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Real Estate Lease Financing

Challenge faced:  

Landlord with Triple Net Leases (“NNN “) from Investment Grade tenant wishes to receive the Present Value of the 20 year lease stream, in 30 to 60 days, without recourse if the national tenant goes out of business. Seventeen years remain on the leases, so Bankers want personal guarantees that the tenant will not go out of business and/or not pay their rent, plus banker fees, compensating balances and no guarantee of the loan actually funding.  

     
Opportunity discovered:  

100% fiancing, amoritized over 10 years. Lender provided 100% financing, plus $3 million of cash reserves, with no payments for 3 years.
 
Full production was projected to begin in 18 months, allowing $14million in subordinated earnings during the 36 month payment holiday period.

Benefits:  
  • Lender received no equity stake of any type
  • Lender provided all mezzanine and venture capital
  • Lender did not charge any points, fees nor lender closing costs
  • All $35 million was disbursed to the project at closing
  • No personal guarantees by management or ownership.
 
Please note: We respect the confidentiality of our clients’ transactions. The purpose of this example is to illustrate the unique features and benefits of our financing structures. Key details are not disclosed or may be changed to protect confidentiality. Every university will be different, but payments will be structured so that the university will receive an infinite return on payment from energy savings, as long as an acceptable investment grade guarantee and “waiver of appropriations risk” has been delivered.

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