Management Agreements and Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Management Agreements and Leases

Note 5. Management Agreements and Leases

As of December 31, 2019, we owned 329 hotels included in six operating agreements and 816 service-oriented retail properties net leased to 194 tenants. We do not operate any of our properties.

Hotel agreements

As of December 31, 2019, 327 of our hotels were leased to our TRSs and managed by independent hotel operating companies and two hotels are leased to third parties. As of December 31, 2019, our hotel properties were managed by or leased to separate subsidiaries of Marriott, IHG, Sonesta, Wyndham, Hyatt and Radisson under eight agreements. These hotel agreements had initial terms expiring between 2019 and 2038. Each of these agreements is for between one and 103 of our hotels. In general, the agreements contain renewal options for all, but not less than all, of the affected properties included in each agreement, and the renewal terms range between 15 to 60 years. Most of these agreements require the third party manager or tenant to: (1) make payments to us of minimum returns or minimum rents; (2) deposit a percentage of total hotel sales into FF&E reserves; and (3) for our managed hotels, make payments to our TRSs of additional returns to the extent of available cash flows after payment of operating expenses, funding of the FF&E reserves, payment of our minimum returns, payment of certain management fees and replenishment of security deposits or guarantees. Some of our managers or tenants or their affiliates have provided deposits or guarantees to secure their obligations to pay us.

IHG agreement. Our management agreement with IHG for 103 hotels, or our IHG agreement, which expires in 2036, provides that, as of December 31, 2019, we are to be paid annual minimum returns and rents of $216,239. We realized minimum returns and rents of $205,941, $189,981 and $178,883 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. We also realized additional returns under this agreement $12,250 during the year ended December 31, 2017 from our share of hotel cash flows in excess of the minimum returns and rents due to us for those years. There were no additional returns realized under this agreement during the years ended December 31, 2019 and 2018 .

Pursuant to our IHG agreement, IHG has provided us with a security deposit to cover minimum payment shortfalls, if any. Under this agreement, IHG is required to maintain a minimum security deposit of $37,000 and this security deposit may be replenished and increased up to $100,000 from a share of future cash flows from the hotels in excess of our minimum returns and rents. The available balance of the IHG security deposit was $75,717 as of December 31, 2019.

We funded $55,359 and $39,668 for capital improvements to certain of the hotels included in our IHG agreement during the years ended December 31, 2019 and 2018, respectively.

Marriott No. 1 agreement. Our management agreement with Marriott for 53 hotels, or our Marriott No. 1 agreement, provided that, as of December 31, 2019, we were to be paid an annual minimum return of $71,872 to the extent that gross revenues of the hotels, after payment of hotel operating expenses and funding of the FF&E reserve, were sufficient to do so. Marriott’s base and incentive management fees were only earned after we received our minimum returns. We realized minimum returns of $71,410, $69,325 and $68,944 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. We also realized additional returns of $2,052, $4,457 and $6,180 during the years ended December 31, 2019, 2018 and 2017, respectively, which represented our share of hotel cash flows in excess of the minimum returns due to us for those years. We did not have any security deposits or guarantees for our minimum returns from the 53 hotels included in our Marriott No. 1 agreement. Accordingly, the minimum returns we received from these hotels managed by Marriott were limited to the hotels’ available cash flows after payment of operating expenses and funding of the FF&E reserve.

We funded $17,356 and $9,050 for capital improvements to certain of the hotels included in our Marriott No. 1 agreement during the years ended December 31, 2019 and 2018.

Marriott No. 234 agreement. Our management agreement with Marriott for 68 hotels, or our Marriott No. 234 agreement, provided that, as of December 31, 2019, we were to be paid an annual minimum return of $110,383. We realized minimum returns of $108,564, $106,978 and $106,405 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. Pursuant to our Marriott No. 234 agreement, Marriott had provided us with a security deposit to cover minimum return payment shortfalls, if any. Under this agreement, this security deposit may have been replenished and increased up to $64,700 from a share of hotel cash flows in excess of the minimum returns due to us. Marriott’s base and incentive management fees were only earned after we received our minimum returns. During the year ended December 31, 2019, our available security deposit was replenished by $734 from a share of hotel cash flows in excess of the minimum returns due to us for the year. The available balance of this deposit was $33,445 as of December 31, 2019. Pursuant to our Marriott No. 234 agreement, Marriott had also provided us with a limited guaranty for shortfalls up to 90% of our minimum returns, if and after the available security deposit had been depleted. This guaranty expired on December 31, 2019.

