Leases

12 Months Ended

Dec. 31, 2024

We have operating ground leases and 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 to 50 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. We have no finance leases as of December 31, 2024.

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, 2024 and 2023, our leased assets and liabilities consisted of the following (in thousands):


	December 31, 2024		December 31, 2023
Assets
Operating lease right-of-use assets	$	34,852	$	78,383

Liabilities
Operating lease liabilities	$	19,984	$	60,379

We incurred the following lease costs related to our operating leases (in thousands):



		Year Ended December 31,
	Classification	2024		2023		2022
Operating lease cost (1)	Hotel operating expenses - other	$	4,505	$	6,757	$	6,653

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(1) For the years ended December 31, 2024, 2023 and 2022, operating lease cost includes approximately $934,000, $2.3 million and $2.2 million, respectively, of variable lease cost associated with the ground leases. Additionally, we recorded $451,000, $474,000 and $474,000, respectively, of amortization costs related to the intangible assets that were reclassified to “operating lease right-of-use assets” upon adoption of ASC 842. Short-term lease costs in aggregate are immaterial.

Other information related to leases is as follows:


	Year Ended December 31,
	2024			2023			2022

Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases (in thousands)	$	3,288		$	3,310		$	3,307





Weighted Average Remaining Lease Term
Operating leases (1)	41 years			43 years			44 years

Weighted Average Discount Rate
Operating leases (1)	5.25		%	4.98		%	4.98		%

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(1) Calculated using the lease term, excluding extension options, and discount rates of the ground leases.

Future minimum lease payments due under non-cancellable leases as of December 31, 2024 were as follows (in thousands):


	Operating Leases
2025	$	1,216
2026	1,124
2027	1,132
2028	1,136
2029	1,129
Thereafter	52,152
Total future minimum lease payments (1)	57,889
Less: interest	(37,905)
Present value of operating lease liabilities	$	19,984

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(1) Based on payment amounts as of December 31, 2024.