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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
1/23/19

Oil Holds Losses Near $53
Posted on Tuesday January 22, 2019

Oil held its losses from Tuesday at near $53 a barrel as pessimism over the prospects for a U.S.-China trade deal clouded the global economic outlook.

MEG to Cut Spending and Shuffle Board
Posted on Monday January 21, 2019

Fresh off defeating a hostile takeover bid, MEG Energy is slashing capital spending and reviewing the makeup of its board.

Crude Oil Futures Falter
Posted on Monday January 21, 2019

Two individuals notably absent from Swiss ski resort are making their mark.

Frac Water Demand in US Skyrockets
Posted on Monday January 21, 2019

New research by Rystad Energy finds that the demand for frac water in the US has more than doubled since 2016.

Nearly $1B Awarded for Canada LNG Project
Posted on Monday January 21, 2019

The British Columbia project will boast unimpeded access to LNG customers in Asia.

Halliburton Receives International Gains to Close Out 2018
Posted on Monday January 21, 2019

The oilfield services giant saw $5.9 billion in revenue in the fourth quarter of 2018.

Shale Slowly Choking Off Historic Gasoline Trade
Posted on Monday January 21, 2019

The rise of U.S. shale oil is choking off a historic gasoline trade, dealing a blow to European refineries that for decades have relied on American drivers to buy their excess supplies.

Genel Buys Stakes in Chevron KRI Blocks
Posted on Monday January 21, 2019

Genel Energy reaches an agreement to acquire stakes in the Chevron operated Sarta and Qara Dagh blocks.

Industry Confidence Keeps Rising
Posted on Monday January 21, 2019

Industry confidence has risen again, according to a new report released Tuesday by oil and gas technical adviser DNV GL.

Oil Halts Gains Near 2-Month High
Posted on Monday January 21, 2019

Oil halts gains near a 2-month high as investors weigh concerns over outlook for the global economy against the OPEC+ coalition's performance on pledged output cuts.

Wall Street Journal
Commercial News

1/23/19

WSJ.com: Commercial Real Estate

CBRE Global Investors Buys Stake in Three GGP Malls
One of the world?s largest real-estate asset managers has purchased a 49% stake in three malls in a deal that values them at more than $1 billion and shows that investors still have an appetite for top-tier retail property.

FAO Schwarz Is Returning to New York
A dominant presence in Midtown Manhattan for decades before its closure in 2015, the toy store is coming to life again with a new, 20,000-square-foot Rockefeller Center location.

Sportswear-Maker Puma to Open New York Flagship
Germany?s Puma has signed a lease deal to creating a marquee location on Fifth Avenue that will be the first of its kind for the company in North America.

Kushner Cos., Brookfield Near a Deal for Stake in 666 Fifth Ave.
The real estate arm of Brookfield Asset Management is in advanced talks with Kushner Cos. to buy roughly a 50% stake in 666 Fifth Ave. and invest hundreds of millions of dollars in the Manhattan office tower, which has been at the center of a controversy over possible conflicts of interest involving Jared Kushner, President Donald Trump?s son-in-law and adviser.

Sign of the Times: New Office Space Created in Retail's Tumult
Normandy Real Estate Partners? $133 million deal for the upper portion of ABC Carpet?s flagship store is an example of office space edging into territory that once was retail?s domain.

Want to Buy a Luxury Hotel in the U.S.? Try China's Insurance Regulator
When Chinese regulators seized control of Anbang Insurance, they took ownership of more than a dozen luxury U.S. hotels. Now, as the government looks to sell, it faces a problem: The buildings likely are worth less than what Anbang paid only a couple of years ago.

New York's Commercial Property Slump Shows Signs of Slowing
After a two-year plunge, brokers are optimistic that more deals will take place in 2018.

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