Sale and leaseback
Sale and leaseback

The following Property practice note provides comprehensive and up to date legal information covering:

  • Sale and leaseback
  • Why sell and lease back?
  • Release capital
  • Outsourcing/streamlining
  • Tax
  • Accounting benefits
  • Buyer's benefits
  • Lease terms

Why sell and lease back?

Release capital

A sale and leaseback transaction allows an owner of real estate to unlock capital. In its most basic form the transaction is a disposal of freehold property in return for a lump sum. The properties still required for operational purposes are leased back. The lump sum is used to generate a return in the business in excess of the rents payable following the sale.

Outsourcing/streamlining

The transaction is an opportunity for an owner to offload the risks inherent in owning real estate and to outsource their asset management. At the same time they can streamline their portfolio by disposing of parts of the property they no longer need.

Tax

Tax may not be the driver for the transaction, but it will be a significant factor in how it is structured. The parties will seek to minimise the tax costs in relation to the transaction itself and going forward.

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