| Leasing Transactions, As a Lessee | Leasing Transactions As a Lessee We have lease agreements covering many of our properties, as well as various equipment, with the most significant leases being our five leases with Service Properties Trust, or SVC, which are further described below. Certain of our leases include renewal options, and certain leases include escalation clauses and purchase options. Renewal periods are included in calculating our operating lease assets and liabilities when they are reasonably certain. Leases with an initial term of 12 months or less are not recognized in our consolidated balance sheets. As of June 30, 2021, most of our SVC Leases (as defined below), the leases covering our other properties and most of our equipment leases were classified as operating leases and certain of our other equipment leases and one SVC lease were classified as finance leases. As of June 30, 2021, our non-SVC finance lease assets and liabilities were immaterial to our consolidated financial statements. Finance lease assets were included in other noncurrent assets, with the corresponding current and noncurrent finance lease liabilities included in other current liabilities and other noncurrent liabilities, respectively, on our consolidated balance sheets. Certain of our operating leases provide for variable lease costs, which primarily include percentage rent and our obligation for the estimated cost of removing underground storage tanks under the SVC Leases. Our lease costs are included in various balances in our consolidated statements of operations and comprehensive income (loss), as shown in the following table. For the three and six months ended June 30, 2021 and 2020, our lease costs consisted of the following: Classification in our Consolidated Three Months Ended 2021 2020 Operating lease costs: SVC Leases Real estate rent expense $ 58,952 $ 59,498 Operating lease costs: other Real estate rent expense 2,398 2,844 Variable lease costs: SVC Leases Real estate rent expense 2,105 605 Variable lease costs: other Real estate rent expense 156 132 Total real estate rent expense 63,611 63,079 Operating lease costs: equipment and other Site level operating expense and selling, general and administrative expense 776 950 Financing lease costs: equipment and other Site level operating expense 77 — Short-term lease costs Site level operating expense and selling, general and administrative expense 175 411 Amortization of finance lease assets: Depreciation and amortization expense 553 — Amortization of finance lease assets: other Depreciation and amortization expense 409 — Interest on finance lease liabilities: Interest expense, net 308 — Interest on finance lease liabilities: other Interest expense, net 108 — Sublease income Nonfuel revenues (517) (527) Net lease costs $ 65,500 $ 63,913 Classification in our Consolidated Six Months Ended 2021 2020 Operating lease costs: SVC Leases Real estate rent expense $ 118,089 $ 118,999 Operating lease costs: other Real estate rent expense 5,082 5,677 Variable lease costs: SVC Leases Real estate rent expense 3,971 1,701 Variable lease costs: other Real estate rent expense 338 290 Total real estate rent expense 127,480 126,667 Operating lease costs: equipment and other Site level operating expense and selling, general and administrative expense 1,622 1,916 Financing lease costs: equipment and other Site level operating expense 99 — Short-term lease costs Site level operating expense and selling, general and administrative expense 342 950 Amortization of finance lease assets: Depreciation and amortization expense 737 — Amortization of finance lease assets: other Depreciation and amortization expense 659 — Interest on finance lease liabilities: Interest expense, net 411 — Interest on finance lease liabilities: other Interest expense, net 189 — Sublease income Nonfuel revenues (1,003) (1,023) Net lease costs $ 130,536 $ 128,510 Maturities of our operating lease liabilities that had remaining noncancelable lease terms in excess of one year as of June 30, 2021, were as follows: SVC Leases (1) Other Total Years ended December 31: 2021 $ 134,643 $ 2,371 $ 137,014 2022 268,936 3,647 272,583 2023 255,343 1,757 257,100 2024 251,150 620 251,770 2025 250,667 490 251,157 Thereafter 1,783,837 2,288 1,786,125 Total operating lease payments 2,944,576 11,173 2,955,749 Less: present value discount (2) (1,133,897) (1,809) (1,135,706) Present value of operating lease liabilities $ 1,810,679 $ 9,364 $ 1,820,043 (1) Includes rent for properties we sublease from SVC and pay directly to SVC's landlords. (2) The discount rate used to derive the present value of unpaid lease payments is based on the rates implicit in