Sale and Leaseback
Sale and leaseback is a transaction where property owner sells to investor and immediately leases back the property, unlocking equity while retaining operational use.
| Transaction Structure | Mechanics |
| Sale to investor | Property sold at fair market value |
| Leaseback to seller | Seller becomes tenant, typically 10 to 25 year lease |
| Rent level | Market rate or below-market with higher sale price |
| Lease type | Triple-net (tenant pays all expenses) typical |
| Seller benefit | Unlocks capital for operations or expansion |
| Buyer benefit | Creditworthy tenant, long-term stable income |
| Use Cases | Example |
| Corporate expansion | Retailer sells stores, leases back, uses cash to grow |
| Debt refinancing | Replace expensive debt with sale proceeds |
| Balance sheet optimization | Convert illiquid asset to cash |
| Tax planning | Rent expense may be more favorable than ownership |
| Typical cap rates | 5% to 7% for investment-grade tenants |
| Investor profile | REITs, pension funds, insurance companies |
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