Leases

9 Months Ended

Sep. 30, 2023

Leases

Leases

11. 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, Ole Red Tishomingo, Ole Red Nashville International Airport and Ole Red Las Vegas; and 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, with the exception of Ole Red Nashville International Airport, which has no extension option. Extension options are not considered reasonably assured to be exercised and, as a result, 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 applies 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 calculates 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 and nine months ended September 30, 2023 and 2022 are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Operating lease cost	$	4,411	$	3,826	$	13,499	$	11,171
Finance lease cost:
Amortization of right-of-use assets		58		31		119		92
Interest on lease liabilities		6		8		18		26
Net lease cost	$	4,475	$	3,865	$	13,636	$	11,289

Future minimum lease payments under non-cancelable leases at September 30, 2023 are as follows (in thousands):

	Operating		Finance
	Leases		Leases
Year 1	$	9,814	$	148
Year 2		9,276		94
Year 3		9,258		74
Year 4		9,227		46
Year 5		9,146		47
Years thereafter		558,415		603
Total future minimum lease payments		605,136		1,012
Less amount representing interest		(476,099)		(166)
Total present value of minimum payments	$	129,037	$	846

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

Weighted-average remaining lease term:
Operating leases	43.1	years
Finance leases	11.2	years
Weighted-average discount rate:
Operating leases	7.0	%
Finance leases	3.7	%