Sale Leaseback Considerations

More companies are evaluating the pros and cons of sale leaseback. In many cases they are finding greater benefit to the sale leaseback including :

Converting a non-liquid real estate asset to cash while retaining control and utilization of the property.

Removes a capital asset book value from the balance sheet and replaces it with cash received form the sale. The lease obligation goes on the balance sheet as a footnote if structured as an operation lease.

Avoids the cost associated with placing conventional debt financing on the real estate.

Allows the user to effectively depreciate the land as the lease payments cover the use of the land and building. The lease payments are tax deductible.

Offers an ownership exit strategy for a user who might not otherwise be able to sell the real estate readily.

Example of  larger recent sale/leaseback deal includes Spirit Financial Corp $815.3M transaction.