Delek Logistics Partners, LPDKL
Delek Logistics Partners, LP Leases Disclosure
Leases
Lessee
We have noncancelable operating leases primarily associated with rights-of-way and transportation equipment. We also have noncancelable finance leases primarily associated with compressors and transportation equipment. Our remaining lease terms range from less than one year to 39 years with renewal options ranging from 3 to 40 years, and some agreements have multiple renewal options.
The components of lease cost are as follows (in thousands) (1):
Year Ended December 31, | |||||||||||||||||
2025 | 2024 | 2023 | |||||||||||||||
Components of lease costs | |||||||||||||||||
Operating lease cost | $ | 8,610 | $ | 10,370 | $ | 11,533 | |||||||||||
Finance lease cost: (1) | |||||||||||||||||
Amortization of ROU assets | 5,637 | — | — | ||||||||||||||
Interest on lease liabilities | 1,491 | — | — | ||||||||||||||
Total finance lease cost | 7,128 | — | — | ||||||||||||||
Short-term lease cost | 6,691 | 7,359 | 5,031 | ||||||||||||||
Variable lease cost | 905 | 1,261 | 3,826 | ||||||||||||||
Total lease cost | $ | 23,334 | $ | 18,990 | $ | 20,390 | |||||||||||
(1) An immaterial amount of finance lease costs was included in operating lease costs during the years ended December 31, 2024 and 2023. | |||||||||||||||||
Supplemental balance sheet information related to leases is as follows: | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2025 | 2024 | ||||||||||||||||
Weighted-average remaining lease term (years) for operating leases | 3.5 | 3.4 | |||||||||||||||
Weighted-average discount rate (1) operating leases | 7.5 | % | 7.4 | % | |||||||||||||
Weighted-average remaining lease term (years) for finance lease | 3.4 | 3.5 | |||||||||||||||
Weighted-average discount rate (1) finance lease | 7.5 | % | 8.4 | % | |||||||||||||
(1) Our discount rate is primarily based on our incremental borrowing rate in accordance with ASC 842. | |||||||||||||||||
Maturities of lease liabilities as of December 31, 2025 are as follows (in thousands):
Year Ended December 31, | Operating | Finance | |||||||||
2026 | $ | 3,384 | $ | 10,108 | |||||||
2027 | 1,978 | 9,941 | |||||||||
2028 | 902 | 6,892 | |||||||||
2029 | 232 | 4,179 | |||||||||
2030 | 124 | 1,155 | |||||||||
2031 and thereafter | 851 | — | |||||||||
Total lease payments | 7,471 | 32,275 | |||||||||
Less: present value discount | 893 | 3,676 | |||||||||
Lease liabilities | $ | 6,578 | $ | 28,599 | |||||||
Lessor
We are the lessor under certain agreements for gathering, transportation, storage, terminalling, and offloading with Delek Holdings. These agreements have remaining terms ranging from 2 to 11 years with renewal options of 5 years, and some agreements have multiple renewal options. Revenue from these leases are recorded in affiliate revenue in the consolidated statements of income. For details on Lease Revenue, see Note 5.
During 2024, we executed renewals to certain agreements between DKL and Delek Holdings. The renewals required the embedded leases within these agreements to be reassessed under ASC 842. As a result of these lease assessments, certain leases were reclassified from an operating lease to a sales-type lease. Accordingly, the underlying property, plant and equipment, net, and associated deferred revenue, if any, were derecognized and the present value of the future lease payments and the unguaranteed residual value of the assets were recorded as a net investment in sales-type lease during the respective periods.
The net investment in sales-type leases is recorded utilizing the estimated fair value of the underlying leased assets at contract modification date and are nonrecurring fair value measurements. The leased assets were valued using a cost method valuation approach which utilizes Level 3 inputs.
We recognized any billings in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in Net Revenues - Affiliate in the accompanying consolidated statements of income and comprehensive income.
We did not elect to use the practical expedient to combine lease and non-lease components for lessor arrangements. The tables below represent the portion of the contracts allocated to the lease component based on relative standalone selling price.
Lease income included in the consolidated statements of income and comprehensive income was as follows:
Year Ended December 31, | |||||||||||
(in thousands) | 2025 | 2024 | 2023 | ||||||||
Operating leases: | |||||||||||
$ | 200,180 | $ | 268,843 | $ | 311,096 | ||||||
Sales-type leases: | |||||||||||
Interest income (Sales-type rental revenue-fixed minimum) | 112,456 | 47,709 | — | ||||||||
Lease revenue (Revenue from variable lease payments) | 15,708 | 7,673 | — | ||||||||
$ | 128,164 | $ | 55,382 | $ | — | ||||||
The following presents the consolidated financial statement impact of sales-type leases on commencement or modification date for the year ended December 31, 2024. These transactions are non-cash transactions. We did not have any sales-type leases that commenced during the year ended December 31, 2025. The amount recognized on commencement date was recorded in contributions in the consolidated statements of partners' equity (deficit), given the underlying agreements are between entities under common control.
Year Ended December 31, | ||||||||
(in thousands) | 2024 | |||||||
Lease receivables | $ | 217,263 | ||||||
Unguaranteed residual assets | 10,573 | |||||||
Property, plant and equipment, net | (108,143) | |||||||
Amount recognized on commencement date | $ | 119,693 | ||||||
The following is a schedule of annual undiscounted minimum future lease cash receipts on the non-cancelable operating leases as of December 31, 2025 (in thousands):
2026 | $ | 50,331 | |||
2027 | 38,240 | ||||
2028 | 7,680 | ||||
2029 | 1,567 | ||||
2030 | 1,567 | ||||
2031 and thereafter | 784 | ||||
Total minimum future lease revenue | $ | 100,169 | |||
Annual future minimum undiscounted lease receipts under our sales-type leases were as follows as of December 31, 2025 (in thousands):
2026 | $ | 108,927 | |||
2027 | 78,858 | ||||
2028 | 78,858 | ||||
2029 | 78,858 | ||||
2030 | 78,858 | ||||
2031 and thereafter | 183,905 | ||||
Total minimum future lease revenue | 608,264 | ||||
Less: Imputed interest | 402,243 | ||||
Lease receivable | $ | 206,021 | |||
The components of our aggregate net investment in sales-type leases are as follows:
Year Ended December 31, | |||||||||||
2025 | 2024 | ||||||||||
Lease receivable | $ | 206,021 | $ | 203,803 | |||||||
Less: Current lease receivables (1) | 36,362 | 22,783 | |||||||||
Long-term lease receivables | 169,659 | 181,020 | |||||||||
Unguaranteed residual assets (noncurrent) | 15,997 | 12,106 | |||||||||
Net lease investment - affiliate | $ | 185,656 | $ | 193,126 | |||||||
(1) Presented in Lease receivable - affiliate, in the consolidated balance sheets.
The following table summarized our investment in assets held under operating lease by major classes (in thousands):
December 31, | |||||||||||
2025 | 2024 | ||||||||||
Land | $ | 10,995 | $ | 11,643 | |||||||
Building and building improvements | 22 | 387 | |||||||||
Pipelines, tanks and terminals | 240,822 | 419,528 | |||||||||
Other equipment | 812 | 2,229 | |||||||||
Property, plant and equipment | 252,651 | 433,787 | |||||||||
Less: accumulated depreciation | (103,897) | (143,961) | |||||||||
Property, plant and equipment, net | $ | 148,754 | $ | 289,826 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 28, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.