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Leases

9 Months Ended

Sep. 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 September 30, 2022 and December 31, 2021 were as follows:


	Classification	September 30, 2022		December 31, 2021
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	372,591	$	414,105
Operating lease liabilities	Lease liabilities	431,913		482,781

Finance Leases
Property and equipment, gross	Right-of-use assets	17,127		10,947
Amortization of right-of-use assets	Right-of-use assets	(5,684)		(3,072)
Property and equipment, net		11,443		7,875
Finance lease liabilities	Lease liabilities	11,431		7,954

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


		Three Months Ended September 30,				Nine Months Ended September 30,
	Classification	2022		2021		2022		2021
		(in thousands)
Operating lease cost	General and administrative	$	24,491	$	23,992	$	73,076	$	73,039
Financing lease cost:
Amortization of right-of-use assets	General and administrative	1,021		631		2,845		1,611
Interest on lease liabilities	Interest expense	50		24		143		67
Total finance lease cost		1,071		655		2,988		1,678
Variable lease cost (1)	General and administrative	9,970		9,763		30,125		29,653
Sublease income	General and administrative	(8,296)		(9,550)		(26,167)		(28,863)
Net lease cost		$	27,236	$	24,860	$	80,022	$	75,507

(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 nine months ended September 30, 2022)	$	23,382	$	874	$	24,256
2023	101,940		3,855		105,795
2024	102,514		2,944		105,458
2025	35,310		2,515		37,825
2026	33,829		1,496		35,325
Thereafter	175,182		62		175,244
Total lease payments	472,157		11,746		483,903
Less interest	(40,244)		(315)
Present value of lease liabilities	$	431,913	$	11,431

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	7.38
Finance leases	3.49
Weighted average discount rate:
Operating leases	2.67	%
Finance leases	1.65	%

Supplemental cash flow information related to leases was as follows:


	Nine Months Ended September 30,
	2022	2021
	(in thousands)




Right-of-use assets obtained in exchange for lease obligations(1):
Operating leases	32,862	74,305
Finance leases	6,414	4,840

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

Leases