Janover has closed a $2.7 million construction financing package for the development of an approximately 20,000-square-foot build-to-suit industrial property in Gypsum, Colo., through its commercial real estate financing platform. The project site is located half a mile from the Eagle County Regional Airport and less than 4 miles from the nearest Interstate 70 on-ramp.
Brian Hamada, associate director of capital markets with Janover, coordinated the transaction between the borrower and the lender, a Colorado-based credit union. The construction loan closed at a 75% loan-to-cost ratio and includes interest-only payments for the 24-month term, which is immediately followed by a longer-term, permanent loan.
“This deal closed in under 60 days, and despite the challenges of a rising rate environment we were able to lock in a 10-year, permanent loan at a low, fixed interest rate,” said Hamada. The permanent financing component amortizes over 25 years without a prepayment penalty.
Build-to-Suit Projects Strong Nationwide
Industrial assets have consistently performed well ahead of most commercial real estate asset types in the past couple of years with few exceptions. Due to extremely low vacancy across the country, more and more developers are getting into the game, adding new, modern space to supply-constrained markets.
While the speculative development pipeline remains robust, build-to-suit projects offer additional security to developers seeking to reduce the costs associated with maintaining vacant buildings. REjournals reported that build-to-suit developments will continue to make up a larger and larger share of total construction activity as construction timelines become more and more prolonged.
While lenders closely scrutinize the borrower and the tenant in any build-to-suit development, risk factors are generally more noteworthy in custom facilities for highly specialized tenants. For distribution centers, logistics hubs, and easily repurposed manufacturing facilities, most companies with at least a bit of experience in building industrial projects face little trouble securing loans from more traditional lenders — think credit unions or banks. That said, an experienced broker can make a crucial difference in securing the absolute best terms for a project.