Commercial Real Estate Investment Specialists
Sale-Leaseback Services
Sale-leaseback transactions are typically employed by nationally recognized retail names and arranged as a triple net lease (NNN), commonly with a tenant/seller option to renew. The landlord/buyer of these investments from national retailers benefit from typically secure, long and predictable cash flow with the tenant/seller benefitting from balance sheet tax consequences.
VCG partners with various national tenants to perform feasibility studies and site selection based on strict parameters. Once a site is selected and developed to the user’s specifications, it is offered as a ‘sale-leaseback’. Success through this lengthy process is dependent on local market knowledge ensuring the optimal site selection. Proper site selection impacts value at each subsequent stage of the project.
Seller Advantages - Raising funds through a sale-leaseback transaction offers property owners a number of important business advantages.
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Converts Equity into Cash
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Alternative to Conventional Financing
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Possibility of Better Financing
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Improves Balance Sheet and Credit Standing
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Avoid Debt Restrictions
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Deterrent to Corporate Takeovers
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Avoids Usury Limitations
Seller Disadvantages - Owners should consider the following business disadvantages in deciding whether to raise funds through a sale-leaseback.
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Loss of Residual Property Value
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Possible Relocation
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Loss of Flexibility
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High Rental Payment
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Buyer Bankruptcy
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Higher Cost of Financing
Seller Tax Considerations* - A seller's decision to raise funds through a sale-leaseback frequently is based on substantial income-tax advantages. These savings are potentially an additional source of cash that the seller may use.
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Deduction of Rental Payments
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Timing Gain and Loss Recognition
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Capital Gain-Ordinary Loss Treatment
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Sale-Leaseback May Not Be Recognized
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Loss May Not Be Recognized
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Deductions May Be Recaptured
*For demonstrational purposes only. Information contained herein is not financial, tax or legal advice. For sale-leaseback considerations and related matters; seek financial, tax or legal advice from your licensed professional advisor.
Buyer Advantages - The viability of a sale-leaseback often depends on the potential effects of the transaction on the buyer. A properly structured sale-leaseback transaction provides the buyer with a number of advantages and benefits.
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Higher Return Rate
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Predictable and Secure Return Rate
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Greater Ease in Handling a Seller Default
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Avoids Usury Problems
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Ownership of the Reversion
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Built-in Tenant
Buyer Disadvantages - Even though there are significant advantages to the buyer in a sale-leaseback transaction, disadvantages also must be considered.
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Possibility of Seller Default
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Higher Administrative Costs
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Required Property Management
Buyer Tax Considerations* - The basic income tax considerations from the buyer's perspective are straightforward.
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Rental Payments Are Taxed in Full
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Availability of Deductions and Tax Credits
*For demonstrational purposes only. Information contained herein is not financial, tax or legal advice. For sale-leaseback considerations and related matters; seek financial, tax or legal advice from your licensed professional advisor.
Vitalis Capital Group has been a game-changer for my investment portfolio. Their expertise in real estate syndication and joint ventures has allowed me to diversify my investments and achieve impressive returns. The team's personalized approach and commitment to transparency gave me the confidence to invest, and I've seen my wealth grow steadily.