Basic Credit Tenant Lease Lending Criteria – What it takes to qualify for a CTL loan

August 19, 2011

Loan: Commercial Mortgage, Purchase or Refinance
Collateral: Stand Alone, Single Tenant, Net Leased Real Estate
Type: Office, Retail, Warehouse, Distribution Center, Data or Light Industrial
Lease: Triple Net (NNN), Double Net (NN) or Bondable, 10yr +
Tenant: BBB- (or better) by S&P or Baa3 (or better) by Moody’s, or Equivalent.
Term:  Co-Terminus with Lease
Amortization: Full, Self Amortizing

Click on our logo to apply for a CTL loan or other commercial real estate financing

Click on our logo to apply for a CTL loan or other commercial real estate financing

Rate: Fixed, Interpolated US Treasury + Small Margin
Recourse: Non-Recourse
LTV: No Restrictions on LTV (To 100% LTV subject to DSCR)
DSCR: 1x-1.05x
Minimum: $3,000,000.00
Maximum: Virtually No Maximum

—Click Here to Apply for a CTL Loan—Click Here to See How MasterPlan does Business—Click Here to Learn More About the CTL Loan Process

Financing is Available for Walgreens Portfolios – Capital for Credit Tenant Lease (CTL) Loans against Multiple Walgreens Locations – Special Pricing (Low Rates) for 3+ Stores, $15MM+ Loans

August 15, 2011

Commercial real estate investment banking firm, MasterPlan Capital, has a significant, but limited amount of capital available to fund credit tenant lease (CTL) loans for the purchase, refinance and construction of multiple Walgreens stores.

Sponsors with 3 or more Walgreens locations ($15MM+) who are willing to cross collateralize the properties will find current interest rates extremely attractive.

The firm notes that Walgreens financing remains tentative, due to over saturation of Walgreens debt in investors portfolios, but is available as-of right now.

Property owners, builders and investors can apply for a CTL loan on line or can call 800-727-5140 xtn # 1 for a phone consultation.

Why Credit Tenant Lease (CTL) Loans Have Been Closing While Traditional Lending has Faltered

August 5, 2011

Throughout the credit and liquidity crisis that started several years ago and continues today, credit tenant lease (CTL) lending has remained relatively healthy. Indeed, CTL has been a welcomed bright spot in commercial real estate finance. CTL bankers never lost their appetite for originating loans and never lacked the liquidity it takes to fund them.

Why is it that CTL finance is able to thrive while almost all other forms of lending continue to struggle? There are several factors that contribute to the resiliency of CTL.

First is the fact that CTL loans are only made against real estate that is net leased (triple net [NNN], double net [NN] or bondable) on a long term basis to a single very stable, very strong corporate tenant. To qualify for a CTL loan a building or plot of land must be net leased to what is known as an “investment grade” or “credit” tenant. A credit tenant is one that enjoys a credit rating of BBB+ or better from the rating agency Standard & Poors and/or Ba1 or better from Moody’s. Because CTL loans only deal with strong tenants there is less risk to lenders and, subsequently, deals are easier to close.

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

Another factor that contributes to the strength of the CTL market is the fact that virtually all CTL loans are non-recourse. The borrowers finances will be checked out to see if they have enough money to pay any required closing costs but borrowers are not underwritten and won’t be on the hook if a loan defaults. Because lenders are not overly concerned with the financial strength of the borrower there are less things that can crop up and derail the lending process. Basically, if the lease and the tenant pass muster a loan will close.

CTL is a very straight forward process. Experienced CTL bankers know what will work and what will not. Because the private placement bonds that fund CTL loans are sold to insurance companies, pension funds, trusts and commercial banks, there are very strict criteria for qualification with no wiggle room or discretion allowed. Most CTL lenders will be able to tell you if a deal is doable after just one reading of the lease and they only accept deals they know they can get funded. If a CTL banker issues a letter of intent or term sheet for a deal, you can count on financing with a very high degree of confidence.
The standardized nature of CTL loans means that borrowers can get a definitive yes or no very quickly, and if the answer is yes they can count on funding.

Finally, the last reason for the relative health of the CTL market is that CTL lending and net lease investing is not necessarily correlated with traditional lending or regular real estate investing.

CTL lending is, in reality, a specialized form of commercial real estate investment banking. Investment bankers that make CTL loans fund deals by creating securities and selling them to investors, not by loaning capital or selling mortgages to Fannie Mae or Freddie Mac the way banks do.

Net lease investing (especially single tenant, NNN lease) is not the same as traditional real estate investing. In-fact net lease investing is actually a sophisticated form of fixed income investing. Traditional real estate investing typically involves running and managing a property or otherwise adding value to a transaction (such as refurbishing). Most net lease investors don’t have any landlord responsibilities or any physical or emotional connection to the real estate at all; most have never even visited the buildings they own. They buy and hold for the monthly income that a lease produces; they look at their real estate the same way other income investors look at bonds.

All this is to say that net lease investing and the CTL finance that goes along with it is a niche market and is much less affected by liquidity problems at banks or the ups and downs of the traditional real estate markets. This non-correlation allowed the CTL finance sector to continue to grow and thrive while the rest of the world experienced a severe shortage of capital.

There is no liquidity crunch in CTL finance. Investors with property that is net (NNN, NN or bondable) leased on a long term basis to a single, investment grade tenant will find that they have a dependable source of capital available to buy, refinance or build their real estate projects.

Read More Articles on Commercial Real Estate Finance –  Click Here – And Here

 

Consumer Confidence Down Again – About to Hit a New 10 Year Low – Lowest Confidence Recorded Since March ’09 – America Losing Heart, Giving Up Hope

August 4, 2011

Read about the capitulation of confidence at rasmussenreports.com.

