Sale-Leaseback
A sale-leaseback is when an owner-occupier sells its property and simultaneously leases it back, becoming the tenant. It unlocks capital but can carry above-market rent.
A sale-leaseback is a transaction where a company that owns and occupies its property sells the real estate to an investor and simultaneously leases it back, becoming the long-term tenant — usually on a NNN basis. The seller frees up capital tied in the building; the buyer gets a single-tenant, contracted income stream.
Why it matters: the rent in a sale-leaseback is set by negotiation, not the open market, so it can be above market — which inflates the price (rent ÷ cap = value). Underwrite it carefully: check the rent against market comps, the tenant's credit, and lease term/escalators, and separate the broker NOI from the true, market-rent picture.
The same two-NOI discipline as NNN applies. UpsideIQ models sale-leaseback economics with broker vs true cap rate so above-market rent doesn't slip past you.
Teardown: How I underwrote a $10.8M industrial sale-leaseback — rent coverage vs the headline cap.
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