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Leases

3 Months Ended

Apr. 30, 2020

14. LEASES

The Company has operating leases and finance lease for its corporate offices in Phoenix, Arizona, and land leased in Albuquerque, New Mexico. The Company’s lease terms include options to extend or terminate the leases and the Company includes these options in the lease term when it is reasonably certain to exercise that option.

Operating Leases

On August 4, 2017, the Trust entered into a five-year office lease agreement with Northpoint Properties for a commercial office lease at 1730 E Northern Ave, Suite 122, Phoenix, Arizona 85020 commencing on September 1, 2017. Base monthly rent of $4,100 increases 6% on a yearly basis. No rent is due for October 2018 and October 2022 months. The Trust also agreed to pay electricity and applicable sales tax. The office lease agreement provides early termination with a 90-day notification with an early termination fee of $12,000, $8,000, $6,000, $4,000, and $2,000 for years 1 - 5 of the lease term.

The Company’s Albuquerque Hotel is subject to non-cancelable ground lease. The Albuquerque Hotel non-cancelable ground lease was extended on January 14, 2014 and expires in 2058.

The following table presents the Company’s lease costs for the three months ended April 30, 2020:

	Three Months
	Ended
	30-Apr-20
Operating Lease Costs:
Operating lease cost*	$	55,000

* Short term lease costs were immaterial.

Supplemental cash flow information is as follows:

	Three Months
	Ended
	30-Apr-20
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	41,850

Right-of-use assets obtained in exchange for lease obligations:
Operating leases, net	$	2,301,461
Long-term obligations	$	2,240,427

Weighted average remaining lease terms and discount rates were as follows:

Weighted average remaining lease term (years)	April 30, 2020
Operating leases		37.5

Weighted average discount rate
Operating leases		4.85	%

The aggregate future lease payments for Operating Lease Liability as of April 30, 2020 are as follows:

For the Years Ending January 31,
Remaining in 2021	$	126,930
2022		172,177
2023		148,348
2024		112,116
2025		121,459
Thereafter		5,151,311
Total minimum lease payments	$	5,822,998
Less: amount representing interest		3,143,792
Total present value of minimum payments		2,409,207
Less: current portion	$	168,780
Long term portion of operating lease liability		2,240,427

Finance Leases

The Company’s Tucson Oracle Hotel is subject to non-cancelable cable lease. The Tucson Oracle Hotel non-cancelable cable lease expires in 2023.

The following table presents the Company’s lease costs for the three months ended April 30, 2020:

	Three Months
	Ended
	30-Apr-20
Finance Lease Costs:
Amortization of right-of-use assets	$	6,937
Interest on lease obligations		1,265

Supplemental cash flow information is as follows:

	Three Months
	Ended
	30-Apr-20
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	7,781

Right-of-use assets obtained in exchange for lease obligations:
Finance leases, net	$	97,120
Long-term obligations	$	68,880

Weighted average remaining lease terms and discount rates were as follows:

Weighted average remaining lease term (years)	April 30, 2020
Finance leases		3.75

Weighted average discount rate
Finance leases		4.85	%

The aggregate future lease payments for Finance Lease Liability as of April 30, 2020 are as follows:

For the Years Ending January 31,
Remaining in 2021	$	23,343
2022		31,123
2023		31,123
2024		23,343
2025		-
Thereafter		-
Total minimum lease payments	$	108,932
Less: amount representing interest		8,929
Total present value of minimum payments		100,003
Less: current portion	$	31,123
Long term portion of finance lease liability		68,880