If you’re a commercial property owner and are looking to expand your business, a sale-leaseback may be an option for you. A sale-leaseback is when a property owner, who is also an operator, sells their property but continues to operate it by leasing back the property from the new owner.
A sale-leaseback arrangement is useful when a property owner needs or wants to gain access to cash, or wants to divest from a property but maintain the existing operation on the site. The sale-leaseback option will allow the property owner to access the equity in their property and reinvest the funds in the business. The lease agreement is executed at the same time as the sale. The seller of the property becomes the tenant while the buyer becomes the landlord.
The transaction allows the business and property owner to increase their liquidity while reducing their debt. In addition, the immediate access to capital allows sellers to:
Add additional units
Invest in marketing, new team members, inventory, etc.
Pay off business debt
Lease Term: 15-20 years