We funded $33,700 and $9,030 for capital improvements to certain of the hotels included in our Marriott No. 234 agreement during the years ended December 31, 2019 and 2018.

Marriott No. 5 agreement. We leased one hotel in Kauai, HI to Marriott which required that, as of December 31, 2019, we were paid annual minimum rents of $10,518. This lease was guaranteed by Marriott and we realized $10,518, $10,321 and $10,159 of rent for this hotel during the years ended December 31, 2019, 2018 and 2017, respectively. This lease expired on December 31, 2019.

On December 31, 2019, we entered into agreements with Marriott, which combined our Marriott Nos. 1, 234 and 5 agreements into a single portfolio for a 16-year term commencing January 1, 2020, or the Marriott Agreement. Among other terms, the new combined agreements with Marriott provide as follows:

• That all 122 Marriott hotels will be combined economically so that excess cash flows from any of these hotels are available to pay the aggregate annual minimum returns due to SVC for these hotels, which was initially $190,600. Our TRS subsidiaries will continue to participate in the net cash flows from hotel operations after payment of management fees to Marriott and these base fees will continue to be subordinated to the annual minimum return due to us.

• That the existing security deposit we held for the Marriott No. 234 agreement ($33,445 as of December 31, 2019) will continue to secure payment of the aggregate annual minimum returns due to us under the new combined agreements and may be replenished up to the security deposit cap of $64,700 from 60% of the cash flows realized from operations of the 122 hotels after payment of the aggregate annual minimum return due to us, Marriott’s base management fees and certain other advances by us or Marriott, if any.

• That Marriott will provide a new $30,000 limited guaranty for 85% of the aggregate annual minimum return due to us through 2026 under the new combined agreements if the security deposit is exhausted.

• That the term of the agreements will be extended through 2035, with Marriott having the option to renew for two consecutive 10-year terms on an all or none basis.

• That 5.5%-6.5% of gross revenues from hotel operations will continue to be placed in escrow for hotel maintenance and periodic renovations, or an FF&E reserve.

We and Marriott identified 33 of the 122 hotels covered by the Marriott Agreement that will be sold or rebranded, at which time we would retain the proceeds of any such sale and the aggregate annual minimum returns due to us would decrease by the amount allocated to the applicable hotel.

Sonesta agreement. As of December 31, 2019, Sonesta managed 14 of our full service hotels and 39 of our limited service hotels pursuant to management agreements for each of the hotels, which we refer to collectively as our Sonesta agreement, and a pooling agreement, which combines those management agreements for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us. See Notes 4 and 9 for further information regarding our relationship, agreements and transactions with Sonesta.

As of December 31, 2019, our Sonesta agreement provided that we are paid a fixed annual minimum return equal to 8% of our invested capital, as defined therein, which was $146,800, as of December 31, 2019, if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), are sufficient to do so. Our Sonesta agreement further provided that we are paid an additional return based upon operating profits, as defined therein, after payment of Sonesta’s incentive fee, if applicable. We realized returns of $67,592, $78,076 and $70,576 during the years ended December 31, 2019, 2018 and 2017, respectively, under our Sonesta agreement. We do not have any security deposits or guarantees for our Sonesta hotels. Accordingly, the returns we receive from our Sonesta hotels are limited to the hotels’ available cash flows after payment of operating expenses including management and related fees.

As of December 31, 2019 our Sonesta agreement provided that Sonesta is entitled to receive, after payment of hotel operating expenses, a base management fee equal to 3.0% of gross revenues for our full service Sonesta hotels and 5.0% of gross revenues for our limited service Sonesta hotels. Additionally, Sonesta is entitled to a reservation fee equal to 1.5% of gross room revenues, as defined in the Sonesta agreement, a system fee for centralized services of 1.5% of gross revenues, a procurement and construction supervision fee equal to 3.0% of third party costs of capital expenditures and an incentive management fee equal to 20.0% of operating profits remaining after reimbursement to us and to Sonesta of certain advances and payment of our minimum returns. Sonesta’s incentive management fee, but not its other fees, is earned only after our minimum returns are paid. Our Sonesta agreement also provided that the costs incurred by Sonesta for advertising, marketing, promotional and public relations programs and campaigns, including “frequent stay” rewards programs, for the benefit of our Sonesta hotels are subject to reimbursement by us or are otherwise treated as hotel operating expenses, subject to our approval.

