Posted by Wayne IL on July 23, 2003 at 14:25:54:
For an investment grade (S & P Rating “A” or better), spread would range from 160 to 240 bps over interpolated 10 yr UST.
Spreads vary substantially by lender type, location of the property, demographics as well as credit rating quality. Cap rates are running about the same as the interest rate on borrowed money . . . most deals are 1031s where the borrower needs to find a place for his money.
Wayne IL
Financing of Triple Net Properties? - Posted by newbie
Posted by newbie on July 22, 2003 at 17:15:18:
This is my pressing question at the moment to figure some other things out. What type of financing goes with triple net properties?
Thank you for your responses!
Sincerely,
newbie
Re: Financing of Triple Net Properties? - Posted by Wayne IL
Posted by Wayne IL on July 23, 2003 at 07:51:41:
Assuming that by NNN properties you are referring to single tenant leased properties, financing is geneerally split between properties leased by investment grade quality credits versus non-invetment grade.
Investment grade quality credits are typically referred to as Credit Tenant Leased (CTL) properties and the financing is based on the cash flow of the lease payments and the tenant’s credit quality rating. The borrower’s credit is rarely a factor in underwriting. Most CTL lenders will have a minimum loan amount of $1.5 million. LTV typically maxed out at 95% to 100% of value.
Financing of loans less than $1.5 million and for non-investment grade credit quality tenants (or unrated) will require review of tenant financials to establish a credit quality “phantom rating”. Loans typically are 75% LTV, up to 85% LTV on better credits.
Wayne IL
Re: Financing of Triple Net Properties? - Posted by Don Dion
Posted by Don Dion on July 22, 2003 at 18:23:25:
You need more detail on the type of property your talking about. There can be triple net office buildings, triple net strip centers and triple net single use buildings like home depot ect.
Return Measures of CTL Properties Questions. - Posted by newbie
Posted by newbie on July 23, 2003 at 12:14:50:
I’m trying to measure cash on cash and internal returns, assuming a cash downpayment, but I need more information.
Typically what are the interest rates for Credit Tenant Leased (CTL) properties? And at what cap rates do they sell for? With a 95% ltv, that should be enough to get an rough estimate, right?
Thank you for your responses!
Sincerely,
Daniel (newbie)