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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
2/16/20

Oil Posts Weekly Gain
Posted on Thursday February 13, 2020

Investor confidence was lifted after China reassured the international community that a huge spike in new coronavirus cases was a one-off event.

Tullow Gets Green Light on Gas-Flaring Request
Posted on Thursday February 13, 2020

The permission will assist heavily indebted Tullow to support production in its offshore fields.

Pemex Ex-CEO Arrest Puts AMLO in Delicate Situation
Posted on Thursday February 13, 2020

The arrest of a former top government official is a breakthrough for Mexico's crackdown against corruption, but it puts President Andres Manuel Lopez Obrador in a delicate spot.

Oil to Flow Again from Saudi-Kuwait Neutral Zone
Posted on Thursday February 13, 2020

Kuwait and Saudi Arabia will resume oil production from their shared fields this month, more than five years after a dispute halted supply.

Asian Traders Get Surprise from Chinese Teapots
Posted on Thursday February 13, 2020

A sudden oil buying spree by China's independent "teapot" refiners has taken Asian traders by surprise.

Coronavirus Could Test Oil Players' Risk and Compliance Plans
Posted on Thursday February 13, 2020

The global coronavirus outbreak could put heightened risk management and compliance plans to the test.

Oil Climbs on Easing Coronavirus Concerns
Posted on Wednesday February 12, 2020

The World Heath Organization rekindled optimism that the coronavirus outbreak could be abating.

Global Oversupply Equals a Tough Year for LNG Exporters
Posted on Thursday February 13, 2020

Demand is insufficient to absorb rising global supplies of this super-cold fossil fuel.

Marathon Cuts 2020 Capital Budget by 11 Percent
Posted on Thursday February 13, 2020

The company's low organic free cash flow breakeven of $47 per barrel will be key in 2020.

Noble Energy Shaves $560MM From CAPEX Budget
Posted on Thursday February 13, 2020

The company is prioritizing free cash flow generation over US onshore growth in 2020.

Wall Street Journal
Commercial News

2/16/20

WSJ.com: US Business

Alstom Reaches Preliminary Deal to Buy Bombardier Train Unit
French train giant Alstom SA has reached a preliminary deal to acquire Bombardier Inc.?s train business for more that $7 billion.

New York Won't Appeal T-Mobile Merger Verdict
New York Attorney General Letitia James said the state won?t appeal a federal judge?s decision to allow T-Mobile US and Sprint to merge, removing another hurdle between the cellphone carriers and their long-planned combination.

SoftBank's Boss Bet $22 Billion on Sprint. It Was a Slog.
For Japanese billionaire Masayoshi Son, a U.S. judge?s recent approval of a merger between Sprint and T-Mobile is long-awaited payback on his $22 billion investment. But it is far from the triumph he sought when he announced he was taking control of Sprint in 2012.

British Airways' Operating Chief and Its Director of People to Leave Carrier
British Airways? chief operating officer and its director of people are leaving the carrier after last year?s tense standoff with pilots, which led to the airline?s first strike in decades.

The Ride-Hail Utopia That Got Stuck in Traffic
Uber and Lyft said they would ease congestion. Instead they made it worse.

How High Should Government Debt Go? Economists Can't Agree
Economists warned a decade ago that pushing public debt above about 90% of gross domestic product could hurt growth. Now they aren?t so sure.

New Source of Climate Pressure for Companies: Workers
Investors and customers aren?t the only ones pressuring big companies to address climate change?employees are joining in too.

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