If your company owns its own property, a sale and leaseback of real estate can be a way to free up capital and use it, for example, to increase working capital. With sale and leaseback you sell the property and at the same time rent the property from the party who buys it from you. Where financing can only be obtained for part of the value when establishing a mortgage, it is possible to cash in the entire value of the property with a sale and leaseback.
Why sale and leaseback?
In addition to releasing value that is tied up in real estate, there is a number of other arguments for considering a sale and leaseback:
- Improvement of the balance sheet and liquidity position;
- Improve the marketability of the business;
- Optimising the sales revenue;
- Transfer of risks, costs and responsibilities associated with ownership, including maintenance.
Success through good preparation and a thorough process
A successful sale and leaseback requires good preparation and a thorough process. It is important to prepare the property for sale as well as possible. You should think of:
- Drawing up a draft rental agreement that you enter into with the buyer, including an overview of service costs and possibly an SLA. The conditions of this must be both in the interest of your business and interesting enough for a buyer to invest in it. The trick is to find the optimal balance;
- Drawing up a draft purchase agreement;
- Carrying out a (construction) technical investigation. This allows you to make it clear to potential buyers exactly what they are buying;
- Conducting a legal investigation and setting out all relevant legal documentation. This includes cadastral data, title deeds, deeds of division, establishment of easements, ground leases, permits, etc.;
- Setting out tax aspects such as VAT and transfer tax;
- Conducting a soil survey to demonstrate that there is no soil contamination;
- Conducting an asbestos investigation to demonstrate that there is no asbestos contamination present in the building. Or if there is, setting out what asbestos there is and which risks and/or obligations this entails;
- Conducting a legionella test to rule out problems with the water supply network;
- Possibly conducting a building-historical survey (for monuments);
- Identifying business expenses, such as local taxes and duties;
- Collecting guarantee certificates, insurance policies, inspection reports and certificates;
- Collecting construction drawings/plans and any specifications;
- Drawing up a measurement certificate;
- Request an Energy Performance Certificate;
- Requesting a KLIC report;
- Requesting the zoning plan;
- Identifying possible redevelopment possibilities;
- Producing good photos and drafting a commercial sales text.
What exactly needs to be done in the preparation is of course different from case to case. The more clarity can be given to an interested buyer, the fewer risks and the smoother the sales process can proceed. If the preliminary investigation reveals technical or legal flaws, it may sometimes be advisable to remedy them in advance so that they do not block the sale.
In the event of inadequate preparation, a potential buyer will have to conduct more research itself, with the risk that all kinds of unforeseen things will come to light, with the result that it can have a negative effect during the price negotiation and the lead time. The lack of good information also increases the risk for a buyer – which also has an effect on the price.
The sales process consists of 4 phases:
Collating the aforementioned information;
Filling the data room;
Identifying potential buyers;
Offering the property to selected prospective buyers on the basis of brief information;
Providing additional information in the data room after signing a confidentiality agreement;
Requesting indicative offers;
- Investigation by potential buyer(s) (Due Diligence)
Conducting negotiations with one or more parties;
Asking and answering questions;
Supervising viewings for (technical/environmental) research;
Final negotiation and signing of purchase and lease agreement;
Supervising notarial transport;
What we can do for you
Redept advises companies through the entire process and ensures complete preparation, marketing and actual negotiation. Because Redept only advises “users” of real estate and never investors, we avoid the risk of a conflict of interest.
We use Vendr.nl for the sale. This is an online platform where information can be shared confidentially and your property can be offered to a wide range of professional buyers. This can be publicly as well as “off-market”. In the latter case, your property is only visible to carefully selected investors.
Would you like to know what the options are for selling your property? Then contact us without obligation.