Wealth management and financial planning teams are trusted advisors, often tasked with stewarding generational family wealth, balancing risk exposures, and meeting clients’ cash flow needs.
High-net-worth and ultra-high-net-worth clients often have substantial assets – typically illiquid real estate assets – outside of the relationship. For clients who are business owners with significant real estate holdings, one underutilized tool is the sale leaseback.
A sale leaseback can be a unique source of cost-effective liquidity, providing capital for business initiatives while also creating new investable assets for advisors to manage.
A sale leaseback enables a client’s company to sell its owned real estate – either its current facility or that of an acquisition target – and simultaneously lease it back under a long-term agreement.
Strategically, this is good for the client’s business and, by extension, good for the client. Specifically, the business converts a fixed, illiquid asset into capital while retaining full operational control. Lease terms typically run 15–20 years with multiple renewal options, ensuring continued control for decades.
In practice, the only change is financial ownership: the company continues to occupy and operate the facility as before, while the buyer is a passive investor seeking stable long-term income.
Sale leasebacks can be executed across a wide range of industries, from industrial manufacturing to logistics and distribution to healthcare, auto dealerships, and even experiential retail.
For wealth management clients who own and operate businesses, the uses of sale leaseback proceeds are broad and strategic. Some companies use the capital to recapitalize the balance sheet and provide a distribution to stakeholders. Others fund growth initiatives – purchasing new equipment, upgrading facilities, or expanding production capacity. Proceeds may also be deployed to pay down debt, lowering interest costs and improving cash flow, or to finance acquisitions that accelerate growth.
Business owners are generally in the business of producing a product or delivering a service – not managing real estate. Yet significant capital often sits idle in owned property. A sale leaseback allows companies to monetize 100% (or more) of a property’s market value, as compared to traditional mortgages, which typically release only 70–80%. The result is immediate liquidity without the need to layer on additional debt.
For owners planning an eventual business sale, separating the real estate can create significant incremental value. Sale leaseback investors, who are the natural long-term owners of corporate facilities, often pay higher multiples for properties underpinned by long-term leases than operating company buyers would. This multiple arbitrage can make a compelling case for executing a sale leaseback ahead of an exit.
From a wealth management perspective, this may be the most critical benefit. A single, illiquid property tied to the fortunes of one business becomes a diversified portfolio of investable assets. Many owners intend to generate future passive income for themselves or for trusts, but holding the operating facility on the balance sheet actually works against those goals. A sale leaseback allows them to achieve both income and diversification by converting a concentrated real estate exposure into a range of investments better aligned with long-term planning.
All real estate faces obsolescence risk over time, and single-tenant properties are particularly vulnerable. Their value depends heavily on occupancy of a healthy operator; once vacant, market value can decline sharply. Waiting until a business exit to sell often means selling a vacant or less attractive property at a discount. By contrast, a sale leaseback enables an owner to capture full value today while the business is still in place. Investors who specialize in sale leasebacks are purpose-built for this risk profile, underwriting the credit and operations of the tenant as their core competency.
It is natural for business owners to feel a deep connection to the facility where they have built their company. However, a sale leaseback does not disrupt operational control. With initial terms of 15–20 years and multiple renewal options, companies can effectively secure use of their facility for 40 years or more. Buyers in these transactions are passive investors who seek cash flow, not operational involvement. For the owner, little changes day-to-day: the business continues to operate as it always has, but with far greater financial flexibility.
Advisors should consider any client who owns the real estate their business occupies as a candidate to explore a sale leaseback. Unlike traditional real estate sales, where location often drives value, sale leasebacks are largely dependent on the creditworthiness of the underlying business. As a result, even properties in non-core or secondary markets can often be monetized effectively.
Across industries – manufacturing, distribution, healthcare, automotive, grocery, and more – companies have successfully executed sale leasebacks to unlock capital and redeploy it into higher-return opportunities.
The natural home for corporate real estate is with sale leaseback investors, whose business model is built around stable income streams. For companies, owned property often sits passively on the balance sheet, creating little value. For advisors, unlocking that equity can mean more investable assets to manage, greater diversification for clients, and reduced concentration risk tied to one facility and one operating business.
As wealth managers help clients plan for growth, succession, and estate needs, sale leasebacks should be part of the toolkit. They offer a path to liquidity today, enhanced diversification, and improved long-term risk management – while allowing clients to maintain control of the facilities that support their core business.
Dave Rosenberg, CFA is a principal at SLB Capital Advisors, which advises corporates and private equity sponsors on a wide range of sale leaseback transactions.
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