Sale Leaseback Offers Grocers Attractive Alternative to Traditional Debt Financing
November 30, 2023 – SLB Capital Advisors provided perspectives on the relevance of sale leasebacks in the grocery space
- Malik Franklin, Partner at SLB Capital Advisors, provided perspectives on the relevance of sale leasebacks to the grocery space in the most recent issue of Today’s Grocer (Vol. 63 No. 12)
- For grocers who own real estate and have a strong credit to fulfill long-term lease obligations, the lower cost capital that sale leasebacks provide is definitely worth considering as an immediate or ongoing alternative to traditional debt financing.
- A sale leaseback has always been an attractive capital source, given its cost relative to a company’s weighted average cost of capital. However, today, given the increase in interest rates over the last 18 months, the sale leaseback transaction is an even more attractive capital alternative company executives should consider
- Additionally, in contrast to the temperamental debt market, the sale leaseback market remains active and open. For reference, institutional loan volume in 2022 was down about 70% from 2021’s volume and almost 40% from 2020’s volume, according to Fitch ratings. Compare this to heightened sale leaseback activity in 2022 – a record year for sale leasebacks in both transaction volume (874 unique transactions) and dollar amount ($31 billion), as well as a first quarter in 2023 which was the second highest Q1.
- Read the full article here