A sale-leaseback lets a business that owns and occupies its building sell the property to an investor and sign a long-term lease to stay. The business gets cash to reinvest in operations, an expansion, or a succession plan, and keeps control of the space.
How it works
The owner/occupant signs a new long-term lease when we have identified an unrelated, qualified investor to buy the real estate. At closing, the seller receives the sale proceeds, no longer pays a mortgage, and becomes a rent-paying tenant. The investor becomes the landlord under the terms of the lease. Leases can include renewal options and, in some cases, a repurchase option.
Pros and cons
The main benefit is turning dormant real estate equity into capital that can earn a higher return in your business. It can also help when a business is being sold, since buyers sometimes discount owned real estate. On the other side, the cost can be higher than conventional mortgage financing depending on terms and rates, and you are committed to the lease term. We help you weigh both before deciding.