Financing for Recycling facilities

by a searcher

6 months ago

I am evaluating an investment into a clean fill recycling facility and one potential option on the table is to acquire the real estate and sign a lease agreement with an operator to run the facility. I have a feeling lenders may be cautious about lending for properties with a history of environmental use. If anyone with knowledge about this is willing to share their thoughts, that would be great

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professional

Hello, I Can assist on separating the real from the business and also potentially create an arbitrage that you can use as equity to acquire the business. DM me

6 months ago | like reply | 0 likes

lender from Eastern Illinois University

Great question. There is a lot to unpack with this one. First, anytime you buy any sort of commercial property, especially one that might have more exposure to environmental concerns, a Phase I and potentially a Phase II Environmental report would be required by all lenders. So long as those reports come back and show there is no contamination to the property or if there is contamination, it can be mitigated either in advance or closing or with funds from the closing, you should not have an issue financing the property.

The type of financing you would qualify for would differ depending on the ownership of the operating company. If you will own the operating company as well as the real estate, then you would qualify for owner-occupied commercial real estate financing. With conventional banks that would provide you with up to 80% financing and if you use one of the SBA loan programs, you could get up to 90% financing (unless the property is deemed special-use in which case it would be 85% financing). However, if you will just own the real estate as an investment property and it will be leased to a third party operator, then you would be looking at conventional investment real estate financing. Under that scenario you are likely looking at maximum 75% financing for the property purchase.

We provide financing for all of the scenarios discussed above. I would be more than happy to discuss all options in more detail at any time. You can reach me here or directly at --@----.com Good luck!

6 months ago | like reply | 1 like

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