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 ?
On May 4th2017, Norwegian announced the sale-leaseback of eight new Boeing 737-800 aiarcraft to be conducted in the second quarter.
The sale-leaseback unlocked the full value of Flagler's real estate assets, allowing the company to invest its capital where it is needed most," Watson said.
These types of transactions can be structured in many different ways, but the leases in typical sale-leaseback transactions are customarily long-term (for a term of at least 15-20 years, plus renewal options), and are true triple-net leases in which the tenant is responsible for all aspects of the property (including maintenance, all payment obligations, insurance, etc.
According to ILFC, the agreement provided for 15 previously ordered Boeing 737-800 Next Generation aircraft to be purchased by ILFC from American and immediately leased back to American under a sale-leaseback financing arrangement.
Sale-leaseback investments in larger public companies, such as Walgreens stores or Family Dollar locations, typically come with corporate guarantees or sponsorship, and are typically easier transactions for the investor, with less risk and thus less return.
The sale-leaseback also can be an attractive alternative to refinancing" due to the costs and fees associated with a refinance.
The retail sector has seen an uptick in sale-leaseback activity in recent years because a number of retailers have had substantial real estate holdings and the markets for the financing of those holdings has become more efficient, as earlier reported by HFN.
Depending on a company's specific needs, it may choose to divide a sale-leaseback into separate leases with differing terms, rents and covenants.
Peck: Would you compare and contrast sale-leaseback and sale-manageback?
Citing ASA Investerings Partnership the IRS disregarded the transactions as a sham, holding that, in essence, they equated to a basic sale-leaseback transaction between A and D.
This article examines gift-leaseback and sale-leaseback transactions among family members and offers suggestions to avoid IRS attacks.
The facility is being used for the sale-leaseback of nine locations in Texas, New Mexico, Ohio, Georgia, and Alabama.