Archive for May, 2011

Some Lenders are Looking to Fund Gas Stations and Other Auto Related Real Estate

May 26, 2011

Several weeks ago our firm discontinued financing auto related real estate. We determined that our clients and our company would be better served if we concentrated on our core efficiencies and deemphasized lending areas that were not our specialties.

That-being-said, there are some excellent gas station, auto service center, car wash and car dealership deals out there. So, while we will not lend on auto deals ourselves, we will point investors in the right direction.

If you are looking for a purchase or refinance loan against auto related real estate, please contact us or visit our web site and complete our simple, one page, commercial mortgage application form. We will quickly put you in touch with one of our funding partners that have an appetite for your specific type of loan.

I hope we can help.

-MPC Structured Finance-              Toll Free: 800-727-5140

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The Truth About 100% LTV Credit Tenant Lease (CTL) Lending

May 26, 2011

As credit tenant lease bankers we often get questions regarding the possibility of 100% financing for single tenant, triple net (NNN) properties.

Is 100% CTL financing possible?

The answer is yes, it’s possible but…

Like most CTL bankers we place no restrictions on loan-to-value (LTV) nor do we restrict loan-to-cost (LTC) on CTL construction loans. So, in theory, it is possible to secure a 100% leveraged CTL loan.

But please consider the following. While we don’t limit loan balances due to LTV, we do have strict debt-service-coverage ratio (DSCR) criteria. Our firm requires at least a 1x DSCR and we may require as-much-as 1.05x depending on the final deal structure. So the rent you collect must cover the mortgage payment. We will lend up to 100% of the value (lease fee valuation) but we won’t write you a loan with monthly mortgage payments bigger than the monthly rent.

Further, CTL loans are generally self amortizing loans with terms coterminous with the term of the lease. So the shorter the lease term, the shorter the amortization schedule and the lower the loan balance.

Click Our Logo to Apply for A Credit Tenant Lease (CTL) Loan

Also, when buying a net lease property investors must keep in mind the fact that the seller has likely already considered the option of refinance before deciding to sell. No one will sell you a NNN or NN building for the same amount they can borrow. In-other-words if you can borrow a million dollars from me to buy a building the current owner can also borrow the same one million in a refi. They won’t go through the hassle and expense of selling unless they can earn a premium.

So, while it is very true that there are no LTV restrictions on CTL loans, new investors should not assume that they can buy quality net leased assets without a fairly significant capital commitment.

Net lease real estate is an excellent form of fixed income investing and CTL is an excellent capital solution for net lease investors but, there are no free lunches in the commercial real estate industry. Those who believe otherwise will inevitability be disappointed. 

The author of this post, Vincent Remealto, is an analyst for MasterPlan Capital LLC. Feel free to contact him with questions about CTL or other aspects of commercial real estate finance.

Credit Tenant Lease (CTL) Loans – Lower Overall Costs When Sponsors Borrow From Portfolio Lenders

May 25, 2011

Credit tenant lease (CTL) finance is an investment banking solution for the capital needs of single tenant, net lease real estate investors. Specialized lenders, in effect, turn triple net leases into bonds and use the proceeds from the bond issue to fund a commercial mortgage loan. Credit tenant lease loans tend to be long-term (co-terminus with the lease), fixed rate, non-recourse, self amortizing loans, and because they are usually assumable by a subsequent owner they are often the last loan a property will ever need.

CTL is an efficient and dependable method of financing the purchase or refinance of net leased property but it is not inexpensive. The investment banking aspects and the necessity of adhering to securities laws causes the fees and expenses associated with CTL to be somewhat higher than those associated with conventional lending.

Click Our Logo to Apply for A Credit Tenant Lease (CTL) Loan

One way for borrowers to lower the overall cost of securing a CTL loan is to utilize CTL portfolio lenders. These unique lenders underwrite and fund CTL loans with the intention of holding them in their own portfolios for their own benefit for the entire life of the loan.

