Sale leasebacks offer a more attractive capital solution for companies now.
By Richard Berger |
Green Street believes that WP Carey’s recent multimillion dollar sale-leaseback transaction with a leading generic drug manufacturer in Canada “could suggest increased demand for sale-leaseback financing following the recent banking crisis in early March that likely tightened bank lending standards for small and medium-sized businesses.”
Net Lease REIT W.P. Carey in April executed the largest transaction in the company’s 50-year history with a $468 million sale-leaseback of a portfolio of four pharmaceutical R&D and manufacturing campuses in the Greater Toronto Area.
The portfolio represents the lion’s share of the global operations of Apotex Pharmaceutical Holdings, the largest generic drug manufacturer in Canada.
Sales Leaseback Cap Rates ‘More Attractive’
A recent report from SLB Capital Advisors also points to a possible step up in sales leaseback transactions as their cap rates, which range from 6.25% to 8.25%, offer a more attractive cost-of-capital solution for companies than ever before despite some upward cap rate movement.
“There continues to be an attractive value arbitrage across various industry sectors driven by the delta between business and real estate multiples,” according to its report.
Sales leasebacks are also gaining appeal to net lease investors, which are watching deal volume and asset pricing decline. In the last three months the sales price for an average deal came in at 7.1% below the asking price and the average sale took 8.6 months to complete, according to Partners.
*If you’re considering buying a NNN sale-leaseback or if you are a company exploring the leveraging of a sale-leaseback program to raise capital, please contact us. We can help you understand and quantify your options and realize the best execution of your strategy.