Sell the building, stay in the space: a sale-leaseback decision guide

1. Start with the reason for releasing capital

A sale-leaseback means selling a property and leasing it back from the purchaser. The business continues occupying the premises under the agreed lease, while the buyer becomes the landlord. It can be considered by an owner-operator who needs capital but still needs the location. Read the source.

Write down the purpose of the money before seeking an offer: equipment, expansion, an ownership transition or another defined business need. Then ask whether the current building will still suit the operation. Selling and committing to remain can be a poor fit if loading, floor area or location is already limiting the business.

2. Compare keeping, refinancing and selling

Ask your financing adviser what retaining ownership could look like. BDC describes an equity take-out as refinancing a commercial mortgage to access part of the property’s equity while retaining ownership. Availability and terms depend on the lender and borrower; it is an alternative to investigate, not an assumed approval.

Compare usable proceeds, ongoing occupancy payments, financing commitments and flexibility under each route. Include the option of making no property change. Also compare the ownership value you would retain or give up, including uncertain future appreciation or depreciation and equity at your eventual exit. A sale price by itself cannot show whether releasing capital improves the business enough to justify the future commitment.

3. Design the lease around the operation

Before treating a proposed price as attractive, review the rent, increases, length of commitment, renewal rights, permitted use, repairs, insurance and future alterations. Ask your lawyer to explain assignment, default and any guarantees. Decide which rights the business must retain to function and which obligations it can realistically carry.

Illustrative example: a manufacturer sells its building to fund new equipment. The property sale may supply capital, but the new lease also needs to accommodate installation, maintenance access and the business’s future space needs. An appealing price does not repair a lease that prevents the intended operating plan.

4. Investigate the buyer’s view and the net outcome

An investor should examine both the real estate and the tenant business supporting the rent. Ask what happens if that business leaves: alternative users, building condition, required work and the practicality of reletting all belong in the investigation. A long lease does not remove tenant risk.

For the seller, have advisers calculate what remains after debt repayment, transaction costs and applicable taxes. CRA guidance treats commercial sales and rentals under GST/HST rules, with circumstances and exceptions to consider. Ask about income-tax consequences and other applicable transaction taxes as well. Obtain transaction-specific tax advice before agreeing terms; do not assume a sale-leaseback is tax-free or automatically tax-efficient.

5. Coordinate the transaction and the next chapter

Have the purchase agreement and lease reviewed together so the closing, possession and occupancy arrangements are consistent. Confirm any lender consents, required documents and responsibilities for outstanding work. Keep the business’s operating requirements visible throughout negotiations.

After closing, maintain a calendar of lease obligations and a record of approvals for changes to the premises. The business is now occupying under a contract rather than exercising ownership rights. For Metro Vancouver and Fraser Valley owners, the useful question is whether that change supports the business’s next stage at a cost and level of flexibility it can accept.

Sources and further reading

• Colliers Canada: sale-leaseback services and definition
• BDC: equity take-outs, January 8, 2026
• CRA: commercial real property sales and rentals

General information for commercial property decisions in Metro Vancouver and the Fraser Valley. Confirm property-specific requirements with the appropriate legal, financial and technical advisers.