What is the maturity date range for the sale leaseback financing obligations of Aplus?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
weighted average interest rate on the total amount outstanding at December 31, 2023 was 7.54%. The Partnership was in compliance with all financial covenants at December 31, 2023. The Partnership's net leverage ratio was 3.66 to 1.00 at December 31, 2023.
Lease-Related Financing Obligations
Southside Oil, LLC, a subsidiary of the Partnership, is a party to a sale leaseback transaction that did not meet the criteria for sale leaseback accounting. This transaction was accounted for as a fi
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, Southside Oil, LLC, a subsidiary of the Partnership, is party to a sale leaseback transaction accounted for as a financing arrangement. These obligations mature on varying dates through 2058. These obligations require monthly interest and principal payments and bear interest at 11.865%. As of December 31, 2023 and 2022, the balance of the sale leaseback financing obligation was $85 million.
This means that Aplus has long-term financial obligations related to lease agreements that extend far into the future. For a prospective franchisee, this indicates that Aplus is involved in significant real estate financing arrangements. The interest rate of 11.865% suggests that these financing arrangements may be relatively expensive.
It is important to note that these obligations are associated with a subsidiary and are part of a larger financial structure. Franchisees should consider the overall financial health and stability of Aplus, including these lease-related financing obligations, as part of their due diligence. Understanding the details of these obligations can provide insight into the company's long-term financial planning and risk management.