Leases

9 Months Ended

Sep. 30, 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 years 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 were $12.6 million and $12.1 million for the three months ended September 30, 2020 and September 30, 2019, respectively, and $37.6 million and $34.7 million for the nine months ended September 30, 2020 and September 30, 2019, respectively, and are included in “Operating, administrative and other” on the accompanying unaudited condensed consolidated statements of operations. Operating cash flows for the nine months ended September 30, 2020 and September 30, 2019 included payments of $36.4 million and $32.9 million for operating lease liabilities, respectively. As of September 30, 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 and nine months ended September 30, 2020 and September 30, 2019, Newmark had short-term lease expense of $0.2 million and $0.7 million, respectively, and $0.7 million and $2.0 million respectively, and sublease income of $0.4 million and $0.8 million, respectively, and $0.2 million and $0.6 million, respectively.

The weighted-average discount rate as of September 30, 2020 and December 31, 2019 was 7.21% and the remaining weighted-average lease term was 8.4 and 8.8 years, respectively.

As of September 30, 2020 and December 31, 2019, Newmark had operating lease ROU assets of $191.7 million and $201.7 million, respectively, and operating lease ROU liabilities of $28.6 million and $27.2 million, respectively, recorded in “Accounts payable, and accrued expenses and other liabilities” and $217.0 million and $227.9 million, respectively, recorded in “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 September 30, 2020 and September 30, 2019 were $12.3 million and $13.0 million, respectively, and $37.3 million and $36.7 million for the nine months ended September 30, 2020 and September 30, 2019, respectively. Rent expense is included 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):


	September 30, 2020		December 31, 2019
2020	$	11,826	$	44,709
2021	45,205		42,612
2022	41,059		39,812
2023	39,676		38,210
2024	37,068		35,602
Thereafter	155,102		146,463
Total lease payments	329,936		347,408
Less: Interest	84,297		92,282
Present value of lease liability	$	245,639	$	255,126