RLJ Lodging TrustRLJ
RLJ Lodging Trust Commitments Disclosure
Commitments and Contingencies
Operating Leases
As of December 31, 2025, 12 of Company's hotel properties were subject to ground lease agreements that cover the land underlying the respective hotels. The ground leases are classified as operating leases. The total ground lease expense was $15.7 million for the year ended December 31, 2025, which consisted of $11.6 million of fixed lease expense and $4.1 million of variable lease expense. The total ground lease expense was $16.3 million for the year ended December 31, 2024, which consisted of $11.7 million of fixed lease expense and $4.6 million of variable lease expense. The total ground lease expense was $16.7 million for the year ended December 31, 2023, which consisted of $11.9 million of fixed lease expense and $4.8 million of variable lease expense. The total ground lease expense is included in property tax, insurance and other in the accompanying consolidated statements of operations and comprehensive income.
The Company's ground leases consisted of the following (in thousands):
| Ground Lease Expense | ||||||||||||||||||||||||||
| For the year ended December 31, | ||||||||||||||||||||||||||
| Hotel Property Name | Term Expiration (1) | 2025 | 2024 | 2023 | ||||||||||||||||||||||
| Wyndham Boston Beacon Hill (2) | N/A | $ | — | $ | 49 | $ | 929 | |||||||||||||||||||
| Wyndham San Diego Bayside | 2029 | 5,038 | 5,525 | 5,315 | ||||||||||||||||||||||
| DoubleTree Suites by Hilton Orlando - Lake Buena Vista | 2057 | 928 | 956 | 815 | ||||||||||||||||||||||
| Residence Inn Palo Alto Los Altos (3) | 2033 | 86 | 86 | 86 | ||||||||||||||||||||||
| Courtyard Pittsburgh University Center | 2083 | 726 | 726 | 726 | ||||||||||||||||||||||
| Marriott Louisville Downtown | 2153 (4) | — | — | — | ||||||||||||||||||||||
| Embassy Suites San Francisco Airport - Waterfront | 2059 | 1,885 | 1,882 | 1,850 | ||||||||||||||||||||||
| Wyndham New Orleans - French Quarter | 2065 | 487 | 487 | 487 | ||||||||||||||||||||||
| Courtyard Charleston Historic District | 2096 | 1,064 | 1,062 | 1,052 | ||||||||||||||||||||||
| Courtyard Austin Downtown Convention Center and Residence Inn Austin Downtown Convention Center | 2100 | 781 | 906 | 1,025 | ||||||||||||||||||||||
| Courtyard Waikiki Beach | 2112 | 4,424 | 4,295 | 4,121 | ||||||||||||||||||||||
| Moxy Denver Cherry Creek | 2115 | 287 | 280 | 272 | ||||||||||||||||||||||
| $ | 15,706 | $ | 16,254 | $ | 16,678 | |||||||||||||||||||||
(1) Assumes the exercise of any remaining extension options.
(2) In January 2024, the Company acquired a fee simple interest in this hotel property, which was previously owned via a leasehold interest that was subject to a ground lease, for approximately $125.0 million.
(3) The ground lease underlying a portion of this hotel property is part of a municipal utility district’s water pipeline right-of-way.
(4) The lease may be extended for up to four twenty-five year terms at the Company's option.
The future lease payments for the Company's operating leases are as follows (in thousands):
| December 31, 2025 | |||||
| 2026 | $ | 10,247 | |||
| 2027 | 11,023 | ||||
| 2028 | 11,075 | ||||
| 2029 | 10,638 | ||||
| 2030 | 8,882 | ||||
| Thereafter | 518,573 | ||||
| Total future lease payments | 570,438 | ||||
| Imputed interest | (452,249) | ||||
| Lease liabilities | $ | 118,189 | |||
The following table presents certain information related to the Company's operating leases as of December 31, 2025:
| Weighted average remaining lease term | 62 years | ||||
| Weighted average discount rate | 7.30 | % | |||
Restricted Cash Reserves
The Company may be obligated to maintain cash reserve funds for future capital expenditures, real estate taxes, insurance, and other items. The management agreements, franchise agreements and/or mortgage loan documents require the Company to reserve cash ranging typically from 3.0% to 5.0% of the individual hotel’s revenues for future capital expenditures (including the periodic replacement or refurbishment of FF&E). Any unexpended amounts will remain the property of the Company upon termination of the management agreements, franchise agreements or mortgage loan documents. As of December 31, 2025 and 2024, approximately $31.9 million and $23.5 million, respectively, was available in the restricted cash reserves for future capital expenditures.
Litigation
Neither the Company nor any of its subsidiaries is currently involved in any regulatory or legal proceedings that management believes will have a material and adverse effect on the Company's financial position, results of operations or cash flows.
Management Agreements
As of December 31, 2025, 92 of the Company's consolidated hotel properties were operated pursuant to management agreements with initial terms ranging from to 25 years, with 15 different management companies as noted in the table below. This number includes 36 consolidated hotel properties that receive the benefits of a franchise agreement pursuant to management agreements with Hilton, Hyatt, or Marriott.
| Management Company | Number of Hotel Properties | |||||||
| Aimbridge Hospitality | 26 | |||||||
| Colwen Management, Inc. | 1 | |||||||
| Concord Hospitality Enterprises Company | 1 | |||||||
| Crestline Hotels and Resorts | 1 | |||||||
| Davidson Hotels and Resorts | 2 | |||||||
| Hilton Management and affiliates | 21 | |||||||
| HEI Hotels and Resorts | 2 | |||||||
| Hersha Hospitality Management | 6 | |||||||
| Highgate Hotels | 3 | |||||||
| Hyatt Corporation and affiliates | 12 | |||||||
| InnVentures (1) | 3 | |||||||
| Marriott International, Inc. | 3 | |||||||
| Pyramid | 1 | |||||||
| Sage Hospitality | 6 | |||||||
| White Lodging Services | 4 | |||||||
| 92 | ||||||||
(1) InnVentures is a subsidiary of Highgate Hotels.
Each management company receives a base management fee between 1.5% and 3.5% of hotel revenues. Management agreements that include the benefits of a franchise agreement incur a base management fee between 1.0% and 7.0% of hotel revenues. The management companies are also eligible to receive an incentive management fee if hotel operating income, as defined in the management agreements, exceeds certain thresholds. The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel.
Management fees are included in management and franchise fee expense in the accompanying consolidated statements of operations and comprehensive income. For the years ended December 31, 2025, 2024 and 2023, the Company incurred management fee expense of approximately $39.0 million, $41.0 million and $41.7 million, respectively.
Franchise Agreements
As of December 31, 2025, 53 of the Company's consolidated hotel properties were operated under franchise agreements with initial terms ranging from to 30 years. This number excludes 36 consolidated hotel properties that receive the benefits of a franchise agreement pursuant to management agreements with Hilton, Hyatt, or Marriott. In addition, three hotels are not operated with a hotel brand so they do not have franchise agreements. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee between 2.0% and 6.0% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs between 1.0% and 4.3% of room revenue. Certain hotels are also charged a royalty fee between 1.5% and 3.0% of food and beverage revenues.
Franchise fees are included in management and franchise fee expense in the accompanying consolidated statements of operations and comprehensive income. For the years ended December 31, 2025, 2024 and 2023, the Company incurred franchise fee expense of approximately $63.8 million, $67.0 million and $65.7 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 25, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.