Lease Commitments

12 Months Ended

Dec. 31, 2022

At December 31, 2022, Northern Trust was obligated under a number of non-cancelable operating leases, primarily for real estate. Certain leases contain rent escalation clauses based on market indices, renewal option clauses calling for increased rentals, and rental payments based on usage. There are no restrictions imposed by any lease agreement regarding the payment of dividends, debt financing or Northern Trust entering into further lease agreements.

The components of lease costs for the years ended December 31, 2022 and 2021 were as follows.

TABLE 80: LEASE COST COMPONENTS


	FOR THE YEAR ENDED DECEMBER 31,
(In Millions)	2022		2021
Operating Lease Cost	$	104.5	$	96.2
Variable Lease Cost (1)	82.2		76.9
Sublease Income	(2.9)		(4.5)
Total Lease Cost	$	183.8	$	168.6

(1) Variable Lease Cost includes rental payments based on usage, common-area maintenance costs and property taxes.

The following table presents a maturity analysis of lease liabilities as of December 31, 2022.

TABLE 81: MATURITY OF LEASE LIABILITIES


(In Millions)	MATURITY OF LEASE LIABILITIES
2023	$	88.3
2024	86.3
2025	88.5
2026	71.9
2027	71.4
Later Years	319.2
Total Lease Payments	725.6
Less: Imputed Interest	(99.4)
Present Value of Lease Liabilities	$	626.2

As of December 31, 2022, Northern Trust had commitments for operating leases in addition to the above that have not yet commenced for approximately $122.7 million. These operating leases are for the use of office space with lease terms of between 7 and 20 years and are expected to commence in the first and third quarter of 2023.

Northern Trust uses its incremental borrowing rate to determine the present value of lease payments for operating leases. Operating lease right-of-use (ROU) assets and lease liabilities may include options to extend or terminate the lease only when it is reasonably certain that Northern Trust will exercise that option. Northern Trust elects not to separate lease and non-lease components of a contract for its real estate leases. The location and amount of ROU assets and lease liabilities recorded on the consolidated balance sheets as of December 31, 2022 and 2021 are presented in the following table.

TABLE 82: LOCATION AND AMOUNT OF LEASE ASSETS AND LIABILITIES


(In Millions)	LOCATION OF LEASE ASSETS AND LEASE LIABILITIES ON THE BALANCE SHEET	DECEMBER 31, 2022		DECEMBER 31, 2021
Assets
Operating Lease Right-of-Use Asset	Other Assets	$	484.8	$	531.2
Liabilities
Operating Lease Liability	Other Liabilities	$	626.2	$	663.1

The weighted-average remaining lease term and weighted-average discount rate applied to leases as of December 31, 2022 and 2021 were as follows:

TABLE 83: WEIGHTED-AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE


	DECEMBER 31, 2022		DECEMBER 31, 2021
Operating Leases
Weighted-Average Remaining Lease Term	9.3 years		9.6 years
Weighted-Average Discount Rate	3.0	%	2.4	%

The following table provides supplemental cash flow information related to leases for the years ended December 31, 2022 and 2021.

TABLE 84: SUPPLEMENTAL CASH FLOW INFORMATION


	FOR THE YEAR ENDED DECEMBER 31,
(In Millions)	2022		2021
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows	$	70.3	$	69.5
Supplemental non-cash information
Right-of-use assets obtained in exchange for new operating lease liabilities	$	61.0	$	58.5