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 Drivers	M&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