Crystallizing Value Creation & Market Overview
Crystallizing Value Creation:
Illustrative Sale-Leaseback Scenarios
SLB transactions: Inherently a deleveraging
and value-enhancing exercise for
shareholders of corporate sellers
$500 MILLION SALE-LEASEBACK TRANSACTION AT 6.0% CAP RATE
$30 MILLION ANNUAL LEASE PAYMENT
CORPORATE SELLER USES PROCEEDS TO DE-LEVER BALANCE
SHEET...
REALTY
INCOME
CORPORATE SELLER USES PROCEEDS FOR SHARE
BUYBACK...
PRE-SLB
$ IN MILLIONS
Real Estate
PRE-SLB
ADJUSTMENTS
POST-SLB
$ IN MILLIONS
ADJUSTMENTS
POST-SLB
$500
($500)
$0
Real Estate
$500
($500)
$0
Total Debt
$3,100
($500)
$2,600
Total Debt
$3,100
$3,100
Rent
$0
$30
$30
Common Equity
$6,000
($500) +$140
$5,640
Total Lease Adj. Debt(1)
$3,100
($500) + $225
$2,825
Shares Outstanding
100
($500/$60)
91.7
EBITDA
$800
($30)
$770
Price/Share
$60
Total Debt/EBITDA
3.9x
3.4x
Earnings
Lease Adj. Debt/ EBITDAR
3.9x
3.5x
EPS
$61.5
$500
($30)
$470
$5.00
$5.13
(1) Assuming rating agency rent capitalization at 7.5x.
P/E
12.0x
12.0x
24
Note: Assuming constant P/E | Corporate seller uses $500 million of SLB proceeds to buy back 8.3 million shares at $60/sh.View entire presentation