Traditional CTL Financing
Residual Value Insurance (RVI):
Insures the balloon payment of a long dated loan.
- Non-payment of balloon balance.
- Bank must opt to submit a claim.
CTL Financing with RVI Coverage
- Policy limit is no more than 50% Dark Value of the asset and land.
- Term coincides with primary term of lease, typically 10-20 years.
Paid for by the borrower for benefit of the lender.
In case of claim the asset and land are surrendered (free and clear).