Eligible Properties:
Single and multi-tenant properties including warehouses used for storage, assembly and packaging, as well as research and development facilities. Prefer dock high loading and tilt wall construction, located in industrial park developments. Must have adequate ceiling heights, column spacing and truck turnaround area(s).
Eligible Property Locations:
Nationwide; good access to primary thoroughfares in areas with strong demand generators for industrial properties. Should have easy access to major interstate roads as well as key local roads that provide access to local, industrial, and commercial centers. Rail access is also desired. Will also consider secondary markets with strong sponsorship.
Loan Size:
$2 Million - $40 Million; will also consider larger portfolio transactions on a case by case basis.
Debt Service Coverage:
1.20 x minimum
Term:
Terms from 12 to 36 months. Extension options available, early termination requirements negotiable.
Loan-to-Value Ratio:
Up to 80%
Loan Term:
$2 Million - $40 Million; will also consider larger portfolio transactions on a case by case basis.
Amortization:
30 years or less, depending on major lease terms and expiration, and property age.
Tenancy:
Factors for determining tenant quality include the stability of the specific business and the quality of the tenant's financial condition. The rent roll should be reasonably diversified with staggered expirations. For multi-tenant properties, require staggered leases to avoid adverse re-leasing risk. Leases should be representative of the market. Single tenant properties typically will require higher coverage and reserves.
NOI Calculation:
Strongly prefer to receive three full years of operating history. Warehouse leases should be triple net. Exceptions may be made for structural maintenance and management fees. R&D leases typically written on a modified gross basis. Lease rollovers should be less than 30% GLA in early years of the loan term.
Rent Roll - Prefer smooth lease expiration schedules so that the debt coverage ratio in any given year does not fall below break-even. May consider properties with significant rollover risk on a case-by-case basis. Tenants not occupying space and paying full rent for at least 3-months will require a seasoning reserve equal to 3-months rent.
Management Fee - Can be 4% if consistent with market. Single tenant buildings that are fully maintained and managed by occupant can be underwritten at a 3% management fee.
Reserves - $.10 to $.25 per square foot for structural reserves depending on the property age, condition and percentage of office build-out subject to an engineering report. Determine Tenant Improvement and Leasing Commission reserves from the rollover schedule and market averages.
