Leases

3 Months Ended

Mar. 31, 2024

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 $14,403 and $13,428 for the three months ended March 31, 2024 and 2023, respectively, and variable lease cost, which principally include costs for real estate taxes, common area maintenance and other operating expenses of $1,528 and $1,186 for the three months ended March 31, 2024 and 2023, respectively.

In conjunction with its lease agreements at 55 East 52nd St., New York, New York, the Company had an option to take on an additional three floors, which it exercised during 2023. The Company entered into a lease agreement for this space in January 2024 and anticipates that it will take possession of this space in 2025. The lease term will end on December 31, 2035. The expected additional annual expense under this lease agreement, net of certain lease incentives, is $9,862.

In conjunction with the lease of office space, the Company has entered into letters of credit in the amount of $5,790 and $5,757 as of March 31, 2024 and December 31, 2023, 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 $1,474 and $1,450 for the three months ended March 31, 2024 and 2023, 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 $10,691 and $15,561 for the three months ended March 31, 2024 and 2023, respectively, related to its operating leases, which was net of cash received from lease incentives of $718 for the three months ended March 31, 2024.

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


	For the Three Months Ended March 31,
		2024			2023
New Right-of-Use Assets obtained in exchange for new operating lease liabilities		$	880		$	19,917


		March 31, 2024			March 31, 2023
Weighted-average remaining lease term - operating leases		10.5 years			10.5 years
Weighted-average discount rate - operating leases		4.58		%	4.05		%

As of March 31, 2024, the maturities of the undiscounted operating lease liabilities for which the Company has commenced use are as follows:


2024 (April 1 through December 31)	$	36,221
2025	66,875
2026	64,135
2027	50,122
2028	48,642
Thereafter	337,870
Total lease payments	603,865
Less: Tenant Improvement Allowances	(7,380)
Less: Imputed Interest	(130,814)
Present value of lease liabilities	465,671
Less: Current lease liabilities	(37,413)
Long-term lease liabilities	$	428,258

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 has entered into certain lease agreements, primarily 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 these leases will commence by the end of 2025 and will have lease terms of 3 to 11 years once they have commenced. The additional future payments under these arrangements are $140,646 as of March 31, 2024.