Extended capital-markets CFO
A build-to-suit project should connect the tenant agreement, construction obligations and permanent financing before major commitments are made. A strong future tenant can help the financing case, but only if the lease and delivery conditions support the intended structure. Construction funding and long-term funding may be different arrangements.
Bring the capital question into lease negotiations
Identify the actual tenant and guarantor, firm lease term, rent commencement and early termination rights. Establish which improvements are the landlord's responsibility and which the tenant funds. A commercial term sheet should not imply that permanent financing has already been approved.
Map the period before rent begins
Plot land acquisition, construction draws, equipment delivery, tenant acceptance and rent commencement. Determine who pays interest, overruns and delay costs. A completed-building financing assumption cannot silently fund the period before the building exists. Obtain clear conditions for any construction-to-permanent commitment.
Separate the building from the TI package
A project may support distinct real estate and improvement financings, but the two cannot conflict on ownership, security and payment obligations. Providers market dedicated landlord TI structures as well as CTL products. Treat those as alternatives to examine, not evidence that both can be added without consent or duplication.
Market reference: Dolfin: landlord TI financing; Mesirow: credit tenant lease financing.
Compare the combined occupancy economics
The tenant cares about total occupancy cost and operating flexibility. The developer cares about equity, risk and return. Review rent, TI payments and any concessions together. A structure that reduces the developer's equity while raising the tenant's total cost may need a different commercial bargain.
Illustrative example, not a client result
The decision in practice
A tenant agrees to occupy a customized facility only after performance testing. The financing plan must show who bears a failed test, the cure period and the resulting delay in rent. A completion guarantee from a thinly capitalized entity is not equivalent to dependable completion support.
What to prepare
- Lease or negotiated terms and guarantor identity
- Development budget, construction contract and acceptance tests
- Separate landlord and tenant cost schedules
For an initial conversation, a summary is enough. Share private materials only through an agreed channel.
Common questions
Should we wait for a signed lease to discuss financing?
No. Early advice can identify important terms. But unsigned terms are assumptions, not committed cash flow or financing.
Can the tenant fund its equipment separately?
Possibly, provided ownership, liens, access and obligations are coordinated with the property and construction financing.
Sources and further reading
Our decision framework is CFO Signals analysis. External references describe market practices and products, not an endorsement, partnership or available offer. Terms and eligibility require confirmation for your transaction.