what is a sale leaseback in real estate

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In a sale-leaseback,an asset that is previously owned by the seller is sold to someone else and then leased back to the first owner for a long duration.In this way,a business owner can continue to use a vital asset but doesn’t own it.The most common users of sale-leasebacks are builders or companies with high-cost fixed assets.

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  • What is a sale-leaseback in real estate?

  • In the typical sale-leaseback, a property owner sells real estate used in its business to an unrelated private investor or to an institutional investor. Simultaneously with the sale, the property is leased back to the seller for a mutually agreed-upon time period, usually 20 to 30 years.

  • What is a a leaseback agreement?

  • A leaseback agreement is one in which the corporation that sells an asset has the option to lease that same asset back from the purchaser at a later date.

  • Is a sale leaseback a good idea for your business?

  • There a good reason why a sale leaseback can make perfect sense for a business. Your business gains much-needed funds from the sale of the property. But you檙e allowed to continue using the property the same as before you sold it. The buyer becomes the new owner of a valuable piece of real estate.

  • Who is the lessee in a sale leaseback?

  • In a sale-leaseback transaction, the seller of the asset becomes the lessee and the purchaser becomes the lessor. A sale-leaseback enables a company to sell an asset to raise capital, then lets the company lease that asset back from the purchaser.

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