FINANCING OF TENANT IMPROVEMENTS

• US 20120005111A2
• Filed: 03/06/2009
• Published: 01/05/2012
• Est. Priority Date: 03/06/2008
• Status: Abandoned Application

• Current Assignee: TI Solutions LLC
• Original Assignee: TI Solutions LLC
• Inventors: Lowenstein, Douglas, Britton, Dean
• Application Number:
  US12/399,764
• Publication Number:
  US 20100017220A1
• Time in Patent Office: Days
• US Class Current: 705/313
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 50/16 Real estate

Abstract

Methods for lease financing of tenant improvements. Improvements to a lease space are leased from a special purpose entity to a tenant under an improvements lease distinct from the space lease. The special purpose entity may be a legal entity owned under tax accounting rules by a landlord of the space. Financial statements of the special purpose entity may be consolidated with financial statements of the landlord. The special purpose entity may be capitalized by: (a) an equity investment by the landlord of at least three percent of the value of the tenant improvements and (b) debt issued by the special purpose entity of at least about eighty percent of the value of the tenant improvements, the debt being non-recourse against the special purpose entity, the landlord and the improvements and being secured by an absolute obligation of the tenant. The special purpose entity owns the improvements lease. Development of the tenant improvements may be financed by the special purpose entity. Rent payments under the improvements lease may have a present value at least equal to a value of the improvements at a time of commencement of the improvements lease. The improvements lease may be structured together with the space lease to support an accounting conclusion that the space lease and improvements lease are to be considered together as a single lease and classified as an operating lease. Rent payments under the improvements lease may be fully tax deductible to the tenant.

Claims

1. A method, comprising the steps of:

in a non-transitory memory of a computer, recording data reflecting sale of tenant improvements that are owned by a tenant of a space from the tenant to a landlord of the space, and data reflective of an amendment to a lease agreement between the landlord and the tenant to provide for an increase in the rent paid by the tenant for the space to which the tenant improvements are appurtenant;

wherein at least some portion of the selling of the tenant improvements, modeling the selling or amending of the lease, amending the lease, or servicing the amended lease, or retaining records relating to the amended lease is performed with assistance of a computer.

34. The method of claim 1, further comprising said sale being for cash or cash equivalent, at a justifiable price, market rents having risen between the time the space lease was entered and the sale of the tenant improvements, the sale being made at a price that realizes a tax loss relative to the depreciated tax basis at which the tenant carries the tenant improvements.

35. The method of claim 1, further comprising said increase in rent being an amount determined to amortize the selling price with possible adjustments for transaction costs and costs of capital.

36. The method of claim 1, wherein the sale price is less than the depreciated tax basis and the difference between the sale price and the depreciated basis is realized as accelerated depreciation.

2. One or more non-transitory computer-readable memories, having embedded thereon programs to support one or more steps in a transaction with the following steps:

selling tenant improvements that are owned by a tenant from the tenant to a landlord, a space owned by the landlord being leased from the landlord to the tenant, the sale being for cash or cash equivalent, at a justifiable price, market rents having risen between the time the space lease was entered and the sale of the tenant improvements, the sale being made at a price that realizes a tax loss relative to the depreciated tax basis at which the tenant carries the tenant improvements; and

leasing the tenant improvements from the landlord to the tenant at an increased rent paid by the tenant.

3. The computer-readable memories of claim 2, wherein the property the space is located in has a distressed debt situation.

4. The computer-readable memories of claim 2, wherein purchase money for sale of said tenant improvements is financed in large part by a third party lender.

5. The computer-readable memories of claim 4, wherein a loan for said purchase money by a third party lender is non recourse against the landlord.

6. The computer-readable memories of claim 4, wherein a loan for said purchase money by a third party lender has recourse against the landlord'"'"'s equity interest in the property the space is located in.

7. The computer-readable memories of claim 4, wherein

the purchase money is borrowed as debt issued by a special purpose entity, being a legal entity controlled by the landlord.

8. The computer-readable memories of claim 7, wherein

at least about 80% of the capitalization of the special purpose entity is a loan to the special purpose entity secured by an absolute obligation of the tenant.

9. The computer-readable memories of claim 2, wherein rent payments are fully tax deductible to the tenant.

10. The computer-readable memories of claim 2, wherein the improvements are leased back to the tenant under an improvements lease that is distinct from the space lease.

11. The computer-readable memories of claim 10, wherein said improvements lease is structured together with the space lease to support an accounting conclusion that the space lease and improvements lease are to be considered together as a single lease and classified as an operating lease under financial accounting rules or a true lease under tax accounting rules.

12. The computer-readable memories of claim 2, wherein

the leasing of the tenant improvements is effected by amendment of a lease agreement between the landlord and the tenant of the space to which the tenant improvements are appurtenant, the amendment providing for an increase in rent paid by the tenant, the increase in rent being an amount determined to amortize the selling price with possible adjustments for transaction costs and costs of capital.

13. The computer-readable memories of claim 2, wherein the increase in rent is an amount determined to amortize the selling price with possible adjustments for transaction costs and costs of capital.

14. A method, comprising the steps of:

processing data in a non-transitory computer-readable memory of a computer, said memory having embedded thereon programs to support one or more steps in a transaction,

said processing reflecting buying tenant improvements that are owned by a tenant, the sale taking place from the tenant to a landlord, a space owned by the landlord being leased from the landlord to the tenant, the sale being for cash or cash equivalent, at a justifiable price, market rents having risen between the time the space lease was entered and the sale of the tenant improvements, the sale being made at a price that realizes a tax loss relative to the depreciated tax basis at which the tenant carries the tenant improvements; and

said processing reflecting leasing the tenant improvements from the landlord to the tenant at an increased rent paid by the tenant;

wherein at least some portion of the buying of the tenant improvements, modeling the selling or leasing, the leasing, or servicing the lease, or retaining records relating to the lease is performed with assistance of a computer.

