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Leases

12 Months Ended

Dec. 31, 2020

7. Leases

The Company is a lessee of a 65.3 acre site in Osceola County, Florida on which Gaylord Palms is located, building or land leases for Ole Red Gatlinburg, Ole Red Orlando and Ole Red Tishomingo, various warehouse, general office and other equipment leases. The Gaylord Palms land lease has a term through 2074, which may be extended through January 2101, at the Company’s discretion. The leases for Ole Red locations range from five to ten years, with renewal options ranging from five to fifty-five years, at the Company’s discretion. Extension options are not considered reasonably assured and thus are not included in the Company’s calculation of its right-of-use assets and liabilities.

The terms of the Gaylord Palms lease include variable lease payments based upon net revenues at Gaylord Palms and certain other of the Company’s leases include rental payments adjusted periodically for inflation. The Company recorded $0.7 million, $2.5 million and $2.2 million of contingent rental expense related to the Gaylord Palms in 2020, 2019 and 2018, respectively. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As the discount rate implicit in the Company’s operating leases is not readily determinable, the Company applied judgments related to the determination of the discount rates used to calculate the lease liability as required by Accounting Standards Codification Topic 842, “Leases”. The Company calculated its incremental borrowing rates by utilizing judgments and estimates regarding the Company’s secured borrowing rates, market credit rating, comparable bond yield curve, and adjustments to market yield curves to determine a securitized rate.

The Company’s lease cost for the years ended December 31, 2020 and 2019 is as follows (in thousands):


	2020		2019
Operating lease cost	$	12,016	$	13,877
Finance lease cost:
Amortization of right-of-use assets		149		157
Interest on lease liabilities		48		63
Net lease cost	$	12,213	$	14,097

Lease expense for operating leases for 2018 was $14.3 million.

Future minimum lease payments under non-cancelable leases at December 31, 2020 are as follows (in thousands):


	Operating		Finance
	Leases		Leases
Year 1	$	6,232	$	260
Year 2		6,011		234
Year 3		6,039		199
Year 4		5,844		46
Year 5		5,956		46
Years thereafter		568,311		567
Total future minimum lease payments		598,393		1,352
Less amount representing interest		(490,824)		(257)
Total present value of minimum payments	$	107,569	$	1,095

The remaining lease term and discount rate for the Company’s leases are as follows:


Weighted-average remaining lease term:
Operating leases	50.2	years
Finance leases	10.1	years
Weighted-average discount rate:
Operating leases	6.9	%
Finance leases	4.0	%