Many warehouse and industrial facilities are owned and occupied by one firm. As such, these loans are usually underwritten and priced based on the financial status of the owner/user firm and not on the income value of the property. However, the larger the firm and facility, the more the building is underwritten based on the perceived rental stream.
Warehouse facilities that are leased to others can command non-recourse financing and are underwritten on the strength of the leases. Other warehouse facilities are really businesses that do not lease space but rather operate a storage facility for various tenants in non-designated areas. The loans available to this particular type of facility are those made to an owner-occupied business .
Industrial space can be a warehouse or a plant. If the former, the underwriting is similar to warehouse space. If the latter, the underwriting becomes more complicated. That's because value is not necessarily based on the re-use of the space by renters but by a business manufacturing a product. Almost without exception, this type of space is underwritten on the financial soundness of the firm using the space whether it be the owner or a tenant.
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