A sale/leaseback transaction releases capital stranded in low-yielding, real estate assets and redeploys it into the operations of the business where it can earn a substantially higher return. The benefits of a sale/leaseback include:
Maximization of Proceeds:
Sale/leaseback transactions monetize 100 percent of the real estate value, compared with a traditional mortgage financing, which typically yields 50-80 percent.
Standard Lease Document:
A master lease can be utilized multiple times for different properties, reducing transactional friction and acquisition costs.
No Loss of Control:
During the lease term, the lessee retains control over the operations of the property, including the right to sublet and a generous allowance for alterations and additions. The lessee also retains ultimate responsibilty for all operating expenses related to the property.
Asset/Liability Matching:
The long-term fixed lease payments match the long depreciable life of the assets being financed. The initial term of the lease is typically 10-20 years and the lessee is often afforded multiple renewals, allowing the company to control the property for up to 50 years.
Tax Benefits:
One-hundred percent of the lease payment is tax deductible, vs a traditional mortgage where only the interest is tax deductible. In addition, the sale/leaseback allows for the monetization and “expensing” of the underlying land, which is normally not depreciable.
Quiet, Patient Capital:
With limited or no covenants, sale-leaseback financing is quiet, patient capital that dovetails well with other senior (bank, finance company) and subordinated or mezzanine funding.
Other Real Estate:
- CRAG will also… Invest in existing net lease properties;
- Evaluate sites subject to environmental contamination;
- Provide construction financing for build- to-suit situations;
- Consider portfolio opportunities.
| RR Donnelley (fka Pro Line Printing, Inc.) Three manufacturing facilities totaling approximately 350,000 sq. ft located in Arlington, TX; Avon, CT; and Pineville, NC |
| RR Donnelley (fka Pro Line Printing, Inc.) Three manufacturing facilities totaling approximately 350,000 sq. ft located in Arlington, TX; Avon, CT; and Pineville, NC |
| Roberts-Gordon LLC Two manufacturing facilities totaling approximately 260,000 sq. ft located in Buffalo, NY and Orlando, FL |
| Trantech Radiator Products, Inc. 126,000 sq. ft. manufacturing facility located in Edgefield, SC, which is approximately 30 miles northeast of Augusta, GA |
| SourceLink, LLC One 140,000 sq. ft. building comprised of 125,000 sq. ft. manufacturing and warehouse space and 15,000 sq. ft. of office space, located in Miamisburg, OH. |