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Operating Leases
12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Operating Leases

Note 15. OPERATING LEASES

Operating Leases of Retail Sites as Lessee

We lease 465 retail sites from third parties under certain non-cancelable operating leases that expire from time to time through 2033. The weighted-average remaining lease term was 5.6 years as of December 31, 2020.

Lease expense as measured under ASC 842 was classified in the statement of income as follows (in thousands):

 

 

 

For the Year Ended December 31,

 

 

 

2020

 

 

2019

 

Cost of sales

 

$

25,214

 

 

$

27,493

 

Operating expenses

 

 

9,067

 

 

 

379

 

General and administrative expenses

 

 

1,081

 

 

 

685

 

Total

 

$

35,362

 

 

$

28,557

 

 

Variable lease payments included in the above table are based on inflation, revenues or volumes and totaled $2.3 million and $1.8 million for 2020 and 2019, respectively. Short-term lease payments included in the table above that are excluded from the lease liability amounted to $0.8 million and $0.6 million for 2020 and 2019, respectively. Cash paid for amounts included in the measurement of lease liabilities under operating leases totaled $33.1 million and $25.8 million for 2020 and 2019, respectively.

Lease expense as measured under ASC 840 was $21.5 million for 2018. Contingent rent expense, based on gallons sold, as measured under ASC 840 was $1.9 million for 2018.

As of December 31, 2020, future minimum rental payments under operating leases, excluding variable lease payments or short-term payments, were as follows (in thousands). The weighted-average discount rate as of December 31, 2020 was 6.7%.

 

2021

 

$

33,118

 

2022

 

 

31,350

 

2023

 

 

29,141

 

2024

 

 

26,224

 

2025

 

 

23,961

 

Thereafter

 

 

81,043

 

Total future payments

 

 

224,837

 

Less impact of discounting

 

 

51,499

 

 

 

 

173,338

 

Current portion

 

 

31,958

 

Long-term portion

 

$

141,380

 

 

Most lease agreements include provisions for renewals. We generally do not include renewal options in our lease term for purposes of measuring our lease liabilities and right-of-use assets unless the sublease to our customer extends beyond the term of the head lease.

See Note 5 for information regarding the acquisition of leasehold interests in connection with the acquisition of retail and wholesale assets.

Of our leased sites, we operate 108 of them as company operated sites. Substantially all the remaining leased sites are subleased to lessee dealers or commission agents under leases with terms generally ranging from one to ten years and which may include renewal options. Sublease rental income amounted to $34.8 million, $38.2 million and $37.1 million for 2020, 2019 and 2018, respectively.

Operating Leases of Retail Sites as Lessor

Motor fuel stations are leased to tenants under operating leases with various expiration dates ranging through 2032. Most lease agreements include provisions for renewals. We generally do not include renewal options in our lease term. Future minimum rental payments under non-cancelable operating leases with third parties as of December 31, 2020 were as follows (in thousands):

 

2021

 

$

48,667

 

2022

 

 

39,367

 

2023

 

 

27,646

 

2024

 

 

22,288

 

2025

 

 

17,505

 

Thereafter

 

 

38,902

 

Total future minimum lease payments

 

$

194,375

 

 

The future minimum rental payments presented above do not include contingent rent based on future inflation, future revenues or volumes of the lessee, or non-lease components for amounts that may be received as tenant reimbursements for certain operating costs.

 

Deferred rent income from straight-line rent relates to the cumulative amount by which straight-line rental income recorded to date exceeds cash rents billed to date under the lease agreement and totaled $5.3 million and $7.1 million at December 31, 2020 and 2019, respectively. See Note 5 for information regarding the write-off of deferred rent income as a result of terminating leases in connection with the acquisition of retail and wholesale assets.