How Corporations Can Use Real Estate To Access Untapped Capital

Written by Mike Myatt

Most corporations of any size and scale have large investments inrepparttar land and facilities necessary forrepparttar 145976 successful operation of their business. While making corporate investments into real estate assets may seem to be a reasonable strategy at first glance, they are rarely investment or capital driven decisions, but rather operating decisions that in retrospect usually fail to maximizerepparttar 145977 leverage and value of their land and facilities beyond what is typically provided for within traditional ownership and financing structures.

When an operating business finds itself in need of low cost capital their corporate real estate assets should be evaluated as a source of readily accessible quality capital. While a number of financially engineered solutions are available to maximize corporate real estate assetsrepparttar 145978 most commonly used structures center around Sale Leaseback transactions. Sale Leaseback transactions are popular solutions forrepparttar 145979 following reasons:

Improved Financial Statements: By moving corporate real estate assets “Off-Balance Sheet” financing solutions are engineered that create no mortgage or other indebtedness to be carried as debt on your company's balance sheet. The immediate boost in cash without offsetting debt can improverepparttar 145980 overall financial health of a business. Book income typically increases inrepparttar 145981 transaction's early years, with rent payments less thanrepparttar 145982 interest and depreciation under conventional financing. With our solutions,repparttar 145983 book value of company assets is effectively understated — enhancing your company's Return on Assets (ROA).

Financial Flexibility: Corporate real estate transactions are not bound by formalized loan industry or REIT requirements, giving lenders flexibility to meetrepparttar 145984 operating needs of your business. Rents can be fixed forrepparttar 145985 full lease term without inflation adjustments or any percentage rent. Rents can also be stepped to be lower inrepparttar 145986 early years or reset periodically to take advantage of improved credit, interest rates and other conditions. We can also address unexpected financial and business contingencies.

Operational Control: Most lenders offer programs that will allow you to retain complete operational control ofrepparttar 145987 property for as long as it is required in your business.

Low After-Tax Cost: The lease payment under a sale leaseback structure is fully deductible overrepparttar 145988 lease term, makingrepparttar 145989 after-tax cost to your company less than with alternative forms of asset-based financing and less thanrepparttar 145990 market rent you would typically pay. For federal income tax purposes, a company can only depreciate buildings and other physical improvements, but not land. Most sale leaseback solutions factorrepparttar 145991 value ofrepparttar 145992 land intorepparttar 145993 rent. The rent is fully deductible, effectively enabling you to depreciaterepparttar 145994 cost ofrepparttar 145995 land.

TR Cutler Featured in June InMFG and Managing Automation

Written by Thomas Cutler

Thomas R. Cutler, President and CEO ofrepparttar largest manufacturing PR and marketing firm, TR Cutler, Inc. ( received editorial coverage in bothrepparttar 145936 June issue of InMFG, a leading Reed Business Publication, as well as Managing Automation. Both articles can be found onrepparttar 145937 right-hand column ofrepparttar 145938 website home page.

Thomas R. Cutler is a contributing journalist forrepparttar 145939 following publications:

- Advanced Manufacturing - American Metal Market - Business Integration Journal - Canadian Manufacturers and Exporters - Fabricating and Metalworking - Food Engineering - Food Quality - InMFG magazine - Industrial Computing/InTech - IT for Industry - Machine Design - Manufacturing Automation - Metalworking Production and Purchasing - Moldmaking Technologies - Plant Magazine - Plastics News - Quality Digest - The Manufacturer - Time Compression Technologies

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