Sale Leaseback

What is a Sale Leaseback?

A sale leaseback occurs when a company sells the land and building used in its current business operations. Simultaneously, the company leases it back under a long-term lease with the buyer. Our target clients are small to middle market companies with revenue between $10M and $250M.  Sale leasebacks are a great tool as a financial alternative for middle market companies, especially at a time when it’s difficult to attract bank financing to run and grow their businesses.

Why do a Sale Leaseback?

Companies do sale leasebacks for a variety of reasons, but generally do so to use net proceeds of the transaction in order to reinvest in a corporate purpose that produces higher yields. Corporately occupied real estate typically commands a return of 6% to 10%. A company can receive a higher return from allocating its capital to other uses:

  • Acquiring another company or building
  • Expanding the company
  • Reducing debt
  • Stock repurchases

A sale leaseback is an excellent mechanism to raise capital to:

  • Replenish working capital
  • Buy-out a partner
  • Provide capital allowing a senior stakeholder to retire and structure an orderly transition to the next generation
  • Upgrade company infrastructures

Additionally, most companies aren’t in the business of owning real estate but need the access to land and office/retail/industrial buildings used in daily business operations.  Selling back the assets and maintaining operations on the site is becoming a popular method for companies to raise funds to grow their business.

Sale Leaseback Benefits

  • Monetize 100% of the fair market value of your real estate versus today’s 50% to 70% value limitations in mortgage financing.
  • No change in operational control of the real estate
  • Company controls the terms of the lease including rent, lease and renewal terms
  • Excellent source of alternate financing in today’s difficult credit environment
  • Alternative to debt financing for build-to-suit projects
  • Typically short transaction closing process
  • Enhances the company’s liquidity
  • Company raises inexpensive capital without giving up ownership interest

Why Choose Calkain?

Calkain Companies is a leader in advising its corporate clients in single tenant net lease and portfolio sale leaseback transactions.

  • Experienced sale leaseback team has closed over $1.2 Billion of both single asset as well as portfolio transactions
  • Jointly establish a strategic plan with company to maximize the value of the real estate consistent with corporate objectives, addressing critical provisions to be included in the lease
  • Extensive contact list of principals and advisors used to create a wide distribution of the offering to targeted potential investors
  • Strategically located offices with expert in-house teams provide strong local real estate market knowledge
  • Effectively manage the process, communicating when necessary with the client, but minimizing direct client involvement
  • Strong track record in closing transactions for both investment and noninvestment grade sellers which meet or exceed corporate objectives

Calkain has the technical knowledge and experience to structure a complex transaction and follow it through to a successful closing. We have been consistently able to obtain numerous offers from qualified investors resulting in successful executions on behalf of our clients.

Interested in our Sale leaseback services?  Give us a call at 703.787.4714 or contact us today.

Traci BidingerSale Leaseback