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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2017

Schedule of basic and incentive management fees

Total basic management fees, net of key money incentives received from third-party hotel managers, along with incentive management fees incurred by the Company during the three months ended March 31, 2017 and 2016 were included in other property-level expenses on the Company’s consolidated statements of operations and comprehensive income as follows (in thousands):


	Three Months Ended		Three Months Ended
	March 31, 2017		March 31, 2016
	(unaudited)		(unaudited)
Basic management fees	$	7,895	$	7,667
Incentive management fees		2,553		1,704
Total basic and incentive management fees	$	10,448	$	9,371

Schedule of License and Franchise Costs

Total license and franchise fees incurred by the Company during the three months ended March 31, 2017 and 2016 were included in franchise costs on the Company’s consolidated statements of operations and comprehensive income as follows (in thousands):


	Three Months Ended		Three Months Ended
	March 31, 2017		March 31, 2016
	(unaudited)		(unaudited)
Franchise assessments (1)	$	5,927	$	5,813
Franchise royalties		2,128		2,283
Total franchise costs	$	8,055	$	8,096

(1)

Includes advertising, reservation and frequent guest club assessments.

Schedule of assets under capital lease

The capital lease asset was included in investment in hotel properties, net on the Company’s consolidated balance sheets as follows (in thousands):


	March 31,		December 31,
	2017		2016
	(unaudited)
Gross capital lease asset - buildings and improvements	$	58,799	$	58,799
Accumulated depreciation		(7,105)		(6,738)
Net capital lease asset - buildings and improvements	$	51,694	$	52,061

Schedule of future minimum lease payments under capital lease

Future minimum lease payments under the Company’s capital lease together with the present value of the net minimum lease payments as of March 31, 2017 are as follows (in thousands):


2017	$	1,403
2018		1,403
2019		1,403
2020		1,403
2021		1,403
Thereafter		106,257
Total minimum lease payments (1)		113,272
Less: Amount representing interest (2)		(97,697)
Present value of net minimum lease payments (3)	$	15,575

(1)

Minimum lease payments do not include percentage rent which may be paid under the Hyatt Centric Chicago Magnificent Mile building lease on the basis of 4.0% of the hotel’s gross room revenues over a certain threshold. No percentage rent was due during either the three months ended March 31, 2017 or 2016.

(2)

Interest includes the amount necessary to reduce net minimum lease payments to present value calculated at the Company’s incremental borrowing rate at lease inception.

(3)

The present value of net minimum lease payments are presented on the Company’s consolidated balance sheet as of March 31, 2017 as a current obligation of $1,000, which is included in accounts payable and accrued expenses, and as a long-term obligation of $15.6 million, which is included in capital lease obligations, less current portion.

Schedule of ground, building and air lease rent

Total rent expense incurred pursuant to ground, building and air lease agreements for the three months ended March 31, 2017 and 2016 was included in property tax, ground lease and insurance on the Company’s consolidated statements of operations and comprehensive income as follows (in thousands):


	Three Months Ended		Three Months Ended
	March 31, 2017		March 31, 2016
	(unaudited)		(unaudited)
Minimum rent, including straight-line adjustments	$	2,340	$	2,396
Percentage rent (1)		1,585		2,060
Total	$	3,925	$	4,456

(1)

Several of the Company’s hotels pay percentage rent, which is calculated on operating revenues above certain thresholds.

Schedule of Hotel Geographic Concentration of Risk

As of March 31, 2017, 16 of the Company’s 27 hotels were concentrated in California, Illinois, Massachusetts and the greater Washington DC area as follows:


							Greater
							Washington DC
	California		Illinois		Massachusetts		Area
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Number of hotels	7		3		3		3
Percentage of total rooms	29	%	9	%	15	%	14	%
Percentage of total consolidated revenue during the past 12 months	34	%	7	%	15	%	14	%

- Definition

Tabular disclosure of a lessee's leasing arrangements including: (1) the basis on which contingent rental payments are determined, (2) the existence and terms of renewal or purchase options and escalation clauses, (3) restrictions imposed by lease arrangements, such as those concerning dividends, additional debt, and further leasing, (4) rent holidays, rent concessions, or leasehold improvement incentives and unusual provisions or conditions. Disclosure may also include the specific period used to amortize material leasehold improvements made at the inception of the lease or during the lease term. Additionally, for operating leases having initial or remaining noncancelable lease terms in excess of one year: (a) future minimum rental payments required as of the date of the latest balance sheet presented, in the aggregate and for each of the five succeeding fiscal years, (b) the total of minimum rentals to be received in the future under noncancelable subleases as of the date of the latest balance sheet presented, and (c) for all operating leases, rental expense for each period for which an income statement is presented, with separate amounts for minimum rentals, contingent rentals, and sublease rentals. Rental payments under leases with terms of a month or less that were not renewed need not be included.

+ References + Details