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Acquisition Financing

When acquisition opportunities appear, it is important to act on them quickly. However, there are several reasons why this might not be possible. A few of them are:

  • Bad time to make the cash commitment due to low operating cash
  • Low on cash and have limits on borrowing capacity
  • Could borrow but not the full purchase amount
  • Could borrow, but time is of the essence
  • Could borrow, but additional debt affects financial ratios and credit rating

NNN Lease Investors acquisition financing can frequently solve many of these problems:

  • NNN Lease Investors can provide 100% (or more) of cash required
  • Normal closing time is 60 days; under 30 days in some cases
  • Transaction structured as operating lease does not appear as liability on balance sheet (Off-balance sheet financing)
  • Off-balance sheet financing has less impact on financial ratios and credit rating than debt does

In corporate mergers and acquisitions work, the buyer frequently sells off the real estate and leases it back to reduce required equity. This use of greater leverage can dramatically increase their return on investment (ROI).

Similarly, in the healthcare industry, many hospitals are changing hands. In one instance, an $80 million dollar facility was bought with funds from working capital that were later replaced with borrowed funds. However, if cash had not been so readily available, NNN Lease Investors could have provided them with the funds for purchase plus several million dollars for refurbishing of the acquired facility.