What are the primary benefits realized by a tenant from sale-leaseback financing?
A sale-leaseback, structured properly with an operating lease, in addition to expense reduction and the conversion of the seller/tenant’s illiquid real estate assets to capital, can provide the seller/tenant company with the following business advantages:
1. 100% financing based on the appraised value of the property
2. Operating leases that do not appear on the tenant’s balance sheet as debt or as a long-term lease obligation
3. Full control of the tenant’s real estate under lease provisions
4. Tax deductible lease payments
5. Cash realized from the sale-leaseback transactions that can be used to enhance liquidity, expand operations, acquire other businesses, reduce debt, invest in 1031 exchanges, etc.
Tags: leaseback, off balance sheet, sale and leaseback, Sale-leaseback