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Operating Leases
12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Operating Leases

Note 14. OPERATING LEASES

Operating Leases of Retail Sites as Lessee

We lease 462 retail sites from third parties under certain non-cancelable operating leases that expire from time to time through 2041. The weighted-average remaining lease term was 5.6 years as of December 31, 2021.

Lease expense was classified in the statement of income as follows (in thousands):

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Cost of sales

 

$

23,765

 

 

$

25,214

 

 

$

27,493

 

Operating expenses

 

 

13,531

 

 

 

9,067

 

 

 

379

 

General and administrative expenses

 

 

1,331

 

 

 

1,081

 

 

 

685

 

Total

 

$

38,627

 

 

$

35,362

 

 

$

28,557

 

 

Variable lease payments based on inflation or fuel volume included in the table above totaled $3.4 million, $2.3 million and $1.8 million for 2021, 2020 and 2019, respectively. Short-term lease payments included in the table above that are excluded from the lease liability amounted to $1.7 million, $0.8 million and $0.6 million for 2021, 2020 and 2019, respectively. Cash paid for amounts included in the measurement of lease liabilities under operating leases totaled $33.5 million, $33.1 million and $25.8 million for 2021, 2020 and 2019, respectively.  

As of December 31, 2021, 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, 2021 was 6.2 %. 

2022

 

 

36,041

 

2023

 

 

33,691

 

2024

 

 

30,540

 

2025

 

 

28,180

 

2026

 

 

24,092

 

Thereafter

 

 

68,812

 

Total future payments

 

 

221,356

 

Less impact of discounting

 

 

46,375

 

 

 

 

174,981

 

Current portion

 

 

34,832

 

Long-term portion

 

$

140,149

 

 

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

Of our leased sites, we operate 124 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 $34.5 million, $34.8 million and $38.2 million for 2021, 2020 and 2019, respectively.

Operating Leases of Retail Sites as Lessor

Motor fuel stations are leased to tenants under operating leases with various expiration dates ranging through 2037. 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, 2021 were as follows (in thousands):

 

2022

 

 

50,189

 

2023

 

 

39,783

 

2024

 

 

33,130

 

2025

 

 

25,792

 

2026

 

 

17,262

 

Thereafter

 

 

33,339

 

Total future minimum lease payments

 

$

199,495

 

 

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 $5.1 million and $5.3 million at December 31, 2021 and 2020, respectively.