A synthetic lease structure (also referred to as a tax retained operating lease) is created by conveying legal title to the subject properties to a single-purpose trust. Wells Fargo Bank Northwest, formerly known as First Security Bank of Utah, is well known for serving as the owner-trustee of such trusts. The trust issues notes to the lenders secured by deeds of trust on the properties and leases the properties to the sponsor -- in this case, Smart and Final -- for rent sufficient to cover debt service.

In effect the sponsor has sold and leased back the properties. The sponsor has the right to buy the properties at the end of the lease term for an agreed upon termination value or the sponsor can request that the properties be sold to third parties. In the latter case, all sole proceeds go to the lenders plus the amount necessary, if any, payable by the sponsor, to bring the total amount received by the lenders up to an agreed upon residual guarantee amount.

Founded in 1871 in Los Angeles, Smart & Final Inc. is a chain of more than 200 warehouse grocery stores stocking 10,000 grocery and foodservice items in institutional sizes and quantities, including canned foods, paper products, frozen and delicatessen items, restaurant and janitorial supplies. The company operates outlets across the country. The transactions concerned the company's California, Arizona, Florida, Oregon, Nevada and Washington locations.