What exit strategy captures value after tenant stabilization?

After a build-to-suit (BTS) or industrial asset reaches tenant stabilization,  typically defined as full lease commencement with a credible rent track record, the project becomes attractive for value capture through exit. A well-planned exit strategy enables developers or investors to monetize rental cash flows, recover capital, and unlock profits while minimizing tax or vacancy risks.

Below are the most effective exit strategies post-stabilization:

1. Outright Sale to Institutional Investors

• Strategy: Sell the asset to REITs, pension funds, or industrial-focused private equity firms.
  
• Why It Works:
  
  • These buyers seek stabilized, income-producing assets with long-term leases.
    
  • Low-risk profile yields competitive cap rates and higher valuations.
    
• Key Conditions:
  
  • Minimum 3–5 years of remaining lease term
    
  • High-credit tenant with a clean payment history
    
  • Escalation clauses and NNN lease structures preferred

2. Sale and Leaseback with Capital Recycling

• Strategy: In cases where you own the operational business, sell the asset to an investor and lease it back under a long-term agreement.
  
• Why It Works:
  
  • Frees up capital for growth while retaining operational control.
    
  • Investors pay a premium for secure long-term rental streams.
    
• Best For:
  
  • Owner-occupiers
    
  • Capital-intensive manufacturers or logistics players

3. Portfolio Aggregation for Premium Sale

• Strategy: Combine multiple stabilized assets (or phases) into a portfolio sale.
  
• Why It Works:
  
  • Institutional buyers prefer multi-asset deals for operational scale and risk diversification.
    
  • Bundling improves pricing power and lowers transaction friction.
    
• Requirements:
  
  • Uniform lease terms and documentation
    
  • Standardized maintenance, insurance, and compliance status

4. Refinancing via Income-Based Loan (Loan Against Property)

• Strategy: Retain the asset and refinance based on rental income stability.
  
• Why It Works:
  
  • Enables partial capital extraction while retaining asset ownership.
    
  • Interest paid is often lower than the capital gain tax incurred on sale.
    
• Lenders Require:
  
  • Registered lease with lock-in
    
  • Tenant’s audited financials and rent payment history

5. REIT Placement or Private REIT Formation

• Strategy: If you have multiple leased assets, place them into a REIT structure or create a private yield vehicle for long-term investors.
  
• Why It Works:
  
  • Attracts investors seeking predictable income.
    
  • Provides liquidity without an outright asset sale.
    
• Considerations:
  
  • Requires regulatory compliance, valuation, and unitization.
    
  • Best suited for developers or funds managing 100,000+ sq. ft portfolios.