Realty World Caribbean

Realty World Trust (RWT)

Sale / Leaseback Transactions

A sale-leaseback is a transaction where a company sells its property and simultaneously leases the property back on a long-term basis, usually 15 years and more. The company retains complete control over the property, as if it were the owner. Any property type is eligible for sale-leaseback financing and transaction is generally closed within 30-45 days after a letter of intent has been executed by the parties.

Sale-leaseback real estate is typically valued at 100% of market value as determined by an independent appraiser.

Benefits of sale-leaseback

Obtain capital to invest or repay existing debt

Core business usually has return rate of 25% and up to justify an investment. By owning a low-returning real estate, companies are accepting a rate of return 5-10% that is often not sufficient to repay existing debt. Many of the world's top companies lease all of their facilities to release capital tied-up, and to invest in higher-returning core business.

Realize 100% of the property value  

Pledging assets for a bank loan might yield proceeds of 50% - 70% of the building’s value. Selling a property through a sale-leaseback transaction will generate proceeds of 100%.

Secure permanent, fixed-rate financing

Unlike traditional bank debt, sale-leasebacks never need to be refinanced. Fixed lease rates can be secured for up to 25 years or more.

Mortgage pre-payment penalties (if any) can be capitalized into the sale-leaseback transaction price.