The Sale-Leaseback remains pretty hot and corporations are continuing to look to take advantage of investor’s appetites for these types of transactions. Many corporations have become tired of managing real estate and are looking to focus on their core businesses resulting in more and more corporations turning to sale-leaseback (SLB) transaction.
Although not the right structure for everyone, there are advantages of a SLB for many corporations.
Capital Re-Deployment - Allows the corporation to re-deploy the capital garnered from a SLB transaction directly back into the company’s core business.
Set Your Own Terms – Due to the fact that the seller will be the lessee when the transaction is finalized, the seller has a great deal of power in negotiating the lease that will be in place upon the sale of the asset.
Tax Benefits – If is often the case that lessees have the ability to write off their total lease payment as an expense for tax purposes. This amount is likely greater then the interest expense and depreciation that were tax deductible as owners of the property.
Inexpensive Capital – Company can raise inexpensive capital without giving up ownership interest.
Operational Control – Corporation still maintains operational control of the asset over the terms set forth through the lease.