Leaseback arrangement #1 Suites

[princess_morbucks]

Saw this ad in The Property Guru magazine :

https://pbs.twimg.com/media/Be1uPFXCAAEvz2o.jpg

What does leaseback arrangement mean?

[RCT]

Saw this ad in The Property Guru magazine :

https://pbs.twimg.com/media/Be1uPFXCAAEvz2o.jpg

What does leaseback arrangement mean?

Maybe have a third party rent your unit and then rent it out to the others at a higher rate... Something like 2nd landlord? But really? 1088 psf still don't have people buy?

[princess_morbucks]

Found the answer in this website :

http://www.investopedia.com/terms/l/leaseback.asp


Definition of 'Leaseback'


An arrangement where the seller of an asset leases back the same asset from the purchaser. In a leaseback arrangement, the specifics of the arrangement are made immediately after the sale of the asset, with the amount of the payments and the time period specified. Essentially, the seller of the asset becomes the lessee and the purchaser becomes the lessor in this arrangement.
http://www.investopedia.com/sites/default/themes/investopedia/img/icon_inv.png Investopedia explains 'Leaseback'


A leaseback arrangement is useful when companies need to un-tie the cash invested in an asset for other investments, but the asset is still needed in order to operate. Leaseback deals can also provide the seller with additional tax deductions. The lessor benefits in that they will receive stable payments for a specified period of time.

Also known as a "sale and leaseback."

[DC33_2008]

It is common with hotel development.
Found the answer in this website :

http://www.investopedia.com/terms/l/leaseback.asp


Definition of 'Leaseback'


An arrangement where the seller of an asset leases back the same asset from the purchaser. In a leaseback arrangement, the specifics of the arrangement are made immediately after the sale of the asset, with the amount of the payments and the time period specified. Essentially, the seller of the asset becomes the lessee and the purchaser becomes the lessor in this arrangement.
http://www.investopedia.com/sites/default/themes/investopedia/img/icon_inv.png Investopedia explains 'Leaseback'


A leaseback arrangement is useful when companies need to un-tie the cash invested in an asset for other investments, but the asset is still needed in order to operate. Leaseback deals can also provide the seller with additional tax deductions. The lessor benefits in that they will receive stable payments for a specified period of time.

Also known as a "sale and leaseback."

[princess_morbucks]

It is common with hotel development.

But this one is residential and not commercial.
Wonder who will they lease out to?
By right, it has to be at least a 6 month lease.

But let's say, the developer who leases back from the buyer, becomes the Company's tenant, it means that the people occupying the unit is an occupier, who is usually the employee of the company.

This occupier is not subjected to the minimum 6 month occupation period, right?

[richwang]

From the Developer's point of view, if it needs cash flow, it has two options:

1. Drop price and sell the units - it will have problem by getting less cash to repay banks, etc;
2. Maintain the price by promise a high rental - it will get immediate high cash (but will pay rental at a later stage).

So the developer is kicking the can further and just to show the price is not dropping. It can also satisfy the regulatory requirement of selling the units within a certain period without paying fines. (Effectively developer is selling to itself although legal ownership has changed hands.)

[derekong]

Saw this ad in The Property Guru magazine :

https://pbs.twimg.com/media/Be1uPFXCAAEvz2o.jpg

What does leaseback arrangement mean?


Leaseback is like "guaranteed rental yield" of which upon TOP, the developer guarantees you a certain yield, typically for 2 years. During this period, they will aggressively market the unit and sublet it out to potential tenants, hopefully at a higher rental than you get.

The good is that you can recurring income immediately after TOP, whether the unit is really rented out or vacant.

The bad is that typically buyers pay a premium becos of this scheme.

[focus]

Wow .. this type of aggressive promotion like 2008/2009 coming..

It's cheap but people worry about the developer's ability to complete the project.
Even if it's Oxley.. the MM King.

Hmm.. worth a look rite..

[SQ008]

funny sort of arrangement :doh: