Realty Income, a U.S.-listed landlord that rents buildings to companies on long leases, said on 2 November 2026 that it invested US$2.6 billion in the third quarter. Its chief executive, Sumit Roy, spoke in the same release of persistent "economic and cost of capital volatility". One common way such landlords acquire buildings is the sale leaseback, a deal in which a company sells a property it uses and immediately rents it back.
The structure deserves attention from Indian investors because it changes what is really being bought. In a sale leaseback the building matters, but the investor is mainly buying a long stream of rent from one company, so the tenant and the lease decide most of the outcome. The guide to how net lease compares with other U.S. property types sets out where this kind of property sits in the wider market.
What a Sale Leaseback Is
A sale leaseback has two parts that close together. A company that owns a factory, warehouse, clinic or restaurant sells the property to an investor and, in the same transaction, signs a lease to keep using it. The company stays in the building and keeps running its business there, while the investor becomes its landlord.
W. P. Carey, a net lease landlord, says on its page explaining sale leasebacks that most of these deals involve leases of 10 or more years. It gives the example of a triple net lease, under which the tenant pays insurance, taxes and maintenance on top of rent. That moves the day-to-day costs of the building onto the tenant, although the exact split always depends on the lease document.
Why Companies Sell Buildings They Still Need
A company chooses a sale leaseback because it wants cash that is tied up in property without moving out. The money can repay debt, fund expansion, pay for an acquisition or allow a founder to retire. Bisnow reported in June 2026, citing SLB Capital Advisors, that about 714 sale leaseback deals worth around US$14.4 billion closed in the U.S. in 2025, and that the first quarter of 2026 was the busiest first quarter since 2022.
The seller's motive is also the first thing an investor should examine. A healthy company may sell because it would rather put capital into its own operations than into buildings. A strained company may sell because it has few other ways to raise money. The two deals can look almost identical on paper, which is why the reason for the sale belongs at the top of any assessment.
How a Sale Leaseback Investment Reaches an Indian Investor
Indian residents usually reach this kind of property through a private U.S. real estate offering rather than by buying a building themselves, and the overall route from India follows the same steps whatever the property type. Money leaves India under the Liberalised Remittance Scheme, which allows a resident individual to remit up to US$250,000 in a financial year. The investor's authorised dealer bank reviews each transfer, and TCS applies to investment remittances above ₹10 lakh in a financial year, recoverable as a credit or refund in the income tax return.
On Raveum, Indian investors invest through a U.S. corporation, often called a blocker, which holds the interest in the entity that owns the property. Rent paid by the tenant flows to that entity, the corporation pays U.S. tax on its income, and distributions to the investor are typically reported on Form 1042-S. How that income is then taxed in India, and how credit is claimed for U.S. tax, is covered in the U.S. real estate tax guide for Indian investors.
This layering means the investor depends on several commitments at once. The tenant must pay rent, the special purpose vehicle that owns the property must pass cash upward, and the sponsor, the real estate firm that finds and manages the deal, must run it well. Each link is worth understanding before any money is sent.
What to Check in the Tenant and the Lease
Because one tenant usually pays all the rent, the review starts with that company. An investor should ask how long the tenant has operated, whether its financial statements are shared, how much debt it carries and whether the building is central to its business. A plant that produces most of a company's output is more likely to stay occupied than a site the company could close without much loss.
The lease deserves the same attention as the tenant. The points most worth reading in the lease document are listed below.
- The remaining lease term, and whether the tenant has options to renew or to leave early.
- How rent changes over time, for example through fixed annual increases or increases linked to inflation.
- Which costs the tenant pays, including taxes, insurance, the roof and the structure.
- Whether a parent company stands behind the lease, or only a smaller operating subsidiary.
- Whether the rent was set close to local market rent, or higher to support a higher sale price.
The last point is easy to miss. A seller that agrees to rent above the market level can obtain a higher price for its building, but if the lease ends or is renegotiated, the property may only attract market rent from the next tenant. That gap feeds directly into what the property may be worth at sale, which is where exit cap rate assumptions enter the picture.
