118. Sandwich Leases – a lease at below market value might have some value for the tenant if the tenant has the ability to sublease the property to someone else.
This has been the case for years in commercial properties. Sometimes even a bankrupt tenant is able to generate money by auctioning off it’s leases to other companies that see the value in the below market lease.
The sandwich lease phenomenon has spread from commercial to residential properties with the rise of sites like Airbnb and Homeaway. Sometimes a tenant will lease an apartment on a regular 1 year or longer lease, then turn around and rent the unit for much more on a short term basis.