Leases

Leases Placements

Lease Structure	Sigma Capital can provide advisory services to determine to best type of lease for you, capital lease, operating lease, municipal lease, etc. Sigma Capital can tailor leases for unique circumstances, and are particularly useful for energy savings or renewable energy generation equipment where a lease payments can be matched with the savings stream.
Lease Characteristics	Typical leases range in size from $1,500,000 to $20,000,000. Solar leases are generally structured as a operating lease with the Lessor taking investment tax credits and depreciation attributes to "buy down" the price of the lease. These leases may have many of the following characteristics: Solar Operating Lease: Term may be 15-20 years depending on the creditworthiness of the host Energy Savings: Term: 5-7 years, potentially longer depending on the equipment and creditworthiness of the host Lease rate: prime plus to mid teens, depending on credit
Company Characteristics	In addition to superior management, project companies (Special Purpose Entities) typically have the following characteristics: Project capital $1.5-20 million Substantial DSCR (Debt service coverage ratio) sufficient to cover the lease payments for term of lease Push through to host credit worthiness
Advantages of leasing	Depending on the structure, leases can provide advantages both for the lessee: Lower cost - Leasing conserves capital. Monthly lease payments are less than monthly purchase payments or monthly depreciation plus interest expense. Flexibility - Payments can be matched to budgetary levels. Your business conditions - cash flow, equipment needs and tax situation - help define the terms of your lease. Provides for off balance sheet financing - This potentially increases your borrowing capacity while easing the budgeting process and preserving key financial ratios. Protects against inflation - Fixed-rate pricing allows for protection against inflation whereas variable-rate leases let you take advantage of falling interest rates. Ability to customize payment schedules Lease payments are fixed and not dependant on complicated energy savings measurements Lease rental payments are made from pre-tax rather than after-tax earnings
True Lease	A term used when addressing the tax implications of a lease. In simple terms a lease is considered a true lease if at the end of the lease term the lessee has the option to purchase the equipment at what is defined as Fair Market Value. Conversely, if the lease agreement contains a bargain purchase option, it would be treated as an installment sale.
Operating Lease	For financial reporting purposes, FASB defines an operating lease as one that does not meet the criteria of a capital lease. This means that the asset and corresponding liability are viewed as "off balance sheet" and the entire monthly payment is expensed or treated as a budget item. As viewed by the lessor, an operating lease describes a short-term lease (compared to the asset's expected useful life) in which the total of payments received by the lessor do not cover the cost that the lessor paid to acquire the asset. At the end of an Operating lease term, the Lessee has the option either to purchase or renew at the product's then current Fair Market Value (FMV) or to return the equipment.
Municapal Lease	Due to tax-exempt status, many U.S. state universities, hospitals, city, county and state governments qualify for Municipal Leases. This status helps enable leasing companies to pass on the savings to these customers through lower monthly payments.