AppHarvest completes sale of Berea farm to partner, will lease back facility

Kentucky-based AppHarvest finalized the sale-leaseback deal of its Berea farm, the company said Tuesday, freeing up more funds for the financially struggling fruit and vegetable grower.

As part of the deal, worth approximately $127 million, the mega greenhouse company will sell its recently opened 15-acre, indoor Berea farm to Mastronardi Produce, AppHarvest’s marketing and distribution partner, and then lease back the facility.

Some of the $57.5 million in net proceeds from the deal will help AppHarvest pay back a $30 million bridge loan from Mastronardi Produce as well as the first two years of prepaid rent on the Berea facility.

The lease will last for an initial term of 10 years and AppHarvest will pay $9.5 million annually until the end of the second lease year when the price will increase annually, a financial filing on Tuesday detailing the deal showed.

Once called ‘future of farming,’ AppHarvest discloses ‘substantial doubt’ about its future

The company also announced the beginning of operations at its 60-acre Richmond farm, the company’s fourth massive greenhouse that has the ability to grow fruits and vegetables at large scale in controlled, indoor environments. About $22.5 million of the proceeds from the sale-leaseback deal will go to construction costs related to the Richmond facility, the financial filing showed.

The first harvest of Campari tomatoes at the Richmond facility is expected in January, AppHarvest said.

“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 in a release. “The team is now focused on operations to ramp up production and revenue from the four high-tech farms.”

In its third quarter financial report, AppHarvest disclosed “substantial doubt” about its future.

“Absent additional sources of financing, we expect that our existing cash and cash equivalents will only allow us to continue our planned operations into the first quarter of 2023,” the company said in the report.

Aside from the facilities in Richmond and Berea, AppHarvest has farms in Morehead and Somerset.