$19,000,000 Industrial Cold Storage, Dallas, TX

Overview

Commercial Lending Solutions arranged $19,000,000 in permanent financing for a temperature-controlled cold storage and food distribution facility in Dallas, Texas. The property serves the Dallas-Fort Worth metroplex's growing grocery, restaurant, and last-mile food distribution supply chain. Getting a cold storage asset to the closing table on a permanent loan is a different exercise than financing conventional industrial, and this deal illustrated exactly why.

The Deal

The borrower owned a stabilized, in-place cold storage and food distribution facility in one of the country's largest consumer markets. The asset was fully occupied, generating consistent cash flow, and the tenant had made substantial investments of its own in racking, refrigeration infrastructure, and dock systems. The borrower's objective was straightforward: replace short-term or construction debt with clean, long-term permanent financing sized at $19,000,000. No lease-up story, no construction risk, no value-add business plan. Just a stabilized asset that needed a lender willing to underwrite it correctly.

The Challenge

Cold storage underwrites less like a building and more like a piece of equipment. The ammonia or glycol refrigeration plant, the insulated panel envelope, and the backup power system can represent a significant share of total replacement cost, and most permanent lenders discount that improvement value sharply when they stress-test a vacancy scenario. The buyer pool for a vacated cold box is genuinely narrow. Only food distributors, third-party logistics operators with cold chain capabilities, or grocery chains with distribution needs can absorb the space, and even those users typically require customization. That exit risk shapes how conservative lenders want to be on leverage, regardless of how strong the in-place cash flow looks.

The DFW industrial market added a layer of headline noise. Several years of speculative big-box development had pushed vacancy numbers higher across the broader market, and lenders without cold storage experience were reading those headlines and applying them to the refrigerated subsegment, which is a different market entirely. Developers rarely spec-build cold storage given the cost basis and the operational complexity. Supply in the refrigerated segment has stayed constrained relative to the region's food distribution demand, but making that case required lenders who understood the distinction and were willing to look past the aggregate industrial data.

There were also property-specific underwriting items that had to be addressed proactively. The facility operated with an ammonia refrigeration system, which brings Risk Management Plan compliance requirements under EPA regulations. Any sophisticated lender at this loan size was going to ask about environmental compliance, and the answer had to be documented. Separately, the refrigeration plant itself had an age profile that required an engineering report to properly size capital reserves. Lenders financing cold storage need to know whether the refrigeration system has five years of useful life left or fifteen, because those numbers drive replacement cost assumptions and reserve requirements that affect how the loan is structured.

The Solution

The positioning started with the right lender universe. This was not a deal for a debt fund optimizing for yield at high leverage. At $19,000,000 on a specialized asset, the deal needed a lender that understood refrigerated logistics as mission-critical infrastructure: a regional bank with genuine industrial lending experience or a life insurance company with appetite for food-chain adjacent real estate. Both categories can hold this type of paper without needing to package and sell it, which matters when the asset's specialized nature would complicate any secondary market execution.

The loan was sized conservatively on leverage, reflecting the narrower buyer pool and the replacement cost discount lenders apply to specialized improvements under a vacancy scenario. Critically, the underwriting was structured around debt yield rather than debt service coverage ratio alone. DSCR-driven sizing can produce a number that looks reasonable in today's cash flow but doesn't account for the thin exit market on a vacated facility. Sizing off debt yield builds that exit risk into the structure from the start, which is what a sophisticated lender in this space actually requires.

The tenant's own sunk capital became a core part of the credit narrative. When an operator has invested substantially in racking, refrigeration, and dock infrastructure specific to a facility, the probability of a mid-lease departure drops materially. That retention story was documented and presented as a structural element of the underwriting, not an afterthought. The current Phase I with RMP-level ammonia compliance documentation addressed the environmental question before lenders had to ask. The engineering report on the refrigeration plant gave lenders a defensible reserve figure and confirmed the system's remaining useful life, removing two of the three issues that typically derail cold storage financing before a term sheet is issued.

The Outcome

The borrower closed a fixed-rate permanent loan at $19,000,000, sized at a leverage level appropriate for the asset type and structured with a term and amortization schedule consistent with the stabilized, long-term hold profile. The financing replaced shorter-term debt, locked in rate certainty, and gave the borrower a capital structure that matches the underlying asset: stable, cash-flowing, and built for duration rather than a near-term exit.