The Miller Team Can Give You
User Perspective Regarding
Sale-Leaseback Analysis
We can help you review the sale-leaseback transaction: how it is structured, benefits and drawbacks, tax issues and potential prospects. He´ll help you select a discount rate used by corporate and non-corporate users. And you´ll see how to analyze the alternatives of owner/occupants as to whether to continue to own and occupy space or to sell to an investor and lease it back.
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We can help you in the following critical areas: |
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Explain the basic structure of a sale leaseback transaction |
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Identify potential prospects for a sale leaseback |
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Describe benefits and drawbacks of the sale leaseback transaction for user/sellers and investors |
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Identify some of the tax issues associated with a sale leaseback |
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Describe the process for selecting a discount rate used by corporate and non-corporate users |
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Explain how the discount rate differs for corporate and non-corporate users |
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Define opportunity cost as it relates to using discounted cash flow analysis |
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Quantify the net present value (NPV) of continuing to own and occupy a property for a specific period of time versus the net present value of the cash flows associated with selling and leasing back that property for the same period of time:
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1. |
Calculate annual cash flows after tax for the continue-to-own alternative |
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2. |
Calculate the sale proceeds after tax for the continue-to-own alternative |
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3. |
Calculate NPV of cash flows for continue-to own-alternative |
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4. |
Calculate cash flows after tax from the sale leaseback alternative |
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5. |
Calculate net present value of cash flows |
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6. |
Compare the two net present values |
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Determine the sales price at the end of the holding period of the continue-to-own alternative that would make the net present values of the two alternatives (continue to own versus sale leaseback) |
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Calculate the after-tax cost of funds raised by a sale leaseback (IRR of the differential) |
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Conduct an analysis of the sale leaseback transaction from a user's perspective using a variety of Excel-based analysis tools. |
The Miller Team Can Give You
Investor Perspective Regarding
Sale-Leaseback Analysis
We can help you see how to structure a profitable sale leaseback transaction from an investor's perspective. He guides you through the structure, benefits and drawbacks, tax issues, and potential prospects associated with a sale-leaseback transaction. And he can show you an analysis model for the sale leaseback.
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We can help you in the following critical areas: |
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• |
Explain the basic structure of a sale leaseback transaction |
|
• |
Identify potential prospects for a sale leaseback |
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• |
Describe benefits and drawbacks of the sale leaseback transaction for user/sellers and investors |
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• |
Identify some of the tax issues associated with a sale leaseback |
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Determine the loan amount available to purchase property being sold and leased back:
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1. |
Calculate loan amount using lender's maximum loan to value requirement |
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2. |
Calculate loan amount using lender's minimum debt coverage ratio requirement |
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Select the lowest loan amount and round it down to nearest thousand |
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Calculate various measures of investment performance such as:
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1. |
Capitalization rate |
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2. |
Before-tax cash on cash |
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3. |
Before-tax internal rate of return |
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4. |
After-tax internal rate of return |
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5. |
Before-tax capital accumulation |
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6. |
After-tax capital accumulation |
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7. |
Before-tax annual growth rate of capital |
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8. |
After-tax annual growth rate of capital |
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Given a set of financial assumptions on the structure of a proposed sale leaseback, evaluate if measures of return to the potential investor are sufficient to attract investment capital into the property offered for sale in the sale leaseback transaction |
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Conduct an analysis of the sale leaseback transaction from an investor's perspective using a variety of Excel-based analysis tools |