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Day: February 21, 2017

A Credit Tenant Lease (CTL) or Conventional (Bank) Loan – Which Is Best for My NNN Deal?

Many good quality, single tenant, net leased properties qualify for both credit tenant lease (CTL) financing and conventional commercial mortgage lending. Net lease property investors should consider the pros and cons of each before deciding which type of loan to commit to.

CTL lending is generally best for the long term income investor who wants permanent, high leverage, fixed rate, fully amortized financing and desires speed and certainty of execution. Bank lending has a lower initial (but not overall) cost and can offer a larger variety of terms and conditions. Banks are best for investors who need options, don’t need maximum leverage (have large down-payment available), and who are not sure if they will hold a property for the long run.

The Difference

CTL lending combines aspects of commercial mortgage lending with specialized investment banking in-order-to close deals. A CTL banker issues and sells private placement corporate bonds that are secured by the lease on the real estate. The proceeds of the bond sales are used to fund a commercial mortgage loan for the borrower. The loan is administered by a third party Trustee throughout the life of the deal.

Traditional commercial mortgages are standard loans secured by mortgage liens against the real estate, the income the property produces and the credit of the borrower. Banking institutions originate a loan and fund the deal either by selling the loan to an investor (private or Government) or by lending its own funds and holding the loan in its portfolio.

Leverage

The ongoing credit crunch has forced banks to tighten up their lending criteria. It is highly unlikely that a commercial bank will offer any more than 75{4917788a0bd7aa7369c2a945027b4fe6c9853cda4150a24fe1255b18ce3083dc} loan-to-value (LTV) on any deal today. Banks have no incentive to take unnecessary risk; they can borrow money from the Fed (Federal Reserve Bank) at 0{4917788a0bd7aa7369c2a945027b4fe6c9853cda4150a24fe1255b18ce3083dc} percent and buy 10 year Treasury Bonds at 2{4917788a0bd7aa7369c2a945027b4fe6c9853cda4150a24fe1255b18ce3083dc} earning 2 points risk free. They will pass on high leverage loans and only lend where they have large amounts of protective equity.

CTL lenders will lend up to 100{4917788a0bd7aa7369c2a945027b4fe6c9853cda4150a24fe1255b18ce3083dc} LTV (lease fee valuation) on a non-recourse basis. They are in the business of loaning the full, current cash value of a lease (against the guaranteed future income). CTL bankers, without question, make the highest loan offers in the commercial real estate finance industry.

Speed and Certainty of Execution

CTL loans can close in about 1/3rd of the time it takes to close a conventional commercial mortgage. CTL deals have been known to be completed, from-start-to-finish, in as-little-as 45 days (unheard of in the world of commercial banking) but generally take 60.

Bank loans take at least 60 days, sometimes 180 or more. Also, because CTL deals either qualify or doesn’t, a banker can give a borrower a solid yes or no very quickly. There are a thousand ways a bank loan can fall through but, once a CTL banker commits to a deal and a borrower signs off, there is a near 100{4917788a0bd7aa7369c2a945027b4fe6c9853cda4150a24fe1255b18ce3083dc} certainty of execution.

Recourse

CTL …

Tubal Reversal Insurance Coverage

A tubal reversal or tubal ligation is a procedure that surgically corrects and reconstructs the fallopian tubes of the female reproductive system for purpose of conceiving. The procedure is performed by a credentialed surgeon who is considered an accomplished specialist in his or her field with proficiency to restore functional capacity of fertility. There are basically three standard operations utilized in the medical community to accomplish this reconstruction which are displayed prominently in media including implantation, anastomosis, and a salpingostomy. All variations of correcting the problem are operationally invasive, inherent in risk, relatively expensive, and elective thus not usually covered under normal circumstance by health insurance, or is it?

Why Is Tubal Reversal Usually Or Normally Not Covered By Insurance?

A medically underwritten plan for an individual would require an exclusionary benefit period for a prolonged duration of time while reinvesting the monthly premium at regular intervals to earn sufficient return on invested capital hence funding the operation. The median average claim expenditure for Tubal Reversal Ligation surgery can run anywhere from $4,500.00 to $10,000.00 depending on several factors such as history of female complications, age, height, or weight and with just one person to pool this risk the cost of covering exceeds the insurers return on investment by a wide margin. The second reason is the fact that very speculative complications can occur during the course of operating such as excessive bleeding, infection, anesthetic casualty, damage to nearby organs, and risk of ectopic pregnancy all which would only exacerbate the claim cost expenditures and cause negative asymmetries in the medical loss ratio costing a fortune for the insurance company.

Exceptions To The Rule.

Group insurance benefits are unsurpassed in the arena of coverage and most often commercial insurance carriers write experienced rated policies instead of medically underwritten benefits to cover these procedures which are offset by factoring the premiums of the business enterprise as a whole. Simply put, with many employees paying monthly premiums there is financial leverage to provide this as a covered expense. Some states are required by federal mandated law to honor payment for Tubal Reversal Ligation if they do in fact cover maternity regardless of the provisions stipulated within its contractual arrangements with the insured. As a matter of fact, The National Infertility Association has addressed them by state including Arkansas, California, Connecticut, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Montana, New Jersey, New York, Ohio, Rhode Island, West Virginia, and Texas. The caveat is there are certain loopholes in regards to evading or meeting such requirements such as not all carriers being required to offer maternity related coverage’s.

Applying for Tubal Reversal Insurance.

Our company Health Insurance Buyer will assist you in locating such coverage from carriers like Blue Cross Blue Shield, Humana, and Aetna to name a few insurance companies as well as help you locate reputable providers that perform the aforementioned services such as Chapel Hill Tubal Reversal Center, Center for Fertility and Gynecology, or Atchafalaya Obstetrics and Gynecology as an example. Once our …