ACM offers a solution to corporations wishing to restructure or to strengthen their balance sheet with creative financing solutions, via the sale-leaseback of corporate real estate assets.
Alliance Capital Markets (ACM) Structured-Finance Advantages
The sale and lease-back of corporate properties can offer organizations many benefits:
Sale-Leaseback transactions allow your company to free-up capital to pay down debt, fund mergers and acquisitions or to re-allocate capital for more productive uses.
Your company maintains full operational control of the property.
You can offset lease costs as an operating cost, resulting in tax benefits to your company.
Your real estate becomes liquid by monetizing low-return/non-return assets.
There are possible repurchase options available through various transaction structures which will meet FASB 13/98. This simply means that you don’t have to give-up long-term control and ownership of your asset, if you wish to maintain these features.
Transactions can be brought to market within 21 days and completed in 60-120 days. This is a very quick turnaround, and can benefit you if you have a short time horizon with regard to tax strategies.
Almost all transactions are structured as off-balance sheet operating leases. Therefore, the corporation’s balance sheet no longer reflects a large, illiquid asset carried at a below-market value. This can protect your corporation from aggressive take-over moves from competitors, speculators or arbitragers.
When compared to mortgage debt, the leaseback transaction produces greater leverage, typically 30-35% more.
The typical weighted average cost of capital (WACC – The blended cost of the debt component and equity hurdle being considered, or the typical operating margin of the company) for most organizations is approximately 14-18%. A leaseback is typically completed at a reversion rate of 5-8%, depending on credit rating and term.
“Alliance Capital’s team was able to create a positive credit enhancement vehicle which solved questions ,we encountered in the marketplace and they were able to promote out company strategy as well as anyone in our organization.