Loan structure
Conversion loans, matched to your deal
A conversion loan finances a change of use: an office building becoming apartments, a hotel becoming multifamily or senior housing, a warehouse becoming self-storage, a retail box becoming medical office. It is underwritten as construction with a twist, because the asset class the lender is being asked to rely on at the end is different from the one they are lending against at the start. Programs differ on which conversions they will touch and how they treat the ending asset, which is why one conversion file deserves several answers.
- 5,000+loan programs screened
- 5–8matches on a typical deal
- $0 upfrontto submit and compare offers
- 0.50–1.00%broker fee, paid only at closing
Who is a conversion loan actually for?
Owners and developers repositioning a building whose current use no longer works: an obsolete office tower with residential floor plates, a hotel whose market has moved, an industrial building in a neighborhood that now wants storage or flex space. If the use stays the same and only the condition changes, that is a value-add or bridge loan. A conversion changes what the building is.
What do conversion lenders disagree about?
Feasibility and the ending value. Programs take different views on which building types convert well, how to value a project whose comparables are the ending use rather than the current one, what zoning and code approvals must be final before funding, how much contingency a gut renovation needs, and whether the exit is a permanent loan on the new use or a sale. Some lenders publish an ending asset class they will lend into and decline everything else, so the file has to name where the building is going.
What should be ready before a conversion file goes out?
The current use and occupancy, the zoning and code path for the new use with any approvals outstanding, a design that shows the new floor plates work, a line-item budget with hard costs, soft costs and contingency, the contractor, and an operating projection for the ending use tied to comparables in that use. Files that arrive with the approvals path already mapped get taken seriously faster, because that is the first thing a conversion desk asks about.
How does getting matched actually work?
You describe the deal once — about five minutes — and it is screened against 5,000+ loan programs. Most deals return 5–8 matches, and the median first offer arrives in under an hour. There is $0 upfront; the fee is 0.50–1.00%, paid only at closing.
YieldStack is a commercial mortgage brokerage, not a lender. The rate, the leverage and the credit decision belong to the lenders competing for your deal; our job is making sure the right ones see it at the same time, so the terms you compare are real competition rather than one desk’s appetite.
What do lenders actually look at?
Every program weighs these in its own way — which is the argument for several quoting at once.
- Whether the building physically suits the new use
- Zoning and code approvals for the change of use, and what is still pending
- The budget and contingency for a renovation with unknowns behind the walls
- The sponsor's record on conversions or comparable heavy renovations
- The ending asset class, and which takeout programs will accept it
Frequently Asked Questions
Is a conversion the same as a value-add loan?
No. Value-add improves a building within its current use; a conversion changes the use. The change is what makes lenders underwrite the ending asset rather than the current one.
Which conversions are easiest to finance?
The ones with a clear path: a building whose floor plates and systems suit the new use, a zoning path that is already approved or routine, and an ending use with strong local comparables. Each lender has its own list.
Do lenders finance office-to-residential conversions?
Some do, on buildings that suit it. Floor depth, window lines, plumbing runs and the approvals path decide feasibility, and lenders that have done them look at those first.
Can I keep tenants in place during a conversion?
Sometimes, in a phased project. Lenders will want the phasing in the schedule and the income from remaining tenants shown separately from the projection for the new use.
How is the value set on a building that is changing use?
On the ending use, usually as a stabilized value after completion, with the current value as the floor. How much weight each gets varies by program and drives leverage.
What is the exit for a conversion loan?
A permanent refinance on the new use once it is leased, or a sale. Lenders test that exit before funding and often name the takeout programs they expect, so it belongs in the file from the beginning.
Is YieldStack a lender?
No. YieldStack is a commercial mortgage brokerage, not a lender. Every term sheet comes from a lender in the network and is subject to that lender's underwriting.
Does it cost anything to see terms?
No. It costs $0 upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
Is financing guaranteed?
No. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
Next step
One deal.Several lenders.
YieldStack is a commercial mortgage brokerage, not a lender.