Summary of Significant Accounting Policies

Principles of consolidation

The consolidated financial statements include Empire’s accounts and their wholly-owned subsidiaries. All inter-company balances and transactions are eliminated in consolidation.

Estimates and assumptions

The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from estimates.

Revenue recognition

As described below, the Company adopted the provisions of new accounting standards and updates as codified in the Accounting Standards Codification ("ASC") Topic 606 regarding revenue recognition. The Company adopted this guidance as of January 1, 2018 using the modified retrospective approach. Under the modified retrospective approach, amounts presented as of December 31, 2017 and for the years ended December 31, 2017 and 2016 have not been adjusted to reflect the impact of the ASC Topic 606. This approach does not significantly impact the comparability of the 2018, 2017 and 2016 amounts. The promotional allowances recorded in 2017 and 2016 are no longer presented separately in 2018 under ASC Topic 606. The adoption of the provisions of ASC 606 resulted in an increase of $54,000 to both “Accrued expenses and other current liabilities” and “Accumulated deficit” at January 1, 2018. These increases were exclusively the result of remeasuring the loyalty program liability from a deferred cost model to a deferred revenue model. This change only impacts MRMI, since the Casino did not commence operations until February 8, 2018.

The Company’s patron transactions primarily consist of gaming wagers, hotel room and food and beverage purchases. The transaction price for gaming wagers is the difference between gaming wins and losses, not the total amount wagered. The transaction price for hotel room and food and beverage purchases is the net amount collected from the patron for such goods and services. Hotel room and food and beverage goods and services have been determined to be separate, stand-alone transactions and the transaction price for such goods or services is recorded as revenue as they are transferred to the patron over the duration of the patron’s stay at the hotel or when the Company provides the food and beverage services. In the case of a hotel stay involving multiple days, the total transaction price of the stay is recognized on a straight-line basis. The Company collects advanced deposits from hotel patrons for future reservations representing obligations of the Company until the room stay is provided to the patron.

Gaming wagers by patrons who are members of our loyalty programs represent two performance obligations of the Company. Patrons who are members of our loyalty programs earn loyalty points for gaming wagers. Points awarded under our loyalty programs are given to members based on their gaming play and the promise to provide points to members is required to be accounted for as a separate performance obligation. The Company applies a practical expedient by accounting for gaming wagers on a portfolio basis, as such wagers have similar characteristics and the Company reasonably expects the effects on the financial statements of applying the revenue recognition guidance to the portfolio to not differ materially from that which would result if applying the guidance to each individual patron. For purposes of allocating the transaction price when loyalty points are earned, the Company allocates an amount to the loyalty point liability based on the stand-alone selling price ("SSP") of the points earned, which is determined by the value of a point that can be redeemed for a hotel room or food and beverage services. An amount is allocated to the gaming wager performance obligation using the residual approach as the stand-alone price for wagers is highly variable and no set established price exists for such wagers. The allocated revenue for gaming wagers is recognized when the wagers occur because all such wagers settle immediately. The loyalty point liability amount is deferred and recognized as revenue when the patron redeems the points for a hotel room stay or for food and beverage services and such goods or services are provided to the patron. Prior to the adoption of ASC 606, we determined our liability for unredeemed points based on the estimated costs of services or merchandise to be provided and estimated redemption rates.

Additionally, outside of our loyalty programs and at our discretion, we offer our patrons complimentary goods and services, primarily food and beverage and hotel room stays. Such complimentaries are provided in conjunction with revenue-generating gaming activity and are largely provided to entice contemporaneous and future revenue-generating gaming activities. We allocate a portion of the transaction price for gaming wagers we receive from such patrons to the complimentary goods and services provided to such patrons using the residual approach. This allocation is based on the estimated SSP of the underlying goods and services provided, which are determined based on observed SSP we receive for selling such goods and services.

