Originally Posted by
muscat
Definitely not. Much better to sell off your assets, free up capital, and lease the item back. For example:
hotels don't own the buildings
nursing homes don't own the buildings
breweries don't own the pubs
On the other hand, Southern Cross Nursing Homes is a good example of what can go wrong with this strategy
Ditto United Airlines around 2001/2 - they leased most of the aircraft, and had nowhere to go when the business turned down.
Ditto the Banks in 2007/8 - hopelessly leveraged and unable to withstand much turbulence.
Basically, when the economy is good the pundits, "professional" investors and all the speculating riff-raff declare managers incompetent if they're not leveraged to the eyeballs, leaving the business hopelessly exposed when the inevitable downturn arrives.
Of course there were a group of politicians who claimed to have ended "boom & bust", but look what happened to them....