For real estate developers raising capital for their warehouse or industrial development project, Mid-market list has a large database of commercial real estate lenders to filter in order to create a short list of the companies that are right for your project.
We will also place projects in front of the lending companies that are best suited for it if the sponsor is qualified and fills out the form below. Because we charge the lending companies, there is never a charge for the team getting the loan.
If your team has proven success with commercial real estate construction, tell us about the specifications of your specific project and we will put it in front of the loan companies who are most capable of funding the development.
The interest rates on warehouse and industrial loans are typically slightly lower than they would be for many other real estate development projects (apartment, office, etc.) However, many lenders don’t work with projects in the industry because the returns are lower than with other asset classes. The majority of private money loans that are made for lodging projects and placed with qualified development teams that have a track record of success.
Private money lenders have become popular amongst developers who want to get funded quickly and those that have been denied by traditional banks. However, private money loans are almost always made at a higher interest rates and for shorter terms than loans from traditional financial institutions. This is so that the investors that are behind the loan can still make a suitable return on the project that is in-line with the risk that they are assuming.
Loans made to develop warehouse and manufacturing facilities will only be made after the lending institution conducts significant due diligence. The lender will require information about the location, plot of land, general contractor and development team. Warehouses and manufacturing facilities are historically the second safest type of real estate for lenders to invest in (behind only farm land). Even though it is considered a low volatility asset class, lenders will still want to make sure that they are only working with qualified sponsors.
While there may be less private money lenders that are willing to lend for manufacturing facilities and warehouses because of the low returns, there are also a couple companies that specialize in the industry.
Many loans made for warehouse & manufacturing facility construction from private money lenders are non-recourse loans. This means that the developer does not have to risk their home or other personal assets to secure financing. This is obviously a large benefit to the borrower.
In addition to being comfortable with real estate development as an asset class and more specifically warehouses and manufacturing facilities, many lenders will only make loans for projects in certain geographic regions or in markets with certain characteristics. If you have specifications on your project, share them on the above form and we will find the best lender for you to work with.
All lenders favor working with seasoned real estate developers. It is not impossible for novice developers to raise capital. However, they will likely have to pay a higher interest rate or commit more of their own capital for the deal. This helps the lenders mitigate their risk as they are lending a smaller amount of money relative to the completed projects value. They can also be assured that the project sponsor will be motivated as they have a large amount of cash in the deal.
Development teams who have worked with manufacturing facility and warehouse industry previously and can show a track record of success will be able to obtain financing on more favorable terms.
If you are a newcomer to the industry or seasoned development sponsor looking for more information on commercial real estate development financing, have a look at our guide to commercial real estate construction financing article for an up-to-date industry overview.