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Leases | 12 Months Ended
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Dec. 31, 2023
Leases [Abstract] |
Leases | Leases The majority of our leases, as lessee, are operating ground leases. We also have operating equipment leases, such as copier and vehicle leases, at our hotel properties. Some leases include one or more options to renew, with renewal terms that can extend the lease term from one year to 99 years. The exercise of lease renewal options is at our sole discretion. Some leases have variable payments, however, if variable payments are contingent, they are not included in the ROU assets and liabilities. In December 2022, the Company acquired the lease of a single hotel property in Marietta, Georgia. The lease is considered a finance lease and resulted in an increase to “investments in hotel properties, net” and “finance lease liabilities” of approximately $19.0 million, inclusive of transaction costs, and $18.8 million, respectively. The discount rate used to calculate the lease liability and ROU asset related to our ground leases is based on our incremental borrowing rate (“IBR”), as the rate implicit in each lease is not readily determinable. The IBR is determined at commencement of the lease, or upon modification of the lease, as the interest rate a lessee would have to pay to borrow on a fully collateralized basis over a similar term and at an amount equal to the lease payments in a similar economic environment. As of December 31, 2023 and 2022, our leased assets and liabilities consisted of the following (in thousands):
|  | Lease Classification |  |  |  |  | December 31, 2023 |  | December 31, 2022 |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating lease right-of-use assets |  | Operating lease right-of-use assets |  |  |  |  | $ | 44,047 |  |  | $ | 43,921 |  |  |  |  |  |  |
Finance lease assets |  | Investments in hotel properties, net |  |  |  |  | 17,269 |  |  | 18,972 |  |  |  |  |  |  |
Total leased assets |  |  |  |  |  |  | $ | 61,316 |  |  | $ | 62,893 |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating lease liabilities |  | Operating lease liabilities |  |  |  |  | $ | 44,765 |  |  | $ | 44,661 |  |  |  |  |  |  |
Finance lease liabilities |  | Finance lease liabilities |  |  |  |  | 18,469 |  |  | 18,847 |  |  |  |  |  |  |
Total leased liabilities |  |  |  |  |  |  | $ | 63,234 |  |  | $ | 63,508 |  |  |  |  |  |  |
We incurred the following lease costs related to our leases (in thousands):
|  |  |  | Year Ended December 31,
Lease cost |  | Classification |  | 2023 |  | 2022 |  | 2021
Operating lease cost |  |  |  |  |  |  |  |
Rent expense |  | Hotel operating expenses - other (1) |  | $ | 4,351 |  |  | $ | 4,714 |  |  | $ | 4,665 |
Finance lease cost |  |  |  |  |  |  |  |
Amortization of lease assets |  | Depreciation and amortization |  | $ | 537 |  |  | $ | 26 |  |  | $ | — |
_______________________________________ (1) For the years ended December 31, 2023, 2022, and 2021, operating lease cost includes approximately $1.1 million, $1.2 million and $1.1 million, respectively, of variable lease cost associated primarily with the ground leases and $(15,000), $181,000 and $211,000, respectively of net amortization costs related to the intangible assets and liabilities that were reclassified to “operating lease right-of-use assets” upon adoption of ASC 842. The change in net intangible amortization costs from 2022 to 2023 was primarily due to certain leases with intangible balances reaching maturity in 2023. Short-term lease costs in aggregate are immaterial. Other information related to leases is as follows:
|  | Year Ended December 31, |  |  |  |  |  |  |
Supplemental Cash Flows Information |  | 2023 |  | 2022 |  | 2021 |  |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating cash flows from operating leases (in thousands) |  | $ | 2,647 |  |  | $ | 2,713 |  |  | $ | 2,824 |  |  |  |  |  |  |  |  |  |
Weighted Average Remaining Lease Term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating leases (1) |  | 67 years |  | 67 years |  | 68 years |  |  |  |  |  |  |  |  |
Finance lease (2) |  | 31 years |  | 32 years |  | — |  |  |  |  |  |  |  |  |  |
Weighted Average Discount Rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating leases (1) |  | 5.26 | % |  | 5.14 | % |  | 5.14 | % |  |  |  |  |  |  |  |  |
Finance lease |  | 10.68 | % |  | 10.68 | % |  | — | % |  |  |  |  |  |  |  |  |
_______________________________________ (1) Calculated using the lease term, excluding extension options, and our calculated discount rates of the ground leases and owner managed leases. (2) The weighted-average remaining lease term includes the lease term of our finance lease with the City of Marietta which terminates December 31, 2054. Future minimum lease payments due under non-cancellable leases as of December 31, 2023 were as follows (in thousands):
