Why Sale-Leasebacks are Coming Back Strong

Jahn S. Brodwin, senior managing director at FTI Consulting

NEW YORK CITY—WarnerMedia created big buzz in early January with the news of its proposed sale-leaseback of its tower at New York City’s Hudson Yards, which is still under construction. It was reported that the company hopes to raise approximately $2 billion from the sale of the 1.4 million-square-foot space it has taken there (and will not occupy until the summer). The company completed a similar transaction in 2014 as Time Warner, Inc., when it sold its interest in its Time Warner Center headquarters to a real estate investor and leased it back until it is ready to move this year to Hudson Yards.

There were several other high-profile transactions that drew attention to the strategy, such as Brinker International’s transaction to sell and lease back 141 of its Chili’s restaurants for aggregate consideration of $455.7 million. Whether in the office, industrial, retail, or hospitality sectors, sale-leasebacks remain attractive to sellers and buyers alike in today’s current environment, for several reasons: