Thinking about pulling cash out of your building without moving your operation off the I‑20 corridor? For many Conyers owner‑operators, a sale‑leaseback can provide capital for growth while you keep running your business in place. You will learn how it works, what drives pricing, which lease terms to negotiate, the timeline to expect, and the risks to weigh. You will also see a simple local example to make the numbers real. Let’s dive in.
What a sale‑leaseback is
In a sale‑leaseback, you sell your property to an investor and immediately lease it back. You get cash at closing, and your business stays put as the tenant. Owners use this to unlock capital, reduce debt, fund expansion, cover capex, or bolster working capital while keeping operations uninterrupted.
Compare it to refinancing, SBA or other loans, or taking in equity partners. Weigh after‑tax proceeds, the cost of capital, and how much control and flexibility you give up. Lease accounting rules may still create right‑of‑use assets and liabilities on your books. Always consult a CPA or tax attorney on your specific situation.
Why it fits Conyers and I‑20
Conyers sits east of Atlanta along I‑20 and is part of the broader industrial and logistics market. Local sale‑leaseback candidates often include small to mid‑sized warehouses and flex buildings, manufacturing facilities, auto dealerships and service centers, and stable neighborhood retail. Likely buyers range from regional industrial investors and private funds to institutional REITs on larger, stabilized assets.
Local details matter for value and buyer interest. Truck access, ceiling heights, dock doors, lot size, and zoning can influence pricing and terms. Environmental risks, such as past industrial use or underground tanks, can increase due diligence costs and affect offers. If you have a mortgage, lender consent or payoff is a key step in your plan.
How pricing works
Investors underwrite your new lease to estimate Net Operating Income. They then apply a cap rate or a required yield to set price.
- NOI is market rent minus landlord‑paid expenses, property taxes, insurance, and reserves.
- Purchase price is often estimated as NOI divided by cap rate. Some buyers use discounted cash flow with rent escalations and end‑of‑term assumptions.
Several factors drive price and rent:
- Tenant credit and lease length. Stronger credit and longer terms reduce risk and can lift price.
- Lease structure. NNN leases, where you pay taxes, insurance, and maintenance, tend to command higher prices than gross leases.
- Market versus contract rent. If rent is below market, price may be lower; if above market, buyers may demand a higher yield.
- Property condition, environmental exposure, and re‑tenanting risk at lease end.
You can often trade purchase price and rent. A higher rent can support a higher sale price, while a lower rent may reduce price. Repurchase rights or early termination options are possible, but buyers typically price those protections into their offers.
A quick Conyers example (hypothetical)
Consider a 30,000 sf light industrial building along I‑20. If a buyer underwrites NNN rent at $8.00 per sf per year, annual NOI is about $240,000. At a 7 percent buyer cap rate, the price is roughly $3.43 million.
Your new rent would be about $20,000 per month before escalations. You would compare your net cash at closing after mortgage payoff, closing costs, and taxes against your goals, then weigh the ongoing rent cost versus your prior mortgage payments. This is a simple illustration only. Work with a CPA to model after‑tax outcomes.
Lease terms that matter
Structure and term
- Lease type: NNN, modified gross, or full service. Investors often prefer NNN for predictable cash flow.
- Primary term: 5 to 20 years is common for industrial. Longer terms may raise price but reduce your flexibility.
- Renewal options: Set how and when you can extend, and how renewal rent is determined.
Rent and escalations
- Base rent: Initial rent should reflect market and your deal goals.
- Escalations: Fixed annual increases, CPI‑based adjustments with caps or floors, or market resets at renewal. Fixed steps are easier to budget. CPI ties rent to inflation and can be less predictable.
Expenses and maintenance
- Operating expenses: Clarify who pays taxes, insurance, utilities, and common area maintenance.
- Pass‑throughs and audits: Spell out how expenses are billed and your rights to review them.
- Repairs and capital items: Decide if you or the landlord handle roof and structural elements. Many industrial NNN leases place most maintenance on the tenant, but structural obligations are often negotiated.
Improvements and credit support
- Tenant improvements: Who funds upgrades, who owns them at lease end, and any removal rules.
- TI allowances: If the buyer funds TIs, they may recoup through higher rent or a lower price.
- Security: Security deposit, letter of credit, or corporate guaranty may be required based on financial strength.
Flexibility and protections
- Assignment and subletting: Ask for reasonable rights to assign or sublease with consent not unreasonably withheld.
- Default and remedies: Ensure cure periods are clear and reasonable.
