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Credit Tenant Leasing


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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.

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Credit Tenant Leasing

  1. 1. 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 March, 2009
  2. 2. Newmark Knight Frank Overview Newmark Knight Frank Financial Services Clients National Coverage Newmark was founded in 1929 in New York, Knight Frank was founded in 1896 in London. INSTITUTIONAL FUND MANAGEMENT PRIVATE EQUITY The Bank of New York Omega Advisors Apollo Management One of the largest independent full-service real estate Citigroup Soros Fund Management Behrman Capital The Goldman Sachs Group Moore Capital Management The Blackstone Group firms in the world JPMorgan Chase Eton Park Capital Management The Carlyle Group Lehman Brothers Old Lane Management Centerbridge Partners Merrill Lynch TPG – Axon Harvest Partners Serves as leasing agent and/or property manager for over Morgan Stanley Alstra Capital Management Lincolnshire Management 130 million square feet of commercial space nationally Wachovia Bank QVT Financial Providence Equity Partners UBS Arden Advisors Texas Pacific Group Diamondback Advisors NY LLC Healthcor Partners National Offices Samlyn Capital ADVISORY / SPECIALIST / PRIME BROKERAGE DISTRESSED DEBT OTHER AMBAC Financial Group, Inc. Bear Stearns ESL Partners Archipelago Holdings Citigroup GSO Capital Partners (Hybrid) Bloomberg Credit Suisse First Boston MatlinPatterson Global BrokerTec – Garban - ICAP Deutsche Bank Advisers Evercore Partners The Goldman Sachs Group WL Ross & Company First New York Securities Hoenig/ITG Quadrangle Debt Recovery i-Deal Morgan Stanley Advisors International Fund Services UBS Knight Trading Group Sagent Peter J. Solomon Company Sanford I. Weill Page 2
  3. 3. Newmark Knight Frank Overview Newmark Knight Frank’s Global Reach One 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 Page 3
  4. 4. 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 Page 4
  5. 5. 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 Page 5
  6. 6. Who is Utilizing CTLs A number of investment grade companies, universities and municipalities are utilizing credit tenant leases, including: Page 6
  7. 7. Credit Tenant Lease (CTL) Fixed renewals for up to 30 years at today’s rates Asset or Build-to-Suit Sold to structured lease investor Fully FASB 13 compliant operating lease Ability to finance virtually all tenant Debt Financed With LT Bonds improvement costs within operating lease Credit Based Based on LT Complete asset control Credit Rating Structured with residual value Aa3 Example insurance (no tenant residual Fully Amortizing Debt 2.95% Treasury @ 15 year treasury 5.00 Corporate Spread obligation) + Corporate Spread 7.95% Rate Structure Page 7
  8. 8. 201 17th Street, Suite 900, Atlanta, GA 30363 • Tel: 404.926.1100 • Fax: 404.926.1101 • United States: New York • Atlanta • Boston • Chicago • Connecticut • Dallas • Detroit • Houston • Long Island • Los Angeles • Miami Nashville • New Jersey • Orange County, CA • San Francisco • San Jose • Washington, D.C. • Westchester International: Australia • Belgium • Botswana • Brazil • China • Czech Republic • France • Germany • Hong Kong • India • Indonesia • Ireland • Italy • Kenya • Malawi • Malaysia Netherlands • Nigeria • Poland • Portugal • Russia • Singapore • Spain • Tanzania • Thailand • Uganda • Ukraine • United Kingdom • Zambia • Zimbabwe