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In a sale-leaseback (or sale and leaseback), a business sells its commercial genuine estate to an investor for money and at the same time participates in a long-lasting lease with the brand-new residential or commercial property owner. In doing so, the company extracts 100% of the residential or commercial property's value and converts an otherwise illiquid asset into working capital, while preserving full operational control of the facility. This is a fantastic capital tool for business not in business of owning real estate, as their property assets represent a substantial cash value that could be redeployed into higher-earning segments of their company to support growth.

What Are the Benefits?

Sale-leasebacks are an attractive capital raising tool for many companies and use an option to standard bank funding. Whether a company is looking to purchase R&D, broaden into a brand-new market, fund an M&A deal, or simply de-lever, sale-leasebacks act as a strategic capital allotment tool to fund both internal and external growth in all market conditions.

Key Benefits Include:

- Immediate access to capital to reinvest in core organization operations and growth initiatives with higher equity returns.

• 100% market worth realization of otherwise illiquid assets compared to financial obligation options.
• Alternative capital source when conventional financing is unavailable or restricted.
• Ability to maintain operational control of realty without any disturbance to daily operations.
• Potential to get a long-lasting partner with the capital to fund future expansions, building remodellings, energy retrofits and more.
  
  Who Receives a Sale-Leaseback?
  
  There are numerous factors that determine whether a sale-leaseback is the right fit for a business. To be qualified, business need to fulfill the following requirements:
  
  Own Their Realty
  
  The first and most obvious requirement for credentials is that the business owns its realty or have a choice to acquire any existing leased area. Manufacturing facilities, corporate headquarters, retail places, and other types of real estate can be potential prospects for a sale-leaseback. Unlocking the worth of these places and redeploying that capital into greater yielding parts of the organization is a key driver for companies pursuing sale-leasebacks.
  
  Be Willing to Commit to Operating in the Space
  
  While the term of the lease in a sale-leaseback can vary, many financiers will want a dedication from a future renter to inhabit the space for a 10+ year term. Assets vital to a business's operations are frequently good prospects for a sale-leaseback since a business is ready to sign a long-lasting lease for those places. This makes it a more attractive financial investment for sale-leaseback investors as they have more security that the tenant will remain in the facility for the long term.
  
  Have a Strong Credit Profile
  
  Companies do not need to be investment-grade quality to pursue a sale-leaseback. However, some credit history is normally required so the sale-leaseback financier understands that the 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 credit reliability