$15,400,000 Single Tenant Net Lease, Colorado Springs, CO

Overview

Commercial Lending Solutions arranged $15,400,000 in permanent financing for a single tenant net lease asset in Colorado Springs, Colorado. The deal required matching loan structure precisely to lease term, proving dark value in a secondary market, and finding a lender willing to underwrite to the credit of the tenant rather than to the risk of re-tenanting the building.

The Deal

The borrower owned a net leased property occupied by a single credit tenant and needed long-term permanent debt to replace short-term financing. The objective was straightforward: lock in fixed-rate, long-term capital at an execution that reflected the quality of the tenancy, not the uncertainty that comes with any single-tenant asset when you strip the lease out of the equation.

At $15,400,000, the loan sat in a range where life insurance company capital is typically most competitive. Life companies price net lease credit product aggressively in this band, and when the lease terms are clean, they will underwrite directly to the income stream rather than applying a re-tenanting haircut. Getting there, however, depended on several structural decisions made before the first lender conversation.

The Challenge

Single tenant net lease deals are, in one sense, the simplest underwriting exercise in commercial real estate: one tenant, one lease, one income stream. In another sense, they are the most concentrated credit risk a lender can hold. Everything depends on that tenant, and every lender in the room is running the same mental exercise: what does this building look like dark?

Three factors complicated execution here.

First, Colorado Springs is a secondary Front Range market. Institutional lenders who are active in Denver will price the same credit profile wider in Colorado Springs and apply more conservative assumptions to the going-dark scenario. The market is not a problem for lenders who know it, but it narrows the pool quickly when you start calling shops that treat anything outside a primary metro as a market risk adjustment.

Second, life company underwriting on net lease product is disciplined about one thing above almost everything else: the loan cannot mature into a re-leasing gap. The debt term and amortization schedule have to be structured so the loan pays off at or before the tenant hits a renewal option or the lease rolls. If the math puts loan maturity inside an exposure window where the tenant could go dark and the lender is left holding a vacant building, the deal either does not get done or it gets repriced to account for that risk. Mapping the debt structure against the rent roll was the first problem to solve.

Third, the lease itself had to be packaged and presented in a way that let a lender underwrite to the tenancy. That means a tight lease abstract covering rent bumps, renewal options, any termination rights, and any purchase options that could complicate a lender's collateral position. A messy or incomplete lease presentation forces a lender to underwrite to re-tenanting assumptions. A clean one lets them price to the credit.

The Solution

Trevor Damyan and the team at Commercial Lending Solutions structured the loan term and amortization schedule to align with the tenant's lease, keeping maturity ahead of the next renewal window and eliminating the re-leasing gap concern before it could become a lender objection. The loan was structured as a fixed-rate permanent facility with a 25-year amortization schedule, giving the borrower long-term payment stability while keeping the term short enough to satisfy life company underwriting standards on lease coverage.

The lender pool was narrowed intentionally. Rather than broad marketing, outreach went directly to life insurance companies and regional bank portfolio lenders with demonstrated Colorado Springs activity. Out-of-market lenders without existing comfort in the submarket were set aside early. This kept the process clean and avoided wasting time on lenders who would reprice the deal at the goal line over market familiarity concerns.

The lease abstract was prepared in full before any lender conversation started. Rent schedule, bump structure, renewal option dates, and a review of any tenant rights that touched the lender's collateral position were all documented and included in the offering package. The goal was to give a credit underwriter everything needed to approve the deal on the lease itself, with no gaps that required assumptions about what a replacement tenant might pay or how long a lease-up might take.

Financing was ultimately placed with a national life insurance company at a fixed rate, reflecting execution consistent with a well-structured credit tenant deal in a secondary market.

The Outcome

The borrower closed $15,400,000 in fixed-rate permanent financing with a term and amortization structure that matched the lease profile and removed the re-leasing risk from the lender's underwriting. The rate reflected life company pricing for credit net lease product, the loan closed without material structure changes from the initial term sheet, and the borrower had long-term debt certainty on an asset where the income is only as secure as the lease behind it.