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Favorable Lease Assets
 6 Months Ended
Jun. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]  
Favorable Lease Assets
Favorable Lease Assets

In connection with the acquisition of certain hotels, we recognized intangible assets for favorable ground leases and tenant leases. Our favorable lease assets, net of accumulated amortization, as of June 30, 2013 and December 31, 2012 consist of the following (in thousands):
 
June 30, 2013
 
December 31, 2012
Westin Boston Waterfront Ground Lease
$
18,618

 
$
18,726

Westin Boston Waterfront - Lease Right
9,045

 
9,045

Minneapolis Hilton Ground Lease
5,872

 
5,910

Oak Brook Hills Marriott Resort Ground Lease
5,273

 
5,489

Lexington Hotel New York Tenant Leases
1,248

 
1,323

Hilton Boston Downtown Tenant Leases
396

 
479

 
$
40,452

 
$
40,972



The favorable lease assets are recorded at the acquisition date and are generally amortized using the straight-line method over the remaining non-cancelable term of the lease agreement. Amortization expense for the period from January 1, 2013 to June 30, 2013 was approximately $0.5 million.

We own a favorable lease asset related to the right to acquire a leasehold interest in a parcel of land adjacent to the Westin Boston Waterfront Hotel for the development of a 320 to 350 room hotel (the “lease right”). The option expires in 2016. We do not amortize the lease right but review the asset for impairment annually or at interim periods if events or circumstances indicate that the asset may be impaired. No impairment loss was recorded for the period from January 1, 2013 to June 30, 2013. An impairment loss of $0.5 million was recorded during the fiscal quarter ended June 15, 2012.

The fair value of the lease right is a Level 3 measurement under the fair value hierarchy (see Note 2) and is derived from a discounted cash flow model using the favorable difference between the estimated participating rents or actual rents in accordance with the lease terms and the estimated market rents. The discount rate is estimated using a risk adjusted rate of return, the estimated participating rents are estimated based on a hypothetical hotel comparable to our Westin Boston Waterfront Hotel, and market rents are based on comparable long-term ground leases in the City of Boston.