Leases

3 Months Ended

Mar. 31, 2019


	Leases

We lease office space, furniture and office equipment under various operating and financing leases. Our current leases have remaining lease terms of 1 year to 11 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.

Since 2010, we have sub-leased over one million square feet of office space. The liability relating to our global space consolidation initiatives was $85.8 million as of December 31, 2018 ("Liability"). Upon adoption of ASC 842 on January 1, 2019, we recorded the Liability as a reduction to our operating right-of-use assets.

Leases included in the condensed consolidated statement of financial condition as of March 31, 2019 were as follows:



	Classification	March 31, 2019
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	419,247
Operating lease liabilities	Lease liabilities	539,096

Finance Leases
Property and equipment, gross	Right-of-use assets	2,356
Accumulated depreciation	Right-of-use assets	(286		)
Property and equipment, net		2,070
Finance lease liabilities	Lease liabilities	2,074

The components of lease expense included in the condensed consolidated statement of income as of March 31, 2019 were as follows:



		Three Months Ended March 31,
	Classification	2019
		(in thousands)
Operating lease cost	General and administrative	$	27,141

Financing lease cost:
Amortization of right-of-use assets	General and administrative	286
Interest on lease liabilities	Interest expense	17
Total finance lease cost		303
Variable lease cost ⁽¹⁾	General and administrative	9,873
Sublease income	General and administrative	(14,463		)
Net lease cost		$	22,854

⁽¹⁾ Variable lease expense includes operating expenses, real estate taxes and employee parking.

The sublease income represents all revenues received from subtenants. It is primarily fixed base rental payments combined with variable reimbursements such as operating expenses, real estate taxes and employee parking. The vast majority of subtenant income is derived from our New York metro subtenant agreements. Subtenant income related to base rent is recorded on a straight-line basis.

Maturities of lease liabilities were as follows:



	Operating Leases			Financing Leases			Total
Year ending December 31,	(in thousands)
2019 (excluding the three months ended March 31, 2019)	$	93,535		$	898		$	94,433
2020	110,711			941			111,652
2021	101,977			297			102,274
2022	88,107			—			88,107
2023	81,356			—			81,356
Thereafter	120,326			—			120,326
Total lease payments	596,012			2,136			598,148
Less interest	(56,916		)	(62		)
Present value of lease liabilities	$	539,096		$	2,074

During October 2018, we signed a lease, which commences in mid-2020, relating to 205,000 square feet of space at our new Nashville headquarters. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 15 year initial lease term is $126 million. During April 2019, we signed a lease, which commences in 2024, relating to approximately 190,000 square feet of space in New York City. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 20 year lease term is approximately $448 million.



Lease term and discount rate:
Weighted average remaining lease term (years)
Operating leases	5.69
Finance leases	1.97
Weighted average discount rate
Operating leases	3.49	%
Finance leases	3.14	%

Supplemental cash flow information related to leases was as follows:



	Three Months Ended March 31, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	35,728
Operating cash flows from financing leases	17
Financing cash flows from finance leases	282
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	2,289
Finance leases	—

Leases

Leases included in the condensed consolidated statement of financial condition as of March 31, 2019 were as follows:



	Classification	March 31, 2019
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	419,247
Operating lease liabilities	Lease liabilities	539,096

Finance Leases
Property and equipment, gross	Right-of-use assets	2,356
Accumulated depreciation	Right-of-use assets	(286		)
Property and equipment, net		2,070
Finance lease liabilities	Lease liabilities	2,074

The components of lease expense included in the condensed consolidated statement of income as of March 31, 2019 were as follows:



		Three Months Ended March 31,
	Classification	2019
		(in thousands)
Operating lease cost	General and administrative	$	27,141

Financing lease cost:
Amortization of right-of-use assets	General and administrative	286
Interest on lease liabilities	Interest expense	17
Total finance lease cost		303
Variable lease cost ⁽¹⁾	General and administrative	9,873
Sublease income	General and administrative	(14,463		)
Net lease cost		$	22,854

⁽¹⁾ Variable lease expense includes operating expenses, real estate taxes and employee parking.

Maturities of lease liabilities were as follows:



	Operating Leases			Financing Leases			Total
Year ending December 31,	(in thousands)
2019 (excluding the three months ended March 31, 2019)	$	93,535		$	898		$	94,433
2020	110,711			941			111,652
2021	101,977			297			102,274
2022	88,107			—			88,107
2023	81,356			—			81,356
Thereafter	120,326			—			120,326
Total lease payments	596,012			2,136			598,148
Less interest	(56,916		)	(62		)
Present value of lease liabilities	$	539,096		$	2,074



Lease term and discount rate:
Weighted average remaining lease term (years)
Operating leases	5.69
Finance leases	1.97
Weighted average discount rate
Operating leases	3.49	%
Finance leases	3.14	%

Supplemental cash flow information related to leases was as follows:



	Three Months Ended March 31, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	35,728
Operating cash flows from financing leases	17
Financing cash flows from finance leases	282
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	2,289
Finance leases	—

Leases

Leases included in the condensed consolidated statement of financial condition as of March 31, 2019 were as follows:



	Classification	March 31, 2019
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	419,247
Operating lease liabilities	Lease liabilities	539,096

Finance Leases
Property and equipment, gross	Right-of-use assets	2,356
Accumulated depreciation	Right-of-use assets	(286		)
Property and equipment, net		2,070
Finance lease liabilities	Lease liabilities	2,074

The components of lease expense included in the condensed consolidated statement of income as of March 31, 2019 were as follows:



		Three Months Ended March 31,
	Classification	2019
		(in thousands)
Operating lease cost	General and administrative	$	27,141

Financing lease cost:
Amortization of right-of-use assets	General and administrative	286
Interest on lease liabilities	Interest expense	17
Total finance lease cost		303
Variable lease cost ⁽¹⁾	General and administrative	9,873
Sublease income	General and administrative	(14,463		)
Net lease cost		$	22,854

⁽¹⁾ Variable lease expense includes operating expenses, real estate taxes and employee parking.

Maturities of lease liabilities were as follows:



	Operating Leases			Financing Leases			Total
Year ending December 31,	(in thousands)
2019 (excluding the three months ended March 31, 2019)	$	93,535		$	898		$	94,433
2020	110,711			941			111,652
2021	101,977			297			102,274
2022	88,107			—			88,107
2023	81,356			—			81,356
Thereafter	120,326			—			120,326
Total lease payments	596,012			2,136			598,148
Less interest	(56,916		)	(62		)
Present value of lease liabilities	$	539,096		$	2,074



Lease term and discount rate:
Weighted average remaining lease term (years)
Operating leases	5.69
Finance leases	1.97
Weighted average discount rate
Operating leases	3.49	%
Finance leases	3.14	%

Supplemental cash flow information related to leases was as follows:



	Three Months Ended March 31, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	35,728
Operating cash flows from financing leases	17
Financing cash flows from finance leases	282
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	2,289
Finance leases	—