$5M NNN Acquisition Phoenix | Commercial Lending Solutions 
Loan Size Example

$5 Million NNN Acquisition in Phoenix

By Trevor Damyan, Commercial Mortgage Broker at Commercial Lending Solutions

A $5 million net lease acquisition in Phoenix represents a core-plus entry point for experienced investors capitalizing on the metro's robust tenant diversification and steady cap rate compression. At this loan size, borrowers typically target investment-grade or strong regional tenants on 10 to 15 year leases, with lenders offering leverage in the 65 to 75 percent range depending on tenant credit and lease structure. Rates in the current market sit around 6.75 percent for bank programs, with life company and CMBS alternatives pricing competitively for longer-duration leases. Phoenix's competitive NNN market means execution speed and clean underwriting are critical differentiators.

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Capital Stack

What a $5M NNN Acquisition Capital Stack Looks Like

National banks with active single-tenant net lease programs dominate this deal size, though life insurance companies and CMBS conduits remain viable alternatives for investors seeking longer terms or non-recourse structures. Lender selection typically hinges on lease length, tenant credit rating, and the borrower's equity position, with many 1031 exchange buyers favoring banks for faster closings and flexible recapture language.

Capital Source Rate / Cost Size / LTV Notes
National bank with STNL program 6.50 to 6.95 percent, CMT-based floating or fixed $3.25M to $3.75M (65 to 75 percent LTV) Standard recourse or limited recourse available. 25 to 30 year amortization. 12 to 16 week close. Preferred for 1031 exchange buyers.
Regional bank credit union 6.65 to 7.15 percent, fixed rate $3.0M to $3.5M (60 to 70 percent LTV) Full recourse typical. Faster decision timeline. Strong community lender presence in Phoenix market. Often lower fees.
Life insurance company 6.35 to 6.85 percent, fixed rate long-term $3.5M to $4.25M (70 to 85 percent LTV) Non-recourse available at 70 percent LTV or lower. 30 to 40 year amortization. Longer underwriting timeline (8 to 12 weeks). Ideal for long-term hold investors.
CMBS conduit lender 6.75 to 7.25 percent, fixed or floater $3.75M to $5.0M (75 percent LTV max) Non-recourse structure. Requires investment-grade or mid-grade tenant. 10 week closing standard. DSCR floor typically 1.20x. Competitive for shorter lease terms.

Pricing reflects active CLS CRE quote pipeline as of April 2026. Specific deal pricing depends on sponsor, property, and structure.

Sponsor Profile

Who Closes a $5M NNN Acquisition Deal

The typical $5 million NNN buyer in Phoenix is a net worth investor or small fund with 3 to 7 prior acquisitions, often executing a 1031 exchange from a smaller asset or a secondary market sale. These sponsors demonstrate strong credit scores, liquid reserves equal to 6 to 12 months of debt service, and a working knowledge of tenant credit and lease mechanics. Acquisition motivation is typically income stability and cap rate preservation, with many investors gravitating toward essential services, quick-service restaurants, or automotive service tenants that have weathered recent economic cycles.

From the CLS CRE Pipeline

A Real $5M Example

CLS CRE closed a $4.8 million acquisition facility in early 2025 for an established 1031 exchange buyer targeting a single-tenant automotive service property in the North Phoenix submarket. The borrower secured a 72 percent LTV loan at 6.68 percent fixed from a regional bank with a 25 year amortization, full recourse, and a 30 day rate lock. The tenant maintained a solid regional credit profile with a 12 year remaining lease term and annual 2.5 percent rent escalation. The deal closed in 13 weeks with no conditions at final underwriting, demonstrating the advantage of clean tenant financials and an experienced sponsor in an efficient execution.

Anonymized. All deal references protect borrower and lender identity.

FAQ

$5M NNN Acquisition Phoenix FAQ

Most lenders target 10 year minimum remaining lease terms, with strong pricing available at 12 to 15 years. Investment-grade tenants on shorter leases (7 to 10 years) can still obtain approval, but expect tighter leverage (60 to 65 percent LTV) or higher rates. Longer leases (15 to 20 years) unlock better risk-adjusted pricing and non-recourse availability.
Yes, non-recourse is available from life companies and CMBS lenders, typically at LTV of 70 percent or lower with an investment-grade tenant and remaining lease term of 12 years or greater. Non-recourse rates usually run 25 to 50 basis points lower than comparable recourse structures because the lender's sole recovery is the property and lease. Life company non-recourse terms often extend to 35 to 40 years, substantially reducing monthly debt service.
Investment-grade public companies (rated BBB minus or higher by S&P or Moody's) close fastest and achieve lowest rates. However, strong mid-market private companies with 3 to 5 year track records and solid financials (typically 20 million to 100 million in revenue) clear underwriting without major delays. Avoid startups or newly franchised tenants unless the franchisor provides a parent guarantee.
Most lenders require a minimum 1.20x to 1.25x DSCR calculated on the tenant's triple-net lease rent. Since the borrower receives the full NOI (subject only to the debt service), achieving this ratio is straightforward for credit-quality tenants. CMBS and bank programs are fairly consistent here, though some life companies may accept 1.10x to 1.15x on longer terms or stronger credits.
Bank programs generally close in 10 to 16 weeks with straightforward underwriting and a credit-quality tenant. Regional credit unions can move faster (8 to 12 weeks). Life companies typically require 12 to 16 weeks due to their longer documentation and appraisal process. CMBS conduits operate on a standard 10 week timeline but may require extended due diligence if tenant credit is borderline. Always factor in 1 to 2 weeks for appraisal scheduling in Phoenix's current market.


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