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

 

 

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

Private equity sale-leaseback successes

External of a building owned by W. P. Carey, leased to Apotex.

Apotex

$468 million of sale-leaseback capital used to finance a portion of a PE firm's buyout of global pharmaceutical company.
Industrial machinery

Siderforgerossi

$80 million in sale-leaseback capital provided to PE firm to help pay down debt and reinvest in portfolio company growth. 
Shelves leading up to the ceiling stacked with cardboard boxes in a warehouse

CentroMotion

$45 million of sale-leaseback financing provided to PE firm to help pay down debt and expand portfolio company facilities.
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