Under what condition does The Standardx make equity method investments?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
Equity Method Investments—We have investments in unconsolidated hospitality ventures accounted for under the equity method. These investments are an integral part of our business and strategically and operationally important to our overall results. When we receive a distribution from an investment, we determine whether it is a return on our investment or a return of our investment based on the underlying nature of the distribution. Certain equity method investments are reported on a
lag of up to three months. When intervening events occur during the time lag, we recognize the impact in our consolidated financial statements.
We assess investments in unconsolidated hospitality ventures for impairment quarterly, and when there is an indication that a loss in value has occurred, we may evaluate the carrying value in comparison to the estimated fair value of the investment, among other factors, to determine if the loss in value is other than temporary. Fair value is based on internallydeveloped discounted cash flow models, third-party appraisals, and if appropriate, pending third-party offers. Under the discounted cash flow approach, we utilize various assumptions requiring judgment, including projected future cash flows, discount rates, and capitalization rates, which are primarily Level Three assumptions. Our estimates of projected future cash flows are based on historical data, internal estimates, and/or external sources and are developed as part of our routine, long-term planning process.
We apply judgment to determine whether the decline in value is other than temporary. We consider factors including, but not limited to, the length of time and extent of the decline, loss of value as a percentage of the cost, financial condition and near-term financial projections, our intent and ability to recover the lost value, and current economic conditions. If the estimated fair value is less than the carrying value and the decline in value is deemed other than temporary, impairments are recognized in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income.
For additional information about equity method investments, see Note 4.
Debt and Equity Securities—Excluding equity method investments, debt and equity securities consist of various investments:
- Equity securities consist of interest-bearing money market funds, mutual funds, exchange-traded funds, common shares, and preferred shares.
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the company makes equity method investments in unconsolidated hospitality ventures. These investments are considered an integral part of The Standardx's business, strategically and operationally important to their overall results.
The Standardx also has equity method investments in entities where they hold a variable interest but are not the primary beneficiary, such as the Unlimited Vacation Club business. At the end of 2024, The Standardx had $68 million recorded in other long-term liabilities related to their guaranteed obligations of this unconsolidated VIE (Variable Interest Entity). Their maximum exposure to loss was $142 million, including the maximum exposure under a guarantee and indemnification.
In 2023, The Standardx acquired 50% of the outstanding shares of a third-party entity that owns three of their managed properties in India in exchange for the non-cash redemption of a HTM debt security. Upon completion, Juniper Hotels Limited acquired 100% of the outstanding shares of the entity, and The Standardx recorded a $32 million equity method investment. These investments are assessed for impairment quarterly, and if there is an indication of a loss in value, The Standardx evaluates the carrying value in comparison to the estimated fair value to determine if the loss in value is other than temporary.