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Sale and Leaseback Arrangements
A growing form of real estate
transaction, particularly favorable to corporate enterprises,
because of tax benefits and the release of capital, is the
Aminoff & Co. has developed particular skills in negotiating,
planning and closing such transactions, offering professional
assistance based upon client objectives.
Many types of property are adaptable to such arrangements:
commercial or retail buildings and stores; corporate offices and
headquarters buildings; research and development facilities;
industrial warehouses and manufacturing plants.
For a company desiring to convert illiquid assets into working
capital, sale/leaseback arrangements are particularly attractive.
Overall, the benefits of leaseback financing to a property owner
- It generates 100% "financing" of business real estate assets.
- There are no restrictions on the use of funds provided by
sale/leaseback financing. They may be used for expansion, debt
consolidation or reduction, operating capital, or for investment
- Credit lines with banks, insurance companies or other lenders
are generally not disturbed - because negative covenants in
borrowing agreements do not usually prevent the debtor from
selling and leasing back real estate.
- The net proceeds from the sale of the real estate will appear
as an asset on the balance sheet as additional cash (minus
provisions for income taxes as a result of any gain on the sale).
The net worth of the company is increased on the balance sheet
because, in most cases, the equity in real estate realized by a
company in a sale/leaseback is greater than the net book value of
- If the transaction is properly structured, the total rent is a
deductible item for income tax purposes. This has the effect of
deduction non-depreciable land, since the rent includes the right
to use the land.
- The seller is assured of the right to occupy the property on a
long-term basis on terms which he has negotiated for his benefit.
The seller has the use of the property as though he owned it,
without having capital invested in it.
- If the transaction is properly structured, capital
improvements built by the lessee may be amortized over the period
of the lease. Many times this results in an amortization schedule
which is faster than what would be available by depreciation if
the lessee owned the property.
Aminoff & Co. specializes in sale/leaseback transactions, and
arranges several each year.