In 2020, what was the total cash Aunt Millies Bakeries received from the sale and leaseback transaction?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
e lease term is for 10 years at a monthly cost approximately $91,804 through October 2020 and increasing to $102,664 through May 2029. The lease is an operating lease and is included in the minimum lease payment schedule in Note 6. The lessee is responsible for all maintenance, insurance and taxes on the property. The transaction resulted in a net gain on sale of the property approximating $1,154,000, which was included in other liabilities and is being amortized over the life of the corresponding lease.
During 2020, the Company entered into a sale and leaseback transaction with an external party. The Company sold land and buildings in exchange for cash totaling $4,600,000, with
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to the 2025 FDD, Aunt Millies Bakeries engaged in a sale and leaseback transaction during 2020. In this transaction, Aunt Millies Bakeries sold land and buildings to an external party and then leased the property back from them. The total cash received by Aunt Millies Bakeries from this sale amounted to $4,600,000. After deducting closing costs, the net proceeds to Aunt Millies Bakeries were approximately $4,200,000.
The lease agreement specifies a 20-year term, with monthly costs starting at approximately $21,551 in February 2020 and escalating to $45,780 by February 2040. As the lessee, Aunt Millies Bakeries is responsible for all maintenance, insurance, and taxes related to the property. The sale resulted in a net gain of approximately $2,234,000 for Aunt Millies Bakeries, which is being amortized over the lease term.
Sale and leaseback transactions can be a way for companies like Aunt Millies Bakeries to free up capital tied to real estate while still retaining the use of the property for business operations. The gain from the sale is recognized over the life of the lease, impacting the company's financial statements over that period. For a prospective franchisee, understanding these transactions can provide insight into the financial strategies and obligations of Aunt Millies Bakeries.