Why Sale Leasebacks Work

Companies consider sale leasebacks for a wide range of reasons.

There is often an underlying arbitrage to be captured between the business EBITDA multiple and the effective real estate multiple

  • Average sale leaseback cap rates imply multiples of 12x – 16x

In cases where a company’s EBITDA multiple is lower than the real estate multiple, value can be created for the owner by executing a sale leaseback.

Some of the many other sale leaseback drivers are listed below:

General Strategic & Financial DriversM&A-Related Factors
  • Focus on Core Competency
  • Redeploy Capital for Internal Growth Initiatives
  • Improve Blended Cost of Capital
  • Balance Sheet Management
  • Transfer/Mitigate Residual Risk
  • Managing Core Constituents – Shareholders, Analysts
  • Preparing for a Business Sale
  • Capitalize on Value Arbitrage
  • Buy Down the Equity Multiple
  • Acquisition Funding
  • Maximize Aggregate Valuation in an M&A Context
  • Gain Advantage Relative to Other Company Bidders That are Not Factoring in an SLB