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Sale-LeasebackA sale/leaseback transaction, in
its simplest form, is a method for a business to raise immediate
cash. When a business owns its real estate (and generally has
substantial equity in the real estate) it can gain a new source
of cash which it can then invest back into the business, payoff
partners, etc. It generally has positive effects on the balance
sheet and by leasing the property for a substantial period of
time; the business retains control of the property.
During this credit crunch, more
and more companies are using a sale/leaseback transaction as the
preferred method of obtaining additional cash for operating
expenses.
Generally, a buyer looks at
three main items in considering the transaction:
1. The market value of the
property being sold, including consideration of the condition of
the property.
2. The fair market rent the property may yield -- the rental
income stream is used to calculate the potential value of the
property being sold.
3. The credit worthiness of the seller.Read rest of article |
