FY22 financial report print.indd

Virginia Tech Financial Report 2021-2022

15. Long-term Leases Payable Long-term leases represent the university’s obligation to pay owners for the right to use the present service capacity of their assets. These obligations are primarily for leases of facilities, such as office space in the North End Center office building, the North End Center parking garage, space in the Children’s National Hospital, and various office and laboratory spaces in the Virginia Tech Corporate Research Center. The university’s lease agreements for facili ties typically range from 3-20 years, with renewal options equal to the base term appearing more frequently in the university’s 3-5-year lease agreements. The difference between the effective borrowing rates on the university’s determinable-rate contracts and prime-rate contracts is immaterial. The tax-ex empt borrowing rates on the university’s leases range from 2.19% to 25.4%, with a tax-exempt effective portfolio rate of 3.26% at June 30, 2022. A portion of the North End Center parking garage liability is a taxable obligation, and carries a 4.31% borrowing rate. The university’s lease portfolio is primarily with the Virginia Tech Foundation and its subsidiaries. Several of the university’s leases with the foundation operate on a non-profit basis, in which the rent owed is trued-up at regular intervals to reflect cost-only payments. These agreements make up the major ity of the university’s 20-year leases. The university’s present lease portfolio does not contain provisions for variable payments based on the university’s future performance or usage of the underlying assets. Additionally, the university’s present lease portfolio does not contain provisions for residual value guarantees. The university had no impairment losses on its lease portfolio in fiscal year 2022. The university committed $10.3 million to the university’s future Gilbert Street lease with the foundation. The lease is for 182,578 square feet of office space commencing on or around November 1, 2022. The amount is for construction and renovation costs documented in the lease agreement dated May 1, 2022. Long-term Leases Payable Activity As of June 30, 2022 (all dollars in thousands) Beginning Balance Additions Retirements Terminations Ending Balance Current Portion

Long-term leases payable Land

$

3,397 $

- $

383 $

- $

3,014 $

351

Building Equipment Infrastructure

123,719

12,040

16,191

2,273

117,295

16,168

1,653

- -

515

- -

1,138

550

152

29

123

30

$

128,921 $

12,040 $ 17,118 $

2,273 $

121,570 $ 17,099

Total long-term leases payable

Future Principal Commitments For fiscal years subsequent to 2022 (all dollars in thousands)

Land

Building

Equipment

Infrastructure

Total

2023 2024 2025 2026 2027

$

351 $

16,138 $

550 $

30 $

17,099 15,320 10,486 9,654 9,432 26,645 22,788 4,914 2,712 2,375

264 191 197 173 924 578

14,437 10,263 9,427 9,259 25,721 22,210 4,870 2,650 2,290

588

31 32 30

- - - - - - - - - -

- - - - - - - -

2028-2032 2033-2037 2038-2042 2043-2047 2048-2052 2053-2057 2058-2059

44 62 85

112

- -

112

33

33

$

3,014 $

117,295 $

1,138 $

123 $

121,570

Total future principal requirements

Future Interest Commitments For fiscal years subsequent to 2022 (all dollars in thousands)

Land

Building

Equipment

Infrastructure

Total

2023 2024 2025 2026 2027

$

98 $

4,845 $

60 $

3 $

5,006 3,747 2,844 2,456 2,079 7,104 3,270 1,169

88 80 74 68 52 44 32 17 256 112

3,635 2,763 2,382 2,011 6,848 3,158 1,117

22

2 1 - - - - - - - - -

- - - - - - - - - -

2028-2032 2033-2037 2038-2042 2043-2047 2048-2052 2053-2057 2058-2059

597 145

641 177

- -

17

1

1

$

922 $

27,501 $

82 $

6 $

28,511

Total future interest requirements

33

Notes to Financial Statements