In one sentence
A transaction where an owner-occupant sells its property and simultaneously leases it back, converting owned real estate into a long-term lease.
The longer version
In a sale-leaseback, a company sells the real estate it operates from and signs a long-term lease to stay, freeing capital while retaining use. The buyer gets a property with a built-in credit tenant.
Financing a sale-leaseback centers on the lease and the tenant's credit, since the lease is effectively the asset's income and the source of loan repayment.
Common questions
- What is a sale-leaseback?
- A transaction where an owner-occupant sells its property and leases it back under a long-term lease, converting real estate into capital while keeping occupancy.
- How do lenders underwrite a sale-leaseback?
- Largely on the tenant's credit and the lease terms, since a single tenant's rent supports the loan.
- Why do companies do sale-leasebacks?
- To raise capital from owned real estate for operations or growth while continuing to use the property.
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