Sale Lease Back Musings

The challenge for the buyer in these transactions generally revolves around ensuring that the lease secures the anticipated return for the price reflected in the sale, as the sale part of the transaction will likely be a fairly vanilla “as is, where is” sale.

Buyer concerns typically relate to securing the covenant of the seller for the term of the lease, which often manifests itself in assignment and change of control restrictions and, to a lesser degree, subletting.  The new landlord often seeks to ?limit assignments that do not require consent to situations in which substantially all of the assets of the tenant are being purchased and the new tenant has a similar covenant (which in the case of a public company can be reflected with a ratings test, or for a private company, a net asset value test). Except where the seller-tenant is a public company, the landlord will also wish to restrict changes of control, which could be used as a means of circumventing the