If the operator currently owns the real estate prior to the selling the business, consult with a commercial real estate professional who specializes in triple net or sale leasebacks
to determine the best way to structure the sale of the asset either to the buyer of the business or to an investor.
Sale and leasebacks
are a relatively recent phenomenon.
As a result, companies end corporate property owners with significant real estate assets will continue to source capital via sale leasebacks
and investors looking to invest in real estate without taking a huge capital risk will be the likely buyers.
Banks will lend around 70% of the vacant possession value whilst a sale and leaseback
structure can realise 100% of the investment value, hence releasing what could be double the amount of cash into the business.
The most significant effect of section 467 arises for disqualified leasebacks
and long-term agreements.
If the rental agreement is a disqualified leaseback
or long-term agreement that has increasing or decreasing rents, a principal purpose of which is tax avoidance, the fixed rent for each rental period is redefined as the constant rental amount.
The seller-lessee retains substantial risks of ownership in the property through the temrs of the leaseback
Retailers anticipating a future sale/ leaseback
should consider meeting this standard at the time of acquisition to avoid the costs and potential risks of having to fill in gaps in the environmental report later.
With a net leaseback
, companies can leverage 100 percent of an asset's value, officials said.
Consensus: The EITF decided executory costs of the leaseback
should be excluded from the calculation of profit to be deferred on a sale-leaseback
transaction irrespective of who pays the executory costs or the classification of the leaseback
Sale and leasebacks
are also gaining in favor, with both investors and those owners seeking to raise capital through a sale of their owned facilities.
The perception was that sale leasebacks
were for weak companies that needed to raise cash in a hurry.