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- July 1, 2010 Vol. 4 No. 7

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Selling Up and Staying Put: Companies with Owner-Occupied Property Assets Are More Convinced Now of the Advantages of Sale-and-Leaseback Finance Arrangements

by H Cabot Lodge III

Asset-based borrowing has long been a prevalent form of financing for corporations with significant corporate real estate holdings as well as for private equity firms and management groups looking to finance the acquisition of these kinds of companies. This type of borrowing continues to be a viable source of funding for companies that have a strong management and a solid business strategy.

The long-term sale-and-leaseback is a form of asset-based financing that allows companies to access the market value embedded in their corporate real estate assets and convert it to a liquid source of capital that can be used to retire existing debt, fund operating costs, support expansion strategies or some combination of all three. The basic premise of the sale-and-leaseback is that a corporation sells its real estate to an investor who then leases the property back to the company on a long-term basis — thereby allowing the company to retain operating

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