Direct Property Investment

Instead of real estate financing in the form of a loan, real estate can also be sold to financiers with the creation of a beneficial interest.

In practice the procedure is implemented follows:

• Leasing companies acquire a property in return for payment of the purchase
• Transfer to the lessee for use in return for payment of leasing instalments

The following market participants act as property leasing providers:

• Banks with their special-purpose subsidiaries
• Leasing companies
• Funds
• Special Purpose Vehicle
  • Leasing options
    • Lessor constructs building on behalf of the lessee
    • Lessor acquires an existing building (buy and lease)
    • Lessor buys a building from the lessee and leases it back to him (sale and leaseback)
  • Lease and rent back or lease and sale back
    • The real estate must be shown in the balance sheet, not the mortgages
    • Asset Backed Securities (ABS) are thus referred to as Commercial Real Estate Backed Securities (CREBS) or lease-backed securities
  • Lease and leaseback
    • No real estate transfer
    • Advantages
      • Tax depreciation options
      • Financial profit through tax advantage