Sale Leasebacks as an Alternative Form of Financing

Convert your real estate into dynamic capital

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

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