Real Estate Leases
Headquarters Lease
Effective January 1, 2023, we entered into a new lease agreement for our headquarters in Colmar, PA (the “HQ Lease”) following the expiration of our prior lease agreement. The HQ Lease covers approximately 342,000 square feet of office, warehouse, and storage space and was entered into by a subsidiary of the Company as the tenant, with the Company providing a corporate guarantee. The owner of the property and counterparty to the prior lease and the new HQ Lease at the time of execution was BREP I, a Pennsylvania limited partnership. The HQ Lease terminates on December 31, 2027, has one three-year renewal option, and is a triple net non-terminable lease under which we are responsible for all expenses attributable to the facility (including maintenance and repair). The approximate amount of rent expected to be paid during the base term is $19.4 million, and in fiscal 2023 we paid rent of approximately $2.2 million under the HQ Lease.
The limited partners of BREP I are our Non-Executive Chairman, Mr. Berman, a marital qualified terminable interest property trust for the benefit of Sharyn Berman, Mr. Berman’s sister-in-law (the “Marital Trust”), of which Mr. Berman and Sharyn Berman are co-trustees, Mr. Berman’s father, Jordan S. Berman, and Mr. Berman’s brothers, Marc H. Berman and Fred B. Berman. Mr. Berman and the Marital Trust each own a 27.9% interest in BREP I. Mr. Berman and the Marital Trust are controlling shareholders of BREP, Inc., a Pennsylvania corporation, which is the general partner of BREP I. Jordan S. Berman, Marc H. Berman and Fred B. Berman are each directors and officers of BREP, Inc. Each of Mr. Berman, Sharyn Berman and Marc H. Berman beneficially own greater than 5% of our outstanding common stock.
Effective December 1, 2023, BREP I sold the property subject to the HQ Lease to an unaffiliated third party.
Lewisberry, PA Lease
We are party to a lease agreement with BREP IV, LLC, a Pennsylvania limited liability company, for remanufacturing, warehouse and office space in Lewisberry, PA (the “Lewisberry Lease”). The leased
facility consists of approximately 142,500 square feet. The term of the Lewisberry Lease began on September 30, 2020 and expires on December 31, 2027. The Lewisberry Lease provides us with one option to extend the term for one additional period of two years. In fiscal 2023, we paid rent of approximately $0.7 million under the Lewisberry Lease. The approximate amount of rent expected to be paid during the base term is $5.2 million. The Lewisberry Lease is a non-terminable lease.
The equity interests of BREP IV, LLC are owned 20% by each of Mr. Berman, the Marital Trust, Mr. Berman’s father, Jordan S. Berman, and Mr. Berman’s brothers, Marc H. Berman and Fred B. Berman. Jordan S. Berman is managing member of the entity.
SuperATV Leases
Our subsidiary, Super ATV, LLC (“SuperATV”), leases two facilities in Madison, Indiana and one facility in Shreveport, Louisiana, from entities in which Ms. Lindsay Hunt, our President and Chief Executive Officer, Specialty Vehicle, owns 24.5% of each entity and in which Ms. Hunt’s father owns 50% of each entity (collectively, the “Hunt Entities”). The leases were included as part of the acquisition of SuperATV by the Company in October 2022. The lease for one facility in Madison, Indiana covers approximately 333,000 square feet, and the facility is used for manufacturing, distribution, and office space. The lease for the second facility in Madison, Indiana covers approximately 145,000 square feet, and the facility is used for manufacturing and distribution. The lease for the third facility in Shreveport, Louisiana covers approximately 65,000 square feet, and the facility is used for warehouse and distribution.
Each lease is a triple net non-terminable lease under which SuperATV is responsible for all expenses attributable to the facility (including maintenance and repair). Total rental payments to the Hunt Entities under these lease arrangements was approximately $2.6 million in fiscal 2023. The leases for all three facilities were renewed in October 2022 in connection with the SuperATV acquisition. Each lease has a term expiring on October 31, 2027, and SuperATV has two, five-year renewal options under each lease.
