Sale-Leaseback

Sale-leasebacks let an owner-occupant unlock the capital tied up in owned real estate — often at a lower effective cost than other financing sources, and without diluting equity or taking on conventional mortgage covenants — while continuing to operate from the same location under a negotiated lease, typically long-term and structured as NNN or absolute NNN.

The lease terms negotiated as part of the sale directly drive the sale price: a longer term, higher rent, and stronger tenant credit profile all support a lower cap rate and therefore a higher sale price, which means the seller and its broker are effectively negotiating two interdependent things — the purchase price and the lease terms — at the same time, not sequentially.

Sale-leasebacks are a recurring exit and capital strategy for cannabis operators specifically, since conventional bank financing is largely unavailable to cannabis real estate — a sale-leaseback to a cannabis-focused or private real estate investor can free up capital for operations or expansion while the operator keeps its licensed location, provided the buyer and lease structure account for license-related risk (e.g., what happens to the lease if the license is revoked or not renewed).