What are the Advantages & Disadvantages of a Sale Leaseback?
Updated on
October 8, 2021
What is a Sale Leaseback?
Sale leasebacks occur when a business sells a building it both owns and occupies while entering into a long-term lease agreement with the purchaser of the building. Sale leasebacks are a strong alternative to conventional financing as they allow users/owners of property to free up excess capital that has been invested in real estate and put it toward other uses.
What Companies or Properties are Good Candidates for Sale Leasebacks?
- Properties with single tenants
- Most property types, such as office, retail, medical, and industrial
- Companies with a long and provable operating history as well as a healthy balance sheet
- Companies which are willing to enter into leases of at least ten years at the current market rate
- Companies which are willing to enter a triple net lease and agree that the tenant will be responsible for any and all operating expenses
What are the Advantages of a Sale Leaseback?
- Will convert non-liquid real estate assets to usable capital without stripping the user of control over or use of the property
- Will avoid costs usually associated with conventional debt financing for real estate transactions
- Will allow the user/seller to depreciate the land as the lease payments will cover the use of land as well as the building
- Lease payments are tax-deductible
- Will remove debt associated with real estate from the balance sheet and improve the company’s debt to equity ratio
What are the Disadvantages of a Sale Leaseback?
- Any future property value appreciation is forfeited by the user
- The user can no longer sell the real estate as part of any subsequent sale of the business as a whole
- In cases where the property has been owned for a long period, the tax impact incurred may be substantial.
Houston Commercial Real Estate Services
From real estate purchases & sales to finding the perfect office space, contact Pride Street Realty for all of your Houston business & commercial real estate needs.
Schedule an Appointment
Additional Real Estate Blog Articles
Texas Real Estate Information & Categories
the right property, the first time
Find your next property
Contact us to find your next property. We find you the best beginner or luxury home or commercial & business real estate opportunities.
.png){kind=small}
.png){kind=small}
For Rent
For Sale
3
Bedrooms
2
Bathrooms
For Rent
For Sale
5
Bedrooms
5.5
Bathrooms
For Rent
For Sale
4
Bedrooms
3
Bathrooms
Free Texas Real Estate Consultations
We are looking forward to hearing from you.
contact us
Monday to Sunday
24/7
Address
Pride Street Realty
713-201-5257
Katy, TX 77449
Email
Contact Our Texas Real Estate Experts Today
Schedule a Free Texas Real Estate Property Consultation
For Rent
For Sale
3
Bedrooms
2
Bathrooms
For Rent
For Sale
5
Bedrooms
5.5
Bathrooms
For Rent
For Sale
4
Bedrooms
3.75
Bathrooms
For Rent
For Sale
4
Bedrooms
2.5
Bathrooms
Get the latest residential & commercial property updates
receive the best Property deals in your inbox
The Latest from the Walkthrough Blog
Moving can be incredibly stressful, but it doesn't have to be. With a little bit of preparation and planning, it's possible to streamline the entire moving process. Start by breaking down the move into manageable tasks and setting an overall timeline for when everything should be completed. Ready to create a stress-free plan for your move? Follow these tips from Pride Street Realty Group.
As a home-based business owner, it’s always exciting to watch your business grow and expand. But as your business grows, you may find that your home is no longer sufficient to support your needs. Whether you need more space for inventory, a dedicated home office, or a professional place to meet with clients, upsizing your home might be the solution you need. Moving into a bigger home is a major decision, so it’s important to plan your upgrade carefully. Check out the following tips to ensure your upsizing process goes as smoothly as possible.
Buying or selling a home is an exciting period in everyone’s lives, but it can become overwhelming quickly, especially when it comes to keeping track of the paperwork. Misplacing documents can lead to closing delays or missed deals. To make sure you make it through the process as smoothly as possible, here are some helpful tips from Pride Street Realty on how to keep up with the paperwork that comes with the home buying and selling process.
Embracing a vibrant new city can be an exhilarating prospect, especially if you've recently been through a hard time. Beginning anew in an unfamiliar place could feel overwhelming, however, which is why having a plan and smart advice is key for making the most of this fresh start. To help you out on your journey, Pride Street Realty has put together a few helpful tips that will make the process a little easier.
Contact
Tom Eickleberry
