By Sir Felix Modebe B.Sc., M.Sc., MBA, FRICS, CCIM, KSJI
Visionary Founder-Leader | N3 CAPITAL AFRICA

African corporations hold real estate portfolios (10-35% of assets) functioning as “dead assets”—properties generating 2-4% returns while business opportunities offer 15-25% returns. Sale-Leaseback transforms illiquid equity into strategic capital within 90 days.

What “Dead Assets” Mean

Buildings at book value not generating liquidity: Campus purchased $30M, depreciated to $18M, carries $50M market value—$32M trapped equity. Underutilized real estate: 2-4% appreciation vs. 15-25% business returns. Opportunity cost: Capital trapped vs. market expansion, technology, product development.

Why SLB Unlocks Capital Fast

SLB vs. Bank Debt: No covenant stress, 60-90 day cash vs. 4-6 month approvals, off-balance-sheet potential improving metrics.

Capital Unlock: Sale $50M, lease $4M annually (8%), redeployed @ 20% = $10M.

Net benefit: $6M annually ($10M – $4M vs. $1.5M appreciation).

10-year: $60M value creation.

90-Day Timeline

Weeks 1-2: Initial evaluation.

Weeks 3-6: Due diligence & documentation.

Weeks 7-10: Investor approval & regulatory.

Weeks 11-12: Closing and capital deployment.

Case Study: $250M Portfolio Transformation

Before (Ownership): 200 facilities, $150M book value, $250M market value, $100M trapped equity.

Property appreciation: $7.5M annually (3% of market value).

Annual property expenses: $15M (maintenance, insurance, property taxes, utilities, security).

Net annual cost: -$7.5M ($7.5M appreciation – $15M expenses).

After (Sale-Leaseback): Portfolio sale: $250M proceeds to corporate treasury.

Annual lease obligation: $20M (8% effective rate including property management services).

Capital redeployed to core business operations @ 20% returns: $50M annually.

Net annual benefit: $30M ($50M business returns – $20M lease obligations vs. -$7.5M net property cost).

10-year cumulative value creation: $300M additional shareholder value through systematic capital redeployment.

ROIC Transformation:

• Before: -3% returns ($7.5M appreciation – $15M expenses on $250M capital)
• After: +20% returns ($50M business operations on $250M redeployed capital)
• ROIC Improvement: 23 percentage points (from -3% to +20%)

This transformation—converting negative-return real estate to positive-return business operations—represents systematic value creation impossible through operational improvements alone.

Strategic Deployment

Market expansion (20-25%): Geographic, product, customer acquisition.

Technology (25-35%): Digital transformation, automation, analytics, cybersecurity.

Working capital (15-20%): Inventory, supplier terms, customer credit.

Debt reduction: Eliminate 25-35% rates, credit rating improvement.

Acquisitions (30-40%+): Competitor, vertical integration, technology.

Strategic Benefits

$100-500M immediate liquidity from portfolio monetization enabling strategic investment capital constraints previously prevented. 23 percentage point ROIC improvement (example case) through capital redeployment from -3% real estate to +20% business returns—systematic financial performance enhancement rewarded through valuation expansion. Zero debt impact preserving borrowing capacity—capital access without leverage complications or covenant restrictions. Operational continuity through 15-25 year leasebacks ensuring uninterrupted operations while capturing financial benefits. Competitive advantages through capital availability enabling market expansion, technology investment, acquisition opportunities competitors cannot pursue.