Because there is little or no amortization, the purchase price should not be considered a bargain under SFAS 13. Otherwise, the lease would violate SFAS 13. The lessor uses this contingent rent payment to repay a portion of the debt component of the transaction. The lessee is then required to market the property on behalf of the lessor. On a sale of the property, the lessor uses the sales proceeds to pay the remainder of the outstanding debt and equity.
Any residual profit belongs to the lessee.
The SPE may be structured several different ways. The loan, which may be made by an affiliate of the lessor, is sometimes secured by the lessor's assignment of the rental stream under the lease, a security interest in the facility, or both. In an alternative structure, the trust beneficiaries are both the debt and the equity participants. The beneficiaries advance funds to the trust, which are used to buy the property and construct the improvements. Because the trust owns and holds the property for the benefit of the debt and equity participants, the parties may see no need for a security interest in the facility.