Commercial Loans and Fun Blog

Commercial Financing with a Credit Tenant Lease (CTL Financing)

Posted by George Blackburne on Tue, Jun 15, 2010

Bed Bath BeyondIf you have a credit tenant and the lease is triple net, CTL Financing terms are much, much better than conventional commercial loan terms.

If you are an investor with a prime property leased on a triple net basis to a credit tenant, you can still get terrific commercial financing. (If you need CTL or any other commercial financing right now, please write to me, George Blackburne III - the old man - at




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A credit tenant lease is a method of financing real estate. The landlord borrows money to finance the property and pledges as security the rents to be received from the tenant. Usually, the financing is structured as nonrecourse debt, and the lease is structured as a triple net lease.  Credit tenant leases may be created either in sale/leaseback transactions or new purchase transactions.

A credit tenant is typically a national company that is rated BBB or higher by Standard & Poors. Examples of national credit tenants include Walgreens, CVS Pharmacies, Petco, Auto Zone, Bed Bath & Beyond, Advance Auto Parts, Lenscrafters, FedEx Kinko's, etc.


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Credit Tenant Lease Financing (CTL) is available to borrowers for acquisitions, refinances or the construction of a variety of property types that are tenanted by Investment-Grade rated tenants on long-term Bond, NNN, or ground leases. Acceptable property types include Single Tenant Retail, Corporate Office, Industrial (warehouse distribution) and US Government leased properties.

Loans range in size from $3 million up to $300 million or more on single properties or large multi-property portfolios. Minimum debt service coverage ratios range from 1.0x to 1.05x. Surprisingly, there are no traditional restrictions on the LTV; however, the loan-to-value ratio must not exceed 100%.


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These CTL loans are made on a fixed rate basis at a market spread over matching United States Treasuries (UST's). The loan term will often, but not always, match the term of the underlying lease (coterminous).  What this means is that if there are 18 years left on your credit tenant lease, lenders will sometimes - but not always - amortize their loans over 18 years.  

"But George, won't the short term of the loan making the monthly payments much too large?"  You would think so, but the interest rate on CTL loans are soooo low that most deals cash flow comfortably. 

If you need CTL or any other commercial financing right now, please write to me, George Blackburne III - the old man - at  I get 1,300 emails per day (really), and I don't want to miss your email.  Would you please make the Subject Line read, "CTL Financing"?  Thanks!


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Topics: credit tenant financing, credit tenant loan, CTL financing, CTL loan, triple net lease financing