How can I add a Sale Leaseback to my LBO?

Sale Leasebacks can be added to new or existing Mosaic LBOs through the Special Situations panel. 

Including a Sale Leaseback in a New LBO

In a new LBO, as you complete the various stages in the assumptions "Wizard," navigate to the Special Situations Step and check the box for Sale Leaseback:

Advance to the next step, and complete the required fields and update any default fields as required for your deal.

Adding a Sale Leaseback to an Existing LBO

When viewing an existing LBO, navigate to the lefthand sidebar, then down to the "Special Situations" section, then to "Sale Leaseback" as shown below:

Complete the required fields and update any default fields as required. Mosaic will recalculate automatically and refresh the LBO outputs as shown above.

Viewing Sale Leaseback Details (Dashboard)

To view detailed calculations supporting the Sale Leaseback navigate to the FCF tab to see the impact from Sale Leaseback Proceeds, and the Consolidated tab of the LBO to see the impact on EBITDA of Sale Leaseback rent:

Viewing Sale Leaseback Details (Excel)

Detailed calculations supporting the Sale Leaseback can be reviewed in full transparency by downloading the model to Excel. Click the download button on the top navigation bar as shown below:

When the Excel file opens, navigate to the FCF and Consolidated tabs to review the relevant calculations therein.  

For further information supporting the methodology employed by Mosaic's Sale Leaseback functionality, please visit our technical guide hosted at Mosaic Academy linked below:

Sale Leaseback Modeling Guide

Below is some background on each assumption available in Mosaic related to Sale Leasebacks:

• Sale Leaseback Proceeds. This is the after-tax amount of cash received for the sale of properties involved in the transaction.
• Starting Annual Rent. This is the amount the business will need to pay annually for continued use of the properties after the sale is completed. We call this “starting” because often some sort of inflationary rent escalator will be applied each year, growing the annual cost to the business.
• Annual Rent Increase. A percentage amount of increase on the beginning rent, applied each year (often contractually under a long-term lease with the lessor).
• Sale Leaseback Year. Most investors buying a business with a large non-core real estate portfolio will identify the Sale Leaseback opportunity and plan to action it immediately (i.e., in Year 1 of their ownership). If that is not the case, you may want a dynamic assumption to pick which year within the investment hold period you want to action the Sale Leaseback (e.g., if you have another value creation plan priority before distracting the team with the Sale Leaseback or if you want to wait for a more favorable Cap. Rate environment, etc.).