THE credit crunch has focused many minds on the availability and cost of finance, according to Simon Harland, investment associate director at DTZ.

“Fortunately, some businesses have valuable property assets, the value of which, if released, could provide capital on more competitive terms than the banks,” he said.

Until recently, the proliferation of easy sources of finance was the catalyst for many businesses to purchase their occupational property, as opposed to the more traditional leasing route. Now however, with the cost of finance increasing dramatically and its availability significantly reduced, the tables have been turned.

“Businesses looking to invest are now finding it more difficult to raise debt and where this is possible costs have grown alarmingly, with many small businesses facing finance rates into double figures,”

said Simon.

“As a result businesses are now increasingly turning to sale and leaseback solutions to unlock value in their occupational property as a means to raise finance.

“Structuring a sale and leaseback can realise 100% of the investment value of the property, which will be considerably higher than the 70% of vacant possession value a bank will typically release.

Businesses can now access a range of sophisticated financial solutions for ownership that allows them to structure corporate assets more flexibly and to effectively strike a balance between maximising up-front proceeds and retaining the necessary degree of flexibility.”