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A Purchase-leaseback with Corporate Partners offers the
following potential benefits:
- The purchase price, lease term and rent structure can be tailored
to meet the needs of the seller.
- The company can maintain long-term control of the operation and
management of their facility.
- The transaction can be structured as an outright purchase,
or in the case of a new development, as a forward commitment, which
may facilitate
the seller's needs for interim financing.
- The cash proceeds from the sale
can be put to more productive uses such as investing in the company’s
higher growth core businesses, reducing debt, repurchasing company
stock, or returning it to investors.
- The company frees up illiquid, fixed assets
carried on the books at depreciated value, converting them into
cash at market value.
- Cash proceeds are recognized on the balance sheet while
on-going lease obligations are structured for off-balance sheet
treatment.
- The
company will be able to deduct rental payments in full for income
tax purposes.
- As opposed to raising capital through new debt or equity offerings,
the purchase-leaseback can be consummated quickly.
- Unlike traditional
real estate mortgage/debt financing, a purchase-leaseback results
in 100% cash proceeds, compared to 50-75% proceeds. With
mortgage/debt financing, the company continues to have
25-50% of the property value
carried as a fixed asset on the books.
- As opposed to a synthetic
lease, The Purchase-leaseback is a long-term, more robust solution
that can be applied to both
new
and existing
properties, and has not been the subject of regulatory
scrutiny and the resulting
uncertainty.
- The company avoids the risks of real estate ownership
related to property value and the cost and availability of debt
financing.
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