Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Operating Leases - Lessors

As a lessor, the Company will receive lease revenue from the Lessees under its lease contracts. The lease contracts contain a specific base rent amount or a percentage rent amount, which is calculated based on a percentage of room revenues, food and beverage revenues, and other revenues at the hotel properties. The lease contracts will expire in 2021 (one hotel), 2022 (24 hotels) and thereafter (one hotel).

As a result of the COVID-19 pandemic, the Lessees negotiated for and were granted an abatement on base rent of $17.5 million for the three months ended June 30, 2020, as well as an abatement on base rent of $17.5 million for the three months ended September 30, 2020. The Lessees have received a total abatement on base rent of $35.0 million during the nine months ended September 30, 2020. The Company has recognized the rent abatements as negative variable lease revenue of $17.5 million during the three months ended June 30, 2020 and $17.5 million during the three months ended September 30, 2020. The Company owes the Lessees $2.9 million for reimbursement of rent as of September 30, 2020, which is included in related party rent payable on the consolidated balance sheet.

The lease revenue recognized during the three and nine months ended September 30, 2020 and 2019 consisted of the following:


	For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019
Lease revenue relating to lease payments (1)	$	364	$	13,745	$	18,568	$	43,050
Lease revenue relating to percentage rent lease payments	104		32,647		2,336		109,484
Total related party lease revenue	$	468	$	46,392	$	20,904	$	152,534

(1) Reflects the impact of base rent abatement of $17.5 million and $35.0 million for the three and nine months ended September 30,

2020, respectively.

The future lease payments to the Company under the noncancelable operating leases were as follows (in thousands):


	September 30, 2020
2020	$	17,475
2021	54,478
2022	51,750
2023	—
2024	—
Thereafter	—
Total	$	123,703

Restricted Cash Reserves

The Company is obligated to maintain cash reserve funds for future capital expenditures at the hotels (including the periodic replacement or refurbishment of furniture, fixtures and equipment ("FF&E")) as determined pursuant to the management agreements, franchise agreements and/or mortgage loan documents. The management agreements, franchise agreements and/or mortgage loan documents require the Company to reserve cash ranging typically from 4.0% to 5.0% of the individual hotel’s revenues and maintain the reserves in restricted cash reserve escrows. Any unexpended amounts will remain the property of the Company upon termination of the management agreements, franchise agreements or mortgage loan documents. As of September 30, 2020 and December 31, 2019, approximately $6.1 million and $4.1 million, respectively, was available in the restricted cash reserves for future capital expenditures, real estate taxes and insurance.

Litigation

Other than the legal proceeding mentioned below, neither the Company nor any of its subsidiaries is currently involved in any regulatory or legal proceedings that management believes will have a material and adverse effect on the Company's financial position, results of operations or cash flows.

Prior to the Mergers, an affiliate of InterContinental Hotels Group PLC ("IHG"), which previously managed three of the Company’s hotels, notified the Company that National Retirement Fund ("NRF") had assessed an employee withdrawal liability, with required quarterly payments including interest, in connection with the termination of IHG’s management of those hotels. In October 2020, the Company entered into an agreement with IHG and NRF resolving this dispute.