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Leases

6 Months Ended

Jun. 30, 2022

11. 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, Ole Red Tishomingo, Ole Red Nashville International Airport, and 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 as a result are not included in the Company’s calculation of its right-of-use assets and lease 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’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 applies 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 calculates 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 costs for the three months ended June 30, 2022 and 2021 are as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Operating lease cost	$	3,809	$	3,243	$	7,345	$	6,370
Finance lease cost:
Amortization of right-of-use assets		30		37		61		74
Interest on lease liabilities		10		10		18		21
Net lease cost	$	3,849	$	3,290	$	7,424	$	6,465

Future minimum lease payments under non-cancelable leases at June 30, 2022 are as follows (in thousands):


	Operating		Finance
	Leases		Leases
Year 1	$	7,046	$	232
Year 2		6,893		106
Year 3		6,746		46
Year 4		6,786		46
Year 5		6,841		46
Years thereafter		561,701		497
Total future minimum lease payments		596,013		973
Less amount representing interest		(481,003)		(202)
Total present value of minimum payments	$	115,010	$	771

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


Weighted-average remaining lease term:
Operating leases	47.6	years
Finance leases	11.2	years
Weighted-average discount rate:
Operating leases	6.8	%
Finance leases	4.0	%