Sale and leaseback: checking the income promise
In a sale-and-leaseback arrangement, the seller transfers the property and remains as a tenant under an agreed lease. The investment therefore depends on both the purchase and the tenant's continuing obligations. An attractive stated return should be traced to the actual contracts and paying entity.
Identify the parties behind the promise
Confirm the legal seller, title holder, tenant and any guarantor. These may be different entities. Ask who is obliged to pay, what evidence supports that entity's capacity, and how any guarantee can be enforced. Have the documents reviewed by the appropriate legal and financial advisers.
For a Dubai property, verify the title details through DLD. A valid property title does not establish the financial strength of the future tenant.
Review the lease as an investment document
| Term | Why it matters |
|---|---|
| Rent and payment dates | Defines the contracted income schedule |
| Rent-free periods or concessions | Changes cash received in early periods |
| Break or termination rights | Can shorten the expected income period |
| Repair and charge obligations | Determines owner-paid costs |
| Security or guarantees | Needs its own scope and enforceability review |
| End-of-term condition | May create future refurbishment expenditure |
Avoid treating the advertised lease term as guaranteed occupancy. Read all routes by which the agreement could change or end, including default provisions.
Check whether the price embeds the income promise
Consider a hypothetical property sold for AED 8 million with AED 640,000 annual contracted rent. The headline ratio is 8% before expenses. If the purchase price includes a premium for that lease, a later buyer may value the property differently once the lease expires or the tenant's position changes.
Compare independent property evidence, sustainable rental assumptions and the actual lease economics. A seller-funded payment or incentive should be distinguished from income generated by an unrelated occupier.
The final decision file should contain the property verification, complete lease, tenant assessment, cost allocation and an exit scenario. A sale-and-leaseback can be assessed like any other investment, but the word “guaranteed” in marketing should never replace examination of who promises what, for how long and under which conditions.
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Related guide: Buying a Tenanted Property in Dubai.
Sources and scope
Official references checked on 29 October 2026: DLD: Verify Title Deed. The comparison methods and hypothetical examples are Livrichy planning aids. Official sources do not endorse the examples; confirm current requirements for the actual transaction.