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Why Consider a Sale/Leaseback?
Increase Your Liquidity
A sale/leaseback essentially provides 100% financing to the business owner. A seller/lessee (tenant) does not have to tie up cash in the form of a downpayment required by conventional banks. A seller can unlock the equity in the real estate and turn that equity into cash. Unlike refinancing, the seller/lessee accesses all of the equity.
Improve Your Balance Sheet
A sale/leaseback removes the capital asset from the balance sheet at book value and replaces it with the cash realized from the sale. Unlike refinancing, which only allows you to write off the loan's interest, all rent payments may be deducted by the tenant as business expenses.
Sale/Leaseback Facts
- The sale price is derived from the quality of the real estate and the credit of the seller.
- Lease terms are 10-20 years.
- The lease rate is determined by the negotiated capitalization rate.
- Portfolio sale/leasebacks sell for lower capitalization rates, yielding more to the seller.
- Current capital gains reductions to 15% are set to expire in 2011, but may be revised to expire sooner.
- Closings vary from three weeks to ninety days.
- Sale/leaseback activity has increased as lenders have become much more selective in issuing credit.
- Many corporations utilize the transaction for funding acquisitions and expansions.
The Value of my Services
Great care and knowledge are paramount in developing a sale/leaseback that considers the goals and unique circumstances of each business. My expertise focuses on identifying the optimal balance between maximizing asset value in consideration of lease operating expenses. The process to carry out a successful sale/leaseback requires expert assistance in marketing and negotiation. I work extensively with many types of purchasers including private equity funds, real estate investment trusts, pension funds, trade buyers, and tenants in common investment groups. The bidding process and my experience ensure the absolute maximum sale price is achieved.
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