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Leases
12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Leases

9. Leases

We have various non-cancelable lease agreements for certain of our offices with original lease periods expiring between 2021 and 2042. Our lease terms may include options to extend or terminate the lease when it is reasonably certain we will exercise that option. Certain of the arrangements have free rent periods or escalating rent payment provisions. Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheets. We recognize rent expense on a straight-line basis over the lease term. Additionally, we sublease certain operating leases to third parties primarily as a result of moving to a centralized corporate office in Santa Monica, California in 2018.

Lease Cost

The components of lease cost were as follows:

 

 

Year Ended December 31,

 

 

2020

 

 

2019

 

 

(in thousands)

 

Operating lease expense

$

60,450

 

 

$

60,921

 

Sublease income

 

(2,815

)

 

 

(4,716

)

Total net lease costs

$

57,635

 

 

$

56,205

 

 

 

Lease Term and Discount Rate

The weighted-average remaining lease term (in years) and discount rate related to the operating leases were as follows:

 

 

For the Year Ended December 31,

 

 

2020

 

 

 

 

2019

 

Weighted-average remaining lease term

 

7.6

 

 

 

 

 

8.1

 

Weighted-average discount rate

 

5.5

%

 

 

 

 

5.7

%

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments.

Maturity of Lease Liabilities

The present value of our operating lease liabilities as of December 31, 2020 were as follows:

 

 

Operating Leases

 

 

(in thousands)

 

Year ending December 31,

 

 

 

2021

$

59,129

 

2022

 

63,968

 

2023

 

59,859

 

2024

 

59,731

 

2025

 

55,341

 

Thereafter

 

107,125

 

Total lease payments

$

405,153

 

Less: Imputed interest

 

(76,784

)

Present value of lease liabilities

$

328,369

 

 

As of December 31, 2020, we have additional operating leases for facilities that have not yet commenced with lease obligations of $13.5 million. These operating leases will commence between 2021 and 2022 with lease terms of greater than one year to five years. This table does not include lease payments that were not fixed at commencement or modification.

In 2018, we exited various operating leases prior to the end of the contractual lease term, primarily as a result of moving to a centralized corporate office located in Santa Monica, California. The charges, recorded as general and administrative expenses, primarily included the present value of our remaining lease obligation on the cease use dates that occurred during the period, net of estimated sublease income. As of December 31, 2018, we had exited all properties associated with this event. On January 1, 2019, under the transition provisions of ASU 2016-02 (Topic 842), we adjusted the initial measurement of the lease asset related to the lease exit properties by $32.1 million which represents the carrying amount of the associated lease exit liability as of December 31, 2018. Changes to our estimated sublease income, including actual contracted sublease income, may result in impairment of the right-of-use asset in the period determined.

Prior to January 1, 2019, we had several lease agreements where we were deemed the owner under build-to-suit lease accounting. The value of the leased property and corresponding financing obligations was included in property and equipment, net and other liabilities, respectively, on our consolidated balance sheets as of December 31, 2018. Net assets capitalized under build-to-suit leases were $48.4 million as of December 31, 2018. As part of the adoption of Topic 842, we derecognized those assets and liabilities and recorded the difference as an adjustment to accumulated deficit at January 1, 2019. These leases are included within the right-of-use asset and lease liability balances on our consolidated balance sheet as of December 31, 2020 and 2019.

Other Information

Cash payments included in the measurement of our operating lease liabilities were $73.3 million and $66.3 million for the years ended December 31, 2020 and 2019, respectively.

Lease liabilities arising from obtaining operating lease right-of-use assets were $36.2 million and $35.2 million for the years ended December 31, 2020 and 2019, respectively.