Sale-Leasebacks of Real Estate

12 Months Ended

Dec. 31, 2024

The Company has a series of leases accounted for as failed sale-leaseback financing obligations associated with long-lived real estate assets. These obligations were assumed in conjunction with the Company’s acquisition of Agro Merchants Group (“Agro”) in December of 2020 and are further detailed in the table below as of December 31, 2024 and 2023.


	December 31, 2024				December 31, 2023
	Maturity	Interest Rate	Balance		Maturity	Interest Rate	Balance
	(In thousands, except percentages)
1 warehouse – 2010	7/2030	10.34%	$	15,872	7/2030	10.34%	$	16,912
11 warehouses – 2007	—	—	—		9/2027	7.00% - 19.59%	78,735
3 facilities - 2007 (Agro)	7/2031	10%	58,359		7/2031	10%	60,987
1 facility - 2013 (Agro)	12/2033	10%	4,770		12/2033	10%	5,303
Total sale-leaseback financing obligations			$	79,001			$	161,937

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 were accounted for as financing obligations. 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 a financing obligation. 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 obligation.

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.

During the year ended December 31, 2024, the Company purchased the 11 aforementioned warehouses that were previously accounted for as failed sale-leaseback financing obligations. Total cash outflows related to these purchases of $191.0 million are included within “Termination of sale-leaseback financing obligations” on the Consolidated Statements of Cash Flows for the year ended December 31, 2024.

These purchases resulted in the recognition of a $115.1 million Loss on debt extinguishment during the year ended December 31, 2024. These amounts are recognized within “Loss on debt extinguishment, modifications and termination of derivative instruments” on the Consolidated Statements of Operations.

As of December 31, 2024, 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)
2025	$	12,259
2026	12,325
2027	13,059
2028	13,261
2029	13,421
Thereafter	54,133
Total minimum payments	118,458
Interest portion	(39,457)
Present value of net minimum payments	$	79,001