Industrial Commercial Real Estate Financing
What is industrial real estate?
Industrial property is used for industrial purposes. It sounds simple, but it comes in all shapes and sizes and covers a huge range of business types. Business owners who occupy at least 51% of their industrial space, should consider purchasing or refinancing their space. Terms have never been better!
Industrial properties can generally be broken down into three sizes: small, large and enormous.
Small industrial sites include single or double-storey buildings zoned for industrial use. These often have flexible interior space, usually a mix of warehouse and office space. ‘Flex’ spaces are used by small businesses such as mechanics, research laboratories and start-ups.
Large industrial properties include medium to large warehouses and factories that are designed to manufacture or store goods. They include distribution companies such as third party logistics (3PLs).
On the larger end of the scale are the ‘big box’ industrial spaces. These enormous industrial spaces are used as logistics and distribution centres that hold and then distribute finished goods to stores and/or directly to customers. If you think of the type of warehouse Amazon would have, you will get the idea.
What are the benefits of investing in industrial retail estate?
Investing in industrial real estate can be good business for the savvy investor. Some of the key benefits include:
Higher rents = higher yields
One of the attractive aspects of investing in industrial property is the higher rental incomes and yields (the annual return on investment) they offer.
Industrial property is usually valued in relation to the square metres available and can offer yields of 8%, compared to say just 4%-5% on a house.
Another advantage is that most industrial leases include fixed annual price increases, which are often linked to CPI.
Industrial tenants are usually willing to sign long lease agreements (up to 10 years in some cases) that provide investors with much greater security than a typical residential lease.
Net leases mean tenants pay most outgoings
Most industrial leases are triple net leases. This means the tenant pays for costs that would normally be paid by the owner. These include insurance, utilities, maintenance and repair costs.
Generally speaking, a good tenant will maintain the building to a high standard, as the appearance reflects on their business. This means industrial buildings can be relatively low maintenance as the tenant is likely to attend to any maintenance issues quickly themselves.
INDUSTRIAL REAL ESTATE FINANCING PROGRAM HIGHLIGHTS
Please note that these are just a few of the options we have available. We will work with you to find the perfect fit for your project.
BRIDGE TO FREDDIE MAC
- Uses: Purchase, Recapitalization, Refinancing (Including Cash-Out), Upgrades and/or Seasoning, Expedited Closings
- Good for Non-Stabilized Properties, Rehab/Renovations
- Loan Size: $1MM – $7.5MM
- Leverage up to 85% LTC/80% LTV
- Terms: Typically < 2 yrs with 6 month to 1 yrs extensions available
- Interest Only
FIXED RATE PROGRAM
- Uses: Acquisition, Refinance, Cash Out
- Property Types: Multifamily, office, retail, industrial, self-storage and hospitality
- Loan Size: $1MM – $25MM with portfolios up to $100MM
- Stabilized properties
- Terms: 2-10 yrs (can consider longer terms on case-by-case basis) with up to 30 yr amortization
- Flexible payment schedules
- As low as 1.20x DSCR
- No minimum FICO stated
- Can close in less than 30 days when requested
FIXED RATE FREDDIE MAC SBL PROGRAM
- Loan size: $1MM to $7.5MM
- Terms: Fixed 5, 7, 10 yr, Hybrid 20 yr ARM with initial 5, 7, 10 yr fixed
- Prepayment: Declining schedules available
- 120x DSCR Top, 1.25x Standard, 1.30 Small/Very Small
- Stabilized properties
- Amortization: Interest only partial term and full-term may be available with 30 year amortization.
- Minimum 650 Avg FICO, Net Worth equal to loan amount, Liquidity equal to nine months debt service.