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

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


Conducted on Thursday, August 3, 2017

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will provide real estate and finance counsel with the tools to structure sale-leaseback transactions. The panel 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 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 a longer term, fixed payments, and effectively higher leverage than conventional loans, and allow 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 it had 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 provisions critical to the negotiation. The seller/lessee must be cognizant of the accounting treatment of the lease, with new accounting standards going into effect in 2018.

Listen as our authoritative panel of real estate practitioners 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.

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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 interests of all parties
  6. The new tax accounting rules for leases.

Benefits

The panel will review these and other key questions:

  • What market conditions are 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 with respect to subordination to the mortgage and what rights should they seek to negotiate in SNDA provisions?

Faculty

Brian E. Davis
Brian E. Davis

Partner
Mayer Brown

Mr. Davis focuses his broad-based real estate practice on providing counsel to equity investors and corporate users of...  |  Read More

Friedberg, Stephen
Stephen E. Friedberg

Member
Mintz Levin Cohn Ferris Glovsky and Popeo

Mr. Friedberg is engaged in the general practice of commercial real estate law, both nationally and locally, including...  |  Read More

Andrew H. Raines
Andrew H. Raines

Partner
Raines Feldman

Mr. Raines is a real estate and transactional attorney with over 30 years of experience in legal practice and real...  |  Read More

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