WYSIWYG
Credit tenant loan (CTL) financing is an attractive debt financing solution for owners and developers of single tenant properties leased to investment grade tenants.
A credit tenant loan is a type of high leverage, long-term debt financing for single-tenant commercial real estate leased to investment grade tenants via a long-term lease. Credit tenant loans are sized by discounting all of the rent payments due under the lease. Since CTL financing relies on the credit of the tenant, lenders are not constrained by loan-to-value or dollar per sq. ft.
CTL loans can be used to finance build-to-suit developments. In these cases, the borrower locks into one loan with one, fixed interest rate, therefore eliminating interest rate risk and the risk of refinancing with permanent a take-out loan.
Please refer to our Introduction to Credit Tenant Loan Financing guide for additional details.
Some information contained herein has been obtained form sources known to be reliable but is not necessarily complete and its accuracy cannot be guaranteed. Any opinions expressed are subject to change without notice. It should not be assumed that any historical market performance information discussed herein will equal such future performance. This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Waterway Capital LLC is a FINRA/SEC member.
July 29, 2025 – New York, NY – Waterway Capital, LLC (Waterway Capital) is proud to announce the successful closing of a $201,904,000 credit tenant loan (CTL) for the construction of a newly completed 370,000 square foot office building located at 2440 Fulton Street in the Broadway Junction area of Brooklyn. The loan was closed in 2022 and supported the development of this critical public infrastructure project.
The primary occupant of the building is the City of New York, which, through its Human Resources Administration (HRA), has leased approximately 280,000 square feet within a dedicated condominium unit. The financing was structured based on the strength of the City’s lease, utilizing a CTL approach to deliver high-leverage, long-term, fixed-rate financing aligned with the lease term.
On May 1, 2025, New York City Mayor Eric Adams celebrated the grand opening of the facility, highlighting it as a state-of-the-art hub for vital social services in East Brooklyn.
“This transaction demonstrates how CTL financing was used to facilitate a civic infrastructure project,” said Thomas A. Sargent, President of Waterway Capital. “We’re proud to have played a role in helping the developer and the City bring much-needed resources to the community.”
CTL Highlights
Waterway Capital acted as Placement Agent for the construction-to-permanent debt financing of the building. The $201,904,000 CTL loan included a rated balloon. The financing had a term of 23.7 years and was underwritten at a 1.03x debt service coverage ratio. Staged funding reduced the amount of interest carry during the construction period.
About Waterway Capital
Waterway Capital is a FINRA/SEC registered broker-dealer and investment bank, providing customized financing solutions for developers and owners of commercial real estate. With decades of experience, the Waterway team has built a reputation for advancing the industry with innovative idea.
Disclaimer
This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. All investments include risk, including potential loss of principal.
June 4, 2025 – Newark, DE — Waterway Family Funds LLC (“WFF”) is pleased to announce the acquisition of two premier student housing communities near the University of Delaware: Holly Woods and East Village.
Strategically located adjacent to campus, just steps from the University of Delaware’s core, both properties offer boutique, townhome-style accommodations and were 100% leased at the time of acquisition. Positioned on East Campus, residents enjoy walkable access to academic buildings, student centers, and East Main Street—the University’s primary commercial corridor for shopping, dining, and nightlife.
With an enrollment of over 24,400 students and the University of Delaware’s maintained bed-to-enrollment ratio of only 42%, WFF’s most recent acquisition capitalizes on a favorable supply-demand dynamic for well-located student housing.
This acquisition marks WFF’s sixth project, expanding the firm’s acquisition track record to a total of 139 units, including 414 student beds, and approximately 160,600 square feet of commercial real estate.
About the University of Delaware
The University of Delaware is a public land-grant research university located in Newark, Delaware offering three associate’s programs, 148 bachelor’s programs, 121 master’s programs (with 13 joint degrees), and 55 doctoral programs across its 10 colleges. It is considered a large institution, with approximately 19,000 undergraduate and 5,300 graduate and professional students. The University was recently ranked the #10 Top Public School by the WSJ/College Pulse and is consistently ranked among the top 50 U.S. News National Public Universities.
Classified as an “R1: Doctoral University – Very High Research Activity,” the university is committed to investing in research, innovation, and state-of-the-art facilities. In FY 2023, the university’s research expenditures exceeded $237 million, with a goal of reaching half a billion by 2029.
About Waterway Family Funds
Waterway Family Funds is an affiliate of Waterway Capital, a FINRA/SEC registered broker dealer and investment bank. WFF sources and acquires commercial real estate focused on achieving the highest risk-adjusted returns across diverse asset classes and geographic locations. With principals who have an average of more than 30 years of experience in commercial real estate, the company targets assets that (1) preserve capital, (2) maximize distributable yields, and (3) generate superior all-in returns. Since 2003, WFF and its affiliates have financed +$12 billion of real estate transactions and acquired +$16 billion of total real estate value.
