Sell and leaseback


Have you considered your property portfolio as a source of finance?

Considerations

  • Do you own property assets that are a core, long-term hold?
  • Would your business benefit from diversification of its capital structure and access to comparatively cheap capital?
  • Does your business require cash to assist with cashflow to deal with the impacts of short or longer term disruption faces?
  • Would you be prepared to sign up to lease terms that are aligned to the needs of the business, in exchange for a capital receipt?

Insight

Now is the time to consider optimising your property assets, particularly if you need capital to invest in response to a disrupted business environment, by exploring sale and leaseback.

There is significant global capital allocated to real estate investment within the UK and with a long term low interest rate environment, pricing is at historically attractive levels. We have seen prime yields for industrial and office sectors drop to as low as 4-5% in recent times.

To maximise value from your real estate as a strategic asset, it is crucial to understand the portfolio and consider what is needed from it in the short , medium and long term. This will help identify assets that are core long-term hold.

Advisors can assess market attractiveness of an asset's potential value that could be achieved. They can engage the market at the right stage to ensure any lease structure matches your needs and is commercially deliverable. For prioritised assets, they can undertake a comprehensive options appraisal to ensure the right decision is made for the business, including considering accounting and IFRS 16 implications.

An optimised sale and leaseback strategy has many benefits. It can generate cash to assist with cashflow issues, release valuable capital to invest in the business, diversify capital structure and reduce overall cost of capital.

It’s important to consider strategically the real estate, operational and accounting implications together. Speak to our highly experienced team of professionals with relationships with international investors and access to global capital markets to identify the optimal solution and find the right investment partner.

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For more information please contact:

Mark Frampton Principal Investment mark.frampton@avisonyoung.com