HF Foods Group Inc.HFFG
HF Foods Group Inc. Leases Disclosure
Note 6 - Leases
The Company leases office space, warehouses and vacant land that is currently being developed under non-cancelable operating leases, with terms typically ranging from to thirty years, as well as operating and finance leases for vehicles and delivery trucks, forklifts and computer equipment with various expiration dates through 2051. The Company determines whether an arrangement is or includes an embedded lease at contract inception.
Operating and finance lease assets and lease liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. Operating lease expense is recognized on a straight-line basis over the lease term. The Company also recognizes finance lease assets and finance lease liabilities at inception, with lease expense recognized as interest expense and amortization of the lease payment. Variable lease costs were insignificant in the years ended December 31, 2025 and 2024.
Operating Leases
The components of operating lease expense were as follows:
| Year Ended December 31, | ||||||||||||||
| ($ in thousands) | 2025 | 2024 | ||||||||||||
| Operating lease cost | $ | 6,903 | $ | 4,709 | ||||||||||
| Short-term lease cost | $ | 4,088 | $ | 868 | ||||||||||
| Weighted average remaining lease term (months) | 122 | 58 | ||||||||||||
| Weighted average discount rate | 6.7% | 5.4% | ||||||||||||
Supplemental cash flow information related to operating leases was as follows:
| Year Ended December 31, | |||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Operating cash flows from operating leases | $ | 5,986 | $ | 4,623 | |||||||
Finance Leases
The components of finance lease expense were as follows:
| Year Ended December 31, | |||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Finance leases cost: | |||||||||||
| Amortization of ROU assets | $ | 7,000 | $ | 4,249 | |||||||
| Interest on lease liabilities | 1,874 | 1,284 | |||||||||
| Total finance leases cost | $ | 8,874 | $ | 5,533 | |||||||
Supplemental cash flow information related to finance leases was as follows:
| Year Ended December 31, | |||||||||||
| (In thousands) | 2025 | 2024 | |||||||||
| Operating cash flows from finance leases | $ | 1,817 | $ | 1,205 | |||||||
Supplemental balance sheet information related to finance leases was as follows:
| ($ in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Property and equipment, at cost | $ | 50,002 | $ | 36,072 | |||||||
| Accumulated depreciation | (21,132) | (14,262) | |||||||||
| $ | 28,870 | $ | 21,810 | ||||||||
| Weighted average remaining lease term (months) | 113 | 143 | |||||||||
| Weighted average discount rate | 5.9 | % | 5.9 | % | |||||||
Maturities of lease liabilities are as follows:
| (In thousands) | Operating Leases | Finance Leases | ||||||||||||
| Year Ended December 31, | ||||||||||||||
| 2026 | $ | 6,792 | $ | 8,057 | ||||||||||
| 2027 | 4,406 | 7,598 | ||||||||||||
| 2028 | 3,729 | 6,662 | ||||||||||||
| 2029 | 2,822 | 3,719 | ||||||||||||
| 2030 | 2,746 | 2,015 | ||||||||||||
| Thereafter | 23,760 | 15,683 | ||||||||||||
| Total lease payments | 44,255 | 43,734 | ||||||||||||
| Less: Imputed interest | (16,931) | (12,030) | ||||||||||||
| Total | $ | 27,324 | $ | 31,704 | ||||||||||
As of December 31, 2025, the Company had additional leases for vehicles that had not yet commenced which total $0.8 million in future minimum lease payments and were excluded from the table above. These vehicle leases are expected to commence during the year ended December 31, 2026 with lease terms of 7 to 8 years.
AnHeart Lease Arrangements
The Company was previously the guarantor of leases for properties located at 273 Fifth Avenue and 275 Fifth Avenue in Manhattan, New York. In connection with these arrangements, the Company previously determined that AnHeart, Inc. (“AnHeart”) was a variable interest entity (“VIE”); however, because the Company was not the primary beneficiary, AnHeart was not consolidated.
Effective January 21, 2021, the Company assumed the lease for 273 Fifth Avenue and became responsible for the related tenant obligations thereunder, including rent and required property improvements. The lease term expires in January 2051. In March 2024, the Company commenced the required construction of a multi-use facility at the property. As of December 31, 2025, the Company had incurred approximately $7.3 million of construction costs, and the project was placed in service in September 2025 following receipt of the certificate of occupancy. The lease agreement permits subletting of the premises, and as of December 31, 2025, the Company had entered into sub-lease arrangements for portions of the property.
Following AnHeart’s default under the 275 Fifth Avenue lease in 2022, the Company performed under its guaranty and recognized a lease guarantee liability. Effective April 30, 2024, the Company assumed the lease for portions of the 275 Fifth Avenue property. Upon assumption of the lease, the Company determined that AnHeart was no longer a VIE with respect to this arrangement. The remaining lease guarantee liability of $5.4 million was reversed, and an operating lease right-of-use asset and lease liability of approximately $4.9 million were recognized on the consolidated balance sheet. The Company recognized a $5.4 million gain in other expense (income), net during 2024 for the reversal of the lease guarantee liability. The lease term expires on April 30, 2034, includes options to renew for up to two additional five-year terms, and provides for initial monthly rent of approximately $45,000, subject to annual increases. Certain legal matters relating to the 273 Fifth Avenue and 275 Fifth Avenue lease arrangements are described in Note 17 - Commitments and Contingencies.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 26, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Jan 31, 2023 | |
| 2020 | Mar 16, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Apr 1, 2019 | |
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.