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Leases | 9 Months Ended
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Sep. 30, 2023
Leases [Abstract] |
Leases | Leases Significant Lease Transactions The following table summarizes the significant lease transactions during the nine months ended September 30, 2023 (in thousands):
|  |  |  |  |  |  |  | Renewal/Termination Options excluded (1) |  |  |  | Net Incremental (2)
Lease |  | Quarter |  | Transaction |  |  |  |  | Lease Classification |  | ROU assets |  | ROU liabilities
Chicago 1/2/4 ("CH1/2/4") data center lease expansion |  | Q2 |  | Expanded CH1 to additional space within the building (3) |  |  |  | One 10-year renewal option |  | Operating Lease |  | $ | 150,990 |  |  | $ | 176,316 |
|  |  |  |  |  | Finance Lease |  | 78,073 |  |  | 52,747 |
(1) These renewal/termination options are not included in determining the lease terms as we are not reasonably certain to exercise them at this time. Certain complementary leases contain one additional 10-year renewal option. (2) The net incremental amounts represent the adjustments to the right of use ("ROU") assets and liabilities recorded during the quarter that the transactions were entered. (3) The incremental balance includes the impact of reassessing lease terms of complementary leases of CH1, resulting in new lease end dates ranging from June 2037 to October 2040 from including renewal options that are reasonably certain to be exercised and in certain complementary leases changing classification. Lease Expenses The components of lease expenses are as follows (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Finance lease cost |  |  |  |  |  |  |
Amortization of right-of-use assets (1) | $ | 46,428 |  |  | $ | 39,456 |  |  | $ | 131,481 |  |  | $ | 120,684 |
Interest on lease liabilities | 28,422 |  |  | 27,742 |  |  | 85,100 |  |  | 84,986 |
Total finance lease cost | 74,850 |  |  | 67,198 |  |  | 216,581 |  |  | 205,670 |
Operating lease cost | 57,803 |  |  | 55,031 |  |  | 168,896 |  |  | 159,632 |
Variable lease cost | 17,273 |  |  | 12,721 |  |  | 46,847 |  |  | 30,003 |
Total lease cost | $ | 149,926 |  |  | $ | 134,950 |  |  | $ | 432,324 |  |  | $ | 395,305 |
(1) Amortization of right-of-use assets is included within depreciation expense, and is recorded within cost of revenues, sales and marketing and general and administrative expenses in the condensed consolidated statements of operations. Other Information Other information related to leases is as follows (in thousands, except years and percent):
| Nine Months Ended September 30,
| 2023 |  | 2022
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from finance leases | $ | 82,864 |  |  | $ | 82,841 |
Operating cash flows from operating leases | 150,779 |  |  | 144,954 |
Financing cash flows from finance leases | 98,091 |  |  | 97,808 |
Right-of-use assets obtained in exchange for lease obligations: (1) |  |  |
Finance leases | $ | 193,667 |  |  | $ | 78,432 |
Operating leases | 254,822 |  |  | 318,882 |
| September 30, 2023 |  | December 31, 2022
Weighted-average remaining lease term - finance leases (2) | 14 years |  | 15 years
Weighted-average remaining lease term - operating leases (2) | 13 years |  | 12 years
Weighted-average discount rate - finance leases | 6 | % |  | 6 | %
Weighted-average discount rate - operating leases | 5 | % |  | 4 | %
Finance lease right-of-use assets (3) | $ | 1,991,556 |  |  | $ | 2,018,070 |
(1) Represents all non-cash changes in right-of-use assets. (2) Includes lease renewal options that are reasonably certain to be exercised. (3) As of September 30, 2023 and December 31, 2022, we recorded accumulated amortization of finance lease right-of-use assets of $856.5 million and $840.0 million, respectively. Finance lease assets are recorded within property, plant and equipment, net on the condensed consolidated balance sheets. Maturities of Lease Liabilities Maturities of lease liabilities as of September 30, 2023 are as follows (in thousands):
| Operating Leases |  | Finance Leases |  | Total
2023 (3 months remaining) | $ | 39,947 |  |  | $ | 56,103 |  |  | $ | 96,050 |
2024 | 212,645 |  |  | 253,239 |  |  | 465,884 |
2025 | 202,434 |  |  | 273,817 |  |  | 476,251 |
2026 | 195,717 |  |  | 242,464 |  |  | 438,181 |
2027 | 179,302 |  |  | 247,062 |  |  | 426,364 |
Thereafter | 1,300,666 |  |  | 2,327,007 |  |  | 3,627,673 |
Total lease payments | 2,130,711 |  |  | 3,399,692 |  |  | 5,530,403 |
Less imputed interest | (595,223) |  |  | (1,144,950) |  |  | (1,740,173) |
Total | $ | 1,535,488 |  |  | $ | 2,254,742 |  |  | $ | 3,790,230 |
We entered into agreements with various landlords primarily to lease data center spaces and ground leases which have not yet commenced as of September 30, 2023. These leases will commence between year 2023 and 2026, with lease terms of 5 to 20 years and total lease commitments of approximately $509.4 million.
