CTL. Credit tenant lease

credit tenant

Definition

A tenant with the size and financial strength worthy enough of being rated as an investment grade by one of three major credit agencies: Fitch, Moody's, or Standard & Poor's. An investment grade rating is seen as a good sign that the tenant will be able to pay rent, even in economic downturns or specific market slumps.

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Credit Tenant Lease

Grandbridge Real Estate Capital provides competitive Credit Tenant Lease financing (CTL) to borrowers for acquisitions, refinance or construction of a variety of property types that are tenanted by investment-grade rated tenants on long-term Bond, NNN, NN or ground leases.

CTL financing is a powerful tool that maximizes the financing on your commercial real estate properties leased to investment-grade tenants for either existing or to-be-built properties. Acceptable property types include Single Tenant Retail, Corporate Office, Industrial (warehouse distribution) and U.S. Government leased properties.

Credit Tenant Lease (CTL) Financing

Debt coverage as low as 1.0 to 1.05,

Loans in excess of cost allowed,

Loan term matches lease term,

Extended term beyond primary lease possible,

Amortization can match increases in lease payments for maximum dollars, and

95% LTV Max.

While traditional commercial real estate loans are written against the value of the land, as well as the credit and business record of the borrower, Credit Tenant Lease financing primarily emphasizes the credit quality of the tenant and lease structure in order to establish a cost of borrowing. Investment-grade tenant loans tend to price and trade like bonds in the capital markets. Pricing for non-investment grade and non-rated tenants requires additional analysis to include, among other risks, the value of the real estate asset.

Grandbridge structures CTL loans ranging in size from $1 million up to $50 million or more on single properties or large multi-property portfolios. Minimum debt service coverage ratios range from 1.0x to 1.05x, with loan-to-value not to exceed 95% LTV.

Mobile, AL

$4,500,000

7 Acres

New Construction

Insurance Company

 

 

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© 2015, Grandbridge Real Estate Capital LLC.

A credit tenant lease is a method of financing real estate. The landlord borrows money to finance the property and pledges as security the rents to be received from the tenant. Usually, the financing is structured as nonrecourse debt, and the lease is structured as a triple net lease.

 

Credit tenant leases may be created either in sale/leaseback transactions, or new purchase transactions.

 

A credit tenant is usually an organization with a national footprint, a large regional tenant, or a local tenant with excellent credit that may be better than their national competitors. only larger companies are called credit tenants. A lender will offer better financing terms for a development with a certain amount of space preleased or currently leased to credit tenants.

 

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