Could sale and leaseback of your commercial property be the answer to your cashflow concerns?
As we continue to stumble through lockdown, several trends have appeared across markets, with business owners looking at a range of options to support cashflow during a period of much reduced trading.
The latest trend is property sale and leaseback, with Topps Tiles being a notable business who have recently executed a transaction of this nature.
This is an arrangement whereby businesses who own their trading premises can sell that asset to an investor and then enter into a long term lease arrangement with the purchaser. Such a move has an immediate cash flow boost as the proceeds of any such sale are paid directly to the business making the sale, less any debt which may exist which uses that asset as security.
Such an arrangement also has the benefit of a long term lease which ensures that the property asset remains available for use across the lease term, with the lease then set at an agreed price. Property investors will look for strong counterparts who can demonstrate an ability to trade profitability across the envisaged lease term and tend to be drawn towards higher value assets in ‘good’ locations, with consideration given as to how easily the asset could be repositioned toward a new tenant in future years.
Positioning for such a transaction and finding a suitable financier is not easy but could well be useful for businesses as we continue through 2020.
We can assist with a review of your assets, your financial performance and make introductions should this be a strategy which you would like to explore.