Amerifund Commercial Corp.


CTL Financing Programs for Single Tenants




  • Healthcare

  • Financial Institutions

  • Industrials

  • Insurance

  • Utilities

To Consider Other Types Contact Us



The Single Tenant Industry is under a world of change, yet very few see the changes that have already taken place. Without the knowledge that single tenant financing must be as close as possible to fully amortized over the firm lease term, the following will perish.

DEVELOPERS, the ones that hold their single tenant developments after completion, will lose their investment and credit. Developers that sell projects before completion or shortly after completion, will lose their universe of potential buyers. See EVOLVED DEVELOPERS below.

BUYERS will come to the realization that there are better investments than a single tenant that moves out on them, leaving the buyer with a substantial balance on its financing. In addition, the low cap rate environment today is accelerating the downfall of the single tenant buyer market.

OWNERS, those that have not refinanced on a fully amortized basis co-terminus with the remaining lease term, or as close as possible to fully amortized, will join the ranks of developers and buyers who did not understand the New Reality. Owners, however, are in the worst position, as their single tenant lease is already in place, whereas developers can negotiate new single tenant leases to allow for fully amortized debt and buyers can simply move onto safer investments.

REAL ESTATE BROKERS who depend on single tenant sales, will lose their lifeblood. See EVOLVED REAL ESTATE BROKERS below.

FINANCIERS, who have thrived on single tenant developments, acquisitions and refinances, will be forced to re-focus on multi-tenant properties, which are not affected by the New Reality. See EVOLVED FINANCIERS below.

Now for the New Reality. On 02-25-16, the Financial Accounting Standards Board ("FASB") adopted its new lease accounting guidelines. Operating Leases, the single tenant leases that have been commonplace for years because single tenants insisted on leases being off-Balance Sheet, will officially become a liability on the single tenant's Balance Sheet as of 12-15-18 (12-15-19 for Governments that are under GASB). All existing single tenant leases will be affected, as the new FASB and GASB guidelines are retroactive. Thus, the advantage of a lease being off-Balance Sheet is no longer there for the single tenant.

The single tenant's CFO is primarily concerned with improving the company's bottom line on its Statement of Income. For years, as a trade-off for an Operating Lease being off-Balance Sheet, the CFO allowed the Operating Lease to reduce the company's bottom line, as the entire lease payment was expensed out. Now that an Operating Lease is a liability on the single tenant's Balance Sheet (on-Balance Sheet), there is no longer an advantage to a company utilizing an Operating Lease on a company facility.

For facilities that the company plans to occupy for the long-term, the company will now wish to own the facility either through its own low-rate financing or a Finance Lease with Credit Lease Investments (“CLI”) that offers initial annual rent calculated today around 2.75-3.00% with a $1.00 buy-out at the end of the lease term. Due to CLI’s low cost of funds, the Finance Lease has similar, and often lower rent than an Operating Lease. Utilizing this low-cost Finance Lease will dramatically improve the company's bottom line and Balance Sheet over time, as opposed to an Operating Lease. 

EVOLVED DEVELOPERS will become Fee Developers for single tenants, utilizing the single tenant's own financing or CLI.  Developers earn their Developer Overhead & Profit, as if it was a pre-development sale to CLI.

EVOLVED REAL ESTATE BROKERS will negotiate the restructuring of existing Operating Leases via a sale to the tenant, wherein the tenant uses its own financing or utilizes CLI.

EVOLVED FINANCIERS will negotiate the restructuring of existing Operating Leases via a sale to the tenant, wherein the tenant utilizes CLI. Financiers can also fund many other projects utilizing CLI. 

An existing facility under an Operating Lease can be replaced with a new facility that the company will own, wherein the company enjoys all the above benefits of ownership. Alternatively, the company can restructure an existing lease via a purchase of the property utilizing its own financing or CLI. 

New facilities that are being leased today under an Operating Lease are being done so either because either (1) the company has not yet put much thought into the better alternative, which is just a matter of time or (2) the company plans on vacating the facility at the end of the lease term, especially for new 10 to 15-year Operating Leases.

Once developers, buyers and owners recognize that a significantly longer amortization on financing will result in a significant loss, they will insist on higher rent based on a fully amortized financing structure, which in turn, will accelerate the move of single tenants away from Operating Leases and to the many benefits of the company owning its facilities through its own financing or CLI.

In the next 3-5 years, the New Reality will unfold that Operating Leases are no longer purposeful.


For additional information on CLI or to finance an Operating Lease with a safe amortization, contact Amerifund.

© Amerifund 2018




Amerifund Commercial Corp | Contact Us