Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

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 and a percentage rent amount, which is dependent upon the hotel properties reaching certain revenue thresholds and, if earned, 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). The Company had a receivable due from the Lessees of $17.5 million as of March 31, 2021, which is included in related party rent receivable on the consolidated balance sheet. The Company owed 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.

As a result of the COVID-19 pandemic, two of the Lessees negotiated for and were granted an abatement on base rent of $2.8 million for the three months ended March 31, 2021. The Company has recognized the rent abatement as negative variable lease revenue during the three months ended March 31, 2021. None of the Lessees received rent abatements during the three months ended March 31, 2020.

The lease revenue recognized during the three months ended March 31, 2021 and 2020 consisted of the following (in thousands):


	For the three months ended March 31,
		2021		2020
Lease revenue relating to lease payments (1)		$	15,240	$	17,839
Lease revenue relating to percentage rent lease payments		2,699		7,780
Total related party lease revenue		$	17,939	$	25,619

(1) Reflects the impact of base rent abatement of $2.8 million for the three months ended March 31, 2021.

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


	March 31, 2021
2021	$	51,446
2022	51,750
2023	—
2024	—
2025	—
Thereafter	—
Total	$	103,196

Advance to Lessee - Related Party

The Company's consolidated joint venture has provided advances to its Lessee as a result of the impact of the COVID-19 pandemic on the Lessee's operations. The total advance of $4.7 million and $2.7 million as of March 31, 2021 and December 31, 2020, respectively, is included in advance to Lessee - related party in the accompanying consolidated balance sheets.

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 March 31, 2021 and December 31, 2020, approximately $5.6 million and $3.9 million, respectively, was available in the restricted cash reserves for future capital expenditures, real estate taxes and insurance. The restricted cash reserves at March 31, 2021 of $5.6 million also includes $1.4 million held by lenders due to cash trap events.

Litigation

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.