Sale-leasebacks Gain Ground as Flexible Capital Solution

With corporate debt maturing and capital market and tariff uncertainty persisting, more companies are turning to sale-leasebacks to access capital quickly, without sacrificing control of their key real estate.

“Sale-leasebacks are a unique option to provide liquidity, especially when traditional lending becomes less accessible and more expensive,” says Zachary Pasanen, managing director, investments, W. P. Carey. “Interest rates are still elevated, so companies that own their real estate are leaning into sale-leasebacks to pay off expensive debt and shore up their financial position.”

As a result, this long-standing strategy is seeing increased interest as operators across industries navigate rising debt costs, looming maturities and a cautious lending environment.

Meeting liquidity needs quickly

In a typical sale-leaseback, a company sells a property it owns and simultaneously leases it back from the buyer. This frees up capital previously tied up in real estate while allowing the company to keep operating in the same location.

“W. P. Carey is unique in that we don’t use asset-level financing,” says Pasanen. “We’re an all-equity buyer with access to multiple forms of capital, which allows us to close quickly on deals that meet our investment criteria.”

He points to a recent nine-figure deal that closed just 22 days after signing the letter of intent, highlighting the advantage of working with a buyer that has decades of broad experience and ready access to capital.  

For companies looking beyond traditional debt financing, sale-leasebacks are a great option, particularly when you can find a buyer that offers speed and certainty of execution. “It allows the company to focus on their core competency, whether that’s a product or service, rather than tying up capital in real estate,” says Pasanen.

What to consider before moving forward

For companies exploring this strategy for the first time, Pasanen has a few words of advice, starting with the accounting implications.

“Talk to your accounting department beforehand to make sure you understand how the lease will be treated on the books,” says Pasanen.

From there, he says it’s about evaluating all your options. Many companies are surprised to learn that even secondary or tertiary locations can appeal to the right buyer. “We’re location agnostic,” says Pasanen. “As long as we’re acquiring mission-critical real estate with a long-term commitment from a company, we’re willing to consider a deal, irrespective of location.”

Looking ahead, companies are likely to encounter escalating expenses and more restrictive lending environments, positioning sale-leasebacks as an effective means to swiftly generate capital and align with long-term strategic goals. “With the access to capital that we have,” says Pasanen, “we really view ourselves as a leading provider of sale-leaseback financing, delivering the type of solutions operators need in order to fund their next phase of growth.”