Occupancy Expense and Information Systems and Communications Expense

Occupancy expense and information systems and communications expense include depreciation of buildings, leasehold improvements, computer hardware and software, equipment, and furniture and fixtures. Total depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $417 million, $401 million and $407 million, respectively.

We lease 1,025,000 square feet at One Lincoln Street, our headquarters building located in Boston, Massachusetts, and a related underground parking garage, under 20-year, non-cancelable capital leases expiring in September 2023. A portion of the lease payments is offset by subleases for approximately 127,000 square feet of the building. In 2014, we began leasing approximately 500,000 square feet at the Channel Center in Boston, Massachusetts under a 16-year capital lease expiring in December 2029. In addition, we lease approximately 362,000 square feet at 20 Churchill Place, an office building located in the U.K., under a 20-year capital lease expiring in December 2028. As of December 31, 2014 and 2013, an aggregate net book value of $624 million and $646 million, respectively, related to the above-described capital leases was recorded in premises and equipment, with the related liability recorded in long-term debt, in our consolidated statement of condition.

Capital lease asset amortization is recorded in occupancy expense in our consolidated statement of income over the respective lease term. Lease payments are recorded as a reduction of the liability, with a portion recorded as imputed interest expense. For the years ended December 31, 2014, 2013 and 2012, interest expense related to these capital lease obligations, reflected in net interest revenue, was $38 million, $40 million and $42 million, respectively. As of December 31, 2014 and 2013, accumulated amortization of capital lease assets was $426 million and $369 million, respectively.

We have entered into non-cancelable operating leases for premises and equipment. Nearly all of these leases include renewal options. Costs related to operating leases for office space are recorded in occupancy expense. Costs related to operating leases for equipment are recorded in information systems and communications expense.

Total rental expense, net of sublease revenue, amounted to $204 million, $224 million and $227 million for the years ended December 31, 2014, 2013 and 2012, respectively. Total rental expense was reduced by sublease revenue of $6 million for both years ended December 31, 2014, and 2013 and $4 million for the year ended December 31, 2012.

The following table presents a summary of future minimum lease payments under non-cancelable capital and operating leases as of December 31, 2014. Aggregate future minimum rental commitments have been reduced by aggregate sublease rental commitments of $55 million for capital leases and $15 million for operating leases.



(In millions)	Capital Leases			Operating Leases		Total
2015	$	105		$	179	$	284
2016	91			141		232
2017	82			145		227
2018	82			119		201
2019	82			86		168
Thereafter	520			265		785
Total minimum lease payments	962			$	935	$	1,897
Less amount representing interest payments	(248		)
Present value of minimum lease payments	$	714