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Leases

6 Months Ended

Jun. 30, 2022

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 15 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.

Leases included in the condensed consolidated statement of financial condition as of June 30, 2022 and December 31, 2021 were as follows:


	Classification	June 30, 2022		December 31, 2021
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	378,326	$	414,105
Operating lease liabilities	Lease liabilities	442,797		482,781
Finance Leases
Property and equipment, gross	Right-of-use assets	16,227		10,947
Amortization of right-of-use assets	Right-of-use assets	(4,663)		(3,072)
Property and equipment, net		11,564		7,875
Finance lease liabilities	Lease liabilities	11,408		7,954

The components of lease expense included in the condensed consolidated statement of income as of June 30, 2022 and June 30, 2021 were as follows:


		Three Months Ended June 30,				Six Months Ended June 30,
	Classification	2022		2021		2022		2021
		(in thousands)
Operating lease cost	General and administrative	$	24,060	$	24,629	$	48,585	$	49,047
Financing lease cost:
Amortization of right-of-use assets	General and administrative	1,084		479		1,824		980
Interest on lease liabilities	Interest expense	56		21		93		43
Total finance lease cost		1,140		500		1,917		1,023
Variable lease cost (1)	General and administrative	9,468		10,344		20,155		19,890
Sublease income	General and administrative	(9,310)		(9,506)		(17,871)		(19,313)
Net lease cost		$	25,358	$	25,967	$	52,786	$	50,647

(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. We derive most of our sub-tenant income 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)
2022 (excluding the six months ended June 30, 2022)	$	51,013	$	1,676	$	52,689
2023	97,944		3,667		101,611
2024	99,840		2,756		102,596
2025	33,769		2,327		36,096
2026	32,336		1,309		33,645
Thereafter	170,100		—		170,100
Total lease payments	485,002		11,735		496,737
Less interest	(42,205)		(327)
Present value of lease liabilities	$	442,797	$	11,408

We have signed a lease which commences in 2024, relating to approximately 166,000 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 $393.0 million.


Lease term and discount rate:
Weighted average remaining lease term (years):
Operating leases	7.41
Finance leases	3.59
Weighted average discount rate:
Operating leases	2.72	%
Finance leases	1.65	%

Supplemental cash flow information related to leases was as follows:


	Six Months Ended June 30,
	2022	2021
	(in thousands)




Right-of-use assets obtained in exchange for lease obligations(1):
Operating leases	12,151	29,333
Finance leases	5,513	3,283

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

Leases