Credit Tenant Lease Financing
Credit Tenant Loan (CTL) Rates - - Rates updated November 20th, 2024
| Loan Product | Rates (start as low as) | LTV | |
|---|---|---|---|
| 5 Year Fixed Rates | 6.48% | Up to 75% | Get Free Quote |
| 7 Year Fixed Rates | 6.55% | Up to 75% | Get Free Quote |
| 10 Year Fixed Rates | 6.62% | Up to 75% | Get Free Quote |
We specialize in making commercial mortgage loans for single credit tenant leased properties. These loans are sometimes called Credit Tenant Loans or CTL loans. These loans are secured by properties occupied by one single credit rated tenant with an investment grade credit rating such as Walgreen’s or CVS Drug Stores. Our rates are extremely competitive, and we can offer fixed rates that match the lease term. Other examples of credit tenant leases that we have financed include: AutoZone, Dollar Tree, Family Dollar, Dollar General, Advance Auto Parts, O’Reilly Auto Parts, Starbucks, Tractor Supply, and Sherwin Williams.
We are a nationwide commercial mortgage broker specializing in all types of commercial mortgage loans, apartment loans, multifamily loans, and credit tenant lease loans.
Benefits of our CTL Financing program:
Credit Tenant Lease Rates as low as 6.48% (as of November 20th, 2024)
• CTL loans up to 75% LTV
• No upfront application or processing fees
• Simplified application process
• Terms and amortizations up to 30 years
• Loans for purchase and refinance, including cash-out
• 24 hour written pre-approvals with no cost and no obligation
• Low stepdown prepayment penalties
• Non-recourse and partial-recourse options available
• Fixed rate loans up to existing lease term
• Credit tenant leases (CTL financing)
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Credit Tenant Lease Loan Outlook for 2024
The real estate market continues to adapt and grow, and the outlook for credit tenant lease (CTL) loans in 2024 reflects the ongoing changes in economic conditions, consumer behavior, and lending practices. Credit tenant leases, featuring national credit-rated tenants, remain an attractive investment due to their stability and reliable income streams.
One of the significant trends in 2024 is the increasing investor demand for properties with strong, creditworthy tenants. As the economy continues to recover and stabilize, properties leased to national credit-rated tenants such as CVS, Walgreens, and Starbucks remain highly sought after. These tenants provide a level of security that appeals to investors looking to mitigate risk in their real estate portfolios.
Commercial mortgage rates for credit tenant lease loans in 2024 remain competitive. Although interest rates have seen some adjustments due to the Federal Reserve's measures to control inflation, they are still favorable compared to historical standards. This environment benefits investors seeking to finance properties leased to credit tenants. Lenders are optimistic about this market segment, focusing on properties with strong tenants and stable income streams.
Securing favorable financing terms for CTL loans will significantly depend on the tenant's credit rating and the property's lease structure. Properties leased to nationally recognized, creditworthy tenants are more likely to receive better loan terms. Conversely, properties with less established tenants may face higher interest rates and more stringent lending requirements.
The adaptability of credit tenant lease properties has been a key factor in their resilience. Many national tenants have successfully navigated economic challenges by adopting innovative business practices and maintaining robust financial health. This resilience makes CTL properties a safe and appealing investment for 2024.
Additionally, the trend of incorporating sustainability into commercial properties is gaining traction. Investors and tenants alike are increasingly focusing on environmentally friendly practices, which can enhance property value and attract favorable financing terms. Properties that incorporate green building practices and energy-efficient systems are particularly attractive in the current market.
Overall, the outlook for credit tenant lease loans in 2024 is positive, with continued opportunities for investors to leverage competitive commercial mortgage rates and invest in stable, income-generating properties. However, careful consideration of tenant creditworthiness, lease structure, and market conditions is essential to maximize the benefits of securing a CTL loan in the coming year.
Additional Benefits of Credit Tenant Lease Loans
There are many benefits to purchasing CTL leased properties and obtaining CTL financing. Credit tenant leased properties make it much more feasible for investors to purchase properties that can provide long term revenue streams. Here are a few reasons why you should consider a CTL leased property for your next purchase:
• CTL leases typically provide an investor with a credit tenant on a long-term lease. It is very normal for a credit tenant to have a lease with over 10 years remaining on the term. These long-term leases provide the property owner a more stable source of rental payments. Short term leases in local retail centers can be disastrous for an investor. If the lease ends and the tenant does not renew, it could take a long time to fill the vacancy. Credit tenants provide a certain level of certainty that rental payments will be made for a significant period of time.
• Credit tenant leases significantly reduce the amount of time, energy and money that the property owner has to put into his or her building. With these leases, the tenant deals with property maintenance and pays taxes and insurance leaving the property owner with much more time and capital to invest in other properties.
• Additionally, CTL leases are very predictable and simple. Both parties are aware of the structure and the terms of the lease upon signing the lease. This makes it simple to know what the rental income or payment will be throughout the entire term of the lease. All rent increases on CTL properties are agreed to upfront by both parties, providing a stable income stream for investors.
• Properties with credit tenant leases are easier to finance than local shopping centers. Many lenders love lending on credit tenant properties such as CVS, Walgreens, Dollar General, Family Dollar and Dollar Tree. Investors looking to invest in retail can get much better rates and terms on these deals than on other retail properties. While we aren’t very bullish on financing retail centers (with local tenants on short term leases), we are very actively offering CTL financing.
In our view, the best properties to purchase now are properties with credit tenants. These tenants are corporately backed by big companies with financials available to the public. Lenders are aggressively offering CTL lease loans on credit tenant occupied properties today. Some of the best loans can be obtained on properties with top credit tenants. These tenants provide property owners some of the safest investments in commercial real estate and some of the best mortgage terms.
Overall, we highly suggest that retail investors look into considering properties with credit tenant leases as part of their investment portfolio