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Leases

6 Months Ended

Jun. 30, 2023

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, 2023 and December 31, 2022 were as follows:


	Classification	June 30, 2023		December 31, 2022
		(in thousands)
Operating Leases
Operating lease right-of-use assets	Right-of-use assets	$	349,216	$	360,092
Operating lease liabilities	Lease liabilities	401,004		415,539

Finance Leases
Property and equipment, gross	Right-of-use assets	19,608		18,116
Amortization of right-of-use assets	Right-of-use assets	(7,985)		(6,310)
Property and equipment, net		11,623		11,806
Finance lease liabilities	Lease liabilities	11,527		11,940

The components of lease expense included in the condensed consolidated statement of income as of June 30, 2023 and June 30, 2022 were as follows:


		Three Months Ended June 30,				Six Months Ended June 30,
	Classification	2023		2022		2023		2022
		(in thousands)
Operating lease cost	General and administrative	$	24,120	$	24,060	$	47,284	$	48,585
Financing lease cost:
Amortization of right-of-use assets	General and administrative	1,203		1,084		2,279		1,824
Interest on lease liabilities	Interest expense	88		56		153		93
Total finance lease cost		1,291		1,140		2,432		1,917
Variable lease cost (1)	General and administrative	7,432		9,468		16,299		20,155
Sublease income	General and administrative	(8,741)		(9,310)		(17,001)		(17,871)
Net lease cost		$	24,102	$	25,358	$	49,014	$	52,786

(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)
2023 (excluding the six months ended June 30, 2023)	$	50,468	$	2,060	$	52,528
2024	110,393		3,843		114,236
2025	42,301		3,414		45,715
2026	40,413		2,087		42,500
2027	37,735		592		38,327
Thereafter	159,699		67		159,766
Total lease payments	441,009		12,063		453,072
Less interest	(40,005)		(536)
Present value of lease liabilities	$	401,004	$	11,527

We have signed a lease that 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	7.31
Finance leases	3.21
Weighted average discount rate:
Operating leases	2.9	%
Finance leases	2.7	%

Supplemental non-cash activity related to leases was as follows:


	Six Months Ended June 30,
	2023	2022
	(in thousands)




Right-of-use assets obtained in exchange for lease obligations(1):
Operating leases	28,827	12,151
Finance leases	2,096	5,513

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

Leases