19x rent for the building my business sits in, with a 15 year leaseback

I had to read this twice. So the seller and the tenant are the same person, and the rent in the lease is basically negotiated backwards from the price the buyer wants to pay? That seems like it would let anybody manufacture a number. What stops it?

juniper, nothing stops it, which is why buyers underwrite rent coverage instead of taking rent at face value. If the box pays 190,000 a year and the location's four-wall cash flow before rent is 300,000, that's a coverage story. If it's 210,000, the lease is a liability dressed as an asset.

thatch, the piece I'd want you to look at before signing is the land. Hard corner in a second-tier metro, 6,400 feet, the dirt may be worth a real number on its own for a different use, and by-right permitted uses vary by municipality so pull your zoning district text rather than assuming. If land is most of the value, you're selling the optionality cheap.

The rural version of this is worse. I've seen small-town leasebacks where the seller set rent 40 percent above market and the buyer paid a 7.9 for it, and when the operator closed the location there was nobody to backfill at anything close to that rent. Above-market rent in a thin market is the trap, thatch. Your metro gives you more shots at a replacement tenant than most of what I look at.

Warning, mostly. Not disqualifying. When I look at leasebacks the first thing I do is compare the lease rent to asking rents on comparable freestanding space in that submarket. If the lease is inside 10 percent of market I stop worrying about who set it. If it's 30 percent over, I'm buying a rent that will reset down at expiry and I have to price the exit at market rent, not at contract rent.

thatch, that also tells you something about your own decision. If you're signing at 30 percent over, you're borrowing from your future self at a rate you should write down.

Why does the buyer care about the 2 percent bumps so much? Is that just inflation protection or is it doing something to the price?

compass, both. The bumps set what the rent is at year 10 and year 15, and a buyer's exit price is a cap rate on future rent, so escalators move resale value directly. That's also why a lot of net lease buyers will pay up for 2 percent annual over flat, and why flat-rent deals trade wider.

thatch, the honest tension in your post is that everything making the price attractive to you makes the deal harder for the buyer, and the buyers who take it anyway are the ones who never verified coverage. That's who you'd be selling to. Whether that bothers you is your call, and the lease terms themselves are worth an attorney's read before you sign a 15 year obligation.