Hermes Capital Partners

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Sale-Leaseback & 1031 Exchange

In today's financial economy, corporate financial objectives can be limited by the lack of access, use or allocation of capital. Corporate-owned real estate can be costly and erode profits. However, real estate can be used to unlock shareholder equity.

Sale-leaseback transactions are an alternative method for raising capital. A sale-leaseback transaction allows a property to be sold and immediately leased back to the seller. After the transaction the seller is able to make use of the property in a more productive way. Tenants profit from the sale, while retaining full operating control of the property.

Hermes Capital Partners utilizes intellectual property to structure a 1031 exchange within a Sale Leaseback structure so that the seller of the real estate, through the commitment of the lease, can defer the tax just as if they were purchasing the real estate.
It can be a lucrative option for companies seeking to:

- Defer Tax

- Unlock working capital bound by rel estate ownershp.

- Enable off-balance sheet financing

- Increase financial ratios.

- Look to finance growth.

- Make an acquisition.

- Pay down a debt.

- Reallocate capital into more productive uses.


Sale-leaseback financing is more than just a cost-effective alternative to investing in commercial realestate. It's a capital management tool that allows corporations to use and control essential real estate without employing vast sums of debt and equity capital in an illiquid, poorly perceived asset class. Properly executed, a sale-leaseback transaction can:

- Unlock corporate capital trapped in under-performing real estate.

- Provide longer-term capital (15-25 years) than is available from traditional debt source.s

- Result in off-balance sheet treatment for generally accepted accounting principles (GAAP) purposes.

- Improve working capital, balance sheet strength and financial position of the business.

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