Food and beverage revenues, and room revenues include (i) revenues generated from transactions with patrons for such goods and/or services, (ii) revenues recognized through the redemption of points from our loyalty programs for such goods and/or services, and (iii) revenues generated as a result of providing such goods and/or services on a complimentary basis in conjunction with gaming activities. Food and beverage revenues and room revenues are recognized when goods are delivered and services are performed. In general, performance obligations associated with these transactions are satisfied at a point-in-time, but may also be satisfied over a period of time, which is typically over the course of a patron’s stay. Advance deposits on rooms are reflected as a performance obligation liability until the goods and/or services are provided to the patron. The Company's performance obligation liabilities are included in “Accrued expenses and other current liabilities” in our consolidated balance sheets.

Racing revenues include revenue earned from pari-mutuel wagering on live harness racing and simulcast signals to and from other tracks. Some elements of racing revenue from Off-Track Betting Corporations are recognized as collected, due to uncertainty of receipt and timing of payments.

Other revenues primarily include commissions received on ATM transactions and cash advances, as well as lottery tickets, which are recorded on a net basis as the Company represents the agent in its relationship with the third-party service providers. Other revenues also include the sale of retail goods, which are recognized at the time the goods are delivered to the customer.

Subsequent to the adoption of ASC 606, complimentary food and beverage revenues and room revenues are included in food and beverage revenues, room revenues, and other revenues, with a corresponding decrease to gaming revenues, in the condensed consolidated statements of operations.

Complimentary food and beverage revenues, and complimentary room revenues for the years ended December 31, 2018 and 2017, respectively, were as follows:



	Year ended December 31,
	2018	2017
	(in thousands)
Complimentary food and beverage revenues	$10,837	$1,000
Complimentary room revenues	3,455	—

The Company’s performance obligation related to its loyalty point obligation is generally completed within one year, as a patron’s loyalty point balance is forfeited after six months of inactivity, as defined in the loyalty programs. The Company’s deferred revenue liability under ASC 606 was approximately $2.1 million at December 31, 2018. The Company's liability for its loyalty point performance obligations was $1.5 million at December 31, 2017. Loyalty points are generally earned and redeemed continuously over time.

The retail value amounts included in promotional allowances for the years ended December 31, 2017 and 2016 were as follows:



	Year ended December 31,
	2017	2016
	(in thousands)
Food and beverage	$1,000	$1,486
Non-subsidized free play	2,718	978
Players Club awards	324	383
Total retail value of promotional allowances	$4,042	$2,847

The estimated cost of providing complimentary food, beverages and other items for the years ended December 31, 2017, and 2016 were as follows:



	Year ended December 31,
	2017	2016
	(in thousands)
Food and beverage	$1,750	$2,080
Non-subsidized free play	1,603	577
Players Club awards	324	383
Total cost of promotional allowances	$3,677	$3,040

Cash and cash equivalents

Cash and cash equivalents include cash on hand, demand deposits and certificates of deposit with original maturities of three months or less at acquisition. The Company maintains significant cash balances with financial institutions, which are not covered by the Federal Deposit Insurance Corporation. The Company has not incurred any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

Restricted cash and cash equivalents

The Company has several types of restricted cash accounts. These restrictions are in accordance with the NYSGC regulations. In addition, at December 31, 2018, the Company had restricted cash and cash equivalents of $21 million from the proceeds of the Term Loan Facility (as defined below) held in the lender-controlled accounts pursuant to the Term Loan Facility.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows:



	December 31, 2018	December 31, 2017	December 31, 2016
	(in thousands)
Cash and cash equivalents	$28,338	$10,380	$11,012
Restricted cash	373	693	1,078
Restricted cash and cash equivalents for Development Projects	21,039	41,982	26,384
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$49,750	$53,055	$38,474

The Company has three types of restricted cash accounts.

