A sale-leaseback is not necessarily the best solution for every company’s capital needs. But like any corporate finance option, it should always be carefully evaluated as a finance strategy.
The following are examples of companies that did their homework and are glad they did!
Tex-Mex Industrial Portfolio
A privately owned company owned seven buildings in Reynosa, Mexico and one, large distribution facility in McAllen, Texas. The company had an offer on the table of $23 million to sell both the operating company and the real estate portfolio. The time from when they signed the listing contract with us to closing was 45 days. We found a buyer that paid $34.5 million for only the real estate. Not only did our client receive nearly $10 million more for the real estate, but they continued to own and receive cash flow from the operating company, which they can sell separately at a future date.
A large family-owned business had discontinued an operating unit of the company, which caused operating losses from the non-recurring expenses related to the reorganization. On behalf of the company that has been in the same family for six generations, we structured a competitive process for the sale and leaseback of their 232,000 SF office and manufacturing complex. The property had been appraised for $3.3 million. We received 22 offers that were over $6 million. The sale provided the working capital that the company needed to get it past the disruptive and expensive process of the divestiture. Several years later, the company acquired another company to continue the impressive growth and profitability of its core business.
Private Equity Portfolio Company
On behalf of a private equity group, we structured a sale and leaseback for one of their portfolio companies’ real estate. The result was that the property sold for more than 30% over its appraised value. The transaction not only returned capital to its limited partners, but also to its general partners – which reduced their risk and greatly improved the return on their investment.