Leases

9 Months Ended

Sep. 30, 2019

(6) Leases

Lease Overview

We lease railcars and certain facilities to support the Partnership’s operations. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments which are adjusted periodically for factors such as inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, we do not have any material lessor or sub-leasing arrangements.

Effect of Initial Adoption of New Lease Standard - January 1, 2019

ROU Assets. Upon initial recognition, our ROU assets for operating and finance leases were comprised of the following:



(in thousands)	January 1, 2019 (initial recognition)
Railcar leases	$	14,255
Real Estate and other leases	18
Total ROU assets	$	14,273

Lease Liabilities. Upon initial recognition, our lease liabilities for operating and finance leases were comprised of the following:



(in thousands)	January 1, 2019 (initial recognition)
Current liabilities:
Operating leases	$	3,462
Long-term liabilities:
Operating leases	10,811
Total lease liabilities	$	14,273

Balance Sheet Summary for the Period Ended September 30, 2019

The following tables summarize the ROU asset and lease liability balances for the Partnership’s operating and finance leases at September 30, 2019:



(in thousands)	September 30, 2019
Operating Leases:
ROU asset, net
Railcars	$	11,454
Real estate and other	2,396
Lease liability
Railcars	$	11,666

Financing Leases:
ROU asset, net
Real estate and other	$	226
Lease liability
Real estate and other	$	229

Lease Expense Summary for the Three and Nine months ended September 30, 2019

We recognize lease expense on a straight-line basis over the lease term. For the three and nine months ended September 30, 2019, we recognized lease expense comprised of the following components:



(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease expense	$	1,023	$	3,069
Financing lease expense:
Amortization of ROU asset	$	25	$	297
Interest expense on lease liability	2		17

Short-term lease expense, recognized within direct operating expenses, was $0.2 million and $0.3 million for the three and nine months ended September 30, 2019, respectively.

Lease Terms and Discount Rates

The following outlines the remaining lease terms and discount rates used in the measurement of the Partnership’s ROU assets and liabilities:



	September 30, 2019		January 1, 2019 (initial recognition)
Weighted-average remaining lease term (years)
Operating Leases	3.7		4.3
Finance Leases	2.5		0.5
Weighted-average discount rate
Operating Leases	5.1	%	5.1	%
Finance Leases	3.9	%	8.0	%

Maturities of Lease Liabilities

The following summarizes the remaining minimum lease payments through maturity of the Partnership’s ROU assets and liabilities at September 30, 2019:



(in thousands)	Operating Leases			Financing Leases
Remainder of 2019	$	1,023		$	27
2020	3,602			107
2021	3,430			107
2022	2,990			—
2023	1,133			—
Thereafter	648			—
Total lease payments	12,826			241
Less: imputed interest	(1,160		)	(12		)
Total lease liability	$	11,666		$	229

Leases