Sale-Leasebacks of Real Estate

12 Months Ended

Dec. 31, 2022

The Company’s outstanding sale-leaseback financing obligations of real estate-related long-lived assets as of December 31, 2022 and 2021 are as follows:


	Maturity	Interest Rate as of December 31, 2022	2022		2021
			(In thousands)
1 warehouse – 2010	7/2030	10.34%	$	17,607	$	18,177
11 warehouses – 2007	9/2027	7.00%-19.59%	84,406		89,269
3 facilities - 2007 (Agro)	7/2031	10%	63,550		65,661
1 facility - 2013 (Agro)	12/2033	10%	5,526		5,710
Total sale-leaseback financing obligations			$	171,089	$	178,817

In connection with the Agro acquisition, the Company assumed four sale-leaseback facilities. Agro completed a sale-leaseback transaction for three of its warehouse facilities in 2007 that was accounted for as financing. The initial term of the agreement was 20 years and was amended in 2011 to extend the term to 2031. The rent payments increase every five years by the lesser of 125% of the cumulative increase in the Consumer Price Index (CPI) over the related five-year period or 9%. Agro also completed a sale-leaseback transaction for one of its warehouse facilities in 2013 that was accounted for as financing. The initial term of the agreement is 20 years and includes six extension options, each for five-years. The rent payments increase every five years by the lesser of the cumulative increase in CPI over the related five-year period or 12%.

In September 2010, the Company entered into a transaction by which it assigned to an unrelated third party its fixed price “in the money” purchase option of $18.3 million on a warehouse it was leasing in Ontario, California. The purchase option was exercised in September 2010, and the Company simultaneously entered into a new 20-year lease agreement with the new owner and received $1.0 million of consideration to use towards warehouse improvements. Under the terms of the new lease agreement, the Company will exercise control over the asset for more than 90% of the asset’s remaining useful life, and it has a purchase option within the last six months of the initial lease term at 95% of the fair market value as of the date such option is exercised. The transaction was accounted for as a financing.

In connection with an acquisition completed in 2010, the Company assumed sale leaseback agreements for 11 warehouses originally entered into in 2007, and received gross proceeds of $170.7 million. The agreements for the leases of these properties had various initial terms of 10 to 20 years and annual rent increases of 1.75%. The leases contained four extension options at the discretion of the Company, each for a five-year period. In July 2013, the lease agreements for six of the 11 warehouses were amended to extend the expiration date on four of the warehouse leases to September 2027 and reduce the annual rent increases from 1.75% to 0.50% on five of the warehouse leases. All of the 11 warehouses subject to the sale-leaseback transaction continue to be accounted for as a financing.

As of December 31, 2022, future minimum lease payments, inclusive of certain obligations to be settled with the residual value of related long-lived assets upon expiration of the lease agreement, of the sale-leaseback financing obligations are as follows:


Years Ending December 31:	(In thousands)
2023	$	27,460
2024	27,787
2025	28,075
2026	28,363
2027	25,123
Thereafter	129,034
Total minimum payments	265,842
Interest portion	(94,753)
Present value of net minimum payments	$	171,089