Case Study
Airport-Adjacent Industrial: Avigation Easement Height Restriction
The Deal
You are a credit analyst at Sable Ridge Commercial Bank, underwriting a $7,800,000 acquisition loan for Ironbridge Logistics Capital, LP's purchase of Falcon Crossing Logistics Center, a 145,000 SF single-tenant industrial/distribution building at 2200 Aviation Parkway in Calderwood, TX, for a contract price of $12,000,000. The building sits inside the Runway 14 approach corridor of Calderwood Regional Airport (CWR) and is encumbered by a recorded avigation easement that caps the maximum elevation of any structure on the property and imposes noise-attenuation construction standards on any new enclosed occupiable space. The building's sole tenant, Vantage Distribution Solutions, LLC, has asked Ironbridge to build out a 22,000 SF interior mezzanine for pick-and-pack operations, and the proposed loan term sheet includes a $650,000 improvement holdback that is conditioned on the completed work not violating the recorded easement. Before you can recommend approval, you need to underwrite the deal's in-place cash flow and leverage, and then use the recorded easement's height limitation together with the project engineer's site plan to determine whether the mezzanine expansion, as currently designed, can actually be built without violating the easement - and therefore whether Sable Ridge should release the holdback on the terms proposed.
You’ll Practice
- Calculate NOI, going-in cap rate, DSCR, and LTV for an airport-adjacent industrial acquisition loan from a T12 and lender term sheet.
- Read and apply the height-limitation and noise-attenuation covenants of a recorded avigation easement to a proposed building expansion.
- Reconcile a site plan's above-mean-sea-level elevation data against an easement's stated height ceiling to determine compliance versus violation.
- Evaluate a loan improvement holdback's compliance condition and decide whether funding should be released given a design conflict with a recorded easement.
- Recognize how airport-proximity risk factors (elevated insurance cost, a permanent expansion ceiling) should be reflected in forward-looking underwriting rather than left embedded only in trailing financials.