Approximately $223,000 of cash is held in reserve in accordance with NYSGC regulations as of December 31, 2018 as listed below. The Company granted the NYSGC a security interest in the segregated cash account used to deposit NYSGC’s share of net win in accordance with the NYSGC Rules and Regulations. Under New York State Racing, Pari-Mutuel Wagering and Breeding Law, MRMI is obliged to withhold a certain percentage of certain types of racing and pari-mutuel wagers towards the establishment of a pool of money, the use of which is restricted to the funding of approved capital improvements. Periodically during the year, MRMI petitions the NYSGC to certify that the noted expenditures are eligible for reimbursement from the capital improvement fund. The balance in this account was approximately $18,000 and $25,000 at December 31, 2018 and 2017, respectively. In April 2005, the New York law governing VGM operations was modified to provide an increase in the revenues retained by the VGM operator. A portion of that increase was designated as a reimbursement of marketing expenses incurred by the VGM operator. The amount of revenues directed toward this reimbursement is deposited in a bank account under the control of the NYSGC and the VGM operator. The funds are transferred from this account to the VGM operator upon the approval by NYSGC officials of the reimbursement requests submitted by the VGM operator. The balance in this account was approximately $205,000 and $343,000 at December 31, 2018 and 2017, respectively.

In addition to the NYSGC restricted cash balances listed above, the Company established an account to segregate amounts collected and payable to Monticello Harness Horsemen’s Association (the “MHHA”) and pursuant to its contract. The balance in this account was approximately $150,000 and $324,000 at December 31, 2018 and 2017, respectively.

Restricted cash, cash equivalents and investments for Development Projects

Restricted cash and cash equivalents for Development Projects represented the remaining funds from the Term Loan Facility to be utilized for the Development Projects. At December 31, 2018, restricted cash and cash equivalents for Development Projects of $21.0 million was comprised entirely of cash and cash equivalent balances. At December 31, 2017, restricted cash, cash equivalents and investments for Development Projects balance of $136.4 million was comprised of cash balances of approximately $11.2 million, cash equivalents of approximately $30.7 million and short-term investments maturing within one year of approximately $94.5 million. At December 31, 2017, short-term marketable securities were comprised of commercial paper of approximately $59.4 million and U. S. Treasury Notes of approximately $35.1 million, all with maturities of less than one year. The short-term marketable securities are recorded at amortized cost, which approximates fair value due to their short-term nature.

Accounts receivable

Accounts receivable, net of allowances, are stated at the amount the Company expects to collect. When required, an allowance for doubtful accounts is recorded based on information on the collectability of specific accounts. Accounts are considered past due or delinquent based on contractual terms, how recently payments have been received and the Company’s judgment of collectability. The Company extends credit to certain gaming patrons upon completion of a credit application process. Gaming patrons are expected to repay gaming markers within a predetermined period of time, the Company also settles wagers for other racetracks and is exposed to credit risk. These amounts are included in accounts receivable. Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company recorded an allowance for doubtful accounts of approximately $150,000 and $171,000, as of December 31, 2018 and 2017, respectively.

Property and equipment

Property and equipment is stated at cost less accumulated depreciation. The Company provides for depreciation on property and equipment used by applying the straight-line method over the following estimated useful lives:



Assets	Estimated Useful Lives
Vehicles	5-10 years
Furniture, fixtures and equipment	5-10 years
Land improvements	5-20 years
Building improvements	5-40 years
Buildings	40 years

Capitalized Interest

Interest costs incurred in connection with the construction of the Casino and the Development Projects have been capitalized in the cost of the projects. Capitalization ceased for the Casino when it was substantially complete. Capitalization will cease for the other Development Projects substantially complete or if development activity is suspended for an extended period of time.

The Company capitalized $12.3 million and $29.1 million of interest charges for the year ended December 31, 2018 and 2017, respectively. The Company did not recognize any capitalized interest charges for the fiscal year ended December 31, 2016.

Debt issuance costs

Debt issuance costs are amortized using the effective interest method over the term of the related debt. The amortization is included within interest expense and is included as a component of the capitalized interest costs.

Impairment of long-lived assets and other financial assets

The Company periodically reviews the carrying value of its long-lived assets in relation to historical results, as well as management’s best estimate of future trends, events and overall business climate. If such reviews indicate an issue as to whether the carrying value of such assets may not be recoverable, the Company will then estimate the future cash flows generated by such assets (undiscounted and without interest charges). If such future cash flows are insufficient to recover the carrying amount of the assets, then impairment is triggered and the carrying value of any impaired assets would then be reduced to fair value.

