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How does a sale-leaseback differ from debt?

April 26, 2017debt differ sale-leaseback

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How does a sale-leaseback differ from debt?

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A sale-leaseback provides more proceeds than debt financing (100% of fair market value vs. 60%-75% of value, respectively). In addition, a sale-leaseback represents a safer source of capital, because it contains no financial covenants and it never needs to be repaid. To compensate for these benefits, sale-leasebacks are more expensive than debt.