15. The method of claim 14, wherein the property the space is located in has a distressed debt situation.

16. The method of claim 14, wherein purchase money for buying said tenant improvements is financed in large part by a third party lender.

17. The method of claim 16, wherein a loan for said purchase money by a third party lender is non recourse against the landlord.

18. The method of claim 16, wherein a loan for said purchase money by a third party lender has recourse against the landlord'"'"'s equity interest in the property the space is located in.

19. The method of claim 14, wherein

the purchase money is borrowed as debt issued by a special purpose entity, being a legal entity controlled by the landlord.

20. The method of claim 14, wherein

at least about 80% of the capitalization of the special purpose entity is a loan to the special purpose entity secured by an absolute obligation of the tenant.

21. The method of claim 14, further comprising leasing the improvements back to the tenant under an improvements lease that is distinct from the space lease.

22. The method of claim 21, further comprising said improvements lease being structured together with the space lease to support an accounting conclusion that the space lease and improvements lease are to be considered together as a single lease and classified as an operating lease under financial accounting rules or a true lease under tax accounting rules.

23. The method of claim 14, wherein

the leasing of the tenant improvements is effected by amendment of a lease agreement between the landlord and the tenant of the space to which the tenant improvements are appurtenant, the amendment providing for an increase in rent paid by the tenant, the increase in rent being an amount determined to amortize the selling price with possible adjustments for transaction costs and costs of capital.

24. The method of claim 14, wherein the increase in rent is an amount determined to amortize the selling price with possible adjustments for transaction costs and costs of capital.

25. A method, comprising the steps of:

processing data in a non-transitory computer-readable memory of a computer, said memory having embedded thereon programs to support one or more steps in a transaction,

said processing reflecting selling tenant improvements that are owned by a tenant, the sale taking place from the tenant to a landlord, a space owned by the landlord being leased from the landlord to the tenant, the sale being for cash or cash equivalent, at a justifiable price, market rents having risen between the time the space lease was entered and the sale of the tenant improvements, the sale being made at a price that realizes a tax loss relative to the depreciated tax basis at which the tenant carries the tenant improvements; and

said processing reflecting leasing the tenant improvements from the landlord to the tenant at an increased rent paid by the tenant;

wherein at least some portion of the selling of the tenant improvements, modeling the selling or leasing, leasing, or servicing the lease, or retaining records relating to the lease is performed with assistance of a computer.

26. The method of claim 25, wherein rent payments are fully tax deductible to the tenant.

27. The method of claim 25, wherein the improvements are leased back to the tenant under an improvements lease that is distinct from the space lease.

28. The method of claim 25, wherein said improvements lease is structured together with the space lease to support an accounting conclusion that the space lease and improvements lease are to be considered together as a single lease and classified as an operating lease under financial accounting rules or a true lease under tax accounting rules.

29. The method of claim 25, wherein

the leasing of the tenant improvements is effected by amendment of a lease agreement between the landlord and the tenant of the space to which the tenant improvements are appurtenant, the amendment providing for an increase in rent paid by the tenant, the increase in rent being an amount determined to amortize the selling price with possible adjustments for transaction costs and costs of capital.

30. The method of claim 25, wherein the increase in rent is an amount determined to amortize the selling price with possible adjustments for transaction costs and costs of capital.

31. A method, comprising the steps of:

processing data in a non-transitory computer-readable memory of a computer, said memory having embedded thereon programs to support one or more steps in a transaction,

said processing reflecting arranging the sale of tenant improvements that are owned by a tenant, the sale taking place from the tenant to a landlord, a space owned by the landlord being leased from the landlord to the tenant, the sale being for cash or cash equivalent, at a justifiable price, market rents having risen between the time the space lease was entered and the sale of the tenant improvements, the sale being made at a price that realizes a tax loss relative to the depreciated tax basis at which the tenant carries the tenant improvements; and

said processing reflecting arranging the leasing of the tenant improvements from the landlord to the tenant at an increased rent paid by the tenant;

wherein at least some portion of the arranging of the sale of the tenant improvements, the selling, modeling the selling or leasing, the leasing, or servicing the lease, or retaining records relating to the lease is performed with assistance of a computer.

32. A computer program product stored on a non-transitory computer usable readable medium comprising:

computer readable program code embodied therein configured to perform the following steps;

selling tenant improvements that are owned by a tenant from the tenant to a landlord, a space owned by the landlord being leased from the landlord to the tenant, the sale being for cash or cash equivalent, at a justifiable price, market rents having risen between the time the space lease was entered and the sale of the tenant improvements, the sale being made at a price that realizes a tax loss relative to the depreciated tax basis at which the tenant carries the tenant improvements; and

leasing the tenant improvements from the landlord to the tenant at an increased rent paid by the tenant.

33. A computer program product for supporting one or more steps in a transaction,

the computer program product comprising:

a non-transitory readable recorded medium;

computer readable program code recorded on the medium for performing the following steps;

selling tenant improvements that are owned by a tenant from the tenant to a landlord, a space owned by the landlord being leased from the landlord to the tenant, the sale being for cash or cash equivalent, at a justifiable price, market rents having risen between the time the space lease was entered and the sale of the tenant improvements, the sale being made at a price that realizes a tax loss relative to the depreciated tax basis at which the tenant carries the tenant improvements; and

leasing the tenant improvements from the landlord to the tenant at an increased rent paid by the tenant.