Unlocking the Benefits of Sale-and-Leaseback Deals in Real Estate Investing
Sale-and-leaseback (SALB) deals have become increasingly popular in the real estate industry, particularly in the commercial sector. This type of transaction involves the sale of a commercial property with the seller then leasing the asset back from the buyer, usually on a long-term lease.
For the seller the benefits are multi-fold. Not only does a SALB deal allows tenants to unlock the equity in their real estate holdings, providing access to cash for other business needs without moving or interrupting business operations, it also provides an alternative to traditional financing arrangements which is particularly attractive in light of the current debt market. Many grocers have faced increased costs due to inflation, or restructuring to reduce carbon emissions and SALB deals allow them to access fresh capital.
For the investor benefits include the ability to acquire an operating asset that has a stable and secure tenant who has operated at that property for a period of time already and is confident enough in their success there to sign a long-term lease. The appeal of these assets lie in their robustness and longevity of income, particularly with many leases linked to consumer price indices. In conjunction with this, signing new long-term leases also provides the opportunity to incorporate a commitment from both the landlord and the tenant to upgrade the property to a higher environmental standard.
Our fund Greenman OPEN has recently signed its 6th SALB deal. We place great emphasis on strong and long-term relationships with our tenants and we believe the co-operation involved with SALB deals provides our tenants with both an opportunity to raise capital and access to our expertise to implement improvements that will bring value to the asset and business long-term.
We are looking forward to all upcoming and future sale-and-leaseback deals this year!