ABC optimally models inverted leases, also known as lease pass-through agreements. An inverted lease is structured to pass the credit to the equity investor as a lessee, and allow the developer to retain full ownership of the asset as a lessor. These financing structures are popular for tax equity investors that are interested in federal tax credits but have limited capacity to accept depreciation benefits.
The inverted lease analysis in ABC considers the economic interests of both the developer and the equity investor simultaneously. ABC optimizes the underlying rents, the rental prepayment, and the allocated rent profile to provide maximum efficiency to both parties in the transaction.