Credit Tenant Leasing (CTL) programs provide the lowest cost and most efficient method of financing real estate leased by investment grade and other high credit tenants. CTL financing is used by both profit making entities and non-profits to maximize loan amounts and minimize costs through a “bondable net lease”. A “bondable net lease” is a lease that provides the credit tenant all the advantages of real estate ownership along with most of the costs of ownership in a very efficient manner. A CTL transaction avoids the classic real property underwriting of banks and life insurance companies and the revenue bond underwriting of the public bond markets.
Specifically, a CTL provides:
- Increased loan dollars up to 100% LTV to reduce cash needed in project budgets
- Fixed rates up to 30 years eliminating repricing risk
- Debt service coverage of 1.0 times based upon the bondable net lease payments
- Non-Recourse Financing
- No Financial Covenants
- No credit rating required
A CTL can also be used for a Build-to-suit Construction and Permanent Financing Program (BCPF) program whereby the Lender provides the Borrower with construction and permanent fixed-rate capital. The permanent component is without recourse, no financial covenants and a limited default obligation under the lease.