Credit Tenant Leasing
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March, 2009 For further information regarding this Financing Structure, please contact: Patrick M. Duffy, Managing Principal at (404) 926-1106 or Ed Hartwell, Associate at (404) 926-1143
description
Newmark Knight Frank’s team includes more than 30 advisory professionals with expertise in office and industrial tenant representation, investment sales, portfolio management and strategic planning services. Combined, our principals have more than 90 years of experience negotiating complex transactions on behalf of clients in nearly every industry. For any assignment, including lease restructures, headquarters relocations, build-to-suit development and sale/leasebacks, our advisory team provides best-in-class services, resources and strategic advice that enable our clients to make informed real estate decisions. We analyze each client’s financial, cultural, operational and strategic goals to determine the ideal real estate environment with minimal real estate costs. We also provide value-added, in-house capabilities, such as legal review, financial analysis, market research and demographic analysis.
Transcript of Credit Tenant Leasing
March, 2009
For further information regarding this Financing Structure, please contact:
Patrick M. Duffy, Managing Principal at (404) 926-1106 or
Ed Hartwell, Associate at (404) 926-1143
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Newmark Knight Frank Overview
Newmark Knight Frank Financial Services Clients
Bear Stearns Citigroup
Credit Suisse First Boston Deutsche Bank
The Goldman Sachs Group Hoenig/ITG
Morgan Stanley UBS
PRIME BROKERAGE
Omega Advisors Soros Fund Management
Moore Capital Management Eton Park Capital Management
Old Lane Management TPG – Axon
Alstra Capital Management QVT Financial Arden Advisors
Diamondback Advisors NY LLC
Healthcor Partners Samlyn Capital
FUND MANAGEMENT PRIVATE EQUITYINSTITUTIONAL
ESL PartnersGSO Capital Partners (Hybrid)
MatlinPatterson Global Advisers
WL Ross & CompanyQuadrangle Debt Recovery
Advisors
AMBAC Financial Group, Inc. Archipelago Holdings
Bloomberg BrokerTec – Garban - ICAP
Evercore Partners First New York Securities
i-Deal International Fund Services
Knight Trading Group Sagent
Peter J. Solomon Company Sanford I. Weill
DISTRESSED DEBTADVISORY / SPECIALIST / OTHER
Apollo Management Behrman Capital
The Blackstone Group The Carlyle Group
Centerbridge Partners Harvest Partners
Lincolnshire Management Providence Equity Partners
Texas Pacific Group
The Bank of New York Citigroup
The Goldman Sachs Group JPMorgan Chase Lehman Brothers
Merrill Lynch Morgan Stanley Wachovia Bank
UBS
National Coverage
Newmark was founded in 1929 in New York, Knight Frank was founded in 1896 in London.
One of the largest independent full-service real estate firms in the world
Serves as leasing agent and/or property manager for over 130 million square feet of commercial space nationally
National Offices
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Newmark Knight Frank Overview
Newmark Knight Frank’s Global ReachOne of the largest independent real estate service firms in the world Employs over 990 people throughout the United States, and 6,900 professionals worldwide Operates from over 195 offices in established and emerging property markets on six continents Handles transactions worth over $47.6 billion, with revenues exceeding $962 million, annually Provides an extensive global platform of integrated services which includes real estate advisory, investment sales and financial services, consulting, project management and property and facilities management. Delivers seamless worldwide service through open information exchange with international broker teams
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Summary of Credit Tenant Lease Structure
Generally viewed as a bond rather than a real estate loan
Tenant’s credit is the primary underwriting criteria, not the underlying real estate
Tenants are investment grade with the published credit ratings of BBB- / Baa3 or better by Standard & Poor’s, Moody’s or Fitch
Leases will have no landlord responsibilities (triple-net / bondable leases)
Depending upon the asset, lease can be structured as an operating or capital lease
All risks, except credit, are mitigated through insurance policies
Casualty Gap Insurance
Condemnation Insurance
Ability to provide up to 105% financing
Lease terms may be 15 – 30 years, with renewal rights and/or purchase options
Typical lenders are bond departments of insurance companies or pension funds
Always a direct pay from the Tenant
Always a stand-alone building, with a separate tax parcel
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Why a CTL?
Transaction can be funded in 90 – 120 days
150 – 300 basis points less expensive than a traditional sale/leaseback or build-to-suit
Zero cash flow to Owner
Assets can be fully monetized at, or above, market values
Tenant can have purchase option at the end of lease term at a fraction of then market value
Transaction is priced from an index tracking the 10-year treasury, at an equivalent of 150 – 200 basis points above current treasury depending on Tenant’s credit rating
Residual Value Insurance policy allows up to 42% of asset value to be unamortized over lease term
Smaller assets can be bundled into one master lease
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Who is Utilizing CTLs
A number of investment grade companies, universities and municipalities are utilizing credit tenant leases, including:
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Credit Tenant Lease (CTL)
Fixed renewals for up to 30 years at today’s rates
Fully FASB 13 compliant operating lease
Ability to finance virtually all tenant improvement costs within operating lease
Complete asset control
Structured with residual value insurance (no tenant residual obligation)
Asset or Build-to-SuitSold to structured
lease investor
Debt FinancedWith LT Bonds
Credit BasedBased on LTCredit Rating
Aa3Fully Amortizing Debt
@ 15 year treasury+ Corporate Spread
Example2.95% Treasury5.00 Corporate Spread
7.95% Rate Structure
201 17th Street, Suite 900, Atlanta, GA 30363 • Tel: 404.926.1100 • Fax: 404.926.1101 • www.newmarkkf.comUnited States: New York • Atlanta • Boston • Chicago • Connecticut • Dallas • Detroit • Houston • Long Island • Los Angeles • Miami
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