A hotly sought-after credit tenant lease for Charles Schwab & Co. had investors complaining they couldn't obtain large enough slices of the pie to satiate their appetite. The CTL was sized near $135 million.
The recently executed transaction, through Banc of America Securities, drew intense bidding, said one buyside source. The competition for the deal cut back allocations to individual portfolios, the source added.
A second source stated the CTL priced a single, 20-year final/14-year WAL tranche at 140 basis points over Treasurys. The deal, secured by its building in San Francisco, was viewed as a NAIC-1 credit, the source said.
With the private senior note market unusually quiet last week, the CTL deal drew some buzz, not only because of the tenant named, but due to its structure.
A third source stated the deal showed how starved the market is for the product. The source, who did not partake in the deal, explained that the CTL contained an interesting provision which differed from a typical structure where the tenant always remains obligated to the property. In the case of this CTL, Charles Schwab, as the tenant, has an out, in that it could move and place another tenant on the property in its wake. That tenant would not have to have the same credit profile as Charles Schwab, according to the terms of the CTL, the source said.
Charles Schwab, the world's largest discount broker, makes its home in San Francisco, the site of its corporate headquarters. As of June 17, the company claimed 7.5 million active client accounts with approximately $985 billion in assets.
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