IRS Form 1099, 1099-NEC, and Form 1099-MISC: Advanced Issues and Updates

Structuring Sale-Leaseback Transactions

$149.00

SKU: 410917

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 operators 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: 1:00 PM ET End Time: 2:05 PM ET

Learning Objectives

* You will be able to define the sellertenantbuyerlandlord relationship and the respective needs, concerns and goals of the parties.

* You will be able to review how to evaluate and address economic return and risk allocation.

* You will be able to describe land and improvement values as affecting the transaction.

* You will be able to discuss financing a purchase and leaseback, income stream, and credit quality.

Rental Rate Determination
• Seller Seeks to Sell Asset for Capital and to Continue Use Rights
• Buyer Is Seeking Return and a Limited Risk of Tenant Default
• Lease of Land or Land and Improvements
• Initial Rent Typically Established Based on a Rate of Return on the Purchase Price and Tenant Credit Quality and Recent Challenges as to Choosing Rate of Return
• Escalations

Risk and Maintenance Allocation Issues
• Risk for Condition of Land and Improvements Upon Sale and During Term
• Buyer and Seller’s Differing Views, Especially as to Existing Conditions
• Buyer Wants Property Maintained to Preserve the Value
• Seller May Be Inclined to Reduce Maintenance as End of Term Near

Expiration of Lease Term
• Improvement’s Residual Value
• Value May Depend on ‘Aging’ and Uniqueness and Usability of Improvements.
• Removal Obligation
• Evaluation of Hold Period and Asset Value at Lease Expiration

Special Circumstances
• Buyer-Landlord as Seller; Arbitrage on Lease Rate Versus Sale Price
• Sale and Shorter Leaseback as Planned Exit Strategy for User
• Raising Capital and Financing Issues in Current Market

Current Market Conditions
• Interest Rate Trends
• Market Occupancy Risk
• Financing Challenges and Alternative for Debt

CLE (Please check the Detailed Credit Information page for states that have already been approved) ,CPE ,Additional credit may be available upon request. Contact Lorman at 866-352-9540 for further information.

Kenneth S. Kramer-Nossaman LLP

IRS Form 1099, 1099-NEC, and Form 1099-MISC: Advanced Issues and Updates

Structuring Sale-Leaseback Transactions

$149.00

SKU: 410691

Description

Explore the structure of saleleasebacks and the more creative versions of such transactions.
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 operators 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.
We will explore the overall structure of saleleasebacks and the considerations for each side to evaluate and address in a particular transaction, as well as look at some of the elements that may affect the more creative versions of such transactions and the potential impacts of current market uncertainty on these transactions.

Date: 2023-04-26 Start Time: 1:00 PM ET End Time: 2:05 PM ET

Learning Objectives

* You will be able to define the sellertenantbuyerlandlord relationship and the respective needs and goals of the parties.

* You will be able to review how to evaluate and address economic return and risk allocation.

* You will be able to describe land and improvement values as affecting the transaction.

* You will be able to discuss financing a purchase and leaseback, income stream, and credit quality.

Rental Rate Determination
• Seller Seeks to Sell Asset for Capital and to Continue Use Rights
• Buyer Is Seeking Return and a Limited Risk of Tenant Default
• Lease of Land or Land and Improvements
• Initial Rent Typically Established Based on a Rate of Return on the Purchase Price and Tenant Credit Quality
• Escalations Consistent With a Normal Lease Structure

Risk and Maintenance Allocation Issues
• Risk for Condition of Land and Improvements Upon Sale and During Term
• Buyer May View Seller as Fully Responsible for the Property
• Seller May Want the Buyer to Assume the Risk for Pre-Existing Conditions
• Buyer Wants Property Maintained to Preserve the Value
• Seller May Be Inclined to Reduce Maintenance as End of Term Near

Expiration of Lease Term
• Improvement’s Residual Value
• Value May Depend on ‘Aging’ and Uniqueness of Improvements. (e.g., a Restaurant With a Particular Theme or Characteristic Structure May Have Less Value for a New User)
• Removal Obligation
• Evaluation of Hold Period and Asset Value at Lease Expiration

Special Circumstances
• Buyer-Landlord as Seller; Arbitrage on Lease Rate Versus Sale Price
• Sale and Shorter Leaseback as Planned Exit Strategy for User
• Raising Capital and Financing Issues in Current Market

Current Market Conditions
• Interest Rate Trends
• Market Occupancy Risk
• Financing Challenges and Alternative for Debt

CLE (Please check the Detailed Credit Information page for states that have already been approved) ,CPE ,Additional credit may be available upon request. Contact Lorman at 866-352-9540 for further information.

Kenneth S. Kramer-Nossaman LLP