What is a "sale leaseback?"
A sale-leaseback is a financial transaction where an asset owner sells an asset to another party and then immediately leases it back from the new owner.
How it works:
Sale: You own an asset (usually real estate or equipment)
Sale: You sell this asset to another party, usually an investor or financial institution.
Leaseback: You then lease the asset back from the new owner for a specific period and at predetermined terms.
Benefits:
Improved cash flow: You receive immediate cash from the sale, which can be used for other business purposes.
Reduced debt: You can use the proceeds to pay off debt, improve your balance sheet, and potentially lower your interest costs.
Focus on core business: You can concentrate on your core operations without worrying about asset management.
Common Use Cases:
Commercial real estate: Businesses often use sale-leasebacks to free up capital tied up in property.
Equipment: Companies can sell equipment and lease it back to maintain operations without owning the assets.
Essentially, a sale-leaseback allows you to unlock the value of your assets while continuing to use them.
