A leverage lease involves 3 parties:

          1. The lessee
          2. The lessor (or Equity participants)
          3. The lender

 From the stand point of the lessee there is no difference between a leverage lease and any other lease. The lessee contracts to make periodic payments (over the basis lease period and in return is entitled to use the asset over that time period.

The role of the lessor, however, is changed. The lessor acquires the asset in keeping with the term of the lease and finances the acquisition in part by an equity investment (say 20% equity investments) and the remaining 80% is provided by a long-term lender (provider of debt fund). The long-term loan is covered by a mortgage on the asset as well as an assignment of the lease and the lease payment. In this case therefore, the lessor is the borrower (equity participant).