Sale Leasebacks & Synthetic Leases

Overview

Often used as a financing alternative, sale-leasebacks offer financially struggling companies access to cash to pay down debt and improve the bottom line. Find out how sale-leaseback transactions have helped the balance sheets of hotel, restaurant, retail, and other businesses.

What is a Sale-Leaseback

References

We've already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require a password.


Seller Benefits:

  • Converts equity into cash
  • Offers alternatives to conventional financing
  • Possibility of better financing
  • Improves balance sheet and credit standing
  • Avoids debt restrictions
  • Deterrent to corporate takeovers
  • Avoids usury limitation

Buyer Benefits:

  • Higher return rate
  • Predictable and secure return rate
  • Greater ease in handling a seller default
  • Avoid usury problems
  • Ownership of the reversion
  • Built-in tenant

Tax Considerations:

  • Deduction of rental payments
  • Timing gain and loss recognition
  • Capital gain-ordinary loss treatment

Source: Sale-Leaseback Solutions: Examine the Business and Tax Considerations of These Transactions (CCIM Institute)

About Sale-Leasebacks & Synthetic Leases 

Why Sale-Leasebacks are Coming Back Strong (Globe St., Feb. 8, 2019)

An Analysis of the New Sale and Leaseback Guidance (CPA Journal, Sep. 2018) E

Synthetic Leases: An Old New Leasing Approach (Connect Commercial Real Estate, Jul. 20, 2018)

Renewed Interest in Synthetic Leases (King & Spalding Law, Jun. 6, 2018)

Investors Welcome Surge of Corporate Sale-Leasebacks (National Real Estate Investor, Apr. 5, 2018)

Mutually Beneficial: How to Negotiate a Sale-Leaseback So That Both Parties Benefit (Smart Business Cleveland, Jan. 2018) E

Sale-Leaseback Strategies: Maximizing Value (Calkain Companies)

Advantages of Sale-Leasebacks

Sale-Leaseback: Weighing the Risks and Rewards for Your Business (JLL, Jan. 17, 2019)

The Many Benefits of Sale-Leasebacks for Middle Market and Private Equity Owned Businesses (ETF Trends, Oct. 29, 2018)

Watch Out for These Sale-Leaseback Challenges (Globe St., Mar. 29, 2018)

Why Private Equity Likes Sale-Leasebacks (Commercial Property Executive, Sep. 19, 2018)

Synthetic Leases: Benefit or Burden? (CCIM Institute)

Real Estate Sale-Leasebacks: What's the Attraction of the Net Lease Arrangement? (CIRE Magazine)

Sale-Leasebacks Provide Capital for Core Business Investment (CCIM Institute)

Hotel & Restaurant Property Leasebacks

 

Check, Please: Restaurant Chains Jump on Leaseback Deals to Raise Capital (CoStar News, Feb. 13, 2019)

Sale-Leaseback Deals Help Unlock ‘Untapped Value’ (Hotel News Now, Nov. 2, 2018)

Are Sale/Leasebacks Beneficial? (Convenience Store Decisions, Sep. 2017) E

Government Property Leasebacks

Fixing the Government Pension Problem for Fun and Profit (Chicago Crain’s Business, Apr. 23, 2018) E

Making the Most of Public Assets (National Real Estate Investor, Nov. 3, 2017)

Sale/Lease-Back Deals Attract Smaller Firms (Wall Street Journal, Aug. 12, 2015) E

Healthcare Property Leasebacks

Healthcare Providers Use Sale-Leasebacks to Help Fuel Growth (Lexology, Nov. 28, 2018)

Understanding the Medical Office Building (MOB) Sale-Leaseback and its Advantages (UCR Properties, Nov. 16, 2017)

Medical Real Estate: Sale-Leaseback Advantage (Ploutus Advisors)

Articles, Surveys & More From NAR

Find all of NAR's Commercial Real Estate Research here

Find an index to all NAR Research here

Expectations & Market Realities in Real Estate 2019 (National Association of REALTORS®)

Commercial Real Estate Lending Trends 2019 (National Association of REALTORS®)

Commercial Real Estate Outlook (National Association of REALTORS®)

The Commercial Real Estate Outlook is NAR's flagship commercial research publication. It is produced quarterly and includes the latest market information on five major commercial real estate sectors — industrial, office, multi-family, retail and hospitality real estate.

eBooks & Other Resources

eBooks.realtor.org

The following eBooks and digital audiobooks are available to NAR members:

The Art of Commercial Real Estate Leasing (Kindle, Audiobook, eBook)

Complete Book of Real Estate Leases (eBook)

Investing in Real Estate with Lease Options and "Subject-to" Deals (Kindle, eBook)

The Leasing Process: Landlord and Tenant Perspectives (eBook)

Leasing Administration Simplified (Kindle, eBook)

Negotiate the Best Lease for Your Business (eBook)

Books, Videos, Research Reports & More

The resources below are available for loan through Member Support. Up to three books, tapes, CDs and/or DVDs can be borrowed for 30 days from the Library for a nominal fee of $10. Call Member Support at 800-874-6500 for assistance.

Real Estate Investors Deskbook (Boston, MA: West Group, 2011) HG 4521 Ar6Re

Commercial Lease Law Answer Book (New York, NY: Vendome Group, 2008) KF 593 C6

Managing and Leasing Commercial Properties (New York, NY: Wiley, 2007) HD 1394 AL2ma

Real Estate Finance: Theory and Practice (Mason, OH: Thomson Southwestern, 2003) HG 4029 C57 Ed. 6

Real Estate Sale/Leaseback: A Review of the Advantages and Disadvantages (Washington, D.C.: Society of Office and Industrial REALTORS®, 1993) HD 1384 So1


Have an idea for a real estate topic? Send us your suggestions.

The inclusion of links on this page does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this page complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.

Advertisement

Young Professionals Network

YPN helps young real estate practitioners become more business savvy through networking events, communications, and sharing tips and tricks.