LEASESWe have operating leases primarily for office space. We determine if an arrangement is a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether we obtain substantially all of the economic benefits from and have the ability to direct the use of the asset. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Operating lease right-of-use assets and corresponding operating lease liabilities are recognized upon the commencement date based primarily on the present value of lease payments over the lease term. We use the implicit rate of the lease, if it is readily determinable, in determining the present value of lease payments. Our leases generally do not provide an implicit rate. Therefore, we use a collateralized incremental borrowing rate that incorporates information available at commencement date, including our company-specific interest rates from recent debt issuances, which we adjusted to obtain our company-specific interest rate risk. We also leverage commercial mortgage-backed securities, or CMBS, rates for transactions with similar values, origination dates, geographies and property types as the respective lease, which are adjusted using linear interpolation if the lease term falls between the published CMBS terms.
The following table summarizes supplemental balance sheets information related to leases at December 31, 2025 and 2024:
| | | | | | | | | | | | | |
| 2025 | | 2024 | | |
| (dollars in millions) | | |
| Operating leases: | | | | | |
Operating lease liabilities | $ | 4.3 | | | $ | 6.0 | | | |
| Operating lease right-of-use assets | $ | 2.0 | | | $ | 2.6 | | | |
Operating lease liabilities are included in other liabilities and operating lease right-of-use assets are included in other assets in our consolidated balance sheets.
Operating lease expense, variable lease expense and short-term lease expense recognized during the years ended December 31, 2025, 2024 and 2023 were immaterial.
Supplemental cash flow information for the years ended December 31, 2025, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | | | |
| For the Years Ended December 31, |
| 2025 | | 2024 | | 2023 | | |
| (dollars in millions) | | |
| Operating cash flows paid for amounts included in the measurement of lease liabilities | $ | 2.2 | | | $ | 3.0 | | | $ | 3.2 | | | |
We have restricted cash of $1.1 million and $1.0 million as of December 31, 2025 and 2024, respectively, held by a financial institution to satisfy letter of credit requirements for certain property leases.
We also sublease certain office space, resulting in sublease income. Sublease income and the related assets and cash flows are not material to our consolidated financial statements as of and for the years ended December 31, 2025, 2024 and 2023. Sublease income is recognized as a reduction to operating lease expense in our consolidated statements of operations and comprehensive income (loss).
The weighted-average remaining lease term and weighted-average operating lease discount rate, as of December 31, 2025 and 2024 are as follows:
| | | | | | | | | | | | | |
| 2025 | | 2024 | | |
| Weighted-average of remaining operating lease term (years) | 2.10 | | 3.10 | | |
| Weighted-average operating lease discount rate | 11.79 | % | | 11.83 | % | | |
Future lease payments as of December 31, 2025 were as follows:
| | | | | |
| Operating Leases |
| (dollars in millions) |
| 2026 | $ | 2.3 | |
| 2027 | 2.3 | |
| 2028 | 0.2 | |
| 2029 | — | |
| 2030 and thereafter | — | |
| |
| Total future lease payments | 4.8 | |
| Less: imputed interest | (0.5) | |
| Total lease liabilities | $ | 4.3 | |