[PEN-L:30079] Sale and Lease Back

["Natasha Potter" <natpot74@xxxxxxxxxxx>]

> Last week it was reported that Hilton hotels were selling their buildings 
> and land to a Scottish banking group and leasing them back.

Sounds like a good way of getting capital 'up-front' by companies. It's 
effectively a mortgage.

As for comments that this will reduce debt ratios - I'm not so sure - it 
will remove depreciation charges and reduce the total Assets held but apart 
from that - I'm not so sure.

Sale and Lease Back is a form of PPP - indeed, I think it's the worst form 
in existence as its very obviously close to full-scale privatisation. The 
rationale for it, is the tightness of funding, a reduction in depreciation 
costings and transfer of 'risk' - of course risk never really transfers to 
the private sector who typically insures with a minute 'fly-by-night' who 
goes bust at first demand. The other thing is that the British Treasury are 
forcing both depreciation charges and cost of capital charges into 
Departmental Expenditure Limits - through Resource Budgeting methods and 
this *actually* constrains the ability of Departments to spend money - it 
also seems to be the way in which they will force PPPs to be adopted 
throughout.

> With political will it could become a mechanism for the socialisation of 
> land while allowing the market in material and service commodities to 
> continue. That would only be possible with increased social planning by 
> governmental authorities and monitoring of the aims of the finance
capitalist companies. Plus a little political will of course to socialise 
the means of production, at least as far as rational land managment is 
concerned. It might also be countercyclical.

That might be true; however, it would be just as easy to socialise the land 
*and* the productive sectors. I don't see what huge benefits might accrue 
from Government's holding land on which they will receive rent from private 
sector guzzlers. Indeed, the socialisation of land in current circumstances 
would be impossible as the land-owners would require payment (unless you are 
saying that they should be compelled to sell-up) and where's that money 
going to come from?

Sé



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