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					                          Credit Tenant Lease Transactions




                                                            June 2001

Investment Banking    •    Equity Research     •     Institutional & Private Brokerage    •    Asset Management      •    Private Capital

             William Blair & Company, L.L.C. 222 West Adams Street Chicago Illinois 60606 312-236-1600 www.williamblair.com

             CHICAGO       HARTFORD       LONDON       NEW YORK        SAN FRANCISCO          TOKYO    VADUZ       ZURICH
                          PRESENTATION OBJECTIVES




William Blair & Company
                          Presentation Objectives




This presentation is intended to accomplish the following object ives:
                          Presentation Objectives

Ø Provide an Overview of William Blair & Company, L.L.C.

Ø Summarize Credit Tenant Lease Transactions

Ø Discuss Typical Lenders for Credit Tenant Leases

Ø Compare and contrast underwriting of CTL transactions with Whole
  Commercial Mortgage Loans and Commercial Mortgage Back Securities
  (“CMBS”) Loans

Ø Compare and contrast servicing of CTL transactions with Whole
  Commercial Mortgage Loans and CMBS Loans

Ø Illustrate recent Credit Tenant Lease deals

Ø Summarize the primary aspects of servicing Credit Tenant Leases and
  “Trends” in servicing CTL’s
                          WILLIAM BLAIR & COMPANY OVERVIEW




William Blair & Company
                  William Blair & Company, L.L.C.




                                  Vaduz
                       London
                                                   Tokyo
        Chicago    Hartford
                              Zurich
San Francisco     New York

                                          § Full service investment bank founded in 1935


                                          § Offices in Chicago, San Francisco, New
                                             York, Hartford and four offices
                                             internationally


                                          § 938 employees


                                          § 100% owned by active principals
      William Blair & Company’s Four Primary Business Functions


Investment Banking
     Ø Private Equity & Debt
     Ø Mergers & Acquisition
     Ø Credit Tenant Leases



Sales and Trading
     Ø Debt & Equity Sales
     Ø Syndicate
     Ø NASDAQ and listed trading


Portfolio Management
     Ø Investment Management Services
     Ø Private Equity funds
     Ø Mezzanine funds



Research
     Ø Equity Coverage of over 300 Companies
                 William Blair & Company’s CTL Experience



           Historical Volume
($000s)
                                           w   In 2000, completed 35 CTL
$300,000
                                               transactions.
$250,000
                                           w   Since 1996, William Blair &
$200,000                                       Company has completed
                                               approximately 170 transactions
$150,000                                       totaling $847 million.

$100,000                                   w   In the past 12 months William
                                               Blair & Company has completed
 $50,000                                       fourteen secondary CTL
                                               transactions totaling
      $0                                       approximately $100 million.
           1996 1997 1998      1999 2000
           SUMMARY OF CREDIT TENANT LEASE STRUCTURE




William Blair & Company
                Summary of Credit Tenant Lease Structure

Ø Typically viewed as a bond rather than a real estate loan

Ø Investors look to the underlying credit or the Tenant’s ability to pay rent as
  the primary underwriting criteria, as opposed to fundamental real estate
  analysis

Ø Tenants are typically investment grade with published credit ratings by
  Standard & Poor’s or Moody’s

Ø Leases generally have little or no landlord responsibilities (Double-net,
  Triple-net, or Bondable Leases)

Ø Borrowers are structured as a single asset or special purpose entity
               Summary of Credit Tenant Lease Structure

Ø All risks beyond credit are mitigated through insurance policies
           Ø Condemnation Insurance
           Ø Casualty Gap Insurance

Ø Ability to provide up to 100% financing

Ø Terms are extended out to 20-25 years

Ø Schedule D treatment by NAIC allows for less capital reserves

Ø Priced like a bond rather than a mortgage
               TYPICAL LENDERS FOR CREDIT TENANT LEASES




William Blair & Company
               Typical Lenders for Credit Tenant Leases




Ø Bond Departments of Insurance Companies

Ø Pension Funds

Ø Other Long Term Institutional Investors including Banks and Finance
  Companies
                          UNDERWRITING CREDIT TENANT LEASES




William Blair & Company
                           UNDERWRITING
  CTL LOANS VERSUS COMMERCIAL MORTGAGE WHOLE LOANS AND CMBS LOANS


                                  Commercial
                                   Mortgage
                  CTL’s           Whole Loans          CMBS Loans


Single Asset         Yes             No                 Yes
Entity

Condemnation         Yes             No                 No
Insurance



Casualty Gap         Yes             No                 No
Insurance
                            UNDERWRITING
   CTL LOANS VERSUS COMMERCIAL MORTGAGE WHOLE LOANS AND CMBS LOANS


                                        Commercial
                                         Mortgage
                          CTL’s         Whole Loans     CMBS Loans

Debt Service             1.00          1.20x or           1.20x or
Coverage                 to            greater            greater
                         1.05x