The Company also reviews its financial assets (i.e. non-derivative financial assets) for impairment, if it becomes probable that the commitment will not result in the receipt of proceeds from the issuance of securities.

Other long-term liabilities

The difference between our cash payments and straight-line rent on our land leases of $8.1 million and $8.3 million at December 31, 2018 and 2017, respectively, is included in other long-term liabilities. In addition, the Company has accrued a liability-classified guaranty of approximately $2.3 million related to compensation due the Horsemen under the MHHA Agreement. At December 31, 2018, the Company has also recorded a derivative liability in the form of a put option of approximately $0.9 million, related to the bet365 equity transaction.

Common stock - loss per share

The Company computes basic loss per share by dividing net loss applicable to common shares by the weighted-average common shares outstanding for the period. Diluted loss per share reflects the potential dilution of earnings that could occur if securities or contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the entity. Since the effect of common stock equivalents is anti-dilutive with respect to losses, these common stock equivalents have been excluded from the Company’s computation of loss per common share. Therefore, basic and diluted loss per common share for the years ended December 31, 2018, 2017 and 2016 were the same.

The following table shows the approximate number of common stock equivalents outstanding at December 31, 2018, 2017 and 2016 that could potentially dilute basic loss per share in the future, but were not included in the calculation of diluted loss per share for the years ended December 31, 2018, 2017 and 2016, because their inclusion would have been anti-dilutive:



	Outstanding at December 31,
	2018	2017	2016
Unvested Restricted stock	37,000	139,000	216,000
Warrants	193,000	133,000	133,000
Restricted stock units ("RSUs")	196,000	73,000	—
Option Matching Rights	—	3,000	21,000
Options	—	13,000	34,000
Total	426,000	361,000	404,000

On August 19, 2009, the Company entered into an investment agreement (the "2009 Investment Agreement") with Kien Huat, pursuant to which Kien Huat purchased shares of common stock of the Company during the year ended December 31, 2009. Under the Investment Agreement, if any options or warrants outstanding at the time of the final closing under the 2009 Investment Agreement, or the first 200,000 options or warrants granted to directors or officers as of the final closing date under the 2009 Investment Agreement, are exercised, Kien Huat has the right to purchase an equal number of additional shares of common stock as are issued upon such exercise at the exercise price for the applicable option or warrant. The Company refers to these rights as the “Option Matching Rights.” On January 24, 2018, Kien Huat exercised its option to purchase 1,666 shares of common stock due to an option exercise. The last remaining Option Matching Rights expired in July 2018.

Interest Rate Cap Agreement

In February 2017, the Company entered into an interest rate cap agreement with Credit Suisse AG, International to limit its exposure to increases in interest rates on its Term B Loan (as defined below) from May 1, 2017 through February 28, 2018 and then for a portion of the balance of its Term B Loan through July 31, 2019 (the "Interest Rate Cap"). The Company paid $0.7 million for the Interest Rate Cap. The cost of the Interest Rate Cap is amortized over its term as interest expense. The fair value of the Interest Rate Cap was $143,000 and $251,000 at December 31, 2018 and 2017, respectively, and is presented at fair value as "Other Assets" on the Consolidated Balance Sheet. The difference between the fair value and amortized cost is recorded as an adjustment to accumulated other comprehensive loss.

Accumulated Other Comprehensive Loss

As of December 31, 2018 and 2017, accumulated other comprehensive loss of $0.2 million and $0.3 million, respectively consisted solely of the fair value adjustment relating to the Interest Rate Cap.

Derivative Liability and Asset

The Company’s Collaboration Agreement with bet365 (see Note I) along with the related Common Stock Purchase Agreement contained an initial put option that met the definition of a derivative instrument and a freestanding contingent forward instrument. The Company classified the initial put option as a long-term liability on its consolidated balance sheet. Also, because, bet365 has or will be obligated to purchase shares of the Company’s common stock at a strike price less than the expected equity value once bet365’s Online Sportsbook Services is approved in New York State, we have classified the freestanding contingent forward instrument as a long-term asset in the Consolidated Balance Sheet. The derivative liability and the contingent forward asset were initially recorded at fair value upon the effective date of the Collaboration Agreement and will be subsequently remeasured to fair value at each reporting date. Changes in the fair value of the derivative liability and long-term asset will be recognized as a component of "other income (expense), net" in the consolidated statement of operations.

