a member of erste bank-group and sparkassen real estate leasing in romania harald trinkl / vasile...

A Member of Erste Bank-Group and Sparkassen

Real Estate Leasing in Romania

Harald Trinkl / Vasile Cristescu

Bucharest, October 19th, 2006

National Leasing Conference ALB

October 19th, 2006

2A Member of Erste Bank-Group and Sparkassen

Possible Objects for Real Estate Leasing

Office buildings

Logistic centers

Retail spaces

Production facilities

Hotels

Warehouses


Clients for Real Estate Leasing

corporate clients:

services (office buildings) commercial (supermarkets / retailers) industrial (production facilities, warehouses, logistic centres)

public sector:

municipalities (town halls, schools and kindergardens, public transport and buildings)

private sector:

flats and houses


Approval procedure

Analysis of project: plot location, expert valuation report concerning the plot of land and the building (if existing);

Analysis of the client’s credit standing; Preparation of application to credit committee

approval (either in Romania or with the shareholders of the leasing company);

Approval (with or without additional requirements).


Different types of Real Estate Leasing

1. Finance leasing:

One of the following criteria must be fulfilled:

all risks and benefits of the project / lease object are transferred to the lessee;

pursuant to the leasing agreement at the end of the lease term ownership over the lease object is transferred automatically to the lessee;

the lease term exceeds 75% of the standard useful life of the lease object; Benefit: long term financing.


Balance Sheet in case of Finance Leasing

Finance leasing: real estate is in the balance sheet

of Lessee

Lessor: Lessee:

balance balance

-receivable to Lessee

-refinancing

P+L-interest

-real estate -liabilities

P+L-depreciation-interest



2. Operate Leasing:

if no criteria for a finance leasing is met

the lessee is paying back a part of the total investment cost up to an agreed residual value

at the end of the contract the lessee is not obliged to buy the lease object (risk of the residual value remains with the lessor)

In case of an operate lease, Lessee has no liabilities in his books (therefore a better credit rating) – but residual value risk of Lessor


Balance Sheet in case of Operate Leasing

Operate leasing: real estate is in the balance of Lessor

Lessor: Lessee: “off balance”

balance balance-real estate -refinancing

P&L-depreciation-interests

-lease instalments

- -

P&L

-lease instalment / rent


Balance Sheet in case of Operate Leasing

Depreciation

In case of operate leasing, the residual value of the leasing contract is equal to the bookkeeping value of the lease object.

for example:

industrial buildings: 40-60 years office buildings: 40-60 years production halls: 16-24 years warehouse / retail: 24-48 years



3. Sale & Lease back:

Owner of a property sells to a leasing company at market value. The leasing company leases back the property to the lessee.

This results in a higher liquidity in the company and the client can invest in other projects.

At the end of the duration of the lease, the client can become owner of the property again.


Legal requirements

Owner of plot

Leasing company /General Contractor

Lessee /General Contractor Construction company

Purchase contract – Superficies/Rent - Concession

Real estate leasing contract

General contractor agreementSub-contractor agreement

Sub-contractor agreement


Possible Structures to Secure the Real Estate

Acquisition of land – asset deal / share deal

Superficies Agreement / Long Term Rent

Concession (in case plot is state owned)


Construction period

General contractor contract between lessor and lessee

Sub-contractor contract between lessee and construction company: specification of contraction works and costs

Additional Services from the lessor’s side (planning, site control, architectural services)

Payment by the leasing company to the general contractor according to progress in construction work

Common construction site visits

Calculation of interim financing


Completion of construction

Taking over of the finished building:

taking over protocol has to be signed by lessor and lessee;

operating permits / authorizations have to be obtained by lessee from the competent authorities.

Lease period start

Calculation of Total investment costs


Administration of lease contract

Total investment costs – will be defined and shall build the basis for the calculation for the lease instalments (construction services, interim financing, all other expenses referring to the construction like costs for notary, taxes will be added)

Invoicing of lease instalments payment of land taxes to the authorities insurance


Thank you for your attention!

Immorent Romania IFN SA

Str. Stirbei Voda, nr. 104-106, Sec. 1, Bucuresti

Tel.: 021 310 12 04, Fax: 021 310 18 80 [email protected]

a member of erste bank-group and sparkassen real estate leasing in romania harald trinkl / vasile...

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