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.

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 ?
One obstacle to large bulk sale-leaseback transactions is that public real estate investment trusts usually prefer to minimize risk by diversifying in a number of properties.
Paragraphs 32 and 33, however, say a seller-lessee should follow sale-leaseback accounting (that is, the seller should remove the asset and any related liabilities from the balance sheet and recognize the sale) for sale-leaseback transactions involving personal property.
Realty Income said it believes there is significant demand from high-quality tenants in Europe for sale-leaseback capital on reasonable terms and believe Realty Income is uniquely positioned to capitalise on this opportunity utilising its scale and cost of capital.
In a typical sale-leaseback deal, the tenant sells the building to a real estate investment group or other owner and agrees to lease back the building under a long-term agreement, usually 10 to 15 years.
This EITF issue, Impact of an Uncollateralized Irrevocable Letter of Credit on a Real Estate Sale-Leaseback Transaction, considers the effect of a letter of credit on sale-leaseback accounting under FASB Statement no.
Global Banking News-November 23, 2018-Mesirow Financial appoints new VP of business development to expand sale-leaseback team
has announced it will invest $1.25 billion in Steward Health Care System LLC through the sale-leaseback of 9 acute care hospitals run by Steward, and by buying a limited equity stake in the firm.
(NYSE: WPC) said it has acquired a Class A office building in Sunderland, England in a sale-leaseback transaction of USD50.6 million (EUR32.5 million).
(NYSE: NHI) has closed a USD 67m purchase of three senior living communities in North Carolina, Indiana and Tennessee in a sale-leaseback transaction with affiliates of East Lake Capital Management, the company said.
However, a sale-leaseback transaction does not come without its disadvantages for the seller (and eventual tenant).
Generally, under a sale-leaseback arrangement, the owner of a residence sells the property to a junior family member or to a partnership comprised of junior family members.
Some believe the lessee should account for these transactions as a sale-leaseback under FASB Statement no.