Leases (Tables)

3 Months Ended

Mar. 31, 2026

Schedule of supplemental balance sheet information related to leases

Operating leases were included on the accompanying consolidated balance sheets as follows (in thousands):


	March 31,			December 31,
	2026			2025
	(unaudited)
Right-of-use assets, net (1)	$	4,098		$	4,418

Lease obligations (1)	$	6,811		$	7,348

Weighted average remaining lease term		5 years
Weighted average discount rate		5.8	%

(1)

The Company’s operating lease obligations include a ground lease that expires in 2071 and requires a reassessment of rent payments for periods subsequent to 2025, agreed upon by both the Company and the lessor. As of March 31, 2026, the reassessment had not been finalized; therefore, no amounts related to this ground lease are included in the table above. The Company recorded lease expense of approximately $3.3 million during the three months ended March 31, 2026, based on the contractual rent in effect as of December 31, 2025. Upon completion of the reassessment, the Company will evaluate the accounting treatment of the lease in accordance with Accounting Standards Codification Topic 842, Leases.

Schedule of components of lease expense and supplemental cash flow information for operating leases

The components of lease expense, as well as supplemental cash flow information for operating leases, were as follows (unaudited and in thousands):


	Three Months Ended March 31,
	2026		2025
Operating lease cost	$	431	$	1,367
Variable lease cost (1)		3,253		1,986
Sublease income (2)		(305)		(297)
Total lease cost	$	3,379	$	3,056

Operating cash flows for operating leases (3)	$	619	$	1,505

(1)

Several of the Company’s hotels pay percentage rent, which is calculated on operating revenues above certain thresholds.

(2)

Sublease income is included in corporate overhead in the accompanying consolidated statements of operations for the three months ended March 31, 2026 and 2025.

(3)

As noted above, the Company’s operating lease obligations exclude a lease for which the reassessment had not been finalized as of March 31, 2026. Accordingly, operating cash flows used for amounts included in the measurement of operating lease liabilities for the three months ended March 31, 2026 do not include lease expense related to this lease, which was recognized based on the contractual rent in effect as of December 31, 2025.