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RELATED PARTY TRANSACTIONS | 6 Months Ended
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Jun. 30, 2022
RELATED PARTY TRANSACTIONS |
RELATED PARTY TRANSACTIONS | NOTE 5. RELATED PARTY TRANSACTIONS ​ The shopping center adjacent to the Atlantis (the “Shopping Center”) is owned by Biggest Little Investments, L.P. (“BLI”). John Farahi and Bob Farahi, Co-Chairmen of the Board and executive officers of the Company, and Ben Farahi have significant holdings (the “Farahi Family Stockholders”) in Monarch and each also beneficially owns limited partnership interests in BLI. Maxum LLC is the sole general partner of BLI, and Ben Farahi is the sole managing member of Maxum LLC. Neither John Farahi nor Bob Farahi has any management or operational control over BLI or the Shopping Center. Until May 2006, Ben Farahi held the positions of Co-Chairman of the Board, Secretary, Treasurer and Chief Financial Officer of the Company. ​ On August 28, 2015, Monarch, through its subsidiary Golden Road Motor Inn, Inc., entered into a 20-year lease agreement with BLI for a portion of the Shopping Center, consisting of an approximate 46,000 square-foot commercial building on approximately 4.2 acres of land adjacent to the Atlantis (the “Parking Lot Lease”). This lease gives the Atlantis the right to use a parcel, approximately 4.2 acres, comprised of a commercial building and surrounding land adjacent to the Atlantis. The primary purpose of the Parking Lot Lease is to provide additional, convenient, Atlantis surface parking. The Company demolished the building and converted the land into approximately 300 additional surface parking spaces for the Atlantis. The minimum annual rent under the Parking Lot Lease is $695 thousand commencing on November 17, 2015. The minimum annual rent is subject to a cost of living adjustment increase on each five-year anniversary. In addition, the Company is responsible for the payment of property taxes, utilities and maintenance expenses related to the leased property. The Company has an option to renew the Parking Lot Lease for an additional ten-year term. If the Company elects not to exercise its renewal option, the Company will be obligated to pay BLI $1.6 million. For the three-month periods ended June 30, 2022 and 2021, the Company paid $187 thousand and $174 thousand in rent, respectively, plus $1 thousand in operating expenses in each period relating to this lease for each of the periods. For the six-month periods ended June 30, 2022 and 2021, the Company paid $374 and $348 thousand in rent, respectively, plus $8 thousand in each period in operating expenses relating to this lease. The right of use asset and lease liability balances as of June 30, 2022, recognized in the Consolidated Balance Sheet, was $10.1 million. ​ In addition, the Atlantis shares a driveway with the Shopping Center and leases approximately 37,400 square feet from BLI (the “Driveway Lease”) for an initial lease term of 15 years, which commenced on September 30, 2004, at an original annual rent of $300 thousand plus common area expenses. The annual rent is subject to a cost of living adjustment increase on each five-year anniversary of the Driveway Lease. Effective August 28, 2015, in connection with the Company entering into the Parking Lot Lease, the Driveway Lease was amended to: (i) make the Company solely responsible for the operation and maintenance costs of the shared driveway (including the fountains thereon); (ii) eliminate the Company’s obligation to reimburse the Shopping Center for its proportionate share of common area expenses; and (iii) exercise the three successive five-year renewal terms beyond the initial 15-year term in the existing Driveway Lease agreement. At the end of the renewal terms, the Company has the option to purchase the leased driveway section of the Shopping Center. For each of the three-month periods ended June 30, 2022 and 2021, the Company paid $101 thousand in rent plus $7 thousand and $5 thousand, respectively, in operating expenses relating to this lease. For each of the six-month periods ended June 30, 2022 and 2021, the Company paid $202 thousand in rent plus $16 thousand and $13 thousand, respectively, in operating expenses relating to this lease. The right of use asset and lease liability balances as of June 30, 2022, recognized in the Consolidated Balance Sheet, was $3.6 million. ​ The Company occasionally leases billboard advertising, storage space and parking lot space from affiliates controlled by the Farahi Family Stockholders, and paid $123 thousand and $52 thousand, respectively, for the three-month periods and $204 thousand and $94 thousand, respectively, for the six-month periods ended June 30, 2022 and 2021, for such leases. ​

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