A Sale-Leaseback is when an owner/operator of real estate sells their building to a third party then leases it back.
How a Sale-Leaseback Works
Why Do a Sale-Leaseback
To recognize the heightened value of the real estate that is created by the strength of the operating business. Further benefits include:
- Maintain Control = determine optimal lease structure to meet short- and long-term goals.
- (i.e. rents, CAM, term, right of first refusal, etc.)
- Tax Advantages = full deductibility of lease payments, as opposed to depreciation and interest only deductions.
- Access to working Capital = Discretionary capital to expand and/or update operations.
- Improve Balance Sheet = reduce debt and liabilities.