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Credit Tenant Lease Calculator
A CTL prices off tenant credit, not real estate. This calculator values it as a bond-like stream.
Total PV of CTL
$8,390,863
Rent stream PV
$7,455,449
Residual PV
$935,414
How the math works
Rent PV = annuity at discount rate (treasury + credit spread). Residual PV = discounted exit value.
Credit spread moves with tenant rating and market conditions. Watchlist tenants on rating agency lists. A downgrade from BBB to BB can cut CTL value by 15-25%.
How to Use
- Enter annual rent.
- Enter lease term (years).
- Enter tenant credit spread over treasury.
- Enter residual asset value.
- Read PV of lease.
Frequently Asked Questions
What is a CTL?
Long-term NNN lease (15-25 yr) with investment-grade tenant. Rent stream priced like corporate bond. Residual asset value adds return on top.
Typical spreads?
AAA: 80-120bps over treasury. A: 150-250bps. BBB: 250-400bps. Below investment grade not usually a CTL. Match tenant rating to relevant bond index.
Risks?
Credit downgrade widens spread (value falls). Default ends stream entirely. Dark rent (tenant pays but vacates) reduces asset liquidity. Diversify across CTLs in portfolios.
What documentation matters here?
Written leases, move-in/move-out inspections with photographs, ledger entries showing every payment and charge, served notices with proof of service, and contemporaneous emails or texts. Courts weigh written evidence heavily; informal understandings rarely stand. Institutional operators run a monthly file audit to catch gaps before they matter. Good paper trails recover most of what's owed.
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