Leases

12 Months Ended

Dec. 31, 2020

The Company leases substantially all of its U.S. dialysis facilities. The majority of the Company’s facilities are leased under non-cancellable operating leases which range in terms from five years to 20 years and which contain renewal options of five years to ten years at the fair rental value at the time of renewal. Certain of the Company's leases are subject to periodic consumer price increases or contain fixed escalation clauses. See Note 1 for further information on how the Company accounts for leases.

As of December 31, 2020 and December 31, 2019, assets recorded under finance leases were $275,389 and $247,246, respectively, and accumulated amortization associated with finance leases was $49,345 and $27,193, respectively, included in property and equipment, net, on the Company's consolidated balance sheet.

In certain markets, the Company acquires and develops dialysis centers. Upon completion, the Company sells the center to a third party and leases the space back with the intent of operating the center on a long term basis. Both the sale and leaseback terms are generally market terms. The lease terms are consistent with the Company's other operating leases with the majority of the leases under non-cancellable operating leases ranging in terms from five years to 20 years and which contain renewal options of five years to ten years at the fair rental value at the time of renewal.

The Company adopted Topic 842, Leases beginning on January 1, 2019 through a modified retrospective approach for leases existing at the adoption date with a cumulative effect adjustment. Consequently, financial information was not updated for dates and periods before January 1, 2019.

The components of lease expense were as follows:


	Year ended December 31,
Lease cost	2020		2019
Operating lease cost(1):
Fixed lease expense	$	541,090	$	526,352
Variable lease expense	122,729		119,740
Financing lease cost:
Amortization of leased assets	24,720		23,724
Interest on lease liabilities	14,421		14,932
Net lease cost	$	702,960	$	684,748

(1) Includes short-term lease expense and sublease income, which are immaterial.

Other information related to leases was as follows:


	Year ended December 31,
Lease term and discount rate	2020		2019
Weighted average remaining lease term (years):
Operating leases	8.7		9.0
Finance leases	10.5		10.2
Weighted average discount rate:
Operating leases	3.8	%	4.1	%
Finance leases	5.1	%	5.4	%


	Year ended December 31,
Other information	2020		2019
Gains on sale leasebacks, net	$	34,301	$	20,833
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	661,318	$	637,655
Operating cash flows for finance leases	$	20,981	$	22,257
Financing cash flows for finance leases	$	24,780	$	25,692
Net operating lease assets obtained in exchange for new or modified operating lease liabilities	$	401,559	$	432,074

Future minimum lease payments under non-cancellable leases as of December 31, 2020 are as follows:


	Operating leases		Finance leases
2021	$	480,439	$	35,039
2022	504,789		35,124
2023	464,023		35,645
2024	412,419		35,669
2025	361,447		35,539
Thereafter	1,437,965		174,907
Total future minimum lease payments	3,661,082		351,923
Less portion representing interest	(552,915)		(77,631)
Present value of lease liabilities	$	3,108,167	$	274,292

Rent expense under all operating leases for 2020, 2019, and 2018 was $663,819, $646,092 and $596,117, respectively. Rent expense is recorded on a straight-line basis over the term of the lease, including leases that contain fixed escalation clauses or include abatement provisions. Leasehold improvement incentives are deferred and amortized to rent expense over the term of the lease. Finance lease obligations are included in long-term debt. See Note 13 for further details on long-term debt.