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Commitments and Contingencies (Tables)
 9 Months Ended
Sep. 30, 2017
Commitments and Contingencies  
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 and nine months ended September 30, 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 September 30,

 

Nine Months Ended September 30,

 

    

2017

    

2016

    

2017

    

2016

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Basic management fees

 

$

8,432

 

$

8,510

 

$

25,269

 

$

25,130

Incentive management fees

 

 

1,172

 

 

1,541

 

 

5,525

 

 

4,735

Total basic and incentive management fees

 

$

9,604

 

$

10,051

 

$

30,794

 

$

29,865

 

Schedule of License and Franchise Costs

Total license and franchise fees incurred by the Company during the three and nine months ended September 30, 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 September 30,

 

Nine Months Ended September 30,

 

    

2017

    

2016

    

2017

    

2016

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Franchise assessments (1)

 

$

6,839

 

$

6,666

 

$

19,941

 

$

19,546

Franchise royalties

 

 

2,592

 

 

2,742

 

 

7,426

 

 

7,856

Total franchise costs

 

$

9,431

 

$

9,408

 

$

27,367

 

$

27,402

 

(1)

Includes advertising, reservation and frequent guest club assessments.
Schedule of assets under capital lease

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

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

    

2017

    

2016

 

 

(unaudited)

 

 

 

Gross capital lease asset - buildings and improvements

 

$

58,799

 

$

58,799

Gross capital lease asset - land

 

 

6,605

 

 

—

Gross capital lease assets

 

 

65,404

 

 

58,799

Accumulated depreciation

 

 

(7,840)

 

 

(6,738)

Net capital lease assets

 

$

57,564

 

$

52,061

 

Schedule of future minimum lease payments under capital lease

Future minimum lease payments under the Company’s capital leases together with the present value of the net minimum lease payments as of September 30, 2017 are as follows (in thousands):

 

 

 

 

 

2017

    

$

2,357

2018

 

 

2,357

2019

 

 

2,357

2020

 

 

2,365

2021

 

 

2,453

Thereafter

 

 

139,287

Total minimum lease payments (1)

 

 

151,176

Less: Amount representing interest (2)

 

 

(124,419)

Present value of net minimum lease payments (3)

 

$

26,757

 

(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. Under the Hyatt Chicago Magnificent Mile’s building lease, $20,000 and $36,000 in percentage rent was due during the three and nine months ended September 30, 2017 and 2016, respectively. 

(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 September 30, 2017 as a current obligation of $1,000, which is included in accounts payable and accrued expenses, and as a long-term obligation of $26.8 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 and nine months ended September 30, 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 September 30,

 

Nine Months Ended September 30,

 

    

2017

    

2016

    

2017

    

2016

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Minimum rent, including straight-line adjustments

 

$

2,124

 

$

2,251

 

$

6,804

 

$

6,857

Percentage rent (1)

 

 

1,901

 

 

2,802

 

 

5,241

 

 

7,327

Total

 

$

4,025

 

$

5,053

 

$

12,045

 

$

14,184

 

(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 September 30, 2017, 21 of the Company’s 27 hotels were geographically concentrated as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trailing 12-Month

 

 

 

 

 

Percentage of

 

Total

 

 

    

Number of Hotels

    

Total Rooms

    

Consolidated Revenue

    

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

California

 

 7

 

29

%  

34

%  

Hawaii

 

 1

 

 4

%  

 7

%  

Illinois

 

 3

 

 9

%  

 7

%  

Massachusetts

 

 3

 

15

%  

16

%  

Greater Washington DC area

 

 3

 

14

%  

13

%  

Louisiana

 

 2

 

 6

%  

 4

%  

Florida

 

 2

 

 7

%  

 7

%