Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

Leases

As lessor, and as of December 31, 2020, the majority of our leases were operating leases with the exception of certain failed sale-leaseback transactions classified as notes receivable under the guidance provided by ASC 842.

As lessee, the significant majority of leases the Company enters are for real estate (office and warehouse space for our operations as well as automobiles). These lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with terms of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Some of the Company’s leases include variable non-lease components (e.g., taxes) which are not separated from associated lease components (e.g. fixed rent, common-area maintenance costs, vehicle protection plans and other service fees) as elected under the practical expedient package provided by ASC 842.

The Company’s leases have remaining lease terms of one to six years, some of which include options to renew or extend the lease term from one to five years. Our automobile leases include an option to purchase the vehicle at lease termination. The depreciable life of assets is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The exercise of lease renewal options or purchase at lease termination is at the Company’s sole discretion. If it is reasonably certain that we will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of our ROU assets and lease liabilities.

Supplemental balance sheet information related to leases was as follows:

Leases	Classification	December 31, 2020			December 31, 2019
		(in thousands, except lease term and discount rate)
Assets
Operating lease right-of-use assets	Other assets	$	3,784		$	4,084
Total leased assets		$	3,784		$	4,084
Liabilities
Operating lease right-of-use liabilities	Accounts payable and accrued expenses	$	3,873		$	3,835
Total lease liabilities		$	3,873		$	3,835
Weighted average remaining lease term (years)
Operating leases		4.20			5.17
Weighted average discount rate
Operating leases		3.1		%	4.5		%

The weighted average discount rate is based on the discount rate for each lease and the remaining balance of the lease payments for each lease at the reporting date.

Future maturities of the Company’s operating lease liabilities at December 31, 2020 are as follows:

Year	(in thousands)
2021	$	1,189
2022	1,033
2023	708
2024	394
2025	394
Thereafter	591
Total lease payments	4,309
Less: interest	(436)
Total lease liabilities	$	3,873

The following table represents future minimum lease payments under non-cancelable operating leases at December 31, 2020:

Year	(in thousands)
2021	$	1,227
2022	1,055
2023	688
2024	394
2025	394
Thereafter	592
	$	4,350

The components of lease expense were as follows:

		Years Ended December 31,
Lease expense	Classification	2020		2019
		(in thousands)
Operating lease cost	General and administrative	$	1,141	$	1,326
Net lease cost		$	1,141	$	1,326

Supplemental cash flow information related to leases was as follows:

	Years Ended December 31,
	2020		2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,083	$	920
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	705	$	495

Leases

Leases

As lessor, and as of December 31, 2020, the majority of our leases were operating leases with the exception of certain failed sale-leaseback transactions classified as notes receivable under the guidance provided by ASC 842.

As lessee, the significant majority of leases the Company enters are for real estate (office and warehouse space for our operations as well as automobiles). These lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with terms of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Some of the Company’s leases include variable non-lease components (e.g., taxes) which are not separated from associated lease components (e.g. fixed rent, common-area maintenance costs, vehicle protection plans and other service fees) as elected under the practical expedient package provided by ASC 842.

The Company’s leases have remaining lease terms of one to six years, some of which include options to renew or extend the lease term from one to five years. Our automobile leases include an option to purchase the vehicle at lease termination. The depreciable life of assets is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The exercise of lease renewal options or purchase at lease termination is at the Company’s sole discretion. If it is reasonably certain that we will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of our ROU assets and lease liabilities.

Supplemental balance sheet information related to leases was as follows:

Leases	Classification	December 31, 2020			December 31, 2019
		(in thousands, except lease term and discount rate)
Assets
Operating lease right-of-use assets	Other assets	$	3,784		$	4,084
Total leased assets		$	3,784		$	4,084
Liabilities
Operating lease right-of-use liabilities	Accounts payable and accrued expenses	$	3,873		$	3,835
Total lease liabilities		$	3,873		$	3,835
Weighted average remaining lease term (years)
Operating leases		4.20			5.17
Weighted average discount rate
Operating leases		3.1		%	4.5		%

The weighted average discount rate is based on the discount rate for each lease and the remaining balance of the lease payments for each lease at the reporting date.

Future maturities of the Company’s operating lease liabilities at December 31, 2020 are as follows:

Year	(in thousands)
2021	$	1,189
2022	1,033
2023	708
2024	394
2025	394
Thereafter	591
Total lease payments	4,309
Less: interest	(436)
Total lease liabilities	$	3,873

The following table represents future minimum lease payments under non-cancelable operating leases at December 31, 2020:

Year	(in thousands)
2021	$	1,227
2022	1,055
2023	688
2024	394
2025	394
Thereafter	592
	$	4,350

The components of lease expense were as follows:

		Years Ended December 31,
Lease expense	Classification	2020		2019
		(in thousands)
Operating lease cost	General and administrative	$	1,141	$	1,326
Net lease cost		$	1,141	$	1,326

Supplemental cash flow information related to leases was as follows:

	Years Ended December 31,
	2020		2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,083	$	920
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	705	$	495

Equipment Held for Operating Lease

As of December 31, 2020, the Company’s $1,886.6 million equipment held for operating lease portfolio and $158.7 million notes receivable represented 291 engines, eight aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2019, the Company’s $1,650.9 million equipment held for operating lease portfolio and $38.1 million notes receivable represented 263 engines, 12 aircraft, one marine vessel and other leased parts and equipment.

A majority of the equipment is leased and operated internationally. Substantially all leases relating to this equipment are denominated and payable in U.S. dollars.

The Company leases equipment to lessees domiciled in eight geographic regions. The tables below set forth geographic information about the leased equipment grouped by domicile of the lessee (which is not necessarily indicative of the asset’s actual location):

	Years Ended December 31,
Lease rent revenue	2020		2019
Region	(in thousands)
Europe	$	57,972	$	84,335
United States	33,291		39,178
Asia	32,198		42,127
South America	11,686		10,030
Mexico	3,670		5,284
Middle East	2,067		4,117
Canada	2,011		3,279
Africa	—		2,340
Totals	$	142,895	$	190,690

	As of December 31,
Net book value of equipment held for operating lease	2020		2019
Region	(in thousands)
Europe	$	460,664	$	554,529
United States	362,471		240,454
Asia	324,946		427,246
Mexico	168,593		51,573
South America	104,671		110,563
Middle East	47,899		26,732
Canada	8,500		22,640
Africa	—		2,597
Off-lease and other	408,869		214,584
Totals	$	1,886,613	$	1,650,918

As of December 31, 2020, the lease status of the equipment held for operating lease (in thousands) was as follows:

Lease Term	Net Book Value
Off-lease and other	$	408,869
Month-to-month leases	339,868
Leases expiring 2021	208,302
Leases expiring 2022	526,244
Leases expiring 2023	252,186
Leases expiring 2024	78,496
Leases expiring 2025	44,430
Leases expiring thereafter	28,218
	$	1,886,613

As of December 31, 2020, minimum future payments under non-cancelable leases were as follows:

Year	(in thousands)
2021	$	120,393
2022	75,835
2023	28,452
2024	15,091
2025	5,647
Thereafter	8,002
	$	253,420