Site Selection turned to Scott Merkle, Managing Partner at SLB Capital Advisors, for insight on the reverse build-to-suit transaction.
For companies weighing a major facility decision, the reverse build-to-suit is not a replacement for traditional financing so much as an additional, and often underappreciated, tool in the corporate capital toolkit.
A reverse build-to-suit puts the company back in control of the process while still moving the real estate off its balance sheet.
In this structure, the company leads its own site selection and controls the design and construction of the facility, just as it would if it intended to own the building outright.
Two advantages stand out . . . The first is economics. Because there is no developer in the transaction, there is no developer profit margin baked into the cost of the facility. The company effectively builds at cost and finances that cost through a single, long-term lease.
The second is site freedom. The company is not limited to land a developer happens to control. It can pursue the optimal location for its operations — weighing labor markets, transportation access, power and utility capacity, and the incentive packages offered by competing jurisdictions — then bring an investor to that site rather than the other way around.
Read the full article here https://siteselection.com/the-reverse-build-to-suit-a-capital-efficient-path-to-new-facilities/