Annual report pursuant to Section 13 and 15(d)

Leases

v3.24.0.1
Leases
 12 Months Ended
Dec. 31, 2023
Leases [Abstract]  
Leases LEASES
We enter into a variety of operating lease agreements through the normal course of business including certain administrative offices. The leases are long-term, non-cancelable real estate lease agreements, expiring at various dates through fiscal 2032. The agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance, and repairs. We also lease vehicles, IT equipment and certain land parcels related to our energy projects, expiring at various dates
through fiscal 2059. The office and land leases make up a significant portion of our operating lease activity. Many of these leases have one or more renewal options that allow us, at our discretion, to renew the lease for six months to seven years. Only renewal options that we believed were likely to be exercised were included in our lease calculations. Many land leases include minimum lease payments that commence or increase when the related project becomes operational. In these cases, we estimated the commercial operation date used to calculate the ROU asset and minimum lease payments.
A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). We utilized each lease’s minimum lease payments to calculate the lease balances upon transition. The subsequent increases in rent based on changes in CPI were excluded and will be excluded for future leases from the calculation of the lease balances but will be recorded to the consolidated statements of income as part of our operating lease costs.
The discount rate was calculated using an incremental borrowing rate based on financing rates on secured comparable notes with comparable terms and a synthetic credit rating calculated by a third party. We elected to apply the discount rate using the remaining lease term at the date of adoption.
We also enter into leases for service agreements and other leases related to our construction projects such as equipment, mobile trailers, and other temporary structures. We utilize the portfolio approach for this class of lease, which are either short-term leases or are not material.
Rent and related expenses were as follows:
Year Ended December 31,
2023 2022 2021
Rent and related expenses $ 10,504  $ 9,199  $ 9,740 
We have a number of leases that are classified as financing leases, which related to transactions that were considered sale-leasebacks under ASC 840. See the sale-leaseback section below for additional information on our financing leases.
The table below sets forth supplemental balance sheet information related to leases:
December 31,
2023 2022
Operating Leases
Operating lease assets $ 58,586  $ 38,224 
Current portion of operating lease liabilities $ 13,569  $ 5,829 
Long-term operating lease liabilities, net of current portion 42,258  31,703 
Total Operating lease liabilities $ 55,827  $ 37,532 
Weighted-average remaining lease term 18 years 13 years
Weighted-average discount rate 6.6  % 6.0  %
Financing Leases (1)
Energy assets, net $ 27,262  $ 29,365 
Current portions of financing lease liabilities $ 871  $ 1,992 
Long-term financing lease liabilities, net of current portion, unamortized discount and debt issuance costs 13,057  14,068 
Total financing lease liabilities $ 13,928  $ 16,060 
Weighted-average remaining lease term 13 years 14 years
Weighted-average discount rate 12.05  % 12.1  %
(1) Includes sale-leaseback transactions entered into prior to January 1, 2019.
The costs related to our leases were as follows:
Year Ended December 31,
2023 2022 2021
Operating Leases
Operating lease costs $ 9,416  $ 8,372  $ 8,780 
Financing Leases
Amortization expense 2,103  2,104  2,129 
Interest on lease liabilities 1,804  2,147  2,541 
Total financing lease costs 3,907  4,251  4,670 
Total lease costs $ 13,323  $ 12,623  $ 13,450 

Supplemental cash flow information related to our leases was as follows:
Year Ended December 31,
2023 2022
Cash paid for amounts included in the measurement of operating lease liabilities $ 10,724  $ 7,978 
Right-of-use assets obtained in exchange for new operating lease liabilities (1)
$ 25,225  $ 4,872 
(1) Includes non-monetary lease transactions of $13,941. See disclosure below for additional information.
