Leases

We lease certain property, land and equipment, the majority of which comprise property related leases to provide office space where we operate our business. Leases with an initial term of

months or less are

not

recorded on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term.

Our property related leases typically have terms of between

three

and

five

years, with the exception of the lease governing the Company’s headquarters, and are classified as operating leases. These leases do

not

contain any residual value guarantees or restrictive covenants and

variable lease payments, except for common area maintenance and real estate taxes. Many of our property related leases give us the option to extend the lease term for a period of time, generally consistent with the initial lease term. These options are excluded from our calculation of the right-of-use asset and lease liability until such time as we determine it is reasonably certain that the option will be exercised.

The property related lease for the Company’s headquarters in Denver, Colorado is

ten

years in length with an expiration date of

October 31, 2026

and contains a

ten

year option to extend the term of the lease through

2036.

This option has been excluded from our calculation of the right-of-use asset and lease liability as it is

not

currently considered reasonably certain that the option will be exercised.

Operating lease expense is included as a component of selling, general and administrative expenses and expenses in the homebuilding and financial services sections of our consolidated statements of operations and comprehensive income, respectively. Components of operating lease expense were as follows:

	Three Months Ended
	March 31, 2019
	(Dollars in thousands)
Operating lease cost 1	$	1,980
Less: Sublease income (Note 20)		(37	)
Net lease cost	$	1,943

_________________________________________
1 Includes variable lease costs, which are immaterial.

Supplemental cash flow information related to leases was as follows:

	Three Months Ended
	March 31, 2019
	(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,771
Leased assets obtained in exchange for new operating lease liabilities	$	1,477

Supplemental cash flow information related to non-cash transactions also includes the recognition of operating lease right-of-use assets of

$33.5

million and operating lease liabilities of

$34.3

million upon adoption of ASC

842.

Weighted-average remaining lease term and discount rate for operating leases were as follows:

	March 31, 2019
Weighted-average remaining lease term (in years)		6.8
Weighted-average discount rate		5.5	%

Maturities of operating lease liabilities were as follows:

	Year Ended
	December 31,
	(Dollars in thousands)
2019 (excluding the three months ended March 31, 2019)	$	5,315
2020		6,317
2021		6,066
2022		5,752
2023		5,148
Thereafter		13,118
Total operating lease payments 1	$	41,716

Less: Interest		7,133
Present value of operating lease liabilities 2	$	34,583

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Operating lease payments exclude

$0.6

million of legally binding lease payments for leases signed but

not

yet commenced.

Financial services operating lease liabilities of

$1.1

million are included as a component of accrued liabilities in the financial services section of our consolidated balance sheet at

March 31, 2019.