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Retail Food Store

A retail asset is a space where the public comes to purchase a product or a service. Examples include grocery store, department store, bank, restaurant and more. This type of property typically attracts a more sophisticated buyer as a result of the risk profile and operational complexities.


Financing Options


Base Financing

Properties with stable cash flow and consistent operating histories are favourable candidates for base financing. For retail assets, this can mean properties that are fully or nearly fully leased, have a majority of tenants on long-term leases and can display a consistent history of strong tenancy.


Base financing offers a term of five years or more, a fixed interest rate and is typically closed to prepayment for the term’s duration.


Base financing is usually considered when borrowers want the payment predictability that comes with a fixed interest rate. However, it is important to note that a typical conventional financing term for a retail plaza is five years. Longer terms are available, but there is often greater scrutiny on future cash flows.


Borrowers must be able to show that longer-term leases (i.e. maturing in 10 years or more) are in place for the duration of the mortgage term.


Commercial Mortgage Backed Securities (CMBS): CMBS is a conventional financing solution available for first mortgages on established, stabilized properties (generally three or more years of stable operating history). This type of financing works well for properties with in-place, stabilized net cash flow.



Bridge financing addresses a borrower’s short-term needs, usually three months to three years. Some borrowers choose bridge financing when they need flexibility to decide about the future of an asset (i.e. contemplating a sale, impending change in ownership structure or operational planning) or time to coordinate a standard financing option.


For retail assets, short-term financing may be a strategic solution if many of the property’s leases are approaching maturity. The flexibility enables the borrower to negotiate new leases or acquire new tenants, ultimately positioning the property more positively for standard financing.


Bridge financing typically includes floating interest rates and usually allows some form of early prepayment. Consistent cash flows and strong operational histories are key considerations for this type of financing.



This short-term financing option enables access to a property’s equity for improvements, renovations or repairs, eliminating the need to raise funds from personal sources. The goal is usually to increase lease rates and/or reduce operating expenses to drive up the value of the property and make it eligible for standard financing.



Second mortgages are often used to access equity in a property when a borrower wants to purchase another asset or renovate/repair a property. Borrowers with a first mortgage may be eligible for secondary financing on the same property.


Options include standard or short-term financing. Secondary financing is an attractive alternative to refinancing, especially if a borrower wants to avoid the penalties associated with breaking a mortgage mid term.

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