What is the interest rate associated with Camp Margaritaville's debt, including the SOFR floor?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
d $1,447,387 and $1,433,243, respectively.
5. Investments in Unconsolidated Entities
Effective February 5, 2018, the Company owns a 3.2% interest in 560 MV Hotel LLC (a resort in New York, New York) and did not have significant influence over the entity. The investment was accounted for at cost less impairment under ASC321-10-35. In October 2023, the majority owner (96.8%) of the resort foreclosed on its loan agreement, and in December 2023, the lender assumed control of the property. Consequently, the Company lost its ownership interest in the resort and fully impaired its investment of the property. The property remains open and continues to operate. The investment account for 560 MV Hotel LLC was $0 for the years ended December 31, 2024 and 2023. The impairment loss is reflected in net loss on investments in unconsolidated entities on the consolidated statements of operations.
Notes to Consolidated Financial Statements (continued)
6. Notes Receivable
On April 19, 2021, the Company executed a promissory note with the Caribbean restaurant license partner that is associated with uncollected royalties from 2020 and 2019 in the amount of $637,279. The note bears interest of 2%, is paid quarterly, and commences on May 31, 2021. Principal payments commence June 30, 2022, and will be collected alongside interest quarterly over the
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, the interest rate associated with the company's debt is 4.75% plus the Secured Overnight Financing Rate (SOFR), with an SOFR floor of 1.00%. This information is detailed in the notes to the consolidated financial statements for the year ending December 31, 2023. The debt was refinanced in June 2022, which resulted in the full extinguishment of prior notes payable and a line of credit.
The refinanced debt consists of a $160,000,000 debt facility term loan from a lender group, including $105,000,000 in closing date term loans, $50,000,000 in delayed draw term loans, and a $5,000,000 revolving credit loan. The closing date term loans and line of credit both expire in June 2027. The delayed draw was available to be withdrawn from the closing date through the first 27 months of the loan.
The term loan agreement requires minimum principal of 1% to be paid each year beginning June 30, 2022. The debt issuance costs related to securing the debt facility approximate $449,152, which were amortized fully in 2022. The company opted to amortize the debt issuance costs in the year incurred as it was calculated immaterially different from the effective interest method over the remainder of the loan term. In June 2023, the Company withdrew $24,000,000 against the delayed draw term loans, and in May 2024, the Company withdrew the remaining $26,000,000 against the delayed draw term loans.