|
Credit Tenant Lease ("CTL") Loans
[ Conduit Program ] [ Express Program ] [ BSC Small Loan Program ] [ Credit Tenant Lease ] [ Single Tenant, Non-Credit ] [ Fixed-Rate Earn Out ] [ Bridge Loans ] [ Church Loans ]
Since traditional real estate loans are
generally based on the value of the real estate and track record of the
borrower, lenders require borrowers to have at least 20% equity in a project to
protect the lender in the event of default.
CTL is more concerned with the credit rating
of the tenant occupying the property rather than the underlying real
estate. Rating agencies such as S&P give credit ratings to companies
depending on their risk of default as a going concern. Therefore, it
stands to reason that the risk of defaulting on their corporate debt is similar
to that of defaulting on their real estate obligations.
Loans are structured as self amortizing
based on the income stream that is generated over the initial term of the lease including
any rent bumps without taking deductions to the underwritten NOI for structural
reserves, tenant improvements and leasing commissions.
To further maximize proceeds the loan is
underwritten at a 1.0x DSCR so that in certain cases leverage of 100%
Loan-to-Cost can be achieved.
Market fluctuations will affect pricing, as well as
whether the company in question has a "positive," "negative"
or "neutral" outlook.
Here are the basic parameters of the program:
|
Loan Amounts: |
Minimum
$3,000,000 |
|
Qualifications: |
Existing,
stabilized, income-producing properties housing investment-grade credit
tenants with a credit rating of "BBB" with stable outlook or
better. Tenants rated "BBB-" with a stable outlook by both
S&P and Moody’s will be considered on a very selective basis.
Cannot finance
non-rated companies regardless of the strength of their financials without
a shadow rating.
|
|
Property Types: |
Office
Retail
Industrial |
|
Term: |
Up to 25 years. |
|
Index: |
U.S. Treasury or Swap Index
correlating to the average life of the remaining lease term.
|
|
Spread: |
Fixed spread
added to the appropriate index. Call for pricing.
|
|
Amortization: |
Fully
amortizing and coterminous with the remaining lease term. Balloons
structured by exception and require residual value insurance and an MAI
appraisal.
|
|
Average Life: |
15/15 deal has
9 year average life; use interpolated 9-year U.S. Treasury or interpolated
9-year Swap Rate index
20/20 deal has
12-year average life; use interpolated 12-year U.S. Treasury or
interpolated 12-year Swap Rate index.
25/25 deal has
15-year average life; use interpolated 15-year U.S. Treasury or
interpolated 15-year Swap Rate index. |
|
Residual Value Insurance (RVI): |
Required for
transactions structure with balloons. |
|
Rate Lock: |
45-day forward
rate lock available after execution of Loan Commitment and payment of a 1%
commitment fee. |
|
Loan-to-Value: |
Maximum 100% LTV.
|
|
Minimum DSCR: |
Office
Retail
Industrial
|
1.00x
1.00x
1.00x
|
|
Lease Type: |
Bondable (no
landlord obligations),
NNN (landlord
only responsible for roof and structural repair),
NN (landlord
responsible for significant portion of operating expenses). |
|
Typical
Closing: |
45 – 60 days
from receipt of executed application and the Good Faith Deposit. |
|
Recourse: |
Non-recourse
except for standard carve-outs for "bad boy" acts and
environmental.
|
|
Origination Fee: |
Call for pricing
|
|
Required Reports: |
Phase I Environmental
Assessment Report
Physical Condition Assessment
Report
MAI Appraisal (if balloon
payment is structured)
All reports to
be ordered by BSC and prepared by approved vendors only. |
|
Assignment / Assumption: |
One-time option
only with BSC's consent and payment of 1.00% fee (based on outstanding
principal loan balance) and BSC’s transaction costs.
|
|
Lockout |
None |
|
Prepayment: |
Defeasance only
|
|
On-Going Reserves / Escrows: |
None |
|
Reserves: |
Letter of
credit or upfront cash reserve sized to meet any landlord obligations for
non-bondable leases.
|
| 
Suite 402