Why do companies that own a building sell the building and lease a space in it? Ex: CBS with television city
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Flexibility. I have a business owner as a client. He wanted to retire. He owned 2 businesses: a hardware store and the company that owned the land the store was on. Upon retirement, he sold his hardware store. The new owners paid a lump sum in cash and that was that. However, they now have to pay rent to my client to the tune of $10,000/month. Included in the sale was a lifetime lease agreement. He’ll have that $10k/month as long as he shall live.
If he owned the store and the land as one company sure his sale proceeds would’ve been greater, but probably not to the same extent that sales proceeds plus $120k/yr in income will result in.
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