The team at Ardent brings 50+ years of cumulative M&A and sale leaseback experience, and can advise on how to effectively use the sale-leaseback avenue in a company’s overall capital strategy.
- Sale Leasebacks, by definition, are transactions where a business owner “sells” their real estate, and “leases it back” from the buyer for an extended period, ranging from 10 – 50 years, allowing the business owner to maintain operational control of the property while simultaneously realizing value from the asset.
There are numerous advantages to sale leasebacks that may benefit your business:
- Improved Cost of Capital and Availability of Capital
- More efficient and faster market growth, allowing your business equity to go further and open more locations
- Allows businesses to purchase a peer or competitor by monetizing real estate
- Commercial mortgages may provide 65-75% loan to value (LTV), whereas a sale leaseback monetizes 100% of value
- Owners can maintain the “look, feel, and control” of ownership, without tying up capital
- Allows the business owner to realize a liquidity event without selling the business
- Sale leasebacks can be valued at an EBITDA equivalent multiple of 12x – 15x on rents paid
- Often allows for “covenant light” transaction terms for streamlined operations and less lender control / obstacles
- Provides opportunity to consolidate and pay down business term debt and/or mortgage debt
- Predictable, long-term capital with 10 – 25-year base terms, plus extension options
- Allows for possible dividend recapitalizations
- Opens up Leveraged Buyout and Management Exit financing possibilities
- Improves liquidity and reduces “maturity wall/rate risk” of short-term debt