In a sale-leaseback (or sale and leaseback), a business sells its industrial real estate to a financier for cash and at the same time participates in a long-lasting lease with the brand-new residential or commercial property owner. In doing so, the business extracts 100% of the residential or commercial property's worth and transforms an otherwise illiquid asset into working capital, while maintaining full operational control of the facility. This is a terrific capital tool for companies not in the organization of owning real estate, as their property possessions represent a significant cash worth that could be redeployed into higher-earning segments of their organization to support development.

What Are the Benefits?

Sale-leasebacks are an appealing capital raising tool for many companies and provide an option to conventional bank financing. Whether a company is wanting to buy R&D, expand into a brand-new market, fund an M&A deal, or merely de-lever, sale-leasebacks serve as a strategic capital allotment tool to fund both internal and external growth in all market conditions.

Key Benefits Include:

- Immediate access to capital to reinvest in core service operations and development initiatives with higher equity returns.

• 100% market price awareness of otherwise illiquid assets compared to debt options.
• Alternative capital source when conventional funding is not available or minimal.
• Ability to maintain operational control of realty with no disturbance to day-to-day operations.
• Potential to acquire a long-lasting partner with the capital to fund future growths, developing renovations, energy retrofits and more.
  
  Who Qualifies for a Sale-Leaseback?
  
  There are numerous aspects that determine whether a sale-leaseback is the best suitable for a company. To be eligible, companies must fulfill the following criteria:
  
  Own Their Realty
  
  The very first and most apparent criterion for certification is that the company owns its realty or have an alternative to acquire any existing leased area. Manufacturing facilities, business head offices, retail places, and other kinds of genuine estate can be possible candidates for a sale-leaseback. Unlocking the value of these places and redeploying that capital into higher yielding parts of business is an essential driver for business pursuing sale-leasebacks.
  
  Want to Commit to Operating in the Space
  
  While the regard to the lease in a sale-leaseback can differ, the majority of financiers will desire a commitment from a future tenant to inhabit the space for a 10+ year term. Assets vital to a business's operations are typically good candidates for a sale-leaseback because a business wants to sign a long-lasting lease for those places. This makes it a more attractive investment for sale-leaseback investors as they have more security that the tenant will stay in the center for the long term.
  
  Have a Strong Credit Profile
  
  Companies do not need to be investment-grade quality to pursue a sale-leaseback. However, some credit report is normally required so the sale-leaseback investor understands that the organization can make rental payments throughout the lease. Sub-investment-grade businesses are still qualified as long as they have a strong performance history of income and cashflow from which to judge their credit reliability