Sale and Leaseback

Sale and Leaseback

Sale and Leaseback means:
a form of lease arrangement whereby a company sells an asset to another party-usually an insurance or finance company, a leasing company a limited partnership, or an institutional investor-in exchange for cash, then contracts as a tenant to lease the asset for a specified term. In a sale and leaseback transaction, the owner of property will sell it to a buyer who then leases it back to the original owner. Generally, any gain or loss on the sale is recognized, except when the risks and rewards of ownership are not transferred; in that case the transaction is treated as though the “seller” merely arranged a loan. This method is sometimes used to release the value of capital assets for use in a business.


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