Leases

12 Months Ended

Dec. 31, 2019

9. LEASES

Effective January 1, 2019, the Company adopted ASU 2016-02 and ASU 2018-11 which outline new guidance on the accounting for leases. The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. Most leases include an option to extend or renew the lease term. The exercise of the renewal is at the Company’s discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if the Company is reasonably certain of exercise those options. The Company, in determining the present value of lease payments utilizes either the rate implicit in the lease if that rate is readily determinable or the Company’s incremental secured borrowing rate commensurate with terms of the underlying lease.

Supplemental information related to operating leases is as follows for the periods indicated:

	Year Ended
	December 31,
(Dollars in thousands)	2019
Lease expense incurred:
Operating lease cost	$	21,471

	At December 31,
(Dollars in thousands)	2019
Operating lease right of use assets	$	152,978
Operating lease liabilities		160,387

	Year Ended
	December 31,
(Dollars in thousands)	2019
Operating cash flows from operating leases	$	(17,617)

	At December 31,
	2019
Weighted average remaining operating lease term	12.8 years
Weighted average discount rate on operating leases	3.91	%

Maturities of the existing lease liabilities are expected to occur as follows:

(Dollars in thousands)

2020	$	17,793
2021		15,106
2022		16,921
2023		16,465
2024		16,425
Thereafter		122,861
Undiscounted lease payments		205,571
Less: present value adjustment		45,184
Total operating lease liability	$	160,387

As of December 31, 2018, the Company accounted for leases per the guidance codified in Accounting Standards Codification, Topic 840-Leases. Based on prior guidance, the future minimum rental commitments, exclusive of cost escalation clauses, at December 31, 2018, for all of the Company’s operating leases were $73,873 thousand. The breakdown of the minimum rental commitments as of December 31, 2018 were as follows: $17,004 thousand for 2019, $16,594 thousand for 2020, $7,806 thousand for 2021, $7,501 thousand for 2022, $7,385 thousand for 2023 and $17,583 thousand for all years thereafter.

On July 2, 2019, the Company entered into a lease agreement to relocate its corporate offices from Liberty Corner, New Jersey to a corporate complex in Warren, New Jersey. The new lease, which covers approximately 315,000 square feet of office space, became effective in October, 2019 and runs through 2036. The initial base rent payment of the lease will be approximately $650 thousand per month or $7,800 thousand per year. The Company expects to relocate the existing operations and employees of the Liberty Corner, New Jersey facility to the new corporate complex during 2021.