Sale-Leaseback
Definition:
A Sale-Leaseback is a financial transaction where an owner sells their property and immediately leases it back from the buyer. This allows the original owner to free up capital while still occupying and using the property. Sale-leasebacks are commonly used by businesses to raise cash while maintaining operational control of their real estate.
🔍 Did You Know?
Sale-leaseback transactions are often structured with long-term leases, providing stability for both the seller-lessee and the buyer-lessor.
Examples:
Example 1:
A company sells its office building for $5 million and signs a 10-year lease to remain as the tenant. This allows the company to free up cash for expansion while continuing to operate in the same space.
Example 2:
An investor purchases an industrial warehouse in a sale-leaseback agreement with the former owner, who continues to operate their business in the facility under a 20-year lease.
Why It’s Important:
Sale-leasebacks offer a way for property owners to convert real estate assets into liquid capital while maintaining occupancy of the property. For buyers, it provides long-term rental income with a reliable tenant.
Who Should Care:
- Business owners looking to raise capital without moving operations.
- Real estate investors seeking long-term, stable rental income.
- Commercial property brokers facilitating sale-leaseback transactions.
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