What is a Sale-Leaseback?
Despite not being in the real estate business, many companies find themselves having substantial equity tied-up in their real estate. The sale-leaseback is a way to exchange that illiquid equity for cash and enter into a long-term structured lease agreement. The business can free up the equity held in its property while continuing to use the asset without disruption.
As interest rates begin to rise a sale-leaseback can be a great alternative to traditional financing. There are many other benefits, here are a few to help you decide if a sale-leaseback is right for you:
1. Retain Control of Your Real Estate – Sorted Capital structures our leases so that the business continues operation without interruption.You are free to use the property as you always have.We can even make small or significant improvement to the property to meet your operational goals.
2. Set Your Lease Terms – Typical leases run 10-20 years with options for extensions.We want to asset to work for you, long term “hands-off” leases mean you can focus solely on your business.
3. Tax Benefits – As a lessee companies are able to write off their entire lease payment.By contract, a property owner can only deduct interest and depreciation expenses.Juice the bottom line!
4. Extract More Value – Unlike a mortgage that limits you to 60%-80% of the asset value, a sale-leaseback provides 100% of the fair market value of your real estate.Studies also show that assets close at a higher valuation in sale-leaseback structures.
5. Attractive Financing – Interest rates have begun to rise and the trend is predicted to continue.That makes capital expensive for companies.With the influx of cash from the asset sale, a company can borrow on better terms. Cash is king!
“We are here to assist the middle market realize their investment. Whether it’s a family run business looking to mitigate their risk, or a company seeking capital for growth the sale-leaseback is the straightforward way to realize your goal.” – Kevin Serfass
When is a Sale-Leaseback Right for You?
When your company is ready to grow and cash is needed for cap/ex, operations, distributions, etc.
When your company is being packaged for a sale
When you have a need to expand your facility but don’t want to extend the equity
When borrowing money is expensive
When you simply want to realize your equity today!