Fair Value of Financial Assets and Liabilities

The Company follows the provisions of ASC 820, “Fair Value Measurement,” issued by the FASB for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value, requires certain disclosures and discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The Company chose not to elect the fair value option as prescribed by the FASB for its financial assets and liabilities that had not been previously carried at fair value. The Company’s financial instruments are primarily comprised of current assets, restricted cash and investments, Interest Rate Cap, current liabilities, long-term debt, contingent forward contracts, derivative instruments,and a guaranty liability. Current assets, investments and current liabilities approximate fair value due to their short-term nature.

In determining fair value, the Company uses quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.

The fair value hierarchy of observable inputs used by the Company is broken down into three levels based on the source of inputs as follows:

- Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities.

- Level 2 - Valuations based on inputs that are observable inputs and quoted prices in active markets for similar assets and liabilities.

- Level 3 - Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement.

The following table presents the carrying amount, fair values and classification level within the fair value hierarchy of financial instruments measured or disclosed at fair value on a recurring basis:



	December 31, 2018		December 31, 2017
	Carrying Amount	Fair Value	Carrying Amount		Fair Value	Level of Fair Value Hierarchy
Assets:	(in thousands)
Cash and cash equivalents	$28,338	$28,338	$10,380		$10,380	Level 1
Restricted cash	373	373	693		693	Level 1
Interest Rate Cap	143	143	251		251	Level 2
Restricted cash, cash equivalents and investments for Development Projects:
Cash and cash equivalents	21,039	21,039	41,982		41,982	Level 1
Short-term investments	—	—	94,449		94,209	Level 2
Other assets:
Non-derivative financial asset - Series F Preferred Stock, redeemable	31,122	31,122	—		—	Level 2
Contingent forward contract - bet365	1,865	1,865	—		—	Level 3

Liabilities:
Term B Loan, net of discount	440,803	440,660	443,161		449,749	Level 2
Term A Loan	64,750	64,750	—		—	Level 2
Bangkok Bank Loan	20,000	20,000	16,000		16,000	Level 3
Revolving Credit Facility	15,000	15,000	—		—	Level 2
Long-term loan, related party, net of debt issuance costs	30,954	30,954	—		—	Level 3
Equipment loans	20,384	20,384	31,095		31,095	Level 3
Guaranty liability - MHHA agreement	2,300	2,300	—	—		Level 2
Derivative liability - bet365	879	879	—		—	Level 3

The fair value of cash and cash equivalents and restricted cash are based on the fair values of identical assets in active markets. The Company used a third party to complete the valuation of its Interest Rate Cap, which is considered a Level 2 asset and is measured at fair value on a recurring basis using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows for the Interest Rate Cap. At December 31, 2017, the estimated fair value of the Company's investments in marketable securities was $94.2 million and the carrying value was approximately $94.5 million. At December 31, 2018 and 2017, the estimated fair value of the Company's outstanding Term B Loan was approximately $440.7 million and $449.7 million and the carrying value before unamortized discounts was approximately $446.6 million and $450.0 million, respectively. The fair value of the Bangkok Bank Loan, the related party loan and the equipment loans approximate carrying value, due to the short-term nature of these agreements. The fair value of the non-derivative financial assets - Series F Preferred Stock, redeemable was valued using a Black Scholes put option model.

Valuation of Derivative Liability and Contingent Forward Contract

The fair value of the derivative liabilities and asset recognized in connection with the Company’s Collaboration Agreement with bet365 (see Note I) was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The derivative liability for the initial put option was recorded in "Other long-term liabilities" on the consolidated balance sheet. The contingent forward contract was recorded net of the contingent put option in "Other assets" on the consolidated balance sheet. The fair value of the derivative liabilities and asset was determined using a Monte Carlo simulation valuation approach with the following assumptions:



