|
13. Leases
The following table presents components of lease cost included in general and administration expense on the consolidated statements of income:
|
(in millions) |
|
2020 |
|
|
2019 |
|
|
Lease cost(1): |
|
|
|
|
|
|
|
|
|
Operating lease cost(2) |
|
$ |
147 |
|
|
$ |
141 |
|
|
Variable lease cost(3) |
|
|
40 |
|
|
|
39 |
|
|
Total lease cost |
|
$ |
187 |
|
|
$ |
180 |
|
|
(1) |
Rent expense and certain office equipment expense under lease agreements amounted to $135 million in 2018. |
|
(2) |
Amounts include short-term leases, which are immaterial for both 2020 and 2019. |
|
(3) |
Amounts include operating lease payments, which may be adjusted based on usage, changes in an index or market rate, as well as common area maintenance charges and other variable costs not included in the measurement of ROU assets and operating lease liabilities. |
The following table presents operating leases included on the consolidated statement of financial condition:
|
(in millions) |
Statement of
Financial Condition
Classification |
December 31, 2020 |
|
|
December 31, 2019 |
|
|
Statement of Financial Condition information: |
|
|
|
|
|
|
|
|
|
Operating lease ROU assets |
Other assets |
$ |
649 |
|
|
$ |
669 |
|
|
Operating lease liabilities |
Other liabilities |
$ |
755 |
|
|
$ |
776 |
|
Supplemental information related to operating leases is summarized below:
|
(in millions) |
December 31, 2020 |
|
|
December 31, 2019 |
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of operating lease liabilities |
$ |
154 |
|
|
$ |
142 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental noncash information: |
|
|
|
|
|
|
|
|
ROU assets in exchange for operating lease liabilities
in connection with the adoption of ASU 2016-02, "Leases" |
$ |
— |
|
|
$ |
661 |
|
|
ROU assets in exchange for operating lease liabilities |
$ |
93 |
|
|
$ |
117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
December 31, 2019 |
|
Lease term and discount rate: |
|
|
|
|
|
|
|
|
|
Weighted-average remaining lease term |
|
8 |
|
years |
|
9 |
|
years |
|
Weighted-average discount rate |
|
3 |
|
% |
|
3 |
|
% |
|
(in millions) |
|
|
|
|
|
Maturity of operating lease liabilities at December 31, 2020 |
|
Amount (1) |
|
|
2021 |
|
$ |
162 |
|
|
2022 |
|
|
159 |
|
|
2023 |
|
|
107 |
|
|
2024 |
|
|
74 |
|
|
2025 |
|
|
58 |
|
|
Thereafter |
|
|
305 |
|
|
Total lease payments |
|
$ |
865 |
|
|
Less: imputed interest |
|
|
110 |
|
|
Present value of lease liabilities |
|
$ |
755 |
|
|
(1) |
Amount excludes $1.4 billion of legally binding minimum lease payments for leases signed but not yet commenced. |
In May 2017, the Company entered into an agreement with 50 HYMC Owner LLC, for the lease of approximately 847,000 square feet of office space located at 50 Hudson Yards, New York, New York. The term of the lease includes 20 years of cash rental payments expected to begin in May 2023, with the option to renew for a specified term. The lease requires annual base rental payments of approximately $51 million per year during the first five years of the lease term, increasing every five years to $58 million, $66 million and $74 million per year (or approximately $1.2 billion in base rent over a 20-year period). In November 2019, the Company exercised its initial expansion option with respect to two additional floors aggregating approximately 122,000 square feet of office space. The additional space requires approximately $185 million in base rent over the 20-year period.
|