Is your property portfolio a source of capital for your company?
The number of ‘sale and leaseback’ transactions has increased over the last decade in the UK and Europe and the reason behind this is driven primarily by factors within industry. In circumstances where equity and debt markets become more challenging, it’s common for businesses to turn to alternative sources of capital, including the value tied up in their real estate assets. In the current economic climate, commentators are expecting that trend to continue and anticipate more sale and leaseback transactions in 2023.
‘Due to a combination of both tighter lending policies and rising interest rates… We are expecting that trend to coninue and to see more sale and leaseback transactions in the first half of 2023’
Evan Lazar, Global co-chairman of Dentons, PropertyEU
Sale and Leasebacks can increase a company’s liquidity and raise funds, without impacting the day-to-day operations or external perception of the business. The freed-up capital may be invested, maintained as capital, or immediately reinvested in corporate operations.
What is a Sale and Leaseback property transaction?
An investor purchases a property from the owner-occupier, after which the investor immediately leases the property back to the vendor. Simply put, the owner transfers property ownership to the investor and immediately takes the position of the tenant.
What are the benefits of a Sale and Leaseback?
Some of the benefits to a business considering a Sale and Leaseback include:
– The ability to release capital to increase liquidity.
– Capitalise on attractive property market sale conditions.
– Free up capital to fund other lucrative business investments such as machinery or new technology.
– Fund modernisation or pension deficits.
– Free the business from the commercial burden, financial risk and responsibility of property ownership.
– The lease agreement can be negotiated to suit the organisational and operational needs of the company.
– The transaction enables a business to receive 100% of the property’s value.
How can we help as Sale and Leaseback consultants?
Both the buyer and the seller may benefit from a sale and leaseback transaction, but it’s important that their adviser is experienced and fully aware of the market situation in order to allow a business to determine the most beneficial outcome for the company’s specific needs.
Our RICS Registered team has years of experience and is able to rely on extensive sector-wide market knowledge to achieve the best outcome for both our investor and occupier clients. We advise clients based on their specific requirements and guide business’ through what can be a complicated process. This guidance ultimately enables a company to increase its flexibility, agility, and ability to produce liquidity whilst continuing to operate.
We believe it is important to offer continuous support during each stage of the process, from initial investor introduction and negotiation of lease terms to collaborating with financing experts and solicitors.
If you would like further information on sale and leasebacks, do not hesitate to get in touch with our investment team.
NR Insights 