Sale and leaseback as investment option-【移投策】
Sale and leaseback as investment option-Sale and leaseback as investment option-【移投策】

Sale and leaseback as investment option

条评论 1678

2017-07-28

The proposal breaks down to the following idea: the company X is in possession of immovable and/or movable property land, buildings, machines, etc., and is in need of financing for its activities. “Our” company, registered in Bulgaria purchases from company X its assets for the amount of desired financing and simultaneously leases back the same assets to the company from which it bought them. The specific price, term, etc. are subject to negotiation.

The main advantage for the investor (purchaser-lessor) is that he invests his means in a secure manner in material assets at a price, considerably lower than the market average and at income, equal or higher than the interest on a similar bank credit, including insurances. Currently, in Bulgaria, the minimum income that can be achieved is 5 %. This low price renders faster and simpler any termination of the investment as opposed f.e. to the case where the investment has been secured with a mortgage. The main and probably only risk is the total collapse of the market of business properties, machinery, equipment, etc. assets subject of the investment. 

On the other side, the company seller – lessee receives fresh financial resource to be used in the development of its actual business. In the same time, its manner of work does not undergo any changes (f.e. a machine-manufacturer that sells buildings or machines or bank or insurance company that sells and leases back its own building.)

This investment proposal has a wide application area – from business properties, machines, equipment, patents, etc. to leasing of real estates, vehicles, etc. of natural persons. It is a matter of choice of the investor.

The market of these services is poorly developed in Bulgaria and competition is practically absent.

The sale and leaseback investment requires a small-number (especially at the beginning), experienced staff of people active in the areas of banking, real estate transactions and leasing transactions. Normally, a six person team – a manager, two attorneys, an accountant, a real estate agent and an office manager - shall be sufficient to organize and conduct the business professionally, with a minimum investment risk and in compliance with the active legislation.

The expenses required to sustain such team on a yearly basis amount to appr. EUR 400 000.

Based on my personal experience in banking, my contacts in this area and my work as a bank manager, consultant and attorney, I am in position to organize and manage the entire investment. Based on the above figures and in order to prove more financially sustainable, I consider that the amount of the investment should be at least EUR 50 000 000.

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