Operating Leases
Typically shorter term lease arrangements (generally under seven years), operating leases
cover both new and existing owned and managed rail equipment. Net lease
agreements hold the lessee directly responsible for maintenance, insurance,
and taxes. Under a full service lease agreement, First Union Rail
arranges for the performance of all maintenance on behalf of the lessee.
These agreements can be structured as a fixed rate rental obligation or
a car hire arrangement. In a carhire arrangement, cars generate per diem and
mileage earnings while on railroads, which handle cars under an industry
prescribed system, or bilateral agreement.
Finance Leases
Finance leases are typically longer term transactions, ten to twenty-two years in length.
They typically cover new equipment, in which the lessor's interest is financial
only. Generally, the lessee assumes all responsibility for maintenance,
taxes, and insurance. Lease transactions can also be structured as single
investor or leveraged. The lessee may have termination options (with penalties)
and purchase options at various times throughout the lease term.
Sale/Leaseback
In this transaction, used equipment is purchased from a company (lessee) by First Union
Rail. The title passes from the user to First Union Rail and the equipment
is then leased back to the company. This type of transaction often encompasses
a modification, upgrade, or rebuild of the equipment prior to being leased
back to the lessee.
Portfolio Acquisitions
First Union Rail occasionally purchase rail equipment
from financial institutions (usually equipment under maturing finance leases),
builders (with a corresponding lease), competitors, railroads, and shippers.
Asset Sales
First Union Rail occasionally sells assets to interested parties.
A bid package is prepared and forwarded to potential buyers which may include
competitors, existing lessees, financial institutions, railroads, shippers,
and brokers.
Lease-In/Lease-Out
This arrangement involves leasing in equipment from a third party (competitor, railroad,
or shipper) and subleasing it to the ultimate user.
|
