The current conditions are a challenge for many entrepreneurs who struggle with difficult access to external financing for development, among others due to the stricter requirements of banks and the increase in the cost of debt capital. They also have to deal with significantly lower profits due to the skyrocketing costs of labour, utilities, fuels, raw materials and a number of other processes, goods and services necessary for the functioning of processes. New market conditions often require restructuring of the company and modification of the market offer, which entails financial outlays. Entrepreneurs who have assets of significant value that can be liquidated in a short time horizon are in a relatively better position, such as real estate with parallel long-term rental, often secured by the right of repurchase. This is the return lease service, which consists in the sale of an owned and used commercial property, such as an office building, warehouse or factory, to a specialized entity, and then further use of the property on a long-term lease basis.
Entrepreneurs who are looking for capital for investment purposes or to finance operating activities, and who own real estate, can use the so-called “return lease” service. In the case of this form of financing, capital is raised by a company specialized in managing transactions on the real estate market, and the entrepreneur receives the capital necessary to achieve his goals. What’s more: the entrepreneur remains the user of the property, which he uses on the basis of long-term rental on attractive, individually agreed terms. In this way, the company releases the frozen capital and entrusts the management of the property to a professional entity that cares about the uninterrupted operation of the property and invests in maintaining or improving its standard. The company pays only rent for rent, which is the cost of doing business and at the same time gets rid of such burdens as real estate tax and insurance costs or the cost of technical inspections.
?The sale of real estate to a specialized entity brings many benefits, not only financial, but in particular, it improves the quality of its management, while increasing the quality of its use. In the case of DL Invest Group, all activities are carried out based on the highest standards of facility operation. Our projects are certified in the international BREEAM certification system, the company operates in accordance with ISO standards, as well as uses funds related to the ecological parameters of the investment” – says Dominik Leszczyński, CEO of DL Invest Group, an experienced Polish investor and developer that provides the reverse lease service. ?As part of our company, we have implemented the ESG – DL Green strategy, which assumes a number of activities carried out for our partners and to improve the internal and external environment of our properties. At the same time, we are working on optimizing property maintenance costs, including energy consumption in buildings and the use of renewable energy sources. This means that an entity willing to release funds frozen in its real estate gains not only capital and reduces the number of administrative obligations related to the maintenance of the real estate, but also does not incur the costs of their maintenance, and can potentially raise the standard of the occupied space and gain added value in the form of numerous activities in the field of corporate social responsibility, which is in line with the standards of the ESG strategy, and almost every large company operating on the markets of developed or developing countries has or will have these soon,? emphasizes Dominik Leszczyński.
The subject of the sale & leaseback maybe commercial real estate such as office buildings, warehouses, production plants or employee hotels. Importantly, the property is purchased at market prices. Thanks to this form of transaction, frozen funds are released, which can be used by the company for other investments or operating activities.