Sale Leaseback

A property owner sells real estate used by its business to an investor and, as part of the same transaction, leases it back from that investor. Therefore, the business owner becomes the tenant and the investor becomes the landlord. The seller (now tenant) receives the sales proceeds from the property sale and pays the new owner (investor) rent over the lease term. The seller (now tenant) no longer has its capital tied up in the property.

Sale-Leaseback-arrow-graphProperty owners unlock capital by selling their real estate and retain long-term control through a lease. This tactic can generate cash and owners free themselves from the financial burden of ownership and the terminal value risk. The unique structure of sale leaseback transactions allows a property’s owner occupant to sell their real estate to an outside investor and simultaneously execute a lease to convert the occupant into a tenant rather than the owner. The occupant is able to exit the ownership role but remain in the property as a tenant continuing to utilize the real estate without the ownership. The sale leaseback is a way to “monetize” a property for owners who desire liquidity and flexibility.  Medical sale leasebacks and private business sale leasebacks are very active areas of focus.