Pursuant to our Sonesta agreement, as of December 31, 2019, we incurred base management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing program and third party reservation transmission fees of $36,169, $34,821 and $28,238 for the years ended December 31, 2019, 2018 and 2017, respectively, under our Sonesta agreement. In addition, as of December 31, 2019, we recognized procurement and construction supervision fees of $3,320, $2,374 and $1,080 for the years ended December 31, 2019, 2018 and 2017, respectively, under our Sonesta agreement. These amounts are included in hotel operating expenses or have been capitalized, as appropriate, in our consolidated financial statements.

As of December 31, 2019 our Sonesta agreement did not require FF&E escrow deposits, but did require us to fund capital expenditures that we approved at our Sonesta hotels. We funded $114,082, $82,329 and $34,933 for renovations and other capital improvements to hotels included in our Sonesta agreement during the years ended December 31, 2019, 2018 and 2017, respectively. We owed Sonesta $15,537 and $5,703 for capital expenditure reimbursements and for a previously estimated overpayment of minimum returns advanced at December 31, 2019 and 2018, respectively. Amounts due from Sonesta are included in due from related persons and amounts owed to Sonesta are included in due to related persons in our consolidated balance sheets, respectively.

Our Sonesta agreement expires in January 2037, and will be extended automatically for up to two successive 15 year renewal terms unless Sonesta elects not to renew any such agreement. Under the pooling agreement, if Sonesta elects not to renew a management agreement, that will be deemed to be a notice of non-renewal for all our management agreements with Sonesta. We generally have the right to terminate a management agreement with Sonesta after three to four years without cause upon payment of a termination fee. We also have the right to terminate a management agreement with Sonesta without a termination fee if our minimum return is less than 6% of our invested capital during any three of four applicable consecutive years. Both we and Sonesta have the right to terminate any management agreement included in our Sonesta agreement upon a change in control, as defined therein, of the other party, and under certain other circumstances that, in the case of termination by Sonesta, may require that we pay a termination fee to Sonesta. Under the pooling agreement, if we terminate or Sonesta terminates a management agreement following a change of control, that will be deemed a termination of all of our management agreements with Sonesta. Under our Sonesta agreement, if we terminate without cause, or if Sonesta terminates under certain circumstances, the termination fee is an amount equal to the present value of the payments that would have been made to Sonesta as a base management fee, reservation fee, system fee and incentive management fee, each as defined therein, between the date of termination of the applicable agreement and the scheduled expiration date of the term that was remaining prior to such termination, which present value is calculated based upon the average of each of such fees earned in each of the three years ended prior to the date of termination, discounted at an annual rate equal to 8%. We may designate a hotel as “non-economic” under the pooling agreement, in which case the hotel would be subject to sale and the applicable Sonesta management agreement would be terminated, and we have an early termination right under each of the management agreements included in our Sonesta agreement if the applicable hotel does not meet certain criteria for the stipulated measurement period. These stipulated measurement periods begin on the later of January 1, 2017 and January 1st of the year beginning at least 18 months following the effective date of the applicable management agreement.

On November 1, 2019, we rebranded two full service hotels previously managed by Wyndham (Chicago, IL and Irvine, CA) to the Sonesta brands under short term agreements with Sonesta that expire on December 31, 2020.

We also lease 48 vacation units in the Chicago, IL Sonesta hotel to a subsidiary of Wyndham Destinations, Inc. (NYSE: WYND), or Destinations, which requires that, as of December 31, 2019, we are paid annual minimum rents of $1,537. The guaranty provided by Destinations with respect to the Destinations lease for part of one hotel is unlimited. We recognized rental income of $503 during the year ended December 31, 2019 and $1,456 and $1,414 during the years ended December 31, 2018 and 2017, respectively, under our Destinations agreement. We reduced rental income by $997 for the year ended December 31, 2019 and increased rental income by $358 and $400 for the years ended December 31, 2018 and 2017, respectively, to record adjustments necessary to record rent on a straight line basis. We have amended the lease of the 48 Destinations units at the Chicago hotel so the term of the lease expires on March 31, 2020, at which time Destinations will vacate the leased space.

See Note 4 for information regarding the effects of certain of our property acquisitions on our management agreements with Sonesta.

