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Strategies & Market Trends : Value Investing
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To: Michael Burry who wrote (9741)1/26/2000 1:04:00 AM
From: James Clarke  Read Replies (1) of 78505
 
Market rents are what market rents are - you might think they're going to fall, but they haven't yet. That is a forecast. I don't know for a fact, but I would guess EBSC's leases are at or more likely below market. Are you agreeing with my underlying point on the economics?

Let me illustrate it again this way. There is a BIG difference between a lease obligation and a debt obligation.

If I owe a lender money, thats the extent of the obligation - I have to repay him with interest.

If I sign a lease, I owe money, but the lessor owes me the use of something of value. So with what you rightly call an off-balance sheet liability also comes an off-balance sheet asset. That is why I consider it way overly conservative to worry too much about operating leases except in extreme circumstances.

Think again about the lease on an apartment. Lets say I have an apartment lease for $1000 a month going out one year. And I have a $12,000 car loan. There is clearly a difference between the two, no?
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