In a sale-leaseback (or sale and leaseback), a company offers its commercial realty to a financier for cash and simultaneously enters into a long-lasting lease with the new residential or commercial property owner. In doing so, the business extracts 100% of the residential or commercial property's worth and converts an otherwise illiquid possession into working capital, while keeping full operational control of the facility. This is a fantastic capital tool for business not in the business of owning real estate, as their realty properties represent a substantial money worth that could be redeployed into higher-earning segments of their service to support growth.

What Are the Benefits?

Sale-leasebacks are an appealing capital raising tool for many business and offer an alternative to traditional bank funding. Whether a company is aiming to purchase R&D, broaden into a brand-new market, fund an M&A deal, or simply de-lever, as a tactical capital allotment tool to fund both internal and external development in all market conditions.

Key Benefits Include:

- Immediate access to capital to reinvest in core business operations and development efforts with higher equity returns.

• 100% market price realization of otherwise illiquid assets compared to financial obligation alternatives.
• Alternative capital source when conventional financing is not available or minimal.
• Ability to retain operational control of real estate without any disruption to everyday operations.
• Potential to gain a long-lasting partner with the capital to fund future growths, building renovations, energy retrofits and more.
  
  Who Qualifies for a Sale-Leaseback?
  
  There are numerous factors that determine whether a sale-leaseback is the right suitable for a company. To be qualified, business must satisfy the following criteria:
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  Own Their Property
  
  The first and most obvious requirement for credentials is that the business owns its property or have a choice to purchase any existing rented area. Manufacturing facilities, home offices, retail areas, and other types of property can be potential candidates for a sale-leaseback. Unlocking the value of these locations and redeploying that capital into greater yielding parts of the company is a crucial driver for business pursuing sale-leasebacks.
  
  Be Willing to Commit to Operating in the Space
  
  While the term of the lease in a sale-leaseback can differ, a lot of investors will want a commitment from a future renter to occupy the area for a 10+ year term. Assets critical to a company's operations are typically good prospects for a sale-leaseback due to the fact that a company is ready to sign a long-lasting lease for those places. This makes it a more attractive investment for sale-leaseback investors as they have more security that the occupant will stay in the facility for the long term.
  
  Have a Strong Credit Profile
  
  Companies do not require to be investment-grade quality to pursue a sale-leaseback. However, some credit rating is usually needed so the sale-leaseback financier understands that business can make rental payments throughout the lease. Sub-investment-grade companies are still qualified as long as they have a strong performance history of earnings and cashflow from which to evaluate their creditworthiness