Sale-Leaseback
Private Credit glossary · Private Credit Fundamentals
Definition
Transaction in which a company sells an asset and immediately leases it back; sometimes used to monetize real estate within an LBO capital structure.
Sale-Leaseback in plain English
A sale-leaseback is a clever way for a company to turn a building it owns into instant cash without having to move out. It sells the property to an investor for a lump sum, then immediately signs a lease to keep using that exact same building, now paying rent instead of owning it. Picture owning your house outright, selling it to free up cash for something urgent, but staying put and just paying the new owner rent, you get the money now and keep your life unchanged. Companies do this to "monetize" (unlock the cash value of) real estate, often after a buyout when they want funds without borrowing more.
Practice Sale-Leaseback
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