Sale-Leasebacks Back on Track

Lurie warned that there are several possible disadvantages to sale-leasebacks, including a potentially lower EBITDA, loss of flexibility due to terms of the lease and the loss of the right to retain occupancy once the lease term ends, along with the attendant risks of incurring moving costs and unanticipated increased occupancy costs once the term ends. In addition, sale-leasebacks can incur a potentially negative tax impact if the basis in the property is low compared to the sales price. He added that disadvantages relating to the right to retain occupancy at the end of the lease term can be eliminated by providing the seller/tenant with the right to repurchase the property in the future. However, this right could have a negative impact on the price a buyer/landlord would be willing to pay in the transaction.