When a client owns the office or medical office property their business occupies, a capital, retirement, or succession discussion may also raise a real estate question: should they continue owning the building?

A sale-leaseback is one option to evaluate. It allows the owner to sell the property while the business remains as a tenant under a negotiated lease. The decision requires a review of potential sale proceeds, ongoing occupancy costs, business needs, and tax and accounting consequences.

I help accountants and their clients assess the real estate side of that decision for office and medical office properties in Tampa Bay.

When Might a Sale-Leaseback Deserve a Closer Look?

A discussion may be useful when a client wants to access capital tied up in real estate while continuing to operate at the same address.

Common reasons to explore the option include:

• Funding equipment, technology, expansion, or other business investments
• Comparing a property sale with refinancing or additional borrowing
• Reducing the amount of capital committed to the building
• Planning for retirement, succession, or a future business sale
• Separating ownership of the real estate from operation of the business
• Evaluating whether sale proceeds could support a broader debt or capital plan

These circumstances justify an evaluation. They do not establish that a sale-leaseback is the best outcome.

Bring the Real Estate and Financial Analysis Together Early

A useful comparison needs realistic assumptions about both the property sale and the leaseback. An estimated property value alone does not show what the client would retain after closing or what the business would commit to afterward.

The real estate review should address:

• Potential sale pricing supported by the property and available market evidence
• Likely buyer interest and the information buyers would request
• Proposed rent, scheduled increases, and lease length
• Renewal options and flexibility for future business changes
• Responsibility for taxes, insurance, maintenance, and major repairs
• Potential transaction costs and other assumptions needed for the financial comparison

Those assumptions can then inform your analysis of after-tax proceeds, cash flow, accounting treatment, and the alternatives available to the client.

Evaluate the Sale Price Alongside the Lease Obligation

The sale and lease need to be evaluated together. A higher purchase price may be accompanied by higher rent, a longer commitment, or other obligations that affect the business after closing.

Consider whether the proposed rent is sustainable, what happens as rent increases, and which property expenses remain the tenant’s responsibility.

A sale-leaseback should not be described as an automatic improvement to the balance sheet, a guaranteed tax benefit, or a lower-cost alternative to borrowing. The result depends on the transaction structure, applicable rules, and the client’s circumstances.

Your tax and accounting review is essential to understanding that result. The client’s attorney should review the sale and lease documents, guarantees, and restrictions affecting future decisions.

Identify the Property Owner and Future Tenant

The entity that owns the building may differ from the entity operating the business. Establish that structure before developing assumptions about who receives the proceeds and who takes on the lease obligations.

Questions to resolve include:

• Which entity owns and will sell the real estate?
• Which entity will sign the lease?
• What financial information can be provided to prospective buyers?
• Will guarantees or other financial support be requested?
• How would the arrangement affect partners or other owners?

Clarifying these points early helps keep the real estate proposal aligned with the client’s broader planning.

Account for a Future Business Sale or Retirement

If the client expects to sell the business or retire, the leaseback should support that plan. A future business buyer may need to occupy the property under the lease negotiated today.

Have counsel review assignment provisions, changes in control, renewal options, guarantees, and any conditions affecting a future transfer. The client should understand which obligations could remain after a business sale.

For medical and dental practices, also consider patient access, parking, specialized improvements, equipment ownership, and the practice’s expected need for the location.

Compare the Realistic Alternatives

A sale-leaseback is one possible approach. Depending on the client’s circumstances, alternatives may include continued ownership, refinancing, other financing, or a property sale followed by relocation.

Compare the capital available, ongoing costs, commitments, and flexibility under each option. Include the ownership benefits the client would give up, along with any expenses or responsibilities retained under the lease.

If the business is under financial pressure, assess whether the proposed rent remains manageable after the sale proceeds have been used. Access to capital does not resolve an unsustainable occupancy cost by itself.

Start With a Property and Ownership Discussion

An initial conversation can establish the property’s location, approximate size, current use, ownership structure, financing position, and the client’s objective.

From there, we can identify the property and market information needed for a more useful comparison. Coordinate with the client before sharing sensitive financial or business records.

My role is to evaluate the property’s market position, potential buyer interest, and proposed real estate business terms. Your tax and accounting analysis and the attorney’s legal review remain central to the client’s decision.

Discuss a Client’s Tampa Bay Office Property

If your client owns an office or medical office property in Hillsborough, Pinellas, or Pasco County, contact me to discuss the real estate questions affecting their plans.

Call John Milsaps at (813) 279-1366 or send a message to arrange an initial conversation.

If the client would like to begin with the property itself, they can request a confidential property value review.