The Lease – An Alternative for Funding Investments in Real Estate

Keywords

leasing, real estate, investments, funding. Summary: This article is dedicated to the use of leases in funding investments in real estate, which still is not very common in Bulgaria, although a growth in the relative share of leasing has already been noticed in the portfolios of Bulgarian companies. The article places an emphasis on the legal aspect of leasing real estate (a combination of contracts – lease, credit, purchase, construction) and its fi nancial features as a combination of monetary relationships and cash flows. Attention is paid to the specific types of financial leasing of real estate – leasing of new construction, leasing of the buy-and-lease type, sale and leaseback, leasing through closed-end real estate funds. The advantages of leasing for the three parties to the real estate lease transaction – lessor, lessee and creditor, are explained, as well as the specifics of some financial conditions – lease payments, the distribution of the various types of expenses, connected to the management of the property, between the lessor and the lessee, etc. It is noted in the conclusion that the leasing of real estate is a promising form of funding of investments, the development of which would contribute to a more dynamic real estate market.