Lower Rates

Portfolio lenders tend to price CTL loans like bonds rather than like mortgages. Sponsors will find that rates are very reasonable for long term, fixed rate debt. The rates will be set based upon the going rate of an (interpolated) US Treasury Bond plus a very small premium.

Lower Legal Fees

The fixed income funds that have a sophistication level high enough to issue, fund and hold CTL loans tend to be very large, often with assets in the tens of billions. More often than not these funds employ “in-house” counsel that can and do save borrowers thousands in legal fees.

• Fewer Middle Men

Traditional CTL finance uses brokers, bankers, bond traders, third party rating services and independent trustees to get deals done. A portfolio lender cuts way down on the middle men and, because they will not be offering bonds in the market, do not require independently verified credit ratings or National Association of Insurance Commissioners (NAIC) ratings. Less people to compensate can mean big savings to borrowers.

Time is Money

By definition, portfolio lenders don’t need to rely on third party service providers and can move a loan through the process very quickly and efficiently. Portfolio CTL lenders can fund deals 15-20% faster than private placement lenders can, closing loans in as-little-as 45 days from start-to-finish. In NNN real estate investing time really is money the sooner a buyer can get into a deal the more rent they will collect.

Private placement bond CTL financing is an excellent method of financing single tenant, net lease investments and our firm will continue to offer it. However, when a deal qualifies (portfolio lenders have strict qualification criteria and a slightly higher debt-service-coverage-ratio [DSCR] ) sponsors and investors will be well served by applying to a portfolio lender.

The author of this post, Glenn Fydenkevez, is President of MasterPlan Capital LLC. He has over 25 years in the finance industry and has been an officer at one of the world’s largest investment banks. Feel free to contact him with any questions you may have about CTL finance or other aspects of commercial real estate finance.

Are Credit Tenant Lease (CTL) Loans More Expensive Then Traditional Commercial Mortgages? A CTL Investment Banker Explains.

May 24, 2011
Savvy income orientated real estate investors have long known the benefits of single tenant, triple net (NNN), credit tenant investing. NNN investors enjoy the high monthly income and potential tax benefits that come with owning commercial real estate without having to deal with any of the hassles of being a landlord.

Credit tenant lease (CTL) finance is a specialized form of lending designed to work hand-in-glove with NNN real estate. CTL is not, however, inexpensive capital. Because CTL lending is actually a sophisticated form of investment banking the process tends to be a little more costly then traditional methods of commercial mortgage lending.

The process is fairly straight-forward. First, investment bankers issue private placement bonds that correspond with and are secured by the income that a NNN lease produces. Next, the bonds are sold to fixed income investors, such as insurance companies, pension funds, and regional banks. Finally, the proceeds of the bond sale are used to fund the CTL loan to the buyer (or owner) of the NNN real estate. The loan and the bond are serviced by a third party Trustee throughout the life of the deal.

The large majority of CTL expenses are exactly the same as the expenses in conventional commercial mortgage lending. The added costs (as-compared-to conventional lending) are due to the fact that the Investment Bankers, the Bond Brokers and the Trustee all need to be compensated for their services. In addition, the intricate and somewhat complex nature of CTL finance translates into higher legal and documentation fees as-well.

Click Here / Apply for A CTL Loan or call 800-727-5140 x 101

Developers, owners and buyers of NNN properties have been willing to pay the extra costs associated with CTL lending because it has proven to be a highly dependable source of capital; if the tenant is credit worthy and the lease is long term NNN, funding is almost assured. And, beyond the efficiency and dependability of CTL loans, they are also attractive because of the high leverage that is possible with CTL. Bankers put no restrictions on loan-to-value (LTV) ratios or loan-to-cost (LTC) ratios. Unlike other commercial mortgage bankers, CTL lenders will lend up-to 100% of a given property’s value as long as the rent collected covers the mortgage payment.

In-short, CTL is reliable, long-term, fixed rate, high leverage, non-recourse financing that offers the highest loan balances in the commercial real estate industry. Those attributes are well worth paying a little more for.

