Sale-Leaseback Transaction

A Sale-Leaseback Transaction is a financial arrangement in which one party sells an Asset, typically real estate or equipment, and simultaNeously Leases it back from the buyer. This allows the seller to convert an Asset into cash while still retaining the use of it. The Lease terms are usually structured to provide the seller with operational flexibility and to ensure a steady stream of rental income for the buyer.

For example, a company may own its office building and decide to sell it to an investor. After the sale, the company enters into a long-term Lease agreement with the investor to continue occupying the building. This transaction provides the company with immediate cash to rEINvest in its operations while allowing it to maintain its business location.

In a notable case, ABC Corp sold its manufacturing facility to a real estate investment Trust (REIT) for $10 million and simultaNeously entered a 15-year Leaseback agreement. This allowed ABC Corp to access Capital for expansion while ensuring it could continue its production without interruption.