Leasing: The public sector catches on
The public sector is waking up to the advantages of leasing as budget-constrained public bodies from Sweden to Hungary and from town councils to hospitals seek out ways to take advantage of off-balance-sheet funding techniques.
This June, Bank Austria led a public private partnership project in Hungary for the construction and operation of a new 800-inmate prison for €34 million.
The deal, a full operational lease, is one of several PPP projects in Hungary that have been structured as leases. Bank Austria and Immorent have both been active in a number of PPP operational leases involving student halls and universities in Hungary.
Siemens Financial Services estimates that in the US and Europe more than €130 billion annually is tied up in capital budgets that could be freed up by the use of asset-financing techniques.
As a result hospitals and public health services are increasingly turning to leasing and renting when it comes to investing in new equipment. In some cases pay-per-use arrangements are also being explored, particularly for medical imaging equipment.
Leasing can give the additional advantage of allowing the user easily to upgrade periodically while lessors can easily place older equipment.