On February 27, 2020, we entered into a transaction agreement with Sonesta and its newly formed parent company, Sonesta Holdco Corporation, or Holdco, pursuant to which we and Sonesta restructured our existing business arrangements as follows:

• We amended and restated our existing management agreements with Sonesta for each of our hotels currently manage by Sonesta, which we refer to collectively as our Sonesta agreement, and our existing pooling agreement with Sonesta, which combines our management agreements with Sonesta for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us, as further described below;

• We and Sonesta agreed to sell, rebrand or repurpose our 39 extended stay hotels currently managed by Sonesta with an aggregate carrying value of $480,547 and which currently require aggregate minimum returns of $49,467. As the hotels are sold, rebranded or repurposed, the management agreement for the applicable hotel(s) will terminate witout our being required to pay Sonesta a termination fee and our annual minimum returns due to us under our Sonesta agreement will decrease by the amount allocated to the applicable hotel(s);

• Sonesta will continue to manage 14 of our full-service hotels that Sonesta currently manages and the annual minimum returns due for these hotels will be reduced from $99,013 to $69,013;

• Holdco issued to us a number of its shares of common stock representing approximately (but not more than) 34% of its outstanding shares of common stock (post-issuance);

• We modified our Sonesta agreement and pooling agreement so that 5% of the hotel gross revenues of each of our 14 full-service hotels managed by Sonesta will be escrowed for future capital expenditures as “FF&E reserves,” subject to available cash flow after payment of the annual minimum returns due to us under the Sonesta agreement;

• We modified our Sonesta agreement and pooling agreement so that (1) our termination rights under those agreements for our 14 full-service hotels managed by Sonesta are generally limited to performance and for “cause,” casualty and condemnation events, (2) a portfolio wide performance test now applies for determining whether the management agreement for any of our full service hotels managed by Sonesta may be terminated for performance reasons, and (3) the provisions included in our historical pooling agreement that allowed either us or Sonesta to require the marketing for sale of non-economic hotels were removed; and

• We extended the initial expiration date of the management agreements for our full service hotels located in Chicago, IL and Irvine, CA that are managed by Sonesta to January 2037 to align with the initial expiration date for our other full-service hotels managed by Sonesta.

Except as described above, the economic terms of our amended and restated Sonesta agreement and amended and restated pooling agreement are consistent with the historical Sonesta agreement and pooling agreement.

Hyatt agreement. Our management agreement with Hyatt for 22 hotels, or our Hyatt agreement, which expires in 2030, provides that, as of December 31, 2019, we are to be paid an annual minimum return of $22,037. We realized minimum returns of $22,037 during each of the years ended December 31, 2019, 2018 and 2017 under this agreement. Pursuant to our Hyatt agreement, Hyatt has provided us with a guaranty, which is limited to $50,000. During the year ended December 31, 2019, the hotels under this agreement generated cash flows that were less than the minimum rents due to us for the period and Hyatt made $2,260 guarantee payments to cover the shortfall. The available balance of the guaranty was $19,655 as of December 31, 2019.

Radisson agreement. Our management agreement with Radisson for nine hotels, or our Radisson agreement, which expires in 2035, provides that, as of December 31, 2019, we are to be paid an annual minimum return of $20,443. We realized minimum returns of $20,056, $16,183 and $12,920 during the years ended December 31, 2019, 2018 and 2017, respectively, under this agreement. Pursuant to our Radisson agreement, Radisson has provided us with a limited guaranty which, as a result of capital improvement amounts funded by us during the year ended December 31, 2019, increased by $1,523 to a total of $47,523. During the year ended December 31, 2019, the hotels under this agreement generated cash flows that were less than the minimum returns due to us for the period, and Radisson made $1,343 of guaranty payments to cover the shortfall. The available balance of the guarantee was $41,216 at December 31, 2019. We funded $19,034 for capital improvements at certain of the hotels included in our Radisson agreement during the year ended December 31, 2019.

Wyndham agreements. In October 2019, we amended our agreement with Wyndham whereby the term of the management agreement will expire on September 30, 2020 unless sooner terminated with respect to any hotels that are sold or rebranded. Under the amendment, Wyndham will pay us all cash flows of the hotels after payment of hotel operating costs. Wyndham will not be entitled to any base management fees for the remainder of the agreement term. We realized returns of $20,023, $23,562 and $27,452 during the years ended December 31, 2019, 2018 and 2017, respectively. Wyndham had provided us with a guaranty, which was limited to $35,656, subject to an annual payment limit of $17,828 which was depleted during 2017. To avoid default, Wyndham was required to pay 85% of the minimum returns due to us. Our Wyndham agreement requires FF&E escrow deposits equal to 5% of total hotel sales for all hotels included in the agreement subject to available cash flows after payment of our minimum return. No FF&E escrow deposits were made during the year ended December 31, 2019. We funded $3,040, $2,883 and $1,449 for capital improvements to certain of the hotels included in our Wyndham agreement during the years ended December 31, 2019, 2018 and 2017, respectively.

