According to Statistics Poland, inflation in Poland was at 17.5% in November 2022.
In order to fight the increasing costs, companies must further review their assets and find ways to release equity. Properties owned by a company are one of the possible sources of financing which is rarely taken into account. In the case of manufacturing/warehousing companies, these assets are a significant part of the balance sheet, often funded with the equity, which is difficult to liquidate. Sale and leaseback transaction is a very convenient solution. Regaining the funds frozen in the property and reinvesting the revenue in the core business may not only help companies survive the period of growing costs and protect human capital, but also ensure equity required for the long-term growth and success.
Sale and leaseback consists of two interconnected stages. Firstly, the company sells its property to an investor, and then signs a lease agreement, thus continuing to run its business within the same scope and on the same property. The agreement often guarantees a pre-emption right to the seller following the lease period. The benefit of this type of transaction is that the company may reinvest this equity immediately in its core business. Due to current high inflation, these funds could be used to compensate for growing costs of running a business and to fund long-term initiatives. Moreover, the company retains complete operational control over its assets during the leaseback agreement, which means that nothing limits its activities.
Right now, it is a perfect time to consider sale and leaseback transactions. If the company decides to conclude a sale and leaseback transaction now, it previous rates can still be blocked, which are lower than the next-year rates due to the expected economic slowdown. In Western Europe and the USA, the number and the volume of sale and leaseback transactions are continuously growing. In Poland, this form of funding is gradually becoming popular among big company owners aiming at increasing their development, as well as those struggling with restructuring.