Commercial Sale-Leasebacks in Alberta

1. Define the business objective before the structure

State whether the objective is liquidity, debt reduction, reinvestment, succession, balance-sheet management, operational continuity or another outcome. Quantify the intended use of proceeds and the minimum control the business requires over the premises.

A sale-leaseback is not automatically cheaper than refinancing or continued ownership. Compare it with a hold, refinance, relocation and conventional sale using the same dates and operating assumptions.

• Capital released
• Required term
• Use control
• Expansion
• Capital obligations
• Exit flexibility
• Closing timing

2. Establish the property and operating-company facts

Confirm title holder, legal parcels, occupier, related entities, signing authority, existing debt, registered interests, property use, permits, environmental history and building condition. Identify assets, equipment and trade fixtures that are not intended to transfer.

The property owner and future tenant may be different legal entities. A brand name or common ownership does not establish which party sells the property, signs the lease or supports the rent.

3. Build the sale and lease economics together

Model sale price, debt discharge, closing costs and estimated net proceeds beside base rent, additional rent, escalation, term, options, security, landlord work, maintenance, capital and restoration obligations. Show nominal and, where appropriate, discounted cash flows.

A higher sale price can be paired with above-market rent or unusually long obligations. It is not free value. Separate property value, lease value and financing-like economics for appraisal, accounting, tax and lender review.

4. Design an operationally durable leaseback

Document premises, permitted use, access, parking, loading, yard, signage, utilities, alterations, expansion, assignment, subletting, casualty, expropriation, compliance and renewal requirements. Test the clauses against the actual operating plan.

The leaseback must survive ownership change. Informal practices under self-ownership—shared access, deferred maintenance or unrecorded alterations—should not be assumed to continue after closing.

5. Allocate condition and capital responsibility

Create a dated record of roof, structure, envelope, mechanical, electrical, fire, environmental, site and code condition. Map repair, replacement, compliance, insurance and capital duties to the proposed lease with counsel.

A net-lease label does not prove that every cost shifts to the tenant. Buyers will underwrite exclusions, caps, casualty, latent defects, structural items and end-of-term obligations from the actual documents.

6. Coordinate tax, accounting and financing

CRA explains that commercial real-property sales and rentals are generally taxable supplies unless a statutory exception applies. Determine registration, collection or self-assessment, input-tax-credit and invoicing treatment from the actual parties and facts.

IFRS 16 contains sale-and-leaseback requirements, but the applicable accounting framework and transaction conclusion depend on the reporting entity and contract. Obtain transaction-specific accounting and tax advice before using an expected gain, leverage ratio or balance-sheet result.

7. Run a controlled market and negotiation process

Prepare property, lease, operating, environmental, title and entity evidence before marketing. Qualify buyers for price, lease acceptance, diligence scope, confidentiality, financing and closing capacity.

Compare offers on combined economics rather than headline price. Normalize rent, escalation, term, security, conditions, deposits, closing adjustments, representations and required property work.

8. Close both sides as one coordinated event

Counsel should coordinate the purchase agreement, lease, guarantees or security, lender discharges, title documents, insurance, tax records, adjustments, possession and post-closing notices. No operational handoff should rely on a document that is still conditional or unsigned.

This guide is educational and is not legal, tax, accounting, appraisal, financing or investment advice. Commercially does not determine whether a sale qualifies for a particular accounting or tax treatment.