in Real Estate
SAS Investors provides corporations, both domestic and MNC’s operating in Japan with financial solutions for their real estate holdings. SAS Investors offers a multidisciplinary approach for companies owning warehouses, distribution centers, R&D facilities, factories, office buildings and specialty, single tenant retail assets.
SAS Investors provides companies with real estate and financial alternatives to raise funds, increase earnings and enhance liquidity by freeing capital tied up in real estate holdings. The company extracts 100% of the property’s value while maintaining full operational control. Maximizing the value of the real estate is our focus.
The scope of our solutions include but are not limited to –
Real Estate
What is a sale leaseback?
SAS Investors helps companies improve their asset and capital efficiency benefiting management, employees and shareholders by unlocking the hidden value of their real estate holdings through sale leasebacks
Basic Structure of sale leaseback
Tax Consequences
EFFECT OF IFRS-16 ON SALE-LEASEBACK TRANSACTIONS
OFF-BALANCE OR NOT?
Fixed Asset on Balance Sheet
(Cash)
(Present Value of Lease)
(Lease Rent Payment Obligations)
Lease Asset (Right of Use)
Lease Liability
Reduces Real Estate Holding / Operating Costs
Benefits of sale / leaseback
Monetizing assets to raise capital is
NOT the only benefit of a sale leaseback
- Obtain working and investment capital
- Enhance liquidity through realization of hidden reserves at increased values
- Monetize redundant or underutilized facilities
- Efficient use of capital embedded in fixed assets
- Obtain market value of real estate unrealized on balance sheet
- Supplement existing sources of financing
- Increase and manage earnings
- Enhance shareholder value
- Improve financial ratios
- Fund share buybacks
- Align real estate assets with core revenue initiatives
- Fully depreciated over the term of the lease
- Lease payments are tax deductible
- Increase transparency of real estate-related costs
- Lease structure allows seller to maintain operational control
- “Right-size” your real estate portfolio
- Flexibility of leasing and certainty of recurring expenses
- Offload responsibilities of real estate ownership
Solutions Oriented Approach
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 Investors 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.
Flexible Deal Structure
The following are the type of asset
we acquire and the preferred lease structure
Our investment strategy focuses on –
Warehouses /
logistics facilities
R&D facilities
Specialty single-tenant retail / showrooms
Industrial and light manufacturing
Office properties
Life science facilities
geography
Minimum Deal Size
We target investment of at least JPY 5 billion and prefer deals in excess of JPY 10 billion to JPY 50 billion. We will acquire single assets or portfolios.
DEAL Structure
CAPITAL SOURCES
We have a variety of capital sources prepared to transact across a range of assets from steady long-term leases to repurposing and everything in between.
360° Sale Leaseback Program
SAS Investors has initiated its 360° Sale Leaseback Program, a comprehensive approach that provides companies with financial and real estate solutions that include ESG initiatives to lower energy costs and reduce CO² emissions.
The 360° Sale Leaseback creates a partnership between the seller / lessee and the buyer / lessor that creates value for both parties. As with a standard sale leaseback, the seller / lessee is able to monetize their real estate assets yet maintain operating control, and the buyer / lessee receives long-term stable cash flow. With a 360° Sale Leaseback, the seller / lessee partners with the buyer / lessor to have the buyer / lessor fund the cost of the ESG plan whilst sharing the cost saving of lower energy, water, waste and carbon emissions.
Basic Structure of 360° sale leaseback
Our Defined Process
SAS Investors implements a defined process for our 360°Sale Leaseback Program. It is important for us to understand a company’s objectives for the sale leaseback transaction. In addition to financial, accounting and real estate goals, we also incorporate the company’s ESG targets in order to develop the most suitable deal structure including green lease terms.
| Quantify Company’s Objectives |
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• Financial & Accounting objectives • Real Estate objectives • ESG objectives |
| Review and Analyze Real Estate Assets |
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• Market Pricing • Market Lease Rents • Operating Costs • Capital Expenditure Requirements • ESG Options |
| Outline Proposed Deal Structure |
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• Purchase Price • Lease Terms (rent, length of lease, operational costs) • Lease Structure • Energy / Decarbonization Plan • Due Diligence & Closing Period |
| Documentation & Closing |
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• Purchase & Sale Agreement • Green Lease Agreement • Develop Net Zero Pathway into Asset Plan |
| ESG / Decarbonization Implementation |
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• Costs for ESG Plan funded by Buyer • Monitoring & Reporting • Sharing of ESG Cost Saving |
