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There are many methods of obtaining financing for real estate assets, both debt and equity-based. Debt financing methods include: bank loans, corporate bond issuance, sale and leaseback, factoring, leasing, or shareholder loans.

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Sale and leaseback is a transaction consisting of two parts: the sale of a real property and the lease. The owner sells the property to another entity and executes a rental contract for the same premises. The seller still operates at the same location and within the same scope. The agreement often guarantees a pre-emption right to the seller following the lease period.

Leaseback benefits:

1. Retaining the same seat

Once the real property sales transaction is closed, the company does not need to seek a new office. Instead, it becomes a tenant of the same premises it has been using before the transaction.

2. Obtaining funds as a result of leaseback transaction

As a result of the sale and leaseback transaction, the seller acquires funds that can be spent in any manner they see fit. It often opens up the opportunity to invest in the core business to ensure rapid company growth or repayment of more expensive liabilities, buying another real property or dividend distribution. The seller regains their capital that had been frozen in the developed real property and the funds acquired are often greater than the previously invested amount.

3. Protection against rising interest rates

In April 2022, the Polish Monetary Policy Council once again increased all interest rates. As interest rates continue to raise, WIBOR is also increasing, which entails the increase of variable interest rates on loans. In order to stop the inflationary spiral, interest rates will have to be increased further. A persistent two-digit inflation in 2022 is certain. With the burden of interest liabilities, companies will experience a significant increase in financing costs. The sale of the encumbered real estate (repayment of the liability) and the leaseback may be a salvation for them.

4. Tax deductible expense

By executing a rental contract, the company selling the real property agrees to pay monthly fees. Note that monthly rent is a tax deductible expense deducted from the income tax. The rental contract stipulates the division of administrative or service costs – these may be paid both by the tenant and the lessor.

Sale and leaseback transactions are a popular and provide a form of obtaining capital for SMEs that has been successfuly used in Western Europe for years. The process is becoming more and more popular also in Poland. According to experts, leaseback is preferred by owners of office buildings, shopping centers, warehouses, production lines or real property intended for tourism.

INWI takes an active part in the sale and leaseback contract execution processes.

Please contact us for more information.

Summaries of the year 2021 reveal yet another set of record-breaking transaction values in the investment land market. Despite regularly raised interest rates, high inflation and the continuing pandemic, the segment has been resilient to turbulence. Is selling land a good plan for 2022?

Summaries of the year 2021 reveal yet another set of record-breaking transaction values in the investment land market. Despite regularly raised interest rates, high inflation and the continuing pandemic, the segment has been resilient to turbulence. Is selling land a good plan for 2022?

What factors impact land prices

Forecasts for 2022 expect further growth in the land market. With low availability, investment opportunities are limited. A thorough analysis allows us to seek new opportunities. The INWI team is continuously analyzing factors with the greatest impact on land prices: rising inflation, regularly increased interest rates and rapidly changing legal conditions. The shrinking supply of free plots in big cities is also of great importance. Land banks owned by developers have never been emptied this fast. The demand for new projects is particularly high, thus our perspective for buying new land is truly promising. INWI is a dynamically developing company, employing (and seeking to employ more) experts with years of experience, who have in-depth knowledge of investment land. Our expertise, supported by numerous successes, allows us to analyze the real property market in a broader context. This contributed finalizing land acquisition transactions worth over 250 million zloty over the past 3 years. There are more transactions planned for this year.

INWI offers prices above the market average

There is increasing interest in less obvious land, with complex geometry or numerous legal obstacles. INWI analyzes each opportunity individually. We do not reject any option. We often accept the challenge despite difficulties or potential complications. Solutions we invent are often outside the box. You can rely on our expertise and support regardless of the complexity of the matter and land-related issues. Our team’s vast experience is a priceless asset. Land and building owners often do not realize how valuable the property they own actually is. The prices we offer come as a nice surprise for them. INWI discovers the potential of real property, finding the optimal form of use, which is also beneficial from the legal and business point of view. Land owners often turn to bank loans. They get into debt, not realizing the enormous capital resources hidden in their land. Possibilities open for land owners are numerous: selling an unused part of a plot; developing or demolishing buildings; building a better real property with a more convenient purpose for a particular location. We adopt a proactive approach, often finding a new location for the seller on our own, so they can sell the property profitably and relocate their business. Many companies do not need a central location and relocation is profitable for them.

