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Field Guide to Sale-Leasebacks & Synthetic Leases

(Updated August 2014)

Often used as a financing alternative, sale-leasebacks offer financially struggling companies access to cash to pay down debt and improve the bottom line. And in a post-Enron environment, sale-leasebacks provide an alternative to the less favorable option of synthetic leases. Find out how sale-leaseback transactions have helped the balance sheets of hotel, restaurant, retail, and other businesses, in the articles and books in this guide. (S. Hogan, Information and Web Content Specialist)


Q - ProQuest articles available for NAR members only. Password can be found on the ProQuest/Find Articles page.


About Sale-Leasebacks

Sale-leaseback: A technique in which a seller deed property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.

Source: Glossary of Housing Terms, National Association of REALTORS®

Image Source: Barron's Educational Series, Inc. via allBusiness.com.


Benefits of Sale-Leasebacks

  • Reinvest in the company
  • Retire debt
  • Improve credit rating
  • Increase productivity
  • Make an acquisition
  • Get a better return on capital investment
  • Avoid negative impact from depreciation on the financial statement

Source: Right now sale/leaseback may be the only option to obtain cash and a healthier balance sheet, (ITRA Global, Oct. 12, 2009).


About Sale-Leasebacks & Synthetic Leases 

Sale/Leaseback Transactions Moving Full Steam Ahead, (Mondaq, July 2, 2014).

Understanding Sale and Leaseback, (SSRN Working Paper Series, June 2014).

Net Lease Economic Report - 2013 Year-End Review: Looking Forward to 2014, (Calkain Companies/Chandan, 2013).

Brokers Explore Short Sale Lease Back Programs, (REALTOR® Magazine Online, Apr. 29, 2013).

Short Sale Lease Back Alternative to Foreclosure Available, (Realty Times, Apr. 26, 2013).

Sale-Leaseback Solutions: Examine the Business and Tax Considerations of These Transactions, (CCIM Institute, n.d.).


Advantages of Sale-Leasebacks

Leaseback deal makes its mark in real estate, (Grand Rapids Business Journal, June 10, 2013). Q

Real Estate Sale-Leasebacks: What's the Attraction of the Net Lease Arrangement? (CIRE Magazine, n.d.)

Making the Most of Sales and Leasebacks, (Franchising World, July 2012). Q

Sale-Leasebacks Provide Capital for Core Business Investment, (CCIM Institute, n.d.).

The Corporate Sale/Leaseback Strategy, (Society of Industrial and Office REALTORS® Educational Foundation, n.d.).


Hotel & Restaurant Property Leasebacks

American Realty Capital Properties Closes $1.5 Billion Red Lobster® Sale-Leaseback Transaction, (PR Newswire, July 28, 2014).

Here's the Secret Behind Taco Bell's 45-Year Success, (Business Insider, July 20, 2014).


Government Property Leasebacks

Wind Farm Tax Credits Warrant Deeper Look, (Courthouse News Service, July 23, 2014).

Sale-Leasebacks Ease Italy’s Real-Estate Jam, (Wall Street Journal, July 15, 2014).

Evaluating the Sale-Leaseback Proposal: Should the State Sell Its Office Buildings?, (Legislative Analyst's Office, Apr. 27, 2010).

Government Sale-Leasebacks, (NAI Alliance, Feb. 25, 2010).

States Turn to Commercial Properties for Cash, (The Seattle Times, Feb. 12, 2010).


Healthcare Property Leasebacks

Montclair hospital sold for lease-back, (The Record, May 8, 2014).

Molina Healthcare Announces $158M Sale/Leaseback, (National Real Estate Investor, June 17, 2013).

Not a Deal-Breaker: Sale-leasebacks Still Attractive to Skilled-Nursing Operators despite Rate Cuts, (Modern Healthcare, Nov 7, 2011). Q

The Hartford's Deep Embrace, (Hartford Business Journal, Mar. 2, 2010).

Healthy Prognosis for Medical Buildings Market, (NuWire Investor, Nov. 17, 2008). 


Articles, Surveys & More From NAR 

—Find all of NAR's Commercial Real Estate Research here.

—Find an index to all NAR Research here.

Commercial Real Estate 2013 Lending Survey, (National Association of REALTORS®, 2013).

The Commercial Real Estate Lending Survey is conducted annually and provides an overview of lending conditions that impact commercial transactions nationally, based on responses from commercial real estate members.

Commercial Real Estate Outlook (National Association of REALTORS®)

The Commercial Real Estate Outlook is NAR's flagship commercial research publication. It is produced quarterly and includes the latest market information on five major commercial real estate sectors — industrial, office, multi-family, retail and hospitality real estate.

Expectations and Market Realities in Real Estate 2014 (National Association of REALTORS®)

This report gives commercial investors the information they need to make forward-looking changes to the way they approach today's market, focusing on economic outlook, capital markets, and expectations for the five major property sector markets (office, industrial, retail, apartment, hotel).


eBooks & Other Resources

eBooks.realtor.org

The following eBooks and digital audiobooks are available to NAR members:

Complete Book of Real Estate Leases (Adobe eReader)

Investing in real estate with lease options and "subject-to" deals (Kindle, Adobe eReader)

The Leasing Process: Landlord and Tenant Perspectives (Adobe eReader)

Leasing Administration Simplified (Kindle, Adobe eReader)

Negotiate the Best Lease for Your Business (Adobe eReader)

Books, Videos, Research Reports & More

The resources below are available for loan through Information Central. Up to three books, tapes, CDs and/or DVDs can be borrowed for 30 days from the Library for a nominal fee of $10. Call Information Central at 800-874-6500 for assistance.

Real estate investors deskbook, (Boston, MA: West Group, 2011). HG 4521 Ar6Re

Commercial lease law answer book, (New York, NY: Vendome Group, 2008). KF 593 C6

Managing and leasing commercial properties, (New York, NY: Wiley, 2007). HD 1394 AL2ma

Real estate finance: theory and practice, (Mason, OH: Thomson Southwestern, 2003). HG 4029 C57 Ed. 6

Real estate sale/leaseback: a review of the advantages and disadvantages, (Washington, D.C.: Society of Office and Industrial REALTORS®, 1993). HD 1384 So1

Field Guides & More

These field guides and other resources in the Virtual Library may also be of interest:

Field Guide to Commercial Property Management

InfoCentral Blog


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