Posts Tagged ‘net lease’

Dollar General is Now “Investment Grade” – Eligible for CTL Finance

January 30, 2013

Attention Net Lease Investors, Owners, and Developers .  Dollar General is Now “Investment Grade” and  Eligible for CTL Finance.

Thanks to a recent upgrade Dollar General is now an investment grade corporate entity.

Now that DG is a “Credit Tenant” purchase, development and refinance of DG stores can be financed using Credit Tenant Lease (CTL) lending methods.

MasterPlan Capital can offer long-term (coterminous with the lease), high leverage (to 100% LTV or 100% LTC subject to a DSCR of ~1.05x), fixed rate, non-recourse, CTL loans against existing or planned (with executed lease) Dollar General locations.

Minimum deal size:    3 or more stores, $10mm

Minimum lease term: 10 years

Must be “stand alone” locations

Must be “net” leased. (NN, NNN or bondable)

Contact us or Apply for a CTL loan Online using our simple, one page, inquiry form.

To Qualify for Credit Tenant Lease (CTL) Finance Tenant Must Have “Investment Grade” Credit Rating

February 17, 2012

Credit tenant lease finance is an excellent source of capital for the purchase, refinance or development of net leased property. This unique method of lending against single tenant real estate can provide long term, high leverage, fixed rate debt to NNN investors quickly and efficiently, but it is important to realized that not all tenants qualify.

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

To secure CTL loans the tenant must have an investment grade credit rating from a major rating agency. Bankers have no leeway in this matter.

In order to be considered a “credit tenant” the entity must have a BBB- or better rating from Standard & Poors or a Ba1 rating (or better) from Moody’s.

Sponsors and investors with questions about CTL finance or NNN real estate investing are encouraged to call MasterPlan Capital at 1-800-727-5140 x 101 to speak with an expert or to begin 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

 

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

 

Credit Tenant Lease (CTL) Financing for Single Tenant, Triple Net (NNN) Real Estate Investing – The Perfect Capital Solution for a Unique Real Estate Investment

March 30, 2011

Click Our Logo to Apply for A CTL Loan

By Glenn Fydenkevez – President, MasterPlan Capital LLC

There are two principle reasons to invest in commercial real estate; current income today, and capital appreciation over time. For real estate investors primarily concerned with income, triple net (NNN) real estate investing has proven to be a very attractive option.

Single Tenant NNN Investing

In the world of commercial real estate the initials “NNN” refer to the fact that a parcel of real estate is leased to a tenant on a “triple net” basis. In-short NNN owners have virtually no landlord responsibilities. They don’t have to plow the driveway when it snows, repair the roof if it leaks or fixed clogged toilets when visitors use too much TP. A NNN property owner’s only responsibility is to collect the rent and pay the mortgage; everything else is falls to the tenant.

Savvy real estate investors and Wall Street Investment bankers understand that owning NNN leased real estate is more closely related to fixed income investing than it is to traditional real estate investing. With this knowledge it’s a short hop to credit tenant lease (CTL) finance.  Through the magic of investment banking, specialized CTL bankers turn NNN leases into bonds and turn those bonds into cash.

Credit Tenant Lease Finance (CTL)

The concept behind CTL is easy to understand even while the actual CTL process is quite intricate. First, mortgage specialists originate a commercial mortgage loan. Next, investment bankers create and issue private placement bonds that are directly secured by the NNN lease on the target property. Finally brokers and bond traders sell the bonds to institutional fixed income investors like insurance companies, commercial banks, trusts, and pension funds. The proceeds from the bond sale are used to fund the mortgage and go to the borrower at closing. The entire loan is administered by an independent trustee throughout the life of the deal.

The investors who buy CTL bonds depend on the income the bonds produce, and the bonds, in turn, depend on the income guaranteed by the NNN lease that stands behind it. It follows that the financial strength of the tenant is paramount. To qualify for CTL financing the tenant must be considered “investment grade”. Usually this means that they need a high credit rating from one of the major rating agencies. CTL finance companies generally require tenants to have a BBB- (or higher) rating from Standard & Poors or a Ba1 (or better) from Moody’s before they will underwrite a CTL loan.

