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CREDIT
TENANT FINANCING
We can
provide high leverage financing for investment grade tenants.
The following are ratings used to determine investment
grade
status.
| Investment
Grade |
Non-investment
Grade |
| AAA |
BB |
| AA |
B |
| A |
NR
(not rated) |
| BBB |
|
Examples
of Investment Grade
firms:
| Costco |
A |
| CVS |
A |
| Detroit Edison |
BBB+ |
Diageo, PLC
 | Burger King |
|
A+ |
| Dillards |
BBB- |
| Eastman Kodak Co. |
A+ |
Examples
of Non-Investment Grade
firms:
| K-Mart Corp. |
BB+ |
|
| Ohio Edison Co. |
BB+ |
Positive |
| Owens-Illinois, Inc. |
BB |
|
| Pep Boys |
BB- |
|
| Saks, Inc. |
BB+ |
|
| Sea Containers, Ltd. |
BB+ |
Negative |
OPTIONS
BASED ON NNN LEASE TYPE
| Loan
To Value |
80-100%
|
| NNN |
80-90% |
| NNN/ABSOLUTE
|
90-95% |
Borrower should have a NNN
lease with tenant.
TWO TYPES OF NNN LEASES
NNN
- all expenses except roof and structure paid by tenant.
 |
80-90%
LTV |
NNN
/ ABSOLUTE BONDABLE -
all expenses paid by tenant
|
90-95%
LTV |
A NNN
lease requires less maintenance by the borrower. The
tenant pays all related expenses and the lease is usually
long term (15+ years).
Public companies
want Credit Tenant Financing because they do not want an added
asset on their balance sheet. They prefer to lease rather
than purchase property.
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