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Related to Sale and Leasebacks: Sale and Leaseback Agreement


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.


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 ?
At the moment operating leases are off the balance sheet, which allows companics to spruce up their balance sheet by eliminating mortgage debt obligations through finance vehicles such as sale and leasebacks.
Over the past five years, it has generated more than [pounds sterling] 5bn from the sale and leaseback of property assets - delivering profits of [pounds sterling] 1-3hn.
In 2000, Sainsbury's, which owned 65% of its property on a freehold basis, raised [pounds sterling] 566m from its first two sale and leaseback deals.
As there no doubt will be for the impending release of Sainsbury's next tranche of sale and leaseback stock.
We don't do sale and lease-back deals for various reasons" is Asda's only comment, while Morrisons says it has "no plans to do sale and leaseback at the moment", Both companies own 80% to 90% of their property portfolio freehold j I and could potentially free up a lot of capital to invest into new store openings.
And there's another example even closer to home: a major factor in Woolworths' downfall was parent company Kingfisher undertaking a sale and leaseback on Woolies stores, which exposed the retailer to a minimum 2.
Even if the likes of Tesco do find a way around the new accounting rules, some property pundits think that the appetite for supermarket sale and leaseback deals will eventually runout of steam.
And if changes to the accounting rules do come in, the latest wave of sale and leaseback activity could be rather shorter than hoped.