The Deal
Commercial Lending Solutions arranged a $14.2M permanent loan for a nnn pharmacy ground lease in San Antonio, TX. The assets were leased to a national discount or drug store tenant operating under absolute triple-net leases with no landlord obligations. The leases featured staggered expirations, reducing rollover concentration risk, and each tenant had a strong history of lease renewals at this type of necessity-based retail location. The borrower was refinancing to lock in long-term fixed-rate debt and extract equity for additional acquisitions.
The Challenge
Several of the leases carried base terms within eight years of expiration, which created hesitancy among lenders who required remaining lease terms to equal or exceed the loan term at origination. While the tenant's renewal history at comparable locations was strong, lenders relying purely on contractual lease term without considering renewal probability were quoting shorter-term or higher-rate structures that did not meet the borrower's financing objectives. Finding a lender with the flexibility to underwrite renewal probability required accessing the right capital source.
The Solution
Trevor Damyan at Commercial Lending Solutions identified a life insurance company lender whose underwriting guidelines allowed for lease renewal probability credit on national tenants with established renewal track records. The loan was structured at 60% LTV with a 10-year fixed rate and 30-year amortization. The lender's credit committee accepted a supporting analysis of the tenant's historical renewal rates at comparable necessity-retail locations, which justified full loan term approval despite the contractual lease expirations that concerned other lenders.
The Outcome
The financing closed at a rate reflecting investment-grade single-tenant credit quality, delivering strong positive leverage against the going-in cap rate. The borrower extracted equity proceeds at closing that were immediately redeployed into a new acquisition, accelerating portfolio growth without requiring additional equity capital. The 10-year fixed rate provided rate certainty through the expected holding period, and the 30-year amortization preserved strong monthly cash flow distributions. The transaction reinforced the value of accessing specialty net-lease lenders who can underwrite beyond contractual minimums when tenant credit and renewal history justify it.