A sale-leaseback is a transaction in which a company that owns real estate sells the property to an investor and simultaneously signs a long-term lease to continue occupying and operating from that same location. The seller converts an illiquid asset into cash while retaining full use of the facility, and the buyer gains a leased asset with an established, in-place tenant from day one. These leases are often structured on a net basis, meaning the tenant continues to pay property taxes, insurance, and maintenance.
Companies pursue sale-leasebacks to raise capital for growth, pay down debt, or improve balance sheet metrics without disrupting operations, since the business keeps running from the same location under new ownership. For investors, sale-leasebacks can offer long, stable lease terms and a tenant with a strong operational incentive to remain in place, since relocating would be costly and disruptive. Underwriting typically centers on the tenant's credit quality and the importance of that specific location to its operations, since the real estate value is closely tied to the strength of the lease.
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