Should you sell-leaseback or refinance to pull capital out of a building you own?

A sale-leaseback converts your entire equity to cash. You sell the building, then lease it back, so you free up 100% of market value and stay in the space. A cash-out refinance keeps you on title but only pulls out a loan-to-value slice of the equity, and you carry new debt service at current rates. The sale-leaseback wins when you want maximum capital, an off-balance-sheet result, and you don't need to own the asset long term. The refinance wins when control, future upside, and keeping the building matter more than the size of the check. Run both against your own counsel, tax advisor, and CFO before you commit.

By Brian McCririe | June 17, 2026

You own your building. The equity in it is real, but it's stuck. It doesn't fund a hire, an acquisition, a new line, or a debt paydown until you do something with it. So the question every owner-occupier eventually asks is the right one: how do I get capital out of this asset without giving up the space my company runs in?

You have two main paths. Sell the building and lease it back. Or keep it and refinance the equity into cash.

They are not the same deal. One trades ownership for the full value of the asset. The other keeps ownership and lends you a fraction of it. The right call depends on how much capital you need, what you want your balance sheet to say, and whether you ever want to own this building again. Here's how they actually compare.

How much capital each path actually frees

This is the cleanest difference, and it's usually the one that decides the question.

A sale-leaseback unlocks the full market value of the asset. You sell at a price set by the cap rate a buyer will pay for your lease, and that's your check, minus closing costs and any debt you retire. If your building is worth $10 million, you're working with proceeds near $10 million. You converted illiquid equity into cash at 100 cents.

A cash-out refinance unlocks a slice. A lender advances a percentage of value (the loan-to-value, or LTV) and you keep the rest as equity in the building. Pull cash out and you're borrowing against the new value above your existing loan, not cashing out the whole thing. You walk away with a portion of your equity and a larger loan balance, not the full value of the asset.

So the order is simple. Need the maximum amount of capital? The sale-leaseback frees more, often far more, because it's 100% of value versus an LTV fraction. Need a meaningful amount but not all of it, and you'd rather keep the building? The refinance does that.

The cost-of-capital question in a 5%-to-8% world

Both paths have a price, and in 2026 the price matters more than it did three years ago.

On a refinance, your cost of capital is the interest rate on the new loan. As of June 8, 2026, commercial mortgage rates were starting around 5.56% and ranging up through 8% and beyond depending on asset type, leverage, and credit, per Select Commercial's rate tracker. Many owners who locked debt between 2019 and 2021 are now refinancing into rates meaningfully above their original note, according to Commercial Real Estate Loans. If your old rate started with a 3 or a 4, a cash-out refinance today resets your whole balance higher, not just the new money.

On a sale-leaseback, your cost of capital is effectively the cap rate the buyer prices your lease at, expressed through the rent you agree to pay. Single-tenant net lease office traded around a 7.90% average cap rate in the first quarter of 2026, with overall net lease near 6.80%, per Investment Grade / nnntriplenet.com. The lower the cap rate a buyer accepts, the higher your sale price and the lower your effective cost. The leaseback rent you sign is the price of the capital, spread across the lease term.

The point isn't that one is always cheaper. It's that you can't compare them on instinct. You compare the all-in cost of the new debt against the all-in cost of the leaseback rent, over the same horizon, with the proceeds difference factored in. That's a spreadsheet, not a gut call, and it's exactly the kind of analysis where the lease economics that set your leaseback rent do real work, because the rent you negotiate is the difference between a good leaseback and an expensive one.

Control, flexibility, and what you give up

Capital is one axis. Control is the other, and it runs the opposite direction.

A refinance keeps you as the owner. You keep future appreciation, you keep the depreciation, you control the building, you decide when to sell, and you keep the optionality that comes with title. You've simply added debt. If Denver values recover and your building appreciates, that upside is yours.

A sale-leaseback hands the asset to a new owner. You become a tenant. You gain cash and certainty of occupancy for the lease term, but you give up appreciation, you give up control of the asset, and you take on a long-term lease obligation, usually structured as NNN (triple net), where you carry taxes, insurance, and maintenance on top of base rent. That lease is a real liability with real terms, and the renewal options you negotiate today determine whether you control your own occupancy in year 11 or you're negotiating from weakness.

So the trade is clean. The refinance keeps your flexibility and your upside, and gives you less cash. The sale-leaseback gives you the most cash and certainty of occupancy, and costs you ownership and long-term control of the building.

Balance sheet and tax: confirm this with your tax advisor

This is where owners get the most excited and where I'll be the most careful, because the accounting and tax treatment is genuinely situation-specific and the rules are not something to take from a blog.

In broad strokes, a sale-leaseback can move a building off your balance sheet and convert a fixed asset into cash, which can change how your leverage and return metrics read to a lender or an investor. It can also have tax consequences on the sale itself and on the deductibility of rent going forward. A refinance generally keeps the asset and the debt on your books, and the interest may be treated differently from rent.

