Professional Real Estate Development
Successful development of a site requires careful planning, responsible financing, skillful construction, and ultimately effective management—not to mention having the experience and resources to bring it all together into a project that works. At ABEL Construction, we’re experts at finding the perfect synergy in all aspects of the job.
We focus not only on what will make the site itself a success, but on the underlying factors that make the site practicable for the clients who’ll occupy it. From the preliminary functions like:
- site analysis,
- marketing research & market studies
- infill, redevelopment, or speculative
- demographic studies
to the late-stage responsibilities like exploring lease-back options and setting up ongoing site management, the ABEL Construction Development team will provide the best possible long-term real estate solution for your goals and expectations.
Building to suit is not always the right choice for a growing business. Bank financing typically requires a sizeable down payment and stringent lending guidelines. Not to mention, having your financial resources tied up in your building can make it difficult to invest in the equipment, technology and personnel you need to keep your company competitive. That’s why Abel Construction offers lease-backs as an alternative to bank financing or cash payment. We build, remodel or expand your new or existing facility then lease it to you, freeing your balance sheet for other opportunities.
Tax considerations for a sale/lease-back transaction, as described in the CCIM resources: A seller's decision to raise funds through a sale-leaseback frequently is based on substantial income-tax advantages. These savings are an additional source of cash that the seller may use.
Deduction of Rental Payments. The main tax advantage of a valid sale-leaseback is that rental payments under the lease are fully deductible. With conventional mortgage financing, a borrower deducts interest and depreciation only. The rental deduction may exceed the depreciation in three cases: if the property consists primarily of a nondepreciable asset, such as land (although land is not depreciable, rental payments for the lease of land may be deducted); if the property has appreciated in value (while depreciation deductions are limited by the cost of the property, rental deductions may equal the fair market value of the property); or if the property has been fully depreciated.
Timing Gain and Loss Recognition. A seller can use a sale-leaseback to time the recognition of gains or losses while retaining the use of a property. A business may want to recognize gains to use business credits or net operating loss carryovers. If the business owns appreciated property, a sale of assets will produce a gain that could be offset by the credits or net operating loss carryovers. However, if the adjusted basis of the assets exceeds its fair market value, a recognized loss will reduce tax liability.
Capital Gain-Ordinary Loss Treatment. Because the property involved in a sale-leaseback generally is held for use in the seller's trade or business, it qualifies for capital gain-ordinary loss treatment.