Leases | Leases Significant Lease Transactions The following table summarizes the significant lease transactions during the nine months ended September 30, 2023 (in thousands):
|  |  |  |  |  |  |  | Renewal/Termination Options excluded (1) |  |  |  | Net Incremental (2)
Lease |  | Quarter |  | Transaction |  |  |  |  | Lease Classification |  | ROU assets |  | ROU liabilities
Chicago 1/2/4 ("CH1/2/4") data center lease expansion |  | Q2 |  | Expanded CH1 to additional space within the building (3) |  |  |  | One 10-year renewal option |  | Operating Lease |  | $ | 150,990 |  |  | $ | 176,316 |
|  |  |  |  |  | Finance Lease |  | 78,073 |  |  | 52,747 |
(1) These renewal/termination options are not included in determining the lease terms as we are not reasonably certain to exercise them at this time. Certain complementary leases contain one additional 10-year renewal option. (2) The net incremental amounts represent the adjustments to the right of use ("ROU") assets and liabilities recorded during the quarter that the transactions were entered. (3) The incremental balance includes the impact of reassessing lease terms of complementary leases of CH1, resulting in new lease end dates ranging from June 2037 to October 2040 from including renewal options that are reasonably certain to be exercised and in certain complementary leases changing classification. Lease Expenses The components of lease expenses are as follows (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Finance lease cost |  |  |  |  |  |  |
Amortization of right-of-use assets (1) | $ | 46,428 |  |  | $ | 39,456 |  |  | $ | 131,481 |  |  | $ | 120,684 |
Interest on lease liabilities | 28,422 |  |  | 27,742 |  |  | 85,100 |  |  | 84,986 |
Total finance lease cost | 74,850 |  |  | 67,198 |  |  | 216,581 |  |  | 205,670 |
Operating lease cost | 57,803 |  |  | 55,031 |  |  | 168,896 |  |  | 159,632 |
Variable lease cost | 17,273 |  |  | 12,721 |  |  | 46,847 |  |  | 30,003 |
Total lease cost | $ | 149,926 |  |  | $ | 134,950 |  |  | $ | 432,324 |  |  | $ | 395,305 |
(1) Amortization of right-of-use assets is included within depreciation expense, and is recorded within cost of revenues, sales and marketing and general and administrative expenses in the condensed consolidated statements of operations. Other Information Other information related to leases is as follows (in thousands, except years and percent):
| Nine Months Ended September 30,
| 2023 |  | 2022
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from finance leases | $ | 82,864 |  |  | $ | 82,841 |
Operating cash flows from operating leases | 150,779 |  |  | 144,954 |
Financing cash flows from finance leases | 98,091 |  |  | 97,808 |
Right-of-use assets obtained in exchange for lease obligations: (1) |  |  |
Finance leases | $ | 193,667 |  |  | $ | 78,432 |
Operating leases | 254,822 |  |  | 318,882 |
| September 30, 2023 |  | December 31, 2022
Weighted-average remaining lease term - finance leases (2) | 14 years |  | 15 years
Weighted-average remaining lease term - operating leases (2) | 13 years |  | 12 years
Weighted-average discount rate - finance leases | 6 | % |  | 6 | %
Weighted-average discount rate - operating leases | 5 | % |  | 4 | %
Finance lease right-of-use assets (3) | $ | 1,991,556 |  |  | $ | 2,018,070 |
(1) Represents all non-cash changes in right-of-use assets. (2) Includes lease renewal options that are reasonably certain to be exercised. (3) As of September 30, 2023 and December 31, 2022, we recorded accumulated amortization of finance lease right-of-use assets of $856.5 million and $840.0 million, respectively. Finance lease assets are recorded within property, plant and equipment, net on the condensed consolidated balance sheets. Maturities of Lease Liabilities Maturities of lease liabilities as of September 30, 2023 are as follows (in thousands):
| Operating Leases |  | Finance Leases |  | Total
2023 (3 months remaining) | $ | 39,947 |  |  | $ | 56,103 |  |  | $ | 96,050 |
2024 | 212,645 |  |  | 253,239 |  |  | 465,884 |
2025 | 202,434 |  |  | 273,817 |  |  | 476,251 |
2026 | 195,717 |  |  | 242,464 |  |  | 438,181 |
2027 | 179,302 |  |  | 247,062 |  |  | 426,364 |
Thereafter | 1,300,666 |  |  | 2,327,007 |  |  | 3,627,673 |
Total lease payments | 2,130,711 |  |  | 3,399,692 |  |  | 5,530,403 |
Less imputed interest | (595,223) |  |  | (1,144,950) |  |  | (1,740,173) |
Total | $ | 1,535,488 |  |  | $ | 2,254,742 |  |  | $ | 3,790,230 |
We entered into agreements with various landlords primarily to lease data center spaces and ground leases which have not yet commenced as of September 30, 2023. These leases will commence between year 2023 and 2026, with lease terms of 5 to 20 years and total lease commitments of approximately $509.4 million.

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