leaseback

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Leaseback

A transaction that involves the sales of some property, and an agreement by the seller to lease the property back from the buyer after the sale.

Sale-Leaseback

The sale of a property in which the seller immediately begins to rent the property from the buyer. That is, the seller no longer has ownership of the property, but maintains residence and/or use for the duration of the rental agreement. A sale-leaseback gives the seller profit from the sale while the buyer is guaranteed income from the rental agreement in the medium or long-term. Sometimes, a sale-leaseback occurs in order to grant the seller access to capital to make improvement on the property; for example, the seller may use the proceeds from the sale to build a factory. A form of sale-leaseback, known as sukuk al-ijara, is a common structure for sukuk, or the equivalent of a bond, in Islamic finance. Sale-leaseback is also called simply leaseback.

leaseback

leaseback

an arrangement which involves the selling of an ASSET by the owner to another person or company on condition that the asset is then LEASED (rented back) to the original owner for a specified period of time at an agreed rental. Leaseback is used primarily as a means of raising finance from the sale of surplus properties while allowing the firm to continue its existing business operations. See LEASING.

leaseback

an arrangement whereby the owner of an ASSET agrees to sell it to another person or company on condition that the asset can be leased to its original owner for a fixed term at a prearranged RENT. Leaseback is normally undertaken to enable companies with large assets such as property to realize cash for use elsewhere in their business.

See LEASE, LEASING.

References in periodicals archive ?
A shareholder may seek to enter into a sale-and-leaseback to generate passive rental income to offset against passive losses.
Retired shareholder: If a retired controlling shareholder has entered into a sale-and-leaseback and no longer materially participates in the business, the net rental income will be passive.
The benefits of a sale-and-leaseback will be available only if there is both a valid sale and a valid leaseback.