As mentioned briefly in last week's Private Placement Letter (ASR's sister publication), the Financial Accounting Standards Board hosted a roundtable Monday, Sept. 30 as a forum for industry comment concerning the Board's proposed guidelines for the consolidation of special purpose vehicles. Net lease pro Kyle Gore of Baltimore-based Legg Mason Wood Walker carried the flag for the credit tenant lease camp, emphasizing the distinction between CTLs and synthetic leases, which have been called "financings in disguise" meant to remove real estate related debt from the balance sheet while retaining the tax benefits of ownership.

Given that CTL's typically involve true arms-length operating leases - with no covenants, no debt guarantees, no downgrade triggers, no residual value guarantees and no equity role by the tenant - Gore's primary argument was that they should not be subject to the proposed guidelines at all. While the Board seemed "sympathetic and receptive" to the argument, they reportedly seemed to exude the tacit stance that no structure utilizing an SPE would be completely exempted.

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