Fident Capital secured $5.1MM (70% LTC) of senior acquisition financing for a 40,000 SF industrial property in Tempe, AZ. The repeat borrower, specializing in repositioning Class-B industrial assets across Phoenix, acquired this strategically located asset at an attractive basis well below recent market trades exceeding $200/SF. A regional bank provided the financing with a creative two-year swap structure, delivering a low 6% fixed rate, and closed without a tenant in toe or a signed lease.
Highlighting the tale of two industrial market stratums was a key part of the financing. The 1978-vintage property features 24-foot clear heights (exceeding the submarket’s typical 18-20 feet) and benefits from proximity to Phoenix Sky Harbor International Airport and key highway infrastructure. While Phoenix’s broader industrial market faced 10%+ vacancy from new large-bay deliveries, the property’s infill location and sub-50,000 SF size positioned it in a distinct submarket with just 4-5% vacancy. The asset’s prior use for storing dehydrated food products explained the absence of traditional HVAC infrastructure, creating an immediate value-add opportunity, with recent comparable leases exceeding $1.20/SF validating projected rents of $1.15/SF. Additionally, due to rising renovation costs, the borrower successfully negotiated a price reduction from $7.7MM to $7.3MM ($182/SF) during close.
Closing on a vacant asset requiring significant HVAC and exterior upgrades prior to tenancy added complexity. Most credit unions and Lifeco lenders declined to quote the deal without a signed LOI due to the vacancy and single-tenant nature of the asset, while more flexible bridge capital quoted floating rates between 8-10%. Fident quickly identified a regional bank with deep local market knowledge who, once confident in the sponsor’s execution capabilities and guarantors, provided fixed-rate debt approximately 300-400 basis points below competing bridge offers at a 70% loan-to-purchase price with appropriate reserves for building improvements.
Despite a compressed timeline, volatile interest rate environment, and a shifting purchase price, Fident successfully navigated multiple time-sensitive challenges, including complex appraisal dynamics, and coordinated closely with all parties to meet the seller’s closing timeline.
