Industrial Sale Leaseback
Ever wonder how your business could benefit from a sale leaseback? If your business operates in an industrial property and you also own the real estate, then a sale leaseback could be a great option when you’re ready to raise capital for business growth, to pay down debt, or to sell your real estate due to a business sale.
We help business operators unlock their industrial real estate equity.
Advantages of an Industrial Sale Leaseback
If you operate a business that also owns industrial real estate assets, there are many great advantages to pursuing a sale leaseback transaction. There are some disadvantages too, so it’s important to be clear on what your business goals are, and these goals should help determine whether a sale leaseback is right for you.
Benefits of a sale leaseback for the lessee/seller
- You could quickly unlock any equity that’s “stored” in your industrial real estate to help grow your business faster.
- You decrease your overall operational risk when you no longer own the industrial real estate and that risk now sits with the new owner.
- You can improve the health of your business balance sheet by trading your mortgage (liability) for an asset (cash).
Benefits of a sale leaseback for the lessor/buyer
- They get a lease that is guaranteed by your operating business
- They get a consistent and predictable stream of income for a long period of time
- They get a fair return on their invested capital
As you can see from these benefits, a sale leaseback can be a truly win-win scenario for both you, the business owner, and the buyer/investor alike. While there are many details that both parties need to agree on, such as the lease length, monthly payments, etc, the sale leaseback transaction provides many advantages and is a useful tool you should consider if you are looking to raise capital quickly for your business.
Industrial Sale Leaseback Examples
While there are many industrial sale leaseback examples, here are a couple that should give you a clearer picture of why might choose to do a sale leaseback for your industrial real estate.
Example 1: Manufacturing Expansion
David and his family own a successful metal parts manufacturing business in Indiana. While they have been in business for over two decades, the business has been expanding quickly and they were looking to expand their manufacturing operation. They located a new industrial building near their main property that was for sale. They researched what it would take to finance the purchase of the new location and realized that they would be able to purchase the new location without financing if they raised capital by selling the real estate from their two current industrial properties in a sale leaseback transaction. This would free up the capital they had built up over the years in their real estate. This allowed them to purchase the new industrial property without taking on any new debt and actually improved their balance sheet in the process. They removed mortgage debt from their current properties and increased their assets with the purchase of the new building. They came to an agreement with an investor and sold their industrial real estate and immediately signed a 15 year lease to remain and continue to operate in the initial properties.
Example 2: Manufacturing Business Sale
Mark owns and operates a successful manufacturing company with industrial assets in Ohio. The company was acquired by a competitor business and Mark was able to retire. The new owner wanted to unlock the equity that had built up in the various industrial real estate locations that were owned by the company to facilitate their manufacturing operation. The acquiring company decided that a sale leaseback transaction was the cheapest and quickest way to unlock this real estate equity and allow the business to reduce its debt load and prepare for the next phase of growth. After the acquisition was complete, the new owners found an investor who was willing to purchase the real estate for fair market value and immediately signed a longterm lease with the buyer to lock in a great lease rate that will help control expenses into the future.
Hopefully, these two examples give you a better picture why you might consider a sale leaseback to unlock your industrial real estate equity.
While there are plenty of commercial real estate brokers who would offer to help when you are ready to think through an industrial building sale leaseback for your real estate, there are actually few companies that specialize in the sale leaseback process. These select companies, like SaleLeaseback.co work directly with business operators and private equity companies to buy real estate directly with zero fees and a quick process. We help you think through your options and potential pitfalls associated with a sale leaseback transaction for your particular situation. So, if you are considering a sale leaseback to raise funds for your business expansion or debt pay-down, start by letting us give you a free offer for your real estate.