Investment in Hotel Properties

3 Months Ended

Mar. 31, 2019

Investment in Hotel Properties [Abstract]

NOTE 2. INVESTMENT IN HOTEL PROPERTIES

Investment in hotel properties consisted of the following at March 31, 2019 and December 31, 2018:


	As of
		March 31, 2019		December 31, 2018
		Total		Held for sale		Held for use		Total
Land		$	20,201	$	2,304	$	20,200	$	22,504
Buildings, improvements, vehicle			206,880		4,462		206,821		211,283
Furniture and equipment			21,399		719		20,554		21,273
Initial franchise fees			1,784		25		1,784		1,809
Construction-in-progress			174		7		323		330
Right of use asset			289		-		-		-
Investment in hotel properties			250,727		7,517		249,682		257,199
Less accumulated depreciation			(21,830)		(3,425)		(19,504)		(22,929)
Investment in hotel properties, net		$	228,897	$	4,092	$	230,178	$	234,270

On January 1, 2019, the Company adopted ASU 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 operating leases. Since most of the Company's leases do not provide an implicit rate, the Company used incremental borrowing rates, with a weighted average rate of 5.19% at March 31, 2019. The right-of-use assets and liabilities are amortized to rent expense, included in either Hotel and property operations expenses or General and administrative expenses depending on the nature of the lease, over the term of the underlying lease agreements. The weighted average remaining life of the Company’s operating leases, including options to extend when it is reasonably certain the Company will exercise such options, was 3.7 years at March 31, 2019.

As of March 31, 2019, the Company's right-of-use assets, net of $289 are included in Investment in hotel properties, net and its related lease liabilities of $296 are presented in Accounts payable, accrued expenses, and other liabilities in the Company's consolidated balance sheets. The adoption of this standard had minimal impact on the Company's statements of operations.