Massachusetts Lease Liability
|9 Months Ended|
Sep. 30, 2022
|Massachusetts Lease Liability|
|Massachusetts Lease Liability||
12.Massachusetts Lease Liability
On May 16, 2022, the Company, through its subsidiary CAC, completed the acquisition of the Taunton Facility for $13,047 cash consideration pursuant to a purchase option included in the Company’s lease with the previous owner of the Taunton Facility. Concurrently with the acquisition, CAC sold the Taunton Facility to IIP for $40,000 cash consideration. The Company also entered into a long-term lease for the Taunton Facility with a term of 20 years and a maturity date of May 15, 2042, with twoextensions exercisable at the Company’s discretion (the “Taunton Financing Liability” or “Massachusetts Lease Liability”). The Taunton Financing Liability matures on May 15, 2042, with two five-year extension options. Lease payments are due monthly, and are subject to an annual escalation of 2.5% after two years. CAC anticipates no disruption to its operations as a result of these transactions.
Of the cash proceeds from IIP used to pay the Taunton Facility purchase price, $25,466 was remitted to an escrow account as a compensating balance to the note payable and the remaining proceeds were used to pay transaction expenses. As of September 30, 2022, there was a balance of $7,259 in the escrow account.
The early lease termination and acquisition of the Taunton Facility resulted in derecognizing a right of use (“ROU”) asset balance of $3,940, and lease liability balance of $4,454; and recognizing land and building balances of $6,266 and $6,268, respectively. The transaction with IIP was accounted for as a failed sale and leaseback transaction, where the Company retained the Taunton Facility balances included in property, plant, and equipment, and recognized a note payable of $40,000.
As of September 30, 2022, the Taunton Financing Liability had a balance of $39,849. Future maturities of the Taunton Financing Liability as of September 30, 2022 are as follows:
The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef