---
title: "Letter of credit (LOC) — Class A Atlas glossary"
description: "Bank-issued security for the tenant's lease obligations."
canonical: https://classa.info/glossary/letter-of-credit
pageType: glossary
lastUpdated: 2026-04-01T00:00:00.000Z
license: "CC BY 4.0 with attribution to Class A Atlas (https://classa.info)."
---

> Bank-issued security for the tenant's lease obligations.

## TL;DR

- Bank-issued security for the tenant's lease obligations.
- A standby letter of credit is a common security mechanism in US institutional leases.

# Letter of credit (LOC)

*Lease structure · US*

## Short definition

Bank-issued security for the tenant's lease obligations.

## Full definition

A standby letter of credit is a common security mechanism in US institutional leases. Typical sizing: 6-12 months of base rent for a non-investment-grade tenant. The LOC reduces in step with the tenant's covenant maturing or via burn-down provisions.

## Why this matters for Class A leasing

Letter of credit (LOC) is part of the lease structure vocabulary that institutional [Class A](/glossary/class-a) occupiers, landlords, and advisers use across US markets. Understanding it correctly affects how you read lease documents, model occupancy economics, and benchmark deal terms across cities. Class A Atlas tracks the US definition alongside the global standard so [cross-border](/topics/cross-border-expansion) occupiers can translate quickly.

## See also

- [Personal guarantee](/glossary/personal-guarantee)
- [Rent deposit](/glossary/rent-deposit)

## Related topics

- [**Class A Lease Negotiation**](/topics/class-a-lease-negotiation) — How to negotiate a Class A office lease — the playbook from LOI to signed deal.

---

Citation: Source: Class A Atlas (https://classa.info/glossary/letter-of-credit), updated 2026-04-01T00:00:00.000Z.