SALE LEASEBACK

(401) 525-6544

Real estate sale leaseback makes your equity work for your business.

Real estate sale leaseback financing is when a business sells its commercial property for current market value and then instantly leases it back. They sell it to gain built up equity which frees up capital which can be used to invest back into the business. There are many other benefits to this transaction as well.

The balance sheet of your business is improved greatly and you retain control of the property. Since you will be leasing the property you can defer a good portion of the tax liability. With a lease you can write off the full payment each month whereas with a regular loan only the interest payment can be written off. When you complete this transaction you are always guaranteed the full market value of your property, so you don't risk losing any money in equity.
 
The other benefit is that you can get a lease for commercial property for up to 25 years, which can lower your monthly payments considerably. This gives you more operating capital each month since your monthly payments will go back down some.

Real estate sale leaseback transactions are becoming more popular because they generate capital for immediate use within your business. It unlocks the value in your real estate. With real estate you can get more capital because of how fast it grows. Some businesses do sale and leaseback transactions for equipment as well.

Sale-leaseback transaction criteria:

  • Any property type including:
    • industrial, including distribution/warehouse and light manufacturing
    • office
    • retail of all types, including big boxes, bank branches, gas stations, movie theaters and restaurants
    • medical of all types, including medical office, skilled nursing and hospitals
    • special use properties, such as athletic clubs, hotels and tree farms/nurseries, on a case-by-case basis
    • ground leases
  • Single buildings or portfolios of properties
  • Existing facilities or build-to-suits
  • Total property value of $100,000 to $200+ million
  • Minimum leaseback of 15 years, plus options
  • Located in the U.S., Canada, Mexico or Europe; other locations including Southeast Asia, China and Australia on a case-by-case basis
  • Our clients can also provide financing in certain circumstances for: 
    • renewable power plants with 15-year minimum off-take agreements
    • movie financing
    • receivables factoring
    • equipment sale-leasebacks 

Sale-Leaseback Benefits

A sale-leaseback is a financing transaction that creates value while actually reducing risk. Such a transaction:

Creates shareholder value

  • Liquidates a low-returning investment where the proceeds could be used to repay debt, invest in the higher-returning core business, or make a dividend to the equity holders.
  • Usually accretive on an EBITDA-multiple basis, as real estate investors value cash flows higher than private equity buyers or the stock market.

Improves liquidity

  • Monetizes 100% of the market value of real estate, versus 55%-65% of value typically provided by lenders.
  • Improves balance sheet ratios such as Debt/EBITDA through operating lease accounting treatment.

Reduces risk

  • Matches a long-term asset with fixed-rate long-term financing that never needs to be repaid or refinanced.
  • Contains no financial covenants and is not subject to changes or cancellation over time due to fluctuations in the capital markets or the tenant's operating performance.

Winthrop Financial Solutions, LLC

1240 Pawtucket Ave, Rumford, RI 02916

 Howard L. Weldon

(Direct) 401-525-6544
 (Fax) 888-679-0773
   hweldon301@msn.com