At market TI refers to the Tenant Improvements that do not exceed the primary lender’s LTV limits. At Market TIs are typically funded by the primary mortgage lender or construction lender.
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Above market TI refers to the portion of the TI allowance that exceeds the primary lender’s LTV limit. Above market TI is typically funded using high rate mezzanine debt and/or equity reserves.
The Polestar system can also be used to refinance existing TI funding to free up capital, and reduce risk exposure associated with conventional real estate finance.
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Polestar Capital Group, Tenant Improvement Financing
At Market TI Financing
Polestar finances “At Market” landlord allowances with many of the same benefits offered with Polestar’s “Above market” financing.

ADVANTAGES:
  • Non-recourse debt to owner, but full-recourse to tenant
  • Very low cost of funds tied solely to credit of the tenant
  • No liens or encumbrances against property or TIs
  • Lower equity investment provides higher developer IRR and building sale profit under most buyer analyses
  • Overall project risk is reduced by lowering permanent mortgage requirements and assigning TI credit risk to Polestar
  • Easier to lease vacant space and attract tenants by offering 100% TI financing.

KEY ISSUES:
  • First mortgage lender (if already in place) must allow separation of TI rents from Space Lease
  • The Polestar loan may result in lower total LTV for new projects, but Polestar financing is non-recourse and long-term
  • Cashflow may be reduced under Polestar due to faster amortization (term of lease) versus long-term debt
  • The Polestar structure can be reversed to recombine rents if seller is concerned about marketing the property at a lower CAP rate
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Polestar Capital Associates, LLC * 400 Madison Avenue Suite 2B * New York, NY 10017 * Telephone: 212-981-0589 * Fax: 212-245-7001 * Email: info@polestarcapital.com