Sale-Leaseback Strategy

IMPROVED BALANCE SHEET - By selling appreciated real estate, a long-term liquid asset can be replaced with a liquid asset (cash). In addition, a mortgage appears on the balance sheet as a liability, while an operating lease does not.

IMPROVED INCOME STATEMENT - The real estate sale can reduce the negative impact of depreciation and interest on your income statement.

ACCESS TO CAPITAL - The equity received from the transaction can be deployed in core operations that yield higher returns than appreciation of real estate. The proceeds also can be used to pay down debt.

IMPROVED VALUE - An increase in liquid assets and a reduction in debt can project a better financial picture and result in increased stock value for a public company.

BETTER ACCESS TO LONG-TERM CAPITAL MARKETS - With an improved balance sheet and income statement, a company can improve its credit status.

FAVORABLE RENT PAYMENTS - The lease payment may prove relatively inexpensive compared to the return the com-pany gets on the sale of the property.

TAX BENEFITS - By leasing its facility, a firm can write off its entire rent payment, rather than just the interest portion of a mortgage payment.

CONTROL - The lease agreement can be structured so that the tenant maintains full operating control over the space it occupies.