leveraged lease


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Leveraged lease

A lease arrangement under which the lessor borrows a large proportion of the funds needed to purchase the asset. The lender has a lien on the assets and a pledge of the lease payments to secure the borrowing.

Leveraged Lease

A lease in which a bank or other financial institution provides the lessor (the party granting the lease and retaining title to the lease good) with credit, which the lessor then uses to finance the lease. For example, suppose a car dealer (lessor) extends a lease to someone buying a car (lessee). The lessor may take a loan from a bank in order to receive capital from the lease of the car while the lessee drives away with the car. The lessee then makes payments on the lease, which the lessor then uses to repay the loan to the bank. Importantly, the lessor may take the leased asset away from the lessee if the lessee defaults, and the bank may do the same if the lessor defaults.

leveraged lease

A long-term lease in which a major part of the purchase price of the to-be-leased asset is financed by a third party. Thus, the lessor uses a combination of its own funds and borrowed money in order to purchase the asset that is then leased to another party.
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Usually offered by corporations and financial institutions (tax benefits available to individual lessors are more limited), in a leveraged lease the lessor--which provides only 20% to 30% of the capital needed to purchase the equipment and the remainder is borrowed from institutional investor on a nonrecourse basis to the lessor--claims all of the tax benefits related to the ownership of the equipment and offers the lessee much lower lease rates when compared to single-investor leases [see, e.
After vigorously marketing their assets for almost a year and soliciting 58 potential buyers/investors, it is abundantly clear that, in the current economic environment and with the debtors complicated leveraged lease structure, an out-of-court restructuring sale is not possible.
The Alta project, supported by a 1,550-MW power purchase agreement with US utility Southern California Edison (SCE), is the largest investment in the North American wind energy sector and the first wind energy leveraged lease to be placed in the debt capital markets, Vestas noted.
FASB has issued a staff position that requires companies to recalculate their leveraged leases if there is a change in the timing of cash flows relating to income taxes generated by the leveraged lease.
Mesa Air Group has completed leveraged lease financing for two new Bombardier CRJ-700 aircraft with equity provided by GE Capital Aviation Services and senior and subordinated debt provided by DVB Bank AG and Citibank, respectively.
The aircraft leases are part of Whirlpool's leveraged lease portfolio in discontinued operations.
Simply put, a leveraged lease is a transaction where the lessor puts in a part (usually 20-40 percent) of the funds necessary to purchase the equipment and a third party lender supplies the remainder, hence the lessor's investment is leveraged with third party debt.
Integration of the Statement 13 leveraged lease accounting with the overall deferred tax computation should be much simpler.
A leveraged lease is a long-term lease in which a major part of the purchase price of the to-be-leased asset is financed by a third party.
Leveraged Lease Accounting: Netting, Tax Credits as Revenue, and Aftertax Yield Amortization
9m, excluding a one-time leveraged lease portfolio tax gain of USD21.
Under the settlement, GE Capital has agreed to provide the airline with USD120m in debtor-in-possession financing, a USD360m loan for use after it emerges from Chapter 11, and USD350m of lease equity for the leveraged lease financing of regional jet aircraft.