I am deliberately not giving you the specifics, because the answer depends on your entity structure, your basis in the building, your depreciation history, and current tax law. Confirm every balance-sheet and tax point with your own CPA or tax advisor before it influences your decision. Anyone who promises you a clean tax outcome without looking at your books is selling, not advising.

When each one wins

Here's the decision framed the way I'd frame it across a table from you.

Lean toward a sale-leaseback when:

• You need maximum capital, not a slice. The 100%-of-value proceeds are the whole point.
• The building is not strategic to own. You need the space, not the asset.
• You'd rather convert real estate equity into your core business, where you earn a higher return than you do holding a building.
• An off-balance-sheet result genuinely helps your metrics. Confirm with your CFO and tax advisor.
• Current cap rates let you sell at a strong price relative to the rent you'd agree to pay.

Lean toward a refinance when:

• You want to keep the building, the appreciation, and the control.
• You only need a portion of your equity, not all of it.
• Your existing loan is small or already paid down, so cash-out leverage is comfortable.
• You believe Denver values recover from here and you want that upside.
• The current rate on new debt is one you can carry without straining debt service coverage.

The honest answer for most owners sits in the details. How much capital, at what cost, with what you're willing to give up. That's a math problem with your specific numbers in it, and the inputs (cap rate, rate environment, your basis, your business return on capital) all move.

The Denver context that changes the math

None of this happens in a vacuum. Where your building sits in the Denver office market affects both the sale price a buyer will pay and the rent a leaseback can support.

Denver office is a two-speed market right now. Downtown vacancy hit a record near 38.9% in the first quarter of 2026. The Denver Tech Center is running around 19%, roughly 9 million empty square feet, which is exactly where some investors think the value is sitting in Denver office. Cherry Creek is the opposite, under 5% vacancy.

That spread matters for an owner deciding between these two paths. In a soft submarket, a sale-leaseback buyer prices in vacancy risk and your sale cap rate may be wider, which lowers your proceeds, while a refinance lender may be cautious on value and trim your LTV. In a tight submarket like Cherry Creek, both paths get easier, because the asset is more financeable and more saleable. The submarket is an input, not a footnote.

Frequently asked questions

How much more capital does a sale-leaseback free up than a cash-out refinance?

A sale-leaseback unlocks 100% of the building's market value, while a cash-out refinance only advances a loan-to-value slice and leaves the rest as equity in the building. On the same asset, the sale-leaseback typically frees substantially more cash. The trade is that you give up ownership, future appreciation, and control of the asset, and you take on a long-term lease obligation.

Is a sale-leaseback cheaper than refinancing in 2026?

It depends on the cap rate versus the loan rate, over the same horizon. As of June 2026, commercial mortgage rates were starting around 5.56% and ranging higher, while single-tenant net lease office was trading near a 7.90% average cap rate. Neither is automatically cheaper. You have to compare the all-in cost of the leaseback rent against the all-in cost of the new debt, with the proceeds difference factored in, then confirm the numbers with your CFO.

What are the tax implications of a sale-leaseback?

A sale-leaseback can trigger tax on the sale and changes how the asset and the rent are treated going forward, but the specifics depend entirely on your entity structure, your basis, and current tax law. This is not something to decide from general guidance. Confirm every tax and accounting point with your own CPA or tax advisor before it influences the decision.

Do I lose control of my building in a sale-leaseback?

Yes, you transfer ownership to the buyer and become a tenant, usually on a long-term NNN lease where you carry taxes, insurance, and maintenance. You keep certainty of occupancy for the lease term, but you give up appreciation and control of the asset. The renewal options and lease terms you negotiate up front determine how much control over your own occupancy you keep in later years.

Which option is better for an owner-occupier who wants to stay in the building?

Both let you stay. A refinance keeps you on title and gives you a portion of your equity as cash. A sale-leaseback gives you the most cash and keeps you in the space as a tenant, but you no longer own the asset. The right answer turns on how much capital you need, whether owning the building is strategic, and what the rate and cap rate environment does to the cost of each.

The bottom line

Two paths, one decision. A sale-leaseback frees the full value of your building and keeps you in the space, at the cost of ownership and a long-term lease. A cash-out refinance keeps you on title and your upside intact, at the cost of new debt and a smaller check. The capital, the cost, and the control all pull in different directions, and the right answer is the one that matches what your business actually needs the money to do.

This is the analysis I run with owners before anything gets decided: what's the building worth today, what would a leaseback rent against it, what does a refinance pull out at current rates, and which result your balance sheet and your business return actually want. Cap rates, loan rates, and tax treatment all shift, so confirm any structure against your own counsel, tax advisor, and CFO before you commit.

If you want a current read on Denver deal flow and where the value is sitting right now, let's talk. Schedule time at calendly.com/mccririe.

About Brian McCririe
Brian McCririe is Managing Director of SVN | Denver Commercial and National Council Chair for Occupier Services across the SVN network. After 25 years representing tenants and investors across global markets, he now focuses on the Denver Metro area helping companies navigate leases, acquisitions, and the gap between what landlords offer and what occupiers deserve. He leads one of the metro's top tenant rep practices and writes about the deals, decisions, and market shifts that matter to corporate real estate leaders.