Companies are rated on equity to liability ratios for creditworthiness.<p>Assets = Liability + Equity<p>Let&#x27;s say my company has:
50 million in non-real estate assets (cash, IP, etc)
25 million in liabilities (loans, accounts payable, etc)
25 million in equity
50 million in a building paid by a loan (both an asset and a liability)<p>If I own the building:
Assets (100) = Liabilities (75) + Equity (25)
Equity&#x2F;Liabilities = 1&#x2F;3<p>If I sell it, pay the loan, and lease it back to myself:
Assets (50) = Liabilities (25) + Equity (25)
Equity&#x2F;Liabilities = 1
I appear much more credit-worthy.<p>There may also be tax reasons for this.