Industrial Bridge Loans

Common industrial bridge scenarios

Industrial bridge loans fit properties that fall outside a bank or permanent lender's criteria for a defined period. Typical cases include buying a building an owner-user is vacating, refinancing a multi-tenant park with heavy near-term rollover, acquiring a building with below-market leases to re-lease at market, and funding upgrades that make an older building competitive again.

• Vacant or soon-to-be-vacant single-tenant buildings
• Multi-tenant flex or small-bay parks with short lease terms
• Older buildings needing dock, power, roof, or sprinkler upgrades
• Owner-user exits and sale-leaseback transitions
• Outdoor storage and other low-coverage industrial sites

How lenders underwrite vacancy and short-term leases

For a vacant or short-leased building, the lender focuses on how quickly it will lease and at what rent. That depends on the building's size relative to local demand, the depth of the tenant pool for that product, and recent leasing in the submarket. Small-bay and mid-size buildings usually draw a broader tenant base than very large or highly specialized facilities.

Lenders apply their own downtime and concession assumptions and often size proceeds on as-is value with future funding for leasing costs. Expect requests for the rent roll, lease abstracts, a leasing broker's opinion of market rent and absorption, a property condition report, and a Phase I environmental site assessment. Environmental history carries extra weight in industrial, and prior manufacturing or chemical storage uses can lead to further testing.

Functional obsolescence

Industrial tenants have specific physical requirements, and a building that misses them leases slowly regardless of location. Lenders look at clear height, column spacing, dock doors and levelers, truck court depth, trailer parking, power capacity, sprinklers, and office build-out as a share of the building. Low clear heights or tight truck access can narrow the building to a small set of users. Lenders also check whether zoning still permits the likely tenant uses, since older industrial areas are sometimes rezoned around existing buildings.

When the business plan fixes those issues, the lender underwrites the capital budget and the rent premium the upgrades should produce. Roof replacement, added dock positions, and power upgrades are common scopes, and contractor bids with a clear schedule make the plan easier to approve.

Sale-leaseback transitions and outdoor storage

A sale-leaseback can put the buyer in a bridge position when the seller's leaseback term is short, the seller's credit is thin, or the buyer plans to re-lease after the seller moves out. Lenders underwrite the seller-tenant's financials and the building's appeal to a replacement tenant. Owner-users weighing whether to own instead can compare SBA 504 financing for owner-user industrial.

Industrial outdoor storage and similar low-coverage sites are valued largely on land, zoning, and access, with modest improvements. Lenders in this segment look closely at permitted uses, surface condition, environmental history, and tenant turnover, and many conventional lenders will not quote it. These requests go to a specialized group of capital sources.

The exit and the firm's industrial record

The exit is typically a permanent refinance after lease-up or a sale to an investor buying stabilized income. Lenders test the exit at a cap rate and coverage a takeout lender would likely use, so model it with the cap rate calculator before going to market.

The firm's published industrial closings include a $22.2M SBA 504 loan for a light industrial owner-user in Moorpark, a $7M industrial portfolio loan in Los Angeles, and a $4.5M fixed-term loan on a single-tenant NNN industrial building in Boise. When your building is ready for review, submit the deal to a principal.

Published closings

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Common questions