Real Estate Thinking

Sale Leasebacks

A sale-leaseback converts a building you own into cash you can deploy — while you keep operating inside it. The question is always the same: does your business earn more on that capital than the building does?

  • Advanced
  • 7 min total
  • 11 chapters

What decision this helps you make: Whether to unlock real estate equity through a sale-leaseback — priced against alternatives, with the lease negotiated as your occupancy security for decades.

What this topic is

Selling your building and leasing it back in one transaction: you keep operating there as a tenant; the buyer gets income property with you attached; you get the equity in cash.

Why it matters

Capital trapped in walls often earns less than the operating business could earn with it — and the structure prices that trade explicitly, at the cap rate plus the lease terms.

Who should learn it

Business owners with equity-heavy real estate, buyers seeking tenanted income property, and anyone weighing owning versus deploying.

What you will understand

  • You trade appreciation and control for deployable cash
  • Your own credit quality largely sets the price you get
  • The lease is your occupancy security — negotiate it like it
  • The capital's cost = cap rate + escalations; compare alternatives

Prerequisites

Common misconception

"A sale-leaseback is just an expensive loan." A loan is capital with the building kept; a sale-leaseback is capital with the building sold — 100% of value unlocked (versus a mortgage's fraction), no debt on the balance sheet, but appreciation and residual control gone forever. They're different instruments answering different questions, and pricing them against each other is the whole analysis.