Sale-leaseback

(redirected from Sale Leasebacks)
Also found in: Dictionary.

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.

Sale-leaseback.

In a sale-leaseback arrangement -- also known as a leaseback -- an owner sells his or her property, and then immediately leases it back from the buyer as part of the same transaction.

This way, the seller gets the profits from the sale while keeping possession and use of the property, while the buyer is assured immediate long-term income on the property.

Sale-leaseback transactions are most commonly used in commercial real estate, but can also apply to commercial vehicles and other types of property.

References in periodicals archive ?
STREAM Capital Partners (www.stream-cp.com) is a boutique net lease and sale leaseback advisory group.
Another advantage to a sale or sale leaseback is for the retailer looking for an existing strategy in selling the business.
Complete a sale leaseback to an investor with the existing operation with assignment to a new buyer.
Set up a sale leaseback pre-negotiated for the buyer of the business.
When looking at outright sale or sale leaseback, investors want credit, lease term (at least 10 years, but prefer 15), market rents with escalations.
Some recent example of sale leaseback transactions include Time Equities Inc.'s completion of a $8.3 million sale!
We know of two British companies that have completed sale leasebacks recently with subsidiaries in the United States and due to British Gap Accounting have recognized the gain in the year of the sale.
As a commercial real estate broker who specialized in sale leaseback transactions and the leasing of office facilities in Northern New Jersey in the late 1980's, I had the occasion to speak to many financial officers at the CEO, CFO, Treasurer and
Controller level inquiring to the potential of effectuating sale leaseback transactions on corporately owned property.
The sale leaseback is one vehicle that can enable credit-worthy companies to effectuate these changes.
Structured properly and in accordance with FASB guidelines, the sale leaseback is a means of off-balance sheet financing, which can allow the corporation to improve its return on assets, obtain long term low cost financing, enhance the balance sheet, avoid hostile takeovers, create profit, and raise cash.
The key elements involved in working with FASB guidelines for off balance sheet treatment are to make sure that the sale conforms to the test of being a normal sale leaseback which is defined as active use of the property in the trade or business of the seller lessee.