Credit Tenant Lease Financing
For more than fifteen years, the Credit Tenant Lease Financing Group has been providing customized, long-term, fixed-rate credit tenant lease financing alternatives at competitive rates for tenants and owners around the globe.
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.
CTLs are hybrid financings consisting of elements of corporate finance and real estate finance, resulting in a long-term, highly leveraged, customized 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.
Benefits of CTL financing via Prudential Private Capital 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
- Non-recourse owner financing
- Quick response and fast turnaround, with no lender fees
- Interest rates similar to investment grade debt pricing
- Relationship-oriented approach in which our dedicated team oversees all aspects of the financing, from origination/structuring through lease expiration
With over $5 billion invested in CTL financing since 2004, our team has the experience and know-how to help you determine if a CTL loan is the right fit for your project.
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
Issuer benefits
- Ability to receive capital and structure complex transactions for corporate and government credit tenants
- One-stop-shop capability for construction-to-permanent financing
- No requirement for agency rating
- Quick and efficient execution
PARTNER STORY
New Balance
For more than 100 years, New Balance has strived to make the world move. Their new global headquarters would help them live that promise to keep pushing forward and help them commit to service within the Boston community. Lease Financing was an ideal way to secure funds for construction for their new LEED building.
“Our new headquarters is a space where our associates can thrive and the brand can continue to grow and fulfill its promise to push forward and deliver the best in innovative footwear and apparel.”
Jim Halliday, Managing Director, NB Development Group
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