Master lease & leaseback of government owned real estate : a model for a fixed income investment product

Throughout the United States, significant taxpayer capital is unnecessarily tied up in the ownership of state and municipal government buildings. Today, multiple state and municipal governments face record budget deficits, and are struggling to find ways to raise revenues and decrease annual operating costs in order to close these budget gaps. At the same time, substantial amounts of investor capital from both public and institutional funds, as well as private investors, sits idle, as there is a lack of opportunity for safe, moderate-return long-term investments in today's markets. This thesis investigates the benefits and drawbacks to an investment structure, similar to the commonly used corporate sale-leaseback, that can be used to free capital that is tied up in existing government-owned real estate, while allowing governments to retain long-term ownership of these assets. It also presents the methodology for syndicating these investments into rate-able fixed income products, similar to municipal bonds or CMBS. These investments and the associated participation instruments create arbitrage opportunities for underwriters and syndicators of Government Lease Backed investments, and generate capital flows in the tens of billions of dollars. The models presented may be applied to federal, state and municipal government assets alike. However, this thesis focuses on the application of the models to assets owned by the State of California, as it currently has one of the most significant budget crises in the country, as well as the largest state-owned real estate portfolio.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Urban Studies and Planning.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2003

Author dc:creator

• Hutchinson, Jeffrey E. (Jeffrey Ernest), 1970-

Advisor dc:contributor.advisor

• David Geltner.

• Urban Studies and Planning.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/29961

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/29961