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Leases

3 Months Ended

Mar. 31, 2020

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

Since 2010, we have sub-leased over one million square feet of office space. On January 1, 2019, the previously recorded liability relating to our global space consolidation initiatives of $85.8 million was offset as a reduction to our operating right-of-use assets.

Leases included in the condensed consolidated statement of financial condition as of March 31, 2020 and December 31, 2019 were as follows:



	Classification	March 31, 2020			December 31, 2019
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	337,933		$	360,185
Operating lease liabilities	Lease liabilities	438,854			465,907

Finance Leases
Property and equipment, gross	Right-of-use assets	5,167			3,825
Amortization of right-of-use assets	Right-of-use assets	(1,440		)	(1,317		)
Property and equipment, net		3,727			2,508
Finance lease liabilities	Lease liabilities	3,736			2,544

The components of lease expense included in the condensed consolidated statement of income as of March 31, 2020 and March 31, 2019 were as follows:



		Three Months Ended March 31,
	Classification	2020			2019
		(in thousands)
Operating lease cost	General and administrative	$	23,004		$	27,141

Financing lease cost:
Amortization of right-of-use assets	General and administrative	477			286
Interest on lease liabilities	Interest expense	26			17
Total finance lease cost		503			303
Variable lease cost ⁽¹⁾	General and administrative	9,477			9,873
Sublease income	General and administrative	(9,615		)	(14,463		)
Net lease cost		$	23,369		$	22,854

⁽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)
2020 (excluding the three months ended March 31, 2020)	$	81,317		$	1,420		$	82,737
2021	103,630			1,142			104,772
2022	89,572			757			90,329
2023	82,505			526			83,031
2024	79,600			23			79,623
Thereafter	42,974			—			42,974
Total lease payments	479,598			3,868			483,466
Less interest	(40,744		)	(132		)
Present value of lease liabilities	$	438,854		$	3,736

During October 2018, we signed a lease, which commences in mid-2020, relating to 218,976 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 $134 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	5.04
Finance leases	2.87
Weighted average discount rate
Operating leases	3.52	%
Finance leases	2.71	%

Supplemental cash flow information related to leases was as follows:



	Three Months Ended March 31,
	2020		2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	29,698	$	35,728
Operating cash flows from financing leases	26		17
Financing cash flows from finance leases	504		282
Right-of-use assets obtained in exchange for lease obligations⁽¹⁾:
Operating leases	—		2,289
Finance leases	1,695		—

⁽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 March 31, 2020 and December 31, 2019 were as follows:



	Classification	March 31, 2020			December 31, 2019
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	337,933		$	360,185
Operating lease liabilities	Lease liabilities	438,854			465,907

Finance Leases
Property and equipment, gross	Right-of-use assets	5,167			3,825
Amortization of right-of-use assets	Right-of-use assets	(1,440		)	(1,317		)
Property and equipment, net		3,727			2,508
Finance lease liabilities	Lease liabilities	3,736			2,544

The components of lease expense included in the condensed consolidated statement of income as of March 31, 2020 and March 31, 2019 were as follows:



		Three Months Ended March 31,
	Classification	2020			2019
		(in thousands)
Operating lease cost	General and administrative	$	23,004		$	27,141

Financing lease cost:
Amortization of right-of-use assets	General and administrative	477			286
Interest on lease liabilities	Interest expense	26			17
Total finance lease cost		503			303
Variable lease cost ⁽¹⁾	General and administrative	9,477			9,873
Sublease income	General and administrative	(9,615		)	(14,463		)
Net lease cost		$	23,369		$	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)
2020 (excluding the three months ended March 31, 2020)	$	81,317		$	1,420		$	82,737
2021	103,630			1,142			104,772
2022	89,572			757			90,329
2023	82,505			526			83,031
2024	79,600			23			79,623
Thereafter	42,974			—			42,974
Total lease payments	479,598			3,868			483,466
Less interest	(40,744		)	(132		)
Present value of lease liabilities	$	438,854		$	3,736



Lease term and discount rate:
Weighted average remaining lease term (years)
Operating leases	5.04
Finance leases	2.87
Weighted average discount rate
Operating leases	3.52	%
Finance leases	2.71	%

Supplemental cash flow information related to leases was as follows:



	Three Months Ended March 31,
	2020		2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	29,698	$	35,728
Operating cash flows from financing leases	26		17
Financing cash flows from finance leases	504		282
Right-of-use assets obtained in exchange for lease obligations⁽¹⁾:
Operating leases	—		2,289
Finance leases	1,695		—

⁽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 March 31, 2020 and December 31, 2019 were as follows:



	Classification	March 31, 2020			December 31, 2019
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	337,933		$	360,185
Operating lease liabilities	Lease liabilities	438,854			465,907

Finance Leases
Property and equipment, gross	Right-of-use assets	5,167			3,825
Amortization of right-of-use assets	Right-of-use assets	(1,440		)	(1,317		)
Property and equipment, net		3,727			2,508
Finance lease liabilities	Lease liabilities	3,736			2,544

The components of lease expense included in the condensed consolidated statement of income as of March 31, 2020 and March 31, 2019 were as follows:



		Three Months Ended March 31,
	Classification	2020			2019
		(in thousands)
Operating lease cost	General and administrative	$	23,004		$	27,141

Financing lease cost:
Amortization of right-of-use assets	General and administrative	477			286
Interest on lease liabilities	Interest expense	26			17
Total finance lease cost		503			303
Variable lease cost ⁽¹⁾	General and administrative	9,477			9,873
Sublease income	General and administrative	(9,615		)	(14,463		)
Net lease cost		$	23,369		$	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)
2020 (excluding the three months ended March 31, 2020)	$	81,317		$	1,420		$	82,737
2021	103,630			1,142			104,772
2022	89,572			757			90,329
2023	82,505			526			83,031
2024	79,600			23			79,623
Thereafter	42,974			—			42,974
Total lease payments	479,598			3,868			483,466
Less interest	(40,744		)	(132		)
Present value of lease liabilities	$	438,854		$	3,736



Lease term and discount rate:
Weighted average remaining lease term (years)
Operating leases	5.04
Finance leases	2.87
Weighted average discount rate
Operating leases	3.52	%
Finance leases	2.71	%

Supplemental cash flow information related to leases was as follows:



	Three Months Ended March 31,
	2020		2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	29,698	$	35,728
Operating cash flows from financing leases	26		17
Financing cash flows from finance leases	504		282
Right-of-use assets obtained in exchange for lease obligations⁽¹⁾:
Operating leases	—		2,289
Finance leases	1,695		—

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