The table below sets forth our estimated minimum future lease obligations under our leases:
  Operating Leases Financing Leases
Year ended December 31,  
2024 $ 16,390  $ 2,317 
2025 11,068  2,213 
2026 5,813  2,054 
2027 4,781  1,922 
2028 4,186  1,955 
Thereafter 79,489  15,935 
Total minimum lease payments $ 121,727  $ 26,396 
Less: interest 65,900  12,468 
Present value of lease liabilities $ 55,827  $ 13,928 
We have a future lease commitment for a ground lease which does not yet meet the criteria for recording a ROU asset or ROU liability. The net present value of this commitment totals $10,500 as of December 31, 2023 which relate to lease payments to be made over a 20-year period. The energy asset project related to this lease was sold during the year ended December 31, 2023, and once the final closing takes place in 2024 this lease will be assigned to the buyer.
Non-monetary Lease Transactions
We have two lease liabilities consisting of payment obligations that will be settled with non-monetary consideration. The lease liabilities relating to non-monetary consideration were recorded during the twelve months ended December 31, 2023 based on the fair market value of the project services or back up power expected to be provided, as noted below.
In January 2023, a 37-year land lease commenced with the United States Navy (“Navy”), which expires in 2059. We are working to complete an In-Kind Consideration Project (“IKCP”), which the Navy will credit as consideration towards our lease obligation upon the Navy’s final acceptance of the IKCP.
In August 2023, we acquired an energy asset project and assumed the related 30-year land lease agreement with the United States Army (“Army”), which commenced in 2022 and expires in 2052. We are providing backup power as a stand ready obligation as consideration towards our lease obligation. See Note 7 Energy Assets, Net for additional information.
Sale-leasebacks and Financing Leases
We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous guidance.
The following table presents a summary of amounts related to these sale-leasebacks included in our consolidated balance sheets:
December 31,
2023 2022
Deferred loss, short-term, net 115  115 
Deferred loss, long-term, net 1,340  1,455 
Total deferred loss $ 1,455  $ 1,570 
Deferred gain, short-term, net 345  345 
Deferred gain, long-term, net 4,085  4,430 
Total deferred gain $ 4,430  $ 4,775 
Net gains from amortization expense in cost of revenues related to deferred gains and losses were $230, $383 and $230 for the years ended December 31, 2023, 2022, and 2021, respectively.
August 2018 Master Sale-leaseback
We enter into amendments to our August 2018 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2023, we entered into amendments to this facility which extended the current maturity date to March 31, 2024.
We sold and leased back six energy assets for $103,129 in cash proceeds under this facility during the year ended December 31, 2023. The agreements have low interest rates ranging from 0% to 1.17%, as a result of tax credits which were transferred to the counterparty. As of December 31, 2023, a majority of the total commitment of $350,000 remained available under this lending commitment.
December 2020 Master Sale-leaseback
We enter into amendments to our December 2020 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2023, we sold and leased back three energy assets for $9,201 in cash proceeds under this facility. As of December 31, 2023, no funding is available under this lending commitment.
See Note 9 for additional information on these financing facilities.
Leases LEASES
We enter into a variety of operating lease agreements through the normal course of business including certain administrative offices. The leases are long-term, non-cancelable real estate lease agreements, expiring at various dates through fiscal 2032. The agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance, and repairs. We also lease vehicles, IT equipment and certain land parcels related to our energy projects, expiring at various dates
through fiscal 2059. The office and land leases make up a significant portion of our operating lease activity. Many of these leases have one or more renewal options that allow us, at our discretion, to renew the lease for six months to seven years. Only renewal options that we believed were likely to be exercised were included in our lease calculations. Many land leases include minimum lease payments that commence or increase when the related project becomes operational. In these cases, we estimated the commercial operation date used to calculate the ROU asset and minimum lease payments.
A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). We utilized each lease’s minimum lease payments to calculate the lease balances upon transition. The subsequent increases in rent based on changes in CPI were excluded and will be excluded for future leases from the calculation of the lease balances but will be recorded to the consolidated statements of income as part of our operating lease costs.
The discount rate was calculated using an incremental borrowing rate based on financing rates on secured comparable notes with comparable terms and a synthetic credit rating calculated by a third party. We elected to apply the discount rate using the remaining lease term at the date of adoption.
