Acquisition of Government Leased Real Estate

Civic Finance Associates is actively seeking to acquire privately owned real estate leased to states, counties, cities, school districts, and other state and local agencies ("governmental entities").

CFA utilizes tax-exempt financing to fund all acquisition and closing costs. Traditionally, the market value of investment property is determined to a significant degree by prevailing interest rates for commercial (taxable) real estate loans. However, because tax-exempt rates are lower than taxable rates, CFA can:

  • Afford to pay a higher purchase price than might otherwise be available for a property.
  • Offer the governmental entity lessee:
    • A reduced rental payment.
    • Free and clear ownership of the property at the end of the lease term.

A fee or long-term leasehold in the property will be acquired by a Special Purchase Entity ("SPE"), subject to a newly restructured lease. The project may be either an existing property or a to-be-built project. Closing will take 90-120 days from execution of a purchase contract.

Tax-Exempt Sale-Leaseback and Tax-Exempt Synthetic Lease

CFA has developed proprietary Tax-Exempt Sale-Leaseback and Tax-Exempt Synthetic Lease financing structures. These products allow non-profit owners of real estate to finance their property off Balance Sheet at rates approximating their own cost of capital in the tax-exempt bond market. This device provides low-cost, 100% financing with favorable accounting treatment, yet allows retention of control of the use and operation and, the disposition of the property in certain cases.

Revolving Receivable Discount Facility

The CFA Revolving Receivable Discount Facility was developed for manufacturers/vendors that bid to supply goods and services to municipalities. These companies could not maintain adequate bonding capacity to competitively bid a volume of contracts commensurate with their production or supply capabilities because the lag time between delivery and payment was negatively impacting their balance sheet. In lieu of traditional receivable factoring in the range of 15 to 20%, CFA developed this structure to treat the invoices for credit purposes as a short-term, taxable, government receivable.

Reverse Accommodator Structure

The CFA Reverse Accommodator Structure was developed specifically to help publicly traded real estate development companies complete 1031 exchanges for which discretion in a transaction is critical. After a number of large development companies went public in the 1990's, they quickly discovered that quarterly disclosure requirements made discretion and confidentiality problematic. Hence, a Reverse Accommodator was created as a holding vehicle for the to-be identified trade property. The transactions are structured to be a true sale for tax purposes, albeit capital leases for financial reporting purposes.

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