Definition in brief
= Lease back
A sale and lease back (SLB) transaction has to do with a combination of several legal business transactions: 1. The transfer of ownership in the real estate through the sale from the future lessee to the lessor or the first party assigns in the land register (Grundbuch) to the second party self-contained independent and lasting building rights to his real estate, in order to: 2. To use and to enable the term use against payment of the real estate or building rights within the framework of the real estate leasing agreement (leasing payment [combination of capital payment and rental payment]).
A sale and lease back transaction is characterised by the following elements:
- the lessee sells the lessor a piece of property, which is in his possession
- against payment of the purchase price and with free disposal
- the lessee retains possession of the leasing property for the agreed use
- against remission of a periodic leasing payment
Because of the long-term nature of a sale and lease back, in practice it qualifies as financing leasing, where the real estate of the lessee serves as collateral.
The business procedure of “coupling of sale and lease back” primarily helps the lessee acquire cash through the real estate sale to the lessor.
Sale and Lease back macht vor allem da Sinn, wo die freigesetzten Kapital das Kerngeschäft erweitert werden kann (Zugewinn von Marktanteilen).
The lessee must expand its core business out of the released capital (purchase price naturally after deducting any outstanding mortgage debt) and increase revenues and net income in order to be able to ensure the regular servicing of the leasing payments and amortisation out of the freed and additional liquidity over the medium term. Through the sale of the real estate, the lessee’s flexibility to act is reduced financially and with regard to valuation (for example, no participation in future increases in value; exception: purchase rights or repurchase rights at the end of the leasing term with an appropriate leasing agreement construct).