Leases

12 Months Ended

Dec. 31, 2023

Leases

Leases

9. Leases

As of both December 31, 2023 and 2022, the Company had operating leases for ground, office, equipment and airspace leases with maturity dates ranging from 2024 through 2097, excluding renewal options. Including renewal options available to the Company, the lease maturity date extends to 2147.

Operating leases were included on the Company’s consolidated balance sheets as follows (in thousands):

	December 31,
	2023			2022
Right-of-use assets, net	$	12,755		$	15,025	(1)
Lease obligations	$	16,735		$	19,012
Weighted average remaining lease term		30 years
Weighted average discount rate		5.3	%

(1) In 2022, the Company wrote-down its operating lease right-of-use assets, net and recorded an impairment loss of $2.1 million related to the office lease at its former corporate headquarters. (see Note 5).

Lease Transactions - 2023

In January 2023, the Company relocated its corporate headquarters and recognized a $2.2 million operating lease right-of-use asset and related lease obligation.

Lease Transactions - 2022

During the fourth quarter of 2022, the Company entered into a sublease agreement on its former corporate headquarters, which became effective in January 2023.

Upon sale of the Hilton Garden Inn Chicago Downtown/Magnificent Mile in March 2022 (see Note 4), the Company was no longer obligated under an operating lease related to certain office and parking space at the hotel and the related $2.3 million right-of-use asset, net and $2.6 million lease obligation were removed from the Company’s consolidated balance sheet.

Upon sale of the Hyatt Centric Chicago Magnificent Mile in February 2022 (see Note 4), the Company was no longer obligated under a finance lease related to the building occupied by the hotel and the related $44.7 million right-of-use asset, net and $15.6 million finance lease obligation were removed from the Company’s consolidated balance sheet.

Lease Expense

The components of lease expense were as follows (in thousands):

	2023		2022		2021
Finance lease cost (1):
Amortization of right-of-use asset	$	—	$	—	$	1,470
Interest on lease obligations		—		117		1,404
Operating lease cost		5,427		5,367		5,457
Variable lease cost (2)		8,438		6,853		393
Sublease income (3)		(1,187)		—		—
Total lease cost	$	12,678	$	12,337	$	8,724

(1) Finance lease cost included expenses for the Hyatt Centric Chicago Magnificent Mile’s finance lease obligation before the hotel’s sale in February 2022 (see Note 4).

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

(3) Sublease income is included in corporate overhead in the accompanying consolidated statements of operations for the year ended December 31, 2023.

At December 31, 2023, future maturities of the Company’s operating lease obligations were as follows (in thousands):

2024	$	5,783
2025 (1)		5,854
2026		1,607
2027		926
2028		599
Thereafter		1,207
Total lease payments		15,976
Less: interest (2)		(2,499)
Present value of lease obligations (3)	$	13,477

(1) Operating lease obligations include a ground lease that expires in 2071 and requires a reassessment of rent payments due after 2025, agreed upon by both the Company and the lessor; therefore, no amounts are included in the above table for this ground lease after 2025.

(2) Calculated using the respective discount rate for each lease.

(3) Operating lease obligations include the lease on the Company’s new corporate headquarters and the sublease on the Company’s former corporate headquarters, both of which were entered into during the fourth quarter of 2022.