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Leases

12 Months Ended

Dec. 31, 2019

(3) Leases

Lease Overview

We lease railcars and certain facilities to support the Partnership’s operations. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments which are adjusted periodically for factors such as inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, we do not have any material lessor or sub-leasing arrangements.

Effect of Initial Adoption of New Lease Standard - January 1, 2019

ROU Assets. Upon initial recognition, our ROU assets for operating and finance leases were comprised of the following:


(in thousands)	January 1, 2019 (initial recognition)

Railcar leases	$	14,255
Real Estate and other leases (1)	243
Total ROU assets	$	14,498

(1) Includes $0.2 million of finance leases for operating equipment as of January 1, 2019.

Lease Liabilities. Upon initial recognition, our lease liabilities for operating and finance leases were comprised of the following:


(in thousands)	January 1, 2019 (initial recognition)
Current liabilities:
Operating leases	$	3,462
Finance leases	225
Long-term liabilities:
Operating leases	10,811

Total lease liabilities	$	14,498

Balance Sheet Summary at December 31, 2019

The following tables summarize the ROU asset and lease liability balances for the Partnership’s operating and finance leases at December 31, 2019:


(in thousands)	December 31, 2019
Operating Leases:
ROU asset, net

Railcars	$	10,826
Real estate and other	2,581
Lease liability

Railcars	$	11,088
Real estate and other	228

Finance Leases:
ROU asset, net
Real estate and other	$	201
Lease liability
Real estate and other	$	205

Lease Expense Summary for the year ended December 31, 2019

We recognize lease expense on a straight-line basis over the lease term. For the year ended December 31, 2019, we recognized lease expense comprised of the following components:


(in thousands)	December 31, 2019
Operating lease expense	$	3,122

Finance lease expense:
Amortization of ROU asset	$	322
Interest expense on lease liability	10

Short-term lease expense, recognized within Direct operating expenses (exclusive of depreciation and amortization), was $0.4 million for the year ended December 31, 2019.

Lease Terms and Discount Rates

The following outlines the remaining lease terms and discount rates used in the measurement of the Partnership’s ROU assets and liabilities:


	December 31, 2019		January 1, 2019 (initial recognition)
Weighted-average remaining lease term (years)
Operating Leases	3.4		4.3
Finance Leases	2.3		0.5
Weighted-average discount rate
Operating Leases	5.1	%	5.1	%
Finance Leases	3.9	%	8.0	%

Maturities of Lease Liabilities

The following summarizes the remaining minimum lease payments through maturity of the Partnership’s ROU assets and liabilities at December 31, 2019:


(in thousands)	Operating Leases		Financing Leases
2020	$	4,019	$	107
2021	3,467		107
2022	3,026		—
2023	1,163		—
2024	486		—
Thereafter	162		—
Total lease payments	12,323		214
Less: imputed interest	(1,007)		(9)
Total lease liability	$	11,316	$	205

Leases