Consumer confidence is down? Could it have anything to do with the fact that the economy is heading into a double dip recession?

The Benefits of Credit Tenant Lease (CTL) Loans for Single Tenant, NNN Leased Real Estate

July 13, 2011
Credit tenant lease (CTL) lending has several distinct advantages over traditional commercial mortgage lending. No one type of financing is right for every situation but CTL should be considered whenever investors are buying, refinancing or building single tenant real estate that is , net leased (triple net (NNN), double net (NN) or bondable) to investment grade tenants.

Non Recourse – The sponsor / borrower is not underwritten and will not be on the hook if a loans defaults. If the tenant and the lease pass muster, the loan will close.

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

Speed – CTL loans have been known to close in 45 days from start to finish (60 days is typical). Conventional commercial mortgages can take 90-180 days to fund and close.

High Leverage – CTL bankers place no restrictions on loan-to-value (LTV) or loan-to-cost (LTC). If the debt service is covered (1-1.05x debt-service-coverage-ratio [DSCR]) by the rent CTL lenders will lend up to 100% LTV or LTC. CTL, without question, offers the highest loan balances in the commercial mortgage industry.

Fixed Rate – Rates on CTL loans are generally fixed for the entire life of the deal.

Self Amortizing – CTL mortgages are fully amortized with a term that is co-terminus with the lease. Borrowers won’t have to worry about coming up with large balloon payments or refinancing every 3, 5, 7 or 10 years.

Straight Forward Process – If the tenant is investment grade (BBB+ or better by S&P or Ba1 or better by Moody’s, or the equivalent), the property is stand-alone, single tenant and the deal carries a long term, net lease, CTL offers a very, very high degree of financing certainty.

Liquidity – There is no shortage of liquidity in the CTL sector of the commercial mortgage lending industry. Billions of dollars are available right now to finance single tenant, net leased, credit tenant real estate and bankers are actually eager to lend.

Housing Tax Credit an Utter Waste of $20+ Billion – We Told You So

July 13, 2011

Followers of Commercial Mortgage Loan Blog knew long ago that the housing tax credit was a dumb idea. We posted as much months and months ago. Now a study, by some academic types at Northwestern, have studied it and came to the same conclusion:

The housing tax credit:

  • Did not effect the overall number of houses sold.
  • Went mostly to healthy markets. And,
  • Revised to the mean when it expired.

Great, another $22B down the rat hole. Read Tax Prof’s post about the study here.

The Fed’s Second Round of Quantitative Easing (QE2) Wasted another $600 Billion; who’s up for Round 3?

June 30, 2011

From the stand-point of the commercial real estate industry, QE2 was a $600 billion dollar bust. Rates stayed low but lending stayed anemic. Trophy assets changed hands and big players with cash on their balance sheets got loans while bread and butter assets floundered because banks aren’t lending to the small operators or the mom and pops.

To further exasperate and prolong the problem, banks did not unload nearly enough of their problem loans or problem real estate. Why should they when they can stay solvent by borrowing money for free?

QE1 and QE2, while adding substantially to our national debt, did not solve our problems, it only allowed us to tread water and search the horizon for a rescue boat that we now must realize is not coming.

So what now? Do we print more money and buy the US Bonds that no one else will, or do we let the markets price our debt and go bankrupt?

Globe Street expresses the frustration that CRE execs feel in this recent post.

Credit Tenant Lease Lending Criteria – Large Fixed Income Fund Looking to Fund CTL loans – Here’s What’s Needed to Qualify

June 27, 2011

Commercial Mortgage Lender, MasterPlan Capital LLC, is corresponding with a large ($20b) fixed income fund that is actively seeking to fund credit tenant lease loans against single tenant, net leased real estate. Transactions that fit the criteria (below) can fund in as little as 45 days.

Loan: Commercial Mortgage, Purchase or Refinance
Collateral: Stand Alone, Single Tenant, Net Leased Real Estate
Type: Office, Retail, Warehouse, Distribution Center, Data or Light Industrial
Lease: Triple Net (NNN), Double Net (NN) or Bondable, 10yr +
Tenant: BBB+ (or better) by S&P or Ba1 (or better) by Moody’s, or Equivalent.
Term:  Co-Terminus with Lease
Amortization: Full, Self Amortizing
Rate: Fixed, Interpolated US Treasury + Small Margin
Recourse: Non-Recourse
LTV: No Restrictions on LTV (To 100% LTV subject to DSCR)
DSCR: 1.05x
Minimum: $5,000,000.00
Maximum: Virtually No Maximum

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

 

Accredited Investor Qualifications – Who Can Buy Commercial Real Estate Private Placements?

June 21, 2011

As commercial real estate investment bankers we may sometimes have occasion to raise money in various private placements or other equity arrangements.

It is our policy to only offer such opportunities to “accredited investors” even in cases where some non-accredited investors could legally participate.

This begs the question: Who qualifies as an accredited investor?

We follow the Federal securities law definition and consider an accredited investor to be:

1. a bank, insurance company, registered investment company, business development company, or small business investment company;
2. an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;
3. a charitable organization, corporation, or partnership with assets exceeding $5 million;
4. a director, executive officer, or general partner of the company selling the securities;
5. a business in which all the equity owners are accredited investors;
6. a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;
7. a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
8. a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

Fannie Mae; Scandal on a Monumental Scale – NY Times Op Ed and New Book Chronicle Massive Corruption

June 17, 2011

Fannie Mae, it turns out, is a bigger scam than Bernie Madoff could ever have dreamed of; a sad, expensive and disgusting example of corruption and cronyism that derailed the economy of our country. NY Times Op Ed columnist, David Brooks has penned an indispensible summery of an important and valuable book.

Read the Op Ed here. Get the book here.

Learn from history or be destine to repeat it.