Many organizations have meaningful growth plans and opportunities, but their ability to execute is limited by their lack of capital.
These include For-Profit Businesses and Not-For-Profit Entities involved in Education, Healthcare, and Government.
They do not have adequate liquid capital to fund the growth initiative while continuing to fund the ongoing base operations. As a result, the realization of the growth opportunity is either postponed or completely missed.
Many of these organizations have capital locked up in a significant investment in real estate.
One solution that is becoming more mainstream is to utilize a Sale and Leaseback tool to unlock real estate-related capital and redeploy it for higher-yielding growth initiatives.
This capital is being redeployed to fund acquisitions and investment in new products or program expansions.
Historically, borrowers would look to their banks for a real estate loan to accomplish this task. However, in the current bank financing market, banks are typically limited to lending up to 70% of the appraised value of owner-occupied real estate. I should note that the appraised value is typically set at a relatively conservative low level.
Current SLB Market Conditions
In the current Sale and Leaseback market, the funded amount can significantly exceed not only the property’s lendable value but also its appraised value.
For example, we recently worked on a recapitalization of an auto parts supplier with significant real estate holdings. The bank appraisal came in near $70 million, which would allow a bank to lend $49 million. At the same time, we received a term sheet for over $100 million from one of the leading REITs in the country. I think you would agree that there is a meaningful difference.
We see opportunities to utilize this strategy both within the traditional business community with a focus on their manufacturing and warehouse properties but also within the Not-For-Profit community. We have recently seen interest from the small and medium-sized college community as they are funding growth initiatives in their post-COVID world.
Why Glengarry Capital Group?
At Glengarry Capital Group, we seek to provide innovative financing solutions to help successful middle-market businesses and not-for-profit entities grow. To this end, we have relationships with lenders and other partners who have developed specialized funding solutions to support these enterprises. The above-referred Sale and Leaseback tool is one of those solutions.
Contact me at [email protected] to arrange an introduction to our Sale and Leaseback partner and explore the applicability of this funding programs for you and your enterprise.