What characterizes a "sale-leaseback" transaction?

A sale-leaseback transaction is characterized by the scenario where an asset is sold and the seller immediately leases it back from the buyer. This arrangement effectively allows the original owner of the asset to continue using it while freeing up capital that was tied up in the asset.

In this transaction, the seller benefits by converting the asset into cash while maintaining operational use, which can be crucial for businesses looking to optimize their cash flow. The buyer, on the other hand, obtains a valuable asset and can generate income from leasing it back to the seller. This setup is often used in real estate but can apply to various types of assets.

The other options do not accurately reflect the typical structure of a sale-leaseback. For instance, simply leasing an asset without a sale does not fulfill the definition of a sale-leaseback. Similarly, purchasing an asset with no intention to lease or leasing an asset for a set term before selling it also deviates from the core concept of a sale-leaseback, which hinges on both the sale and the immediate leaseback being part of a single, strategic financial maneuver.