Solutions Oriented Approach

Common Concerns and Considerations associated with a Sale Leaseback Structure

One of several common concerns may arise when considering a sale leaseback, including –

Concern: Selling real estate may be interpreted by the market that the company is in financial trouble.

Solution: Sale Leaseback structure allows companies to maintain operating control of the real estate with no visible changes of ownership.

Concern: The company is losing a fixed asset that we may want to own again in the future.

Solution: SAS can provide a buy-back option during and at the end of the lease term to  provide flexibility. 

Concern: The lease rent and terms may change in the future.

Solution: The lease rent is known throughout the term of the lease.  The lease rent will not be affected should property taxes, insurance and other property-related costs increase during the term.

Concern: Under current IFRS guidelines, the real estate asset does not come off the balance sheet under a sale leaseback.

Solution: It is recategorized as a “lease asset” and fully depreciated over the lease term and the lease payments are tax deductible. Under JGAAP, there remains a structure that does remove the asset from the balance sheet.

Solutions oriented approach 1