13 - LEASES

Effective April 4, 2011, the Company entered into a seven-year sub-sublease agreement for its main office in New York, New York. The term of the sub-sublease commenced June 1, 2011, with a free base rental period until October 31, 2011. Following the expiration of the free base rental period, the monthly base rental payments were $82 per month until May 31, 2015 and thereafter were $90 per month until the end of the seven-year term. Pursuant to the sub-sublease agreement, the sublessor was obligated to contribute $472 toward the cost of the Company’s alterations to the sub-subleased office space. The Company has also entered into a direct lease with the over-landlord of such office space that commenced immediately upon the expiration of such sub-sublease agreement, for a term covering the period from May 1, 2018 to September 30, 2025; the direct lease provided for a free base rental period from May 1, 2018 to September 30, 2018. Following the expiration of the free base rental period, the monthly base rental payments are $186 per month from October 1, 2018 to April 30, 2023 and $204 per month from May 1, 2023 to September 30, 2025. For accounting purposes, the sub-sublease agreement and direct lease agreement with the landlord constitute one lease agreement.

The Company adopted ASC 842 using the transition method on January 1, 2019 (refer to Note 2 — Summary of Significant Accounting Policies) and has identified this lease as an operating lease. Variable rent expense, such as utilities and escalation expenses, are excluded from the determination of the operating lease liability, as the Company has deemed these insignificant.

On June 14, 2019, the Company entered into a sublease agreement for a portion of the leased space for its main office in New York, New York that commenced on July 26, 2019 and will end on September 29, 2025. There is a free base rental period for the first four and a half months commencing on July 26, 2019. Following the expiration of the free base rental period, the monthly base sublease income will be $102 per month until September 29, 2025. The sublease income for the portion of the leased space is less than the lease payments due for the space, which has been identified as an indicator of impairment under ASC 360. As such, the right-of-use asset for the subleased portion of the space was written down to its fair value during the second quarter of 2019 which resulted in $223 of impairment charges which has been recorded in Impairment of right-of-asset in the Condensed Consolidated Statements of Operation during the nine months ended September 30, 2019. Sublease income will be recorded net with the total operating lease costs in General and administrative expenses in the Condensed Consolidated Statements of Operation. There was no sublease income recorded during the three and nine months ended September 30, 2019 as a result of the free rental period.

Total operating lease costs recorded during the three and nine months ended September 30, 2019 were $490 and $1,396, respectively, which was recorded in General and administrative expenses in the Condensed Consolidated Statements of Operation.

Supplemental Condensed Consolidated Balance Sheet information related to the Company’s operating leases as of September 30, 2019 are as follows:


	September 30,
	2019
Operating Lease:
Operating lease right-of-use asset	$	8,576

Current operating lease liabilities	$	1,655
Long-term operating lease liabilities		10,253
Total operating lease liabilities	$	11,908

Weighted average remaining lease term (years)		6.01
Weighted average discount rate		5.15	%

Maturities of operating lease liabilities as of September 30, 2019 are as follows:


	September 30,
	2019
Remainder of 2019	$	557
2020		2,230
2021		2,230
2022		2,230
2023		2,378
Thereafter		4,292
Total lease payments		13,917
Less imputed interest		(2,009)
Present value of lease liabilities	$	11,908

Maturities of operating lease liabilities as of December 31, 2018 are as follows:


	December 31,
	2018
2019	$	2,230
2020		2,230
2021		2,230
2022		2,230
2023		2,378
Thereafter		4,292
Total lease payments		15,590

Supplemental Condensed Consolidated Cash Flow information related to leases are as follows:


	For the Nine
	Months Ended
	September 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating lease	$	1,672

Under the previous leasing guidance under ASC 840, the Company had deferred rent at December 31, 2018 of $3,468. Rent expense pertaining to this lease for the three and nine months ended September 30, 2018 under ASC 840 was $452 and $1,356, respectively.

During the second quarter of 2018, the Company began chartering-in third-party vessels. Under ASC 842, the Company is the lessee in these agreements. The Company has elected the practical expedient under ASC 842 to not recognize right-of-use assets and lease liabilities for short-term leases. During the three and nine months ended September 30, 2019, all charter-in agreements for third-party vessels were less than twelve months and considered short-term leases. Refer to Note 2 — Summary of Significant Accounting Policies for the charter hire expenses recorded during the three and nine months ended September 30, 2019 and 2018 for these charter-in agreements.