$25 Million Cash-Out Refinance Secured Before Construction Completion

In commercial real estate, accessing liquidity through a cash-out refinance is often critical to unlocking equity and moving on to the next project. Financial Compound structured a $25 million cash-out refinance for a high-image retail center that illustrates how strategic structuring and capital markets insight can make it possible—even under non-standard conditions.

The subject property is a 125,000 square foot street-facing retail center featuring a mix of national and regional tenants. Though the property had a compelling tenant roster and favorable location, the borrower needed to close the refinance before construction was fully completed—an unusual ask in the lending market.

Challenge: Unlocking Cash-Out Refinance Equity Before Completion

Most lenders were unwilling to proceed. Their policies required full Certificates of Occupancy and stabilized income before they’d consider a cash-out refinance. But Financial Compound located and secured a lender willing to think outside the box.

Customized Loan Structure for Cash-out Refinance

The solution was a hybrid cash-out refinance and take-out loan:

• The $25 million loan represented 113% of total project cost, allowing the borrower to extract equity despite the unfinished construction.

• The loan funded upon issuance of Certificates of Occupancy for the majority of the property.

• Two end-cap tenant spaces were still under construction, but the lender allowed a six-month post-closing completion window for those spaces.

To mitigate the lender’s risk, the structure included a non-recourse loan with a temporary personal guarantee, burning off once the property reached a 1.40 debt coverage ratio and was fully operational. This provided the borrower with flexibility and the lender with protection.

 

Navigating Capital Market Philosophies

This transaction highlights the diversity of underwriting philosophy across the lending landscape. Many lenders rely strictly on stabilized financials, but others place more weight on location, sponsor strength, or future potential. In this instance, Financial Compound found a lender that prioritized tenancy quality and sponsor experience over rigid benchmarks.

The Power of One Lender’s “Yes”

In commercial mortgage finance, the borrower’s challenge isn’t always about convincing every lender—it’s about finding the right one. A transaction can have both strengths and weaknesses; the key is to match with a lender who sees the same strengths we do.  Financial Compound has built a reputation for doing exactly that—matching borrowers with capital sources who are aligned in risk appetite and investment outlook.  In this case, the result was a cash-out refinance closed on aggressive terms, before the property was even fully delivered.

Strategic Outcomes for the Borrower

By closing prior to full construction completion, the borrower was able to achieve multiple strategic objectives. First, the extracted equity could be redeployed immediately into other pipeline projects, supporting the sponsor’s broader investment strategy. Second, the deal established a forward-looking valuation for the property, giving the borrower a financial edge when engaging with future partners, tenants, or potential buyers. Lastly, by locking in the refinance before market conditions shifted, the borrower insulated themselves from potential rate increases and tightening credit standards—securing liquidity on favorable terms during an uncertain interest rate environment.

Expertise that Creates Optionality

This transaction underscores how non-traditional challenges can be converted into opportunities with the right financial engineering. Most lenders would have declined to engage without full build-out and tenant stabilization. But Financial Compound’s understanding of lender psychology, layered underwriting, and structured finance created a path to close early—without sacrificing deal economics.

Conclusion: A Blueprint for Capital Efficiency

While not every borrower requires a refinance before project completion, this case demonstrates what’s possible with experienced guidance. Creative structuring, informed lender outreach, and the ability to communicate the full story of a project can turn a “no” into a strategic “yes.” At Financial Compound, we specialize in unlocking capital when others can’t—or won’t.