The properties are located across Georgia, Indiana, Florida and Illinois, and were acquired for $4.8 million
Mill Valley, Calif.—Four Corners Property Trust (FCPT), a real estate investment trust primarily engaged in the ownership and acquisition of net-leased restaurant and retail properties, has announced the acquisition via sale-leaseback of six Christian Brothers Automotive properties for $24.8 million.
A sale-leaseback, also known as a leaseback, is a financial transaction where an asset is sold and then leased back to the seller. The seller, now known as the lessee, receives a lump sum payment and continues to use the asset in exchange for regular rental payments to the buyer, now known as the lessor.
The properties are located across Georgia (2), Indiana (2), Florida (1), and Illinois (1). The sites are in strong retail corridors with high traffic and attractive demographics. The properties are each under a long-term lease guaranteed by the corporate entity.
Sale-leasebacks can be used for a variety of assets, including real estate, vehicles, and manufacturing equipment. They can be economically attractive for a number of reasons, including:
- Cash flow: The seller receives a lump sum payment that can be used for other business needs, such as paying down debt or making investments.
- Refinancing: The seller may be able to refinance at a lower rate due to tax benefits.
- Risk reduction: The seller can reduce their exposure to the risks of owning the asset.
- Transition space: The seller can retain use of the asset while relocating to a new property.
The economic terms of the lease are often structured to be similar to those of a secured loan. The lessee typically has the right to acquire the asset at the end of the lease.
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