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LEASES
 9 Months Ended
Oct. 31, 2021
Leases  
LEASES

14. LEASES

 

The Trust has operating leases for its corporate offices in Phoenix, Arizona, land leased in Albuquerque, New Mexico, and a cable equipment finance lease in Tucson, Arizona. The Trust’s corporate office lease includes 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. All leases are non-cancelable.

 

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 July 2022. 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 $2,000 for year 5 of the lease term, which expires August 31, 2022.

 

 

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 nine months ended October 31, 2021:

 

    Nine Months Ended  
    October 31, 2021  
Operating Lease Costs:        
Operating lease cost*     150,260  

 

*Short term lease costs were immaterial.

 

Supplemental cash flow information is as follows:

 

   Nine Months Ended 
   October 31, 2021 
     
Cash paid for amounts included in the measurement of lease liabilities:     
Operating cash flows from operating leases  $64,762 
      
Lease obligations:     
Operating leases, net  $2,326,160 
Long-term obligations  $2,273,740 

 

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

 

Weighted average remaining lease term (years)  October 31, 2021 
Operating leases   37 
      
Weighted average discount rate Operating leases   4.85%

 

The aggregate future lease payments for Operating Lease Liability as of October 31, 2021 are as follows:

 

For the Years Ending October 31,      
2022   $ 43,557  
2023     148,348  
2024     112,116  
2025     112,116  
2026     112,116  
Thereafter     5,039,195  
Total minimum lease payments   $ 5,567,448  
Less: amount representing interest     3,241,288  
Total present value of minimum payments     2,326,160  
Less: current portion   $ 52,420  
Long term portion of operating lease liability     2,273,740  

 

 

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 nine months ended October 31, 2021:

 

   Nine Months Ended 
   October 31, 2021 
Finance Lease Costs:     
Amortization of right-of-use assets  $20,812 
Interest on lease obligations   2,576 

 

Supplemental cash flow information is as follows:

 

   Nine Months Ended 
   October 31, 2021 
     
Cash paid for amounts included in the measurement of lease liabilities:     
Operating cash flows from finance leases  $20,811 
      
Lease obligations:     
Finance leases, net  $59,209 
Long-term obligations  $30,321 

 

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

 

Weighted average remaining lease term (years)  October 31, 2021 
Finance leases   2 
      
Weighted average discount rate   4.85%
Finance leases     

 

The aggregate future lease payments for Finance Lease Liability as of October 31, 2021 are as follows:

 

For the Years Ending October 31,    
2022   7,781 
2023   31,123 
2024   23,343 
Total minimum lease payments  $62,247 
Less: amount representing interest   3,038 
Total present value of minimum payments   59,209 
Less: current portion  $28,888 
Long term portion of finance lease liability   30,321