Leases

3 Months Ended

Mar. 31, 2020

Newmark has operating leases for real estate and equipment. These leases have remaining lease terms ranging from 1 to 12 years, some of which include options to extend the leases in 5 to 10 year increments for up to 10 years. Renewal periods are included in the lease term only when renewal is reasonably certain, which is a high threshold and requires management to apply the judgment to determine the appropriate lease term. Certain leases also include periods covered by an option to terminate the lease if Newmark is reasonably certain not to exercise the termination option.

Operating lease costs, which were $12.4 million and $10.9 million for the three months ended March 31, 2020 and 2019, respectively, are included in “Operating, administrative and other” on the accompanying unaudited condensed consolidated statements of operations. Operating cash flows for the three months ended March 31, 2020 and 2019 included payments of $11.7 million and $10.4 million, respectively, for operating lease liabilities. As of March 31, 2020 and December 31, 2019, Newmark did not have any leases that have not yet commenced but that create significant rights and obligations. For the three months ended March 31, 2020 and 2019, Newmark had short-term lease expense of $0.2 million and $0.6 million and sublease income of $0.2 million and $0.2 million, respectively.

As of March 31, 2020 and December 31, 2019, the weighted-average discount rate was 7.24% and 7.24% and the remaining weighted-average lease term was 8.6 and 8.8 years, respectively.

As of March 31, 2020 and December 31, 2019, Newmark had operating lease ROU assets of $195.5 million and $201.7 million, respectively, and operating lease ROU liabilities of $28.3 million and $27.2 million, respectively, recorded in “Accounts payable, and accrued expenses and other liabilities”, and $221.3 million and $227.9 million recorded “Right-of-use liabilities”, on the accompanying unaudited condensed consolidated balance sheets.

Rent expense, including the operating lease costs above, for the three months ended March 31, 2020 and 2019 were $12.5 million and $11.7 million, respectively. Rent expense is reported in “Operating, administrative and other” on the accompanying unaudited condensed consolidated statements of operations.

Newmark is obligated for minimum rental payments under various non-cancelable operating leases, principally for office space, expiring at various dates through 2032. Certain of these leases contain escalation clauses that require payment of additional rent to the extent of increases in certain operating or other costs.

Minimum lease payments under these arrangements were as follows (in thousands):



	March 31, 2020		December 31, 2019
2020	$	34,019	$	44,709
2021	42,881		42,612
2022	39,847		39,812
2023	38,254		38,210
2024	35,664		35,602
Thereafter	146,572		146,463
Total lease payments	337,237		347,408
Less: Interest	87,717		92,282
Present value of lease liability	$	249,520	$	255,126