AppHarvest completes deal with Mastronardi Berea LLC for $127 million sale-leaseback of Berea. Ky., farm and opens Richmond, Ky., 60-acre high-tech indoor farm achieving goal to quadruple number of operating farms in 2022

Rhea-AI Summary

AppHarvest, a sustainable food company, has completed a sale-leaseback of its Berea, KY indoor farm for over $127 million. This deal includes a 10-year lease at a 7.5% rate and will help repay a $30 million bridge loan. The company also announced the opening of its new 60-acre farm in Richmond, KY, expected to start commercial shipments in early January. AppHarvest has expanded its farm network significantly in 2022, with multiple operational farms now growing a variety of produce.

Positive

• Sale-leaseback of Berea farm for over $127 million strengthens financial position.
• Richmond farm officially opened, expected to contribute to revenue with commercial shipments.
• Quadrupling of farm network enhances operational capabilities and product diversity.

Negative

• None.

MOREHEAD, Ky., Dec. 27, 2022 (GLOBE NEWSWIRE) -- AppHarvest, Inc. (NASDAQ: APPH, APPHW), a sustainable food company, public benefit corporation and Certified B Corp building some of the world’s largest high-tech indoor farms to grow affordable, nutritious fruits and vegetables at scale while providing good jobs in Appalachia announced today it has finalized the sale-leaseback of its Berea, Ky., indoor leafy greens farm for just over $127 million and has opened its 60-acre high-tech indoor farm in Richmond, Ky.

AppHarvest has entered an agreement with Mastronardi Berea LLC, a joint venture between Mastronardi Produce and COFRA Holding, for the sale-leaseback of its Berea high-tech indoor farm for leafy greens for approximately $127 million with an initial lease rate of 7.5% over 10 years, with four renewal terms of five years each. Mastronardi Produce is AppHarvest’s exclusive marketing and distribution partner, which has sold AppHarvest’s produce including tomatoes, leafy greens and strawberries into some of the top national grocery store chains, restaurants and foodservice outlets. Some of the proceeds of the sale-leaseback will be used to repay the previously announced $30 million bridge loan from Mastronardi Produce to AppHarvest and the first two years of prepaid rent at the Berea facility. Additional details on the sale-leaseback are available on the associated Form 8-K filed with the SEC.

“The AppHarvest team has worked relentlessly this year to get the four-farm network operational, and those efforts have paid off with the quadrupling of farms in our network and diversifying our crop set,” said AppHarvest Founder & CEO Jonathan Webb. “The team is now focused on operations to ramp up production and revenue from the four high-tech farms.”

AppHarvest also announced that its Richmond, Ky., farm is officially open and has begun growing Campari brand tomatoes. The first harvest at Richmond is anticipated in early January, which will mean that for the first time AppHarvest is expected to have commercial shipments coming from each facility in its four-farm network. Half of the Richmond farm currently is planted, and the other half is expected to be planted in 2023.

In what the company believes is the largest simultaneous build out of controlled environment agriculture infrastructure in U.S. history, the company has quadrupled the number of farms operating in its network in 2022. Already this year, the company has opened two other high-tech indoor farms—a 30-acre farm in Somerset, Ky., for strawberries and cucumbers and a 15-acre farm in Berea, Ky., for leafy greens. AppHarvest is shipping strawberries under the “WOW® Berries” brand and washed-and-ready-to-eat leafy greens under the “Queen of Greens®” brand. In its third growing season, the AppHarvest Morehead farm has further diversified its crop adding snacking tomatoes sold under the Sunset brand as “Flavor Bombs®” and “Sugar Bombs®.” Morehead began its harvesting this season ahead of schedule.

According to USDA reports, the value of U.S. fruit and vegetable imports rose to a record level in 2021 and has been projected to keep increasing in 2022. Changing weather patterns—ranging from mega-drought in the Southwest of the U.S. to more frequent flooding to catastrophic wind events—are making it harder than ever for open-field farmers to predict the duration of their growing seasons and to have conditions that result in a quality harvest. Major food retailers have demonstrated increasing interest in high-tech indoor farms for their ability to de-risk fruit and vegetable production with a more climate-resilient, more sustainable year-round growing solution that uses far fewer resources. Europe, a pioneer in the industry, is estimated to have nearly 520,000 acres of CEA production compared to an estimated 6,000 acres in the United States.

