Sale-Leaseback Market Weathers Buyout Slowdown
April 14, 2023 – WSJ Pro leveraged SLB Capital Advisors insight in its review of the sale leaseback space
- SLB Managing Partner Scott Merkle shared insights on the sale leaseback market with WSJ Pro
- While sale-leaseback data for this year hasn’t been released, Scott Merkle, managing partner with SLB Capital Advisors LLC, said businesses continue to pursue the transactions as a way to raise capital to use in operations.
- “Sale-leaseback financing did get more expensive for companies, but much less so than other forms of capital raising,” Mr. Merkle said. “We’re working on quite a few sale-leaseback opportunities that fit that exact description, where companies that have owned real estate for a long time, and might have thought about a sale-leaseback in the past but discarded the thought, now really need to think about [it] because it’s become a much more attractive form of financing on a competitive basis.”
- “You had lots of windows [last year] where the debt markets and equity markets weren’t even open for issuance…whereas [for] sale-leasebacks, yes, buyers were being more cautious, but the market was open through the duration of the year,” Mr. Merkle said. He added that capitalization rates, a measure of returns for real-estate buyers and the cost of financing for sellers, “did rise, but they rose at a pretty moderate clip during the year and they did not bounce around” as much as stock and bond prices.
- Read the full article here