Interested in training for your team? Click here to learn more

Structuring Real Estate Sale-Leasebacks: An Alternative to Mortgage Financing for Owner-Operators and Investors

Strategies for Improving Balance Sheet, Maintaining Control of RE Assets, Recovering Capital Costs, and Reducing Tax Liability

Note: CPE credit is not offered on this program

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, June 21, 2022

Recorded event now available

or call 1-800-926-7926

This CLE course will provide real estate and finance counsel with the tools to structure sale-leaseback transactions. The panelist will also discuss the advantages and pitfalls of these deals for seller/tenants and buyer/investors and offer best practices to structure the deal for all parties to protect their interests.

Description

Sale-leaseback transactions provide the seller/lessee access to capital tied up in real estate assets without the underwriting and legal constraints of mortgage financing. Leases can be structured with longer-term, fixed payments and effectively higher leverage than conventional loans, allowing for potential tax benefits not available with mortgage loans.

For the investor/lessor, the sale-leaseback provides the opportunity to acquire commercial real estate that comes with a long-term, credit-worthy tenant under a triple net lease. The credit quality of the tenant and the condition of the property are primary concerns for the investor.

One disadvantage for the seller is the loss of flexibility as owner-occupant. Lease negotiations over potential limitations for the seller can be contentious. Some tenant-friendly lease provisions will need to be subordinated to a future mortgage or ground lease, making SNDA requirements critical to the negotiation. The seller/lessee must be mindful of the accounting treatment of the lease under the accounting standards that went into effect in 2018.

Listen as Jeff Tracy, Associate Director at Stan Johnson Company, discusses sale-leaseback market trends, advantages and pitfalls for sellers and investors, deal structures and terms, and best practices for the parties to protect their interests.

READ MORE

Outline

  1. Current market trends in sale-leaseback transactions
  2. Advantages and pitfalls for both seller/tenants and buyer/investors
  3. Importance of a credit-worthy tenant
  4. Deal structures and terms
  5. Key lease provisions to protect the interests of all parties
  6. The new tax accounting rules for leases

Benefits

The panelist will review these and other essential questions:

  • What are market conditions driving the increase in sale-leaseback activity?
  • What deal structures are generally used for sale-leaseback transactions?
  • What is the tax treatment of sale-leaseback transactions?
  • What are the tenant's objectives concerning subordination to the mortgage, and what rights should they seek to negotiate in SNDA provisions?

Faculty

Tracy, Jeff
Jeff Tracy
Director
Stan Johnson Company

Mr. Tracy specializes in offering sale leaseback and real estate advisory services to corporations, investment banks,...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video