Securitisation through property leasing in Maltese public limited companies and its financial implications

Abstract

As the title of this dissertation implies, this work deals with two main concepts - securitisation of property and property leasing in the corporate sector. Securitisation is the conversion of an asset into paper securities, which then become tradable between institutions. These securities are thought to be more tradable than physical property. Property leasing is the other side of the coin. While businesses would be interested in the securitisation of their immovable property, they still need the physical space from where to operate their business activity. In most highly developed countries businesses no longer buy property as they find it more tax-friendly to lease, while leasing does not tie up valuable capital, which could undoubtedly be put to better use for the businesses. The aim of this dissertation is to study and explore the opportunities that securitisation through property leasing (STPL) offers to local businesses. STPL would, if successfully designed and implemented and if conferred widespread approval and use, revolutionize both the property and investment industry here in Malta as it did elsewhere, making the property market more akin to the stock market. The general feeling and level of awareness of STPL among local entrepreneurs was surveyed by means of a mailed questionnaire. Although quite structured, the questionnaires nevertheless afforded the respondents some leeway to express opinion about grey areas. This was optimized in the case of a number of questionnaires which were carried out in person. The most significant pointer which came out of the study is that the local public limited companies, although aware of the existence of the concept of STPL, have a very shallow understanding thereof The local business community still has to explore the possibilities offered by the application of this concept. Thus STPL offers a myriad of possibilities for the business community and it would be a terrible waste if such avenues were not explored in depth, as they should be. Investing in thorough and explanatory information campaigns pays both the STPL operators who could be cultivating the terrain for their service and even more so the prospective clients who become truly aware of the ins and outs of this concept.