June 16, 2011
ATEL Leasing Corporation is pleased to announce the successful completion of a $30mm lease line for over-the-road trailers with Wal-Mart Stores, Inc.
ATEL and Wal-Mart have enjoyed a mutually fruitful and longstanding relationship and have financed over $85mm of equipment in the past 3 years alone. For accounting purposes, the lease is structured as an operating lease and a true lease for tax purposes.
"The closing of this lease line highlights the critical importance for a lessor to provide the "three R's" when working with a customer," commented Bill Bullock, ATEL's Senior Vice President, Leasing. "Customers primarily care about Reputation, Reliability and Rate. One of the decisions a lessee has to make when initially choosing a lessor is finding the one that offers the best balance between providing the most competitive lease rate and their ability to close the transaction promptly and reliably. We're gratified that we were selected to work with a pillar of corporate America."
Leasing has always been a great financial solution for lessees to manage their equipment that will undergo rapid technological changes. This lease is illustrative that there will always be a need for leasing for the commercial and industrial assets such as rolling stock. Assuming that lessees (and lessors) will have to carry the present value of the lease rental stream on balance sheet in 2013, this lease highlights that residual-based operating leases will continue to play an important role. If early buyout options are required to be accounted as on-balance sheet entries, the role of true operating leases will take on even greater emphasis.