When does the Americas Best Value Inn hotel ground lease in Kalispell, MT expire?
Americas_Best_Value_Inn Franchise · 2025 FDDAnswer from 2025 FDD Document
Lease information (as lessee): During part of 2023 and as of December 31, 2022, we leased office space in Denver, CO under an operating lease that expired in November 2023. Additionally, we were the lessee on ground leases for two hotels. subject to operating leases with unrelated third parties in Seattle, WA and Kalispell, MT, respectively, that expired in February 2024 and expires in 2028, respectively. These leases generally contain fixed contractual rent changes and certain of the leases provide for operating expense reimbursements. We recognize rental expense on leases that contain fixed contractual rent changes on a straight line basis over the terms of the respective leases. We recorded rental expenses, excluding amounts paid for real estate taxes or other building operations, as follows (in thousands):
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 70–71)
What This Means (2025 FDD)
According to the 2025 Americas Best Value Inn Franchise Disclosure Document, the ground lease for the hotel in Kalispell, MT expires in 2028. This information is part of the operating lease commitments disclosed in the financial statements. The document also mentions a ground lease for a hotel in Seattle, WA, which expired in February 2024.
For a prospective franchisee, understanding the terms and expiration dates of ground leases is crucial. If Americas Best Value Inn operates a hotel on leased land, the franchisee needs to be aware that the right to operate the hotel at that location is contingent upon the lease being in effect. The expiration of the ground lease in 2028 for the Kalispell, MT location means that Americas Best Value Inn, and by extension any franchisee operating there, will need to renegotiate the lease or find a new location at that time.
Operating leases, like these ground leases, often include fixed contractual rent changes and may require reimbursements for operating expenses. Americas Best Value Inn recognizes rental expenses on a straight-line basis over the lease term when fixed rent changes are involved. This accounting practice can affect the reported financial performance of the hotels and, consequently, the overall financial statements of the company. Franchisees should consider these lease terms and their potential impact on the profitability and long-term viability of their investment.
It is important for potential franchisees to review all lease agreements carefully and understand their obligations and rights. Consulting with a financial advisor or legal professional is advisable to fully assess the implications of these leases on their investment in an Americas Best Value Inn franchise.