The sale-leaseback of corporate properties
can offer organizations many benefits:
transactions allow your company to free up capital to pay down debt, fund
mergers and acquisitions or reallocate capital for more productive uses.
Your company maintains
full operational control of the property.
Tax benefits -
offsetting lease costs as an operating expense.
Your real estate becomes liquid by monetizing low/non-return assets.
There are possible
repurchase options available through various transaction structures which will meet FASB 13/98.
Transactions can be brought to market within 21 days and completed in 60-120 days.
Almost all transactions
are structured as off-balance sheet operating leases. Therefore, the corporation's balance
sheet no longer reflects a large, illiquid asset carried at a below-market
When compared to mortgage debt the leaseback transaction produces greater leverage, typically 30-35% more.
The typical weighted average cost of capital (The blended cost of the debt component and equity hurdle being considered or typical operating margin of the company) for most organizations is approximately 14-18%. A leaseback is typically completed at a reversion rate of .07 to .105 depending on credit and term.