We also enter into leases for service agreements and other leases related to our construction projects such as equipment, mobile trailers, and other temporary structures. We utilize the portfolio approach for this class of lease, which are either short-term leases or are not material.
Rent and related expenses were as follows:
Year Ended December 31,
2023 2022 2021
Rent and related expenses $ 10,504  $ 9,199  $ 9,740 
We have a number of leases that are classified as financing leases, which related to transactions that were considered sale-leasebacks under ASC 840. See the sale-leaseback section below for additional information on our financing leases.
The table below sets forth supplemental balance sheet information related to leases:
December 31,
2023 2022
Operating Leases
Operating lease assets $ 58,586  $ 38,224 
Current portion of operating lease liabilities $ 13,569  $ 5,829 
Long-term operating lease liabilities, net of current portion 42,258  31,703 
Total Operating lease liabilities $ 55,827  $ 37,532 
Weighted-average remaining lease term 18 years 13 years
Weighted-average discount rate 6.6  % 6.0  %
Financing Leases (1)
Energy assets, net $ 27,262  $ 29,365 
Current portions of financing lease liabilities $ 871  $ 1,992 
Long-term financing lease liabilities, net of current portion, unamortized discount and debt issuance costs 13,057  14,068 
Total financing lease liabilities $ 13,928  $ 16,060 
Weighted-average remaining lease term 13 years 14 years
Weighted-average discount rate 12.05  % 12.1  %
(1) Includes sale-leaseback transactions entered into prior to January 1, 2019.
The costs related to our leases were as follows:
Year Ended December 31,
2023 2022 2021
Operating Leases
Operating lease costs $ 9,416  $ 8,372  $ 8,780 
Financing Leases
Amortization expense 2,103  2,104  2,129 
Interest on lease liabilities 1,804  2,147  2,541 
Total financing lease costs 3,907  4,251  4,670 
Total lease costs $ 13,323  $ 12,623  $ 13,450 

Supplemental cash flow information related to our leases was as follows:
Year Ended December 31,
2023 2022
Cash paid for amounts included in the measurement of operating lease liabilities $ 10,724  $ 7,978 
Right-of-use assets obtained in exchange for new operating lease liabilities (1)
$ 25,225  $ 4,872 
(1) Includes non-monetary lease transactions of $13,941. See disclosure below for additional information.
The table below sets forth our estimated minimum future lease obligations under our leases:
  Operating Leases Financing Leases
Year ended December 31,  
2024 $ 16,390  $ 2,317 
2025 11,068  2,213 
2026 5,813  2,054 
2027 4,781  1,922 
2028 4,186  1,955 
Thereafter 79,489  15,935 
Total minimum lease payments $ 121,727  $ 26,396 
Less: interest 65,900  12,468 
Present value of lease liabilities $ 55,827  $ 13,928 
We have a future lease commitment for a ground lease which does not yet meet the criteria for recording a ROU asset or ROU liability. The net present value of this commitment totals $10,500 as of December 31, 2023 which relate to lease payments to be made over a 20-year period. The energy asset project related to this lease was sold during the year ended December 31, 2023, and once the final closing takes place in 2024 this lease will be assigned to the buyer.
Non-monetary Lease Transactions
We have two lease liabilities consisting of payment obligations that will be settled with non-monetary consideration. The lease liabilities relating to non-monetary consideration were recorded during the twelve months ended December 31, 2023 based on the fair market value of the project services or back up power expected to be provided, as noted below.
In January 2023, a 37-year land lease commenced with the United States Navy (“Navy”), which expires in 2059. We are working to complete an In-Kind Consideration Project (“IKCP”), which the Navy will credit as consideration towards our lease obligation upon the Navy’s final acceptance of the IKCP.
In August 2023, we acquired an energy asset project and assumed the related 30-year land lease agreement with the United States Army (“Army”), which commenced in 2022 and expires in 2052. We are providing backup power as a stand ready obligation as consideration towards our lease obligation. See Note 7 Energy Assets, Net for additional information.
