Sale and Lease Back
Be free of the headaches of owning property and still receive some of the benefits.
The Seller Sells The Premises and Leases it Back Whilst Providing Part Vendor Terms to The Buyer.
There are Many Benefits to The Seller :
No need for seller to move premises
- No relocation costs
- No moving plant and equipment costs
- No fitout costs
- No staff relocation costs and penalties
- No need to change addreses on stationery and marketing material
Free up capital to use in core business
Long, secure lease (Often > 10 years)
Be free of the headaches of owning property
- Ongoing cashflow without the headaches of owning the property
- The seller, who becomes the tenant, will receive ongoing cash flow offsetting the rent they are paying, reducing cash flow requirements
- The cash flow for part vendor terms are secured by the seller who has now become the tenant.
- The cash flow for the part vendor terms are guaranteed by the seller who has now become the tenant.
- Receive "some now, some later"
- The seller will receive a large portion of the sales funds at settlement, and the remainder of the proceeds of the sale over an agreed time as instalments with an interest component, or a balloon payment at the end of the term.
- The funds left in the deal by the seller are secured by a second mortgage or caveat over the property being sold.
- Provided that the tenant has paid all funds owed to the purchaser (the new owner) on time, the purchaser fails to pay the seller moneys owed within 30 days of the date that any moneys are due, the purchaser guarantees to allow the seller to purchase the property back from the buyer at the original purchase price, not including acquisition costs until such time as the purchaser rectifies any payment default.
Flexible terms to suit seller's needs
- Decreased rent payments because offset by return from income from vendor terms
- Receiving income for the funds left in the deal offsets some of the rental costs usually incurred by a tenant, improving tenant's cash flow.
- So the tenant is now receiving a large chunk of capital from the sale, and receiving some cash flow from the amount being financed.
- The income received by the seller results in an improved cash flow position as it offsets some of the rent payable.