August 2008
Newmark Knight Frank Overview

                                                            Newmark Knight Frank Financial ...
Newmark Knight Frank Overview

 Newmark Knight Frank’s Global Reach
   One of the largest independent real estate service ...
Summary of Credit Tenant Lease Structure

  Generally viewed as a bond rather than a real estate loan
  Tenant’s credit is...
Why a CTL?

 Transaction can be funded in 90 – 120 days

 150 – 300 basis points less expensive than a traditional sale/le...
Who is Utilizing CTLs

  A number of investment grade companies, universities and municipalities are utilizing credit tena...
Credit Tenant Lease (CTL)

  Fixed renewals for up to 30 years at today’s
  rates                                         ...
201 17th Street, Suite 900, Atlanta, GA 30363 • Tel: 404.926.1100 • Fax: 404.926.1101 • www.newmarkkf.com
                ...
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Credit Tenant Lease

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This is a slide presentation of our financing strategy to help investment grade entities access debt in the form of a lease.

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Credit Tenant Lease

  1. 1. August 2008
  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 100 million square feet of commercial space nationally Wachovia Bank QVT Financial Providence Equity Partners Arden Advisors UBS 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 Advisers BrokerTec – Garban - ICAP Deutsche Bank WL Ross & Company Evercore Partners The Goldman Sachs Group Quadrangle Debt Recovery First New York Securities Hoenig/ITG Advisors i-Deal Morgan Stanley 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 800 people throughout the United States, and 6,300 professionals worldwide Operates from over 165 offices in established and emerging property markets on six continents Handles transactions worth over $47.6 billion, with revenues exceeding $872 million, annually 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 improvement costs within operating lease With LT Bonds Complete asset control Credit Based Based on LT Credit Rating Very tax efficient Example AA 3.84% Treasury Fully Amortizing Debt Structured with residual value insurance (no 0.95 Corporate rate @ 10 year treasury tenant residual obligation) 0.55 Structure/RVI + Corporate credit rate 5.34% Rate Structure + 55-85 Basis points for Structure/RVI For information regarding this Financing Structure, please contact: Patrick M. Duffy, Managing Principal at (404) 926-1106 or Ed Hartwell, Associate (404) 926-1143 Page 7
  8. 8. 201 17th Street, Suite 900, Atlanta, GA 30363 • Tel: 404.926.1100 • Fax: 404.926.1101 • www.newmarkkf.com 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

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