Set up a sale leaseback pre-negotiated for the buyer of the business.
When looking at outright sale or sale leaseback, investors want credit, lease term (at least 10 years, but prefer 15), market rents with escalations.
Larger companies that execute sale leasebacks might do so to avoid the cost and expense of having internal facilities management staffs.
"Every year we've done more and more sale leasebacks
Controller level inquiring to the potential of effectuating sale leaseback transactions on corporately owned property.
The sale leaseback is one vehicle that can enable credit-worthy companies to effectuate these changes.
Structured properly and in accordance with FASB guidelines, the sale leaseback is a means of off-balance sheet financing, which can allow the corporation to improve its return on assets, obtain long term low cost financing, enhance the balance sheet, avoid hostile takeovers, create profit, and raise cash.
The key elements involved in working with FASB guidelines for off balance sheet treatment are to make sure that the sale conforms to the test of being a normal sale leaseback which is defined as active use of the property in the trade or business of the seller lessee.
Sale leaseback buyers are extremely credit oriented and they seek investment grade credit or as close to investment grade as possible when effectuating sale leaseback transactions.
As a large component of this growth, the report cited the re-emergence of sale leasebacks
as a major trend within the global real estate sector along with easing credit conditions, the related boost to investor activity, rising capital values in major markets and the REIT sector revival.
Ader, who has been responsible for the acquisition and management of over $10 billion of net leased real estate and is a leading authority on the subject of corporate sale leasebacks
. Corporations for which he has successfully closed transactions include Sears, Xerox Corp., Mellon Bank and United Technologies, Inc.