Sale-and-leaseback

Sale-and-leaseback

A sale-and-leaseback [ [http://investorwords.com/4364/sale_and_leaseback.html sale and leaseback Definition ] ] is typically a commercial real estate transaction in which one party, often a corporation, sells its corporate real estate assets to another party, such as an institutional investor, or a real estate investment trust (reit) [ [http://www.reit.com Home ] ] , and then leases the property back at a rental rate and lease term that is acceptable to the new investor/landlord.

In a sale-and-leaseback, the lease term and rental rate is based on the new investor/landlord's financing costs, the seller/lessee credit rating, and a market rate of return based on the initial cash investment by the new investor/landlord. The reasons and advantages for doing a sale-and-leaseback by a seller/lessee is varied, but the most common are:

*Help finance expansion of the existing business, purchase new plant equipment, or invest in new business opportunities.
*Help pay down debt and improve the company's balance sheet.
*Help reduce the seller/lessee's business income tax liability caused by the appreciation in value (land only) of its corporate real estate assets. In addition, the seller/lessee as a tenant can deduct all rent payments as a legitimate business expense on its annual tax returns.

The advantages of doing a sale-and-leaseback by an investor/landlord are:

* Fair return on the investment in the form of rent during the lease term, and ownership of a depreciable asset already occupied by a reliable tenant.
* Long term fully leased asset with a guaranteed income stream.
* For income tax purposes the investor/landlord can take an expense deduction for an investment in a depreciable property to allow for the recovery of the cost of the investment.

When considering to do a sale-and-leaseback transaction always consult with a qualified commercial real estate broker [ [http://www.sior.com SIOR ] ] , attorney, and accountant.

References

* Investorwords.com [http://www.investorwords.com/4364/sale_and_leaseback.html]
* National Association of Real Estate Investment Trusts [http://www.reit.com]
* Society of Industrial and Office Realtors [http://www.sior.com]


Wikimedia Foundation. 2010.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • sale and leaseback — ➔ leaseback * * *    The sale of assets to another party, coupled with an agreement to lease those same assets for an agreed period of time. The seller has the benefit of an immediate inflow of funds, which can be put to use elsewhere in the… …   Financial and business terms

  • sale and leaseback — leaseback. Also called sale leaseback. * * * sale and leaseback UK US noun [uncountable] business the sale of something that the person selling it immediately rents back from the person who buys it, in order to get money from the sale and get a… …   Useful english dictionary

  • sale and leaseback — n. The sale of an item to a buyer who immediately leases it back to the seller, done to free up the seller’s capital or to gain a tax deduction. The Essential Law Dictionary. Sphinx Publishing, An imprint of Sourcebooks, Inc. Amy Hackney… …   Law dictionary

  • Sale and Leaseback — Un leaseback (diminutif de sale and leaseback) est une transaction financière au cours de laquelle une entité vend un actif et le récupère en location pour une longue durée. Ainsi, l’entité continue d’utiliser l’actif mais n’en est plus le… …   Wikipédia en Français

  • sale and leaseback — atgalinė nuoma statusas T sritis turto vertinimas apibrėžtis Vienu metu vykdomi sandoriai, pagal kuriuos pirkėjas tampa turto nuomotoju, o pardavėjas – nuomininku. atitikmenys: angl. sale and leaseback ryšiai: susijęs terminas – nuomotojas… …   Lithuanian dictionary (lietuvių žodynas)

  • sale and leaseback — sale′ and lease′back n. bus leaseback Also called sale′ lease′back …   From formal English to slang

  • sale and leaseback — UK / US noun [uncountable] business the sale of something that the person selling it immediately rents back from the person who buys it, in order to get money from the sale and get a reduction in tax …   English dictionary

  • sale and leaseback — leaseback. Also called sale leaseback. * * * …   Universalium

  • sale and leaseback — noun leaseback …   Wiktionary

  • sale and leaseback — A lease that is initiated when a firm sells an asset it owns to another firm and simultaneously leases the asset back for its own use. A sale of an asset to a vendee who immediately leases back to the vendor. The usual objectives are (1) to free… …   Black's law dictionary

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”