Restaurant Sale Leaseback
Ever wonder how your restaurant business could benefit from a sale leaseback? If you operate restaurants 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 restaurant operators unlock their real estate equity.
Advantages of a Sale Leaseback for Restaurant Operaters
If you operate a restaurant that also owns 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 real estate to help grow your restaurant faster.
- You decrease your overall operational risk when you no longer own the restaurant’s 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 restaurant 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 restaurant.
Restaurant Sale Leaseback Examples
While there are many restaurant 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 restaurant real estate.
Example 1: Restaurant Expansion
Christina and Brian own two locations of a popular fast food franchise in Arizona. They were offered an opportunity to purchase more franchised locations nearby. They researched what it would take to finance the purchase of the new locations and realized that they would be able to purchase both locations without financing if they raised capital by selling the real estate from their two current fast food locations in a sale leaseback transaction. This would free up the capital they had built up over the years. This allowed them to purchase the new locations without taking on much new debt and actually improved their balance sheet in the process. They removed mortgage debt and increased their assets all at once. They came to an agreement with an investor and sold their restaurant real estate and immediately signed a 15 year lease to remain and continue to operate in the first two locations.
Example 2: Restaurant Sale
Mark owns and operates 10 successful locations of a fast casual restaurant brand in Georgia and South Carolina and he was looking to sell his restaurants as a portfolio to a new operator. Mark wanted to unlock the equity he had built up in the ten restaurant locations before he sold the business. He had active mortgages on all ten properties. He decided that a sale leaseback transaction was the cheapest and quickest way to unlock his real estate equity and allow the new operator to continue in the existing locations. He found an investor who was willing to purchase the real estate for fair market value and immediately after the business sale happened, Mark sold the real estate and the new restaurant operator signed a longterm lease 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 restaurant real estate equity.
While there are plenty of commercial real estate brokers who would offer to help when you are ready to think through a sale leaseback for your restaurant real estate, there are actually few companies that specialize in the sale leaseback process. These select companies, like SaleLeaseback.co work directly with restaurant operators to buy real estate directly from you, the owner, 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.