The Company has entered into various lease agreements for its Houses, hotels, restaurants, spas and other properties across North America, Europe, and Asia. The Company’s material leases have reasonably assured lease terms ranging from 1 year to 30 years for operating leases and 50 years for finance leases. Certain operating leases provide the Company with multiple renewal options that generally range from 5 years to 10 years, with rent payments on renewal based on a predetermined annual increase or market rates at the time of exercise of the renewal. The Company has 2 material finance leases with 25-year renewal options, with rent payments on renewal based on upward changes in inflation rates. As of July 3, 2022, the Company recognized right-of-use assets and lease liabilities for 104 operating leases and 2 finance leases. As of January 2, 2022, the Company recognized right-of-use assets and lease liabilities for 101 operating leases and 2 finance leases. When recognizing right-of-use assets and lease liabilities, the Company includes certain renewal options where the Company is reasonably assured to exercise the renewal option.

As part of our overall plan to improve liquidity during the COVID-19 pandemic, the Company negotiated with certain lessors to defer or waive certain rent payments on leased buildings. Cash payment deferrals and waivers have been separately recorded in the period arrangements occurred, and therefore, there have been no remeasurements to the lease liabilities and right-of-use assets associated with the sites that received concessions. The Company accounted for the deferrals of lease payments as if there are no changes in the lease contract. Deferred amounts have been recognized in accounts payable and subsequent reversals will occur once the payments are made. As of July 3, 2022 and January 2, 2022, $9 million and $12 million, respectively, is recorded in accounts payable in the unaudited condensed consolidated balance sheets related to deferred lease payments.

The maturity of the Company’s operating and finance lease liabilities as of July 3, 2022 is as follows:


(in thousands) Fiscal year ended	Operating Leases		Finance Leases
Undiscounted lease payments
Remainder of 2022	$	61,776	$	2,324
2023		125,385		4,682
2024		128,356		4,683
2025		132,358		4,721
2026		133,574		4,647
Thereafter		1,655,293		180,201
Total undiscounted lease payments		2,236,742		201,258
Present value adjustment		1,070,877		136,516
Total net lease liabilities	$	1,165,865	$	64,742

As of July 3, 2022 and January 2, 2022, the long-term liabilities for finance leases were $65 million and $73 million, respectively, and are recorded as finance lease liabilities on the unaudited condensed consolidated balance sheets. As of July 3, 2022 and January 2, 2022, finance lease assets, net of accumulated depreciation, were $56 million and $64 million, respectively, and are recorded within property and equipment, net on the unaudited condensed consolidated balance sheets.

Certain lease agreements include variable lease payments that, in the future, will vary based on changes in the local inflation rates, market rate rents, or business revenues of the leased premises. Leases that contain market rate rents generally reset every five years.

Straight-line rent expense recognized for operating leases was $31 million and $24 million for the 13 weeks ended July 3, 2022 and July 4, 2021, respectively, and $65 million and $53 million for the 26 weeks ended July 3, 2022 and July 4, 2021, respectively.

For the 13 weeks ended July 3, 2022 and July 4, 2021, the Company recognized amortization expense related to the right-of-use asset for finance leases of less than $1 million and less than $1 million, respectively, and interest expense related to finance expense related to finance leases of $1 million and $1 million, respectively. For the 26 weeks ended July 3, 2022 and July 4, 2021, the Company recognized amortization expense related to the right-of-use asset for finance leases of $1 million and $1 million, respectively, and interest expense related to finance leases of $2 million and $3 million, respectively.

New Houses typically have a maturation profile that commences sometime after the lease commencement date used in the determination of the lease accounting in accordance with Topic 842. The unaudited condensed consolidated balance sheets set out the operating lease liabilities split between sites trading less than one year and sites trading more than one year. “Sites trading less than one year” and “sites trading more than one year” reference sites that have been open (as measured from the date the site first accepted a paying guest) for a period less than one year from the balance sheet date and those that have been open for a period longer than one year from the balance sheet date.

The following information represents supplemental disclosure for the statement of cash flows related to operating and finance leases:


	For the 26 Weeks Ended
(in thousands)	July 3, 2022			July 4, 2021
Cash flows from operating activities:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(56,266	)	$	(22,434	)
Interest payments for finance leases		(2,336	)		(1,271	)
Cash flows from financing activities:
Principal payments for finance leases	$	(137	)	$	(117	)
Supplemental disclosures of non-cash investing and financing activities:
Operating lease assets obtained in exchange for new operating lease liabilities	$	85,215		$	27,094

The following summarizes additional information related to operating and finance leases:


	As of
	July 3, 2022	January 2, 2022
Weighted-average remaining lease term
Finance leases	43 years	44 years
Operating leases	17 years	18 years
Weighted-average discount rate
Finance leases	7.00%	7.00%
Operating leases	8.16%	8.06%

As of July 3, 2022, the Company has entered into 13 lease agreements for Houses, hotels, restaurants, and other properties that are in various stages of construction by the landlord. The Company will determine the classification as of the lease commencement date, but currently expects these under construction leases to be operating leases. Soho House Design (“SHD”) is involved to varying degrees in the design of these leased properties under construction. For certain of these leases, the SHD team is acting as the construction manager on behalf of the landlord. Pending significant completion of all landlord improvements and final execution of the related lease, the Company expects these leases to commence in fiscal years ending 2022, 2023, 2024, and 2025. The Company estimates the total undiscounted lease payments for the leases commencing in fiscal years ended 2022, 2023, 2024, and 2025 will be $268 million, $386 million, $322 million, and $320 million, respectively, with weighted-average expected lease terms of 22 years, 21 years, 16 years, and 15 years for 2022, 2023, 2024, and 2025, respectively.

The following summarizes the Company’s estimated future undiscounted lease payments for current leases under construction, including properties where the SHD team is acting as the construction manager:


(in thousands)	Operating Leases Under
Fiscal year ended	Construction
Estimated total undiscounted lease payments
Remainder of 2022	$	1,999
2023		15,288
2024		38,525
2025		56,105
2026		66,854
Thereafter		1,117,215
Total undiscounted lease payments expected to be capitalized	$	1,295,986