Lineage Inc

(15)Failed sale-leaseback financing obligations

In connection with the 2021 Kloosterboer acquisition, the Company assumedtwo failed sale-leaseback financing obligations. The Company’s outstanding obligations for failed sale-leasebacks of real estate-related long-lived assets were as follows:

Arras

In August 2020, prior to its purchase by the Company, Kloosterboer executed an agreement with a bank consortium to finance its construction of a new cold storage facility on a parcel of land previously owned by Kloosterboer in Arras, France (“Arras”). As part of this arrangement, the bank consortium purchased the land parcel from Kloosterboer and concurrently provided funding to construct the cold storage facility. The agreement stipulates that the bank consortium has legal ownership and title to the land parcel and the facility. The agreement also provides the Company with an option to purchase the leased assets for €1.00 at the end of the lease term, which makes the transaction a “failed sale” because the purchase price is nominal. The associated assets are reflected in the consolidated balance sheets within Property, plant, and equipment, net, with a corresponding failed sale-leaseback financing obligation included within Accounts payable and accrued liabilities and Other long-term liabilities. Upon the acquisition of Kloosterboer, the Company recognized a liability related to Arras. The construction of Arras was substantially complete when the Company acquired Kloosterboer and was completed in 2021.

The initial term of the Arras financing agreement is 15 years after the original execution of the agreement. Payments are made quarterly and are based on the total funding provided by the bank consortium to finance the construction work. The agreement’s termination date is December 31, 2035 and has an implicit interest rate of 0.15%. The earliest date that the purchase option can be exercised is 7 years after the completion of the Arras facility. Early exercise of the purchase option requires the Company to pay off the remaining balance of the sale-leaseback financing obligation at the time of exercise. The long-lived assets are depreciated on a straight-line basis over their remaining economic useful life.

Harnes 2

Kloosterboer was party to a separate sale-leaseback transaction related to a facility in Harnes, France. As part of this arrangement, a bank consortium agreed to purchase land from a third-party and finance improvements to an existing facility at the location. This agreement was determined to be a finance lease because it provided Kloosterboer with the ability to purchase the land and facility for a nominal price of €1.00 at the end of the lease term. Subsequently, Kloosterboer and the bank consortium amended the agreement and the bank consortium agreed to finance the construction of a second facility at the location, which would then be leased to Kloosterboer after construction completion (“Harnes 2”). This facility was added to the purchase option from the original lease. As Kloosterboer was already deemed to be reasonably certain to exercise the €1.00 purchase option on the land, the lease for Harnes 2 was considered a “failed sale.” The associated assets are reflected in the consolidated balance sheets within Property, plant, and equipment, net, with a corresponding failed sale-leaseback financing obligation included within Accounts payable and accrued liabilities and Other long-term liabilities. Upon the acquisition of Kloosterboer, no asset or liability was recognized for the Harnes 2 financing obligation because the construction had not begun. The construction of the Harnes 2 facility was completed in 2023.

The initial term of the Harnes 2 financing agreement is 15 years after the original execution of the agreement. Payments are made quarterly and are based on the total funding provided by the bank consortium to finance the construction work. The agreement’s termination date is June 2037 and has an implicit interest rate of 0.19%. The earliest date that the purchase option can be exercised is 7 years after the completion of the improvements contemplated in the original finance lease. Early exercise of the purchase option requires the Company to pay off the remaining balance of the sale-leaseback financing obligation at the time of exercise. The long-lived assets are depreciated on a straight-line basis over their remaining economic useful life.

As of December 31, 2024, the future principal payments for the Arras and Harnes 2 sale-leaseback financing obligation are as follows (in millions):