Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

v3.20.4
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies COMMITMENTS AND CONTINGENCIES
Operating Obligations
In connection with the execution of certain lease agreements, we have committed to provide capital improvements on certain of our farms, which are summarized in the table below (dollars in thousands):
Farm
Location		 Farm
Gross
Acreage		 Total
Commitment
Obligated
Completion
Date(1)
Amount Expended
or Accrued as of
December 31, 2020
Hillsborough, FL 55 $ 2,250 
(2)
 Q2 2021 $ 780 
Tulare, CA 160 700 
(2)
 Q2 2021 — 
Wicomico & Caroline, MD, and Sussex, DE 833 115  Q3 2021 36 
Van Buren, MI 89 150  Q4 2021 126 
Napa, CA 270 1,548 
(2)
 Q3 2023 — 
Santa Barbara, CA 271 4,000 
(2)
 Q3 2024 2,410 
Columbia, OR 157 1,800 
(2)
 Q3 2024 1,146 
Collier & Hendry, FL 3,612 2,000 
(2)
 Q2 2025 — 
Monterey, CA 304 1,248  Q4 2025 1,188 
(1)Our obligation to provide capital to fund these improvements does not extend beyond these respective dates.
(2)Pursuant to contractual agreements, we will earn additional rent on the cost of these capital improvements as the funds are disbursed by us.
Ground Lease Obligations
In connection with two farms acquired on June 1, 2017, through a leasehold interest, we assumed two ground lease arrangements under which we are the lessee (with the State of Arizona as the lessor). These two operating ground leases expire in February 2022 and February 2025, and neither lease contains any extension, renewal, or termination options. Upon our adoption of ASU 2016-02, “Leases (Topic 842): An Amendment of the FASB Accounting Standards Codification,” on January 1, 2019, we recognized an operating lease right-of-use asset of approximately $218,000 and an operating lease liability of approximately $213,000 as a result of these ground leases. These values were determined by discounting the respective future minimum lease payments using a discount rate equivalent to treasury rates with similar terms plus a spread ranging from 2.47% to 2.53%.
As of December 31, 2020 and 2019, we recorded the following as a result of these operating ground leases (dollars in thousands, except for footnotes):
December 31, 2020 December 31, 2019
Operating lease right-of-use assets(1)
$ 136  $ 178 
Operating lease liabilities(2)
$ 130  $ 172 
Weighted-average remaining lease term (years) 3.8 4.6
Weighted-average discount rate 4.20  % 4.20  %
(1)Operating lease right-of-use assets are shown net of accrued lease payments of approximately $6,000 as of each December 31, 2020 and 2019 and are included within Other assets, net on the accompanying Consolidated Balance Sheets.
(2)Included within Other liabilities, net on the accompanying Consolidated Balance Sheets.
As a result of these ground leases, we recorded lease expense (included within Property operating expenses on the accompanying Consolidated Statement of Operations and Comprehensive Income) of approximately $59,000 and $50,000 during the years ended December 31, 2020 and 2019, respectively. Future lease payments due under the remaining non-cancelable terms of these leases as of December 31, 2020 and 2019, are as follows (dollars in thousands):
Future Lease Payments(1)
Period December 31, 2020 December 31, 2019
2020 $ —  $ 47 
2021 47  47 
2022 30  30 
2023 30  30 
2024 31  31 
Thereafter —  — 
Total undiscounted lease payments 138  185 
Less: imputed interest (8) (13)
Present value of lease payments $ 130  $ 172 
(1)Annual lease payments are set at the beginning of each year to then-current market rates (as determined by the State of Arizona). The amounts shown above represent estimated amounts based on the lease rates currently in place.
Litigation
In the ordinary course of business, we may be involved in legal proceedings from time to time. We are not currently subject to any material known or threatened litigation.