LEASE COMMITMENTS

12 Months Ended

Dec. 31, 2013

Operating Leases

Prior to May 2012, our office space was located in Scottsdale, Arizona and subject to an operating lease previously entered into by the Manager which was to expire on June 19, 2017. In our ongoing efforts to reduce overhead expenses, the Company reevaluated its office space needs and the Manager elected to abandon the previous office space effective May 1, 2012. Concurrently, the Company entered into a new lease for appropriately sized and priced office space in Scottsdale, Arizona under a lease commencing on May 1, 2012 and extending through October 30, 2017. Based on management’s analysis, we did not record a charge relating to the abandonment of the Manager’s office lease.

Additionally, we are obligated under various operating leases for office equipment, certain equipment, storage, parking and other operating space related to our operating properties for periods ranging from one to five years, with renewal options for certain properties, as well as certain land and temporary housing leases that extend to 2040. As of December 31, 2013, future minimum lease payments required under these various lease agreements (excluding any amounts under the previous office lease) are as follows, assuming certain renewal options are exercised (in thousands):



Years ending	Amount
2014	$	470
2015	486
2016	453
2017	355
2018	97
Thereafter	155
Total	$	2,016

Rent expense was $0.2 million and $0.4 million for the years ended December 31, 2013 and 2012, respectively, and $0.8 million for the period from acquisition, June 18, 2010 through December 31, 2011, and is included in general and administrative expenses in the accompanying consolidated statement of operations.

Capital Leases

In connection with our acquisition of the hotel operating properties via deed-lieu-of-foreclosure (as described in note 4), we assumed certain capital lease obligations related to the hotel operations. The primary capital lease obligation relates to the leasing of a 28-room hotel complex located adjacent to one of the owned hotels. The lease requires monthly lease payments of approximately $9,800 and extends through December 2040, which approximates the estimated useful life of the property. Using an imputed annual rate of 9% (our estimated incremental borrowing rate), we recorded a capital lease obligation of $1.3 million at the date of acquisition. The remaining leases relate to certain equipment which are approximately three years in term and contain bargain purchase options at the end of the lease term.

A summary of minimum lease payments required under these capital leases as of December 31, 2013 follows (in thousands):



Years ending	Amount
2014	$	160
2015	130
2016	123
2017	118
2018	118
Thereafter	2,591
	3,240
Less: interest portion (9%)	(1,989		)
Capital lease obligation	$	1,251

- Definition

The entire disclosure for operating leases of a lessor. This may include a general description of lessor's leasing arrangements for operating leases, including the basis on which contingent rental payments are determined, the existence and terms of renewal or purchase options and escalation clauses, restrictions imposed by lease arrangements, such as those concerning dividends, additional debt, and further leasing, rent holidays, rent concessions, or leasehold improvement incentives and unusual provisions or conditions.

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