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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
4/3/20

Oil Leaps on Potential Global Output Cuts
Posted on Friday April 03, 2020

Oil posted a record weekly jump on hopes that global producers will decide to make historic output cuts next week.

Trump Phone Call Reports Surprise Oil Experts
Posted on Friday April 03, 2020

Find out what Rigzone panelists view as the top oil market hits and misses for the week ending April 3, 2020.

Saudis Have Pricing Problem as Oil War Hits Month Two
Posted on Friday April 03, 2020

Saudi Aramco will need to price its crude at aggressively low levels this month to keep its customers satisfied.

Billions in Oil Royalty Payments at Stake as Trump Mulls Relief
Posted on Friday April 03, 2020

The teleconference with independent refiners and oil producers will follow a separate meeting between President Trump and oil industry execs at the White House.

The Natural Gas Surplus Goes Offshore
Posted on Friday April 03, 2020

LNG traders are storing huge amounts of the commodity on tankers, hoping prices will rise before the ships dock.

OPEC+ Urges Global Cut to Stem Rout
Posted on Friday April 03, 2020

Oil climbed on the prospect that an idea first touted by President Donald Trump on Thursday looked to be gaining some traction.

Oil Surges as OPEC+ Prepares for Monday Meeting
Posted on Friday April 03, 2020

Oil advanced as OPEC+ scheduled an urgent meeting next week after a historic slump in prices that has crippled the energy sector.

Shale Can Shock the World Again
Posted on Friday April 03, 2020

Here are some of Rigzone's top stories during the last week, just in case you missed them...

Wood Significantly Adjusts Cost Base
Posted on Friday April 03, 2020

Wood announced Thursday that it is taking action to 'significantly' adjust its cost base in anticipation of a reduction in activity levels.

Apache Makes Significant Oil Find
Posted on Friday April 03, 2020

Apache Corporation announced a 'significant' oil discovery offshore Suriname.

Wall Street Journal
Commercial News

4/3/20

WSJ.com: US Business

3M, Under White House Attack, Pushes Back
The company said it is raising domestic mask production, importing masks from its plant in China and taking action against price-gouging on masks that medical workers need to treat patients infected with the new coronavirus.

Small Business Loan Program Makes Bumpy Start
Some of the nation?s biggest lenders say they weren?t yet able to process loan applications under the federal program, frustrating business owners struggling to stay afloat.

Companies Try to Preserve Jobs by Cutting Pay Amid Coronavirus Crisis
Many workers? paychecks are shrinking as companies try to spread the financial pain of the coronavirus pandemic amid government-ordered lockdowns, dwindling production orders and closed stores, restaurants and plants.

Trump Administration Discussed Shutting Oil Production in Gulf of Mexico
It is unclear whether the proposal, which comes as several workers on oil platforms test positive for the new coronavirus, is still under serious consideration. But shuttering platforms would also curtail U.S. oil production amid a world-wide glut that has sent prices plummeting.

CEOs Grapple With the Toughest Calls of Their Careers
The global coronavirus pandemic is forcing corporate bosses to make critical decisions about their workers without knowing what might happen next

U.S. Employers Cut 701,000 Jobs in March
The March jobs report shows the start of a collapse that could shed all the U.S. jobs added by employers in the past decade and push the unemployment rate to record highs.

The March Jobs Report in Charts
U.S. employers cut 701,000 jobs in March and the unemployment rate jumped to 4.4%, its highest level since August 2017, the Labor Department reported Friday, as the coronavirus pandemic hit the economy. Here are some key takeaways from the March report in charts.

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