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Lease Modeling Expertise
Since the mid 1990’s, Mr. Cozart has modeled a
variety of lease transactions using leading software programs for
pricing leasing and partnership transactions. He has focused
extensively on
partnership leasing structures, joined together
with the latest techniques for satisfying the rental income
accounting rules under IRC §467, including rent loans. He has also
developed models to confirm the assumptions used in pricing
 new and
restructured conventional lease transactions.
In the typical big-ticket leveraged leasing transaction, rent and
debt service is optimized using linear programming techniques to
increase the lessor’s after-tax yield (or the lessee’s financial
benefit) by reducing or eliminating sinking funds. The partnership leasing models require
additional complexity associated with the relative investments and
cash flows of the partners and their separate tax positions and
after-tax yield requirements, as well as complex additional tax and
accounting requirements.
In designing a
partnership leasing transaction, lease termination value payments
must be made acceptable to the lessee. Upon a default by the
lessee, these values need to preserve the anticipated after-tax returns
of the partners in the lessor partnership, including by reversing
the tax-based partner’s capital account deficit. See
Leasing Partnerships. In many
transactions, these values may be lowered in the early years of the
lease transaction to acceptable levels by using a variety of
optimization techniques. |
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