Who We Are
Fairfield American Properties LLC, (FFAP) is a Texas LLC that participates in the Sale and Leaseback of Commercial Real Estate Properties primarily for Single User Industrial, Medical and Retail Properties. FFAP addresses corporate finance solutions for owner-operators facing limited or expensive alternatives for raising capital. FFAP enables owner-operators to sell their real estate to get the capital they need and retain the use of their real estate by exercising a long-term lease for the property. This frees up equity in the property and converts it to funds that can be used for reinvestment in their core business to provide far greater returns.
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What We Offer
Purchasing properties from business owners who need to liquidate their equity in their property for cash to use in their basic business and then lease the property back to use in their business.
Many owner-operators find themselves in the position of having substantial funds tied up in the real estate they own. By liquidating that real estate ownership position for cash and retaining the use of the real estate by leasing it back after the sale of the real estate, the owner-operator can free up the equity in the real estate to use in their core business and still have the use the real estate for the business.
FFAP structures our leases on an absolute triple net basis. The lease is structured so that the business continues to operate as if it stills owned the property. The business will still be responsible for all of the taxes, insurance, maintenance, and utilities related to the property. The business will be able to make modifications to the property as appropriate (with landlord approval which will not be unreasonably withheld).
There may be tax benefits to the business since the entire rental payments can be deducted rather than depreciation deductions that are available to it through having an ownership position related to the property.
Additional benefits to an owner-operator in a sale and leaseback transaction over traditional financing alternatives include (1) being able to get the full amount of equity out of the property rather than 60-70 percent of the value of the property with a traditional mortgage, (2) not having restrictive financial covenants that go along with traditional bank financing, (3) rent payments are sometimes cheaper than payments with other types of financing and (4) there is no collateral requirements in a sale and leaseback transaction which is usually required in traditional financing.
In addition, many traditional financing structures provide longer amortization schedules but have a balloon payment requirement on a shorter term such as 5 to 10 years which causes a financial burden on the business
The general criteria for a Real Estate Transaction with FFAP are as follows:
1. Real Estate transaction sizes from $1 Million to $10 Million.
2. Owner-operator Industrial, Medical and Retail Properties where the properties are central to the ongoing business of the owner-operator.
3. Owner-operators with Annual Revenues of $20 Million to $250 Million.
4. Owner-operators with good credit. These businesses can operate on a regional or national basis.
5. Triple net lease structures with no Landlord responsibilities on a long-term basis. Leases are structured for a minimum of 15 years with options for the tenant to renew the lease.
6. Annual rent increases tied to the Consumer Price Index (minimum 2 percent annually).
FFAP’s transaction process proceeds through the following steps:
1. Initial contact is made with the owner-operator for an introduction regarding a proposed transaction.
2. Evaluate the Real Estate and the Financial Position of the owner-operator.
3. Conduct Due Diligence related to the Real Estate and the Financial Statements of the owner-operator to determine that the proposed transaction meets our criterion for acquisition of the Property.
4. Issue a Commitment for the proposed Sale and Leaseback with the owner- operator by FFAP.
5. Prepare a formal contract and lease between FFAP and the owner-operator for the transaction and submit the contract to the Title Company and schedule the closing.
6. Close the transaction.
