NNN Financing
All,  

I was hoping you may be able to help.  I am in commercial brokerage and working on a transaction ~2MM of a single tenant absolute net property.  I am repping the buyer who is high quality.  The tenant is national and excellent, the lease is decades and excellent, the location is excellent, which sounds great until you get to the cap rate which as we've seen on all property is lower than we'd like, but on this specific one is even at the bottom of that range.  

I generally deal with a lot of cash deals but when financing is involved it tends to be SBA or apartments.  On this particular deal I'm finding little local appetite for it with the usual guys. In particular I'm being proposed 15 years of amortization which basically makes it unlendable given a smaller gap between the rate and the return.  

If anyone here does a lot of investment grade NNN I'd graciously appreciate any national lenders/brokers who would want to talk about this more specifically.  Please feel free to private message me.    

As a more public note, I'd be interested in if others are having the same problems here.  Has anyone closed one of those recently that wouldn't mind sharing the lending details?  

The property is in Ohio with a buyer being local.
[{"id": "cmyjsk9", "text": "Not unusual. You have tenant sales?  What's the lease term left?  Rent rate vs market rate?", "replies": [{"id": "cmylb4z", "text": "I don't have the store sales, but the guarantor is in the 50+ million range.  I've honestly done little under writing on them, they passed the sniff test to be of enough credit worthiness to be trading around where we are talking.  Thats not to say I don't plan on it, there just is little reason if financing can't be solved.  \n\nrent rate seems inline (maybe slightly above) market.  Overall though I think you could bulldoze this thing in a week and BTS for another user at a similar rate pretty easy.  It would be a high demand site.  \n\n20 years is left with 10 years of options after that.  \n\nThank you for your response.  \n\nI should of mentioned this is food related btw.  I'm pretty much going to hit the phone all day until I get an answer I like on this.  I'll try to update\n\n", "replies": [{"id": "cmypc10", "text": "You are getting quoted 15-year amms on a property with 20 years left on the lease?  What's the LTV? ", "replies": [{"id": "cmypq4l", "text": "70%.  I am hoping someone will pop up higher but that is less of an issue than the am", "replies": [{"id": "cmyq9y4", "text": "Annoy the shit out of the banks until they explain it.  If they are scared of the purchase price, they can just lower the LTV.  I don't see the logic behind sticking to a 15-year amm on a property that is leased for 20 more years.", "replies": [], "depth": 5}, {"id": "cmzlkud", "text": "This is kind of a weak solution but would your buyer consider putting down 40% on a 15yr am? That would approximate the same debt service as 30% over 20yrs.\n\nWhat happened when you hit the phones? Did you get more reasonable lenders?\n", "replies": [{"id": "cmzrgky", "text": "Possibly.  I'm still working on it and actually made a lot of new contacts I have to fully respond to (thank you to everyone from here who msg'ed me).  \n\nNational brokers are telling me to ignore the local/regional banks, they just don't want to make this deal and the terms offered are bad, that they can do this 25 am all day long, the better question is if you can fix the entire time.  That sad, none has actually given me a quote yet though, just 'let me work work on this and get back to you in a few days'.", "replies": [{"id": "cmzuv0x", "text": "I'm pretty sure the only way they could do a 25yr fixed term is by offloading the risk with an interest rate swap. Either one specific to this deal or for a whole commercial lending portfolio. Without that the banks would be taking way too much of a rate risk. ", "replies": [{"id": "cmzuxna", "text": "that was my thought too.  I wasn't really expecting 25 fixed, just the am.  I sent you an email BTW", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "cmyqmfy", "text": "Is there a public offering sheet online that we can look at to scan for issues? ", "replies": [{"id": "cmyrout", "text": "I'm willing to share any pertinent issues with the thread but I'd rather not link it as I'm not sure how my client would feel about me discussing their deal online.", "replies": [], "depth": 2}], "depth": 1}, {"id": "cn099lh", "text": "Out of curiosity, may I ask what the going-in cap rate is?", "replies": [{"id": "cn1en25", "text": "&lt;6", "replies": [], "depth": 2}], "depth": 1}, {"id": "cndw11q", "text": "Local banks/lenders don't understand NNN loans. They want out in 5 years. You want CTL financing. Google it and understand it. It's specifically for NNN deals. Can buy these properties with a lot less down too so long as loan is self amortizing with NNN rents up to 30 years.", "replies": [], "depth": 1}, {"id": "cnf7cql", "text": "If a lender is offering a 15-year amort then they're definitely concerned with the refi at the end of their term so it's not entirely off base. A 25 year should work though but what you want to look at is what the loan would amortize down to at year 20 when the lease is up. If the loan is less than the raw land value a 25-yr amort works, if not, no bank is going to reasonably touch it. Biggest problem here is that with 20 years left on the lease any bank that takes it is likely stuck with it. ", "replies": [], "depth": 1}]