SALE AND LEASEBACK – A GOOD ALTERNATIVE FOR BANK LOANS

A natural consequence of increasing interest rates is growing WIBOR, and hence loan installments. High inflation and the increase in electricity, gas and fuel prices bring about an increase in the costs of running a business.

The global growth in the prices of raw materials and of some goods, as well as prolonged disruptions in supply chains, contribute to the increased dynamics of drawn loan obligations of large companies.

Sale and leaseback transactions may turn out to be a cheaper and faster alternative to obtaining financing than loans. It is a good time to consider the benefits of sale and leaseback as a form of company funding.

“In order to adjust to the new market reality, we need to analyze possible funding offers from a broader perspective. To our clients — companies with turnover exceeding PLN 200 million, whose assets include manufacturing, warehouse or office properties — we offer the sale and leaseback option. Sale and leaseback transactions, quite popular for a long time in the Western markets, are gaining popularity in the domestic market,” says Daniel Radkiewicz, CEO INWI.

A sale and leaseback transaction consists of two interconnected agreements. A company sells the property to an investor and then signs a lease agreement. The company’s further operations at the facility do not change at all. One of the most important benefits of selling the property by way of the sale and leaseback transaction is acquiring funds at the full market value of the property, without the reduction by own contribution. The ways to use the funds obtained in this manner are unlimited. Usually, it involves reinvestments, payment of liabilities or dividends. Further business expansion becomes much easier when such a significant amount of new funds is obtained.

The property seller bears the costs of monthly rent independent of WIBOR, which is particularly beneficial at a time of increasing interest rates. The parties agree on the agreement provisions, such as service fees, preemption rights or purchase options. A lease agreement may be signed for the period of even 30 years with an option to extend it, even for an indefinite period of time.

“Our experience shows that sale and leaseback processes run extremely smoothly. They do not require so detailed analysis of companies, various reports or in-depth legal analyses as is the case when applying for bank financing. Both parties benefit from the sale and leaseback transaction. The seller receives significant funds and the buyer receives longterm, regular inflows,” says Mariusz Stępień, CFO INWI.

INWI invests in the sector of lands, housing, office, trade and logistics properties. The company is actively looking for land and buildings for its own construction projects or in cooperation with market- leading investors.

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For more, visit www.inwi.pl