Leases

The Company has operating leases for office space and campus facilities. Some leases include options to terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.

Operating lease assets are ROU assets, which represent the right to use an underlying asset for the lease term. Operating lease liabilities represent the obligation to make lease payments arising from the lease. Operating leases are included in the Operating lease assets, net, and Operating lease liabilities, current and long-term on the Consolidated Balance Sheet as of December 31, 2019. These assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the lease does not provide an implicit interest rate, the Company uses an incremental borrowing rate based on information available at lease commencement to determine the present value of the lease payments. The ROU asset includes all lease payments and excludes lease incentives.

Lease expense for operating leases is recognized on a straight-line basis over the lease term. There are no variable lease payments. Lease expense for the year ended December 31, 2019 was approximately $2.6 million. These costs are primarily related to long-term operating leases, but also include amounts for short-term leases with terms greater than 30 days that are not material.

The following tables present information about the amount and timing of cash flows arising from the Company’s operating leases as of December 31, 2019 (dollars in thousands):



Maturity of Lease Liabilities	Lease Payments
2020	2,835
2021	2,903
2022	2,857
2023	1,909
2024	928
2025 and beyond	2,239
Total future minimum lease payments	$	13,671
Less imputed interest	(1,893		)
Present value of operating lease liabilities	$	11,778



Balance Sheet Classification
Operating lease liabilities, current	$	2,283
Operating lease liabilities, long-term	9,495
Total operating lease liabilities	$	11,778



Other Information
Weighted average remaining lease term (in years)	5.53
Weighted average discount rate	5.1	%

The APEI Segment leases corporate and administrative office space in Maryland and Virginia under operating leases that expire through June 2023. Lease expense related to the APEI Segment’s operating leases was $0.7 million, $0.6 million and $0.5 million for the years ended December 31, 2017, 2018 and 2019, respectively. HCN operates five campuses, which are located in the suburban areas of Cincinnati, Cleveland, Columbus, Dayton, and Toledo, Ohio, a new campus planned in Indianapolis, Indiana is expected to open in the second quarter of 2020, and one administrative office in suburban Columbus under operating leases that expire through June 2029. Lease expense related to the HCN Segment’s operating leases was $2.7 million, $2.8 million, and $2.1 million for the years ended December 31, 2017, 2018 and 2019, respectively. A majority of the leases provide for the payment of taxes, maintenance, insurance and certain other operating expenses applicable to the leased premises.