Every profession has its own unique terminology and commercial property (CRE) is no exception. CRE is riddled with hyphenated and compound terms that convey ideas in shorthand, and "sale-leaseback" is among one of the most colorful and least understood.

What is a Sale-Leaseback?

According to Mark Fornes, president of Mark Fornes Real Estate, Inc., based in Dayton, Ohio, this deal is brought out mostly to "raise cash that might be more beneficial in the operation of business than tied up in the property possession."

How Does it Work?

In a sale-leaseback transaction, business offers a property, such as a residential or commercial property or equipment, to a third-party financier. The financier then leases the asset back to the business for a given time period. Business makes regular lease payments to the investor, which can be structured to fit their budget and money flow requirements.

Who Performs a Sale-Leaseback?

A sale-leaseback can be undertaken by a small business that owns and works out of simply one structure or by a large corporation with thousands of employees that owns and occupies numerous residential or commercial properties throughout lots of markets. In either case, the overarching goal is to monetize their property asset.

With a smaller sized business, the inspiration to initiate a sale-leaseback might be an opportunity to open additional offices or places. The money infusion can assist fund those efforts and a lease arrangement with the brand-new structure owner enables business to continue to run from its existing area.

For a big business, Larry Fitzgerald, an industrial realty broker based in Northern Virginia with Newmark Knight Frank, stated that the enticement may be the awareness that a structure "is a non-essential asset and they wish to get it off their balance sheet." Instead of having equity bound in the realty, the company can create liquidity, reallocate the funds and remain in the structure.

Think about this as having your cake and consuming it too: you sell your building and take the cash, while avoiding the interruption of transferring your company, therefore staying quickly accessible to customers, employees, providers, etc.

To see genuine world examples, explore prospective sale-leaseback opportunities in your location to find residential or commercial properties with in place renters and stable rental income.

Commercial Property For Sale

Common Industries That Use Sale-Leasebacks

Sale-leasebacks are specifically popular in asset-heavy industries where companies own valuable property but wish to redeploy capital. Some of the most regular users include:

Quick Service Restaurants (QSRs) - Franchise operators convert equity in owned places into growth capital. Healthcare - Medical workplaces and outpatient centers lower ownership burdens while remaining functional. Retail Chains - Supermarket and big-box merchants unlock capital from owned storefronts. Industrial & Logistics - Warehouse and storage facilities generate income from owned land while maintaining supply chain control. Hospitality - Hotels offload genuine estate to investors while continuing to run the brand name.

These sectors value the ability to remain in place, preserve consumer gain access to, and fund expansion without taking on new financial obligation.

Seller Motivations Beyond Cash

How Sale-Leasebacks Affect Your Balance Sheet

A sale-leaseback enables a business to raise capital without handling new financial obligation or watering down equity. Instead of scheduling a liability, the sale generates money and eliminates the property from the balance sheet. Lease payments end up being operating costs, potentially improving monetary ratios like return on possessions (ROA) and debt-to-equity. This structure makes it a hybrid funding tool, supplying liquidity while keeping utilize low.

For both small and large business, there are additional factors beyond monetary rewards for starting a sale-leaseback.

Focus on mission not genuine estate. In some cases, organization operators simply desire to leave the property business. Owning, operating and keeping a realty possession can be an unnecessary concern, particularly for entrepreneur that want to focus specifically on their business mission. Many do not have the skills, interest or capacity to shovel snow from sidewalks and car park