CREDIT TENANT LEASE (CTL) FINANCING

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:

  • Permanent fixed rate credit tenant lease (CTL) Bond Financing
  • Fixed rate construction/permanent CTL bond financing
  • Fixed rate direct obligations private placement bond financing
  • Government services administration (GSA) real estate and lease financing

Property Type:

  • Retail: Grocery, drug, home improvement, bank branches etc.
  • Corporate: Office, manufacturing, distribution/warehouse, R & D, data centers
  • Education: Public and Private Universities
  • Government: Federal, State, County, Local municipalities

Typical Terms:

  • Loan Size: $3 million to $300 million
  • LTV: up to 100%
  • DSCR: 1-1.05 depending on lease structure
  • Lease: Bondable, NNN, NN, modified gross
  • Term: Coterminous with remaining lease term, typically ten years or more
  • PPP: Yield maintenance at UTS + 50 bps
  • Assumable: Yes for qualified buyer and 1% fee
  • Non recourse
  • Construction: up to 90% LTC. Recourse during construction only. Contractor completion surety bond. Rolls into permanent loan. One closing for both loans.
  • Credit Tenant Lease (CTL) 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 bonds account for approximately $5 billion a year in real estate secured loans.

Qualifications

  • The tenant must have an investment grade credit or equivalent. Unrated tenant CTL's require a private rating through the National Association of Insurance Commissioners (NAIC), with results achieving a designation of not less than NAIC 2. This is typically a quick process and inexpensive.
  • A net lease for a specific non-cancelable period of time. A fully net or bondable lease allows up to a 1 times debt coverage ratio. A lease which requires lessor responsible will be less than 1.0 DSCR and may require reserves.

Advantages of CTL Financing

  • Leverages credit strength of a company to achieve interest rates close to the lessee's corporate cost of borrowing
  • Non-recourse to the borrower/lessor
  • Interest rates are fixed for an extended period equal to the lease term
  • DSC ratio as low as 1.0x
  • High loan to cost (LTC)
  • Loan proceeds can be used for construction on build to suit projects.
  • Maximum proceeds
  • Tenant maintains liquidity
  • Assumable. This aspect of the loan is great for build to suit properties wth an option to buy.
  • : Yield maintenance at UTS + 50 bps
  • Assumable: Yes for qualified buyer and 1% fee
  • Non recourse
  • Construction: up to 90% LTC. Recourse during construction only. Contractor completion surety bond. Rolls into permanent loan. One closing for both loans.

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.

 

Questions? Contact Madera Financial to discuss your Taxable Bonds
and Credit Tenant Lease Financing needs Today.

(520)241-0969

 

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