What is a sale-leaseback arrangement in real estate?

A sale-leaseback arrangement in real estate occurs when the seller of a property sells it to a buyer and then immediately leases it back from the buyer, allowing the seller to continue using the property as a tenant. This structure is particularly beneficial for sellers who wish to free up the capital tied in the property while still retaining the ability to use the property for their business operations. Through this arrangement, the buyer gains an investment property that is immediately income-producing, as the seller, now a tenant, pays rent.

In this context, the other choices do not accurately describe a sale-leaseback arrangement. While the first option touches on the concept of selling and leasing back, it does not specify that the seller is also a tenant after the sale. The third option presents a scenario involving selling at a loss, which does not relate to the fundamental nature of a sale-leaseback. Lastly, the fourth option describes a lease with an option to purchase, which differs from a sale-leaseback, where the property is sold outright but leased back immediately without any purchase option for the tenant.