Investments into Hanover Merchant Capital’s artisan water project is done so on a leaseback agreement basis. That is all very well, but what exactly is a leaseback agreement? And, what does that mean in terms of investing with Hanover Merchant Capital?
In short, a leaseback agreement is when an asset is sold by an entity but then immediately leased, or rented, back from the purchaser. This will invariably be for an agreed price and agreed term – both of which will have been arranged before any money is exchanged between parties. As a very crude example, it would be like selling an apartment, but renting it back from the person to whom you sold it.
In terms of what Hanover Merchant Capital offers, purchasing one of our leaseback contracts, or WLAs (water lease agreement), means you will receive an annual 5.29% return on your initial investment. This acts like a rental payment. Furthermore, there is an option to sell back the contract at the original value after five years. Depending on market conditions, it is also possible to receive an additional 10% return.
In structuring our investments in this way, we believe we offer customers an easy and understandable way to invest.