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Leases

12 Months Ended

Dec. 31, 2019

NOTE 15 — LEASES

The Company is party to various lease agreements for real estate and transportation equipment. For each lease agreement, the Company determines its lease term as the non-cancellable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company also assesses whether each lease is an operating or finance lease at the lease commencement date. Rent expense of operating leases is recognized on a straight-line basis over the lease term and includes scheduled rent increases as well as amortization of tenant improvement allowances.

Operating Leases

As of December 31, 2019, the Company is a tenant under various operating leases related to certain of its hubs, vending machines and corporate offices. The initial terms expire at various dates between 2020 and 2032. Many of the leases include one or more renewal options ranging from one to twenty years and some contain purchase options. The Company also had operating leases for certain of its transportation fleet. In March 2019, the Company reassessed the lease terms of the transportation equipment leases based on the likelihood of exercising its extension options and reclassified them to finance leases. Rent expense for the Company's operating leases was approximately $7.9 million and $4.3 million for years ended December 31, 2018 and 2017, respectively.

Refer to Note 6 — Related Party Transactions for further discussion of operating leases with related parties.

Finance Leases

The Company has finance leases for certain equipment for its transportation fleet. The leases have initial terms of two to five years, some of which include extension options for up to four additional years, and require monthly payments. As of December 31, 2018, the outstanding amount of the finance leases was approximately $16.2 million, of which approximately $3.0 million was due during 2019 and was included as current portion of long-term debt in the accompanying consolidated balance sheet.

Lease Costs and Activity

The Company's lease costs and activity during the year ended December 31, 2019 were as follows (in thousands):


	Year Ended December 31, 2019
Lease Costs:
Finance Leases:
Amortization of finance lease assets	$	8,116
Interest obligations under finance leases	2,014
Total finance lease expense	$	10,130

Operating Leases:
Fixed lease costs	$	13,333
Fixed lease costs to related parties	7,469
Variable short-term lease costs to related parties	1,396
Total operating lease costs	$	22,198

Cash payments related to lease liabilities included in operating cash flows:
Operating lease liabilities to third party	$	9,600
Operating lease liabilities to related party	8,398
Interest payments on finance lease liabilities	2,014

Cash payments related to lease liabilities included in financing cash flows:
Principal payments on finance lease liabilities	$	8,425

Maturity of Lease Liabilities

The following table summarizes maturities of lease liabilities as of December 31, 2019 (in thousands):


			Operating Leases ⁽¹⁾
	Finance Leases		Related Party ⁽²⁾		Non-Related Party		Total Operating		Total
2020	$	13,985	$	8,263	$	14,709	$	22,972	$	36,957
2021	13,195		7,737		14,264		22,001		35,196
2022	12,800		7,775		12,432		20,207		33,007
2023	12,022		7,834		9,725		17,559		29,581
2024	5,010		6,621		7,049		13,670		18,680
Thereafter	578		28,622		78,822		107,444		108,022
Total minimum lease payments	57,590		66,852		137,001		203,853		261,443
Less: amount representing interest	(6,117)		(20,506)		(54,420)		(74,926)		(81,043)

Total lease liabilities	$	51,473	$	46,346	$	82,581	$	128,927	$	180,400

(1) Leases that are on a month-to-month basis, short-term leases, and lease extensions that the Company does not expect to exercise are not included. Payments for additional corporate headquarters space expected to commence in 2020 under an executed lease agreement of approximately $84.8 million are also excluded.

(2) Related party lease payments exclude rent payments due under the DriveTime Lease Agreement and the DriveTime Hub Lease Agreement for locations where the Company shares space with DriveTime, as those are variable lease payments contingent upon the Company's utilization of the leased assets.

As of December 31, 2019, none of the Company's lease agreements contain material residual value guarantees or material restrictive covenants.

Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates as of December 31, 2019 were as follows, excluding short-term operating leases:


Weighted average remaining term (years)
Operating leases	10.6
Finance leases	4.5
Weighted-average discount rate
Operating leases	8.4	%
Finance leases	5.4	%

Leases