Purchase-Leasebacks

Corporate Partners is a leader in structuring purchase/leaseback transactions with corporations. Corporate Partners works with public and private companies (with investment grade, non-investment grade, and un-rated credit) to create innovative solutions that address their unique real estate requirements. These solutions may include acquiring multiple properties, overcoming credit deficiencies, addressing future operating requirements, and managing properties for corporate tenants.

Corporate Partners will work with a corporation to structure a long-term net lease to meet the future operating needs of the corporation. The purchase/lease back transaction allows the corporation to realize the full market value of its real estate while continuing to control the property on a long-term basis with known occupancy costs.

• Improve financial ratios with off-balance sheet operating lease structure
• Structure lease terms to maximize operating flexibility
• Maintain long-term operating control via lease structure
• Generate cash quickly by selling operating real estate assets
• Experienced acquisitions professionals
• Creative transaction structures
• Streamlined due diligence and approval process
• Proven track record

Case Studies

Galyan’s Trading Company:

Challenge: The Limited, Inc. (NYSEL:LTD) was selling a controlling stake in their wholly owned subsidiary company – Galyan’s Trading Company – to a private investment firm. The sale of the company was scheduled to close in 18 days, and was contingent upon The Limited engaging in a purchase-leaseback transaction and removing five stores and a distribution center from its balance sheet. The value was estimated at $65 million.

Solution: A Purchase-Leaseback transaction for all six properties was structured, including arrangements for capitalization of the potential future expansion of the distribution center, and secured permanent debt financing.

Outcome: The transaction closed at pricing based on The Limited’s valuation 18 days from Letter of Intent, meeting both the timing and structural requirements of The Limited and the private investment firm. The Limited was able to consummate the disposition of a controlling interest in Galyan’s. Galyan’s subsequently went public and expanded its distribution facility, taking advantage of the structure put in place as part of the Purchase-Leaseback.

Sierra Health Services:

Challenge: Sierra Health Services, the dominant managed healthcare provider in Nevada, was in the process of restructuring its financial statement and as part of the process wanted to move their real estate off balance sheet while maintaining control. Sierra’s credit was non-investment grade, much of its real estate was special purpose, and all eleven properties are located in Las Vegas. In addition, one facility is one of the largest office complexes in the City. Thus the opportunity was challenging in terms of concentration of credit, geographic location and product type.

Solution: A $115 million Purchase-Leaseback transaction was structured with four lenders providing debt financing. Equity representing 25% of the purchase price was infused.

Outcome: The transaction closed in approximately 60 days from Letter of Intent, and the assets have all been moved off of Sierra’s balance sheet. Sierra’s credit and financial statement improved rapidly after the transaction closed.

EDS / Franklin Covey:

Challenge: EDS entered into a substantial vendor contract with Franklin Covey that resulted in EDS’s takeover of the operation of two warehouse facilities in Salt Lake City, Utah. EDS did not want to take title to the Franklin Covey owned real estate, and thus required a 7 day transaction.

Solution: A purchase from Franklin Covey and a lease to EDS were concurrently structured on an expedited basis.

Outcome: The $15.3 million transaction closed in accordance with the seller and tenant’s requirements.

Circuit City:

Challenge: Circuit City sought on an off-market basis to enter into a purchase-leaseback transaction with a quick and reliable commitment to close within 45 days. The retailer sought to control this Orlando, Florida regional distribution center with a 20 year lease.

Solution: A Purchase-Leaseback was structured that satisfied Circuit City’s price, timing and credibility requirements.

Outcome: The $19.5 million transaction closed on time as scheduled, meeting Circuit City’s requirements to move the asset off its balance sheet.