the SVC Leases and our incremental borrowing rate for all other leases. The weighted average remaining lease term for our operating leases as of June 30, 2021, was approximately 12 years. Our weighted average discount rate for our operating leases as of June 30, 2021, was approximately 9.1%. During the six months ended June 30, 2021 and 2020, we paid $139,113 and $138,735, respectively, for amounts that had been included in the measurement of our operating lease liabilities. As of June 30, 2021 and December 31, 2020, our operating lease assets and liabilities consisted of the following: June 30, December 31, Operating lease assets: SVC Leases $ 1,684,580 $ 1,724,428 Other 8,770 10,455 Total operating lease assets $ 1,693,350 $ 1,734,883 Current operating lease liabilities: SVC Leases $ 109,819 $ 106,788 Other 4,204 4,467 Total current operating lease liabilities $ 114,023 $ 111,255 Noncurrent operating lease liabilities: SVC Leases $ 1,700,860 $ 1,756,449 Other 5,160 6,717 Total noncurrent operating lease liabilities $ 1,706,020 $ 1,763,166 On March 9, 2021, we and SVC amended one of the SVC Leases, pursuant to which, a third party ground lease at one of the 179 travel center properties that we lease from SVC, which was previously accounted for as an operating lease, is now accounted for as a finance lease. As a result of this lease modification, as of June 30, 2021, we recorded $27,648 in other noncurrent assets, $1,373 in other current liabilities and $26,698 in other noncurrent liabilities on our consolidated balance sheet. Maturities of the financing lease liabilities related to the amended SVC lease noted above that had remaining noncancelable lease terms in excess of one year as of June 30, 2021, were as follows: SVC Finance Lease Years ended December 31: 2021 $ 1,187 2022 2,591 2023 2,656 2024 2,722 2025 2,790 Thereafter 24,986 Total financing lease payments 36,932 Less: present value discount (1) (8,861) Present value of financing lease liabilities $ 28,071 (1) The discount rate used to derive the present value of unpaid lease payments is based on the rate implicit in the SVC Lease. Leasing Agreements with SVC. As of June 30, 2021, we leased from SVC a total of 179 properties under five leases that expire between 2029 and 2035, subject to our right to extend those leases. We refer to these five leases collectively as the SVC Leases. We recognized total real estate rent expense under the SVC Leases of $61,057 and $60,103 for the three months ended June 30, 2021 and 2020, respectively, and $122,060 and $120,700 for the six months ended June 30, 2021 and 2020, respectively. Included in these rent expense amounts are percentage rent payable of $1,591 and $124 for the three months ended June 30, 2021 and 2020, respectively, and $2,977 and $849 for the six months ended June 30, 2021 and 2020, respectively, which are based on a percentage of the increases in total nonfuel revenues at each leased property over base year levels, deferred rent of $4,404 and $8,807 for the three and six month periods, respectively, and adjustments for future increases in minimum annual rent on a straight line basis and estimated future payments by us for the cost of removing underground storage tanks on a straight line basis. The remaining balance of our deferred rent obligations was $30,826 as of June 30, 2021. Pursuant to the SVC Leases, we may request that SVC purchase qualifying capital improvements we make at the leased travel centers in return for increased annual minimum rent. We did not sell to SVC any improvements we made to properties leased from SVC for the three and six months ended June 30, 2021 and 2020. As permitted by the SVC Leases, we sublease a portion of certain travel centers to third parties to operate other retail operations. These subleases are classified as operating leases. We recognized sublease rental income of $517 and $527 for the three months ended June 30, 2021 and 2020, respectively, and $1,003 and $1,023 for the six months ended June 30, 2021 and 2020, respectively. As a Lessor We leased two travel centers to franchisees as of June 30, 2021 and 2020. Rent revenues from these operating leases totaled $584 and $572 for the three months ended June 30, 2021 and 2020, respectively, and $1,168 and $1,144 for the six months ended June 30, 2021 and 2020, respectively. Future minimum lease payments due to us for the two leased sites under these operating leases as of June 30, 2021, were $1,190 for the remainder of 2021 and $1,190 for 2022. See above for information regarding certain travel centers that we lease from SVC in which we sublease a portion of the travel centers to third parties to operate other retail operations. |
