Commitments and Contingencies

12 Months Ended

Dec. 31, 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 abatements on base rent for each of the quarters ended June 30, 2020, September 30, 2020 and December 31, 2020. The Lessees received a total abatement on base rent of $52.7 million during the year ended December 31, 2020. The Company has recognized the rent abatements as negative variable lease revenue during the year ended December 31, 2020. The Company owes the Lessees $0.5 million for reimbursement of rent as of December 31, 2020, which is included in related party rent payable on the consolidated balance sheet.

The lease revenue recognized during the years ended December 31, 2020 and 2019 consisted of the following:


	For the year ended December 31,
	2020		2019
Lease revenue relating to lease payments (1)	$	19,257	$	56,796
Lease revenue relating to percentage rent lease payments	4,611		139,899
Total related party lease revenue	$	23,868	$	196,695

(1) Reflects the impact of base rent abatement of $52.7 million for the year ended December 31, 2020.

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


	December 31, 2020
2021	$	69,532
2022	51,750
2023	—
2024	—
2025	—
Thereafter	—
Total	$	121,282

Advance to Lessee - Related Party

During the year ended December 31, 2020, the Company's consolidated joint venture provided a $2.7 million advance to its Lessee as a result of the impact of the COVID-19 pandemic on the Lessee's operations. This advance is included in advance to Lessee - related party in the accompanying consolidated balance sheet.

Lessees

As a lessee, as of December 31, 2020, six of the Company's hotel properties were subject to ground leases that cover the land underlying the respective hotels. The ground leases are classified as operating leases. The total ground lease expense was $7.2 million for the year ended December 31, 2020, which consisted of $6.6 million of fixed lease expense and $0.6 million of variable lease expense. The total ground lease expense was $10.2 million for the year ended December 31, 2019, which consisted of $6.6 million of fixed lease expense and $3.6 million of variable lease expense. The total ground lease expense was $16.6 million for the year ended December 31, 2018. The total ground lease expense is included in property tax, insurance and other in the accompanying consolidated statements of operations and comprehensive (loss) income.

The Company's ground leases consisted of the following (in millions):


			Ground Lease Expense

			For the year ended December 31,
Hotel Property Name	Initial Term Expiration	Extension Term(s) Expiration	2020		2019		2018 (1)

Wyndham Boston Beacon Hill	2028	—	$	0.4	$	0.9	$	0.9
Wyndham San Diego Bayside	2029	—	4.1		4.8		4.8
DoubleTree Suites by Hilton Orlando Lake Buena Vista	2032	2057	0.3		0.9		0.8
Wyndham Pittsburgh University Center	2038	2083	0.7		0.7		0.8

Embassy Suites San Francisco Airport Waterfront	2059	—	1.2		2.4		2.3
Wyndham New Orleans French Quarter	2065	—	0.5		0.5		0.5

			$	7.2	$	10.2	$	10.1

(1) Excludes $6.5 million of ground lease expense related to hotel properties sold during the year ended December 31, 2018.

The future lease payments for the Company's operating leases are as follows (in thousands):


	December 31, 2020

2021	$	4,909
2022	4,968
2023	4,990
2024	5,011
2025	5,033
Thereafter	108,974
Total future lease payments	133,885
Imputed interest	(87,310)
Lease liabilities	$	46,575

The following table presents certain information related to the Company's operating leases as of December 31, 2020:


Weighted average remaining lease term	32 years
Weighted average discount rate	6.85	%

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 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. Any unexpended amounts will remain the property of the Company upon termination of the management agreements, franchise agreements or mortgage loan documents. As of December 31, 2020 and 2019, approximately $3.9 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 (two of which were sold in 2006, and one of which was converted into a Wyndham brand and operation in 2013), notified the Company that the National Retirement Fund ("NRF") in which the employees at those hotels had participated had assessed a withdrawal liability of $8.3 million, with required quarterly payments including interest, in connection with the termination of IHG’s operation of those hotels. During the year ended December 31, 2020, the Company settled the dispute with IHG and NRF and released an accrued liability of $1.8 million, which is included as a benefit to general and administrative expense in the accompanying consolidated statements of operations and comprehensive (loss) income.