A sale-leaseback converts owned real estate into capital while the company keeps operating the property under a long-term lease. For growth companies, multi-unit franchisees, and sponsor-backed platforms, it is often the largest pool of capital available without diluting ownership or taking on restrictive corporate debt. The terms of the lease the seller signs determine both the price the property commands and the obligation the company carries for decades, which is why sale-leasebacks reward disciplined advisory work.
SURMOUNT is a full-service commercial real estate platform that provides net-lease focused solutions, with sale-leaseback among its service lines. The firm reports more than 25 years of track record, over $44 billion in transaction volume, and over 1,200 net lease transactions, with a team of more than 140 people across five offices. This page explains how sale-leaseback advisory works, who uses it, and how a structured process supports pricing.
Expansion capital for growth companies
A sale-leaseback is a single transaction with two parts. A company sells real estate it owns and occupies, then signs a long-term lease — typically a triple net (NNN) lease — to remain in the property as a tenant. The company gives up ownership of the building and keeps everything that generates its revenue: the location, the operation, and the customer base.
For growth companies, the appeal is the math of capital. Real estate sits on the balance sheet at cost and returns nothing beyond shelter. Mortgage debt advances only a portion of a property's value and usually comes with covenants. A sale-leaseback monetizes the full market value of the asset in one closing, and the proceeds are unrestricted — new locations, equipment, acquisitions, debt repayment, or distributions.
The trade is that rent replaces ownership. A well-structured sale-leaseback sets rent at a level the operation can support through a full business cycle, with escalations the company can absorb. That is where advisory matters: the lease the seller signs determines the proceeds received today and the occupancy cost the business carries long after closing.
Multi-unit franchisees and sponsor-backed rollouts
Multi-unit franchisees are natural sale-leaseback sellers. An operator who develops or buys its own real estate ends up with capital trapped in buildings while the franchisor expects new units on a schedule. Selling a stabilized store on a long-term lease and recycling the proceeds into the next sites lets the operator grow without bringing in new equity partners. Restaurant and QSR operators, automotive service chains, and retail franchisees all use this approach.
Private equity and financial sponsors apply the same tool at larger scale. When a sponsor acquires a multi-unit business that owns its real estate, separating the property from the operating company — an opco/propco structure — and executing a sale-leaseback at or shortly after closing can fund a meaningful share of the purchase price, at a cost of capital the sponsor can weigh directly against its other financing options.
SURMOUNT's stated client base includes multi-unit franchisees, business owners, and private equity and financial sponsors, and its platform covers the asset classes where these sellers operate: retail, industrial, healthcare, automotive, education, and specialty assets.
Complex corporate transactions and confidential processes
Sale-leasebacks rarely happen in isolation at the corporate level. They are timed against acquisitions, refinancings, franchisor approvals, and lender consents. A portfolio sale-leaseback may involve dozens of properties across multiple states, with some assets sold individually, some grouped into pools, and some held back. Deciding what to sell, in what grouping, and on what timeline is itself a structuring exercise.
Many corporate sellers also cannot market openly. A publicly visible listing can unsettle employees, alert competitors, or complicate franchisor and lender relationships. A confidential process addresses this with a controlled buyer list, executed nondisclosure agreements before any materials change hands, staged release of financial information, and marketing that describes the opportunity without identifying the company until a buyer is qualified.
Confidentiality and competition pull in opposite directions — fewer eyes on a deal usually means fewer bids. The advisor's job is to manage that trade-off: reach enough qualified capital to create real price tension while keeping the process out of public view.
How lease structure drives the cap rate
Sale-leaseback pricing is quoted as a capitalization rate: net operating income (NOI) divided by purchase price. Under a true triple net lease the tenant carries taxes, insurance, and maintenance, so NOI is effectively the annual rent. Suppose a lease produces $500,000 in annual rent. At a hypothetical 7 percent cap rate the property sells for roughly $7.1 million; at 6.25 percent, roughly $8 million — a lower cap rate means a higher price. Small movements in the cap rate produce large movements in proceeds, which is why the work done before marketing matters as much as the marketing itself.
Buyers underwrite a sale-leaseback as a credit commitment wrapped in real estate, and several structural choices determine where the cap rate lands.
None of these choices are free. A longer term and a stronger guarantee can improve pricing but deepen the seller's obligation. Disciplined advisory means modeling the trade-offs against the company's actual plans — exit horizon, expansion schedule, credit trajectory — rather than defaulting to whatever structure produces the highest headline number.
- Lease term
- Longer initial terms give buyers more contracted income to underwrite, which generally supports stronger pricing.
- Rent level
- Rent set at a sustainable, market-supportable level prices better than inflated rent that signals re-leasing risk.
