Leaseback

Leaseback

Leaseback property is a type of finance transaction.

Leaseback arrangements

After purchasing an asset, the owner enters a long-term agreement by which the property is leased back to the seller, at an agreed-to rate. One reason for a leaseback is to transfer ownership to a holding company while keeping proper track of the ongoing worth and profitability of the asset. Another is for the seller to raise money by offloading a valuable asset to a buyer that is presumably interested in making a long-term secured investment. Sale Leaseback arrangements are common in the REIT industry. The largest sale leaseback provider in the United States for entertainment related real estate is Entertainment Properties Trust(NYSE:EPR) whom provide sale leaseback financing for megaplex movie theatres,ski facilities,waterparks,amusement parks and famlly intertainment centers.

In real estate

Leaseback arrangements are popular in France, the United States and the United Kingdom.

Leaseback in France:The seller is a promoter working with a property management company, Typically the initial lease is for 9 to 11 years (In France). The net rental yields are usually in the range 4 to 6% per annum (based on the purchase price). The properties in these arrangements may be residential units, business residence, student residences, holiday resorts, or almost any other type of commercial real estate in France.

Leaseback of residential property has been popular in France for many years and there are significant tax advantages. Under the scheme the purchaser may own the property usually between 1 to 8 weeks per year (with a maximum of 6 months per year). The French government encourages the development of leaseback schemes in touristic areas to alleviate shortages in rental accommodation. The French government rebates the local tax, called TVA, when the property is purchased. Currently the TVA rate is 19.6%. In France, a leaseback property typically has to remain in the leaseback scheme for a period of 9-11 years, depending on the specific property and program. The property should be kept at least 15 years for the sale to be capital gain tax free.Fact|date=August 2008 For a full VAT rebate you should keep it for 20 years. If you sell it after 11 years then you will need to pay back 9/20 of the VAT.

The leaseback concept has spread to other European countries including Spain and Switzerland. Typical property available are studios, apartments and villas. They are situated in ski areas, beach resorts or golf courses.

Other fields

Leaseback is also commonly used in general aviation, with buyers using the scheme to let flight schools and other FBOs use their aircraft.


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Look at other dictionaries:

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  • leaseback — lease·back / lēs ˌbak/ n: the sale of property with the understanding that the seller can lease it back from the new owner often used in the phrase sale and leaseback Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. lease …   Law dictionary

  • leaseback — A transaction that involves the sales of some property, and an agreement by the seller to lease the property back from the buyer after the sale. Bloomberg Financial Dictionary * * * leaseback lease‧back [ˈliːsbæk] noun [countable, uncountable]… …   Financial and business terms

  • Leaseback — An arrangement where the seller of an asset leases back the same asset from the purchaser. In a leaseback arrangement, the specifics of the arrangement are made immediately after the sale of the asset, with the amount of the payments and the time …   Investment dictionary

  • leaseback — /lees bak /, n. the disposal of a building, land, or other property to a buyer under special arrangements for simultaneously leasing it on a long term basis to the original seller, usually with an option to renew the lease. Also called sale and… …   Universalium

  • leaseback — noun A property transaction where a party sells something, then leases it from the purchaser. The seller is released from tax, depreciation, and maintenance costs, and the buyer is guaranteed an income from the property.[ …   Wiktionary

  • leaseback — n. sale and leaseback, business arrangement in which property is sold and then leased to the original seller for long term use …   English contemporary dictionary

  • leaseback — noun Date: 1947 the sale of property with the understanding that the seller can lease it from the new owner …   New Collegiate Dictionary

  • leaseback — lease|back [ˈli:sbæk] n [U and C] technical an arrangement in which you sell or give something to someone, but continue to use it by paying them rent …   Dictionary of contemporary English

  • leaseback — lease|back [ lis,bæk ] noun uncount BUSINESS an agreement in which you continue to use your property after you sell it, while making regular payments to the new owner …   Usage of the words and phrases in modern English

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