Definition of leaseback

transaction in which one party sells property to another and agrees to lease the property back from the buyer for a fixed period of time. For example, a building owner wanting to get cash out of the building may decide to sell the building to a real estate or leasing company and sign a long-term lease to occupy the space. The original owner is thereby able to receive cash for the value of his property, which he can reinvest in his business, as well as remain in the property. The new owner is assured of the stability of a long-term tenant and a steady income. Leaseback deals (also called sale and leaseback deals) also are executed for business equipment such as computers, cars, trucks, and airplanes. Partial ownership interests in leasing deals are sold to investors in limited partnership form, and are designed to produce a fixed level of income to limited partners for the lease term.