Drive Shack Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

LEASES

LEASES

9 Months Ended

Sep. 30, 2019

The Company's commitments under lease arrangements are primarily ground leases for Entertainment Golf venues and Traditional Golf properties and related facilities, office leases and leases for golf carts and equipment. The majority of lease terms for our Entertainment Golf venues and Traditional Golf properties and related facilities initially range from 10 to 20 years, and include up to eight 5-year renewal options (see Note 13 for additional detail). Equipment and golf cart leases initially range between 24 to 66 months and typically contain renewal options which may be on a month-to-month basis. An option to renew a lease is included in the determination of the ROU asset and lease liability when it is reasonably certain that the renewal option will be exercised.

Lease related costs recognized in the Consolidated Statements of Operations for the three and nine months ended September 30, 2019 are as follows:



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost
Amortization of right-of-use assets	$	1,690	$	4,736
Interest on lease liabilities	353		972
Total finance lease cost	2,043		5,708

Operating lease cost
Operating lease cost	9,798		28,276
Short-term lease cost	420		1,882
Variable lease cost	5,544		12,696
Total operating lease cost	15,762		42,854

Total lease cost	$	17,805	$	48,562

Other information related to leases included on the Consolidated Balance Sheet as of and for the nine months ended September 30, 2019 are as follows:



	Operating Leases		Financing Leases
Right-of-use assets	220,197		21,420
Lease liabilities	207,749		20,419

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows	22,531		668
Financing cash flows	N/A		5,702

Right-of-use assets obtained in exchange for lease liabilities	10,813		11,723

Weighted average remaining lease term	12.6 years		3.6 years
Weighted average discount rate	8.8	%	7.2	%

Future minimum lease payments under non-cancellable leases as of September 30, 2019 are as follows:



	Operating Leases		Financing Leases
October 1, 2019 - December 31, 2019	7,647		2,053
2020	33,151		7,275
2021	32,514		5,785
2022	31,133		4,137
2023	30,962		3,073
Thereafter	229,981		1,047
Total minimum lease payments	365,388		23,370
Less: imputed interest	157,639		2,951
Total lease liabilities	$	207,749	$	20,419

LEASES

Lease related costs recognized in the Consolidated Statements of Operations for the three and nine months ended September 30, 2019 are as follows:



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost
Amortization of right-of-use assets	$	1,690	$	4,736
Interest on lease liabilities	353		972
Total finance lease cost	2,043		5,708

Operating lease cost
Operating lease cost	9,798		28,276
Short-term lease cost	420		1,882
Variable lease cost	5,544		12,696
Total operating lease cost	15,762		42,854

Total lease cost	$	17,805	$	48,562

Other information related to leases included on the Consolidated Balance Sheet as of and for the nine months ended September 30, 2019 are as follows:



	Operating Leases		Financing Leases
Right-of-use assets	220,197		21,420
Lease liabilities	207,749		20,419

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows	22,531		668
Financing cash flows	N/A		5,702

Right-of-use assets obtained in exchange for lease liabilities	10,813		11,723

Weighted average remaining lease term	12.6 years		3.6 years
Weighted average discount rate	8.8	%	7.2	%

Future minimum lease payments under non-cancellable leases as of September 30, 2019 are as follows:



	Operating Leases		Financing Leases
October 1, 2019 - December 31, 2019	7,647		2,053
2020	33,151		7,275
2021	32,514		5,785
2022	31,133		4,137
2023	30,962		3,073
Thereafter	229,981		1,047
Total minimum lease payments	365,388		23,370
Less: imputed interest	157,639		2,951
Total lease liabilities	$	207,749	$	20,419