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One of the best tools to generate capital from real estate.
SALE and leaseback is the sale of an interest in a property and the
subsequent leasing back of that same property. It is one of the best tools
to use in generating capital from real estate. This form of financing
starts as a sale, and the seller then agrees to lease back the property
being sold. Sometimes this leaseback can merely be a move to entice the
buyer into the transaction. In its more effective use, the sale and
leaseback is a technique that allows the seller to maintain the use of the
property.
On the corporate front, real-estate sale and leaseback is when a
business sells its commercial property for its fair market value and then
immediately leases it back so that it retains control of the property. It
is also used by developers to build a corporate building, serviced
apartment or hotel as `financed' by the purchasers.
Here are some of the resulting benefits of a sale and leaseback for a
corporation:
* Frees up capital for re-investment
* Improves the balance sheet
* Receives 100% of open-market value
* Low rental rates for longer...