Jobs Chart tells Sad Story – Employment Fails to Respond to Stimulus Efforts – Weakest Recovery in History of USA

May 23, 2011

Employment Growth is too Slow

If this is a recovery who needs recessions?
The policies our leaders are implementing to fix our economic problems are not working!
We need to change course or we need to change leaders!

CEO of BP, Robert Dudley, takes (Another) Beating in Russia – Punked Again, Shareholders to Pay the Price

May 9, 2011

Over at Seeking Alpha we explain the bind Robert Dudley, CEO of BP, has gotten himself into in Russia. Last time he played in that sandbox the other kids bullied him. It won’t turn out any better this time (unfortunately, for shareholders).

Read the Article Here. Click Here to Visit MasterPlan Capital LLC.

Why Sell a Single Tenant, NNN Asset When you can get a High Leverage Credit Tenant lease Refinance Loan Instead?

May 6, 2011

An interesting and informative article asks why sell when you can CTL?
When compared to attempting to sell a NNN leased, single tenant building, CTL can be highly favorable and is often the better choice. CTL offers the largest loan balances in the commercial mortgage industry (to 100% LTV), and unlike sales proceeds, there is no tax bill due.
Click Here To Read the article

Click Here / Apply for A CTL Loan or call 800-727-5140 x 101

Hanley Investment Group Moves 5 Walgreens Locations for $35MM

May 3, 2011

April was a good month for Hanley Investment Group Real Estate Advisors.

Among other transactions Hanley sold five Walgreens pharmacies for gross proceeds to their clients of over thirty five million dollars.

Retailtraffic.com has the story.

Credit Tenant Lease (CTL) Lending; MasterPlan Capital LLC—

Click Our Logo to Apply for A Credit Tenant Lease (CTL) Loan

Credit Tenant Lease Loans – Large ($15b) Fixed Income Fund Seeks CTL Deals – MasterPlan Capital Expands CTL Offerings

May 2, 2011

We are very pleased to announce that, through a strategic partnership, with a large fixed income fund, MasterPlan Capital can now offer “portfolio” CTL lending against stand alone real estate that is triple net (NNN) leased to a single, investment grade tenant.

By originating loans that are to-be underwritten, funded and held by a single, specific fund, we can offer significantly lower effective rates and greatly lower the costs associated with CTL finance.


This portfolio financing represents a welcomed addition to, not a replacement of, our private placement bond CTL platform that funds loans by underwriting and selling bonds to various investors.

The CTL Portfolio Platform has fairly strict criteria and underwriting standards but, for deals that qualify, the financial benefits can be substantial.

With portfolio lending there is no need to create and sell bonds. This lowers the overall cost by eliminating investment banking functions and the commissions paid to bond traders. Further, the Fund has “in-house” counsel which can lower legal fees by many thousands of dollars.

Collateral:
• Retail, Office, Industrial, Warehouse, Distribution Centers
• Stand Alone (separate tax parcel) real estate
• Single Tenant
• NNN, NN or Bondable
• Investment Grade Tenant
• External or NAIC Ratings NOT necessary.
• Located in Population Centers
Minimum:
• $5,000,000.00+ (prefer $15,000,000.00+)
Parameters:
• Debt-service-coverage ratio (DSCR): 1.05X
• Loan-to-value (LTV): Not Restricted (Subject to DSCR)
• Can Provide 100% Financing (subject to DSCR)
Terms:
• Coterminous (through 30 years)
• Self Amortizing
• Fixed Rate
• Non-recourse
Rates:
• Priced Like a Bond rather than a Mortgage
• Based on Interpolated US Treasury + a Very Small Spread.
• Extremely Competitive Resulting in Largest Possible Loan Balances

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For More Information Click Here: Contact Us About Credit Tenant Lease CTL Lending , or for fast, personal service call 1-800-727-5140 x# 101. Leave a meaasge that includes the best way to reach you and the best time to be in touch.