Net lease portfolio

As of December 31, 2019, we owned 816 net lease service-oriented retail properties with 14.9 million square feet with annual minimum rent of $381,679 with a weighted (by annual minimum rents) average lease term of 8.6 years. The portfolio was 98% leased by 194 tenants operating under 131 brands in 23 distinct industries.

TA Leases

On January 16, 2019, we entered agreements with TA pursuant to which:

• We sold to TA 20 travel center properties that TA previously leased from us for a total purchase price of $308,200. We recorded a gain of $159,535 as a result of these sales. 

• Upon completing these sales, these travel center properties were removed from the TA leases and TA’s annual minimum rent payable to us decreased by $43,148.

• Commencing on April 1, 2019, TA paid us the first of the 16 quarterly installments of approximately $4,404 each (an aggregate of $70,458) to fully satisfy and discharge its $150,000 deferred rent obligation to us that otherwise would have become due in five installments between 2024 and 2030. TA paid to us $13,200 in respect of such obligation for the year ended December 31, 2019.

• Commencing with the year ending December 31, 2020, TA will be obligated to pay to us an additional amount of percentage rent equal to one-half percent (0.5%) of the excess of its annual nonfuel revenues at leased sites over the nonfuel revenues for each respective site for the year ending December 31, 2019.

• The term of each TA lease was extended by three years.

• Certain of the 179 travel center properties that TA continues to lease from us were reallocated among the TA leases.

TA is our largest tenant. As of December 31, 2019, we leased to TA a total of 179 travel centers under five leases that expire between 2029 and 2035 and require annual minimum returns of $246,088 which represents approximately 24.6% of our total annual minimum rents as of December 31, 2019. The number of travel centers, the terms, the annual minimum rent and the deferred rent balances owed to us by TA under our TA leases as of December 31, 2019, were as follows:

	Number of Travel Centers	Initial Term End (1)	Annual Minimum Rent		Deferred Rent (2) (3)
TA No. 1 Lease	36	December 31, 2032	$	49,707	$	15,148
TA No. 2 Lease	36	December 31, 2031	44,077		14,068
TA No. 3 Lease	35	December 31, 2029	42,409		13,870
TA No. 4 Lease	37	December 31, 2033	48,241		14,161
TA No. 5 Lease	35	June 30, 2035	61,654		—
	179		$	246,088	$	57,247

(1) TA has two renewal options of 15 years each under each of our TA leases.

(2) Commencing April 1, 2019, TA is required to pay us $70,458 in 16 quarterly installments of $4,404 each for deferred rent TA owes us.

(3) Represents the balance as of December 31, 2019.

Our TA leases are “triple net” leases that require TA to pay all costs incurred in the operation of the leased travel centers, including personnel, utility, inventory, customer service and insurance expenses, real estate and personal property taxes, environmental related expenses, underground storage tank removal costs and ground lease payments at those travel centers at which we lease the property and sublease it to TA. Our TA leases generally require TA to indemnify us for certain environmental matters and for liabilities that arise during the terms of the leases from ownership or operation of the leased travel centers. In addition, TA is obligated to pay us at lease expiration an amount equal to an estimate of the cost of removing underground storage tanks on the leased properties. Our TA leases do not require FF&E escrow deposits. However, TA is required to maintain the leased travel centers, including structural and non-structural components. Under our TA leases, TA generally cannot own, franchise, finance, operate, lease or manage any travel center or similar property that is not owned by us within 75 miles in either direction along the primary interstate on which a travel center owned by us is located without our consent.

We recognized rental income from TA of $262,038, $302,309 and $293,273 for the years ended December 31, 2019, 2018 and 2017 respectively. We reduced rental income by $11,894 for the year ended December 31, 2019 and increased rental income of $12,127 and $11,966 for the years ended December 31, 2018 and 2017, respectively, to record the deferred rent obligations under our TA leases and the estimated future payments to us by TA for the cost of removing underground storage tanks on a straight line basis. As of December 31, 2019 and 2018, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $68,653 and $91,212, respectively. These amounts are included in due from related persons in our consolidated balance sheets. For the years ended December 31, 2018 and 2017, we recognized the deferred rent obligations under our TA leases as rental income on a straight line basis over the then in-place lease terms. Beginning in January 2019, our recognition of the amended deferred rent obligations are recorded on a straight line basis over the new lease terms of our TA leases.

