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.


Waterway Capital navigated the volatility and dislocation in the capital markets during the first half of the year, closing nine transactions.  Additional details can be found below. Waterway remains committed to providing the best capital solutions for owners, developers, and investors of commercial real estate. We are also working closely with clients evolving to the new realities related to COVID-19 to identify creative solutions for their increasing capital needs.

“Aa3 / AA-” Rated City 


  • Debt financing for a to-be-built 121,000 square foot public safety building
  • 32.7-year term / 22.4-year average life
  • Lessee provided a date certain rent commencement
  • Structure as a credit tenant loan

Partners HealthCare System, Inc. – Salem, NH


  • Debt financing for the ground underlying a to-be-built, three-story medical office and ambulatory care center
  • 31.1-year term / 25.2-year average life
  • 1.00x debt service coverage
  • Structured with phased fundings to reduce interest carry cost for the borrower

“A2 / A” Rated Big Box Retailer


  • Debt financing for a to-be-built, mixed-use industrial building
  • 20.8-year term / 14.9-year average life
  • 91.0% loan-to-value ratio
  • An insured balloon provided additional amortization
  • Structured as a credit tenant loan

FirstEnergy Corporation – Akron, OH


  • Refinancing of an existing loan for a 19-story, free-standing office building
  • The building serves as the tenant’s headquarters
  • 15.3-year term / 8.3-year average life
  • Financing allowed the borrower to monetize a new lease extension
  • Structured as a credit tenant loan

County of Tulare – Visalia, CA


  • Debt financing for the remodel of a building for use by two County departments
  • 25.6-year term / 17.8-year average life
  • 95.2% loan-to-value ratio
  • The lease is subject to annual appropriations
  • Structured as a credit tenant loan

County of Fresno – Fresno, CA


  • Debt financing for a district attorney facility
  • 20.0-year term / 14.3-year average life
  • 1.07x debt service coverage increasing to 1.58x over the life of the note
  • Structured to accommodate a purchase option in year 10 of the note

“A+” Rated Health Care Equipment Manufacturer


  • Debt financing of various equipment utilized in radiation and proton therapy devices
  • 10.0-year term / 7.5-year average life
  • 1.14x debt service coverage
  • Placement agent assisted client in obtaining a rating from an NRSRO
  • Structured as a senior secured note

CVS Health Corporation – Michigan Portfolio


  • Debt financing of two CVS store locations
  • 14.8-year term / 8.4-year average life
  • An NAIC compliant balloon allowed for additional amortization
  • Structured as a credit tenant loan

Waterway Capital, LLC finished 2019 on a high note, closing 6 transactions in the month of December. Overall in 2019, Waterway closed just under $1 billion of credit tenant loans, ground lease financings and other lease-backed products. Highlighted below are select transactions from the second half of 2019:


Amazon.com, Inc. – Seattle, WA


  • Debt financing for the leasehold interest in a 317,804 square foot office building
  • 5.0-year term / 2.6-year average life
  • Located in the South Lake Union neighborhood
  • Structure included a commercial mortgage and a credit tenant loan

New York City Department of Education – New York, NY


  • Debt financing for a 40,000 square foot, six-story school
  • 18.8-year term / 11.5-year average life
  • 1.11x debt service coverage
  • 63.9% loan-to-value ratio
  • Structured as a credit tenant loan

Costco Wholesale Corporation – Cherry Hill, NJ


  • Debt financing for a 13.9-acre parcel containing a Costco store and gas facility
  • 25.9-year term / 17.9-year average life
  • An insured balloon provided additional amortization
  • 89.3% loan-to-value ratio
  • Structured as a credit tenant loan

Mixed-Use Property – Philadelphia, PA


  • Debt financing secured by the leased fee interest in the land underlying a mixed-use building
  • 36.2-year term / 26.8-year average life
  • 89.8% loan-to-value ratio
  • Structured as a rated ground lease

Industrial Tenant – Houston, TX


  • Debt financing for a seven building industrial site
  • 20.0-year term / 11.7-year average life
  • 1.07x debt service coverage increasing to 1.58x over the life of the note
  • Structured as a forward, allowing interest rate to be locked 11 months prior to funding
  • Structured as a credit tenant loan

U.S. Department of Veterans Affairs – Lafayette, IN


  • Debt financing of a to-be-built community-based outpatient clinic
  • A1 / A2 structure to accommodate the funding of tenant improvements
  • 1.05x debt service coverage
  • 77.3% loan-to-value ratio
  • Structured as a credit tenant loan

Bank of America Corporation – Houston, TX


  • Debt financing of a one-story bank branch
  • 10.3-year term / 7.7-year average life
  • An insured balloon provided additional amortization
  • Loan-to-value less than 50%
  • 1.79x debt service coverage
  • Structured as a credit tenant loan