XML 35 R13.htm IDEA: XBRL DOCUMENT v3.24.0.1
Investments in Hotel Properties, net
 12 Months Ended
Dec. 31, 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):
December 31, 2023December 31, 2022
Land$605,509 $622,759 
Buildings and improvements3,331,645 3,650,464 
Furniture, fixtures and equipment175,991 222,665 
Construction in progress114,850 21,609 
Condominium properties— 9,889 
Hilton Marietta finance lease17,269 18,998 
Total cost4,245,264 4,546,384 
Accumulated depreciation(1,293,332)(1,428,053)
Investments in hotel properties, net$2,951,932 $3,118,331 
For the years ended December 31, 2023, 2022 and 2021, we recognized depreciation expense of $187.4 million, $201.4 million and $218.5 million, respectively.
Consolidation of VIE - 815 Commerce MM
On May 31, 2023, Ashford Trust obtained the ability to exercise its kick-out rights of the manager of 815 Commerce Managing Member LLC (“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 on May 31, 2023, 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, 815 Commerce LLC, a subsidiary of 815 Commerce MM, 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 99-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 December 31, 2023, no depreciation has been recorded as the building is under development. The finance liability is recognized in “other finance liability” on the Company's consolidated balance sheet as of December 31, 2023.
Consolidation of VIE - Stirling OP
On December 6, 2023, the Company entered into a Contribution Agreement with Stirling OP, a subsidiary of Stirling Inc. Pursuant to the terms of the Contribution Agreement, the Company contributed its equity interests, and the associated debt and other obligations, in Residence Inn Manchester, Hampton Inn Buford, SpringHill Suites Buford and Residence Inn Jacksonville to Stirling OP in exchange for 1.4 million Class I units of Stirling OP.
The Company determined the transaction resulted in Ashford Trust becoming the primary beneficiary of Stirling OP in contemplation of: 1) the related party group comprised of (i) Ashford Trust and (ii) the initial stockholder who has control over election or removal of the board of directors of Stirling Inc. that have power to direct the most significant activities of Stirling OP; and 2) the consideration that substantially all the economics are held by the Company through its equity interest, and substantially all of the activities are performed on the Company’s behalf. As a result, Ashford Trust began consolidating Stirling OP as of December 6, 2023 and as such, the properties and debt continue to be reflected on the Company's balance sheet at their historical carrying values.