Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

COMMITMENTS AND CONTINGENCIES

Lease Commitments—The Company is a tenant under long-term ground leases at five of its hotel properties, including one hotel site for which development is in process. The ground lease agreements terminate at various dates between 2023 and 2096 and several of the agreements include multiple renewal options for generally five or ten year periods. The Company is also a tenant under a lease for its corporate office. The office operating lease terminates in August 2021 and includes renewal options for two five-year terms.

Rent expense on operating leases is recognized on a straight-line basis and was $3.2 million, $3.2 million, and $3.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. Lease expenses, excluding costs associated with capital leases, are included in hotel operating expense, while office lease expense is included in general and administrative expenses in the accompanying consolidated statements of operations.

As of December 31, 2018 and 2017, capital lease assets totaled $3.8 million and $0, respectively, and are included in property and equipment on the accompanying consolidated balance sheets (see Note 5). Capital lease liabilities totaled $3.4 million and $0 as of December 31, 2018 and 2017, respectively, and are included in accounts payable and accrued liabilities on the accompanying consolidated balances sheets.

Future minimum lease payments as of December 31, 2018, are as follows (in thousands):



Years Ending December 31,	Operating Leases		Capital Leases		Total
2019	$	2,779	$	351	$	3,130
2020	2,899		375		3,274
2021	2,220		384		2,604
2022	806		386		1,192
2023	545		387		932
Thereafter	78,097		3,340		81,437
Total	$	87,346	$	5,223	$	92,569

Letter of Credit—As of December 31, 2018, the Company had one outstanding letter of credit, issued by the Corporation for $0.2 million, which is collateralized by the 2016 Corporation Revolving Credit Facility.

Other Commitments—As of December 31, 2018, accounts payable and accrued liabilities on the accompanying consolidated balance sheet includes $12.3 million related to a resolved legal matter that is payable in early 2019. The amount is expected to be reimbursed and is offset by a $12.3 million receivable included in other assets on the accompanying consolidated balance sheet.

Legal Contingencies—The Company is not a party to any litigation or claims, other than routine matters arising in the ordinary course of business that are incidental to the operation of the business of the Company. The Company believes that the results of all claims and litigation, individually or in the aggregate, will not have a material adverse effect on its business or consolidated financial statements.

ESH REIT

Entity Information [Line Items]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Lease Commitments—ESH REIT is a tenant under long-term ground leases at five of its hotel properties, including one hotel site for which development is in process. The ground lease agreements terminate at various dates between 2023 and 2096 and several of the agreements include multiple renewal options for generally five or ten year periods.

Rent expense on operating leases is recognized on a straight-line basis and was $1.5 million for each of the years ended December 31, 2018, 2017 and 2016. Lease expenses, excluding costs associated with capital leases, are included in hotel operating expense in the accompanying consolidated statements of operations.

Future minimum lease payments as of December 31, 2018, are as follows (in thousands):



Years Ending December 31,	Operating Leases		Capital Leases		Total
2019	$	712	$	351	$	1,063
2020	779		375		1,154
2021	784		384		1,168
2022	806		386		1,192
2023	545		387		932
Thereafter	78,097		3,340		81,437
Total	$	81,723	$	5,223	$	86,946

Legal Contingencies—ESH REIT is not a party to any litigation or claims, other than routine matters arising in the ordinary course of business that are incidental to the operation of the business of ESH REIT. ESH REIT believes that the results of all claims and litigation, individually or in the aggregate, will not have a material adverse effect on its business or consolidated financial statements.