Credit Tenant Lease (CTL) Financing
Customised, long-term, fixed-rate financing
Overview
Overview
What is Credit Tenant Lease financing?
Credit Tenant Lease (“CTL”) Financing is a method of financing real estate in which the landlord/owner borrows money to finance the development or purchase of a property and pledges as security rent to be received from the tenant and a mortgage on the property.
Credit Tenant Lease Financing Structure
CTLs are hybrid financings consisting of elements of corporate finance and real estate finance, resulting in a long-term, highly leveraged, customised credit tenant lease loan. 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.
Learn more about why New Balance chose to work with us to finance their new LEED-certified headquarters.
Typical size, structure, uses, and benefits ▼
Typical size
- $25 million - $100+ million
- Up to 100% loan-to-value
- Proceeds based on present value of future rent payments under the lease
Structural characteristics
- Sale / leaseback of corporate headquarters, office buildings, warehouses, distribution centers, or retail stores
- Maturities of up to 20+ years with custom amortisation schedules
- Below investment grade on a case-by-case basis
- Long-term, fixed-rate debt
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
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
- One-stop-shop capability for construction-to-permanent financing
- No requirement for agency rating
- Quick and efficient execution
