Summit Hotel Properties, Inc.INN

Summit Hotel Properties, Inc. Leases Disclosure

10-KFiled Feb 25, 20262 min read
LEASES
The Company has operating leases related to the land under certain lodging properties, conference centers, parking spaces, automobiles, our corporate office and other miscellaneous office equipment. These leases have remaining terms of one year to 72.5 years, some of which include options to extend the leases for additional years. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize rental expense for these leases on a straight-line basis over the lease term.

Certain of our lease agreements include rental payments based on a percentage of revenue over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or restrictive covenants that materially affect our business.
Our right-of-use assets and related liabilities include renewal options reasonably certain to be exercised. We base our lease calculations on our estimated incremental borrowing rate. As of December 31, 2025 and 2024 our weighted average incremental borrowing rate was 4.8%.

During the years ended December 31, 2025, 2024, and 2023, the Company's total operating lease cost was $4.6 million, $4.5 million, and $4.6 million, respectively, and the operating cash outflows from operating leases were $4.1 million, $4.0 million, and $4.0 million, respectively. As of December 31, 2025 and 2024, the weighted average operating lease term was 31.4 and 31.8 years, respectively.

Operating lease maturities as of December 31, 2025 are as follows (in thousands):
For the Year Ended
December 31,		Amount
2026$2,417 
20272,460 
20282,278 
20292,058 
20301,387 
Thereafter32,415 
Total lease payments (1)
43,015 
Less interest(18,924)
Total$24,091 
(1) Certain payments above include future increases to the minimum fixed rent based on the Consumer Price Index in effect at the initial measurement of the lease balances.

In addition, we rent or lease commercial space in certain of our lodging properties to third parties. During the years ended December 31, 2025, 2024 and 2023, we recorded gross third-party tenant income of $4.6 million, $2.7 million, and $2.6 million, respectively, which were recorded in Other income, net in the Consolidated Statements of Operations.

As of December 31, 2025, non-cancelable commercial operating leases provide for future minimum rental income as follows (in thousands):
For the Year Ended
December 31,		Amount
2026$3,315 
20272,745 
20281,013 
2029724 
2030462 
Thereafter1,624 
Total lease payments$9,883 

Historical Timeline

Fiscal YearFiled
2025Feb 25, 2026Showing above
2024Feb 24, 2025
2023Feb 29, 2024
2022Feb 27, 2023
2021Feb 23, 2022
2020Feb 26, 2021
2019Feb 25, 2020

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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