Leases

3 Months Ended

Mar. 31, 2021

Leases

Leases

9. LEASES:

The Company is a lessee of a 65.3 acre site in Osceola County, Florida on which Gaylord Palms is located, building or land leases for Ole Red Gatlinburg, Ole Red Orlando and Ole Red Tishomingo, various warehouse, general office and other equipment leases. The Gaylord Palms land lease has a term through 2074, which may be extended through January 2101, at the Company’s discretion. The leases for Ole Red locations range from five to ten years, with renewal options ranging from five to fifty-five years, at the Company’s discretion. Extension options are not considered reasonably assured and thus are not included in the Company’s calculation of its right-of-use assets and lease liabilities.

The terms of the Gaylord Palms lease include variable lease payments based upon net revenues at Gaylord Palms and certain other of the Company’s leases include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As the discount rate implicit in the Company’s operating leases is not readily determinable, the Company applied judgments related to the determination of the discount rates used to calculate the lease liability as required by Accounting Standards Codification Topic 842, “Leases”. The Company calculated its incremental borrowing rates by utilizing judgments and estimates regarding the Company’s secured borrowing rates, market credit rating, comparable bond yield curve, and adjustments to market yield curves to determine a securitized rate.

The Company’s lease costs for the three months ended March 31, 2021 and 2020 are as follows (in thousands):

	Three Months Ended
	March 31,
	2021		2020
Operating lease cost	$	3,127	$	3,287
Finance lease cost:
Amortization of right-of-use assets		37		37
Interest on lease liabilities		11		13
Net lease cost	$	3,175	$	3,337

Future minimum lease payments under non-cancelable leases at March 31, 2021 are as follows (in thousands):

	Operating		Finance
	Leases		Leases
Year 1	$	6,366	$	253
Year 2		6,037		234
Year 3		6,006		153
Year 4		5,827		46
Year 5		6,003		46
Years thereafter		566,780		555
Total future minimum lease payments		597,019		1,287
Less amount representing interest		(488,962)		(249)
Total present value of minimum payments	$	108,057	$	1,038

The remaining lease term and discount rate for the Company’s leases are as follows:

Weighted-average remaining lease term:
Operating leases	50.1	years
Finance leases	10.2	years
Weighted-average discount rate:
Operating leases	6.9	%
Finance leases	4.0	%