In addition to the payment of annual minimum rent, our TA Nos. 1, 2, 3 and 4 leases provide for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2015 non-fuel revenues, and, beginning with the year ending December 31, 2020, an additional half percent (0.5%) of non-fuel revenues above 2019 non-fuel revenues) and our TA No. 5 lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2012 non-fuel revenues, and, beginning with the year ending December 31, 2020, an additional 0.5% of non-fuel revenues above 2019 non-fuel revenues). The total amount of percentage rent from TA that we recognized was $4,075, $3,548 and $2,106 during the years ended December 31, 2019, 2018 and 2017, respectively.

Under our TA leases, TA may request that we fund capital improvements in return for increases in TA’s annual minimum rent according to the following formula: the annual minimum rent is increased by an amount equal to the amount funded by us multiplied by the greater of (1) 8.5% or (2) a benchmark U.S. Treasury interest rate plus 3.5%. TA is not obligated to request and we are not obligated to fund any such improvements. We funded $56,346 and $84,632 during the years ended December 31, 2018 and 2017, respectively, for capital improvements to our travel center properties and, as a result, TA’s annual minimum rent payable to us increased by $4,789 and $7,194, respectively. We did not fund any improvements under these leases during 2019.

See Notes 4 and 9 for further information regarding our relationship with TA.

Other net lease agreements

We recognized rental income from the net lease properties we acquired under the SMTA Transaction of $46,861 during the year ended December 31, 2019, which includes $2,160 of adjustments to record scheduled rent changes under certain of our leases on a straight line basis.

Additional lease information (as lessor). As of December 31, 2019, our leases with parties other than our TRSs provide for contractual minimum rents to be paid to us during the remaining current terms as follows:

2019	$	406,518
2020	402,000
2021	390,585
2022	372,440
2023	364,541
Thereafter	2,718,281
Total	$	4,654,365

Additional lease information (as lessee). As of December 31, 2019, 14 of our hotels were subject to ground leases where we are the lessee. In addition, our hotel operators enter various leases on our behalf in the normal course of business at our hotels, or our hotel operating leases. We calculated right of use assets and lease liabilities as the present value of the remaining lease payment obligations for our operating leases, which include the ground leases and hotel operating leases, over the remaining lease term using our estimated incremental borrowing rate. The right of use assets and related lease liabilities are included within other assets, net and accounts payable and other liabilities, respectively, in our consolidated balance sheets.

At December 31, 2019, our right of use assets and related lease liabilities totaled $75,040 and $75,040, respectively, which represented our future obligations under our operating leases and are included in other assets and other liabilities, respectively, in our consolidated balance sheets. Our operating leases require minimum fixed rent payments, percentage rent payments based on a percentage of hotel revenues in excess of certain thresholds, or rent payments equal to the greater of a minimum fixed rent or percentage rent. Rental expense related to our operating leases of $13,892 for year ended December 31, 2019, is included in hotel operating expenses within our consolidated statements of comprehensive income. As of December 31, 2019, our operating leases provide for contractual minimum rent payments to third parties during the remaining lease terms, as follows:

2020	$	7,052
2021	6,424
2022	5,877
2023	5,761
2024	5,762
Thereafter	150,826
Total lease payments	181,702
Less: imputed interest	(106,662		)
Present value of lease liabilities (1)	$	75,040

(1) The weighted average discount rate used to calculate the lease liability and the weighted average remaining term for our ground leases (assuming all extension options) and our hotel operating leases are approximately 5.50% and 31 years (range of 12 years to 68 years) and 5.53% and 31 years (range of 1 month to 54 years), respectively.

As of December 31, 2019, 17 of our net lease properties are on land we leased partially or entirely from unrelated third parties. We are not required to record right of use assets and lease liabilities for these properties as we are not the primary obligor under the leases. The average remaining term of these 17 ground leases was 12 years (range of two to 31 years) with rents averaging $508 per year.

Generally, payments of ground lease obligations are made by our managers or tenants. However, if a manager or tenant did not perform obligations under a ground lease or did not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property.