12. Leases

BBX Capital and its subsidiaries are lessees under various operating leases for retail stores, sales offices, call centers, office space, equipment, and vehicles. Many of the Company’s lease agreements include one or more options to renew, with renewal terms that can extend the lease term from one to seven years, and the exercise of such renewal options is generally at the Company’s discretion. Certain of the Company’s lease agreements include rental payments based on a percentage of sales generated at the leased location over contractually specified levels, and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain material residual value guarantees or material restrictive covenants.

The Company recognizes right-of-use assets and lease liabilities associated with lease agreements with an initial term of 12 months or greater, while lease agreements with an initial term of 12 months or less are not recorded in the Company’s statement of financial condition. The Company generally does not include lease payments associated with renewal options that are exercisable at its discretion in the measurement of its right-of-use assets and lease liabilities as it is not reasonably certain that such options will be exercised. The table below sets forth information regarding the Company’s lease agreements which had an initial term of greater than 12 months (dollars in thousands):



	As of
	December 31, 2019
Operating lease assets	$	109,351
Operating lease liabilities	$	123,430
Weighted average remaining lease term (years)		6.2
Weighted average discount rate (1)		5.27	%

(1)

As most of the Company’s lease agreements do not provide an implicit rate, the Company estimates incremental secured borrowing rates corresponding to the maturities of its lease agreements to determine the present value of future lease payments. To estimate incremental borrowing rates applicable to BBX Capital and its subsidiaries, the Company considers various factors, including the rates applicable to its recently issued debt and credit facilities and prevailing financial market conditions. The Company used the incremental borrowing rates applicable to BBX Capital and its subsidiaries on January 1, 2019 for operating leases that commenced prior to that date.

The Company generally recognizes lease costs associated with its operating leases on a straight-line basis over the lease term, while variable lease payments that do not depend on an index or rate are recognized as variable lease costs in the period in which the obligation for those payments is incurred. The table below sets forth information regarding the Company’s lease costs which are included in cost of trade sales and selling, general, and administrative expenses in the Company’s consolidated statements of operations (in thousands):



	For the Year Ended
	December 31, 2019
Fixed lease costs	$	28,745
Short-term lease costs		5,266
Variable lease costs		9,066
Total operating lease costs	$	43,077

The table below sets forth information regarding the maturity of the Company’s operating lease liabilities as of December 31, 2019 (in thousands):



Years Ending December 31,
2020	$	26,384
2021		25,568
2022		23,413
2023		19,863
2024		12,644
After 2024		44,508
Total lease payments		152,380
Less: interest		28,950
Present value of lease liabilities	$	123,430

The above operating lease payments exclude $19.2 million of legally binding minimum lease payments for lease agreements executed but not yet commenced, as the Company has not received possession of the leased property. Included in the Company’s statement of cash flows under operating activities for the year ended December 31, 2019 was $27.6 million of cash paid for amounts included in the measurement of lease liabilities. During the year ended December 31, 2019, the Company obtained $26.2 million of right-of-use assets in exchange for operating lease liabilities.

The table below sets forth the approximate minimum future rental payments (excluding executory costs) under the Company’s lease agreements during periods subsequent to December 31, 2018 related to agreements that were executed as of December 31, 2018 (in thousands):



Years Ending December 31,		Amount
2019	$	26,871
2020		24,525
2021		23,022
2022		20,682
2023		17,564
Thereafter		41,299
Total	$	153,963

During the years ended December 31, 2018 and 2017, the Company recognized rent expenses under its lease agreements of $41.1 million and $30.8 million, respectively, which are included in cost of trade sales and selling, general, and administrative expenses in the Company’s consolidated statements of operations.