Investment in Hotel Properties

12 Months Ended

Dec. 31, 2019

Investment in hotel properties as of December 31, 2019 and 2018 consisted of the following (in thousands):



	December 31, 2019			December 31, 2018
Land	$	1,042,198		$	1,056,862
Buildings and improvements	4,998,108			5,440,513
Furniture, fixtures and equipment	522,631			462,620
Capital lease asset	134,063			91,985
Construction in progress	35,637			25,643
	$	6,732,637		$	7,077,623
Right-of-use asset, operating leases	335,272			—
Investment in hotel properties	$	7,067,909		$	7,077,623
Less: Accumulated depreciation	(735,322		)	(543,430		)
Investment in hotel properties, net	$	6,332,587		$	6,534,193

On January 1, 2019, the Company adopted ASC 842, Leases and applied it prospectively. At adoption, the Company also elected the practical expedients which permitted it to not reassess its prior conclusions about lease identification, classification, and initial direct costs. Consequently on January 1, 2019, the Company recognized right-of-use assets and related liabilities related to its ground leases, all of which are operating leases. Since most of the Company's leases do not provide an implicit rate, the Company used incremental borrowing rates, which ranged from 5.5% to 7.6%. All of of these ground leases have long terms, ranging from 10 years to 88 years and the Company included the exercise of options to extend when it is reasonably certain the Company will exercise such option. See Note 11 for additional information about the ground leases. The right-of-use assets and liabilities are amortized to ground rent expense over the term of the underlying lease agreements. As of December 31, 2019, the Company's right-of-use assets of $335.3 million, which included favorable and unfavorable intangibles, are included in the investment in hotel properties and its related lease liabilities of $256.2 million are presented in accounts payable and accrued expenses in the Company's consolidated balance sheets. The adoption of this standard had minimal impact on the Company's consolidated statements of operations and comprehensive income.

On September 10, 2017, Hotel Colonnade Coral Gables, Autograph Collection ("Hotel Colonnade") located in Coral Gables, Florida and LaPlaya Beach Resort and Club ("LaPlaya") located in Naples, Florida were impacted by Hurricane Irma. Hotel Colonnade did not suffer any material damage and remained open. LaPlaya was closed in anticipation of the storm and re-opened in stages beginning in the fourth quarter of 2017 and was fully reopened in January 2018.

The Company’s insurance policies provide coverage for property damage, business interruption, and reimbursement for other costs that were incurred relating to damages sustained during Hurricane Irma. Insurance proceeds are subject to deductibles. As of June 30, 2018, the Company reached a final agreement with the insurance carriers related to LaPlaya totaling $20.5 million, and the Company recognized gain of $13.1 million for the year ended December 31, 2018.