What was the weighted average discount rate for Budget's property leases as of December 31, 2024?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
expenses and for the year ended December 31, 2022, includes $(9) million of minimum annual guaranteed rent in excess of concession fees as defined in our rental concession agreements. Included in vehicle depreciation and lease charges, net.
Supplemental balance sheet information related to leases is as follows:
| As of December 31, | |||||||
|---|---|---|---|---|---|---|---|
| 2024 | 2023 | ||||||
| Property leases Operating lease ROU assets | $ | 3,057 $ | 2,654 | ||||
| Short-term opera |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the weighted average discount rate for property leases as of December 31, 2024, was 4.98%. This figure reflects the average rate used to discount future lease payments to their present value, providing an indication of the cost of leasing properties for Budget. The weighted average remaining lease term for these properties was 8.0 years.
This discount rate is a critical component in calculating the lease liabilities reported on Budget's balance sheet. It affects the present value of future lease payments, which in turn impacts the company's financial obligations. A higher discount rate would result in a lower present value of lease liabilities, while a lower rate would increase the reported liabilities.
For a prospective franchisee, understanding these rates and terms is essential as it provides insight into Budget's financial strategies and obligations related to property leases. While this information pertains to Budget's overall financial health, franchisees may encounter similar lease terms and discount rates when securing locations for their own franchise operations. Therefore, it's beneficial to be aware of these financial considerations and how they can impact lease-related expenses and liabilities.
It is important to note that this rate applies specifically to property leases and may differ from the discount rates applied to vehicle leases or other financial instruments. Franchisees should consult with financial advisors to fully understand the implications of lease agreements and discount rates in their specific circumstances.