Credit Tenant Lease Finance
Case Study
Home Depot, Inc.
Mesirow Financial structured and arranged a $15,500,000 permanent
Credit Tenant Lease (CTL) financing for the refinancing of a
Home Depot retail store.
Background. Seven years ago the owner of a sizable retail property in Anchorage,
Alaska signed a 50-year lease with one of the nation’s largest home improvement stores,
Home Depot. The property owner financed the transaction with a traditional real estate
loan with an eight year maturity.
Challenge. With only one year remaining before loan maturity, the property owner was
concerned about refinance risk and wanted to take advantage of the favorable interest
rates in the current market. However, the existing loan included a traditional makewhole pre-payment provision and the owner worried that the penalties associated with
refinancing a year before maturity would preclude a refinancing at the current, attractive
rates.
Finance Solution. Mesirow Financial structured and placed a 100% LTV non-recourse
CTL loan that not only locked in attractive long-term, fixed-rate financing but generated
net proceeds over and above the cost of loan prepayment (including penalties). Mesirow
Financial’s analysis demonstrated that the additional proceeds generated by a full
amortizing 30-year CTL loan (i.e. only a portion of the remaining 42-year lease term)
outweighed the additional cost of the original loan’s make-whole provision. Additionally,
Mesirow Financial negotiated a 90-day extension to the closing period that reduced
the cost of the pre-payment penalty and a loan assignment provision that offered the
borrower future flexibility.
Result. Mesirow Financial CTL analyzed refinancing alternatives for the property owner
and executed a CTL non-recourse refinancing with favorable, long-term rates that
retired the existing loan and eliminated interest rate risk for the balance of the lease
term. The loan proceeds exceeded the cost of existing debt repayment and associated
prepayment penalties generating current investment capital and future free cash flow for
the borrower.
Refinancing of a CTL Loan
Prior to its Initial Maturity
Transaction Data
Credit Tenant
Home Depot
Sector(s)
Retail
Loan Amount
$15,500,000
Loan to Cost
100%
Loan Type
Refinance
Term
30 years
Use(s)
Big Box Retailer
Our Team
Mesirow Financial’s CTL Finance team works collaboratively with our fixed income
sales and trading, real estate and public finance teams in order to structure CTL loans
according to terms most favorable for our clients. We work directly with our bond
traders and are able to provide clients with real-time access to market pricing, offering
very competitive rates and faster execution. We have direct access to the firm’s real
estate consulting and public finance teams, leveraging their expertise in development,
ownership and lease negotiation in order to help customize the loan to meet the client’s
best interests. The breadth of Mesirow Financial’s platform helps enable our clients’
transactions to be best positioned for success.
Additional Services offered by Mesirow Financial
Investment Management Institutional money manager in the areas of hedge fund strategies,
private equity, currency and commodity management, real estate, U.S. value equities and
fixed income, as well as investment advisory services for private clients and retirement plan
sponsors
Global Markets Well-capitalized broker/dealer with expertise in investment banking, saleleaseback financing and non-discretionary brokerage services
Insurance Services Full-service insurance brokerage and consultant specializing in the
areas of property and casualty, surety, employee benefits, life and disability and private client
insurance, as well as structured settlement services
Consulting Financial and operational advisory services including corporate recovery,
litigation, investigative and intelligence services and valuation services, as well as real estate
consulting and compensation and executive benefit strategies
About Mesirow Financial
Mesirow Financial is a diversified financial services firm headquartered in Chicago. Celebrating
its 75th anniversary this year, the firm remains independent and employee-owned with
approximately 1,200 employees globally. With expertise in Investment Management,
Global Markets, Insurance Services and Consulting, Mesirow Financial strives to meet the
financial needs of institutions, public sector entities, corporations and individuals. For more
information about Mesirow Financial, visit its website at mesirowfinancial.com.
Broadview CTL Capital is not an affiliate of Mesirow Financial and is not a registered broker-dealer. Broadview
provides services independent of Mesirow Financial to the mortgage broker community.
Investment Advisory services offered through Mesirow Financial Investment Management, Inc., an SEC Registered
Investment Advisor. Securities offered through Mesirow Financial, Inc. Member NYSE, SIPC. Mesirow Financial
does not provide legal or tax advice. Mesirow Financial refers to Mesirow Financial Holdings, Inc. and its divisions,
subsidiaries and affiliates. The Mesirow Financial name and logo are registered service marks of Mesirow Financial
Holdings, Inc. © 2012, Mesirow Financial Holdings, Inc. All rights reserved. Printed in the U.S.A.
353 North Clark Street | Chicago, Illinois 60654 | 312.595.6200 | mesirowfinancial.com
For Further Information
about our credit tenant lease finance
services, please contact:
Stephen Jacobson
Senior Managing Director
Direct–312.595.7920
Fax–312.595.4290
sjacobson@mesirowfinancial.com
Andrew Minkus
Vice President
Direct–312.595.7922
Fax–312.595.4290
aminkus@mesirowfinancial.com
Nathaniel Sager
Vice President
Direct–312.595.7924
Fax–312.595.4290
nsager@mesirowfinancial.com