Private Equity

A competitive tool for private equity

In a sale-leaseback, a portfolio company sells its real estate to an investor for cash and simultaneously enters into a long-term lease. In doing so, the private equity firm and its portfolio company extract 100% of the property’s value and convert an otherwise illiquid asset into working capital to grow the business, while maintaining full operational control

Benefits of sale-leasebacks for private equity

Unlock immediate, attractively priced capital to maximize portfolio company value and overall returns, which is especially advantageous compared to bank financing today
Replace short-term debt with tax-efficient, permanent capital with no refinancing risk
Take advantage of cheaper acquisition targets or emerging opportunities by adding sale-leaseback financing as part of the capital stack
Provide portfolio companies with balance sheet flexibility by paying down existing debt and boosting cash flow
Return capital to investors through dividends
Maintain operational control of portfolio company real estate

Private equity sale-leaseback successes

The interior of a refrigeration facility.

AeriTek

$61 million sale-leaseback of 6 industrial facilities in Mexico.

The interior of a warehouse

Metra

$86 million follow-on sale-leaseback of with existing tenant backed by strong private equity sponsorship.

The exterior of an environmentally-friendly building leased to Upfield and owned by W. P. Carey.

Upfield

$25 million in build-to-suit financing for portfolio company's state-of-the-art, BREEAM Outstanding R&D facility.

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