Commitments and Contingencies
 3 Months Ended
Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
The Company is periodically subject to claims or litigation in the ordinary course of business, including claims generated from business conducted by tenants on real estate owned by the Company. In these instances, the Company is typically indemnified by the tenant against any losses that might be suffered, and the Company and/or the tenant are typically insured against such claims. The Company is contingently liable for $5.7 million of debt owed by one of its former tenants until the maturity of the debt on March 15, 2022 and is indemnified by that former tenant for any payments the Company may be required to make on such debt. The Company has accrued the full $5.7 million liability in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets as of both March 31, 2019 and December 31, 2018.
The Company estimates future costs for known environmental remediation requirements when it is probable that the Company has incurred a liability and the related costs can be reasonably estimated. The Company considers various factors when estimating its environmental liabilities, and adjustments are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues. When only a wide range of estimated amounts can be reasonably established and no other amount within the range is better than another, the low end of the range is recorded in the consolidated financial statements. As of March 31, 2019, no accruals have been made.
As of March 31, 2019, there were no outstanding claims against the Company that are expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.
Purchase and Capital Improvement Commitments
As of March 31, 2019, the Company had commitments totaling $49.1 million, of which $14.6 million relates to future acquisitions, with the majority of the remainder to fund revenue generating improvements on properties the Company currently owns. Commitments related to acquisitions contain standard cancellation clauses contingent on the results of due diligence. $39.8 million of these commitments are expected to be funded during fiscal year 2019, with the remainder to be funded by 2021.
Lessee Contracts
The Company leases its corporate office space and certain office equipment, which are classified as operating leases. The Company's lease of its corporate office space has an initial term that expires on January 31, 2027 and is renewable at the Company's option for two additional periods of five years each after the initial term. The lease can be early terminated by the Company on July 31, 2023 for a fee based on rent at time of termination. The corporate office lease contains a variable lease cost related to the lease of parking spaces and a nonlease component related to the reimbursement of certain common area maintenance expenses, both of which are recognized as incurred.
The Company is also a lessee under four long-term, non-cancelable ground leases under which it is obligated to pay monthly rent as of March 31, 2019. For all four of the ground leases, rental expenses are reimbursed by unrelated third parties, and the corresponding rental revenue is recorded in rental income on the accompanying consolidated statements of operations. All leases are classified as operating leases and have a weighted average remaining lease term of 8.3 years.
The following table summarizes total rental expenses recognized on the accompanying consolidated statements of operations (in thousands):
 
Three Months Ended 
 March 31,
 
2019
 
2018
Office and Equipment Base Rental Expense
$
202

 
$
201

Office Variable Rental Expense
264

 
155

Total Office and Equipment Rental Expense
$
466

 
$
356

 
 
 
 
Total Ground Lease Rental Expense
$
116

 
$
389


The Company’s minimum rental commitments under all of these operating leases as of March 31, 2019 are as follows (in thousands):
 
Ground Leases
 
Office and Equipment Leases
 
Total
2019 Remainder
$
190

 
$
1,565

 
$
1,755

2020
253

 
2,090

 
2,343

2021
250

 
2,092

 
2,342

2022
166

 
2,103

 
2,269

2023
142

 
2,113

 
2,255

Thereafter
675

 
6,610

 
7,285

Total
1,676

 
16,573

 
18,249

Less: imputed interest
(281
)
 
(9,683
)
 
(9,964
)
Total operating lease liabilities
$
1,395

 
$
6,890

 
$
8,285


Imputed interest was calculated using a weighted-average discount rate of 4.30%. The discount rate is based on our estimated incremental borrowing rate, calculated as the treasury rate for the same period as the underlying lease term, plus a spread determined using factors including the Company's credit rating and REIT industry performance. The evaluation of the Company's right-of-use asset associated with the corporate office included the unamortized portion of a $1.7 million cash lease incentive paid at inception of the lease. As of March 31, 2019, the Company had a right-of-use asset balance of $6.1 million for these lessee contracts.