All of our clients experience unrivaled execution and an attention to detail on all transactions, no matter the size. We attack every deal with a unique strategy which will get you the highest value out of your investment.

Transaction Mechanics

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Seller
Benefits

  • Capitalize on favorable market conditions affecting current value
  • Liquidate real estate capital at 100% of its fair market value
  • Avoid restrictive debt covenants with off balance sheet financing
  • Real estate multiples exceed business earnings multiples
  • Negotiable lease terms with 100% rent write-off and tax savings

Buyer
Benefits

  • Risk adjusted returns based on credit and collateralized asset value
  • Generate a rate of return greater than a financing cost of capital
  • Predictable and relatively secure cash flows
  • Low operating burden as the leases are long-term and triple-net (NNN)
  • Deploy large sums of capital into portfolio transactions

Seller
(Tenant)

Seller Becomes Tenant

Long Term Lease

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Rent Payments

Buyer
(Landlord)

Buyer Becomes Landlord

Property Ownership

Sale Proceeds

One Of Our Specialist Are Standing By To Speak With You

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All of our clients experience unrivaled execution and an attention to detail on all transactions, no matter the size. We attack every deal with a unique strategy which will get you the highest value out of your investment.

OCCUPIERS LOOKING TO SELL YOUR PROPERTY AND LEASE IT BACK

Evaluate Your Options

Considerations

Our team evaluates and executes on a wide range of sale leaseback (SLB) and M & A real estate engagements, across all major real estate types, in diverse industry sectors, with an vast array of investor types.

FINANCIAL IMPACT

SLB’s are typically credit-positive and earnings accretive given their attractive cost of capital and de-levering possibilities on the balance sheet.

USE OF PROCEEDS

Use of proceeds can be used for M & A funding, growth and working capital, de-levering the business, stock buybacks, and shareholder liquidity events.

VALUATION ARBITRAGE

Executing a SLB at an implied rent multiple that is above the company’s EBITDA multiple will drive immediate value creation or arbitrage.

STRATEGIC IMPORTANCE

Long term, strategically important assets make for optimal SLB opportunities. Short term and partial SLB’s serve other business restructuring needs.

COST OF CAPITAL

Cap rates on SLB’s are typically favorable when compared to the weighted average cost of capital (WACC) and therefore are an attractive financing option for the business.

OBSOLESCENCE RISK

Monetizing an asset captures today’s attractive valuation while transferring any long term real estate obsolescence to the new property owner.

DRIVERS

We work with a wide range of owner-occupiers with varying strategic and/or financial drivers to the consideration of monetizing all or part of their real estate holdings.
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STRATEGIC

Redeployment of Capital. Reinvest the capital allocated to real estate back in the business where the returns are higher.

Core Competency Focus. Shift financial resources dedicated to owning real estate into growing higher return operations.

Managing Stakeholders. SLB’s create immediate liquidity, which can be used for distributions, buyouts and consolidations.

Preparing for a Sale. Most of the time the total enterprise value is higher when the real estate is separated from operation.

Eliminate Residual Risk. Over time property obsolescence is inevitable and values are near all time highs, so harvest the capital now.

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FINANCIAL

Value Arbitrage. SLB’s cap rates commonly imply multiples of 12x-16x, which are typically higher than a company’s EBITDA multiple.

Cost of Capital. If the cap rate on a SLB is lower that the WACC, then a SLB is the least expensive cost of capital for that asset class.

Capital Management. SLB’s can improve debt coverage ratio, de-lever the balance sheet, strengthen credit metrics and the capital stack.

Tax Advantages. Operating leases can be 100% expensed, ware owned assets are limited to interest only and long term depreciation.

Acquisition Financing. SLB’s can be used as a financing vehicle that effectively “buys down” an acquisition multiple, if done concurrently.

Process

We approach each engagement from a corporate finance and M & A perspective, providing our clients with a custom execution strategy that maximizes property value and control. This process can be a private off-market sale or an on-market bid process.
01

SALE LEASEBACK REVIEW

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  • Key Features of SLB
  • Strategic Importance
  • Financial Impacts
02

BUSINESS & MARKET REVIEW

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  • Credit Analysis 
  • WACC Review
  • Market Review
03

PROPERTY VALUATION

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  • Cap Rate Comparables 
  • Real Estate Appraisal
  • Value Arbitrage
04
STRUCTURE TRANSACTION
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  • Lease Structure (N/NN/NNN/Bond) 
  • Lease Terms (term, increases)
  • Value Engineering Price
05

DEAL UNDERWRITING

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  • Accounting Compliance
  • Modeling & Analytics
  • Financial Validation
06

EXECUTION STRATEGY

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  • Real Estate Extraction 
  • Property Packaging
  • Investor Engagement

UNDERWRITING

FINANCING COMPARISONSENIORSLBMEZZ
Asset Value10,000,00010,000,00010,000,000
Loan to Value70%100%90%
Capital Raised$7,000,000$10,000,000$9,000,000
Cost of Capital6.00%8.00%18.00%
Amortization/Lease Period (yrs)202020
Maturity Period (yrs)10203 - 5
Loan or Rent Constant8.72%8.00%18.68%
Annual Debt Service/Rent Payment$610,292$800,000$1,681,380
Annual Tax Deduction (ave./rnd down)$251,000$800,000$1,216,000
Debt Coverage RatioYesNoYes
Liquidity Ratio CovenantLikelyNoYes
EBITDA Ratio CovenantLikelyNoYes
Borrowing Base Limit CovenantYesNoneYes
Payment in Kind (PIK Rate)NoNoNegotiable
Financial Reporting CovenantYesNoneYes
Equity WarrantsNoneNoneNegotiable
VALUE ARBITRAGE
EBITDANo SLBOpCoPropCoSLB
100 Real Estate Included Real Estate Extracted and Valued Separately
90
80
70
60
50
40
30
20
10
0
EBITDANo SLBOpCoPropCoSLB
EBITDA$10,000,000$9,000,000$1,000,000$10,000,000
Multiple8x8x12.5x (8 cap)8.6x
EV$80,000,000$72,000,000$14,300,000$86,300,000
WEIGHTED AVERAGE COST OF CAPITAL (WACC)
Capital StackRate% of Total
Senior6.00%40.00%
Mezzanine18.00%20.00%
Revolver9.00%10.00%
Equity15.00%30.00%
WACC11.40%100.00%