Sale-leasebacks and Financing Leases
We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous guidance.
The following table presents a summary of amounts related to these sale-leasebacks included in our consolidated balance sheets:
December 31,
2023 2022
Deferred loss, short-term, net 115  115 
Deferred loss, long-term, net 1,340  1,455 
Total deferred loss $ 1,455  $ 1,570 
Deferred gain, short-term, net 345  345 
Deferred gain, long-term, net 4,085  4,430 
Total deferred gain $ 4,430  $ 4,775 
Net gains from amortization expense in cost of revenues related to deferred gains and losses were $230, $383 and $230 for the years ended December 31, 2023, 2022, and 2021, respectively.
August 2018 Master Sale-leaseback
We enter into amendments to our August 2018 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2023, we entered into amendments to this facility which extended the current maturity date to March 31, 2024.
We sold and leased back six energy assets for $103,129 in cash proceeds under this facility during the year ended December 31, 2023. The agreements have low interest rates ranging from 0% to 1.17%, as a result of tax credits which were transferred to the counterparty. As of December 31, 2023, a majority of the total commitment of $350,000 remained available under this lending commitment.
December 2020 Master Sale-leaseback
We enter into amendments to our December 2020 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2023, we sold and leased back three energy assets for $9,201 in cash proceeds under this facility. As of December 31, 2023, no funding is available under this lending commitment.
See Note 9 for additional information on these financing facilities.
Leases LEASES
We enter into a variety of operating lease agreements through the normal course of business including certain administrative offices. The leases are long-term, non-cancelable real estate lease agreements, expiring at various dates through fiscal 2032. The agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance, and repairs. We also lease vehicles, IT equipment and certain land parcels related to our energy projects, expiring at various dates
through fiscal 2059. The office and land leases make up a significant portion of our operating lease activity. Many of these leases have one or more renewal options that allow us, at our discretion, to renew the lease for six months to seven years. Only renewal options that we believed were likely to be exercised were included in our lease calculations. Many land leases include minimum lease payments that commence or increase when the related project becomes operational. In these cases, we estimated the commercial operation date used to calculate the ROU asset and minimum lease payments.
A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). We utilized each lease’s minimum lease payments to calculate the lease balances upon transition. The subsequent increases in rent based on changes in CPI were excluded and will be excluded for future leases from the calculation of the lease balances but will be recorded to the consolidated statements of income as part of our operating lease costs.
The discount rate was calculated using an incremental borrowing rate based on financing rates on secured comparable notes with comparable terms and a synthetic credit rating calculated by a third party. We elected to apply the discount rate using the remaining lease term at the date of adoption.
We also enter into leases for service agreements and other leases related to our construction projects such as equipment, mobile trailers, and other temporary structures. We utilize the portfolio approach for this class of lease, which are either short-term leases or are not material.
Rent and related expenses were as follows:
Year Ended December 31,
2023 2022 2021
Rent and related expenses $ 10,504  $ 9,199  $ 9,740 
We have a number of leases that are classified as financing leases, which related to transactions that were considered sale-leasebacks under ASC 840. See the sale-leaseback section below for additional information on our financing leases.
The table below sets forth supplemental balance sheet information related to leases:
December 31,
2023 2022
Operating Leases
Operating lease assets $ 58,586  $ 38,224 
Current portion of operating lease liabilities $ 13,569  $ 5,829 
Long-term operating lease liabilities, net of current portion 42,258  31,703 
Total Operating lease liabilities $ 55,827  $ 37,532 
Weighted-average remaining lease term 18 years 13 years
Weighted-average discount rate 6.6  % 6.0  %
Financing Leases (1)
Energy assets, net $ 27,262  $ 29,365 
Current portions of financing lease liabilities $ 871  $ 1,992 
Long-term financing lease liabilities, net of current portion, unamortized discount and debt issuance costs 13,057  14,068 
Total financing lease liabilities $ 13,928  $ 16,060 
Weighted-average remaining lease term 13 years 14 years
Weighted-average discount rate 12.05  % 12.1  %
(1) Includes sale-leaseback transactions entered into prior to January 1, 2019.
