Sale-Leaseback Real Estate Model

The model's core drivers are defined in the Assumptions sheet as named ranges. Property value, land and building split, useful life, and hold period anchor the transaction.

• Lease inputs include the going-in cap rate, annual escalation, and NNN charges. Buyer-lessor costs include asset management and capex reserve percentages, plus a buyer tax rate.
• Financing assumptions cover LTV, interest rate, loan term, interest-only period, and amortisation period. A scenario toggle (base, upside, or downside) applies changes to several key inputs without altering prior years.

The effective drivers then reflect the adjusted values used throughout the model. This setup allows sensitivity testing of the main operating variables while keeping all calculations linked.

The calculation flow begins with Year 1 base rent, equal to purchase price times the going-in cap rate. Subsequent rents grow by compounding the escalation rate.

• Landlord costs for asset management and capex reserves are applied to an escalating property value, so the NOI margin remains flat over the hold period. NOI equals base rent less those landlord-retained costs.
• Debt draws at LTV, with interest on the opening balance and principal amortisation that is zero during any interest-only period. Depreciation is straight-line on the building value only.
• Taxable income is NOI less interest and depreciation; cash tax is the positive taxable income times the buyer tax rate. After-tax operating cash flow nets out debt service and cash tax.
• At exit, the sale value is forward NOI divided by the exit cap rate, less selling costs and loan payoff. The exit-year cash flow combines operating cash flow and net sale proceeds without double-counting NOI.

Seller analysis separately computes net capital freed and compares the net present value of leasing versus owning, including an IFRS-16 right-of-use liability schedule.

NOI = base rent − those landlord-retained costsCopy

The model reports after-tax unlevered and levered IRR, equity multiple, stabilised cash-on-cash return, and yield-on-cost. It also produces a sensitivity grid showing levered IRR across exit cap rate and interest rate combinations.

• For the seller-lessee, the key output is the net advantage of the sale-leaseback, calculated as the NPV of the leasing path minus the NPV of the owning path, with a finite figure confirming the comparison is meaningful. The debt schedule provides DSCR, debt yield, and LTV metrics.
• A checks sheet validates sources and uses, covenant compliance, the NOI margin band, return targets, IRR sanity, yield-on-cost, amortisation, seller net advantage, the ROU liability tie to present value, and the scenario toggle. All checks reference named thresholds from the Assumptions sheet.

This model supports a dual perspective within a single workbook: the seller-lessee weighing whether to monetise the property, and the buyer-lessor underwriting a stabilised, income-producing asset. Users can flex the scenario toggle to see how changes in key drivers affect outcomes.

• The model is intended for commercial real estate sale-leaseback transactions and is not designed for other property strategies. The accompanying downloadable file is a values-only preview of the underlying calculations; it does not contain live formulas.
• Nonetheless, the design allows users to understand the relationships and inputs that determine the financial results. The model's structured check suite helps ensure internal consistency, making it a useful template for analysing a sale-leaseback decision.