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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
11/21/19

Some LNG Sellers Could Miss Out on $15B
Posted on Wednesday November 20, 2019

Nearly 50 percent of LNG contracts worldwide are indexed to the Japan Crude Cocktail price.

Billionaire Fracking Brothers Hit Hard by Permian Holdings
Posted on Wednesday November 20, 2019

Two brothers hit pay dirt during the shale boom when they sold their Texas fracking company in 2011 for $3.5 billion. But many of their more recent investments in the Permian have turned to dust.

India Approves State-Run Refiner Privatization
Posted on Wednesday November 20, 2019

India launched its biggest privatization drive in more than a decade.

OGUK Launches Educational Campaign
Posted on Wednesday November 20, 2019

Oil & Gas UK is challenging the UK to put its energy knowledge to the test as part of a new educational campaign.

OPEC+ Likely to Retain Output Targets in Dec
Posted on Wednesday November 20, 2019

OPEC+ seems 'increasingly likely' to retain its production targets at its next meeting, according to a new research note from Jefferies.

Fredriksen Leaves Seadrill Board
Posted on Wednesday November 20, 2019

Billionaire John Fredriksen steps down as chairman of Seadrill.

Oil Eases as Investors Monitor Trade War
Posted on Wednesday November 20, 2019

Oil eased after the biggest increase in more than two weeks as investors monitor developments in the U.S.-China trade war.

Oil Rises as Key US Storage Hub Shows Biggest Draw in Months
Posted on Tuesday November 19, 2019

Oil jumps the most since the first of the month as American crude stockpiles at a key storage hub shrank by the most since August.

Canadian Heavy Crude Weakens Amid Worker Rail Strike
Posted on Tuesday November 19, 2019

The price of Canadian heavy crude weakened Tuesday as a worker strike at the nation's largest railway curbed oil shipments, exacerbating a supply glut that's crippled Canada’s oil industry.

Tallgrass Energy Kicks Off Open Season
Posted on Tuesday November 19, 2019

Pony Express plans to build 25 miles of new 12-inch pipeline from the Hereford origin to the new origin point in Wyoming.

Wall Street Journal
Commercial News

11/21/19

WSJ.com: US Business

Macy's Posts Lower Sales; Cuts Forecast
Macy?s said sales declined in the third quarter and lowered its guidance for the year, highlighting the continuing struggle to attract shoppers to traditional department stores.

Facebook Weighs Steps to Curb Narrowly Targeted Political Ads
Facebook is considering making changes to its political-advertising policy that could include preventing campaigns from targeting only very small groups of people, in an effort to spurn the spread of misinformation.

Xerox Threatens to Go Hostile With HP Takeover Bid
Xerox told HP?s board that it would take its $33 billion takeover bid to shareholders if HP doesn?t reconsider its rejection of the offer by Nov. 25.

WeWork to Cut Around 17% of Workforce
Troubled office-space startup WeWork said it would shed around 2,400 jobs following its botched initial public offering in an effort to reduce mounting losses.

Once Upon a Time in Hollywood, Reboots Ruled---Now, Not So Much
Weak openings for new installments in several older movie series highlight a challenge facing Hollywood studios: Even familiar titles often have trouble finding audiences?with the notable exception of superhero films.

China Invited U.S. Trade Negotiators for Direct Talks
China?s chief trade negotiator has invited his American counterparts for a new round of talks, according to people briefed on the matter, as both sides are struggling to strike a limited deal to help de-escalate tensions.

U.S. Existing-Home Sales Increased 1.9% in October
Sales of previously owned homes rose in October after a decline the previous month, with gains concentrated in mid- and high-priced homes, a sign limited inventory is posing challenges for sales of homes priced at the low end.

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