Sale-leasebacks enable owners to monetize real estate when real estate is not a core business driver. It also reduces exposure and lowers risk in the event of downward market shifts, thereby locking in gains while the real estate market is up.

With tax reform passed in 2017, a sale-leaseback may help companies meet the challenge of restrictions around business interest deductions, by shaping tax strategies around fully deductible lease expenses.

Locking up a long-term market-rate lease with a credit tenant (in this case, the seller) typically and meaningfully increases the property's value.

Buyers benefit from the steady yield of that long-term lease. This is especially attractive to institutional investors such as pension funds and insurance companies that look for long-term inflation protection and predictable ROI. With today's low interest rates, even a four percent yield that has inflation protection can be enticing to investors.

Sellers may suffer an initial hit to EBITDA in the short term, as the rental cost will generally exceed the operating costs; however, the property's high value may generate a meaningful one-time gain and, depending on how the newfound capital from the sale is deployed, may reap much higher returns when invested by the company elsewhere.

Sovereign wealth funds and ultra-high-net worth foreign investors may have an added incentive by finding a financial safe haven from currency instability. Holding assets in US dollars over the long term may be a hedge for their local currency, as the US dollar has generally performed well against other currencies worldwide.

Although sale-leasebacks have been around for decades, it often takes a noteworthy transaction—such as WarnerMedia's recently announced transaction—to remind us of the enormous opportunities sale-leasebacks may provide to real estate developers, investors and corporate users alike.

Jahn S. Brodwin is a senior managing director at FTI Consulting, Inc. based in New York. As head of the New York Real Estate Solutions team, Brodwin advises the firm's public and private clients on debt and equity transactions, real estate acquisitions, property and corporate due diligence, forensic accounting and litigation support, valuations and capital markets matters.

The views expressed herein are those of the author and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals. The views expressed in the article are the author's own and not those of ALM Media Group.