Fortune 500 Company uses sale leaseback to fund expansion
An international Fortune 500 company was looking to expand its footprint in the Canadian market and needed capital in order to do so. They owned an industrial facility in greater Toronto and engaged Colliers to help determine their best course of action moving forward.
Finding capital in their real estate (quietly)
The company did not want to take on any additional debt and Colliers helped them identify that real estate values were increasing while capitalization rates were declining. They concluded the best approach was to initiate a sale-leaseback process, as the company still needed the asset for the long term (10-year horizon). The client also wanted to ensure that this process was not made public.
$12 million injection fuels growth
Colliers identified several potential investors whose ownership criteria met the company’s brand and values, and landlord expectations. An institutional landlord with a global portfolio was selected as the right partner for the company and they negotiated a purchase agreement and subsequent lease agreement. After retiring debt and a payment of recapture, the company was able to realize net proceeds of over $12 million.
| Building Size | 144,172 SF |
| Building Value | $21,250,000 |
| Capitalization Rate | 4.65% |
| Return (Lease Rate) | $988,125 per annum |
| Lease Rate | $6.85/psf |
