Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

Commitments and Contingencies
12 Months Ended
Dec. 31, 2023
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. Below is a summary of certain of those projects for which we have incurred or accrued costs as of December 31, 2023 (dollars in thousands):
Amount Expended
or Accrued as of
December 31, 2023
Columbia, OR 157 1,800 
Q3 2024 1,146 
St. Lucie, FL 549 230  Q3 2025 185 
Atkinson, GA 175 175  Q3 2025 30 
Ventura, CA 402 1,000 
Q4 2025 448 
Napa, CA 270 1,635 
Q4 2029 1,158 
Wicomico & Caroline, MD, and Sussex, DE 833 115  Q3 2030 49 
Franklin & Grant, WA, & Umatilla, OR 1,126 2,169 
Q4 2032 1,997 
(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 certain farms acquired through a leasehold interest, we assumed certain ground lease arrangements under which we are the lessee. These operating ground leases have lease expiration dates ranging from February 2025 through December 2041, and none of these leases contain any extension, renewal, or termination options. At lease commencement, the net present value of the minimum lease payments was determined by discounting the respective future minimum lease payments using a discount rate equivalent to our fully-collateralized borrowing rate ranging from 4.22% to 8.72%.
As of December 31, 2023 and 2022, we recorded the following as a result of these operating ground leases (dollars in thousands, except for footnotes):
December 31, 2023 December 31, 2022
Operating lease right-of-use assets(1)
$ 574  $ 623 
Operating lease liabilities(2)
$ 568  $ 617 
Weighted-average remaining lease term (years) 15.0 15.3
Weighted-average incremental borrowing rate 8.12  % 7.93  %
(1)Operating lease right-of-use assets are shown net of prepaid lease payments of approximately $6,000 for each of the years ended December 31, 2023 and 2022 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.
Future minimum lease payments due under the remaining non-cancelable terms of these leases as of December 31, 2023, are as follows (dollars in thousands):
Future Lease Payments(1)
For the fiscal years ending December 31: 2024 $ 92 
2025 62 
2026 62 
2027 62 
2028 62 
Thereafter 631 
Total undiscounted lease payments 971 
Less: imputed interest (403)
Present value of lease payments $ 568 
(1)Certain annual lease payments are set at the beginning of each year to then-current market rates (as determined by the lessor). The amounts shown above represent estimated amounts based on the lease rates currently in place.
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 $103,000, $92,000, and $81,000 during the years ended December 31, 2023, 2022, and 2021, respectively.
In the ordinary course of business incidental to our business, we may be involved in various legal proceedings from time to time which we may not consider material. We are not currently subject to any known material litigation known or, to our knowledge, threatened litigation.