Credit Tenant Loans, often called Credit Tenant Lease Financing, are characterized by high loan-to-value (up to 100% LTV) and low debt service coverage (as low as 1.00 DSC) ratios. This type of high-leverage lending, typically done within a triple-net lease, is dependent upon the credit tenant’s rent stream for the repayment of the mortgage loan. The rent stream (the repayment of the mortgage) is protected by lease enhancement coverages protecting against certain real-estate events (a casualty or condemnation of the property) or the failure of the landlord to satisfy its obligations under the lease.
Lease Enhancement Insurance coverages do not replace the need for other business-related coverages (liability, for example). Rather, they complement other, more typical coverages.