What is a sale-leaseback?
In a sale-leaseback transaction a company sells its real estate to Northcliffe and simultaneously enters into a long-term agreement to lease the assets. The company receives 100% of the market value of the assets in cash. The lease contract is structured to ensure that the company’s future operational requirements are met. There is no obligation for the company to repurchase the assets, however, repurchase options may be provided.
High Level Structure
The cash realized through a sale-leaseback can be used for:
- Financing buyouts
- Debt repayment
- Funding growth/ add-on acquisitions
- Paying dividends to shareholders
- Developing new facilities (“build-to-suit” transactions)
- Estate planning for management