Sale-leaseback

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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
One of the first sale-and-leaseback agreements in the Gulf educational sector was announced in 2013 when the US-based firm PineBridge Investments acquired a GEMS campus in Dubai, leasing it back to the original owner over a 20-year period.
McConnell (1978), "Sale-and-Leaseback Agreements and Enterprise Valuation", Journal of Financial and Quantitative Analysis, (December 1978), pp.