How a sale and leaseback works, step by step

The journey, stage by stage

A leaseback is really two deals struck as one — a sale and a lease — negotiated together so neither side is exposed while the other is still being worked out. The stages below run in roughly this order, though price/rent and due diligence typically overlap rather than following a strict straight line.

1. 1Initial confidential conversation. You tell us about the property and the business in confidence. Nothing is marketed and nothing goes public — this stage is about establishing whether a leaseback fits your situation at all.
2. 2Information exchange under NDA. Once there's mutual interest, financials and property information are shared under a non-disclosure agreement, so you can test the waters without any exposure.
3. 3Indicative terms — price and rent, together. We come back with indicative terms that set out the purchase price and the leaseback rent and term as one package, not two separate negotiations — because each affects the other.
4. 4Due diligence and lease negotiated in parallel. Property, financial and legal due diligence proceeds alongside lease negotiation, so both documents mature together rather than one holding up the other.
5. 5Exchange and settlement. Contracts are exchanged, conditions are satisfied, and settlement completes with the lease commencing on the same day ownership changes hands.
6. 6Business as usual, as tenant. You keep trading from the same site under the new lease. What changes is the entry on the title; what doesn't is where your business operates from.

How price and rent interact

A sale and leaseback is one economic transaction wearing two hats, and the two numbers can't be assessed in isolation. A fair, market-evidenced rent is what makes the deal durable — it's a lease both sides can live with for the long term, reviewed on terms that hold up over time.

It's possible to engineer a higher headline price by inflating the rent above what the market would actually bear. That looks attractive on day one, but it puts the tenant under strain at every review and can undermine the very security the leaseback was meant to buy. A rent that's honestly set protects the deal — and the tenant — for the life of the lease.

Choosing your counterparty

Who you sell to matters as much as the terms you sell on. A trader who buys to sell again will only ever hold for as long as suits their own exit — which means your tenure is really borrowed from their timeline, not yours. A permanent-hold owner buys to keep, so the incentives are aligned: a landlord who plans to still own the building in a decade has every reason to run fair reviews, reinvest in the asset, and want the tenant to stay.

Worth asking directly: how long has this buyer typically held what they've bought, and what happens to my lease if they sell the building on?

What changes, what doesn't

• Changes — Who owns the title. The capital tied up in the building is released to you at settlement.
• Changes — You move from owner-occupier to tenant, with rent replacing the costs of ownership.
• Doesn't change — The site, the address, the plant, the signage and day-to-day trading.
• Doesn't change — Your operational control of the premises, within the terms of the lease.