Retail sale-leaseback deals are on the rise. Retailers are usingthe transaction structure to unlock capital tied up in real estateand as an alternative to financing. On the capital side, retailinvestors are chasing these deals, particularly for triple-netlease structures.

“There can be several drivers, but they all relate to unlockingcapital from real estate for other uses. One driver is the use ofthis structure as an alternative to financing,” DavidSwartz, a partner at Crosbie Gliner SchiffmanSouthard & Swanson LLP, tellsGlobeSt.com. “With interest rates still low by historicalstandards, use of a sale-leaseback structure as a financingmechanism is not as prevalent as it was in thepast. Another driver of this activity in the retail arenarelates to when a retail operator owns several sites but, becauseof financing or other concerns, finds it advantageous to monetizeits real estate by creating a separate property ownership entityand separate operating entity whereby the land is transferred tothe property entity and leased back to the operatingentity. As a second step, the land-owning entity is thensold to a third party.”