What Is A Sale Leaseback?
A sale leaseback transaction is actually quite simple. A property owner will sell their property and then lease it back from the buyer under a long-term lease. This gives the owner turned tenant the opportunity to turn real estate equity into cash proceeds. In most cases, the seller will retain control of the property through a triple net (NNN) or absolute triple net (absolute NNN) lease. This means that the seller maintains all responsibility and expenses for the property.
The best way to execute a sale leaseback transaction is with the support and expertise of a commercial real estate broker who is experienced with this particular type of agreement.
The Benefits Of A Sale Leaseback Transaction
Some of the benefits of a sale leaseback transaction are more apparent than others. Let’s dive into the specific advantages a sale leaseback transaction can have for your business.
Turn Equity Into Capital
Arguably, one of the biggest challenges of any business is finding a way to turn the equity of the organization into working capital. Extracting the value of your company and putting that money into the economy is made less challenging with a sale leaseback transaction. Rather than sell part of all of your company or navigate the traditional financing avenues to get the working capital needed, a sale leaseback allows you to sell an asset that has exponential equity while retaining all control of your operation.
Reinvest Into Your Business
The proceeds from a sale leaseback transaction allow you to reinvest in your organization to achieve new heights. Depending on the needs of your business, this reinvestment can look vastly different, but the increase in cash allows you to use it how you see fit - whether that’s expanding employee benefits, purchasing new equipment, or investing in business development.
Increase The Value Of Your Company
It may sound counterintuitive to sell an asset to increase value, but the research shows a positive correlation between market returns and companies that use the proceeds from a sale leaseback transaction to reinvest.
Executing A Sale Leaseback Transaction With Fountainhead Commercial
A sale leaseback transaction can have extensive benefits for businesses of all sizes. The nature of this transaction ensures you have more working capital to reinvest in your business and meet specific financial needs. In order to leverage these benefits, you’ll certainly want the expertise of a commercial real estate professional.
Owner and CCIM-designated broker, Lowrey Burnett, is well-versed in the process of a sale leaseback transaction. If your business needs more working capital and you want to avoid a business loan or selling your organization, consider a sale leaseback transaction with Fountainhead Commercial.