Investment in Hotel Properties

9 Months Ended

Sep. 30, 2020

Investment in Hotel Properties [Abstract]

NOTE 2. INVESTMENT IN HOTEL PROPERTIES

Investment in hotel properties consisted of the following at September 30, 2020 and December 31, 2019:


	As of
		September 30, 2020		December 31, 2019
Land		$	34,929		$	20,200
Buildings, improvements, vehicle			244,056			206,971
Furniture and equipment			24,591			21,805
Initial franchise fees			1,784			1,784
Construction-in-progress			13			100
Right of use asset			67			80
Investment in hotel properties			305,440			250,940
Less accumulated depreciation			(37,112)			(28,877)
Investment in hotel properties, net		$	268,328		$	222,063

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. 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 rate was 5.2% at September 30, 2020. 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 6.4 years at September 30, 2020.

As of September 30, 2020, the Company's right-of-use assets, net of $67 are included in investment in hotel properties, net and its related lease liabilities of $67 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 consolidated statements of operations.