Experience with deals where RE is worth much more than business?

searcher profile

January 29, 2021

by a searcher from Pennsylvania State University in Pittsburgh, PA, USA

I'm wondering if anyone has encountered a business where the income would struggle to cover the fair market lease/or service the debt to purchase the building. Example is $2MM property that building is 50% utilized by a manufacturer that does $200K Ebitda.

Curious to hear your thoughts.

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commentor profile
Reply by a lender
from Western Carolina University in Raleigh, NC, USA
If 51% or more of the loan proceeds are used for a real estate purchase, we can amortize the SBA loan out 25 years. Will still need debt service, but 25 years helps that
commentor profile
Reply by an intermediary
from Wake Forest University in Winston-Salem, NC, USA
Another consideration, the Adjusted EBITDA should take into account a fair market lease. So it it isn't the EBITDA and value of the company is overstated.
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