When an owner and occupier of a commercial building sells that building but stays on as tenant, it is called a sale and leaseback. Many major companies have opted to use sale and leaseback, and it is certainly on the rise in commercial property.
One of the main attractions of a sale and leaseback is that the lease starts on a given day, with no rent-free or fit-out incentives. Sale and leasebacks provide investment opportunities that are hassle free, with all terms agreed to prior to settlement.
Often new owners or investors are looking for secure, reliable tenants that are willing to sign up to a medium to long-term lease – which a leaseback usually provides. Similarly, most sale and leasebacks are structured with a triple net lease which means that the tenant (the old owner) can take full responsibility for the building, sometimes even with full control over major capital improvements. Essentially this means there is less risk for the new owner and it is easier for them to manage.
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