Single and Credit Tenant Lease Financing

2. CTL Balloon Loan (PDF Version) 




Collateral                         First deed of trust (Mortgage) on the property being financed, assignment of leases and rents.


Loan Types                     Immediate funding, permanent, fixed rate loans. Forward commitments with a fixed interest rate may be available on a case-by-case basis depending on the lease, the credit being financed, and current market conditions.


Property Types               Single tenant properties occupied by tenants that are typically investment grade (S&P BBB-, Moody’s Baa3) or better.  Examples include retailers, manufacturers, corporate office buildings, industrial buildings, healthcare providers and hospitals, governments and municipalities, utilities, telecommunications, and colleges and universities.  Properties occupied by tenants not rated or rated below investment grade (BB+ and lower) may be financed on a case-by-case basis. 


Locations Considered    Nationwide.


Lease Requirements      Bond, net or gross leases (landlord responsibilities and cash obligations will be underwritten and reserved).


Ownership                       Corporations, LLC’s, partnerships, individuals; must be a single purpose entity, which must be bankruptcy remote.


Loan Amounts                $1,000,000 and up. 


DCR / LTV                      1.30x depending on tenant rating and lease terms and conditions / Up to 75% of value or cost.


Interest Rate                    Fixed interest rate for the loan term, spread typically locked at commitment.


Expenses                          Third party reports (appraisal, environmental, PCR, survey, title, and credit); lender’s legal fees; property inspection and underwriting fee of $2,500 - $5,000 depending on the size and location of the transaction.


Term                                 Typically 5-10 years.  Other terms, including self liquidating loans, are available on a case by case basis.


Amortization                   30/360 or Actual/360 basis over 25-30 years, depending on the credit, property location and the term of the underlying lease. 


Guaranty                          Non-recourse except for standard non-recourse carve-outs (fraud, misrepresentation, environmental, etc.)


Reserves                           Most reserves are waived for NNN leases.  Typically investors will require some replacement reserves (usually $0.15/sf per year), as well as tenant improvement and leasing commission for shorter lease terms. 


Prepayment                    Prepayment is generally prohibited for a portion of the loan term (2-4 years) with defeasance or yield maintenance for the life of the loan.