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Leases

9 Months Ended

Sep. 30, 2019

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 September 30, 2019 were as follows:



	Classification	September 30, 2019
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	378,083
Operating lease liabilities	Lease liabilities	488,592

Finance Leases
Property and equipment, gross	Right-of-use assets	3,436
Accumulated depreciation	Right-of-use assets	(932		)
Property and equipment, net		2,504
Finance lease liabilities	Lease liabilities	2,535

The components of lease expense included in the condensed consolidated statement of income as of September 30, 2019 were as follows:



		Three Months Ended September 30,			Nine Months Ended September 30,
	Classification	2019			2019
		(in thousands)
Operating lease cost	General and administrative	$	26,181		$	79,829

Financing lease cost:
Amortization of right-of-use assets	General and administrative	355			932
Interest on lease liabilities	Interest expense	20			52
Total finance lease cost		375			984
Variable lease cost ⁽¹⁾	General and administrative	10,588			30,337
Sublease income	General and administrative	(14,021		)	(42,472		)
Net lease cost		$	23,123		$	68,678

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

The sub-lease income represents all revenues received from sub-tenants. 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 sub-tenant income is derived from our New York metro sub-tenant agreements. Sub-tenant 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 nine months ended September 30, 2019)	$	28,748		$	377		$	29,125
2020	112,678			1,251			113,929
2021	102,964			607			103,571
2022	89,187			245			89,432
2023	81,972			126			82,098
Thereafter	121,626			23			121,649
Total lease payments	537,175			2,629			539,804
Less interest	(48,583		)	(94		)
Present value of lease liabilities	$	488,592		$	2,535

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	5.38
Finance leases	2.43
Weighted average discount rate
Operating leases	3.51	%
Finance leases	3.14	%

Supplemental cash flow information related to leases was as follows:



	Nine Months Ended September 30, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	99,490
Operating cash flows from financing leases	52
Financing cash flows from finance leases	901
Right-of-use assets obtained in exchange for lease obligations⁽¹⁾:
Operating leases	10,565
Finance leases	1,080

⁽¹⁾Represents non-cash activity and, accordingly, is not reflected in the condensed consolidated statements of cash flows.

Leases

Leases included in the condensed consolidated statement of financial condition as of September 30, 2019 were as follows:



	Classification	September 30, 2019
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	378,083
Operating lease liabilities	Lease liabilities	488,592

Finance Leases
Property and equipment, gross	Right-of-use assets	3,436
Accumulated depreciation	Right-of-use assets	(932		)
Property and equipment, net		2,504
Finance lease liabilities	Lease liabilities	2,535

The components of lease expense included in the condensed consolidated statement of income as of September 30, 2019 were as follows:



		Three Months Ended September 30,			Nine Months Ended September 30,
	Classification	2019			2019
		(in thousands)
Operating lease cost	General and administrative	$	26,181		$	79,829

Financing lease cost:
Amortization of right-of-use assets	General and administrative	355			932
Interest on lease liabilities	Interest expense	20			52
Total finance lease cost		375			984
Variable lease cost ⁽¹⁾	General and administrative	10,588			30,337
Sublease income	General and administrative	(14,021		)	(42,472		)
Net lease cost		$	23,123		$	68,678

⁽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 nine months ended September 30, 2019)	$	28,748		$	377		$	29,125
2020	112,678			1,251			113,929
2021	102,964			607			103,571
2022	89,187			245			89,432
2023	81,972			126			82,098
Thereafter	121,626			23			121,649
Total lease payments	537,175			2,629			539,804
Less interest	(48,583		)	(94		)
Present value of lease liabilities	$	488,592		$	2,535



Lease term and discount rate:
Weighted average remaining lease term (years)
Operating leases	5.38
Finance leases	2.43
Weighted average discount rate
Operating leases	3.51	%
Finance leases	3.14	%

Supplemental cash flow information related to leases was as follows:



	Nine Months Ended September 30, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	99,490
Operating cash flows from financing leases	52
Financing cash flows from finance leases	901
Right-of-use assets obtained in exchange for lease obligations⁽¹⁾:
Operating leases	10,565
Finance leases	1,080

⁽¹⁾Represents non-cash activity and, accordingly, is not reflected in the condensed consolidated statements of cash flows.

Leases

Leases included in the condensed consolidated statement of financial condition as of September 30, 2019 were as follows:



	Classification	September 30, 2019
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	378,083
Operating lease liabilities	Lease liabilities	488,592

Finance Leases
Property and equipment, gross	Right-of-use assets	3,436
Accumulated depreciation	Right-of-use assets	(932		)
Property and equipment, net		2,504
Finance lease liabilities	Lease liabilities	2,535

The components of lease expense included in the condensed consolidated statement of income as of September 30, 2019 were as follows:



		Three Months Ended September 30,			Nine Months Ended September 30,
	Classification	2019			2019
		(in thousands)
Operating lease cost	General and administrative	$	26,181		$	79,829

Financing lease cost:
Amortization of right-of-use assets	General and administrative	355			932
Interest on lease liabilities	Interest expense	20			52
Total finance lease cost		375			984
Variable lease cost ⁽¹⁾	General and administrative	10,588			30,337
Sublease income	General and administrative	(14,021		)	(42,472		)
Net lease cost		$	23,123		$	68,678

⁽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 nine months ended September 30, 2019)	$	28,748		$	377		$	29,125
2020	112,678			1,251			113,929
2021	102,964			607			103,571
2022	89,187			245			89,432
2023	81,972			126			82,098
Thereafter	121,626			23			121,649
Total lease payments	537,175			2,629			539,804
Less interest	(48,583		)	(94		)
Present value of lease liabilities	$	488,592		$	2,535



Lease term and discount rate:
Weighted average remaining lease term (years)
Operating leases	5.38
Finance leases	2.43
Weighted average discount rate
Operating leases	3.51	%
Finance leases	3.14	%

Supplemental cash flow information related to leases was as follows:



	Nine Months Ended September 30, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	99,490
Operating cash flows from financing leases	52
Financing cash flows from finance leases	901
Right-of-use assets obtained in exchange for lease obligations⁽¹⁾:
Operating leases	10,565
Finance leases	1,080

⁽¹⁾Represents non-cash activity and, accordingly, is not reflected in the condensed consolidated statements of cash flows.