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CREDIT TENANT LOAN

 

A credit tenant loan (CTL) is a real estate loan that is secured by the obligation of a single investment grade company to pay debt service by means of rental payments under a high quality lease or through a recourse loan obligation.

Requirements for a credit tenant loan include investment grade tenant, fully amortizing preferred, or up to 35% of the loan balloon, and bond, absolute net, or double net lease. Typical attributes of a credit tenant loan include debt service coverage as low as 1.0x-1.05x rent (depending on lease quality), and high loan-to-value ratios based on MAI appraised value. CTL also includes potentially all property types and uses, depending on the strength of credit tenant. Physical condition assessments are required for double net leases only and seismic reports are required in areas with seismic risk. While transaction ratings and specialty insurance to cover casualty and condemnation risk is not required, phase I environmental and MAI appraisals are required. CTL prefer locations in primary and secondary markets, but may permit tertiary markets depending on credit quality. Investment grade tenants can be public or private companies, national or regional in operation, and must have the ability to get audited financial statements.

A credit tenant loan is $2 million and up and can rate lock at application. CTLs are fully amortizing or covered balloon exposure at maturity. Special purpose entity or single asset entity is preferred, but not mandatory, as well as trustee structure, depending on each transaction. Construction permanent loan capabilities have different guidelines, with up to 18 months for construction period and a minimum loan of $7 million. A long-term credit tenant loan program enables a borrower to receive the highest loan proceeds that a property’s rent payments can handle. The fixed rent payments defined in the lease generally amortize the greater part of the balance of the loan during the term of the lease, which is usually 20 years. A single-tenant lease property’s qualifications are similar to CTL’s program, but the tenant should be rated BBB- (Standard & Poor’s) or Baa3 (Moody’s) or better. Credit tenants with BBB- or Baa3 ratings may also qualify for financing. Special provisions may be available to facilitate sales.

At Ocean Pacific Capital, for over 31 years, we have understood the commercial financing industry inside and out. Please give us a call today at 1-800-595-1474 or fill out our online commercial application.


Whatever your financing needs,
we will tailor a loan that's right for you.

 


Daily Oil & Gas and Wall Street Journal News
9/22/19

Oil Prices Up for the Week
Posted on Thursday September 19, 2019

An exciting week for WTI and Brent crude oil future has come to an end.

US Drillers Lose 18 Oil, Gas Rigs
Posted on Thursday September 19, 2019

The U.S. lost a net total of 18 oil and gas rigs this week.

Bahamas Terminal Returns to Full Ops
Posted on Thursday September 19, 2019

Buckeye Partners reported that it has resumed full operations at its Buckeye Bahamas Hub.

Permian Child Wells May Cut Oil Recovery By 20 Percent
Posted on Thursday September 19, 2019

Oil producers drilling so-called parent-child wells in the Permian Basin are risking the loss of 15% to 20% of the crude that can ultimately be recovered from those wells by spacing them too close together.

More Haynesville Gas Headed to Gulf Coast
Posted on Thursday September 19, 2019

Enterprise Products Partners will expand and extend its Acadian natural gas pipeline system linking the Haynesville Shale to the LNG market in South Louisiana.

McDermott May Sell Lummus
Posted on Thursday September 19, 2019

McDermott is considering selling all or part of its Lummus Technology business.

Aramco Reveals Damage to Giant Oil Field
Posted on Thursday September 19, 2019

Saudi Aramco revealed damage caused by an aerial strike on its Khurais oil field last weekend.

Volatile Market Expected to Continue in 2H
Posted on Thursday September 19, 2019

The oil and gas market is expected to continue to be volatile in the second half of 2019, Petronas notes.

Texas Coast Reels from Flooding
Posted on Thursday September 19, 2019

The remnants of Tropical Storm Imelda lashed Houston and coastal Texas, inundating homes, paralyzing travelers, disrupting oil supplies and threatening hospitals and refineries.

Risk of Further Saudi Attacks High
Posted on Thursday September 19, 2019

The risk of further high-impact attacks against Saudi energy infrastructure is high, according to Verisk Maplecroft.

Wall Street Journal
Commercial News

9/22/19

WSJ.com: US Business

This Company Has Filed 10,000 Appeals to Trump's Tariffs
President Trump has said China is paying the cost of tariffs, but many U.S. importers see them as threats and are racing to seek exemptions. One such company has filed nearly two-thirds of all appeals.

Oil Companies, Pushed to Address Climate, Disagree on How
As global leaders prepare to debate action on climate change at the United Nations, big oil companies are aiming to show that they are part of the solution to a problem they helped cause.

Deere Turns to U.S. After Growth Stalls Overseas
Deere?s incoming chief executive will take charge as the struggling tractor maker switches course from its sluggish global expansion to a narrower focus on its home U.S. market.

Uber, Lyft Drivers Torn as California Law Could Reclassify Them
Some gig-economy workers who drive for Uber and Lyft see downsides ahead with California?s new law that might label them as employees instead of independent contractors.

The War for Talent in the Age of Netflix
In the battle to dominate the new entertainment landscape, Hollywood?s titans are borrowing from Netflix?s playbook, transforming how they do business with writers, producers and stars?and how money is made in entertainment.

Americans Are Saving More, and That Isn't Necessarily Good
Household saving typically rises after a recession as people pay down debt and rebuild balance sheets, then declines as they grew more optimistic?and spendthrift. But in the current expansion, it just keeps rising.

Fracking Ban, Pushed by Democratic Hopefuls, Could Dent Economy
Climate-change platforms of some Democratic presidential candidates propose a ban on fracking, a move that is popular with their supporters but could have consequences for the U.S. economy.

BRE #:00619059
Charles Elfsten, President
Charles A. Elfsten
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