What is market for a leaseback?

Is a leaseback on a property typically above or below the market rental price? I could see the argument for above - you know that the tenant is only going to be there for a limited period and shorter leases often have higher rates to compensate for the cost of finding another tenant. I can also see how it would be below - the current owner has to entitle the property, so having a tenant in there is basically just icing on the cake/deal. The tenant has total creditworthiness as they just received the funds from the transaction.

Is this handled differently in a commercial vs. residential (sfh) transaction?

Thanks for any comments from those who have worked these deals.

2 Comments
 

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