Real Estate Sale Lease BackStrategic and Operating Considerations for the Seller / UserEach user, industry and location presents unique case specific questions. However, some questions apply to any company considering a Sale Leaseback. Perhaps the most important universal question deals with the importance of and need for a company's flexibility. Since exiting (buying out of) a long term lease or even partial subleasing of a building can be difficult and expensive, a company must determine at the outset the maximum period it is willing to commit to a particular building and labor force. Normally, the longer the term of the leaseback, the more attractive the leaseback rent will be. - You can view a LseMod sample report or download a full report.
- The term of the leaseback is a macro-economic question since it inevitably includes understanding the underlying environment for a company, its competitive environment, and whether the way and place a company does the operations performed in a particular building can be confidently expected to remain unaffected over the anticipated lease term, or failing that, other units can be cost-effectively transferred into the building for the remainder of the leaseback term. Similarly, if a building is essential for reasons such as limited replacement options, accessibility to key markets or labor force among others, then a Sale Leaseback with a series of renewal options would be essential to assure long term preservation of an essential element of a company's supply chain. For reporting reasons, while there is some latitude in interpretation, the terms of the renewal option must be based on "market rate". - Operating questions to be considered prior to entering a Sale Leaseback are numerous and range from . . . - the quality of a building's infrastructure,
- its ability to accommodate new infrastructure,
- safety of the surrounding neighborhood, and
- reliability and adequacy of the local utility and transportation system.
If any of these issues are at risk to be inadequate, the question must be asked as to the impact of that factor on the desired lease term and/or the desire to enter into a Sale Leaseback. - You can view a sample report or download a full report.
Other Topics About Real Estate Sale LeasebackWhat Is a Sale Leaseback? Advantages of a Sale Leaseback to the Seller / User Disadvantages of a Sale Leaseback to the Seller / User Strategic and Operating Considerations for the Seller / User Advantages of a Sale Leaseback to the Investor Disadvantages of a Sale Leaseback for the Investor Key Elements and Assumptions in Analyzing a Sale Leaseback Creating a Sale Leaseback Financial Analysis Sale Leaseback Accounting Bottom Line Caution
© 2007 James R. Duport, All rights
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