Real Estate in Business Sale: Structure Operating Assets Correctly

You have a business located in a property. The property is 50% of your assets.

Question at sale: Do I sell the property with the business? Or just the business?

That's a huge financial decision.

Option 1: SELL EVERYTHING (Business + Real Estate)

The buyer gets the business AND the building.

Advantage: A simple deal. One price for everything.

Disadvantage: You no longer have the real estate. If you need a new property later (e.g., if you have another business), you need to buy a new one.

Option 2: SALE-LEASEBACK

You sell the real estate, then lease it from the buyer.

The buyer buys the building for 2 million. You then pay 100,000€/year rent.

Advantage: You get 2 million cash at sale. And your business can stay in the property.

Disadvantage: You have rent payments (a business risk). The buyer is your landlord.

Option 3: OPCO/PROPCO SPLIT

You keep the real estate in a separate company (PropCo). The business is in another company (OpCo). The buyer buys only the OpCo, not the PropCo.

The business pays rent to the PropCo.

Advantage: You keep the real estate and receive monthly rent payments.

Disadvantage: More complex structure. Taxes are complicated.

Which structure is right depends on your goals. With VALENTYR, we help you choose.

A sale-leaseback is simple: You sell the real estate, then lease it.

How does it work?

1. You sell your building to an investor (e.g., a financial investor, another business).

2. You sign a lease agreement with this new owner.

3. You pay rent, like any tenant.

Advantages:

• IMMEDIATE LIQUIDITY: You get the sale price immediately.

• TAX EFFICIENT: In many cases, a sale-leaseback is more tax efficient than a normal sale.

• FLEXIBLE: You don't have to tie capital to the real estate.

Disadvantages:

• RENT IS A FIXED COST: If your business earns less, you still pay full rent.

• YOU HAVE NO CONTROL OVER THE PROPERTY: The new owner decides on repairs, renovations.

• INFLATION RISK: Rent can increase over time.

A good sale-leaseback has this structure:

• Lease duration: 10-15 years (not too short, or uncertainty is too high)

• Rent increase: 2-3% per year (tied to inflation)

• Exit option: After 10 years, you can buy back the property (or not).

With VALENTYR, we can optimize the sale-leaseback structure to save taxes.

An OpCo/PropCo split is the classic structure in larger sales.

Structure:

• OpCo = Operating company (your business)

• PropCo = Property company (your building)

The business rents the property from PropCo.

At sale:

• You sell the OpCo (the business) to a buyer.

• You keep the PropCo (the real estate).

Example:

A machinery manufacturing business with factory building. The building is 40% of the value.

With OpCo/PropCo split:

• OpCo is worth 6 million (the business itself)

• PropCo is worth 4 million (the building)

You sell the OpCo for 6 million. You keep the PropCo.

The buyer pays 6 million for a business in a property he doesn't own. But that's okay – he pays rent.

Advantage for YOU:

• You get 6 million cash from the sale.

• You still own a property worth 4 million.

• You earn monthly rent (let's say 30,000€/year).

That's a GREAT structure if you need long-term income.

Disadvantage:

• The buyer is your tenant. If his business struggles, he might not pay rent.

• Complicated tax structure.

With VALENTYR, we can optimize the OpCo/PropCo structure and show you tax savings.

The answer depends on your goals:

GOAL 1: I WANT MAXIMUM CASH IMMEDIATELY

Solution: Sale-leaseback or complete sale (OpCo + PropCo together).

GOAL 2: I WANT LONG-TERM INCOME FROM THE PROPERTY

Solution: OpCo/PropCo split. You keep the property and earn rent.

GOAL 3: I NEED TO SAVE TAXES

Solution: Work with a tax advisor to structure the right solution. Sometimes sale-leaseback is better, sometimes OpCo/PropCo split.

GOAL 4: I WANT SIMPLICITY

Solution: Complete sale. No structure, just a simple deal.

With VALENTYR VOS Assessment, we help you choose the best structure for YOUR situation. We calculate:

• How much cash do you get immediately?

• How much taxes do you pay?

• How much risk do you take on?

Then we can compare the structures.

This is the most important part: Taxes can be MASSIVELY different depending on structure.

Scenario 1: COMPLETE SALE (OpCo + PropCo)

You sell everything together for 10 million.

Sale price for building: 4 million

Sale price for business: 6 million

With holding period >10 years: Building is tax-free!

With normal taxation: Taxes on 4 million (e.g., 30-40% = 1.2-1.6 million).

Scenario 2: OPCO/PROPCO SPLIT

You sell OpCo for 6 million. Taxes: 2-2.4 million (about 33-40%).

You keep PropCo (building 4 million). No taxes on sale!

Instead, you get monthly rent (30,000€/year), which is taxable income (about 30% taxes = 9,000€/year).

After 10-15 years, PropCo is tax-free with holding period.

Comparison:

• Scenario 1: Immediately 2-2.4 million taxes

• Scenario 2: Immediately 2-2.4 million taxes + 9k/year tax on rent, but after 10 years: PropCo is tax-free!

With a tax advisor, you can run these scenarios and optimize.

An important point: Germany has a "holding period" of 10 years for real estate.

That means:

If you hold a property >10 years and sell it: NO income tax on the gain.

If you hold <10 years: Full income tax (25% plus solidarity surcharge).

That's MASSIVE.

Example:

A property that cost 2 million and is worth 4 million.

After 10 years: 2 million gain TAX-FREE.

After 9.5 years: 2 million gain with full income tax (about 600,000€ in taxes!).

That changes the whole calculation.

With VALENTYR, we help you pay attention to the holding period timing. If possible, wait until the 10-year mark. If not, structure differently (e.g., OpCo/PropCo split).

Step 1: With VALENTYR VOS Assessment, analyze your real estate portfolio.

• Value of the property?

• How long have you held it?

• Holding period threshold coming up?

Step 2: We evaluate the different structures:

• Sale-leaseback: How much cash, how much taxes?

• OpCo/PropCo split: How much cash, how much rent, how much taxes?

• Complete sale: How much cash, how much taxes?

Step 3: Work with your tax advisor to finalize the best structure.

Step 4: At sale, use this structure to maximize your net proceeds.

The result: With proper real estate structuring, you often save 500,000€-1,000,000€ in taxes.

That's a very worthwhile investment in advice.