Manufacturing, logistics, life science and other specialized facilities often need improvements far beyond a standard allowance. The TI Lease funds them on the occupier’s credit, with no recourse to the property.
Built for specialized, equipment-heavy build-outs.
Manufacturing, logistics and lab infrastructure is built to one occupier’s specification and often costs far more than a standard allowance. The TI Lease funds that scope on the tenant’s credit through a separate lease with a landlord-owned TI Lessor.
The developer delivers the facility the tenant needs without committing more equity or debt, and the property’s financing stays untouched.
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We underwrite the occupier’s credit alongside the build-to-suit or lease negotiation, so the full improvement budget can be part of the deal from the start.
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The tenant signs its space lease with the landlord and a separate TI Lease with the TI Lessor, a special purpose entity owned by the landlord.
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We place the financing with life insurers, banks and credit funds, priced off Treasuries plus a spread matched to the tenant’s credit. It can fund up to 100% of the improvements, commissions and soft costs.
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Proceeds are funded into escrow in a single draw at closing and disbursed as construction progresses, so the full budget is in place before work begins.
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Rent retires the financing over the lease term. There is no balloon to refinance and no recourse to the property.
Kraft Foods needed a $22 million allowance for a manufacturing and distribution center at a 936,000 sq ft campus in Groveport, Ohio. The TI Lease covered 97% of the cost, with the developer contributing only 3%.
Specialized designs that exceed a standard landlord contribution, like the Brooklyn Nets’ 110,000 sq ft practice facility at Industry City, funded through a 25-year TI Lease.
Lab build-outs carry heavy mechanical and specialty systems. The TI Lease funds them on the tenant’s credit and keeps them out of the landlord’s capital stack.
When a developer cannot commit more equity or debt to a tenant’s build-out, the TI Lease lets the lease move forward without either.
Own the property and the TI Lessor
Occupy and operate the facility
Finance the property
The TI Lease closes the gap when the developer cannot fund the tenant’s build-out.
In the Kraft Foods transaction the developer funded only 3% of the improvements.
The occupier keeps its cash for the business instead of someone else’s building.
No new mortgage debt, mezzanine capital or lien on the property.
Terms match the lease, from 10 years for Kraft Foods to 25 years for the Brooklyn Nets.
Tell us about the tenant, the space and the budget. We will come back with whether the TI Lease fits and how it would be priced.
