Leases

12 Months Ended

Dec. 31, 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 “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. Renewal options are evaluated prior to the expiration date, and record upon exercise.

Our operating lease obligations are for office facilities, corporate housing and equipment. Our leases have remaining lease terms ranging between less than 1 year to 14 years, some of which include options to extend the leases. Expenses associated with leases totaled $23.4 million for the year ended December 31, 2019, as compared to $20.6 million for the year ended December 31, 2018. The components of lease expense and other lease information as of and during the year ended December 31, 2019, are as follows:



	December 31,
(in millions)	2019
Operating leases right-of-use assets	$	91.8
Operating lease liabilities	105.7

Operating lease weighted-average remaining lease term	9.91
Operating lease weighted-average discount rate	3.86		%



	For the Year Ended December 31,
(in millions)	2019
Operating lease costs	$	19.3
Variable lease costs	4.5
Sublease income	(0.4		)
Total lease costs	$	23.4

Operating cash flows from operating leases (fixed payments)	$	17.5
Operating cash flows from operating leases (liability reduction)	$	18.3

Our finance leases and short-term leases as of December 31, 2019 were not material.

In December 2019, we re-assessed three real estate leases and based on current facts and circumstances, determined that the leases were terminated. Termination of these leases did not have a material impact on the Consolidated Statement of Income (Loss) for the year ended December 31, 2019. Impact to the Consolidated Balance Sheet was a reduction to the right of use asset and to the lease liability in the amount of $4.2 million.

In December 2019, we sold our corporate aircraft for $15.5 million and as a result, terminated the related lease. As a result of this termination, we recorded a realized loss on the sale of the corporate aircraft of $2.8 million. Impact to the consolidated balance sheet was a reduction to the right of use asset and to the lease liability in the amount of $10.9 million.

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



	December 31,
(in millions)	2019			2018
2020	15.1			18.7
2021	14.5			18.6
2022	13.0			17.5
2023	10.6			14.7
2024	9.6			12.3
Thereafter	67.5			80.1
Total future minimum lease payments	$	130.3		$	161.9

Future lease obligations	—
Less imputed interest	(24.6		)	N/A
Total operating lease liability	$	105.7		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 the office building is included in “Other assets” on our consolidated balance sheet. The condominiums were placed for sale in December 2019. The carrying value of these condominiums are included in the “Assets held for Sale” on our consolidated balance sheet. Income for these leased properties was $2.8 million for each of the years ended December 31, 2019 and 2018. Income for these leased properties is included in “fee and other income” on our consolidated statements of income (loss).