What kind of land is the most precious

Today, all sites are in high demand. We focus on centers and outskirts of cities, but also on well-connected areas located near main highway junctions. Interestingly, there are still many areas in cities with the potential to have their usage converted, e.g. from commercial to residential. Owners of such land often do not notice such a possibility or are attached to the current land usage. Sometimes big companies run their business on a part of the property only, the facilities are obsolete and some of the land is not used. Nowadays, such land in central city districts is at a premium, providing an opportunity for the company to redevelop their facilities. If you are a land owner, feel free to contact us.

Urban recycling – an idea of the past, or the shape of future?

Urban recycling is a process of a physical, social and cultural transformation of a city. The goal is to improve living conditions of city residents and preserve or revive the memory of the city or its individual parts. The phenomenon of urban recycling has been known to architects for centuries. In the old days it would assume bringing new life into rundown urban structures. It affected dysfunctional and decaying areas and optimized them with regard to their social, economic and cultural potential. The contemporary idea of urban recycling differs from the twentieth-century assumptions that aimed at restoring the original condition of a given area. Today, when private entities are the main investors, existing structures are more frequently adapted to modern cultural and social requirements and new emerging needs arising from dynamic development and social changes. The contemporary urban recycling is intertwined with investments associated with transportation and telecommunication infrastructure modernization, the use of alternative energy sources and energy efficiency. Individual facilities and sometimes also whole city districts are developed with sustainability rules in mind. Urban recycling is gaining popularity especially in big agglomerations, where the shortage of land for new investments is evident.

“The present day urban recycling are mainly activities that consist in retrieving the full potential of land or a facility. In case when an existing facility does not meet applicable requirements, such as the ESG policies, the process of urban recycling may mean its demolishing. At present, the ESGs – environmental, social and corporate governance factors – are particularly vital indicators that help companies report the activities that are impossible to be directly translated into typical economic indicators. Such facilities may be outdated industrial installations, dormient commercial and industrial facilities or residential and office facilities built decades ago. At INWI, we can identify the right way that an investor should follow – whether a given facility can be modernized and its function restored, or rather some more radical steps should be taken. Thus we deliver to our customers the solutions that are tailored to their needs”, says Michał Niczewski, an INWI architect.

Besides regular urban recycling, processes related to land revitalization are emerging:

• Land recycling – reusing abandoned, empty or unused land for revitalization purposes. We can distinguish between grey recycling and green recycling. Grey recycling takes place when typically urban facilities, such as buildings or transportation infrastructure, are transformed by way of alteration and adaptation. We can talk about green recycling when green facilities, such as grassland, urban parks or sports facilities, are created.

• Land densification is defined as the management of the premises that takes place within the boundaries of functioning city blocks with the maximum use of existing infrastructure instead of building on the areas that have so far been undeveloped. The phenomenon can be observed within housing complexes built in 1970s and 1980s. Such management of the premises is also part of the assumptions of the 15-minute
  city, also known as the compact city.

Land recycling includes both land densification and recycling as such. And thus land recycling is understood in a broad sense and encompasses three elements: building a compact city as well as grey and green land recycling. The level of land recycling in relation to the total land use is shown by the so-called land recycling indicator. The total land use is understood as all land use processes.

There are a few ways of applying urban recycling processes. One of them is the adaptation of vacant buildings, whose presence in the urban fabric has increased (for example in Katowice and Łódź, respectively 17% and 20% of vacant office buildings were recorded in 2021) and continues to stay on a high level. Obviously, some vacant buildings are to be demolished, although the process is not economically optimal. More and more frequently the adaptation of facilities to completely new purposes is being considered, which contributes to their value increase.

A great example of urban recycling activities is the French developer Novaxia. In 2022, Novaxia purchased real property assets that may potentially undergo recycling into residential units within a short-, mid- or long-term perspective. The total amount allocated for that purpose by the company amounted to nearly 550 million EUR. France is one of three European countries, following Finland and Malta, with the highest rate of land recycling.

“At INWI, we have been paying attention to sustainability and sustainable construction since the very establishment of the company. Our mission is to initiate ambitious projects in order to facilitate the development of the city and improve the living standards of its residents. We combine business with social, cultural and historical values. We appreciate the needs of urban residents and communities that we take into consideration in all of our business activities. At INWI, we identify risks – but most of all opportunities, for which we find place in the investment process. Urban recycling and land recycling are notions that we have been managing for years. We find new, more beneficial functions (in business terms) for localizations that have lost their original significance. We give new applications to such facilities, setting the previously inaccessible capital free. Our experience in land and facilities transactions enables us to identify the opportunities I mentioned and thus we can maximize profit and offer satisfactory benefits to our customers,” says Daniel Radkiewicz, the CEO of INWI.