The costs related to our leases were as follows:
Year Ended December 31,
2023 2022 2021
Operating Leases
Operating lease costs $ 9,416  $ 8,372  $ 8,780 
Financing Leases
Amortization expense 2,103  2,104  2,129 
Interest on lease liabilities 1,804  2,147  2,541 
Total financing lease costs 3,907  4,251  4,670 
Total lease costs $ 13,323  $ 12,623  $ 13,450 

Supplemental cash flow information related to our leases was as follows:
Year Ended December 31,
2023 2022
Cash paid for amounts included in the measurement of operating lease liabilities $ 10,724  $ 7,978 
Right-of-use assets obtained in exchange for new operating lease liabilities (1)
$ 25,225  $ 4,872 
(1) Includes non-monetary lease transactions of $13,941. See disclosure below for additional information.
The table below sets forth our estimated minimum future lease obligations under our leases:
  Operating Leases Financing Leases
Year ended December 31,  
2024 $ 16,390  $ 2,317 
2025 11,068  2,213 
2026 5,813  2,054 
2027 4,781  1,922 
2028 4,186  1,955 
Thereafter 79,489  15,935 
Total minimum lease payments $ 121,727  $ 26,396 
Less: interest 65,900  12,468 
Present value of lease liabilities $ 55,827  $ 13,928 
We have a future lease commitment for a ground lease which does not yet meet the criteria for recording a ROU asset or ROU liability. The net present value of this commitment totals $10,500 as of December 31, 2023 which relate to lease payments to be made over a 20-year period. The energy asset project related to this lease was sold during the year ended December 31, 2023, and once the final closing takes place in 2024 this lease will be assigned to the buyer.
Non-monetary Lease Transactions
We have two lease liabilities consisting of payment obligations that will be settled with non-monetary consideration. The lease liabilities relating to non-monetary consideration were recorded during the twelve months ended December 31, 2023 based on the fair market value of the project services or back up power expected to be provided, as noted below.
In January 2023, a 37-year land lease commenced with the United States Navy (“Navy”), which expires in 2059. We are working to complete an In-Kind Consideration Project (“IKCP”), which the Navy will credit as consideration towards our lease obligation upon the Navy’s final acceptance of the IKCP.
In August 2023, we acquired an energy asset project and assumed the related 30-year land lease agreement with the United States Army (“Army”), which commenced in 2022 and expires in 2052. We are providing backup power as a stand ready obligation as consideration towards our lease obligation. See Note 7 Energy Assets, Net for additional information.
Sale-leasebacks and Financing Leases
We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous guidance.
The following table presents a summary of amounts related to these sale-leasebacks included in our consolidated balance sheets:
December 31,
2023 2022
Deferred loss, short-term, net 115  115 
Deferred loss, long-term, net 1,340  1,455 
Total deferred loss $ 1,455  $ 1,570 
Deferred gain, short-term, net 345  345 
Deferred gain, long-term, net 4,085  4,430 
Total deferred gain $ 4,430  $ 4,775 
Net gains from amortization expense in cost of revenues related to deferred gains and losses were $230, $383 and $230 for the years ended December 31, 2023, 2022, and 2021, respectively.
August 2018 Master Sale-leaseback
We enter into amendments to our August 2018 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2023, we entered into amendments to this facility which extended the current maturity date to March 31, 2024.
We sold and leased back six energy assets for $103,129 in cash proceeds under this facility during the year ended December 31, 2023. The agreements have low interest rates ranging from 0% to 1.17%, as a result of tax credits which were transferred to the counterparty. As of December 31, 2023, a majority of the total commitment of $350,000 remained available under this lending commitment.
December 2020 Master Sale-leaseback
We enter into amendments to our December 2020 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2023, we sold and leased back three energy assets for $9,201 in cash proceeds under this facility. As of December 31, 2023, no funding is available under this lending commitment.
See Note 9 for additional information on these financing facilities.