Real estate is one of the worst assets for long-term corporate capital to be deployed in, as it rarely will ever meet an internal return hurdle/investment threshold. Unlike almost every other asset funded with internal treasury dollars, regardless of whether those moneys are presumed to be debt, equity or blended weighted average cost of capital dollars, real estate is often viewed as a necessary spend even without being able to justify itself as a hurdle-beating investment.
One of the primary reasons for this is control - manufacturing companies in particular feel a strong need to own their real estate assets, viewing leases as a real estate vehicle that somehow gives that control up to a third party, but this does not have to be the case. Whether structured as an on balance sheet, capital lease, or as an operating lease, there is nothing about a lease that has to give any control of the property to an outside party, for a nearly indefinite period of time. A lease does, however, provide a great deal of flexibility vs. ownership.
Most importantly, leasing allows a company to better match cash outflows (expenses) to inflows, and keeps precious corporate capital free to be deployed in high return internal and external corporate investments. Few CFOs in America would want to tell their shareholders that they are only able to find seven percent or eight percent returns for their shareholder moneys, yet every day they invest millions of shareholder dollars into an asset that rarely generates even that much return than that for their companies, and often generates negative returns over the corporate holding period, particularly as corporate property is generally sold as a used, vacant asset.
Angelic structures and places sale and leaseback transactions with investors that provide the lowest cost of capital for a given corporate objective, which may be a very long-term occupancy, a shorter term occupancy, or even a partial occupancy now or in the future of a facility that is larger than the needed space.
We have closed sale/leaseback transactions on properties ranging from a portfolio of retail stores, to hospitals and outpatient clinics, to a portfolio of industrial properties for a large equipment rental company.
We have the relatively unique ability to include FF&E and other very high cost basis items in sale/leaseback transaction structuring, and can even provide TI financing after-the-fact in the form of a tenant improvement sale/leaseback. This can be in conjunction with or entirely separately from a sale and leaseback of the facility in which those improvements are located.