Which financing arrangement is used to finance large commercial or industrial properties?

• A. Graduate payment mortgage
• B. Sale & leaseback
• C. Buy downs
• D. Construction loan

Answer: (B)

In a sale-leaseback, the owner sells the property to an investor and then immediately leases it back to continue using it. This setup is especially common for large commercial or industrial properties because it converts the real estate’s equity into cash while preserving operations. The business gains liquidity to fund expansion, reduce debt, or pursue other investments, and the new owner gains a stable, long-term rental income stream. The arrangement lets the user keep operating the facility and avoid moving or refitting while still unlocking capital tied up in the property. The other options don’t fit this purpose: a graduate payment mortgage is a residential financing product for individuals, a construction loan finances building but not long-term use, and buy-downs modify interest costs rather than provide a way to cash out real estate while staying in place.