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Sale & Lease Back for SipWell: crystal-clear conditions and added value

written by Norbert Padt
Published on:
Future logistics
Sale & lease backFMCGFood & Beverages

Sipping on a nice, refreshing glass of water in the office? Chances are you’re enjoying a unique product by SipWell, Belgium’s market leader in water cooler solutions. This company sets the bar for premium water from quality sources, as well as providing clients with coffee and other related products!

WDP has in turn provided SipWell with an airtight Sale & Lease Back solution for its logistics real estate – tailored service and professional advice included. How did that work out? Let’s find out!

Crystal-clear conditions and added value

SipWell is a 100% Belgian company that supplies crystal-clear water from quality sources to private individuals and businesses. The water comes straight from their six sources in Londerzeel , where it’s bottled directly from the ground. Tasty water guaranteed.

But what challenges did this raise when a Sale & Lease Back was put into place, and why did the company make that decision in the first place? We asked Frederik Middernacht, SipWell’s CFO.

What did Sipwell gain from its Sale & Lease Back operation with WDP?

Frederik Middernacht: Well, first and foremost we wanted to be able to optimally finance our activities and growth. And since real estate management isn’t part of our core business, we chose not to seek finance through third parties.

Banks have a habit of undervaluing real estate, and don’t offer Sale & Lease Back solutions. The liquidity we gained through this Sale & Lease Back operation has been instrumental to strengthening our core activity: offering delicious, crystal-clear drinking water.

The bottling plant is right on top of the water source. Did this add challenges to the mix?

Frederik Middernacht: We definitely thought that one through. The site is crucial to our activities, but the whole Sale & Lease Back operation made WDP the owner of the grounds and the soil. Protecting the accessibility of our water sources was an non-negotiable condition for this transaction to go-ahead.

Together with WDP, we struck the right balance between their interests and ours. We got the guarantees we needed, while still leaving enough room for future investments. The contract states that the building site can be expanded to the fallow part of the site, in cooperation with WDP, an opportunity that we can pursue in the short or long term.

Looking back, what do you think of your collaboration with WDP?

Frederik Middernacht: The personal contact with the people at WDP was outstanding from day one. Their positive and professional approach contributed to the transaction’s success. What’s more, WDP worked seamlessly with our legal firm and our external real estate mediator.

Every conversation we had was straight to the point. When we sat down together, we always shared a common goal and could sense that WDP always approached things in a pragmatic, solutions-focused manner. And on a personal note, team WDP are very pleasant people to work with. That helped!

Did you have any experience with Sale & Lease Back in the past?

Frederik Middernacht: No, it was the first time that SipWell committed to something like this. That’s why we had a specialized real estate mediator advise us along the way. He drafted a memorandum and reached out to several interested parties, of which WDP proved to be the best choice.

Of course, price informed our decision-making process, but so did reliability and experience. WDP really stood out on those fronts. WDP’s stock-market capitalization allowed us to leverage contribution in kind, after which we sold a part of the acquired stock. To this day, we remain a shareholder of WDP, to underscore our faith in the company and our long-standing relationship.

4 golden tips for Sale & Lease Back

by Matthias Maselis, real-estate partner at Stibbe, advisor to SipWell.
  1. Consider opting for a Sale & Lease Back: warehouse yields have never been as high as they are now.
  2. Thanks to European case law, it’s possible to carry out a Sale & Lease Back operation without it automatically leading to a negative VAT review (for the ongoing review period), provided that (i) a building’s VAT has already been deducted in the past, (ii) the building can no longer be regarded as new” for VAT purposes and (iii) the 15-year VAT review period has not yet passed. It’s important to ensure the Sale & Lease Back operation has as many financial lease characteristics as possible, so that the tax authorities consider it to constitute a single financing operation.
  3. A Sale & Lease Back operation is a smart move, as it immediately results in added value appraisal under company tax. From an accountancy point of view, the established added value is generally not immediately declared as a cost, but recorded in an accrued account. Thereafter, it is taken into yield at the rate of the property’s depreciation.
  4. Be assisted by an advisor who knows their stuff. That way, you’ll get the most out of the transaction, you won’t leave any added value behind, and you won’t take any unnecessary risks.
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