After the Municipal Council of Coquimbo approved the idea of requesting a leaseback to face the deep financial crisis facing the Buenos Aires building, and which considers in the first instance the Francisco Sánchez Rumoroso stadium as a support asset to request the money, Experts in the matter affirm that the enclosure is not in conditions to be alienated, sold or put in pledge, since it was built with fiscal resources.
“No (it is possible), because I understand that this stadium was built with state resources and when that happens, precautions are taken. For example, when it comes to an investment of this nature, it cannot be disposed of, sold or pledged for between 20 and 40 years. Therefore, the municipality could not use it in an operation as a leaseback, where the asset is sold to a financial entity and then repurchased to recover it ”, explained lawyer Carlos Osorio.
It should also be noted that Mayor Alí Manouchehri assured that he is not seeking to risk the sports space, commenting that they hope to be able to exchange the property for another property once the resolution of the Treasury is obtained. However, when consulted about this strategy, the lawyer indicates that the possibility exists, but maintains that it is very remote, “if not impossible” and there should be an agreement between the parties.
“For example, you present the stadium to a bank as support and once the loan is approved, exchange it for another asset of lesser value, it will not accept it and if it does, it is for an asset of similar value and I understand that, in this case, the municipality does not have another asset of the same value ”, he analyzed.
Another professional, Francisco Silva, flatly rules out that this could happen, stating that the operation “needs authorization not only from the Municipal Council, and I don’t think it will get it. As it is built with public resources, there must be a higher entity. Apart from the municipality, beyond owning the site, there must be an authorization from the State ”, says the lawyer.
Regarding the possible change that the communal administration plans, Silva clarifies that it could not be done, because in particular it is not about garments, because these are related to movable things, “here we are talking about mortgages. You can change one mortgage for another, but I doubt that the municipality of Coquimbo has such a valuable property as Sánchez Rumoroso, ”he agreed.
“Let me explain, tomorrow I go and tell the bank, I want to change the mortgage on the stadium for the town hall building. It would have to be appraised and I don’t know if the council building is worth more than the stadium, it would have to be seen and then the creditor will say yes or no. It can be done, but it is not automatic ”, he adds.
Another professional, Emilio Jara, clarifies that in the case of the leaseback figure there is no guarantee, but that it is directly a sale, “which later becomes a lease with a purchase option, to the extent that pay the amount that they transferred to you for that sale. It is a sale with a lease and a repurchase agreement, but if you do not pay, that property may not return to your equity, because it is not a mortgage, it is a transfer to the other ”.
Prohibition to dispose
The former municipal administrator of Coquimbo, Patricio Reyes, who is also a lawyer, agreed that the construction of the stadium “was done with silver from the Regional Government and the Central Government, which entered through Chiledeportes and I understand that what they are asking of to small sports clubs, and even more so to a municipality, when there is a gigantic investment, when the IND makes the silver, it is at least 40 years of obligation not to dispose of. Therefore, that property is going to fall from the outset ”.
Another situation that would affect the transfer or sale of the sports venue would be that when the land was donated to the municipality by the Sánchez family, it was with the commitment that it would only be used to build a stadium, with the impossibility that it could be used. sold in the future.
What is a leaseback?
According to what has been indicated by the commercial engineer, Roberto Vergara, a leaseback is an operation where the owner of a real estate sells it to a financial entity and in the same act, signs a lease on the same asset. In this way, the owner of the property receives a certain amount of money from this sale, but does not lose the use of the property. Upon completion of the contract, you have the option to buy back your asset at a specified value.
According to Vergara, the leaseback “was created as an instrument to support entrepreneurs who lost their liquidity, which in practice means that a financial institution buys assets from a company, and then leases them to it for a determined period and once the amounts owed have been paid, it recovers or repurchases the movable or immovable property that it sold at the beginning of the operation ”.
The lawyer explains that this formula combines “the most significant trilogy in the financial world”, which is the “purchase-sale-lease” and specifies that this situation occurs when a businessman or an entity such as a municipality, which also for some years They use this tool, they need cash, but do not have it, “there they can turn to their personal or real estate assets to obtain the cash they need.”
He cites the following example so that it is more clearly understood: “If you have a warehouse and you have cash problems to be able to stock it with merchandise and add other products, you use a leaseback and sell the premises where you have your warehouse to a bank. . The bank buys it from you, but also allows you to continue using the premises through a lease that you pay monthly and at the end of the lease, which was for example for three years, according to what you agreed with the financial institution, buy back the premises, because it is a lease with a purchase option ”.
Appraisal of the good
Before signing the contracts that involve a leaseback, the value of the real or personal property that will be sold to the financial institution must be established. The price of the asset cannot be set arbitrarily or unilaterally, but must resort to a professional appraisal, which will show the market value of the asset. Subsequently, the parties will agree on the percentage that will be part of the lease and what will be the purchase option that can be exercised at the end.
The next step is to analyze the monthly payment capacity that the owner has, which will allow the parties involved to set the value of the monthly payment and the total monthly payments.
All these agreements will be signed in two contracts: One for sale, by which the asset is sold to the financial institution and another for leasing so that the company can continue to use it as a lessee and with the possibility of acquiring it again through the exercise of the purchase option.
Also read: Alí Manouchehri, mayor of Coquimbo: “The appraisals are from the stadium, but after the resolution we would make a modification”
Advantages and disadvantages of leaseback
Of course the operation has some advantages. It allows the release of fixed assets to obtain immediate liquidity and is a useful tool to cover short-term needs. On the other hand, it does not require much bureaucracy and the property can be bought back at the end of the contract.
Another is the maximization of the value of the asset by the owner who gives up his property, as well as financial savings compared to a sale and greater flexibility than a loan, since the entire investment can be financed. It also has the same tax advantages as leasing.
The disadvantages
But there are also disadvantages, since not just any good can be the subject of an operation of this type. Its age, state of conservation and its value are considered, in short, it is what will determine whether a financial institution agrees to enter into a contract of this nature. The asset used in the leaseback cannot be offered as collateral for another financial transaction, such as a loan, for example, because it is not owned by the company and although the use of the asset is as a lessee, the company is obliged to assume not only maintenance and conservation expenses, but also those caused by breakdowns, even if they are extraordinary, even if they cause the loss of the property.
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