Credit Tenant Lease (CTL) Finance
CTL financing is available for Leases to Investment grade tenants that exceed a lease term of 15 plus years.
CTL funding offers the benefits of fixed rate long term funding at high LTVs and low DSCRs effectively making this a commercial property mortgage at a fixed interest rate.
Unlike a typical commercial real estate loan which is underwritten and sized based on the property value, CTLs are sized based on the underlying lessee’s credit rating, lease structure, and rental payments.
Benefits of CTL financing include:
- Up to 100% LTV funding
- DSCRs as low as 1.0x
- Long-term commitments for 15-25+ years
- Lower transaction costs by combining construction and permanent financing
- Quick response and fast turnaround, with no lender fees
- Interest rates similar to investment grade debt pricing
Typical size
- $25 million – $100+ million
- Up to 100% loan-to-value
- Proceeds based on present value of future rent payments under the
lease
Typical uses
- Financing for operationally essential assets
- Capability to fund in local currency
- Investment grade long-term, fixed-rate debt
- Construction-to-permanent financing for corporate or government
credit tenants
Structural characteristics
- Sale / leaseback of corporate headquarters, office buildings,
warehouses, distribution centers, or retail stores - Maturities of up to 20+ years with custom amortization schedules
- Below investment grade on a case-by-case basis
- Long-term, fixed-rate debt
Issuer benefits
- Ability to receive capital and structure complex transactions for
corporate and government credit tenants - Ability to borrow in a variety of foreign currencies
- Quick and efficient execution
Contact Paradigm5 Partners for your CTL needs
If you are looking to fund either a Commercial Property Development or Acquisition tenanted to a high-quality corporate, government or university tenant with a long-term lease, contact us to discuss your funding requirements.