A sale/leaseback is a transaction in which an owner of a property sells the property and simultaneously leases it back from the new owner. The sale/leaseback is used to raise capital or to release equity from the property while still retaining the use of the property.
In a sale/leaseback, the owner of the property sells it to an investor, usually a real estate investment trust (REIT) or other institutional investor, for a lump sum payment. The owner then leases the property back from the new owner, typically for a long-term lease agreement. The lease agreement may include provisions for rent payments, maintenance, and other obligations.
Sale/leasebacks can be a useful tool for businesses, especially for those with high levels of real estate assets, to raise capital for growth, expansion, or other purposes. They can also provide tax benefits, as the sale of the property may result in a tax gain, while the rent payments from the leaseback may be tax deductible.
However, sale/leasebacks also have some disadvantages, such as the loss of ownership and control over the property, the need to pay rent, and the impact on the financial statements. It is important to carefully consider the advantages and disadvantages of a sale/leaseback and to work with experienced real estate and financial advisors to ensure that the transaction is structured properly and meets the goals of the business.
Maven Commercial Real Estate provides to investors and clients who are looking to leverage their hard-earned profits in order to improve their business goals.
Contact your Maven Team to receive the best advice and service with sale-leaseback services.