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.
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