Sale-leaseback Real Estate Model - Lessee vs Lessor

How to Use the Template

This template is designed to guide you through a clear, step-by-step process of evaluating real estate ownership, financing, and sale-leaseback scenarios. Below is an overview of how a typical user might navigate the model:

1. Select a Scenario
   

   • Begin by determining which of the four available perspectives (Tenant Buy & Finance, Tenant Sale-Leaseback, Landlord Sale-Leaseback, Landlord Third-Party Tenant) applies to your situation.
   • Each perspective has its own dedicated tab, ensuring that you only see the inputs and outputs relevant to that specific viewpoint. You can compare the tenant options side-by-side and the landlord options side-by-side.

2. Enter Your Key Assumptions
   

   • Locate the highlighted input cells for data like purchase price, original cost basis, rental rates (and escalations), debt assumptions, operating expenses, and tax rates.
   • If you’re the tenant, you can decide whether you’re selling immediately in the current period or if you already own the building and want to do a sale-leaseback.
   • Landlords can input assumptions around acquisition, rent collections, financing, and so forth.

3. Include Tax-Related Details
   

   • Update fields for any net operating loss (NOL) carryforwards, accumulated depreciation, and potential depreciation recapture.
   • If you wish to account for additional business taxable income, add that in to see how owning vs. leasing affects your overall tax position.

4. Review the Automated Calculations
   

   • The template calculates discounted cash flow (DCF), net present value (NPV), and internal rate of return (IRR), comparing results over a time horizon of up to 20 years.
   • It also provides annual cash flow summaries, making it easy to track potential gains, taxes, and debt service over time.

5. Adjust Your Scenario
   

   • Use the model to test “what-if” situations by changing key variables (rent escalation rates, interest rates, or even length of ownership).
   • For tenants, you can see how reinvesting proceeds from a sale-leaseback might affect overall returns or cash flow requirements.

6. Compare Outcomes
   

   • Quickly compare results across the different scenarios—such as buying vs. leasing or conducting a sale-leaseback—to identify which strategy produces the highest NPV or IRR (for landlords), or the lowest net cost (for tenants).
   • Look at both pre-tax and after-tax results to ensure you have a complete picture of each option’s financial impact.

By following these steps, you can make the most of this template’s thorough, yet user-friendly approach. Whether you’re a corporate tenant needing to decide between owning or leasing, or a landlord assessing different ways to structure a deal, the model streamlines the process, organizes complex calculations, and offers clear insights into each potential path.


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