Caffrey & Company Blog
Single Tenant and Credit Tenant Financing
Single Tenant and Credit Tenant Loans: Many lenders are focused on single tenant lease loans. Some lenders would like to see the amortization align with the primary lease term. All of the lenders will assume the tenant will not exercise any option to extend the lease, unless of course the tenant has already formally extended the primary lease term. Some lenders will consider a small balloon balance extending the loan amortization for 5 to 7-years beyond the primary lease term. If you need a longer amortization then we can move away from the non-recourse lenders to recourse lenders where the principal(s) is providing credit support and agreeing to make payments beyond the lease term should the property go dark. When considering the acquisition of a single tenant property try to estimate the value of the real estate at lease expiration as dark. Some lenders will limit the balloon balance at the end of the lease term to the unimproved land value. There is no easy way to determine the land value without an appraisal or obtaining a professional opinion of value. So when working with single tenant properties supported by long term leases from tenants that can show strong financial strength the loan to value can be less of a concern with the focus turning on how much will the lease payment support (after landlord expense) in the form of loan payments keeping the balloon balance in mind. As of February 2017 we have compiled a list of single tenants that our lenders would like to provide financing for. If you wish we can send you a simple calculator to back into the maximum amount the lease payment would support given different interest rates. Please email: Mike@CaffreyLoans.com for this calculator.
7-Eleven; Aaron Rents, Advance Auto; Ahold; Food Lion; Aldi; AT&T; Auto Zone;BB&T corporation; Bed Bath & Beyond; Big Lots; BJ Restaurants; Buffalo Wild Wings; CarMax; Casey's General Stores; Chik-Fil-A; Circle K; Costco; Dick's Sporting Goods; FedEx; Firestone (recourse); Genuine Parts; GSA (US Government); H-E-B Grocery; Hobby Lobby; Hy-Vee; Kohl's; Kroger; Lowe's; Major Oil Company Service stations - corporate stores only; McDonald's (corporate); O'Reilly's (must see lease before quote); Panda Express; Panaera Bread; Publix; QuikTrip; RaceTrac; Red Robin Gourmet Burgers; Ross Sotres (review lease first); Sheetz; Sherwin Williams; sprouts; Starbucks; Two Farm (Royal Farms); TD Bank; Target; Texas Roadhouse; TJX; Tractor Supply; Trader Joes; Ultra Salon Cosmetics & Fragrance; Verizon; WAWA; Walgreens; Wal-Mart; Whole Foods; Yum Brands.
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