Unlock Capital with a Sale Leaseback
A growing number of owner-operators are looking to structure a sale leaseback as a way to free up the maximum amount of equity in their property. A sale leaseback is a financing tool that allows an owner-operator to sell their real estate interests to a buyer while simultaneously signing a long-term lease to occupy the property as a tenant and secure the location.
By separating the real estate from the core business, urgent care owner-operators can achieve significantly higher real estate values. Sale leasebacks provide flexibility in allowing owner-operators to sell their real estate while maintaining the freedom to partner their practice with a multi-unit operator down the line.
With a sale leaseback, the owner-operator can pull out 100% of the equity to invest into another project while still controlling the core business. Oftentimes this capital is used to open additional locations, expand current business, or acquire another business or real estate property.
Sale leasebacks are being used across all industries and are starting to become more prevalent, demonstrating their numerous benefits.
1. Evaluate the Business
- We carefully analyze your business to structure a long term girl;
- Rent/Sales - establish a sustainable rent based on unit level production;
- Determine a lease term suitable to exit strategy.
2. Market Analysis
- This is where SIG differentiates itself ourselves from the rest. We track the market diligently and gather data to meet the market's expectations. Using market CAP rates we can accurately project a sales price for the real estate. Key factors include the strength of the guarantor behind the lease, unit level performance, intrinsic real estate values, and the restaurant concepts marketability.
3. Structuring a Lease
- Once we have determined a rental rate and a price for the asset, we will use market standards to structure a lease outline. This will be memorialized in a formal lease of the prospective purchaser.
Why Would I do a Sale Leaseback?
Pay Down Debt
Increase Your Liquidity
- Have the funds available for store remodels
- Unlock equity in order to acquire new locations
- Control carrying costs to support other businesses
- Use funds for higher yielding businesses
Funding a Takeover?
- Allow use to help you in funding business/real estate opportunities by separating the real estate purchase
- Create the arbitrage between a bulk purchase and market pricing for the stabilized real estate asset
Right of First Refusal?
- Have you been presented to purchase back your real estate? Talk to us about how we can restructure your lease to help grow your business
- Take advantage of market trends to fund upcoming improvements on your existing stores
How Does SIG Help Me Achieve My Goals?
There are four major components to helping an operator achieve their goals.
- Operator (Tenant): Determine short and long term goals of the Operator and help craft a favorable yet marketable Lease.
- Developer: Match the Operator to a Developer that builds their concepts in the region they are focused on.
- Landlord: Market the property to the largest audience nationwide to identify multiple potential Landlords and shepherd the Operator through interview process.
- Financing: Arrange Debt or Equity financing for the Operator and/or Developer as projects require.
Right Of First Refusals Are a Great Way to Restructure Your Future at Your Current Location
- Structure a new long term lease and renegotiate terms
- Finance improvements/remodel existing store(s)
- Ability to choose your future landlord
Use Sands Investment Group as a resource to find out your options when your landlord provides you with a right of first refusal. More times than not, there is arbitrage in the market when you extend your lease. This will allow you to potentially profit from the sale, finance improvements, and restructure your lease to fit your current business. SIG is an expert at quantifying current and market rents, market demand, market CAP rates, and determining the potential for Operators to capitalize on the opportunity presented by a Right of First Refusal notice.
SIG has successfully helped numerous Operators arrange financing options in order to have the capital necessary to close on the purchase of their property from their Landlord. If you need assistance in arranging financing options contact SIG before you begin the purchase process so we can help you find the right capital partner.