- Escalations
- Fixed annual or CPI-linked increases shape how buyers project income growth over the lease term.
- Guarantee
- A corporate guarantee from the operating entity reads very differently to buyers than a single-unit entity guarantee.
- Lease type
- A true NNN lease, where the tenant carries taxes, insurance, and maintenance, is the structure most net lease buyers underwrite.
- Financial disclosure
- Ongoing reporting and unit-level economics give buyers confidence in the rent coverage behind the lease.
Running a competitive bid process
Price discovery in net lease comes from competition. A structured process begins with underwriting: the advisor finalizes the rent and lease structure, assembles offering materials, and establishes pricing guidance. Marketing then goes out to a defined buyer pool — in net lease, that pool spans REITs, family offices, private investors, institutional capital, and 1031 exchange buyers.
Exchange buyers deserve specific mention. Under IRS Section 1031, an investor who sells a property has 45 calendar days from closing to identify replacement property in writing to a qualified intermediary, and 180 calendar days to complete the acquisition, with both deadlines running from the closing date. Buyers on those clocks are motivated and time-constrained, and long-term net lease assets are a common identification target, which makes them an important constituency in any sale-leaseback process.
Offers come back on a deadline and get compared on more than the headline number: deposit size and when it goes nonrefundable, the length of the diligence period, financing contingencies, and the buyer's record of closing at the contracted price. A best-and-final round among the strongest bidders typically sets the clearing price. The seller's protection throughout is alternatives — a buyer who knows others are waiting behaves differently in diligence than one who knows it is alone.
Who SURMOUNT serves, and the platform behind the advisory
SURMOUNT is a full-service commercial real estate platform providing comprehensive net-lease focused solutions. Its published track record includes more than 25 years in the business, over $44 billion in transaction volume, and over 1,200 total net lease transactions. The firm was founded by Glen Kunofsky, who serves as chief executive officer, and operates with more than 140 people across offices in New York City, Boston, Phoenix, Chicago, and Miami. Its published positioning is "#1 In Net Lease and Sale-Leaseback."
The platform serves private investors, REITs, private equity and financial sponsors, family offices, multi-unit franchisees, business owners, tenants, developers, and lenders. That breadth matters in a sale-leaseback specifically, because the parties on both sides of the transaction — corporate sellers on one side, net lease buyers on the other — sit inside the same client base.
Sale-leaseback is one of seven service lines, alongside investment sales brokerage, lease advisory, capital markets, development, principal investments, and 1031 exchanges. For a seller, the adjacent lines are relevant: the capital markets practice crafts customized financial strategies for both debt and equity, the development platform lists pre-construction sale-leaseback as a disposition path for newly built projects, and the 1031 exchange practice connects to the exchange-driven buyer pool described above. SURMOUNT's published tagline is "relationships over transactions."
Frequently asked questions
What is a sale-leaseback in commercial real estate?
A sale-leaseback is a transaction in which a company sells real estate it owns and occupies, then immediately leases it back under a long-term lease, usually a triple net (NNN) lease. The company converts the property's full market value into cash while continuing to operate in the location as a tenant. The buyer acquires a property with a contracted income stream backed by the seller's lease.
Why do multi-unit franchisees use sale-leasebacks?
Franchisees use sale-leasebacks to recycle capital from completed stores into new development. Selling a stabilized location on a long-term lease returns the full value of the real estate, which can fund additional units without bringing in equity partners or adding restrictive debt. The operator keeps running the store under the lease it negotiated as part of the sale.
What determines the cap rate in a sale-leaseback?
The cap rate reflects how buyers price the lease and the tenant behind it. Key drivers include the length of the initial term, whether rent is set at a sustainable level, the escalation structure, the strength of the guarantee, whether the lease is true NNN, and the quality of financial disclosure. Because price equals net operating income divided by the cap rate, and NOI is effectively the rent under a true NNN lease, structuring these terms before marketing has a direct effect on proceeds.
Can a sale-leaseback be marketed confidentially?
Yes. A confidential process uses a controlled buyer list, nondisclosure agreements before materials are shared, and staged release of company information, so the seller's identity is protected until buyers are qualified. The trade-off is reach: the advisor must contact enough qualified capital to create genuine bid competition while keeping the offering out of public view.
What does SURMOUNT do?
SURMOUNT is a full-service commercial real estate platform providing net-lease focused solutions, with sale-leaseback as one of its services alongside investment sales brokerage, lease advisory, capital markets, development, principal investments, and 1031 exchanges. The firm reports more than 25 years of track record, over $44 billion in transaction volume, and over 1,200 net lease transactions, with a team of more than 140 people across five offices. It was founded by Glen Kunofsky, who serves as chief executive officer.