If your business owns the building it operates in, a sale-leaseback can convert that trapped equity into cash while you stay exactly where you are. For South Florida owner-occupiers sitting on real estate that has appreciated sharply, it's one of the most powerful — and underused — capital strategies available. Justin Crow advises owners on whether it fits and how to structure it.
How it works
You sell the property to a real estate investor and, at the same closing, sign a long-term lease to continue occupying it. You walk away with the full market value of the real estate in cash, and your business keeps running without interruption.
Why owner-occupiers do it
- Unlock capital for expansion, equipment, debt paydown, a partner buyout, or retirement — at the property's full market value, not a loan against part of it.
- Stay in place with a lease term you control.
- Separate the operating company from the real estate, which often makes a future business sale cleaner and lets each asset be valued on its own terms.
The leaseback terms drive the price
The lease you sign is not an afterthought — it's central to the economics. Term length, rent level, and renewal options directly affect what an investor will pay and how protected your occupancy is. Getting that balance right is where representation matters most.
Start by knowing the number
Before anything, you need a defensible value for the property. Start with a free Broker Opinion of Value — or read what your commercial property is worth — then we model the sale-leaseback against simply holding or selling outright.
Frequently asked questions
Why would I sell and lease back my building?
To unlock capital that's locked in the real estate — for expansion, debt paydown, a partner buyout, or retirement — without moving the business. It also separates the operating company from the property, which can make a future business sale cleaner.
How is the leaseback rent set?
The rent you agree to is a major driver of the sale price: a longer term and a market (or slightly above-market) rent generally raises the price an investor will pay, while protecting your occupancy. Structuring that trade-off well is the core of the advisory.
Is a sale-leaseback right for my business?
It depends on your capital needs, tax situation, and plans for the business. It's most attractive for owner-occupiers sitting on appreciated South Florida real estate who want liquidity but need to stay put. We model it against simply holding or selling outright.
What you are really trading
Strip away the terminology and a sale-leaseback is one exchange: you convert an illiquid asset into cash, and you convert an ownership cost into a contractual obligation. Everything good and bad about it comes from that trade.
On the good side you get the equity out at once, at a value set by the market rather than by a lender's appraisal haircut. You stay in the building, so nothing about your operation changes on the day of closing — no move, no downtime, no new address. Rent is generally deductible as an operating expense where mortgage principal is not, though the specifics belong with your CPA. And the buyer, not you, now owns the roof.
On the other side you give up the appreciation from that day forward, and you take on a lease with a term you must honour. You lose the ability to do whatever you like to the building without asking. If your business needs to shrink or move in year four of a fifteen-year lease, that is now a problem you have to negotiate rather than a decision you simply make.
Neither list makes the decision. What makes it is what you would do with the money. Capital that goes into equipment, acquisition, expansion or paying down expensive debt frequently earns more than the building appreciates. Capital that sits in an account does not, and in that case you have sold an appreciating asset to hold cash. I would rather say that plainly than write the deal.
The lease sets the price, not the building
This is the part owners consistently underestimate, and it is where most of the value is won or lost.
A buyer in a sale-leaseback is not buying a warehouse. They are buying an income stream that happens to be secured by a warehouse, and they price it off the capitalized value of that income. Which means the lease you sign as part of the transaction is not paperwork attached to the sale — it is the product being sold.
Rent
Higher rent raises the sale price mechanically, because the price is the rent divided by a cap rate. That relationship is what tempts owners into setting rent above market to inflate the headline number. It works exactly once. You have then bound your business to an above-market occupancy cost for the whole term, and at the end of it you face a market reset with no equity left to cushion it. Buyers and their lenders also see through it and discount for it. Set the rent at market and take the honest price.
Term
Longer terms produce better pricing because they produce more certainty. Ten to fifteen years is common in a sale-leaseback where five would be normal in an ordinary lease. The question to ask yourself before agreeing is what your business plausibly looks like at the end of that term, and whether you would still want this building.
Structure and who carries what
Most sale-leasebacks are triple-net or absolute-net, meaning taxes, insurance, maintenance and often the roof and structure become yours as tenant. That is a genuine change from ownership, where those costs were yours but discretionary in timing. Under a net lease they are obligations with deadlines. Given that Florida insurance has moved sharply in recent years, be specific about which party carries that risk and whether there is any cap.
The options you keep
Renewal options at pre-agreed rates, a right of first refusal if the buyer later sells, an assignment right so the lease does not block a future sale of your business, and a defined process if you need to expand. These cost the buyer little at closing and can matter enormously to you in year eight. They are far cheaper to negotiate now than to buy back later.
How this compares to just borrowing against it
A sale-leaseback is one way to reach the equity in a building you occupy. It is not the only one, and it is not always the best one.
A refinance or a line secured by the property keeps the asset, keeps the appreciation, and does not commit you to a long lease. It gets you less of the value — a lender will advance a percentage, where a sale gets you the whole thing — and it comes with covenants, a debt service obligation and an interest rate. If you need a portion of the equity and want to keep the upside, this is usually the answer.
A straight sale and relocation gets you full value with no lease obligation, but it costs you a move, buildout, downtime, and a new occupancy cost anyway. It makes sense when the building no longer fits the business, which is a different problem than needing capital.
A partial-interest sale or bringing in a partner on the real estate sits between the two and is worth considering when the property has redevelopment value the business does not need.
The way to choose is to run all of them in dollars over the same horizon rather than arguing about them in principle. If you want a structured way to think about which fits your situation, the owner goal planner walks through six questions and points at a direction. If a straight sale looks more likely, start with what the building would bring on the open market, because that is the number every other option gets measured against.
I am a broker, not a CPA or a tax attorney. A sale-leaseback has real tax consequences — gain recognition, depreciation recapture, the treatment of the lease itself — and those belong with your own advisors before you sign anything, not after.
Where the deal usually goes wrong
Four failure modes, and I have watched all of them.
Rent set to win the headline. Covered above, and worth repeating because it is the most common and the most expensive. The inflated price is real on closing day and the above-market rent is real for fifteen years.
Negotiating the sale first and the lease second. By the time the price is agreed, your leverage on lease terms is gone. The two documents are one negotiation and should be run as one.
Taking the first unsolicited offer. Owner-occupied buildings attract direct approaches, and an owner who has never marketed the property has no way to know whether the offer is good. A buyer who reached out privately is not competing with anyone. That is worth what you would expect.
Signing a term the business cannot honestly commit to. If there is a realistic chance you outgrow or exit the space inside the term, that needs to be solved in the document — assignment rights, sublease rights, a defined termination mechanism — rather than assumed away because the closing cheque is attractive.
If you own the building your business operates from and you are weighing this, the useful first step is knowing what it is worth on the open market and what a market rent for it looks like. Those two numbers decide whether a sale-leaseback is worth doing at all, and you should have them before anyone puts an offer in front of you.
