Sale-leaseback financing is a form of financing in which a company sells its real estate for cash and simultaneously signs a long-term lease with the buyer. Sale-leaseback transactions provide the lessee company with a source of capital that is an alternative to other financing sources such as corporate borrowing, mortgaging real property or selling shares of common stock.
A company is able to convert the value of real estate assets into working capital it can use to:
- Pay-down debt
- Fund acquisitions
- Reinvest in the core competencies of its business