3. Leases

We have historically structured our operations so as to minimize ownership of real property. As a result, we lease land and facilities, including certain dealerships and office space. Our property leases are generally for an initial period between 5 and 20 years, and are typically structured to include renewal options at our election. We include renewal options that we are reasonably certain to exercise in the measurement our lease liabilities. We also have equipment leases that primarily relate to office and computer equipment, service and shop equipment, company owned vehicles, and other miscellaneous items. These leases are generally for a period of less than 5 years. We do not have any material leases, individually or in the aggregate, classified as a finance leasing arrangement.

We estimate the total undiscounted rent obligations under these leases, including any extension periods that we are reasonably certain to exercise, to be $5.7 billion. Some of our lease arrangements include rental payments that are adjusted based on an index or rate, such as the Consumer Price Index (CPI). As the rate implicit in the lease is generally not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

Pursuant to the leases for some of our larger facilities, we are required to comply with specified financial ratios, including a “rent coverage” ratio and a debt to EBITDA ratio, each as defined. For these leases, non-compliance with the ratios may require us to post collateral in the form of a letter of credit. A breach of the other lease covenants gives rise to certain remedies by the landlord, the most severe of which include the termination of the applicable lease and acceleration of the total rent payments due under the lease.

In connection with the sale, relocation and closure of certain of our franchises, we have entered into a number of third-party sublease agreements. The rent paid by our sub-tenants on such properties for the three months ended March 31, 2019 totaled $5.4 million. We have in the past and may in the future enter into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which we sell property to third parties and agree to lease those assets back for a certain period of time. Such sales generate proceeds that vary from period to period. Proceeds from sale-leaseback transactions were $7.3 million during the three months ended March 31, 2019. We do not have any material leases that have not yet commenced as of March 31, 2019.

The following table summarizes our net operating lease cost during the three months ended March 31, 2019:


	Three Months Ended
	March 31, 2019
Lease Cost
Operating lease cost (1)	$	63.5
Sublease income		(5.4)
Total lease cost	$	58.1

(1)

Includes short-term leases and variable lease costs, which are immaterial.

The following table summarizes supplemental cash flow information related to our operating leases and the weighted average remaining lease term and discount rate of our leases:


	Three Months Ended
	March 31, 2019
Other Information
Gains on sale and leaseback transactions, net	$	(0.2)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases		59.7
Right-of-use assets obtained in exchange for operating lease liabilities		—

Lease Term and Discount Rate
Weighted-average remaining lease term - operating leases		27 years
Weighted-average discount rate - operating leases		6.6%

The following table summarizes the maturity of our lease liabilities on an undiscounted cash flow basis and a reconciliation to the operating lease liabilities recognized on our consolidated condensed balance sheet as of March 31, 2019:


Maturity of Lease Liabilities
2019 (1)	$	242.2
2020		239.5
2021		233.1
2022		229.6
2023		223.3
2024		217.8
2025 and thereafter		4,269.5
Total future minimum lease payments	$	5,655.0
Less: Imputed interest		(3,187.9)
Present value of future minimum lease payments	$	2,467.1

Current operating lease liabilities (2)	$	88.9
Long-term operating lease liabilities		2,378.2
Total operating lease liabilities	$	2,467.1

(1)

Excludes the three months ended March 31, 2019.

(2)

Included within “Accrued expenses and other current liabilities” on Consolidated Condensed Balance Sheet as of March 31, 2019.

Minimum future rental payments required under operating leases in effect as of December 31, 2018 are as follows:


2019	$	222.5
2020		220.5
2021		217.4
2022		216.0
2023		212.0
2024 and thereafter		4,344.4
	$	5,432.8