Investment in Hotel Properties

6 Months Ended

Jun. 30, 2025

Investment in hotel properties as of June 30, 2025 and December 31, 2024 consisted of the following (in thousands):


	June 30, 2025		December 31, 2024
Land	$	800,517	$	800,143
Buildings and improvements	5,101,506		5,062,727
Furniture, fixtures and equipment	550,096		539,616
Finance lease asset	91,181		91,181
Construction in progress	5,396		5,066
	$	6,548,696	$	6,498,733
Operating lease, right-of-use asset	346,348		351,150
Investment in hotel properties	$	6,895,044	$	6,849,883
Less: Accumulated depreciation	(1,645,559)		(1,530,854)
Investment in hotel properties, net	$	5,249,485	$	5,319,029

Hurricane Helene and Hurricane Milton

On September 26, 2024, LaPlaya Beach Resort & Club ("LaPlaya") in Naples, FL was impacted by Hurricane Helene and, on October 9, 2024, was also impacted by Hurricane Milton. The damage primarily impacted the ground floor of the Beach House, the pool complex and landscaping. LaPlaya closed following Hurricane Milton to undertake clean-up, repairs and a full assessment of damages. The resort is now substantially open.

The Company’s insurance policies provide coverage for property damage, business interruption and other costs that are incurred relating to damages sustained in excess of the applicable deductibles. For the six months ended June 30, 2025, the Company recognized $7.5 million of business interruption insurance income. The Company recorded an insurance receivable for the remediation costs incurred and the estimate of the book value of the property and equipment written off in excess of the applicable deductibles. Through June 30, 2025, the Company received a total of $18.2 million in preliminary advances from the insurance providers. The Company is continuing to evaluate the financial impact of Hurricanes Helene and Milton and its ability to recover, through insurance policies, any loss due to business interruption or damage to LaPlaya.

Impairment

The Company reviews its investment in hotel properties for impairment whenever events or circumstances indicate potential impairment. The Company periodically adjusts its estimate of future operating cash flows and estimated hold periods for certain properties. As a result of this review, the Company may identify an impairment trigger has occurred and assess its investment in hotel properties for recoverability.

During the six months ended June 30, 2025 and 2024, no impairment losses were incurred.

Lease 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. The Company recognized finance lease assets and related finance lease liabilities for properties subject to finance leases. When the rate implicit in the lease could not be determined, 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 operating lease right-of-use assets and liabilities are amortized to ground rent expense over the term of the underlying lease agreements. As of June 30, 2025, the Company's lease liabilities consisted of operating lease liabilities of $320.7 million and financing lease liabilities of $44.3 million. As of December 31, 2024, the Company's lease liabilities consisted of operating lease liabilities of $320.7 million and financing lease liabilities of $44.0 million. The financing lease liabilities are included in accounts payable, accrued expenses and other liabilities on the Company's accompanying consolidated balance sheets.