Sale-leaseback
A transaction in which a company sells an asset and leases it back for an agreed term. It releases cash tied up in ownership while creating lease obligations.
Sale-leaseback in round numbers
Hypothetical: a company sells a property for US$15 million and leases it back for 15 years at annual rent of US$1.2 million. The sale price is a one-time amount; rent is a recurring obligation during the lease. Fees, taxes, debt repayment, and other commitments can reduce the cash available from the sale.
Shayne Fitz-Coy’s definition of Sale-leaseback
A firm buys a company, creates another company, sells the asset to their own company, and then charges rent. That technique has done exactly what you’re describing, and yet it still works.
Terms Related to Sale-leaseback
Dividend recapitalization · Collateral · Covenant · Leverage · Cost segregation · All of the glossary