What kind of lease did Sonesta Simply Suites have for office space in Denver, CO?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
s | | 7,128 | | 4,944 | Other long term liabilities, Accrued Expenses and other current liabilities |
7. Operating Lease Commitments
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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, the company leased office space in Denver, CO under an operating lease. This lease was in effect during part of 2023 and as of December 31, 2022, but it expired in November 2023.
An operating lease is a contract that allows Sonesta Simply Suites to use the office space for a specified period without transferring ownership of the asset. This type of lease is common for businesses that need office space but do not want to invest in purchasing property. The financial statements also indicate that Sonesta Simply Suites subleased some of its Denver office space, generating income of $0.9 million in 2023 and $0.7 million in 2022 from these subleases.
The FDD mentions that rental expenses for the Denver office leases were reduced by income received from subleases. Specifically, $0.9 million in 2023 and $0.7 million in 2022. This subleasing activity effectively offset some of the rental costs for Sonesta Simply Suites. The disclosure of these sublease arrangements provides transparency into how Sonesta Simply Suites manages its lease obligations and generates additional income from its leased properties.
For a prospective franchisee, this information provides insight into Sonesta Simply Suites's financial management practices regarding leased properties. Understanding how the company handles its leases and subleases can help franchisees assess the financial stability and operational efficiency of the franchisor. It's worth noting that the Denver office lease has expired, so this specific lease is no longer an ongoing obligation for Sonesta Simply Suites.