Which type of lease is typically used in a sale-leaseback transaction?

In a sale-leaseback transaction, a net lease is typically used. This type of arrangement allows the seller to sell a property and then lease it back from the buyer, often in order to free up capital while still retaining the right to use the property.

With a net lease, the tenant (who is essentially the former owner) is responsible for not only the base rent but also for additional expenses associated with the property. These might include property taxes, insurance, and maintenance costs. This kind of lease is advantageous for the buyer as it provides more predictable revenue streams, since the tenant is covering these expenses. Thus, in a sale-leaseback scenario, it aligns well with the financial strategies of both parties involved: the seller gets access to cash for other investments while still keeping operational control of the property.

The other lease types mentioned do not fit this specific scenario as effectively. A gross lease, for instance, typically includes all expenses bundled into the rental payment, which may not provide the same benefits from a financial perspective in a sale-leaseback context. A percentage lease ties rental payments to revenue generated by the property, which is not a standard structure in a sale-leaseback. Finally, a month-to-month lease would provide too much