Does this make good business sense?

corporations, like all businesses depend on cash flow. It could be that the corporation has another objective in mind, and needs the liquidity to take advantage of another opportunity.

Owning a building is great, but there are time when the costs of ownership become more onerous than at others. Renting space sometimes is a better business proposition than ownership, especially if the ownership has reduced the liabilities over a long period of time.

There are hundreds of reasons why a corporation would sell assets, like buildings - especially if the ownership is stopping going for other opportunities.

Paul,

Many times a company will consider the current and immediate future accounting periods, especially in very troubling economic times, such as the ones we currently face.

So your company has an asset, the building has value, say $20,000,000. They're going to sell the building and get immediate cash, and in the lease-back pay an annual amount, say $1,000,000. The company has just immediately freed $19 mil to invest in operations, research or other uses for cash. It's a very common process.

You're right in thinking, gee, but now they're paying for something they used to own, but corporate treasure functions are complex and involve many variables.

Hope this helps.

It will definitely be more expensive for the company. However, there are two reasons why this might be beneficial to the corporation. One is that they might want to avoid liability lawsuits from employees related to building renovation, the new owner would then be responsible. Another is that the company has a relationship with the buyer and wants to "throw him a bone". This does not sound kosher to me, but you never know

It's likely the corporation needs some cash flow right now in order to finance current operations. With the bad economy they may be selling some assets in order to keep running and then when times are better and they are making money they will buy them back. Businesses sometimes need cash flow in the short term in order to ride out the tough times. It's no different than someone selling a "luxury item" when they lose their job. They need a large sum of cash in the short term and hope to be able to buy it/similar back later.