Property investors may be either equity investors who buy property or debt investors who lend them the finance to make the purchase. Structured Finance is primarily used by property investors to enable: the capital portion of lease payments to be written off over the lease period with resultant tax benefits to equity investors; the property asset to be off the balance sheet of equity investors with resultant benefits in debt to asset ratio and return on assets. Banks entering into these Structured Finance contracts focus on the quality of client, who is required to be a solid corporate of significant stature. The client is both lessee and lessor. Banks require the leases to be triple-net (fully repairing, maintaining and insuring lease) for a fixed period, creating a certain cash flow. This limits the risk to only the structure risk which lies with the client. Less emphasis is placed on property risk than would be the case with conventional mortgage funding. This implies that Structured Finance should be "cheaper" than mortgage funding. Banks all offer different methods and structures of Structured Finance. This paper reports on case studies of Structured Finance contracts offered by selected South African banks, in which two objectives were pursued. The first was to examine whether equity investor?s objectives stated above were being achieved. The second was to examine both the costs and benefits to both parties to the contract. Work is currently in progress and it is being revealed that equity investors' objectives are only partly achieved with little responsibility being taken by banks to re-structure debt should legislation changes affect the equity investor's benefits. Banks are being well compensated for very little risk.

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