Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.19.1
Leases
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Leases



12.    Leases



BBX Capital and its subsidiaries are lessees under various operating leases for retail stores, sales offices, call centers, office space, equipment, and vehicles. Many of the Company’s lease agreements include one or more options to renew, with renewal terms that can extend the lease term from one to seven years, and the exercise of such renewal options is generally at the Company’s discretion. Certain of the Company’s lease agreements include rental payments based on a percentage of sales generated at the leased location over contractually specified levels, and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain material residual value guarantees or material restrictive covenants.



The Company recognizes right-of-use assets and lease liabilities associated with lease agreements with an initial term of greater than 12 months, while lease agreements with an initial term of 12 months or less are not recorded in the Company’s statement of financial condition. The Company generally does not include lease payments associated with renewal options that are exercisable at its discretion in the measurement of its right-of-use assets and lease liabilities as it is not reasonably certain that such options will be exercised. The table below sets forth information regarding the Company’s lease agreements which had an initial term of greater than 12 months (dollars in thousands):







 

 

 



 

 

 



 

As of

 



 

March 31, 2019

 

Operating lease assets

$

113,536 

 

Operating lease liabilities

$

124,472 

 

Weighted average remaining lease term (years)

 

6.37 

 

Weighted average discount rate (1)

 

5.37 

%



(1)

As most of the Company’s lease agreements do not provide an implicit rate, the Company estimates incremental secured borrowing rates corresponding to the maturities of its lease agreements to determine the present value of future lease payments. To estimate incremental borrowing rates applicable to BBX Capital and its subsidiaries, the Company considers various factors, including the rates applicable to its recently issued debt and credit facilities and prevailing financial market conditions. The Company used the incremental borrowing rates applicable to BBX Capital and its subsidiaries on January 1, 2019 for operating leases that commenced prior to that date.



The Company generally recognizes lease costs associated with its operating leases on a straight-line basis over the lease term, while variable lease payments that do not depend on an index or rate are recognized as variable lease costs in the period in which the obligation for those payments is incurred. The table below sets forth information regarding the Company’s lease costs which are reflected in cost of trade sales and selling, general, and administrative expenses in the Company’s condensed consolidated statements of operations (in thousands):







 

 



 

 



 

For the Three



 

Months Ended



 

March 31, 2019

Fixed lease costs

$

7,321 

Short-term lease costs

 

1,170 

Variable lease costs

 

2,227 

Total operating lease costs

$

10,718 



The table below sets forth information regarding the maturity of the Company’s operating lease liabilities (in thousands):







 

 



 

 

Period Ending December 31,

 

 

2019

$

20,384 

2020

 

25,047 

2021

 

23,470 

2022

 

21,437 

2023

 

18,026 

After 2023

 

46,537 

Total lease payments

 

154,901 

Less: interest

 

30,429 

Present value of lease liabilities

$

124,472 



The above operating lease payments exclude $21.4 million of legally binding minimum lease payments for lease agreements executed but not yet commenced, as the Company has not received possession of the leased property.  Included in the Company’s statement of cash flows under operating activities for the three months ended March 31, 2019 was $6.7 million of cash paid for amounts included in the measurement of lease liabilities. During the three months ended March 31, 2019, the Company obtained $5.9 million of right-of-use assets in exchange for new operating lease liabilities.