| Leasing Transactions, As a Lessor | Leasing Transactions As a Lessee We have lease agreements covering many of our properties, as well as various equipment, with the most significant leases being our five leases with Service Properties Trust, or SVC, which are further described below. Certain of our leases include renewal options, and certain leases include escalation clauses and purchase options. Renewal periods are included in calculating our operating lease assets and liabilities when they are reasonably certain. Leases with an initial term of 12 months or less are not recognized in our consolidated balance sheets. As of June 30, 2021, most of our SVC Leases (as defined below), the leases covering our other properties and most of our equipment leases were classified as operating leases and certain of our other equipment leases and one SVC lease were classified as finance leases. As of June 30, 2021, our non-SVC finance lease assets and liabilities were immaterial to our consolidated financial statements. Finance lease assets were included in other noncurrent assets, with the corresponding current and noncurrent finance lease liabilities included in other current liabilities and other noncurrent liabilities, respectively, on our consolidated balance sheets. Certain of our operating leases provide for variable lease costs, which primarily include percentage rent and our obligation for the estimated cost of removing underground storage tanks under the SVC Leases. Our lease costs are included in various balances in our consolidated statements of operations and comprehensive income (loss), as shown in the following table. For the three and six months ended June 30, 2021 and 2020, our lease costs consisted of the following: Classification in our Consolidated Three Months Ended 2021 2020 Operating lease costs: SVC Leases Real estate rent expense $ 58,952 $ 59,498 Operating lease costs: other Real estate rent expense 2,398 2,844 Variable lease costs: SVC Leases Real estate rent expense 2,105 605 Variable lease costs: other Real estate rent expense 156 132 Total real estate rent expense 63,611 63,079 Operating lease costs: equipment and other Site level operating expense and selling, general and administrative expense 776 950 Financing lease costs: equipment and other Site level operating expense 77 — Short-term lease costs Site level operating expense and selling, general and administrative expense 175 411 Amortization of finance lease assets: Depreciation and amortization expense 553 — Amortization of finance lease assets: other Depreciation and amortization expense 409 — Interest on finance lease liabilities: Interest expense, net 308 — Interest on finance lease liabilities: other Interest expense, net 108 — Sublease income Nonfuel revenues (517) (527) Net lease costs $ 65,500 $ 63,913 Classification in our Consolidated Six Months Ended 2021 2020 Operating lease costs: SVC Leases Real estate rent expense $ 118,089 $ 118,999 Operating lease costs: other Real estate rent expense 5,082 5,677 Variable lease costs: SVC Leases Real estate rent expense 3,971 1,701 Variable lease costs: other Real estate rent expense 338 290 Total real estate rent expense 127,480 126,667 Operating lease costs: equipment and other Site level operating expense and selling, general and administrative expense 1,622 1,916 Financing lease costs: equipment and other Site level operating expense 99 — Short-term lease costs Site level operating expense and selling, general and administrative expense 342 950 Amortization of finance lease assets: Depreciation and amortization expense 737 — Amortization of finance lease assets: other Depreciation and amortization expense 659 — Interest on finance lease liabilities: Interest expense, net 411 — Interest on finance lease liabilities: other Interest expense, net 189 — Sublease income Nonfuel revenues (1,003) (1,023) Net lease costs $ 130,536 $ 128,510 Maturities of our operating lease liabilities that had remaining noncancelable lease terms in excess of one year as of June 30, 2021, were as follows: SVC Leases (1) Other Total Years ended December 31: 2021 $ 134,643 $ 2,371 $ 137,014 2022 268,936 3,647 272,583 2023 255,343 1,757 257,100 2024 251,150 620 251,770 2025 250,667 490 251,157 Thereafter 1,783,837 2,288 1,786,125 Total operating lease payments 2,944,576 11,173 2,955,749 Less: present value discount (2) (1,133,897) (1,809) (1,135,706) Present value of operating lease liabilities $ 1,810,679 $ 9,364 $ 1,820,043 (1) Includes rent for properties we sublease from SVC and pay directly to SVC's landlords. (2) The discount rate used to derive the present value of unpaid lease payments is based on the rates implicit in