Credit Tenant Lease Financing: Loan Terms and Structures, Benefits and Risks, Trends and Developments

Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Real Property - Finance
- event Date
Thursday, November 7, 2024
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will provide an advanced overview of credit tenant lease (CTL) financing. The panel will discuss the trends and developments in CTL financing, examine the common structures and terms for CTL loans, and highlight the advantages and disadvantages of this type of financing under current market conditions.
Faculty

Mr. LaSota is Co-Chair of the Chicago Corporate Practice. He focuses his practice on the representation of institutional investors in advising, structuring, and documenting debt transactions, with particular focus on credit tenant loan real estate transactions (CTLs) and project and infrastructure finance, including public-private partnerships. Mr. LaSota has wide-ranging industry experience including federal and state government, public and private universities, hospitals, resorts, hotels, medical office buildings, retail outlets, parking and transportation facilities, data centers, and oil and gas facilities. A considerable amount of his practice involves reviewing and negotiating lenders’ interests in leases, residual-value guaranties, construction contracts, concession agreements, and other project-related agreements, and negotiating and documenting financing arrangements. Mr. LaSota is experienced with the rules and customs of the NAIC guidelines which govern the treatment of securities (including CTLs) as “Schedule D” bond transactions for certain institutional investors, and is frequently consulted by institutional investors and placement agents for structuring advice and guidance on such matters.

Mr. Robson focuses his practice on corporate, project and structured finance transactions, including public-private partnerships and lease finance transactions. His representation of insurance companies, finance companies, and institutional investors focuses on private placements of debt, both secured and unsecured; complex project and facility financings; real estate transactions; equipment financings; and credit tenant loans. A considerable amount of Mr. Robson’s practice involves energy and infrastructure financings and includes advising, structuring and documenting debt offerings and financing arrangements; negotiating lenders’ interests in project-related agreements; and structuring transactions to attain requisite credit ratings on debt securities from the rating agencies.

Mr.Persky joined CGA in 2024 as a Managing Director involved in the origination, structuring and distribution of CTL transactions. Prior to joining CGA, he spent nearly 29 years at Nuveen and TIAA’s Private Placements group where he was a Managing Director serving as Portfolio Manager and Head of CTL Originations. Mr. Persky also worked in commercial banking at Citibank and European American Bank.
Description
CTL financing is an attractive alternative to traditional real estate financing that may result in a lower interest rate and higher loan-to-value for owners and developers. CTL financing is suited for property leased to a single tenant with a high credit rating under a financeable net lease and is secured by the future stream of payments of the credit tenant as opposed to the property itself.
CTLs are typically structured as bond or triple-net leases but can also be double-net leases. Although the terms for CTL loans vary, they usually include slightly lower interest rates, higher loan-to-value ratios, a lower debt service coverage requirement, and they are fully amortized over a longer period that usually matches the lease term.
The adaptability of CTL financing provides multiple benefits for developers, lenders, tenants, and investors. However, there are also downside risks and challenges that must be weighed in each financing situation.
Listen as our authoritative panel examines the terms and structures for CTL financing and highlights the benefits and risks associated with these types of loans from the perspective of developers, lenders, tenants, and investors.
Outline
- Overview: CTL financing under current market conditions
- Sectors using CTL financing
- Trends and developments
- Criteria for CTL financing
- Tenant creditworthiness
- Lease structure
- Terms and structures of CTL loans
- Benefits and risks of CTL financing for developers, lenders, tenants, and investors
- CTLs and sale leasebacks
- Other key considerations and practice pointers
Benefits
The panel will discuss these and other key considerations:
- How are current market conditions impacting CTL financing?
- What are the basic criteria for CTL financing?
- What are the common terms and structures for CTL loans?
- What are the benefits and risks of CTL financing?
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