The Risks and Limits of a Sale Leaseback
The largest risk is tenant failure. If the tenant files for bankruptcy in the U.S., the Bankruptcy Code allows it to assume or reject an unexpired lease, and a lease of commercial property that is not assumed within 120 days of the bankruptcy order is treated as rejected unless the court extends the deadline. The landlord's claim for future rent is also capped under Section 502 of the Code, so an investor may recover only part of the rent the lease promised.
Concentration is the second risk. A building leased to one company has one source of rent, and if that company leaves, the property can sit empty while it is re-let, often after costly changes for a new user. Specialised buildings such as food plants or laboratories may suit only a narrow group of tenants, which can make re-letting slow.
Investors also face the usual limits of private real estate. The investment is illiquid and is usually held until the property is sold, distributions may be reduced or not paid, values can fall, and loans may have to be refinanced on less favourable terms. The rupee value of dollar income also moves with the dollar and rupee exchange rate, in either direction.
A long lease means a landlord has to look for tenants less often. It does not mean the tenant will stay for the whole term, and the lease is only as strong as the company that signed it.
Reading the Tenant Before the Building
The Realty Income figures show that U.S. landlords are still buying buildings on long leases, even in a period its chief executive described as volatile. Seen from India, a sale leaseback property behaves much like a long contract with a single company, backed by a building. The building can be re-let or sold if the contract fails, while the tenant supplies the income only for as long as it pays.
That is why the tenant's finances, the reason for the sale, the rent level and the lease terms deserve as much attention as the location and the building itself. The U.S. real estate market guide places net lease alongside multifamily, self-storage and other property types, which helps an investor judge how much of a portfolio one tenant should carry. Eligible investors can review how investing in U.S. real estate from India works on Raveum, including the property, sponsor, ownership structure, fees, risks and offering documents for each opportunity.
Frequently Asked Questions
What is a sale leaseback in real estate?
A sale leaseback is a transaction in which a company sells a property it uses and signs a lease to stay in it as a tenant. The company receives cash from the sale, and the buyer becomes the landlord, collecting rent for the length of the lease, which is often 10 years or more.
Why would a company do a sale leaseback?
A company usually does a sale leaseback to turn property into cash without moving out. It may use the money to repay debt, expand, fund an acquisition or let an owner retire. The reason matters to investors, because a company selling under financial strain is a weaker tenant than one reinvesting from a position of strength.
Who pays property taxes in a sale leaseback?
In many sale leasebacks the lease is a net lease, so the tenant pays property taxes, insurance and maintenance in addition to rent. This is not automatic. Each lease sets out its own split of costs, and an investor should read which expenses stay with the landlord, such as roof or structural repairs, before investing.
What happens if the tenant goes bankrupt in a sale leaseback?
Under the U.S. Bankruptcy Code, a tenant in bankruptcy can keep or reject its lease. If it rejects the lease, the building may become empty and the landlord's claim for future rent is capped by law. Investors can lose income and see the property's value fall while a new tenant is found.
Can Indian residents invest in sale leaseback properties in the U.S.?
Indian residents can invest in U.S. commercial property through private offerings, sending money under the Liberalised Remittance Scheme within the US$250,000 limit per financial year. Participation is limited to eligible investors, the bank reviews each remittance, and the investor should confirm the tax treatment in India with a chartered accountant before investing.
Can you withdraw money early from a sale leaseback investment?
Usually not. A private sale leaseback investment is generally illiquid, and invested money usually comes back only when the property is sold or refinanced, which may take several years. There is often no market for selling an interest early, so investors should commit only money they will not need during the holding period.
This article is for general education only and is not investment, tax or legal advice. Rules change and depend on individual circumstances. Investing in private real estate involves risk, including loss of capital, illiquidity, falling property values, distributions not being paid and currency movements. Participation is limited to non-U.S. persons under SEC Regulation S and verified U.S. accredited investors under Regulation D Rule 506(c), and offerings on Raveum are not open to the general public.
