MIAMI—How do sale-leasebacks really unlock value for a corporate real estate owner? And what are the challenges involved in brokering these deals?
GlobeSt.com caught up with Camille Renshaw, lead broker for Stan Johnson Company in New York City. She specializes in the disposition of single-tenant, net lease assets nationwide and has structured over $1 billion in investment sale transactions in the last 15 years. You can still read part one of this interview, How Sale-Leasebacks Can Unlock Significant Value, if you missed it.
GlobeSt.com: Can you give me an example of how a sale-lease back unlocked value for a corporate real estate owner?
Renshaw: At the beginning of the recovery, American Forest Products, the largest supplier of wood to Home Depot, was asked to expand their offerings to their clients and take on more stores. This was an incredible new business opportunity, but AFP needed more equity to capitalize on the opportunity.
SJC conducted a sale-leaseback across five properties, giving AFP access to capital that was previously locked up in their real estate. With that equity, AFP expanded their credit revolvers, took on new business, hired more employees, and grew their corporation's EBITDAR immensely.
GlobeSt.com: What are the challenges of sale-leasebacks?
Renshaw: Buyers will be looking for a deep understanding of the corporation, its business plan, its key personnel, its competition, et cetera—much as though it was an equity investor, not a real estate investor. The strongest buyer pool will find the value of the real estate to be secondary to the future of the corporation and its core business.
Effectively communicating a company's business plan within the current sale-leaseback market can be challenging. Experienced brokers and advisors are absolutely necessary in order to execute a sale-leaseback at its highest value under the best terms.
GlobeSt.com: How do you overcome those challenges?
Renshaw: Experienced brokers and advisors will develop materials that are easily digested by the buyers' investment committees, communicating the corporation's past and future in the best light, given current market trends and needs.
GlobeSt.com: Do you expect to see more or fewer sale-lease backs in 2014? Please explain your answer.
Renshaw: As corporations grow and expand, we expect to see more, particularly in the office and industrial sectors.
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