Lease Structure. Leases are structured as absolute bondable triple-net leases, which means that the tenant retains complete operational control of the property and is responsible for all building repairs and maintenance, janitorial, insurance, real estate taxes, etc. The only contact with the sale-leaseback investor is for payment of the rent.

Lease Pricing. You select either the sales price or the monthly lease payment. From there we will calculate the remaining amount. Higher sales price means higher monthly lease payments, and vice versa.

Sample Deal. Suppose a company enters into a $25 million sale-leaseback transaction at a 10% cap rate, which means that its annual lease payments are 10% of the transaction price, or $2.5 million. Assume the company uses the sale-leaseback proceeds to pay down balance sheet debt. In addition, EBITDA will be reduced by the amount of the lease payments. As a result of this $25 million transaction, the company’s equity value has increased by $10 million, using the same valuation metric as before. Liquidity has also increased, because leverage has been reduced by $25 million, taking it from 50% to 44% of total capitalization and from 3.0x to 2.6x EBITDA. Thus the sale-leaseback transaction has increased the equity value of the company while actually reducing risk. This happened because the company sold its real estate at a higher multiple of cash flow (10.0x cash flow, based on a 10% cap rate) than its EBITDA valuation multiple of 6.0x.