Definition for : Synthetic lease

Synthetic Leases limit the amount of the Lease payments to little more than the financing costs. In such structures, the asset must be repurchased at the end of the Lease period at a price close to the initial price of the asset when the structure is put together. Conceptually, this is tantamount to a Nominee agreement.

(See Chapter 19 The required rate of return of the Vernimmen)

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