In February 2016, the FASB issued ASC 842, Leases, (“ASC 842”) which requires lessees to recognize a right-of-use asset (“ROU”) and a lease obligation for all leases. We adopted ASC 842 as of January 1, 2019, in accordance with the standard. ASC 842 provides an option to apply the transition provisions as of the effective date. We elected this option when we adopted the new standard using a modified retrospective transition method and recognized a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. In addition, we elected to apply a package of practical expedients and as such did not reassess at the date of initial adoption (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, or (3) initial direct costs for existing leases. Lessees can also make an accounting policy election to not recognize an asset and liability for leases with a term of twelve months or less which we elected.

The adoption of this standard resulted in an initial recognition of $40.0 million of ROU assets and $41.4 million of Lease liabilities on our consolidated balance sheet. The lease liabilities recognized are measured based upon the present value of minimum future payments. The ROU assets are equal to lease liabilities, adjusted for prepaid and accrued rent balances which are recorded in the Consolidated Balance Sheets as of January 1, 2019.

Hub currently does not have any variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate). Some leases have options to extend or terminate the agreement, which Management assesses in determining the estimated lease term. If any of the options to extend a lease are exercised, this change will be reflected as a remeasurement of the ROU asset and lease liability accordingly. As of March 31, 2019, the ROU asset and lease liabilities do not reflect any options to extend or terminate a lease as management is not reasonably certain it will exercise any of these options. Also, current leases do not contain any restrictions or covenants imposed by the leases or residual value guarantees.

Occasionally, Hub will sublease office space or parking spaces. The subleases do not relieve Hub of any of its primary obligations under the original agreement. Currently, Hub has subleases with an expected annual income totaling $0.5 million.

Subsequent to March 31, 2019, Hub signed new property lease contracts which have not commenced. Based on the present value of the lease payments, the estimated ROU assets and lease liabilities related to these contracts will total approximately $10.2 million.

Discount rates are not specified on the individual lease contracts at the commencement date. To determine the present value of the lease payments, Hub used its incremental borrowing rate which was determined based on Hub’s credit standing and factoring in the current 12-month LIBOR rate published at the time of the lease commencement. This incremental borrowing rate represents the rate of interest that Hub would have to pay to borrow on a collateralized basis over a similar term and amounts equal to the lease payments in a similar economic environment.

The following table summarizes the lease costs for the three months ended March 31, 2019 (in thousands), which are included in general and administrative costs in the accompanying consolidated statement of income:

	Three Months Ended
	March 31, 2019

Amortization of finance right-of-use assets	$	589
Interest on finance lease liabilities		74
Finance lease cost		663

Operating lease cost		2,606
Short-term lease cost		26
Sublease income		(158	)
Total lease cost	$	3,137

The table below summarizes the Company’s scheduled future minimum lease payments under operating and finance leases, recorded on the sheet, as of March 31, 2019 (in thousands):

	Operating Leases		Finance Leases
Less than 1 year	$	8,974	$	3,212
1-3 years		12,991		4,258
3-5 years		7,837		6
Over 5 years		5,865		-
Minimum lease payments		35,667		7,476
Imputed interest		3,188		339
Present value of minimum lease payments		32,479		7,137
Less: current lease liabilities		8,010		2,988
Long-term lease liabilities	$	24,469	$	4,149

Other information:	Three Months Ended
	March 31, 2019
Operating cash flows from operating leases	$	2,374
Financing cash flows from finance leases		740
Operating cash flows from finance leases		74
Cash paid for a lease liabilities	$	3,188

Right-of-use assets obtained in exchange for new financing lease liabilities	$	6

Rights-of-use assets obtained in exchange for new operating lease liabilities	$	1,302

The weighted average remaining lease term and discount rates as of March 31, 2019 (in thousands) are as follows:


Weighted average remaining lease term — finance leases	2.33 years
Weighted average remaining lease term — operating leases	5.26 years

Discount rate — finance leases		3.87%
Discount rate — operating leases		3.37%