Leases

9 Months Ended

Sep. 30, 2022

Operating Leases – The Company leases office space under non-cancelable lease agreements, which expire on various dates through 2035. The Company reflects lease expense over the lease terms on a straight-line basis. The lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option. Occupancy lease agreements, in addition to base rentals, generally are subject to escalation provisions based on certain costs incurred by the landlord. The Company does not have any leases with variable lease payments. Occupancy and Equipment Rental on the Unaudited Condensed Consolidated Statements of Operations includes operating lease cost for office space of $13,148 and $38,757 for the three and nine months ended September 30, 2022, respectively, and $12,563 and $37,063 for the three and nine months ended September 30, 2021, respectively, and variable lease cost, which principally include costs for real estate taxes, common area maintenance and other operating expenses, of $1,781 and $5,425 for the three and nine months ended September 30, 2022, respectively, and $1,502 and $5,120 for the three and nine months ended September 30, 2021, respectively.

In conjunction with the lease of office space, the Company has entered into letters of credit in the amount of $5,621 and $5,616 as of September 30, 2022 and December 31, 2021, respectively, which are secured by cash that is included in Other Assets on the Unaudited Condensed Consolidated Statements of Financial Condition.

The Company has entered into various operating leases for the use of office equipment (primarily computers, printers, copiers and other information technology related equipment). Occupancy and Equipment Rental on the Unaudited Condensed Consolidated Statements of Operations includes operating lease cost for office equipment of $1,205 and $3,706 for the three and nine months ended September 30, 2022, respectively, and $1,332 and $3,983 for the three and nine months ended September 30, 2021, respectively.

The Company uses its secured incremental borrowing rate to determine the present value of its right-of-use assets and lease liabilities. The determination of an appropriate incremental borrowing rate requires significant assumptions and judgment. The Company's incremental borrowing rate was calculated based on the Company's recent debt issuances and current market conditions. The Company scales the rates appropriately depending on the life of the leases.

The Company incurred net operating cash outflows of $44,718 and $31,714 for the nine months ended September 30, 2022 and 2021, respectively, related to its operating leases, which was net of cash received from lease incentives of $867 and $8,924 for the nine months ended September 30, 2022 and 2021, respectively.

Other information as it relates to the Company's operating leases is as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022			2021
New Right-of-Use Assets obtained in exchange for new operating lease liabilities	$	4,538	$	1,657	$	11,743		$	15,665


					September 30, 2022			September 30, 2021
Weighted-average remaining lease term - operating leases					10.6 years			11.2 years
Weighted-average discount rate - operating leases					3.91		%	4.00		%

As of September 30, 2022, the maturities of the undiscounted operating lease liabilities for which the Company has commenced use are as follows:


2022 (October 1 through December 31)	$	14,829
2023	47,191
2024	39,941
2025	40,373
2026	38,167
Thereafter	216,924
Total lease payments	397,425
Less: Tenant Improvement Allowances	(6,214)
Less: Imputed Interest	(73,876)
Present value of lease liabilities	317,335
Less: Current lease liabilities	(40,633)
Long-term lease liabilities	$	276,702

In conjunction with the lease agreement to expand its headquarters at 55 East 52nd St., New York, New York, and lease agreements at certain other locations, the Company entered into leases for office space which have not yet commenced and thus are not yet included on the Company's Unaudited Condensed Consolidated Statements of Financial Condition as right-of-use assets and lease liabilities. The Company anticipates that it will take possession of these spaces by the end of 2023. These spaces will have lease terms of 3 to 13 years once the Company has taken possession. The additional future payments under these arrangements are $230,552 as of September 30, 2022.