Leases

12 Months Ended

Dec. 31, 2019

The Company has operating leases for its headquarters in San Francisco, California, as well as additional office space for its origination and servicing operations in the Salt Lake City area, Utah, and Westborough, Massachusetts. As of December 31, 2019, the lease agreements have remaining lease terms ranging from approximately two years to ten years. Some of the lease agreements include options to extend the lease term for up to an additional fifteen years and some of them include options to terminate the lease with six months’ prior notice. In addition, the Company is the sublessor of a portion of its office space in San Francisco, with lease terms ranging from two years to three years. As of December 31, 2019, the Company pledged $0.9 million of cash and $5.5 million in letters of credit as security deposits in connection with its lease agreements.

Balance sheet information as of December 31, 2019 related to leases was as follows:



ROU Assets and Lease Liabilities	December 31, 2019
Operating lease assets	$	93,485
Operating lease liabilities ⁽¹⁾	$	112,344


⁽¹⁾	The difference between operating lease assets and operating lease liabilities is the unamortized balance of deferred rent, which prior to January 1, 2019 was included as a separate liability within “Accrued expenses and other liabilities.”

Components of net lease costs for the years ended December 31, 2019, 2018 and 2017, were as follows:



		Year Ended December 31,
Net Lease Costs	Income Statement Classification	2019			2018			2017
Operating lease costs ⁽¹⁾	Other general and administrative expense	$	(19,502	)	$	(17,183	)	$	(15,780	)
Sublease revenue	Other revenue	4,637			397			391
Net lease costs		$	(14,865	)	$	(16,786	)	$	(15,389	)


⁽¹⁾	Includes variable lease costs of $1.6 million, $0.6 million and $0.4 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Supplemental cash flow information related to the Company’s operating leases for the year ended December 31, 2019 was as follows:



Year Ended December 31,	2019
Non-cash operating activity:
Leased assets obtained in exchange for new operating lease liabilities ⁽¹⁾	$	15,277


⁽¹⁾	Represents non-cash activity and, accordingly, is not reflected in the Consolidated Statements of Cash Flows.

The Company’s future minimum undiscounted lease payments under operating leases and anticipated sublease revenue as of December 31, 2019 were as follows:



	Operating Lease Payments		Sublease Revenue			Net
2020	$	18,219	$	(6,369	)	$	11,850
2021	18,649		(6,560		)	12,089
2022	15,010		(2,906		)	12,104
2023	11,663		—			11,663
2024	12,002		—			12,002
Thereafter	74,497		—			74,497
Total lease payments⁽¹⁾	$	150,040	$	(15,835	)	$	134,205
Discount effect	37,696
Present value of future minimum lease payments	$	112,344

⁽¹⁾

As of December 31, 2019, the Company entered into an additional operating lease which has not yet commenced and is therefore not part of the table above nor included in the lease right-of-use asset and liability. This lease will commence when the Company obtains possession of the underlying asset, which is expected to be on April 1, 2020. The lease term is nine years and has an undiscounted future rent payment of approximately $8.7 million.

The weighted-average remaining lease term and discount rate used in the calculation of the Company’s operating lease assets and liabilities were as follows:



Lease Term and Discount Rate	December 31, 2019
Weighted-average remaining lease term (in years)	9.67
Weighted-average discount rate	5.75	%