Our affiliated investment banking concern is a structured finance and investment service firm founded in 1998 to meet the needs of borrowers, mortgage companies, corporations and institution investors with credit-based financing transactions.
The loan programs include:
Advantages of CTL Financing
Credit Tenant Lease (CTL) – also known as Taxable Bonds, CTL bonds, or CTL financing – is a very effective source of capital for credit rated companies by offering the user liquidity for asset monetizing. Real estate loans are typically underwritten to value of real estate. Whereas CTL loans rely on the credit quality of the tenant and structure of the lease to establish the cost of borrowing. CTL taxable bonds account for approximately $5 billion a year in real estate secured loans.
• “Date Certain” Rent Commencement Date - Lease states that rent will commence on a predetermined date regardless of whether a Certificate of Occupancy has been issued, the tenant has accepted the premises, or taken occupancy. Commonly referred to as a “heel or high water” lease term. Separately, the developer (not the landlord) and the tenant may enter into a construction development agreement wherein the developer could be responsible for any amounts advanced by tenant for rent paid prior tp occupancy. The borrower provides a surety bond for performance and payment and a GMP contract, which will be assigned to the bond investor. I/O payments during constructions. An approved construction monitoring firm oversees the draw request process and reviews the third party engineering and inspection reports monthly. Typically structured as a single funding with no additional spread, but may be staged funding with a spread add-on.
• Combined Construction and Permanent Bond - Bond investor takes construction risk and charges a construction fee for the added risk and complexity. Borrower provides a surety bond for performance and payment and a GMP contract, which will be assigned to the bond investor. Typically structured as a staged funding with a predetermined draw schedule. I/O payments are made during construction. An approved construction monitoring firm oversees the draw request process and reviews the third party engineering inspection reports monthly.
• Letter of Credit-Backed Credit Enhancement - Borrower provides a Letter of Credit (LOC) from an approved issuer for 101% of the note amount. LOC insurer will have a first lien on the property until construction id complete, tenant has accepted the premises, taken occupancy and final due diligence is updated/completed. Then, simultaneously the LOC is released and the first lien on the property is released, allowing for the bond investor to move into the first lien position. I/O payments are made during construction. Typically strutted as a single funding with no additional spread.
• Forward Commitment to Fund - Bond investor commits to fund the bonds at a future date at an interest rate locked up front, which includes a premium in the spread depending on how far forward the bonds will be funded. Borrower constructs the project with its own capital sources or procures a construction loan.