What is a Direct Lease?
A direct lease is a financing arrangement by which the lessor buys the property and rents it directly to the lessee. In such cases, the owner of the property truly never intends to ever directly use it for its intended purpose. Rather, it is simply a mechanism for investing and making future profits. A direct lease can be used when two criteria are satisfied. The first condition that must be met is that collection of minimum lease payments is assured. The second factor is that there can exist no major uncertainties regarding the amount of unreimbursable costs that may be incurred. In other words, both sides need to be aware of all costs associated with the lease up front. Further, a direct lease differs from a traditional lease in that the lessor is not a manufacturer or dealer, but rather a third-party owner who buys the property. This may be a bank or some other type of investment firm. Any lease that does not involve a third-party owner cannot be considered a direct lease. In some w
A direct lease is contracted with in-house staff, where the Bureau/Office becomes the lessee. (8) What is a non-direct lease? A non-direct lease is one that the GSA leases for a bureau or one that GSA owns and rents to a bureau. GSA is the lessor and submits rent bills to the lessee bureau. The space rented by GSA is called GSA space or Government-controlled space. (n) Collateral/Installed Equipment. What is collateral equipment and how is it handled with respect to capitalization? Collateral equipment, also known as installed equipment, includes building-type equipment, built-in equipment, and large substantially affixed equipment, normally installed as a part of a facility project either as part of the original facility construction or a modification. Collateral equipment is considered part of the facility project or structure in which it is installed and shall be included in the value of the project when making the determination as to whether the project meets the capitalization cri
