Why the property leg gets overlooked
In most growth-funding and M&A mandates, the operating business is the focus and the property is an afterthought. It sits on the balance sheet, the bank holds security over it, and the deal gets structured around it rather than with it. The freehold is treated as fixed scenery rather than a live source of capital.
That’s often a missed opportunity. For businesses that own industrial freehold in South-East Queensland, the property can be a meaningful source of deal capital — and in some cases it’s cleaner than a further equity raise or additional senior debt, because it dilutes no one and adds nothing to the leverage profile.
Where it fits in the capital stack
A sale and leaseback works well as a parallel track to the main deal. The business sells the freehold to a long-term landlord, receives the proceeds, and continues operating under a lease. Those proceeds can fund an acquisition, retire existing debt to create headroom, recapitalise the balance sheet, or provide founder liquidity alongside a partial trade sale.
Because the structure is a property transaction rather than a debt instrument, it doesn’t encumber the business the way borrowing does. There are no financial covenants attached to the lease, no security reviews at renewal, and no refinancing risk down the track. In a stack that already carries senior debt and equity, an asset sale can be the piece that adds capacity without adding fragility — which often makes the overall structure simpler to underwrite and easier to get across the line.
It’s worth weighing the trade-off honestly alongside the alternatives, because that’s the comparison your client will want. Set against a further equity raise, it avoids dilution and keeps control where it is. Set against more senior debt, it adds no leverage and no covenant package, so it doesn’t consume the headroom the business may need for the deal itself. What it does involve is a long-term rent obligation in place of an owned asset — a real commitment, and one the client should make with eyes open, but for an operator with no intention of relocating it’s frequently the most efficient of the available options.
What makes the property leg clean
For the leaseback to settle smoothly and on time alongside the main transaction, a few things need to be in order early. The title needs to be clear of encumbrances, or the existing mortgage needs to be refinanced or released as part of the settlement waterfall — that sequencing is worth mapping before exchange, not during it. The lease terms also need to be agreed up front — rent, term, renewal options, make-good obligations — because a buyer underwriting a long-term hold needs certainty on each of those to commit.
Contamination searches, structural condition, and council compliance are standard due-diligence items. Industrial properties in South-East Queensland are generally straightforward, but assembling this material early avoids hold-ups at the worst possible moment in a transaction, when several workstreams are converging on a single settlement date.
One point worth flagging to the client early: the lease is a long-term commitment, and the business needs to be comfortable operating as a tenant in that facility for the foreseeable future. For most industrial owner-operators that’s no concern — they have no intention of moving — but it’s worth confirming before the structure is built around it.
How the timetables line up
The practical art is synchronisation. The property sale has its own conveyancing, due diligence, and settlement mechanics, and these need to dovetail with the main deal’s completion rather than run on a separate clock. Where proceeds from the property are funding part of the transaction, the settlement waterfall has to be sequenced so the cash lands when it’s needed.
This is very achievable with a counterparty who can decide quickly and isn’t waiting on a credit committee or an external equity partner. The risk to manage is a property buyer whose own timetable or funding introduces slippage into a deal that has no room for it — which is why certainty on the buyer’s side matters as much as price.
Tax and structuring: your territory, not ours
The tax treatment of the sale proceeds, the GST position, the impact on the client’s trust or corporate structure, and any duty considerations are all matters for you and the client to work through. We’re the property counterparty; we don’t advise on the broader transaction structure, and we’d expect those questions to be settled within the advisory team on the client’s specific facts.
What we can do is move quickly once we have what we need, which is useful precisely when the property settlement has to align with the main deal timetable.
What we need to give you a view
A brief description of the property, a copy of the title or a current valuation if one exists, and an outline of the proposed lease terms are enough for us to give you a preliminary position. We can usually do that within a short timeframe, which means the property track doesn’t hold up your deal process.
We work alongside the advisory team throughout. You remain the client’s adviser; we’re there to give certainty on the property side and to settle to your timetable.
The bottom line
Treated as a live part of the capital stack rather than fixed scenery, the freehold can be one of the simplest sources of funding in a growth or acquisition mandate — provided the title, the lease terms, and the settlement sequencing are sorted early.
If you’re working on a mandate where the client owns their premises, I’m happy to talk through the specific deal on a no-obligation basis and give you an early read on the property leg.