Build To Suit Funding

by The Real Estate Buyers

in , , , ,

Capital for Build To Suit Net Lease Development Projects

In net lease real estate development, the Investment Grade brand provides financial clarity and comprehensive solutions tailored to meet the intricate needs of today’s market. At the heart of our mission lies the commitment to facilitating Build-to-Suit developments, a segment that has gained significant traction for its ability to cater to the specific demands of tenants and investors alike. This article delves into the financing frameworks available under Investment Grade, specifically tailored for Net Lease (NNN) properties, JV Equity partnerships, and Preferred Equity arrangements. By closely aligning with the terms and conditions that have set industry standards, we aim to illuminate the path for developers and investors, ensuring that each project not only meets but exceeds expectations.

Build to Suit Funding for NNN Properties

Definition and Importance

Build to Suit developments represent a tailored approach in real estate, where projects are specifically designed and constructed to meet the lessee’s or tenant’s requirements. This model is particularly prevalent in the realm of NNN properties, where tenants are responsible for all costs associated with the property, including real estate taxes, building insurance, and maintenance, in addition to rent and utilities. The significance of such developments lies in their flexibility and efficiency, providing bespoke solutions that directly address the unique needs of businesses.

Investment Grade Funding Terms

Investment Grade offers an array of funding options for Build to Suit projects, designed to provide developers and investors with the capital needed to bring their visions to fruition. Recognizing the unique nature of each development, our terms are crafted to offer the utmost flexibility while ensuring financial viability and stability. Ground leases, a cornerstone of our funding strategy, allow for the development of a property while maintaining the land ownership separate. This structure benefits developers by reducing initial capital requirements and offers investors a secure, long-term asset.

Advantages for Investors and Tenants

Opting for Investment Grade’s Build to Suit funding solutions presents numerous advantages. For investors, it translates into risk mitigation through secure, long-term leases with reliable tenants, ensuring a steady income stream. Developers benefit from tailored financial structures that accommodate the specific needs of their projects, enabling them to undertake developments with reduced upfront capital. Moreover, tenants enjoy the advantage of occupying spaces designed to their exact specifications, enhancing operational efficiency and satisfaction.

Providing Built-to-Suit & Ground Lease loans is our primary focus. We understand the complexity of these projects inside and out, and our track record speaks to the success of partnering with PSF. Our BTS & GL loan program offers up to 100% LTC (max 80% LTV) financing with quick closing and on-balance sheet investing. We focus on single-tenant, multi-tenant, multiple pads, and even raw land component projects.

Investment Parameters

Loan Size $1M – $50M+

Geographic Focus Nationwide

Term Up to 24 months

Exit Fee 0 – 3%

Origination Fee 1%

Loan to Cost Up to 100%

Loan to Value Up to 80%

Interest Rate Call for details

Tenant Rating Rated and Unrated

Tenant Credit Corporate/Franchisee (Public or Private)

JV Equity for Build to Suit

Understanding JV Equity

Joint Venture (JV) Equity stands as a pivotal component in the financing of real estate projects, particularly within the Build to Suit domain. It encompasses a partnership where two or more parties combine resources to undertake a development project, sharing in the profits and risks. Investment Grade facilitates such collaborations by bringing together developers and investors with aligned goals, ensuring a solid foundation for each project’s success.

Terms and Conditions Offered

At Investment Grade, our JV Equity terms are designed with transparency and mutual benefit in mind. The partnerships we foster are built on a foundation of shared risk and reward, with capital contributions and profit-sharing arrangements clearly outlined from the onset. This approach ensures all parties are aligned in their objectives, working collaboratively towards the successful completion and operation of the Build to Suit development. Our terms are structured to offer flexibility, accommodating various investment thresholds and project scales, mirroring the industry standards set by leading financial entities.

Benefits and Considerations

The strategic advantages of engaging in JV Equity arrangements include access to greater capital resources, diversified expertise, and shared risk, making larger and more ambitious projects feasible. For developers, this means the ability to pursue projects that might otherwise be beyond their individual capacity. For investors, it offers an opportunity to partake in potentially lucrative developments with mitigated financial exposure. However, selecting the right JV partners and crafting a clear, comprehensive agreement is crucial to ensuring the partnership thrives, emphasizing the importance of alignment in vision and commitment to the project’s success.

All preferred developers should consider our BTS JV Equity program. As the sponsor, you will continue to manage the project (pre-development, lease, permitting and entitlements, and construction) and PSF will programmatically fund your projects as your equity partner, providing up to 100% of the capital for your pipeline. The economic setup is a preferred return to PSF + Profit Participation.

Joint Venture Equity Parameters

Transaction Focus Build-to-Suit, Sale Leaseback or Acquisitions

Property Types Retail, Office, Industrial, Healthcare

Geographic Focus Nationwide

Equity Size $1M – $50M+

Attachment Point Up to 80%

Tenant Credit Corporate or Large Franchisee

Interest Rate 12% – 18%

Term 12 months – 36 months

Fees 1% – 3%

Preferred Equity

Basics of Preferred Equity

Preferred Equity is a financing solution that occupies a middle ground between senior debt and common equity, providing investors with a higher claim on assets and earnings than common equity holders but sitting behind debt providers in the capital stack. This form of equity is particularly suited to real estate developments, including Build to Suit projects, offering a strategic tool for developers seeking flexible capital solutions.

Investment Grade Preferred Equity Terms

The Preferred Equity offerings from Investment Grade are crafted to align with the needs of modern real estate development, offering competitive terms that are reflective of market standards. These terms include fixed dividends, maturity dates, and mechanisms for conversion or exit, providing clarity and predictability for both developers and investors. By incorporating Preferred Equity into the capital stack, developers can secure the necessary funding for their projects while maintaining greater control over the development, with investors benefiting from a secure position in the investment hierarchy.

Strategic Implications

Incorporating Preferred Equity into the financing mix of a Build to Suit project can significantly enhance the project’s financial structure. It allows for the balancing of risk and reward among stakeholders, providing a cushion that can attract additional investment by offering a more secure position. For developers, it means access to necessary capital with more favorable terms than common equity might offer, without diluting ownership as significantly. For investors, it presents an opportunity to engage in real estate ventures with a fixed income stream and a relatively higher position in the event of a liquidation.

Our preferred equity option is ideal for developers/sponsors who want to bring in their own Senior Loans. PSF will attach below the senior lender and up to 100% LTC (max 80% LTV). Interest generally is in the 15%-20% range and we can structure programmatic capital commitments for larger pipelines.

Preferred Equity Parameters

Transaction Focus Build-to-Suit, Sale Leaseback or Acquisitions

Property Types Retail, Office, Industrial, Healthcare

Geographic Focus Nationwide

Equity Size $1M – $50M+

Attachment Point Up to 80% (Inclusive of Senior Loan)

Tenant Credit Corporate or Large Franchisee

Interest Rate 13% – 18%

Term 12 months – 36 months

Fees 1% -3%

Through the comprehensive financing solutions offered by Investment Grade, including Build to Suit funding for NNN properties, JV Equity, and Preferred Equity, developers and investors are equipped with the tools needed to navigate the complexities of modern real estate development. By aligning with industry standards and offering flexible, tailored terms, Investment Grade positions itself as a strategic partner capable of meeting the diverse needs of the real estate sector. We invite stakeholders to explore these opportunities further, engaging with our team to discover how our financial solutions can support your next Build to Suit project.


Investment Grade Income Property & The Buyers Collective can provide the capital for your project. Tell us about your development.