MOREHEAD, Ky. — AppHarvest, Inc. announced 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 ten 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 food service outlets. Some sale-leaseback proceeds 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, meaning that AppHarvest is expected to have commercial shipments from each facility in its four-farm network for the first time. Half of the Richmond farm is currently 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, it 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, 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.
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