What a sale exchanges
In most transactions you sell the lease and the income it produces, and you grant an easement over the lease area. The easement is what allows the buyer to keep granting the tenant its rights under the lease. You receive a lump-sum payment at closing. The equipment stays where it is, and in most transactions you keep ownership of your land or your building.
The lease matters more than the rent
The monthly figure is only part of the picture, because the lease decides how long that figure is likely to last. Before you decide, read the lease for four things:
- The current rent and its escalation, which set what the income is today and how it grows.
- The remaining term, including any renewal periods and who has the right to exercise them.
- The tenant’s rights to end the lease or reduce the rent, and how much notice it must give.
- Anything that limits a sale, such as a requirement to notify the tenant or obtain its consent.
Most site leases allow the tenant to reduce the rent or leave on short notice. That right belongs to the tenant, which is why the rent you see today is less certain than it looks.
Rent arrives over years, and a sale price arrives at closing
Rent comes in small amounts over many years, and whether it continues depends on decisions the tenant makes. A sale turns that stream into a known amount. You are paid in immediately available funds at closing. Where it suits your estate or tax planning, the proceeds can instead be structured as a series of payments.
The purchase is a sale rather than a loan, so we have no claim against you if the rent later falls or the tenant leaves. If the tenant ever removes its equipment after closing, you keep the full purchase price.
What to settle before you decide
- How you would use the proceeds, set against what the rent does for you now.
- Who would inherit the lease, and whether a single amount would be simpler for them to receive.
- The tax treatment of a sale, which your accountant or advisor should review with the offer in hand.
- Whether anyone else must approve the sale, such as a co-owner, a lender, or a governing body.
How to get a number to compare
Offers are based on the lease terms, how much term remains, and the rent currently being paid. As each deal is unique in its own right, there may be additional factors taken into consideration, but primarily, the offer we extend to you will rest on those three things. There is no fee for an offer, and a copy of the lease lets us prepare a complete one. The questionnaire takes about two minutes, and the process shows what follows once you have a written offer.