	Derivative Liability - bet365	Contingent forward contract - bet365
Equity value	$29.48	$29.48
Strike price	$20.00	$20.00
Expected term	3.46 years	3.13 years
Volatility	61%	62%
Risk-free rate	2.9%	2.9%
Dividend yield	—%	—%

The following table provides a roll forward of the aggregate fair values of the Company’s derivative liabilities and asset, for which fair value is determined using Level 3 inputs (in thousands):



	Derivative Liability - bet365	Contingent forward contract -bet365
Balance as of December 31, 2017	$0	$0
Initial fair value of derivative (liability) asset in connection with Collaboration Agreement	$(879)	$1,865
Change in fair value	$0	$0
Balance as of December 31, 2018	$(879)	$1,865

Valuation of Non-Derivative Liability

The fair value of the guaranty liability recognized in connection with the Company’s agreement with MHHA (see Note J) was determined based on significant inputs that are observable and quoted prices in active markets for similar liabilities, which represents a Level 2 measurement within the fair value hierarchy. The fair value of the derivative liability was determined using a Black Scholes valuation approach with the following assumptions:



	Guaranty Liability - MHHA Horsemen
Equity value	$10.13
Strike price	$27.50
Expected term	6.11 years
Volatility	68%
Risk-free rate	2.6%
Dividend yield	—%

During the years ended December 31, 2018, 2017, and 2016, there were no transfers between Level 1, Level 2 and Level 3.

Advertising

The Company records in selling, general and administrative expense the costs of general advertising, promotion and marketing programs at the time those costs are incurred. Advertising expense was approximately $11.0 million, $1.4 million and $1.1 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Stock-based compensation

The cost of all share-based awards to employees, including grants of restricted stock and restricted stock units, is recognized in the financial statements based on the fair value of the awards at grant date. The fair value of restricted stock awards is equal to the market price of Empire’s common stock on the date of grant. The fair value of share-based awards is recognized as stock-based compensation expense on a straight-line basis over the requisite service period from the date of grant. As of December 31, 2018, there was approximately $2.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company’s equity compensation plan. That cost is expected to be recognized over a period of 2.5 years. This expected cost does not include the impact of any future stock-based compensation awards.

Income taxes

The Company applies the asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates for the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

Intangible Assets

In accordance with ASC 350, Intangibles - Goodwill and Other, the Company amortizes intangible assets over their estimated useful lives unless the Company determines their lives to be indefinite.

The Company paid $51 million to the NYSGC on February 25, 2016 for its Gaming Facility License. The term of the Gaming Facility License is 10 years and the amortization commenced on the date the Casino opened to the public in February 2018. Beginning in February 2018, the Company recognized amortization of $5.8 million on a straight line basis and will continue amortize approximately $6.3 million annually over the next seven years until the license is up for renewal in 2026. The Company will assess the intangible asset for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Segment Reporting

The Company maintains discrete financial information for each of its operating companies, which is used by the Chief Executive Officer (the "CEO") as the basis for allocating resources. Each company has been identified as an operating segment and meets the criteria for aggregation due to similar economic characteristics as all of the companies provide similar resort services and shares similar processes for delivering services. Our companies have a high degree of similarity in the workforces and target similar patron groups. Accordingly, based on these economic and operational similarities and the way the CEO monitors and makes decisions, the Company has concluded that its operating segments may be aggregated and that it has one reportable segment.

Recent accounting pronouncements

In February 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). "). This ASU will require lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use (“ROU”) assets. ASU 2016-02 will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The standard must be adopted using a modified retrospective approach and provides for certain practical expedients. Early adoption is permitted. The Company adopted the standard on January 1, 2019 and will apply the package of practical expedients available to it upon adoption. The Company expects that the most significant impact on our consolidated balance sheets will be the recognition of ROU assets and lease liabilities for operating leases that exist at the date of adoption, with the most material of such leases being ground leases.

In November 2016, FASB issued ASU 2016-18, "Restricted Cash" Topic 230, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents. The Company adopted this standard on January 1, 2018 using the retrospective transition method. The impact of the new standard is that the Company's condensed consolidated statements of cash flows now present the change in a combined amount for both restricted and unrestricted cash and cash equivalents for all periods presented.