|  | Operating Leases |  | Finance Lease |  |
2024 |  | $ | 3,102 |  |  | $ | 2,411 |  |  |
2025 |  | 3,085 |  |  | 2,411 |  |  |
2026 |  | 3,057 |  |  | 2,284 |  |  |
2027 |  | 3,017 |  |  | 1,904 |  |  |
2028 |  | 3,017 |  |  | 1,904 |  |  |
Thereafter |  | 180,660 |  |  | 51,917 |  |  |
Total future minimum lease payments (1) |  | 195,938 |  |  | 62,831 |  |  |
Less: interest |  | 151,173 |  |  | 44,362 |  |  |
Present value of lease liabilities |  | $ | 44,765 |  |  | $ | 18,469 |  |  |
________ (1) Based on payment amounts as of December 31, 2023.
Leases | Leases The majority of our leases, as lessee, are operating ground leases. We also have operating equipment leases, such as copier and vehicle leases, at our hotel properties. Some leases include one or more options to renew, with renewal terms that can extend the lease term from one year to 99 years. The exercise of lease renewal options is at our sole discretion. Some leases have variable payments, however, if variable payments are contingent, they are not included in the ROU assets and liabilities. In December 2022, the Company acquired the lease of a single hotel property in Marietta, Georgia. The lease is considered a finance lease and resulted in an increase to “investments in hotel properties, net” and “finance lease liabilities” of approximately $19.0 million, inclusive of transaction costs, and $18.8 million, respectively. The discount rate used to calculate the lease liability and ROU asset related to our ground leases is based on our incremental borrowing rate (“IBR”), as the rate implicit in each lease is not readily determinable. The IBR is determined at commencement of the lease, or upon modification of the lease, as the interest rate a lessee would have to pay to borrow on a fully collateralized basis over a similar term and at an amount equal to the lease payments in a similar economic environment. As of December 31, 2023 and 2022, our leased assets and liabilities consisted of the following (in thousands):
|  | Lease Classification |  |  |  |  | December 31, 2023 |  | December 31, 2022 |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating lease right-of-use assets |  | Operating lease right-of-use assets |  |  |  |  | $ | 44,047 |  |  | $ | 43,921 |  |  |  |  |  |  |
Finance lease assets |  | Investments in hotel properties, net |  |  |  |  | 17,269 |  |  | 18,972 |  |  |  |  |  |  |
Total leased assets |  |  |  |  |  |  | $ | 61,316 |  |  | $ | 62,893 |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating lease liabilities |  | Operating lease liabilities |  |  |  |  | $ | 44,765 |  |  | $ | 44,661 |  |  |  |  |  |  |
Finance lease liabilities |  | Finance lease liabilities |  |  |  |  | 18,469 |  |  | 18,847 |  |  |  |  |  |  |
Total leased liabilities |  |  |  |  |  |  | $ | 63,234 |  |  | $ | 63,508 |  |  |  |  |  |  |
We incurred the following lease costs related to our leases (in thousands):
|  |  |  | Year Ended December 31,
Lease cost |  | Classification |  | 2023 |  | 2022 |  | 2021
Operating lease cost |  |  |  |  |  |  |  |
Rent expense |  | Hotel operating expenses - other (1) |  | $ | 4,351 |  |  | $ | 4,714 |  |  | $ | 4,665 |
Finance lease cost |  |  |  |  |  |  |  |
Amortization of lease assets |  | Depreciation and amortization |  | $ | 537 |  |  | $ | 26 |  |  | $ | — |
_______________________________________ (1) For the years ended December 31, 2023, 2022, and 2021, operating lease cost includes approximately $1.1 million, $1.2 million and $1.1 million, respectively, of variable lease cost associated primarily with the ground leases and $(15,000), $181,000 and $211,000, respectively of net amortization costs related to the intangible assets and liabilities that were reclassified to “operating lease right-of-use assets” upon adoption of ASC 842. The change in net intangible amortization costs from 2022 to 2023 was primarily due to certain leases with intangible balances reaching maturity in 2023. Short-term lease costs in aggregate are immaterial. Other information related to leases is as follows:
|  | Year Ended December 31, |  |  |  |  |  |  |
Supplemental Cash Flows Information |  | 2023 |  | 2022 |  | 2021 |  |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating cash flows from operating leases (in thousands) |  | $ | 2,647 |  |  | $ | 2,713 |  |  | $ | 2,824 |  |  |  |  |  |  |  |  |  |
Weighted Average Remaining Lease Term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating leases (1) |  | 67 years |  | 67 years |  | 68 years |  |  |  |  |  |  |  |  |
Finance lease (2) |  | 31 years |  | 32 years |  | — |  |  |  |  |  |  |  |  |  |
Weighted Average Discount Rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating leases (1) |  | 5.26 | % |  | 5.14 | % |  | 5.14 | % |  |  |  |  |  |  |  |  |
Finance lease |  | 10.68 | % |  | 10.68 | % |  | — | % |  |  |  |  |  |  |  |  |
_______________________________________ (1) Calculated using the lease term, excluding extension options, and our calculated discount rates of the ground leases and owner managed leases. (2) The weighted-average remaining lease term includes the lease term of our finance lease with the City of Marietta which terminates December 31, 2054. Future minimum lease payments due under non-cancellable leases as of December 31, 2023 were as follows (in thousands):
|  | Operating Leases |  | Finance Lease |  |
2024 |  | $ | 3,102 |  |  | $ | 2,411 |  |  |
2025 |  | 3,085 |  |  | 2,411 |  |  |
2026 |  | 3,057 |  |  | 2,284 |  |  |
2027 |  | 3,017 |  |  | 1,904 |  |  |
2028 |  | 3,017 |  |  | 1,904 |  |  |
Thereafter |  | 180,660 |  |  | 51,917 |  |  |
Total future minimum lease payments (1) |  | 195,938 |  |  | 62,831 |  |  |
Less: interest |  | 151,173 |  |  | 44,362 |  |  |
Present value of lease liabilities |  | $ | 44,765 |  |  | $ | 18,469 |  |  |
________ (1) Based on payment amounts as of December 31, 2023.

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
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