Legal Definitions - special-purpose vehicle

SPECIAL-PURPOSE VEHICLE

A special-purpose vehicle is a type of company that is created for a specific purpose, such as to hold assets or manage a project. It is also known as a special-purpose entity.

• A real estateinvestment trust (REIT) is a special-purpose vehicle that invests in real estate properties and generates income for its investors.
• A project finance company is a special-purpose vehicle that is created to finance a specific project, such as a power plant or a highway.

These examples illustrate how a special-purpose vehicle is created for a specific purpose and is separate from the companies or individuals involved in the project or investment. It allows for better management and organization of the assets or funds involved.