Mixed-use financing strategies we execute
Mixed-use debt placements typically fall into one of these structures:
- Construction debt for ground-up mixed-use, urban infill, and transit-oriented development
- Bridge debt for lease-up of newly delivered mixed-use
- Permanent debt blending agency multifamily with retail or commercial component
- Condo-structure debt allocating senior debt by component
- Adaptive reuse financing, office-to-residential, industrial-to-mixed-use
Why mixed-use requires a specialist broker
Most commercial lenders are organized around a single asset class. A mixed-use asset breaks their underwriting model. The residential team sees a multifamily deal with a 'commercial overhang'; the commercial team sees a retail deal with a multifamily attachment. Neither wants to lead.
VS Capital Group identifies the lenders, debt funds, specialty banks, life companies, and CMBS shops, that actively underwrite mixed-use as a category and structures the financing accordingly. Where the agency multifamily component is the majority of cash flow, we often blend in a Freddie Mac or Fannie Mae execution alongside a commercial-component carve-out to deliver the most competitive blended rate.
Typical mixed-use loan terms
Terms reflect the residential / commercial split and the project's stabilization profile.
- Loan size: $10M to $500M+
- Leverage: 60% to 75% LTV stabilized; up to 75% LTC construction
- Pricing: spread varies by component mix and stabilization status
- Term: 5 to 30 years on permanent; 24 to 48 months on construction and bridge
- Recourse: typically non-recourse on stabilized; partial-recourse common on construction
Frequently asked questions
- Can a mixed-use property be financed with an agency multifamily loan?
- Yes, when the residential component is at least 80 percent of the gross rentable area and at least 80 percent of the underwritten net rental income (35/35 if the commercial space is essential), Fannie Mae and Freddie Mac will finance the entire asset as multifamily, including the commercial component.
- How do lenders underwrite the retail component of a mixed-use property?
- Lenders underwrite the retail component to in-place rent with vacancy, credit loss, and management cost adjustments, typically conservatively relative to the residential component. Anchor tenants with strong credit and long-duration leases improve underwriting; short-term local tenants are typically discounted heavily.
- Is mixed-use construction debt available?
- Yes. Construction debt for mixed-use is available from banks, debt funds, and life companies that actively finance the category. The senior is typically sized to 60 to 70 percent of total project cost, with mezzanine or preferred equity layered behind when needed.
- Can mixed-use be financed as a condominium structure?
- Yes. Mixed-use assets are commonly structured as horizontal or vertical condominiums to separate the residential and commercial components for financing, tax, and exit purposes. Each component can then be financed separately by the lender best suited to that asset type.
- Is non-recourse mixed-use financing available?
- Yes. Most stabilized mixed-use permanent debt is non-recourse, particularly when placed with CMBS, life companies, or debt funds. Construction and heavy-rehab bridge financing is more frequently partial-recourse.