The Sale-Leaseback (SLB) Advantage: This document provides an overview on the advantages of a real estate Sale-Leaseback Transaction. Information could be of interest to middle-market companies, private equity firms with portfolio companies and/or owner-users of real estate.

1. An Alternate
Form of
Financing
THE SALE-LEASEBACK
ADVANTAGE

2. Sell Property
Lease Property
Back
Use Capital
Raised for
Desired
Purpose
SALE-LEASEBACK (SLB) PROCESS
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3. POTENTIAL USES OF CAPITAL
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Invest in and
expand core
operations
Finance
acquisitions or
growth strategy
Restructure
business
Pay down debt
Uses

4. Jointly
Structure Terms
Retain Use and
Control of
Asset
Enjoy
Significant Tax
Advantages
Extract Greater
Value verses
Mortgage
Middle-Ground
Financing
Alternative
BENEFITS OF SALE-LEASEBACK
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Benefits

5. SIDE-BY-SIDE
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Senior Debt / Mortgage
Asset Value $10,000,000
Loan-To-Value 70.00%
Capital Raised $7,000,000
Interest 6.00%
Amortization in Years 20
Loan Constant 8.60%
Annual Debt Service $601,802
Total Payments $12,036,042
Option 1
Mezzanine Financing
Asset Value $10,000,000
Loan-To-Value 90.00%
Capital Raised $9,000,000
Interest 12.00%
Amortization in Years 20
Loan Constant 13.21%
Annual Debt Service $1,189,173
Total Payments $23,783,460
Option 3
Sale-Leaseback (SLB) ✔
Asset Value $10,000,000
Loan-To-Value 100.00%
Capital Raised $10,000,000
Cap Rate or Cost of Capital 7.00%
Lease Term in Years 20
Loan Constant 7.00%
Annual Rent Expense $700,000
Total Payments $14,000,000
Option 2
VS VS
VS

6. COST COMPARISON
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Parameter Mortgage SLB Mezzanine Result
(1) Loan Constant 8.60% 7.00% 13.21%
vs SLB 1.60% Higher ✔ 6.21% Higher SLB Best
(2) SLB ECOC 3.57%
vs SLB ECOC 5.03% Higher ✔ 9.65% Higher SLB Best
(3) SLB ECOCR 7.99%
vs SLB ECOCR 0.61% Higher ✔ 5.22% Higher SLB Best
ECOC or Effective Cost of Capital: Interest rate required to fully amortize proceeds assuming a loan constant equal to
the cost of capital or capitalization rate
ECOCR or ECOC Adjusted for Residual Value: Rate that equates SLB capital proceeds of $10MM with future value of
asset forgone due to loss of ownership assuming annual appreciation of 2.0% over 20 years

7. TAX DEDUCTIBLE COMPONENT
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Parameter Mortgage SLB Mezzanine
Tax Shield Interest Only Lease Payments Interest Only

8. IMPACT OF REINVESTMENT RATE
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Parameter Mortgage SLB Mezzanine Result
Reinvestment Rate 12.00% 12.00% 12.00%
Capital Raised $7.0MM $10.0MM $9.0MM
Term 20 Years 20 Years 20 Years
FV of Capital Raised $67.52MM $96.46MM $86.82MM
Less: FV of Debt Service $43.36MM $50.44MM $85.68MM
FV of Net Proceeds $24.16MM $46.03MM $1.13MM
vs SLB $21.86MM Less ✔ $44.89MM Less SLB Best
FV: Future Value
MM: Million
SLB Gets More Attractive
As Reinvestment Rate
Increases

9. IMPACT ON M&A / COMPANY SALE
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No Sale-Leaseback (No SLB) Sale-Leaseback (SLB) ✔
Real Estate Value $10,000,000
Cap Rate or Cost of Capital 7.00%
Rent Multiple 14.29x
Annual Rent Expense $700,000
EBITDA $3,000,000 EBITDA $3,000,000
Less: Annual Rent $0 Less: Annual Rent $700,000
EBITDA (Net of Rent) $3,000,000 EBITDA (Net of Rent) $2,300,000
Enterprise Value Enterprise Value
EBITDA $3,000,000 EBITDA (Net of Rent) $2,300,000
Multiple 6.50x Multiple 6.50x
Enterprise Value $19,500,000 Enterprise Value $14,950,000
Real Estate Value Real Estate Value
Real Estate Proceeds Included Above Real Estate Proceeds $10,000,000
Capital Raised $19,500,000 Capital Raised $24,950,000
Excess Capital Raised = $5.45MM
Percent Increase = 27.95%
EBITDA: Earnings Before Interest
Taxes Depreciation and Amortization
VS

10. KEY FEATURES
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Senior Debt
• Fully Secured by Asset
• Lower Interest Rates
• Conservative
Underwriting
• Increases
Indebtedness
Sale-Leaseback
• Reduces Investment in
Non-Core Assets
• Favorable Middle-
Ground Alternative
• Asset Control Via Long-
Term Lease
• Tax Savings - Expense
Entire Lease Payment
• No Major Financial
Covenants
• No Equity Dilution
• Greater Control Over
Core Business
• Off-Balance Sheet - If
Operating Lease
• 100% Financing
• Maximizes Value of
Real Estate
Mezzanine Financing
• Unsecured
• Higher Interest Rates
• Expensive - Usually
Includes PIK Interest
• May Include Warrants
• May Lead to Ownership
Dilution
• Increases Indebtedness
✔

11. CONTACT
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Disclaimer: The information contained herein may be subject to errors, omissions, changes in assumptions and, other factors. We do not provide
any guarantees, express or implied, and/or make any representations as to the accuracy of the information contained herein. All information
should be independently verified by the user. The analysis represents our interpretation and is NOT intended to replace information received from
tax and/or accounting professionals. The user is advised to conduct its own due diligence and consult with its advisors prior to making any
decision.
To monetize a real estate asset, please contact:
Mr. Adnan Tapia
Email: atapia@ploutusadvisors.com
Tel: +1.424.274.3561
Ploutus Advisors, LLC
1875 Century Park East
Suite 700
Century City
CA 90067