A Sale Leaseback occurs when a real estate owner sells the property it occupies to a buyer and simultaneously leases the property back under a lease. A sale leaseback is a financing mechanism for raising capital for a company’s growth. Motivating Factors for a Sale Leaseback:
Raise Capital to reinvest back into their core business. • Improve Financial Health and other financial ratios by paying down debt and improving liquidity, among other things. • Prepare for a Sale or Company Restructure to maximize seller proceeds or to minimize equity basis. • Reduce Property Ownership Risk by maintaining control over the property but limiting risk associated with market downturns or disaster.
Before using a Sale Leaseback as a financing tool, careful consideration must take place: • How much is my Real Estate worth? • How do I establish fair lease terms? • What are my Tax implications if I sell my property? • Will the new lease be considered a Capita…