Sale-Leaseback Agreements
A sale-leaseback agreement is a financial transaction in which one party sells an asset, typically real estate or equipment, to another party and simultaneously leases it back from the buyer. This arrangement allows the seller to free up capital while continuing to use the asset without interruption.
In a typical scenario, a company may sell its office building to an investor for cash and then enter into a lease agreement to rent the building for a specified term. This provides the company with immediate liquidity while retaining operational control over the asset.
Sale-leaseback agreements are commonly used in real estate and can be beneficial for tax purposes, as lease payments may be deductible as business expenses.
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