The Company engages in leasing activity as both a lessee and a lessor. The majority of the Company's lease portfolio originated when the Company was actively involved in the development and financing of IHOP restaurants prior to the franchising of the restaurant to the franchisee. This activity included the Company's purchase or leasing of the site on which the restaurant was located and subsequently leasing/subleasing the site to the franchisee. With a few exceptions, the Company ended this practice in 2003 and the Company's current lease activity is predominantly comprised of renewals of existing lease arrangements and exercises of options on existing lease arrangements.

The Company currently leases from third parties the real property on which approximately 600 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate approximately 60 IHOP restaurants and one Applebee's restaurant. The Company leases from third parties the real property on which 69 Applebee's company-operated restaurants are located. The Company also leases office space for its principal corporate office in Glendale, California and restaurant support centers in Kansas City, Missouri and Raleigh, North Carolina. The Company does not have a significant amount of non-real estate leases.

The Company's existing leases/subleases related to IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases related to Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. Option periods were not included in determining liabilities and right-of-use assets related to operating leases. Approximately 175 of the Company's leases contain provisions requiring additional rent payments to the Company (as lessor) based on a percentage of restaurant sales. Approximately 250 of the Company's leases contain provisions requiring additional rent payments by the Company (as lessee) based on a percentage of restaurant sales.

The individual lease agreements do not provide information to determine the implicit interest rate in the agreements. The Company made significant judgments in determining the incremental borrowing rates that were used in calculating operating lease liabilities as of the adoption date. Due to the large number of leases, the Company applied a portfolio approach by grouping the leases based on the original lease term. The Company estimated the interest rate for each grouping primarily by reference to (i) yield rates on debt issuances by companies of a similar credit rating as the Company; (ii) U.S. Treasury rates as of the adoption date; and (iii) adjustments for differences in years to maturity.



		Year ended December 31, 2019
Finance lease cost:	(In millions)
Amortization of right-of-use assets		$	5.3
Interest on lease liabilities		7.7
Operating lease cost		106.2
Variable lease cost		2.7
Short-term lease cost		0.0
Sublease income		(110.9		)
Lease cost		$	11.0



	Finance Leases			Operating Leases
	(In millions)
2020	$	19.8		$	97.4
2021	16.4			81.1
2022	14.7			73.4
2023	11.6			60.6
2024	9.4			54.9
Thereafter	55.7			173.0
Total minimum lease payments	127.6			540.4
Less: interest/imputed interest	(37.3		)	(108.6		)
Total obligations	90.3			431.8
Less: current portion	(12.9		)	(72.8		)
Long-term lease obligations	$	77.4		$	359.0

The weighted average remaining lease term as of December 31, 2019 was 8.6 years for finance leases and 7.7 years for operating leases. The weighted average discount rate as of December 31, 2019 was 10.4% for finance leases and 5.7% for operating leases.



		Year ended December 31, 2019
	(In millions)
Principal payments on finance lease obligations		$	13.6
Interest payments on finance lease obligations		$	7.7
Payments on operating leases		$	91.9
Variable lease payments		$	2.5



	(In millions)
2020	$	14.6
2021	11.5
2022	8.2
2023	3.6
2024	1.3
Thereafter	2.5
Total minimum rents receivable	41.7
Less: unearned income	(7.7		)
Total net investment in direct financing leases	34.0
Less: current portion	(11.0		)
Long-term investment in direct financing leases	$	23.0



	December 31,
	2018
	(In millions)
Total minimum rents receivable	$	57.3
Less: unearned income	(12.4		)
Net investment in direct financing leases receivable	44.9
Less: current portion	(11.2		)
Long-term direct financing leases receivable	$	33.7

Contingent rental income, which is the amount above and beyond base rent, for the years ended December 31, 2018 and 2017 was $14.3 million and $14.0 million, respectively.



	December 31,
	2018
	(In millions)
Total minimum leases receivable	$	89.9
Less: unearned income	(24.1		)
Net investment in equipment leases receivable	65.8
Less: current portion	(8.5		)
Long-term equipment leases receivable	$	57.3



	Capital Leases			Operating Leases
	(In millions)
2019	$	21.0		$	91.2
2020⁽¹⁾	19.3			92.8
2021	16.2			75.7
2022	14.3			67.6
2023	11.6			55.2
Thereafter	63.4			210.6
Total minimum lease payments	145.8			$	593.0
Less: interest	(44.6		)
Capital lease obligations	101.2
Less: current portion⁽¹⁾	(13.4		)
Long-term capital lease obligations	$	87.8

______________________________________________________

The asset cost and carrying amount on company-owned property leased at December 31, 2018 was $89.0 million and $58.8 million, respectively. The asset cost and carrying amount on company-owned property leased at December 31, 2017, was $89.0 million and $60.0 million, respectively. The asset cost and carrying amounts represent the land and building asset values and net book values on sites leased to franchisees.

The minimum future lease payments shown above have not been reduced by the following future minimum rents to be received on noncancelable subleases and leases of owned property at December 31, 2018:



	Direct Financing Leases		Operating Leases
	(In millions)
2019	$	16.2	$	105.9
2020⁽¹⁾	14.8		106.3
2021	11.7		100.2
2022	8.2		96.2
2023	3.5		91.8
Thereafter	2.9		271.8
Total minimum rents receivable	$	57.3	$	772.2

The Company has noncancelable leases, expiring at various dates through 2057, which require payment of contingent rents based upon a percentage of sales of the related restaurant as well as property taxes, insurance and other charges. Subleases to franchisees of properties under such leases are generally for the full term of the lease obligation at rents that include the Company's obligations for property taxes, insurance, contingent rents and other charges. Generally, the noncancelable leases include renewal options. Contingent rent expense for all noncancelable leases for the years ended December 31, 2018 and 2017 was $2.7 million and $2.6 million, respectively. Minimum rent expense for all noncancelable operating leases for the years ended December 31, 2018 and 2017 was $80.8 million and $73.0 million, respectively.