ARKO Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Leases

Leases

3 Months Ended

Mar. 31, 2023

5. Leases

As of March 31, 2023, the Company leased 1,265 of the convenience stores that it operates, 208 dealer locations, 113 cardlock locations and certain office and storage spaces, including land and buildings in certain cases. Most of the lease agreements are for long-term periods, ranging from 15 to 20 years, and generally include several renewal options for extension periods for five to 25 years each. Additionally, the Company leases certain store equipment, office equipment, automatic tank gauges and fuel dispensers.

The components of lease cost recorded on the condensed consolidated statements of operations were as follows:


	For the Three Months Ended March 31,
	2023			2022
	(in thousands)
Finance lease cost:
Depreciation of right-of-use assets	$	2,853		$	3,047
Interest on lease liabilities		4,162			4,371
Operating lease costs included in store operating expenses		41,584			34,295
Operating lease costs included in general and administrative expenses		534			387
Lease cost related to variable lease payments, short-term leases and leases of low value assets		690			644
Right-of-use asset impairment charges and gain on disposals of leases		(540	)		—
Total lease costs	$	49,283		$	42,744

Supplemental balance sheet date related to leases was as follows:


	March 31, 2023			December 31, 2022
	(in thousands)
Operating leases
Weighted average remaining lease term (in years)		14.4			14.1
Weighted average discount rate		7.7	%		7.7	%
Financing leases
Weighted average remaining lease term (in years)		23.3			23.4
Weighted average discount rate		7.2	%		7.2	%

As of March 31, 2023, maturities of lease liabilities for operating lease obligations and financing lease obligations having an initial or remaining non-cancellable lease terms in excess of one year were presented in the table below. The minimum lease payments

presented below include periods where an option is reasonably certain to be exercised and do not take into consideration any future consumer price index adjustments for these agreements.


	Operating			Financing
	(in thousands)
April 2023 through March 2024	$	169,352		$	21,661
April 2024 through March 2025		170,968			21,002
April 2025 through March 2026		171,661			20,997
April 2026 through March 2027		170,326			20,739
April 2027 through March 2028		168,148			20,762
Thereafter		1,639,282			419,655
Gross lease payments	$	2,489,737		$	524,816
Less: imputed interest		(1,041,336	)		(294,600	)
Total lease liabilities	$	1,448,401		$	230,216