the SVC Leases and our incremental borrowing rate for all other leases. The weighted average remaining lease term for our operating leases as of June 30, 2021, was approximately 12 years. Our weighted average discount rate for our operating leases as of June 30, 2021, was approximately 9.1%. During the six months ended June 30, 2021 and 2020, we paid $139,113 and $138,735, respectively, for amounts that had been included in the measurement of our operating lease liabilities. As of June 30, 2021 and December 31, 2020, our operating lease assets and liabilities consisted of the following: June 30, December 31, Operating lease assets: SVC Leases $ 1,684,580 $ 1,724,428 Other 8,770 10,455 Total operating lease assets $ 1,693,350 $ 1,734,883 Current operating lease liabilities: SVC Leases $ 109,819 $ 106,788 Other 4,204 4,467 Total current operating lease liabilities $ 114,023 $ 111,255 Noncurrent operating lease liabilities: SVC Leases $ 1,700,860 $ 1,756,449 Other 5,160 6,717 Total noncurrent operating lease liabilities $ 1,706,020 $ 1,763,166 On March 9, 2021, we and SVC amended one of the SVC Leases, pursuant to which, a third party ground lease at one of the 179 travel center properties that we lease from SVC, which was previously accounted for as an operating lease, is now accounted for as a finance lease. As a result of this lease modification, as of June 30, 2021, we recorded $27,648 in other noncurrent assets, $1,373 in other current liabilities and $26,698 in other noncurrent liabilities on our consolidated balance sheet. Maturities of the financing lease liabilities related to the amended SVC lease noted above that had remaining noncancelable lease terms in excess of one year as of June 30, 2021, were as follows: SVC Finance Lease Years ended December 31: 2021 $ 1,187 2022 2,591 2023 2,656 2024 2,722 2025 2,790 Thereafter 24,986 Total financing lease payments 36,932 Less: present value discount (1) (8,861) Present value of financing lease liabilities $ 28,071 (1) The discount rate used to derive the present value of unpaid lease payments is based on the rate implicit in the SVC Lease. Leasing Agreements with SVC. As of June 30, 2021, we leased from SVC a total of 179 properties under five leases that expire between 2029 and 2035, subject to our right to extend those leases. We refer to these five leases collectively as the SVC Leases. We recognized total real estate rent expense under the SVC Leases of $61,057 and $60,103 for the three months ended June 30, 2021 and 2020, respectively, and $122,060 and $120,700 for the six months ended June 30, 2021 and 2020, respectively. Included in these rent expense amounts are percentage rent payable of $1,591 and $124 for the three months ended June 30, 2021 and 2020, respectively, and $2,977 and $849 for the six months ended June 30, 2021 and 2020, respectively, which are based on a percentage of the increases in total nonfuel revenues at each leased property over base year levels, deferred rent of $4,404 and $8,807 for the three and six month periods, respectively, and adjustments for future increases in minimum annual rent on a straight line basis and estimated future payments by us for the cost of removing underground storage tanks on a straight line basis. The remaining balance of our deferred rent obligations was $30,826 as of June 30, 2021. Pursuant to the SVC Leases, we may request that SVC purchase qualifying capital improvements we make at the leased travel centers in return for increased annual minimum rent. We did not sell to SVC any improvements we made to properties leased from SVC for the three and six months ended June 30, 2021 and 2020. As permitted by the SVC Leases, we sublease a portion of certain travel centers to third parties to operate other retail operations. These subleases are classified as operating leases. We recognized sublease rental income of $517 and $527 for the three months ended June 30, 2021 and 2020, respectively, and $1,003 and $1,023 for the six months ended June 30, 2021 and 2020, respectively. As a Lessor We leased two travel centers to franchisees as of June 30, 2021 and 2020. Rent revenues from these operating leases totaled $584 and $572 for the three months ended June 30, 2021 and 2020, respectively, and $1,168 and $1,144 for the six months ended June 30, 2021 and 2020, respectively. Future minimum lease payments due to us for the two leased sites under these operating leases as of June 30, 2021, were $1,190 for the remainder of 2021 and $1,190 for 2022. See above for information regarding certain travel centers that we lease from SVC in which we sublease a portion of the travel centers to third parties to operate other retail operations. |
