NNN Single Tenant Property Loans

Single tenant buildings include retail, industrial, restaurant and all types of franchises. Lenders offer financing for buildings with both credit tenants (those with BBB+ or better credit ratings) and non-credit tenants.

Typical Single Tenant, NNN, Property Financing Terms

Note: These are not terms of any specific lender. They represent terms that we frequently see in the marketplace and are not to be relied on as a commitment to provide any specific terms for any specific deal.

Debt service coverage:

Credit tenant: as low as 1.03 times net operating income
Non-credit tenant: 1.25 times net operating income

Maximum loan to value:

Credit tenant: "up to 100% LTV" (this is usually limited by the debt coverage ratio to around 85%)
Non-credit tenant: around 75% LTV

Term:

5, 10, and 20 year terms and terms coterminous with lease are most common.

Amortization:

25 or 30 years

Typical Rates:

Credit tenant: 10 year fixed = 10 yr US T-bill + 1.1% to 2.0%
Non-credit tenant: 10 year fixed = 10 yr US T-bill + 1.7% to 3.0% (lowest for retail, highest for restaurants)
5 year fixed rate and adjustable rate loans are also available at attractive rates.

Prepayment terms:

Prepayment based on "yield maintenance" or "defeasance". This kind of prepay can make it prohibitive to refinance or sell the property (prepayment fees can easily exceed 10% to 15% of the loan).
5 yr fixed rate loans - typically have a decreasing prepayment each year (e.g. 5%, 4%, 3%, 2%, 1%).
Adjustable rate loans - typically have a decreasing and smaller prepay (e.g. 3%, 2%, 1%).

Lease term:

Generally the lease must be 10 years or longer.

Recourse:

Typically non-recourse.

Closing costs:

Borrowers are responsible for all due diligence and closings costs (e.g. Appraisal, Phase 1 Environmental, site inspection, title, etc)

Loans under $3M - costs range from $6,000 to $12,000
For loans over $3M - costs can be $20,000 or more

Information You Will Need For Your Application: