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Leases

6 Months Ended

Jul. 31, 2020

14. LEASES

The Trust has operating leases and finance lease for its corporate offices in Phoenix, Arizona, and land leased in Albuquerque, New Mexico. The Trust’s lease terms include options to extend or terminate the leases and the Trust 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 six months ended July 31, 2020:

	Six Months
	Ended
	31-Jul-20
Operating Lease Costs:
Operating lease cost*	$	120,000

* Short term lease costs were immaterial.

Supplemental cash flow information is as follows:

	Six Months
	Ended
	31-Jul-20
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(11,276	)

Lease Obligations obtained:
Operating leases, net	$	2,396,517
Long-term obligations	$	2,341,097

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

Weighted average remaining lease term (years)	July 31, 2020
Operating leases		38

Weighted average discount rate
Operating leases		4.85	%

The aggregate future lease payments for Operating Lease Liability as of July 31, 2020 are as follows:

For the Years Ending January 31,
Remaining in 2021	$	85,080
2022		172,177
2023		148,348
2024		112,116
2025		112,116
Thereafter		5,151,311
Total minimum lease payments	$	5,781,148
Less: amount representing interest		3,384,631
Total present value of minimum payments		2,396,517
Less: current portion of operating lease liability	$	55,420
Long term portion of operating lease liability		2,341,097

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 six months ended July 31, 2020:

	Six Months
	Ended
	31-Jul-20
Finance Lease Costs:
Amortization of lease obligations	$	13,874
Interest on lease obligations		2,451

Supplemental cash flow information is as follows:

	Six Months
	Ended
	31-Jul-20
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	28,512

Lease Obligations obtained:
Finance leases, net	$	93,408
Long-term obligations	$	66,216

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

Weighted average remaining lease term (years)	July 31, 2020
Finance leases		38

Weighted average discount rate
Finance leases		4.85	%

The aggregate future lease payments for Finance Lease Liability as of July 31, 2020 are as follows:

For the Years Ending January 31,
Remaining in 2021	$	15,562
2022		31,123
2023		31,123
2024		23,343
Total minimum lease payments	$	101,151
Less: amount representing interest		7,743
Total present value of minimum payments		93,408
Less: current portion	$	27,192
Long term portion of finance lease liability		66,216