RCA in the News

Sale-Leaseback Trend Still On The Rise

North Jersey News / February 25th, 2015

North Jersey News reports: Corporation looking to quickly unlock capital have been turning to sale/leasebacks. Companies like Sharp Electronics, who recently sold their US headquarters for $38 million, also leased it back for 12 years. Sale-leasebacks have nearly tripled since 2009 from a low of $3.4 billion post-financial crisis.

“The typical reason that a company would do a sale-leaseback is that they think they have better ways to invest their cash than have it tied up in a building,” said Ben Thypin, Director of Market Analysis for global commercial real estate data and analytics firm Real Capital Analytics (RCA) in New York.

Investors see the transaction like “they’re sort of like buying bonds,” Thypin continued, noting the stability of a rental revenue for more than ten years. Real estate investment trusts and pension funds believe,” it mitigates the risk of real estate because you have an understanding of how much money you’re going to make for the lease term,” Thypin added. 

The lower the risk, the higher the sale price seems to be the consistent case here, more so than other commercial sales. Many analysts see a continued rise in amount of investors pursuing sales-leasebacks as well as their sale prices.