Methods for financing properties using structured transactions
OwnerRichard A. Gross, Hugh P. Quinninventors
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Abstract
A method of financing real estate in which the ownership of a building and its underlying land is separated and leased in a manner that provides advantageous results for all parties to the transaction. a novel method of using an accrual to achieve advantageous accounting treatment for the parties to the transaction. The transaction is structured to enable the lessee to achieve operating lease treatment, thereby avoided an adverse impact on the lessee's balance sheet. The transaction is also structured to achieve leverage lease accounting treatment for the lessor.
Claims24
A method of funding real estate, wherein the real estate is owned by a tax-indifferent party and includes land with an existing building thereon, said method comprising:
- leasing the land to an investor entity;
- selling the building to the investor entity;
- leasing back the building to the tax-indifferent party;
- netting the ground rent due under the land lease against the building rent due under the building leaseback to achieve operating lease classification for the tax-indifferent party;
- and
- setting the building rent at a level that enables leverage lease classification for the investor entity.
A method of funding real estate, wherein the real estate is owned by a tax-indifferent party and includes land with a building desired to be constructed or renovated, said method comprising:
- leasing the land to an investor entity;
- constructing or renovating the building by the investor entity;
- leasing back the building to the tax-indifferent party;
- netting the ground rent due under the land lease against the building rent due under the building leaseback to achieve operating lease classification for the tax-indifferent party;
- and
- setting the building rent at a level that enables leverage lease classification for the investor entity.
A method of funding real estate, wherein the real estate is own by a tax-paying party and includes land with a building thereon, the method comprising:
- selling the land to a tax-indifferent party;
- leasing the land from the tax-indifferent party to an investor entity;
- selling the building to the investor entity;
- leasing the building and the land from the investor entity to the taxpaying party;
- and
- setting the land rent due under the land lease and setting the building rent due under the building lease at levels that enable operating lease classification for the tax-paying party and leverage lease treatment for the investor entity.
Dependencies are inferred from the claim text.