Sale and Leaseback Transactions (SLT)

  • Thread starter Numbers Afficionado
  • Start date

N

Numbers Afficionado

What is the logic of manufacturing an item, selling it, and then
renting it back? That's what a SLT seems to be. SLT's are often-
times used for real-estate (i.e. office space, etc.), and this makes
some sense to me. It's analgous to me selling my home, but continuing
to live here, but paying rent. My initial fund for the sale of the
home would be invested in something quite profitable (i.e. mutual
funds or other things).

An example that my book gave was in the sale of an aircraft. This
example is very confusing, but I don't understand why a company -
let's use Leer Jets - would sell their aircrafts that they manufacture
only to rent them out again! Why would Leer Jets want to rent jets?
I can understand their need of cash.
 
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