Rocky Mountain Chocolate Factory has agreed to sell its production and warehouse facility in Durango, Colorado, for $6.6 million under a sale-leaseback arrangement designed to reduce its outstanding debt while allowing the company to continue operating from the property.
Announced in an October 6 press release, the transaction involves American Heritage Legacies, a company controlled by the family of Rocky Mountain Chocolate Factory’s interim CEO, Allen Harper. The property serves as a production and warehouse site as well as the corporate headquarters of the chocolate manufacturer and franchisor.
Harper recused himself from the transaction review process, according to the company. The purchase price was also supported by an independent appraisal.
Sale Proceeds to Reduce Outstanding Debt
The $6.6 million generated by the sale will be used to repay an equivalent amount in outstanding promissory notes, according to a securities filing.
Under the agreement, Rocky Mountain Chocolate Factory will lease the facility for an initial 10-year period, with the option to extend the lease for another 10 years. Annual rent is set at $624,000 for the first year, with increases of 2% each year thereafter.
The structure allows the company to release capital tied up in its real estate while maintaining access to a facility central to its manufacturing, warehousing and corporate operations.
“We are focused on making thoughtful financial decisions that strengthen Rocky Mountain Chocolate Factory and create a more sustainable foundation for the business,” Mel Keating, chairman of the company’s board of directors, said in the announcement.
“This transaction allows us to significantly reduce our existing debt while securing our continued operations at the Durango facility under a long-term lease.”
Broader Initiatives to Improve Financial Performance
The sale-leaseback is part of Rocky Mountain Chocolate Factory’s broader efforts to improve its financial position, which include operational changes to its supply chain.
In recent years the company has altered freight pricing to improve inventory freshness, outsourced packing operations and discontinued less popular SKUs. The measures have concentrated on inventory management, operational efficiency and cost control.
The recent real estate transaction provides another layer of financial flexibility as the company works to address its debt obligations and manage operating expenses.
Sale-Leasebacks Take Hold Across Warehouse and Logistics Property and Real Estate
The Rocky Mountain Chocolate Factory deal is representative of a broader trend of companies seeking to unlock capital tied up in real estate they still need to operate.
According to SLB Capital Advisors, a media advisory from July noted that warehouse and logistics sale-leaseback transactions from the beginning of 2025 through the first quarter of 2026 totalled nearly $3.5 billion on nearly 300 properties.
The deals enable property occupiers to free up the capital value of their real estate assets while maintaining long-term access to strategically important facilities. Businesses can then use the proceeds to fund growth, automation projects or invest in their supply chains without relocating their operations.
“Sale leasebacks are becoming more common as warehouse and logistics operators look to monetize mission-critical distribution facilities and fund growth, automation and supply-chain investments while maintaining full operational control of their real estate,” said Scott Merkle, managing partner, SLB Capital Advisors.
The approach provides a means for companies with capital-intensive distribution networks to access liquidity while maintaining day-to-day operational control of critical sites.
Loss in Quarter Puts Strain on Finances
The deal comes as Rocky Mountain Chocolate Factory has continued to face financial difficulties. The company posted a net loss of $1.2 million for the quarter ended May 31.
Revenue was lower than in the same period a year earlier, largely due to lower royalty and marketing fees. Meanwhile, expenses grew year-over-year, driven in part by higher costs related to the rollout of a third-party delivery platform.
“Rocky Mountain Chocolate Factory plans to use the proceeds from the sale of its Colorado property to pay down outstanding debt and to continue to operate the same number of stores that we do today. The long-term lease also allows the company to continue to use its Durango facility without having to fund ownership of the property.
