 years for finance leases on investment properties, 9.7 years for operating leases on investment properties and 5.7 years for operating leases on corporate offices.

The following table summarizes total lease cost for operating leases and finance leases, excluding leases on investment properties classified as discontinued operations.

	Year Ended December 31,
	2022				2021				2020
(In thousands)	Investment Properties		Corporate Offices		Investment Properties		Corporate Offices		Investment Properties		Corporate Offices
Operating leases: (1)
Fixed lease expense	$	69,292	$	7,090	$	63,356	$	7,010	$	18,456	$	9,005
Variable lease expense	13,981		2,073		14,897		1,829		5,612		1,986
Total operating lease cost	$	83,273	$	9,163	$	78,253	$	8,839	$	24,068	$	10,991
Finance leases:
Interest expense	$	8,519	NA		$	8,936	NA		$	414	NA
Amortization of ROU lease asset	11,648		NA		11,648		NA		475		NA
Total finance lease cost	$	20,167	NA		$	20,584	NA		$	889	NA

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(1)     Total lease cost for operating leases is included in property operating expense for investment properties and administrative expense for corporate offices.

Lease Commitments

Finance and operating lease liabilities take into consideration renewal or termination options when such options are deemed reasonably certain to be exercised by the Company and exclude variable lease payments which are expensed as incurred. The Company makes variable lease payments for: (i) leases with rental payments that are adjusted periodically for inflation, and/or (ii) nonlease services, such as common area maintenance and operating expenses, primarily for power, in data center leases.

The table below presents the Company's future lease commitments at December 31, 2022, determined using weighted average discount rates of 6.2% for finance leases on investment properties, 6.6% for operating leases on investment properties, excluding properties held for disposition, and 4.9% for operating leases on corporate offices:

(In thousands)	Finance Leases		Operating Leases
Year Ending December 31,	Investment Properties		Investment Properties		Corporate Offices
2023	$	15,942	$	53,090	$	8,709
2024	16,332		51,519		8,934
2025	16,735		41,053		8,071
2026	17,312		37,711		7,346
2027	17,773		36,760		6,402
2028 and thereafter	101,782		232,882		7,423
Total lease payments	185,876		453,015		46,885
Present value discount	(50,252)		(167,082)		(6,388)
Finance / Operating lease liability	$	135,624	$	285,933	$	40,497

Commitments on Future Leases

At December 31, 2022, the Company had operating lease commitments on two corporate office spaces commencing in 2023, including one assumed through the acquisition of InfraBridge in February 2023. The fixed lease payments (undiscounted) total $21.4 million over a 9.7 year weighted average lease term.

Tenant Allowance

In connection with DataBank’s acquisition of a data center portfolio in March 2022 (Note 3), DataBank and the seller concurrently entered into a master lease agreement which provides that the seller leases from DataBank land acquired in the transaction. If the seller does not exercise its rights to early terminate the lease, the seller is obligated to develop a data center facility on a portion of the acquired land and DataBank is committed to provide the seller a tenant allowance of up to $37.5 million to finance the construction. In December 2022, the seller waived its right to terminate the lease with respect to the portion of the land subject to development. The seller will be responsible for undertaking the construction and any resulting overages. Title to the to-be constructed building, improvements and fixtures will be vested in the seller for the duration of the lease and transfers to DataBank thereafter. The timing of funding of DataBank’s commitment to the seller will be based on agreed upon milestones, with construction to be completed no later than January 1, 2026. DataBank expects to fund its commitment through future debt drawdowns.