In a sale-leaseback (or sale and leaseback), a business sells its industrial realty to a financier for cash and at the same time participates in a long-lasting lease with the 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 property into working capital, while maintaining complete operational control of the center. This is a great capital tool for companies not in business of owning realty, as their property properties represent a considerable cash value that could be redeployed into higher-earning sections of their organization to support growth.

What Are the Benefits?

Sale-leasebacks are an attractive capital raising tool for numerous business and provide an option to standard bank financing. Whether a company is wanting to invest in R&D, broaden into a new market, fund an M&A transaction, or simply de-lever, sale-leasebacks act as a strategic capital allowance tool to money both internal and external growth in all market conditions.

Key Benefits Include:

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

• 100% market price awareness of otherwise illiquid assets compared to financial obligation alternatives.
• Alternative capital source when traditional funding is unavailable or limited.
• Ability to retain functional control of realty with no interruption to everyday operations.
• Potential to acquire a long-term partner with the capital to money future growths, building renovations, energy retrofits and more.
  
  Who Gets approved for a Sale-Leaseback?
  
  There are several factors that figure out whether a sale-leaseback is the ideal fit for a business. To be eligible, business should fulfill the following criteria:
  
  Own Their Real Estate
  
  The very first and most obvious criterion for credentials is that the company owns its real estate or have an option to buy any existing leased space. Manufacturing centers, corporate headquarters, retail places, and other types of property can be possible prospects for a sale-leaseback. Unlocking the worth of these locations and redeploying that capital into greater yielding parts of business is a key chauffeur for business pursuing sale-leasebacks.
  
  Want to Commit to Operating in the Space
  
  While the term of the lease in a sale-leaseback can differ, most financiers will desire a commitment from a future occupant to inhabit the area for a 10+ year term. Assets important to a company's operations are typically excellent prospects for a sale-leaseback due to the fact that a business wants to sign a long-term lease for those areas. This makes it a more attractive financial investment for sale-leaseback investors as they have more security that the renter will remain in the facility for the long term.
  
  Have a Strong Credit Profile
  
  Companies do not require to be investment-grade quality to pursue a sale-leaseback. However, some credit history is typically needed so the sale-leaseback financier understands 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 evaluate their creditworthiness