A business can perform a real estate sale and leaseback in order to retain control of a piece of real estate, while at the same time generating a large amount of revenue quickly that can be used for many purposes, though it usually reinvested back into the business structure.
A real estate sale and leaseback agreement is usually made upfront. Two companies or entities both agree to it ahead of time. The first company will purchase a piece of real estate, and then sell it to the second company. Then, the second company will lease the property back to the first. In this way, the first company, in need of capital and property, will pay a large amount of money to another party right away, but then get all that capital and the property back from the lessor. With the capital it gets the ability to invest into its business structure, make developments on the land, perhaps make other purchases, or simply retain enough capital for future operations. It can also use some of the capital to make lease payments on the property.
This sort of agreement could also be made if the first business already possessed the real estate. It could perhaps have fallen on recent hard times, and in order to stay on its feet it could use the real estate sale and leaseback to keep using its land and continue having capital to change its situation for the future.
This setup also gives the lessor the guarantee of continued payments over the term of the lease.
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