Research - JANUARY 21, 2021

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The value of sale-leasebacks during a market downturn

by Andrea Zander

The current economic environment, in which many businesses are in need of operating capital, is a strong one for sale-leasebacks. These transactions present opportunities for owner-occupiers and investors, according to Newmark. What are some important benefits and drawbacks for both sides in a sale-leaseback transaction?

A sale-leaseback occurs when an owner-occupier sells its facility and retains its operations by signing a lease with the building’s new owner. The sale provides the now-tenant with a swift infusion of capital to pay down existing debt or reinvest into its business, while the buyer/investor grows its real estate portfolio with a paying tenant in tow. Sales of this nature are more common during the peak years of a real estate cycle (when property values are high) and generally persist into the first year of a cyclical downturn (when pricing is still relatively high, but more businesses are struggling and are seeking operating capital). Sale-leasebacks are als

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