Waterway Family Funds, LLC (“Waterway”) is pleased to announce the recent acquisition of a student housing property at the University of Oregon.
K14 Campus Flats is a boutique purpose-built student housing property featuring an irreplaceable location steps away from the University of Oregon campus. The property was 100% leased at the time of acquisition. Situated in the University District directly west of main campus, the Property is adjacent to prominent academic buildings, the Knight Library, the Memorial Quad and more. Furthermore, students benefit from immediate access to the Student Recreation Center, Hayward Field, transportation networks and East 13th Avenue – the main retail hub for shops, restaurants and nightlife.
About the University of Oregon
The University of Oregon is a public research university located in Eugene, Oregon, and serves as the state’s flagship university. The University is classified among “R1: Doctoral Universities – Very high research activity” according to the Carnegie Classification of Institutions of Higher Education – maintaining 19 research centers and institutes and nine “research core facilities.”
The University maintains a total enrollment of over 23,800 students, comprised of 19,970 undergraduate and 3,860 graduate students. Over the past two years, the University enrolled it’s two largest freshman classes ever – at 5,350 and 5,050 students, respectively. Recently, there was a $1 billion investment from Phil & Penny Knight for the Knight Campus for Accelerating Scientific Impact, a three-building project with Building 2 set to deliver over 180k SF in 2025.
Waterway Family Funds, an affiliate of Waterway Capital, has closed on its acquisition of 450 Post Road East, a 35,777 square foot Class A office building in Westport, CT. It is currently 100 percent leased by two tenants, including Wells Fargo Advisors. 450 Post Road is located on the Post Road/Route 1 east-to-west corridor less than a mile from the many office, retail and dining options in the downtown area. Located in one of the most affluent communities in the U.S., 450 Post Road benefits from major financial and money management firms’ desire to have an office presence in Westport. This acquisition is less than a mile from, and is complementary to, Waterway’s flagship office property located at 8 & 10 Wright Street.
Waterway Family Funds is an affiliate of Waterway Capital, a FINRA/SEC registered broker dealer and investment bank specializing in lease-backed structured finance. Waterway Family Funds partners with developers, owners, and corporate clients to invest in creditworthy real estate. Drawing on our extensive experience managing private equity funds, we manage the entire investment process.
Credit Tenant Loan (CTL) Financing Continues to be an Attractive Way to Finance Resilient Single-Tenant Assets
As demand for single-tenant, triple-net commercial properties is on the rise, particularly for retail and industrial properties with tenants that provide or supply essential goods and services, CTL lending continues to be an attractive way to finance the acquisition and development of such properties.
Despite COVID-related turbulence and recent volatility in the capital markets, CTL financing has proven to be an available and attractive way to finance single-tenant properties. While traditional lending sources are tightening underwriting guidelines and scaling back on leverage, CTL lenders (which are focused on credit rather than real estate fundamentals) continue to have a strong appetite for new loans, offering comparatively high leverage (up to 100% loan-to-value) for longer leases and relatively low interest rates, keeping in line with the compressed yield levels for corporate bonds (see Chart I).
With interest rates hovering around historic lows, now is the time to lock in long-term financing for properties that meet CTL criteria, namely existing or to-be-built single-tenant properties that have long-term leases with investment-grade tenants. In cases where lease terms have fewer than 15 years remaining, landlords should consider negotiating lease extensions or nudging tenants to exercise extension options to take advantage of the CTL debt currently available in the capital markets.
Although there appears to be a slight preference for A-rated tenants or better, there is still strong demand for CTLs with tenants across the investment-grade spectrum. Interestingly but perhaps not surprisingly, the vast majority of U.S. corporate companies that were investment grade before the pandemic maintained their investment-grade ratings by the end of the first quarter, according to a recent report by Standard & Poor’s. By and large, companies that were downgraded in the first quarter were already sub-investment grade to begin with (see Chart II).
In the first half of 2020, Waterway Capital closed CTL transactions for existing and to-be-built properties leased to tenants in the retail, industrial, health care, energy and municipal sectors. We are committed to helping our clients navigate the commercial real estate lending landscape in light of these extraordinary times.
Some information contained herein has been obtained form sources to be reliable but is not necessarily complete and its accuracy cannot be guaranteed. Any opinions expressed are subject to change without notice. It should not be assumed that any historical market performance information discussed herein will equal such future performance. This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Waterway Capital LLC is a FINRA/SEC/MSRB member.