In a sale-leaseback (or sale and leaseback), a company sells its business realty to an investor for cash and concurrently enters into a long-lasting lease with the new residential or commercial property owner. In doing so, the company extracts 100% of the residential or commercial property's value and transforms an otherwise illiquid possession into working capital, while maintaining complete operational control of the center. This is a terrific capital tool for companies not in the service of owning property, as their genuine estate possessions represent a substantial cash value that could be redeployed into higher-earning segments of their company to support development.

What Are the Benefits?

Sale-leasebacks are an attractive capital raising tool for numerous business and provide an alternative to traditional bank financing. Whether a company is seeking to buy R&D, expand into a new market, fund an M&A deal, or just de-lever, sale-leasebacks serve as a tactical capital allowance tool to money both internal and external development in all market conditions.

Key Benefits Include:

- Immediate access to capital to reinvest in core business operations and growth efforts with greater equity returns.

• 100% market price realization of otherwise illiquid properties compared to financial obligation alternatives.
• Alternative capital source when standard funding is unavailable or restricted.
• Ability to maintain operational control of genuine estate with no disturbance to everyday operations.
• Potential to acquire a long-lasting partner with the capital to fund future expansions, building remodellings, energy retrofits and more.
  
  Who Receives a Sale-Leaseback?
  
  There are several elements that identify whether a sale-leaseback is the best fit for a company. To be eligible, business need to fulfill the following requirements:
  
  Own Their Realty
  
  The first and most obvious criterion for certification is that the company owns its property or have an option to acquire any existing rented space. Manufacturing facilities, corporate head offices, retail locations, and other types of property can be prospective prospects for a sale-leaseback. Unlocking the value of these areas and redeploying that capital into higher yielding parts of the company is an essential motorist for companies pursuing sale-leasebacks.
  
  Be Willing to Commit to Operating in the Space
  
  While the regard to the lease in a sale-leaseback can vary, the majority of financiers will desire a dedication from a future tenant to inhabit the space for a 10+ year term. Assets crucial to a business's operations are frequently great prospects for a sale-leaseback because a company wants to sign a long-lasting lease for those areas. This makes it a more appealing financial investment for sale-leaseback financiers as they have more security that the occupant will stay in the facility 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 rating is usually required so the sale-leaseback financier knows that business can make rental payments over the course of the lease. Sub-investment-grade companies are still qualified as long as they have a strong performance history of revenue and cashflow from which to judge their credit reliability