COMMERCIAL REAL ESTATE LEASING: ANALYSIS OF ECONOMIC EFFICIENCY

Анотація

The article describes typical aspects of leasing agreements that are concluded in the national economy at present (by subjects, duration, rates, advance payments and leased assets). There are realizes a qualitative analysis of the advantages and disadvantages of commercial real estate leasing in comparison with mortgage lending. The economic efficiency of commercial real estate leasing and mortgage lending contracts was compared based on cash flow modeling in a different ways -before and after income tax (using economic performance indicators so as net present value costs, internal rate of return, equivalent annual annuity, effective or equivalent interest rate). In the paper is explains the choice of baseline data for calculation, reveals the methodology of the conducted research and presents the results of evaluation of leasing and mortgage contracts in comparison. The comparability of the selected leasing and mortgage contracts for valuation is provided by the existence of the same agreement terms, calculation scheme of periodic payments, similarity size of the advance payments and using of the same value of the commercial real estate object. There are makes the conclusions about what indicators of economic efficiency of a real estate leasing contract with standard terms are inferior to a mortgage loan agreement, and analyzes the reasons for lower efficiency. In particular, it has been found that the size of net present value cash flow costs, even with tax benefits, is higher on a lease than on a mortgage. The obtained higher internal rate of return on leasing results in lower financial risks that the lessor carries as opposed to the mortgage lender. It indicates a reserve to reduce the interest rate on the lease agreement. The comparison of the effective interest rates on the lease agreement and the mortgage loan revealed their excess in the case of leasing, which explained by the complex nature of the related services provided by the lessor. In conclusions there are proposes measures to promote the development of commercial real estate leasing by business entities, related to changes in contract parameters and the expansion of real estate leasing information.

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