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A sale-leaseback transaction allows owners of real property, like real estate, to free up the balance sheet capital they've invested in an asset without losing the ability to continue using it. The seller can then use that capital for other things while the purchaser owns an immediately cash-flowing asset.
A sale-and-leaseback, also known as a sale-leaseback or simply a leaseback, is a financial transaction where an owner of an asset sells it and then leases it back from the new owner. In real estate, a leaseback allows the owner-occupant of a property to sell it to an investor-landlord while continuing to occupy the property. The seller then becomes a lessee of the property while the purchaser becomes the lessor.
A real estate leaseback transaction consists of two related agreements:
This transaction allows a seller to remain an occupant of a property while transferring ownership of an asset to an investor. The purchaser, meanwhile, is buying a property with a long-term tenant already in place, so that they can start generating cash flow immediately.
A sale-leaseback transaction benefits both the seller and the purchaser of a property. Benefits to the seller/lessee include:
Likewise, the purchaser/lessor also experiences several benefits from a leaseback transaction, including:
