| LEASES |
LEASES TIMBERLAND LEASES Our timberland leases typically have initial terms of approximately 30 to 65 years, with renewal provisions in some cases. NON-TIMBERLAND LEASES In addition to timberland holdings, we lease certain machinery and equipment and office space. Significant leased properties include regional offices in Spokane, Washington; Atlanta, Georgia; and Lufkin, Texas. BALANCE SHEET CLASSIFICATION The following table presents supplemental balance sheet information related to lease assets and liabilities as of June 30, 2026 and December 31, 2025: | | | | | | | | | | | | | | | | Location on Balance Sheet | June 30, 2026 | | December 31, 2025 | | Assets | | | | | | Operating lease assets | Operating lease right-of-use assets | $23,875 | | | $16,286 | | | Finance lease assets (a) | Machinery and equipment | 12,367 | | | — | | | Total lease assets | | $36,242 | | | $16,286 | | | | | | | | Liabilities | | | | | | Current: | | | | | | Operating lease liabilities | Other current liabilities | $5,502 | | | $2,617 | | | Finance lease liabilities | Other current liabilities | 5,333 | | | — | | | Long-term: | | | | | | Operating lease liabilities | Other non-current liabilities | 18,382 | | | 13,669 | | | Finance lease liabilities | Other non-current liabilities | 7,064 | | | — | | | Total lease liabilities | | $36,281 | | | $16,286 | |
(a)Finance lease assets are presented net of accumulated amortization of $2.1 million as of June 30, 2026. LEASE MATURITIES, LEASE COST AND OTHER LEASE INFORMATION The following table details our undiscounted lease obligations as of June 30, 2026 by type of lease and year of expiration: | | | | | | | | | | | | | | | | | Operating Leases | | Finance Leases | | 2026 | | $4,107 | | | $2,987 | | | 2027 | | 5,249 | | | 4,812 | | | 2028 | | 4,178 | | | 3,141 | | | 2029 | | 2,924 | | | 1,864 | | | 2030 | | 2,539 | | | 505 | | | Thereafter | | 10,397 | | | — | | | Total undiscounted cash flows | | $29,394 | | | $13,309 | | | Imputed interest | | (5,510) | | | (912) | | Total lease liabilities at June 30, 2026 | | $23,884 | | | $12,397 | | | | | | | | | | | |
In June 2026, we executed an operating lease for office space in Atlanta, Georgia with a term of approximately 12 years, commencing July 14, 2026. Total undiscounted lease payments are approximately $14.9 million. This lease is excluded from the lease maturity table above, as the commencement date occurred subsequent to quarter end. The following table details components of our lease cost for the three and six months ended June 30, 2026 and 2025: | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Lease Cost Components | 2026 | | 2025 | | 2026 | | 2025 | | Operating lease cost | $1,008 | | | $241 | | | $1,764 | | | $938 | | | Finance lease cost: | | | | | | | | | Amortization of leased assets | 1,262 | | | — | | | 2,102 | | | — | | | Interest expense | 152 | | | — | | | 261 | | | — | | | Variable lease cost (a) | 88 | | | 81 | | | 100 | | | 224 | | | Total lease cost (b) | $2,510 | | | $322 | | | $4,227 | | | $1,162 | |
(a)The majority of timberland leases are subject to increases or decreases based on either the Consumer Price Index, Producer Price Index, or market rates. (b)Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. Related costs are recognized on a straight-line basis over the lease term. Short-term lease expense was not material for the three and six months ended June 30, 2026 and 2025. The following table provides supplemental cash flow information related to leases for the six months ended June 30, 2026 and 2025: | | | | | | | | | | | | | Six Months Ended June 30, | | Supplemental Cash Flow Information Related to Leases | 2026 | | 2025 | | Cash paid for amounts included in the measurement of lease liabilities: | | | | | Operating cash flows from operating leases | $1,692 | | $791 | | Operating cash flows from finance leases | 261 | | — | | Investing cash flows from operating leases | 98 | | 184 | | Financing cash flows from finance leases | 2,066 | | — | | Total cash paid for amounts included in the measurement of lease liabilities | $4,117 | | $975 | | | | | | Lease liabilities arising from right-of-use assets assumed in the PotlatchDeltic merger: | | | | | Operating leases | $7,733 | | — | | Finance leases | 13,446 | | — | | Total lease liabilities arising from right-of-use assets assumed in the PotlatchDeltic merger | $21,179 | | — | | | | | | Right-of-use assets obtained in exchange for new lease liabilities: | | | | | Operating leases | $681 | | — | | Finance leases | 1,175 | | — | | Total right-of-use assets obtained in exchange for new lease liabilities | $1,856 | | — | | | | | | Weighted-average remaining lease term (years): | | | | | Operating leases | 8 | | 11 | | Finance leases | 3 | | — | | | Weighted-average discount rate: | | | | | Operating leases | 6 | % | | 6 | % | | Finance leases | 5 | % | | — | |
We apply the following practical expedients as allowed under ASC 842: | | | | | | | | | | Practical Expedient | | Description | | Short-term leases | | We do not record right-of-use assets or liabilities for short-term leases (a lease that at commencement date has a lease term of 12 months or less and does not contain a purchase option that is reasonably certain to be exercised). | | Separation of lease and non-lease components | | We elect not to separate non-lease components from associated lease components when (i) the components have the same timing and pattern of transfer and (ii) the combined component would be classified as an operating lease. |
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