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| Leases | LEASES Lessee
We lease warehouses, retail stores, regional offices, and machinery and equipment. Lease terms are generally three years to seven years for warehouses, office space and retail store locations, and up to seven years for other leased equipment and property.
We adopted ASC Topic 842, Leases (“ASC 842”) utilizing the modified retrospective adoption method with an effective date of January 1, 2019. We made the election to not apply the recognition requirements in Topic 842 to short-term leases (i.e., leases of 12 months or less). Instead, we may recognize the lease payments in profit or loss on a straight-line basis over the lease term. We elected this accounting policy for all classes of underlying assets. In addition, in accordance with Topic 842, variable lease payments in the period in which we incur the obligation for those payments are not included in the recognition of a lease liability or right-of-use (ROU) asset. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. We recognize ROU assets and liabilities at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, we use the rate implicit in the lease to discount lease payments to present value. However, we do have leases that do not provide a readily determinable implicit rate. For such leases, we estimate the incremental borrowing rate to discount lease payments based on information available at lease commencement. We elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components.
As of December 31, 2019, we had 13 facilities under operating leases consisting of warehouses, regional offices, and retail stores, with lease term expirations between 2020 and 2026.
Rent expense consists of monthly lease rents for warehouses, regional offices, and retail stores under the terms of our lease agreements recognized on a straight-line basis. Rent expense under operating leases was approximately $1.3 million and $1.2 million for the years ended December 31, 2019 and 2018, respectively.
The following table provides details of our future minimum lease payments under finance lease liabilities and operating lease liabilities recorded in our consolidated balance sheet as of December 31, 2019. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.
The majority of our finance lease obligations relate to leased warehouse equipment. Payments under our finance lease agreements are fixed for terms ranging from three to five years. Accounting for finance leases is substantially unchanged under Topic 842. We recorded approximately $0.3 million of finance lease assets, net within "property and equipment, net" as of December 31, 2019, and the related liabilities within "current portion of finance leases" and "finance leases, less current portion," in our consolidated balance sheets. The table below presents information related to our finance and operating leases:
(a)Expenses are classified within "general and administrative expenses" within our consolidated statement of operations and comprehensive loss.
The table below presents lease-related terms and discount rates as of December 31, 2019:
Lessor
We have five operating leases for office space leased to third-party tenants in our corporate headquarters building in Boca Raton, Florida. For the year ended December 31, 2019, we had approximately $0.7 million in rental income related to these operating leases, which we include within “Other income, net” in our consolidated statement of operations and comprehensive loss. We did not have any rental income for the year ended December 31, 2018.
The following table represents the maturity analysis of undiscounted cash flows related to lease payments which we expect to receive from our existing operating lease agreements with tenants:
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| Leases | LEASES Lessee
We lease warehouses, retail stores, regional offices, and machinery and equipment. Lease terms are generally three years to seven years for warehouses, office space and retail store locations, and up to seven years for other leased equipment and property.
We adopted ASC Topic 842, Leases (“ASC 842”) utilizing the modified retrospective adoption method with an effective date of January 1, 2019. We made the election to not apply the recognition requirements in Topic 842 to short-term leases (i.e., leases of 12 months or less). Instead, we may recognize the lease payments in profit or loss on a straight-line basis over the lease term. We elected this accounting policy for all classes of underlying assets. In addition, in accordance with Topic 842, variable lease payments in the period in which we incur the obligation for those payments are not included in the recognition of a lease liability or right-of-use (ROU) asset. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. We recognize ROU assets and liabilities at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, we use the rate implicit in the lease to discount lease payments to present value. However, we do have leases that do not provide a readily determinable implicit rate. For such leases, we estimate the incremental borrowing rate to discount lease payments based on information available at lease commencement. We elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components.
As of December 31, 2019, we had 13 facilities under operating leases consisting of warehouses, regional offices, and retail stores, with lease term expirations between 2020 and 2026.
Rent expense consists of monthly lease rents for warehouses, regional offices, and retail stores under the terms of our lease agreements recognized on a straight-line basis. Rent expense under operating leases was approximately $1.3 million and $1.2 million for the years ended December 31, 2019 and 2018, respectively.
The following table provides details of our future minimum lease payments under finance lease liabilities and operating lease liabilities recorded in our consolidated balance sheet as of December 31, 2019. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.
The majority of our finance lease obligations relate to leased warehouse equipment. Payments under our finance lease agreements are fixed for terms ranging from three to five years. Accounting for finance leases is substantially unchanged under Topic 842. We recorded approximately $0.3 million of finance lease assets, net within "property and equipment, net" as of December 31, 2019, and the related liabilities within "current portion of finance leases" and "finance leases, less current portion," in our consolidated balance sheets. The table below presents information related to our finance and operating leases:
(a)Expenses are classified within "general and administrative expenses" within our consolidated statement of operations and comprehensive loss.
The table below presents lease-related terms and discount rates as of December 31, 2019:
Lessor
We have five operating leases for office space leased to third-party tenants in our corporate headquarters building in Boca Raton, Florida. For the year ended December 31, 2019, we had approximately $0.7 million in rental income related to these operating leases, which we include within “Other income, net” in our consolidated statement of operations and comprehensive loss. We did not have any rental income for the year ended December 31, 2018.
The following table represents the maturity analysis of undiscounted cash flows related to lease payments which we expect to receive from our existing operating lease agreements with tenants:
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