What is a sale-leaseback?
A sale-leaseback is a financing transaction where a company sells its owned real estate and simultaneously leases the property back on a long-term basis. The company retains complete operational control over the property, as if it were the owner.
How does a sale-leaseback differ from debt?
A sale-leaseback provides more proceeds than debt financing (100% of fair market value vs. 60%-75% of value, respectively). In addition, a sale-leaseback represents a safer source of capital, because leases contain no financial covenants and can be rejected in bankruptcy. Sale-leasebacks are permanent capital that are never repaid, so there is no refinancing risk. To compensate for these benefits, sale-leasebacks are more expensive than debt.
Why should companies do sale-leasebacks?
Sale-leasebacks increase shareholder value and improve company liquidity. A sale-leaseback releases capital tied-up in a low-returning asset, and allows a company to invest in its higher-returning core business or repay existing debt. Please see our Benefits page for more details.
Don’t shareholders prefer a company to own “hard” assets?
Most shareholders invest in a company because they want exposure to its core business. Shareholders that want exposure to real estate can invest more efficiently in real estate investment trusts (REITs), which have tax advantages and are run by professional real estate managers. Many of the world’s top companies lease all of their facilities, and more are moving in this direction.
What types of properties can be used in a sale-leaseback?
Almost any property type is eligible for sale-leaseback financing, including warehouse/distribution, manufacturing, office and retail. Sale-leasebacks can finance existing properties or properties planned for development, and can be used for single buildings or portfolios of properties. Please see our Investment Criteria page for more details.
How long does a sale-leaseback take to complete?
A sale-leaseback can generally be completed within two months of an executed letter of intent. This timing can be accelerated if you already possess the required third party reports, including a recent appraisal, environmental Phase I report, and survey, making completion of a sale-leaseback possible within a few weeks.
Why should I contact Mandelbaum Sale-Leaseback Advisors?
We have the expertise to analyze both your real estate and financial situation, which allows us to help structure a sale-leaseback deal that works best for you. We also have extensive knowledge of the sale-leaseback industry, and can identify the most aggressive buyers for your particular situation. We have arranged nearly $250 million of sale-leaseback transactions. Please see our Transactions page for some of the solutions we have provided.
Who are your clients?
We work with a wide array of institutional sale-leaseback investors, including publicly-traded REITs, private REITs, real estate private equity funds, financial institutions and high net worth individuals. Because our clients have diverse investment criteria, we can identify the optimal solution for a wide variety of sale-leaseback opportunities.