Historically Low Interest Rates Make Now Prime Time for Sales-Leasebacks

Posted on June 24, 2020

Despite all the uncertainty created by the COVID-19 pandemic, one thing is sure: businesses are looking for ways to improve cash flow and strengthen their capital reserves to maintain their ongoing operations. While asset sales are one way to generate immediate cash, sales leasebacks are another option.

In a sales-leaseback arrangement, a business sells the commercial property it owns and occupies to a third-party real estate investor(s) and enters into a long-term contract to lease back all or a portion of that property. Essentially, the owner/occupant divests itself of its real estate holdings and becomes the tenant of that property. This allows the business to unlock the underlying value of its real estate assets and provide it with immediate capital to deploy as needed, including investing those dollars to support future financial growth, enhance shareholder value and modify their operations in today’s socially distanced business environment.

For real estate investors, sales-leasebacks can place provide a steady stream of income and return on investment via long-term lease arrangements. Even if tenants do not survive the current period of economic uncertainty, well-located properties will continue to be in demand and potentially command higher rents than the previous tenants.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.