Leases

9 Months Ended

Sep. 30, 2019

We adopted ASU 2016-02, "Leases" on January 1, 2019, which resulted in the recognition of operating leases on the balance sheet beginning in 2019 and forward. See Note 2, “Recently Issued Accounting Pronouncements,” for additional information on the adoption of the ASU.

We determine if a contract contains a lease at inception and recognize operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date. As our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments. Lease agreements have lease and non-lease components. We account for these components separately, therefore our operating lease right-of-use asset and operating lease liabilities represent base rent only. Lease expense is recognized on a straight-line basis over the lease term.

Our operating lease obligations are for office facilities, corporate housing, and equipment, including corporate aviation. Our leases have remaining lease terms of less than 1 year to 14 years, some of which include options to extend the leases. Expenses associated with leases totaled $5.0 million and $17.1 million for the three and nine months ended September 30, 2019, respectively, as compared to $5.2 million and $18.2 million for the three and nine months ended September 30, 2018. The components of lease expense and other lease information as of and during the nine months ended September 30, 2019 are as follows:



(in millions)	September 30, 2019
Operating leases right-of-use assets	$	108.6
Operating lease liabilities	120.2

Operating lease weighted-average remaining lease term	10.31
Operating lease weighted-average discount rate	3.93		%



(in millions)	For the Three Months Ended September 30, 2019			For the Nine Months Ended September 30, 2019
Operating lease costs	$	5.1		$	15.3
Variable lease costs	—			2.1
Sublease income	(0.1		)	(0.3		)
Total lease costs	$	5.0		$	17.1

Operating cash flows from operating leases (fixed payments)				$	14.1
Operating cash flows from operating leases (liability reduction)				11.5

Our finance leases and short-term leases as of September 30, 2019 were not material.

Future minimum lease payments under operating leases as of September 30, 2019 and December 31, 2018 were as follows:



(in millions)	September 30, 2019			December 31, 2018
2019	$	4.7		$	18.7
2020	18.6			18.6
2021	17.5			17.5
2022	14.8			14.7
2023	12.3			12.3
Thereafter	79.4			80.1
Total future minimum lease payments	$	147.3		$	161.9

Future lease obligations	(0.5		)
Less imputed interest	(26.6		)	N/A
Total operating lease liability	$	120.2		N/A

We have certain investment properties that we lease to independent, third parties. These properties consist of an office building that is currently leased through August 2026 and three condominiums that are leased on a short-term basis. The carrying value of these assets are included in "Other assets" on our Consolidated Balance Sheet. Income for these leased properties was $0.7 million for each of the three months ended September 30, 2019 and 2018, and $2.2 million for each of the nine months ended September 30, 2019 and 2018. Income for these leased properties are included in "Fee and other income" on our Consolidated Statements of (Loss) Income.