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Investments in Hotel Properties, net
 6 Months Ended
Jun. 30, 2023
Property, Plant and Equipment [Abstract]  
Investments in Hotel Properties, net Investments in Hotel Properties, net
Investments in hotel properties, net consisted of the following (in thousands):
June 30, 2023December 31, 2022
Land$627,368 $622,759 
Buildings and improvements3,610,472 3,650,464 
Furniture, fixtures and equipment209,506 222,665 
Construction in progress97,558 21,609 
Condominium properties— 9,889 
Hilton Marietta finance lease17,269 18,998 
Total cost4,562,173 4,546,384 
Accumulated depreciation(1,414,596)(1,428,053)
Investments in hotel properties, net$3,147,577 $3,118,331 
Consolidation of VIE
On May 31, 2023, Ashford Trust obtained the ability to exercise its kick-out rights of the manager of 815 Commerce MM, which is developing the Le Meridien hotel in Fort Worth, Texas. As a result, Ashford Trust became the primary beneficiary and began consolidating 815 Commerce MM. The hotel property under development is subject to a 99-year lease of the land and building that has been accounted for as a failed sale and leaseback as described below.
The Company determined that 815 Commerce MM is a VIE that is not a business. As such, the Company measured and recognized 100% of the identifiable assets acquired, the liabilities assumed and any noncontrolling interests of 815 Commerce MM, at fair value. The Company recognized a gain of $1.1 million that represented the difference between the fair value of the assets and liabilities recognized, the fair value of the non-controlling interest and the previous carrying value of the Company’s investment in 815 Commerce MM. The gain is included in “gain (loss) on consolidation of VIE and disposition of assets” in the consolidated statements of operations.
The following table summarizes the assets and liabilities of 815 Commerce MM that were initially consolidated upon Ashford Trust becoming the primary beneficiary (in thousands):
Land$4,609 
Construction in progress56,591 
Restricted cash18,201 
Deferred costs92 
Indebtedness(35,052)
Other finance liability(26,729)
Accounts payable and accrued expenses(88)
Accrued interest payable(104)
Noncontrolling interest in consolidated entities(7,961)
Investment in 815 Commerce MM$9,559 
Other Finance Liability
On November 10, 2021, the 815 Commerce LLC entered into a purchase and sale agreement. Pursuant to the purchase and sale agreement, 815 Commerce LLC sold its land and building in Fort Worth, Texas (the "Property") for $30.4 million. Concurrent with the sale of the Property, 815 Commerce LLC entered into a ninety-nine-year lease agreement (the “Lease Agreement”), whereby 815 Commerce LLC will lease back the Property at an annual rental rate of approximately $1.5 million, subject to annual rent increases of 2.0%. Under the Lease Agreement, 815 Commerce LLC has a purchase option between 90-180 days prior to the commencement of the 36th lease year.
In accordance with ASC 842, Leases, this transaction was recorded as a failed sale and leaseback as there are not alternative assets, substantially the same as the transferred asset, readily available in the marketplace for the repurchase option to qualify as a sale leaseback. Upon consolidation of 815 Commerce LLC in May 2023, the Company utilized a discount rate of 8.2% to determine the fair value of the finance liability. As of June 30, 2023 no depreciation has been recorded as the building is under development. The finance liability of $26.7 million is recognized in “other finance liability” on the Company's consolidated balance sheet as of June 30, 2023.