In late 1997, according to Cardinal principal Gil Besing, Beckman Instruments incurred in excess of $1 billion in debt to purchase Coulter Corp., in order to create a new company.
"This put a heavy debt load on their balance sheet," he
recounts.At the same time, there was also a great deal of real estate on the books, he
adds, "which gave Beckman Coulter
the opportunity to do a sale-leaseback of the facilities and raise $255 million at a relatively cheap price to pay off the more expensive acquisition debt."
Generally speaking, "A company will take two years deciding whether or not to do a sale-leaseback," says Besing
."And when they decide to move forward, they want to close in 45 days."Companies should indeed take some time for analysis when considering the sale-leaseback scenario, he
notes."From the balance sheet perspective, there is no reason at all not to do a sale-leaseback," according to Besing
Potential Pitfalls "But at the same time, there are some considerations that corporate real estate people need to think through thoroughly," notes Besing
.Sale-leaseback deals are most attractive to users when the leaseback term is long, 15 to 20 years, "because that is how they can achieve the most attractive pricing," he