For many owner-occupiers, their commercial real estate represents one of the most valuable assets on the balance sheet. Yet, that capital is often locked away—producing limited financial flexibility. A sale leaseback allows a business to convert real estate equity into cash while continuing to operate in the same location. When timed and structured correctly, it can be a powerful financial and strategic tool.

What Is a Sale Leaseback?

A sale leaseback is a transaction where a company sells its owned property to an investor and simultaneously signs a long-term lease to remain in place as a tenant. The business retains operational control of its space, while the buyer gains a secure, income-producing investment.

In essence, the transaction transforms a fixed, illiquid asset into liquid capital—without disrupting day-to-day operations. It’s particularly appealing for companies with strong credit profiles and long-term occupancy needs.

When a Sale Leaseback Makes Strategic Sense

Not every company will benefit equally from a sale leaseback, but several scenarios make it particularly effective:

1. When the company needs to free up capital for growth

Businesses facing expansion, acquisitions, or modernization often use a sale leaseback to generate capital without taking on additional debt. The funds can then be redeployed into higher-return activities such as technology investment, product development, or hiring.

2. When real estate ownership is not part of the core business

Owning property requires maintenance, capital expenditures, and management attention—none of which contribute directly to core operations. By transferring ownership, the business focuses resources where they create the most strategic value.

3. When interest rates or credit markets are restrictive

During periods of higher borrowing costs or limited credit access, a sale leaseback can serve as an alternative to traditional financing. It allows companies to strengthen their balance sheet by converting equity into working capital—often at a lower overall cost of funds.

4. When the company wants predictable occupancy costs

The lease component of a sale leaseback typically provides long-term rate certainty. With a fixed lease structure, businesses can forecast future occupancy costs more accurately, improving financial planning and reducing exposure to market volatility.

Critical Considerations Before Proceeding

While a sale leaseback can be advantageous, it requires careful analysis. Companies should:

• Evaluate lease terms carefully. Ensure rent, duration, and renewal options align with business plans and operational flexibility.

• Compare the cost of leasing vs. ownership. If the sale proceeds are reinvested at a higher return than the effective lease rate, the transaction may be accretive.

• Understand accounting and tax implications. Recent lease accounting standards (ASC 842) may affect how the transaction appears on financial statements.

• Choose an experienced advisor. Market timing, valuation accuracy, and lease structuring are key to maximizing long-term value.

How Keyser Helps Owner-Occupiers Evaluate a Sale Leaseback

As a conflict-free advisory firm representing only occupiers, Keyser helps clients evaluate whether a sale leaseback aligns with their broader business objectives. The firm provides comprehensive market analysis, property valuation guidance, and lease benchmarking to ensure the economics of the transaction support both immediate liquidity and long-term operational flexibility.

Keyser’s approach extends beyond the transaction. Advisors consider future space needs, exit strategies, and reinvestment opportunities to ensure the client’s overall capital strategy remains sound. By working solely on behalf of occupiers, Keyser eliminates any potential conflict of interest—ensuring recommendations are driven purely by what benefits the client’s business.

Unlocking Capital Without Losing Control

A sale leaseback can transform real estate from a passive asset into an active financial tool. For owner-occupiers looking to unlock capital while maintaining full operational control, it can provide the liquidity and flexibility needed to grow with confidence.

Before proceeding, companies should partner with a trusted occupier advisor like Keyser—one that combines strategic insight, financial expertise, and conflict-free representation to ensure every decision serves the client’s long-term goals.

Frequently Asked Questions:

Q. What is a sale leaseback in commercial real estate?
A. A sale leaseback is a transaction in which a business sells a property it owns to an investor and simultaneously signs a long-term lease to remain in the space as a tenant. This structure allows the company to unlock equity tied up in the real estate while continuing to operate in the same location without operational disruption.

Q. When does a sale leaseback make strategic sense for an owner-occupier?
A. A sale leaseback is most effective when a company needs to free up capital for growth, is not in the business of owning real estate, is operating in a tight credit or high-interest environment, or wants predictable long-term occupancy costs. It is often used to fund expansion, acquisitions, technology upgrades, or other higher-return investments without taking on additional debt.

Q. What should companies evaluate before pursuing a sale leaseback?
A. Before executing a sale leaseback, companies should compare the long-term cost of leasing vs. owning, ensure the lease structure aligns with business needs, understand the accounting and tax implications under ASC 842, and work with an experienced occupier advisor who can benchmark valuation, structure the lease, and ensure the transaction supports long-term strategic and financial goals.