Sale Leaseback
The basic premise of a sale-leaseback is the sale of company real estate and/or equipment to a purchaser who then leases the property back to the seller.
In a standard transaction of this nature, a business will either sell property that it already owns or actually buy property in a prime location, then quickly sell it thereafter, obtaining a long-term lease of the property as part of the transaction.
Companies routinely seek financing to pay down debt, expand their business, fund acquisitions, transition out of a lease or construct new facilities. Options include borrowing funds, issuing stock or selling assets, all of which can be expensive and onerous. Sale-leaseback financing provides a company with access to up to 100% of the value of those fixed assets, generating funds that can be used for other corporate initiatives or liquidity, while providing the company control of its facilities.
One of the more significant benefits of the sale-leaseback is that it allows businesses to free capital tied up in real estate and/or equipment. The value of those assets remains largely intangible for as long as the business owns the property. As a result, a substantial amount of capital that a company could use more productively to expand or improve its main business is tied to these assets.
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