Description
Explore the structure of saleleasebacks and the more creative versions of such transactions.Operators not wanting to retain capital in real property may look to sell the asset and lease it back from the purchaser at the closing in a socalled saleleaseback transaction. Retail users, such as banks and restaurants, frequently utilize such transactions. We have also seen saleleasebacks work for larger users planning a move from the property being sold while retaining the flexibility to have time to do so and generating capital from the first property to move forward with the next property. These transactions include a set of issues that can be viewed as an overlay on the normal approach to each purchase, sale, and lease. Factors include (a) the economics of the transaction as, essentially, an investment transaction, (b) the allocation of risk between the operatorseller which developed the facility, and the purchaserlandlord which will own the property, and (c) the approach to the property upon expiration of the leaseback. Financial creativity has expanded the use of the saleleaseback structure. There are firms that acquire land to lease to an operator and sell the lease following the completion and opening of the operator’s facility. In other cases, a ground lessee, after developing its facility, may sell the ground leasehold interest with or without the improvements made and lease back the improved property from the purchaser, creating a socalled sandwich position for the investor with its own set of issues and opportunities.
Date: 2024-01-30 Start Time: End Time:
Learning Objectives