Posted on/at 8:01 AM by Isti
Commercial Mortgage Loans - The Benefits of Credit Tenant Lease FinancingCredit tenant lease (CTL) financing is a very unique and very special type of commercial mortgage loans that are designed to provide funds for the purchase, refinance and real estate development of clean three-leased (NNN) creditworthy tenants. Unlike traditional commercial mortgage loans loans based on CTL bear the financial strength and structure of rental tenants rather than the underlying value of the property and credit of the borrower. CTL loan with the lease and the income guarantee is the main guarantee to support lending. Because of the nature of straight ahead CTL NNN loan financing offers investors some significant benefits. CTL lenders generally do not make restrictions on loan-to-value and will lend up to 100% LTV. Also there are no restrictions on loan-to-cost (100% LTC) for the construction loan. The only stipulation is that the rent collected should cover the mortgage payments. (Debt-service-coverage ratio [DSCR] is very low, usually 1,01-1,05) CTL financing offers the highest possible amount of the loan. The number of unmatched potential leverage in commercial real estate industry today. CTL loan is an efficient process that takes less time than a bank loan or a typical commercial credit. Average CTL loans can be closed within 60 days or less from start-to-end. Loans from Wall Street bankers, the Hartford insurance company and the commercial banks were known for a protracted, bureaucratic affairs that can take 90-200 days to close. Property owners appreciate the fact that non-CTL loans mortgage helper. The lease is guaranteed; lenders will not come after the borrower if something goes wrong. Timed CTL loans are usually co-terminus with the lease term. Many tenants sign 10, 20 or even 25-year lease. CTL is often the last loan financing investor will ever need. If they sell the new owners of the building can only assume CTL loans. If they do not maintain the building need to worry about financing for a very long time. - Fixed Rate, Self Amortizing
Almost all CTL loan rates are fixed for the life of the loan. Secret investors can plan for the future because they know exactly what their debt service will cost. CTL also amortize the mortgage itself during the loan period, then the property owner does not have to worry about come with the money for the balloon payment. Almost all the other lenders have significantly reduced construction and development financing, but the capital s CTL is still available for financing the construction of buildings to be leased to investment grade tenants. - Many Tenants Have The Right
The U.S. government is still the most "credit tenant". Anyone buying or developing a building that will house the administration office or home in federal court would find it relatively easy to obtain CTL loans. In the private sector, some retail companies are eligible for financing CTL as well. Drugstore chain Walgreens and CVS are among the most popular as a home improvement giant Home Depot and Lowes. Wal-Mart is also very prominent CTL financing candidates. Real estate nearly all tenants to enjoy investment grade (BBB-or higher) credits from one of the major credit agencies, and rent space on the basis of CTL NNN can qualify for loans. CTL loan is one of the best ways to finance the NNN leased real estate. In this era of tight credit and nervous lenders, property owners, investors and developers with the best quality tenants to have sources of funding can depend on them.
By Glenn Fydenkevez
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