- SNDA and lender consent: Secure a Subordination, Non‑Disturbance, and Attornment agreement so your lease remains in force if the landlord’s lender forecloses. If you have an existing loan, coordinate lender consent early.
- Casualty and condemnation: Set rent abatement rules, reconstruction duties, and any termination rights.
- Estoppels and reporting: Expect periodic estoppel certificates and financial reporting requirements for the buyer or their lender.
- Repurchase and first‑offer rights: These can be negotiated, but they are typically priced into the deal.
- Insurance and indemnity: Confirm required coverage limits and any environmental obligations tied to your operations.
Process and timeline
You can expect a staged process with several key steps.
- Initial talks and LOI: 2 to 4 weeks to align on price, rent, term, and key lease points.
- Due diligence: 30 to 60 days for environmental reports, inspections, title and survey, and financial review.
- Financing and closing: Timing depends on the buyer’s capital source. Closing is often scheduled shortly after diligence.
Seller prep checklist
- Financial statements and operating history.
- If partially occupied, lease abstracts and rent rolls.
- Property tax bills, insurance policies, past environmental reports, site plans, surveys, building plans, and maintenance records.
- Resolve title issues and liens; notify your lender if you have a mortgage.
- Consider a pre‑sale appraisal and an environmental screen to avoid surprises.
Buyer diligence to expect
- Phase I Environmental Site Assessment, and possibly Phase II.
- Property condition assessment with roof and structural review.
- Title and survey, zoning and entitlement confirmation.
- Compliance checks, litigation search, and tenant financial analysis.
After closing, your lease typically starts right away. Make sure SNDA and insurance certificates are delivered and your team understands lease compliance.
Risks and tradeoffs
A sale‑leaseback can deliver useful liquidity, but it comes with tradeoffs.
- Loss of ownership control and limits on future redevelopment.
- Total occupancy cost may exceed your prior mortgage payment; model the full picture.
- Capital gains, depreciation recapture, and state taxes may be due at closing.
- Re‑tenanting risk at lease end shifts to the new landlord, and you lose future real estate upside.
- Environmental exposure and indemnities can be significant.
- Existing loans may have prepayment penalties or consent requirements that affect timing.
Is it right for you?
Start with the numbers. Model after‑tax sale proceeds and your ongoing rent against refinancing, SBA or other loans, and equity options. Obtain multiple offers where possible, and compare both price and lease terms. Work with a CPA and a commercial real estate attorney to evaluate tax and legal impacts before you decide.
Next steps in Conyers
- Get a property and leaseback valuation based on current I‑20 market rents and cap rates.
- Engage a broker experienced with industrial sale‑leasebacks in the Atlanta‑east submarket.
- Line up your CPA, attorney, and environmental consultant early.
- Pull your financials, title documents, surveys, past environmental reports, and maintenance records.
- Address lender consent and SNDA items at the start to avoid delays.
Ready to explore your options and see real numbers for your facility in Conyers or Rockdale County? Connect with Ashley Goodroe for a confidential, no‑pressure consultation and a clear path forward.
FAQs
What is a sale‑leaseback and how does it work?
- You sell your property to an investor and immediately lease it back, which gives you cash at closing while you keep operating as a tenant under a new lease.
How long does a sale‑leaseback take in Conyers?
- A typical timeline includes 2 to 4 weeks for an LOI, 30 to 60 days for due diligence, and additional time for the buyer’s financing and closing.
Will my rent be higher than my mortgage after a sale‑leaseback?
- Often yes, since rent is set at market and includes the buyer’s risk premium; compare post‑sale rent and taxes to your prior mortgage on an after‑tax basis.
What lease term should I choose for an I‑20 industrial deal?
- Longer terms can raise price but reduce flexibility; a common middle ground is around 10 years with renewal options based on fixed increases or market rent.
Can I buy the building back later?
- Sometimes; repurchase options, rights of first offer, or early buybacks can be negotiated, but buyers usually price those rights into the deal.
Who handles roof and structural items in an NNN lease?
- Many industrial NNN leases push most maintenance to the tenant, but roof and structural obligations are heavily negotiated and should be spelled out.
What affects the price a buyer will pay in Conyers?
- Tenant credit, lease length, NNN structure, market versus contract rent, property condition, environmental exposure, and re‑tenanting risk drive pricing.
What if I have an existing mortgage on my Conyers property?
- You will likely need lender consent or a payoff at closing; address this early and secure an SNDA from the buyer’s lender to protect your lease rights after closing.
