Credit Tenant Loan
Credit Tenant loan maximizes the financing opportunities for existing or to-be-built properties leased to investment grade tenants. Credit tenant financing emphasizes the credit quality of tenant and lease structure in order to establish a cost of borrowing. Investment grade tenant loans tend to price and trade like bonds in the capital markets. Pricing for non-investment grade and non-rated tenants require additional analysis to determine the value of the real estate asset.
Features
- Debt service coverage is as low as 1.003
- 100% Construction financing available for “Build-To-Suit”
- No loan to value constraints
- No deductions for management or vacancy
- No cost per square foot constraints
- Pre-development funds available on case by case projects
- Buyers Available For Credit Tenant Leased Properties
- Tenants with a credit rating of BBB–or better
Requirements
- Public or private companies
- National or regional in operation
- Rated investment grade (BBB/Baa2 or better) by public debt rating service such as Standard & Poor’s or Moody’s–public debt ratings are preferred, but not required.
- Minimum tangible net worth of $50 million
- Five years of audited financial statements available for review
Structure
- Loans of $2 million and above
- Rate lock at application
- 30/360 interest rate calculation
- Full amortization or covered balloon exposure at maturity
- Good faith deposit refundable at loan closing
- Special purpose entity borrower preferred but not mandatory
- Closings generally handled utilizing in-house staff, local counsel as needed depending on size and complexity of the transaction
- Open to prepayment from origination with yield maintenance
- Transfer/assumption rights allowed subject to lender’s review and approval