CTL finance and NNN investing work together like they were made for each other because in-fact they were. CTL is not the only way to finance single tenant, NNN real estate but it is definitely the most synergetic.

High Leverage

CTL bankers make no restrictions on loan-to-value (LTV) or loan-to-cost (LTC) when deciding how much money they will lend against a particular lease. 100% financing and even cash out financing is realistically possible when buying, building or refinancing with CTL. Bankers only require that the rent collected covers the mortgage payment. Debt-service-coverage (DSCR) ratios are exceedingly low, ranging from 1.05x right down to 1x. There is no question that CTL offers the highest loan balances in the commercial mortgage industry. (high LTV / LTC, and cash-out refi are almost unheard of in the realm of institutional financing in today’s credit environment).

Fixed Rate, Long Term, Fully Amortized

The majority of CTL loans are fixed rate, self amortizing loans with a term “coterminous” with the term of the lease (The loan is paid off when the lease expires). Long term, fixed rate mortgages, while commonplace in residential finance, are rare indeed in the commercial property sector. Long, stable loans allow sponsors to budget for the long haul. Mortgage payments don’t change and there are no looming balloon payments to plan for. Plus investors avoid the expense and hassle of refinancing every 3, 5,7 or 10 years.

Non-Recourse

The primary security that backs a CTL loan is the monthly income that the NNN lease produces. CTL bankers will not require borrowers to personally signature guarantee each loan, nor will they aggressively pursue the borrower if the tenant defaults. CTL lending is based on the strength of the tenant and the structure of the lease, not the wherewithal of the landlord.  

Assumable

Virtually all CTL loans are assumable by a subsequent buyer for a small (usually 1%) fee. So, not only will an original owner never be forced to refinance but, if they decide to sell, they can offer their buyer the benefits of a CTL loan for less then the cost of a new mortgage.

Streamlined Process

We’ve said that CTL lending is highly specialized and intricate, and it is, but it is also standardized. If a deal meets CTL criteria, the funding can happen very quickly and very efficiently. CTL loans have been known to close, from-start-to-finish, in as little as 45 days and it is rare for a loan to take more than 60 days to underwrite, fund and close. NNN investors can go from decision to closing table in about a third of the time it takes to close a bank loan.

Income and Tax Planning

Income is the main reason individuals and institutions buy single tenant, NNN, credit tenant real estate, but it is by no means the sole reason. Sophisticated real estate professionals acquire NNN assets for other reasons as-well. Savvy investors use NNN to take advantage of the unique tax benefits that real estate can provide. By adjusting the amount of leverage they use they can manipulate the amount of cash-flow a building produces and make the income and deprecation tax laws work for rather than against them. NNN is also often used as a vehicle for 1031 exchanges when investor’s desire continued income without having to manage a property or pay large capital gains taxes on a recent sale.

Construction and Development

Builders and developers like NNN real estate as-well, because they know they can stick to construction of a building without ever worrying about managing it. And with CTL financing readily available, they have the confidence that comes with knowing they can cash-out whenever they want.

Cash-out Refinance

One of the most attractive aspects of CTL finance is that it allows credit tenant property owners to execute cash-out refinance loans. As we mentioned above there are no LTV restrictions on CTL loans. If an investor bought right and has equity in a NNN asset, they can pull out up-to 100% of its value. Refinancing with a self amortizing CTL loan avoids all the fuss, bother, expense and time associated with selling, yet still allows owners to realize full value.

A Great Fit

For the sophisticated, income orientated real estate investor there is no better asset class than single tenant, investment grade, NNN real property. And for NNN investors there is no method of financing better suited to NNN than CTL.  

About the Author: Glenn Fydenkevez is President of MasterPlan Capital LLC. He has over 20 years Wall Street experience and has been an officer at one of the worlds largest investment banks. About MasterPlan Capital LLC: MasterPlan Capital is a privately held commercial mortgage lender and real estate investment banking firm offering private and institutionally funded commercial mortgage loans, credit tenant lease (CTL) financing and other services to property owners and developers in the lower 48 states.

To get answers to your questions about CTL lending or other aspects of commercial real estate finance, call MasterPlan Capital at:                                                    1-800-727-5140 xtn 101