Lease Syndication and Securitization

1. Lease Syndicationand Securitization Paul Bent Principal The Alta Group, LLC Latin American Leasing Leadership Summit May 2, 2007 Rio de Janeiro

2. Commonly used term But not always clearly defined Multiple definitions reflect specific usage Generic term Specific transaction structure Particular professional discipline or department Actual meaning dictated by context Meaning of “Syndication”

3. By market segment Large ticket leasing Sharing equity participation among investors Selling off portions of equity to additional investors Middle market or vendor leasing Assigning lessor’s interest to a third party Selling payment stream to a third party Lease portfolios Sharing lessor’s participation in multiple leases Selling or assigning lessor’s interest in multiple leases Securitizing streams of rental payments or receivables Definitions of “Syndication”

4. By transaction type Leveraged leases Sharing equity or debt among multiple participants Selling off debt participations to additional lenders Operating or true leases Selling or assigning lessor’s interest in leases Selling participations in lessor’s interest Asset based lending Selling lease receivables Recourse, non-recourse, or partial recourse Securitization Selling lease rental streams Utilizing non-recourse funding Raising equity through public markets Definitions of “Syndication”

5. By professional discipline Funding and credit Underwriting or providing credit support for equity or debt participations Selling participations in equity or debt interests Legal Marketing or offering equity or debt participations in leases Offering equity or debt participations in securitizations Arranging a syndicate of equtiy or debt participants for a specific transaction Definitions of “Syndication”

6. Involving parties other than the original lessor and lessee Sharing interests among multiple participants Coordinating and balancing the interests of multiple parties In a single transaction In a series of transactions Common Properties in Syndication

7. Distribute risk Among multiple parties Over the term of a lease Optimize ratios Equity vs. assets Exposure vs. potential upside Rate of return Reduce overall cost Distribute transaction costs Increase leverage Generate revenue Fee income Spread margins Benefits of Syndication

8. Time and expense Legal review Documentation Normalization of Risk/Exposure Differences in investment objectives Differences in risk tolerance Differences in timing and income tax treatment Drawbacks of Syndication

9. Simple transaction brokering (assignment) Syndication Structures Lessee Funding Lessor / Broker Rentals Assigned Rentals Funding (discounted) Rentals Funding Source

10. Leveraged lease equity syndication Syndication Structures Debt Participant 70% Funding Assigned Debt Service Lessee Debt Service (Non-Recourse) 30% Funding Owner Trust (Lessor) Lease Rentals 10% Funding 10% Funding Equity Repayment Equity Repayment Equity Repayment 10% Funding Equity Participant (Beneficiary) Equity Participant (Beneficiary) Equity Participant (Beneficiary)

11. Leveraged lease equity and debt syndication Syndication Structures Indenture Trust (Lender) Debt Participant (Beneficiary) 70% Funding Debt Service Lessee Assigned Debt Service Debt Service (Non-Recourse) 30% Funding` Debt Service Debt Participant (Beneficiary) Lease Rentals Equity Trust (Lessor) 10% Funding 10% Funding Equity Repayment Equity Repayment 10% Funding Equity Repayment Equity Participant (Beneficiary) Equity Participant (Beneficiary) Equity Participant (Beneficiary)

12. Portfolio syndication (assignment) Lessees Lessees Lessees Syndication Structures Original Lessor Original Rentals Leases Full or Partial Recourse Assignment of Leases Discounted NPV of Rentals Assigned Rentals New Lessor

13. Portfolio syndication (sale) Lessees Lessees Lessees New Lessor New Lessors New Lessors Syndication Structures Original Lessor Original Rentals Original Leases No Recourse Discounted NPV of Rentals Assigned Leases Sale of Leases Assigned Rentals

14. Securitization of rental streams Lessees Lessees Lessees Funding Source Funding Source Syndicated or Public Funding Sources Syndication Structures Original Lessor Leases Original Lease Rentals Discounted Purchase Price (less Holdbacks) Full or Partial Recourse Assigned Lease Rentals Special Purpose Company Rated securities Funding

15. Leveraged lease syndication Big ticket assets (US$200 million) Owner trust as Lessor Two beneficiaries (equity participants) Different income tax treatment Different pricing and yield requirements Indenture trust as Lender Seven beneficiaries (debt participants) Different payment requirements Different credit requirements Single interest rate, loan documentation, legal counsel Multiple lease schedules (equipment types) Multiple closings (timing) Case Studies / Examples

16. Portfolio syndication (sale with partial recourse) Middle to large ticket assets (US$150 million aggregate) Various asset types Telecommunications Commercial aircraft Transportation equipment Various credits Rated Non-rated Various lease terms Near expiration Long term Multiple purchasers Various residual values Case Studies / Examples

17. Lease securitization Small to middle ticket assets ($120 million aggregate) Reasonably uniform credits Scored and structured under similar criteria Well documented Good geographical and equipment diversity Limited residual obligations Primarily capitalized leases Primarily “$1 outs” Uniform rating of SPC securities Rated by national rating agency Supported by partial recourse to seller Case Studies / Examples

18. Questions & Discussion Thank you. Paul Bent The Alta Group pbent@thealtagroup.com