About AppHarvest 
AppHarvest is a sustainable food company in Appalachia developing and operating some of the world’s largest high-tech indoor farms with robotics and artificial intelligence to build a reliable, climate-resilient food system. AppHarvest’s farms are designed to grow produce using sunshine, rainwater and up to 90% less water than open-field growing, all while producing yields up to 30 times that of traditional agriculture and preventing pollution from agricultural runoff. AppHarvest currently operates its 60-acre flagship farm in Morehead, Ky., producing tomatoes, a 15-acre indoor farm for salad greens in Berea, Ky., a 30-acre farm for strawberries and cucumbers in Somerset, Ky., and a 60-acre farm in Richmond, Ky., for tomatoes. The four-farm network consists of 165 acres under glass. For more information, visit https://www.appharvest.com/.

About Mastronardi Produce Ltd.®
A pioneer and industry leader in the gourmet greenhouse industry, Mastronardi Produce grows and markets nationally recognized products under the SUNSET® brand, including Campari®, Flavor Bombs®, and Angel Sweet® tomatoes. Mastronardi Produce has been family-owned for over 70 years and prides itself on producing consistently flavorful gourmet tomatoes, peppers, cucumbers, berries, and leafy greens.

About COFRA Holding
COFRA Holding AG is a privately held group of companies active in various business sectors, including apparel retail (C&A), sustainable food (Dalsem and Ontario Plants Propagation), renewable energy (Sunrock), real estate investment (Redevco), private equity (Bregal) and asset management (Anthos Fund & Asset Management). Headquartered in Switzerland, the group employs more than 60,000 people across its business operations in Europe, the Americas and Asia. Each business operates independently in a spirit of engaged entrepreneurship while striving to be a “force for good” in the world – a guiding principle that has characterized the Brenninkmeijer family owners’ activities for six generations, since the founding of C&A in 1841. For more information, see www.cofraholding.com

Forward-Looking Statements
Certain statements included in this news release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words or phrases such as “will,” “estimate,” “work to,” “continue,” “expect,” “plan,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. All statements, other than statements of present or historical fact included in this news release, regarding the anticipated benefits and use of proceeds from the sale-leaseback of the Berea farm, the status of the Campari tomato plants, AppHarvest’s intention to build high-tech CEA farms, AppHarvest’s expectation of the landscape of the fruit and vegetables market, the economic impact of changing weather patterns on production for open-field farmers, the anticipated benefits of and production at such facilities, the timing and availability of produce, the expected timing of planting and harvesting produce, AppHarvest’s future financial performance, AppHarvest’s growth and evolving business plans and strategy, ability to capitalize on commercial opportunities, future operations, estimated financial position and cash flow, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements are based on various assumptions, whether or not identified in this news release, and on the current expectations of AppHarvest’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on as, a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of AppHarvest. These forward-looking statements are subject to a number of risks and uncertainties, including those discussed in the company’s Quarterly Report on Form 10-Q filed with the SEC by AppHarvest on Nov. 7, 2022, under the heading “Risk Factors,” and other documents AppHarvest has filed, or that AppHarvest will file, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. In addition, forward-looking statements reflect AppHarvest’s expectations, plans, or forecasts of future events and views as of the date of this press release. AppHarvest anticipates that subsequent events and developments will cause its assessments to change. However, while AppHarvest may elect to update these forward-looking statements at some point in the future, AppHarvest specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing AppHarvest’s assessments of any date subsequent to the date of this news release. Accordingly, undue reliance should not be placed upon the forward-looking statements.

Photos accompanying this announcement are available at
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FAQ

What was the sale price of AppHarvest's Berea farm?

The sale price of AppHarvest's Berea farm was over $127 million.

What will AppHarvest do with the proceeds from the sale-leaseback?

Proceeds will be used to repay a $30 million bridge loan and for prepaid rent at the Berea facility.

When is the first harvest expected from the Richmond farm?

The first harvest from the Richmond farm is anticipated in early January.

How many farms does AppHarvest currently operate?

AppHarvest currently operates four high-tech indoor farms.

What types of produce does AppHarvest grow?

AppHarvest grows tomatoes, leafy greens, strawberries, and cucumbers.