Investment in Hotel Properties

9 Months Ended

Sep. 30, 2021

Investment in hotel properties as of September 30, 2021 and December 31, 2020 consisted of the following (in thousands):


	September 30, 2021		December 31, 2020
Land	$	921,957	$	973,848
Buildings and improvements	5,056,232		4,849,644
Furniture, fixtures and equipment	527,257		515,975
Finance lease asset	91,181		114,835
Construction in progress	10,296		5,443
	$	6,606,923	$	6,459,745
Right-of-use asset, operating leases	364,002		320,564
Investment in hotel properties	$	6,970,925	$	6,780,309
Less: Accumulated depreciation	(1,008,047)		(898,287)
Investment in hotel properties, net	$	5,962,878	$	5,882,022

The Company reviews its investment in hotel properties for impairment whenever events or circumstances indicate potential impairment. As a result of the ongoing effects of the COVID-19 pandemic on its expected future operating cash flows and estimated hold periods for certain properties, the Company determined certain impairment triggers had occurred and therefore, the Company assessed its investment in hotel properties for recoverability. Based on the analyses performed, for the nine months ended September 30, 2021, the Company recognized an impairment loss of $14.9 million related to one hotel as a result of the fair value being lower than its carrying value. The impairment loss was determined using Level 2 inputs under authoritative guidance for fair value measurements using information from current marketing efforts for this property. For the nine months ended September 30, 2020, the Company recognized an impairment loss of $20.6 million related to a retail component of a hotel as a result of the fair value being lower than its carrying value. The impairment loss was determined using Level 2 inputs under authoritative guidance for fair value measurements.

Right-of-use Assets and Lease Liabilities

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 4.7% to 7.6%. In addition, the term used includes any options to exercise extensions when it is reasonably certain the Company will exercise such option. See Note 11, Commitments and Contingencies, 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 September 30, 2021, the Company's lease liabilities consisted of operating lease liabilities of $302.1 million and financing lease liabilities of $41.8 million. As of December 31, 2020, the Company's lease liabilities consisted of operating lease liabilities of $255.1 million and financing lease liabilities of $46.4 million. The financing lease liabilities are included in accounts payable, accrued expenses and other liabilities on the Company's accompanying consolidated balance sheets.