Loan to Value            Up to         Generally          Generally
                         100%          75%                75%


Borrower provides        No            Yes                Yes
Environmental
Indemnity
                          SERVICING CREDIT TENANT LEASES




William Blair & Company
                             SERVICING
 CTL LOANS VERSUS COMMERCIAL MORTGAGE WHOLE LOANS AND CMBS LOANS


                                     Commercial
                                      Mortgage
                        CTL’s        Whole Loans      CMBS Loans
Collect Operating        No          Yes                Yes
Statements of
Property or “Rent
Roll”

Site Inspections         No          Annually           Annually



Lockbox                  Yes         No                 Varies
                                SERVICING
    CTL LOANS VERSUS COMMERCIAL MORTGAGE WHOLE LOANS AND CMBS LOANS


                                        Commercial
                                         Mortgage
                              CTL’s     Whole Loans      CMBS Loans
Payment                15 days            Varies            Varies
Remittance to
Lender/Master
Servicer

Servicing Fees         Flat               Decreasing        Decreasing

                       5 – 8 bps of       8 – 12.5          5 – 7 bps of
                       outstanding        bps of            outstanding
                       principal at       outstanding       principal
                       average life       principal
                       of the loan
                               SERVICING
   CTL LOANS VERSUS COMMERCIAL MORTGAGE WHOLE LOANS AND CMBS LOANS


                                        Commercial
                                         Mortgage
                      CTL’s             Whole Loans     CMBS Loans

Maintenance           Yes                   No              Yes
Reserve
Accounts

Tenant                No                    Rarely          Yes
Improvements &
Leasing
Commissions
Reserve

Tax Escrow            No (Tenant            Generally       Yes
Reserve               Responsibility)       Yes
                               SERVICING
   CTL LOANS VERSUS COMMERCIAL MORTGAGE WHOLE LOANS AND CMBS LOANS


                                        Commercial
                                         Mortgage
                      CTL’s             Whole Loans    CMBS Loans

Casualty              No (Tenant              Varies     Yes
Insurance             Responsibility)
Reserves


Condemnation          1x Premium.             No         No
Insurance Policy      Policy held by
                      Servicer

Casualty Gap          1x Premium.             No         No
Insurance Policy      Policy held by
                      Servicer
ILLUSTRATION OF CREDIT TENANT LEASE TRANSACTIONS




 William Blair & Company
                         Examples of Typical Credit Tenant Lease Deals
   $198,675,080
   $198,675,080              $112,302,723
                             $112,302,723       $107,100,000
                                                $107,100,000            $57,554,914
                                                                        $57,554,914          $49,499,856
                                                                                             $49,499,856




     (57 Stores)
      (57 Stores)             (53 Stores)
                               (53 Stores)       (10 Stores)
                                                  (10 Stores)             (4 Stores)
                                                                           (4 Stores)          (6 Stores)
                                                                                                (6 Stores)


   $42,500,000
   $42,500,000               $30,019,000
                             $30,019,000        $21,500,000
                                                $21,500,000              $18,200,000
                                                                         $18,200,000         $15,187,000
                                                                                             $15,187,000




                                                (3 Buildings)
                                                 (3 Buildings)
(Warehouse Facility)
 (Warehouse Facility)          (3 Stores)
                                (3 Stores)                              (Office Building)      (Medical Facility)


    $15,100,000
    $15,100,000              $13,737,991
                             $13,737,991        $14,358,986
                                                $14,358,986              $11,499,086
                                                                         $11,499,086           $9,725,339
                                                                                               $9,725,339




(Headquarter Building)                          (1 Office Facility)
                                             (1 Warehouse Facility)    (Medical Facility)    (Warehouse Facility)
                                (1 Store)


    $8,282,000
    $8,282,000                $7,575,000
                              $7,575,000        $7,287,343
                                                $7,287,343                $6,760,000
                                                                          $6,760,000          $3,333,000
                                                                                              $3,333,000




(1 Store)                      (1 Store)          (1 Store)           (Warehouse Facility)      (1 Store)
                          SUMMARY OF SERVICING CTLs and TRENDS




William Blair & Company
      Summary of Servicing for Credit Tenant Leases and Trends

SUMMARY:

Ø Always a direct pay from the Tenant

Ø Always a stand-alone building, must have a separate tax parcel

Ø Servicers do not inspect the Property

Ø Servicers do not collect Borrower financial statements

Ø Servicing payment is typically paid from excess rents rather than subtracted from
  Lender’s payment

Ø Servicing payment is calculated as a flat monthly fee throughout the term of the
  Loan, as opposed to a decreasing fee

Ø No tax or insurance escrows
     Summary of Servicing for Credit Tenant Leases and Trends

TRENDS:




Ø Notification of a claim on Residual Value Insurance



Ø For CTL pools, a Master Servicer may be in place
   § Debt Service payment must be remitted within 1-2 days, thus
     decreasing float

				
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