10 Year Sale-Leaseback

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Background & Challenges

Through a long-term local leasing broker relationship, Westcore was able to complete a 10 year sale-leaseback with a manufacturing tenant in 2007. Westcore was attracted to the investment not only due to the stable cash flow, but also due to the options the asset provided in that it consisted of nine individual buildings that could ultimately be sold as separate investments if the tenant were to vacate at the end of its lease.

Actions

The lease included a termination right at the end of year seven. Westcore kept an active dialogue with the local leasing broker in order to help understand this highly private tenant’s needs. Through this understanding of the needs in combination with an understanding of what would be most important to a potential buyer, Westcore was able to negotiate a 10 year renewal at a very strong lease rate.

Results

In conjunction with a local investment brokerage team, Westcore actively marketed the project for sale. This resulted in a sale at more than 50% above its purchase price plus renewal costs. Although many assets acquired by Westcore require extensive repositioning there are times when value can be created through a sale-leaseback.

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