Many small business owners often own the underlying real estate from which their business operates. For those owners seeking an influx of capital, or looking to remove some capital as part of an exit plan, a sale leaseback may make sense. In a sale-leaseback, the property owner sells the property and enters into a long-term lease as a tenant with the new owner/landlord. The new lease is typically a “single net lease,” where the tenant/business remains obligated to pay for all the expenses of the building, in addition to rent. A sale-leaseback arrangement allows the business to move continue to control the real property but not list it on the company’s balance sheet, and may not be as burdensome as seeking out a new lease with a third-party landlord. This transaction may free up capital and allow the business to invest the cash from a sale back into the business. The transaction must be handled properly so that it is not treated as a loan to the business. If you are considering a sale-leaseback transaction for your business property, consider contacting a commercial real estate broker, attorney, and tax planning professional for help on structuring your transaction.
For additional information and a great summary of the benefits of a sale-leaseback transaction, please check out this article: https://www.bullrealty.com/blog/blog-posts/view/the-lure-of-a-sale-leaseback-transaction