How Sale Leasebacks Provide Restaurant Owners With Capital to Grow
May 28, 2024 – SLB Capital Advisors provided insights related to the sale leaseback market and applicability to restaurant operators
- For restaurant owners considering a sale leaseback, it’s important to understand that, at their core, sale leasebacks are a credit-driven transaction. The buyer of the property is looking for a long (and uninterrupted) stream of rental income. As a result, sale leaseback investors conduct standard credit analysis to determine the seller’s ability to service lease payments over the course of the lease.
- A sale leaseback is generally always below a company’s weighted average cost of capital and therefore makes sense to consider. The increase in traditional debt financing rates that have occurred over the last 18-24 months makes the sale leaseback an even more attractive financing solution, given it prices below many companies’ cost of traditional debt
- The restaurant industry requires owners/operators to use all resources at their disposal to continue to be competitive. Monetizing owned facilities can provide a cost-efficient source of capital to help them continue to grow.
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