The sale-leaseback is an established capital practice. A property owner and occupier sells the asset, agreeing to lease it back for a defined period of time. The transaction’s underlying appeal is the release of cash tied up in the plant and equipment, as well as additional tax and accounting benefits. Typically, the benefit of releasing cash via the sale and leaseback is the cost of those funds - the rent - is less than bank loans or other funding methods. The released cash is then deployed for higher returns, such as acquiring a business, extinguishing high-cost debt, or growing the business.

Leaseback Evolution

The leaseback transaction is wildly popular, but its use generally has been limited to “vanilla” assets, long-term rental obligations (15-20 years), and primary markets with little exit risk were the occupier (tenant) to default. Historically, special-purpose assets were largely ignored; so, too, were second-tier and tertiary markets with few obvious buyers. Hence, occupiers to-date have had little to no ability to monetize assets like food production facilities, or, even less specialized properties in ex-urban markets.

New Mill Capital is the Exception 

New Mill Capital has a rare fluency in the value and use of food facilities, and by extension, an unusual risk tolerance. With over 14,000,000 sqft of property acquisitions, at a transaction value exceeding $1B, New Mill Capital is the dominant buyer of turnkey or vacant food production space in North America. Moreover, informed by successful property investments across all food verticals (frozen production, dry mixing and baking, thermal production, beverage, food oils, refrigerated production, etc.), New Mill Capital sees opportunity where others see risk, and as such, is willing to negotiate lower rents, greater operating flexibility, and shorter-lease terms. New Mill Capital embeds in its underwriting the expertise of Global Food Properties, a boutique brokerage firm focusing exclusively on the valuation, sale, and lease of food facilities worldwide.
 
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In sum, we can help if you are evaluating the leaseback of owned or to-be-acquired assets. Institutional owners and generalist brokers are not equipped reasonably to underwrite special-purpose assets in the highly regulated and fast-moving food industry. We are. 

If you are interested in releasing cash from non-traditional property assets, please contact Gregory Schain / gschain@newmillcapital.com, or Jeff Counsell / jeff.counsell@globalfoodproperties.com, or visit www.newmillcapital.com and www.globalfoodproperties.com.